Good day and thank you for standing by. Welcome to Weibo Reports Fourth Quarter and Fiscal Year 2023 Financial Results Conference call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to turn the call over to the first speaker today, Ms. Sandra Zhang from Weibo Corporation. Thank you. Please go ahead.

Thank you, operator. Welcome to Weibo's fourth quarter and full year 2023 earnings conference call. Joining me today are Chief Executive Officer, Gaofei Wang; and our Chief Financial Officer, Fei Cao. The conference call is also being broadcasted on Internet and is available through Weibo's IR website. Before the management remarks, I would like to read you the Safe Harbor statement in connection with today's conference call. During today's conference call, we may make forward-looking statements, statements that are not historical facts, including statements of our beliefs and expectations. Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statements. Weibo assumes no obligation to update the forward-looking statement in this conference call and elsewhere. Further information regarding this and other risks is included in Weibo's Annual Report on Form 20-F and other filings with the SEC. All the information provided in this press release is occurring as of the date hereof. Weibo assumes no obligation to update such information except as required under applicable law. Additionally, I would like to remind you that our discussion today includes certain non-GAAP measures, which excludes stock-based compensation and certain other expenses. We use non-GAAP financial measures to gain a better understanding of Weibo's comparative operating results, performance and future prospects. Our non-GAAP financials exclude certain expenses, gains or losses, and other items that are not expected to result in future cash payment or are non-recurring in nature, or are not indicative of our core operating results and outlook. Please refer to our press release for more information about our non-GAAP measures. Following the management prepared remarks, we'll open the lines for a brief Q&A session. With this, I would like to turn the call over to our CEO, Gaofei Wang.

Thank you. Hello, everyone. Welcome to Weibo's fourth quarter and full year 2023 earnings conference call. On today's call, I'll share with you highlights on Weibo's product and monetization, review the progress made in 2023, and elaborate our strategies for 2024. Starting from our financial performance in the fourth quarter. In the fourth quarter of 2023, our efforts to improve user acquisition and engagement of high-value users continued to pay off. In addition, we beef-up our initiatives to further recover the video content ecosystem, strengthen content operations, and enhance our ability to serve option marketing. As a result, despite the overall sluggish end market, our total revenue in the fourth quarter reached $463.7 million, an increase of 3% year-over-year and 5% quarter-over-quarter. Our total ad revenues reached $403.7 million, an increase of 3% year-over-year and 4% quarter-over-quarter. On a constant currency basis, both our total revenues and ad revenues in the fourth quarter would have increased 5% year-over-year. Our non-GAAP operating income in the fourth quarter reached $145.9 million, representing a non-GAAP operating margin of 31%. Turning to our full year financial performance. In 2023, due to uncertainties of the macro and industry environment, the recovery of ad demand was a bit volatile. It resulted in lower than expected annual marketing budget for some clients in key industries compared with our expectation at the beginning of the year, which weighed down the growth of our ad business. For full year 2023, our total revenues reached $1.76 billion, a decrease of 4% year-over-year. Our total ad revenues reached $1.53 billion, a decrease of 4% year-over-year. On a constant currency basis, both of our total revenues and ad revenues would have increased 1% year-over-year. This year we focus on improving our product's core competitiveness and enhancing operating efficiency to navigate through challenges…

Thank you, Gaofei, and hello, everyone. Welcome to Weibo's fourth quarter and fiscal year 2023 earnings conference call. Let's start with user metrics. In December 2023, Weibo's MAUs and average DAUs reached 598 million and 257 million, respectively, representing an increase of 11 million and 5 million users on a year-over-year basis in 2023. Our user community and engagement remain healthy despite facing out of pandemic-related traffic as well as the ongoing execution of Egypt and China investment strategies. Turning to financials. As a reminder, my prepared remarks would focus on non-GAAP results. All monetary amounts are in US dollar terms and all the comparisons are on a year-on-year basis unless otherwise noticed. We experienced happiness through our financials due to the volatility of foreign exchange rates throughout the year. Since our business primarily operates in China, while we report our financials in US dollars. Our financial performance was affected by adverse currency movements. Let me now walk you through our financial highlights for the fourth quarter and fiscal year 2023. Weibo's fourth quarter 2023 net revenue was $463.7 million, an increase of 3%, or 5% on a constant currency basis. Operating income was $145.9 million, representing operating margin of 31%. Net income attributable to Weibo reached $76.4 million and diluted EPS was $0.31. For full year 2023, total revenue reached $1.76 billion, a decrease of 4%, or an increase of 1% on a constant currency basis. Operating income was $592.1 million, representing operating margin of 34%. Net income attributable to Weibo reached $450.6 million and diluted EPS was $1.88. Operating cash flow for full year 2023 reached $672.8 million, an increase of 19%. Let me give you more color on fourth quarter and full year 2023 revenue performance. Weibo's advertising and marketing revenue for the fourth quarter 2023 was…

[Operator Instructions] Our first question comes from the line of Timothy Zhao from Goldman Sachs.

My question is regarding our advertising business. Could management elaborate more on your outlook for the advertising revenue growth for this year, including the first quarter? And specifically, regarding the advertising products, what is our key strategy for this year?

Thank you for this question. So first of all, because in 2023, for many different quarters, we had a lot of uncertainties for providing these particular expectations. So we remain cautious and prudent in giving the expectations for the whole year of 2024. So in Q1, we do see a recovery of almost all the industries. However, still there are a lot of uncertainties and also challenges relating to the consumption market as a whole. Okay. And also in terms of the overall demand, in 2024, still, we have seen some of the certainties for some industries, for instance, in terms of the gaming -- I mean, the sports, for instance, in the Olympics, which took place in July and also the beginning of August. So this has boosted some of the budget of advertisement for the consumption market, for instance, from the food and beverages and also the apparels and also the footwear as well. So, of course, in 2022, we had actually a very high base because of the Asian Games and also the World Cup. But still, we expect to have a better second half of the year in 2024 than the first half of the year. And also in terms of the gaming, we do see a lot of uncertainties. So for instance, with the booming of the granting of licenses to those gamers -- to the game developers, we do -- can leverage our advantages in terms of the content marketing, and we would like to leverage this advantage and also help to explore and also help a lot of new games to be exploited. So in 2024, we expect to have a better gaming industry than that of 2023. Okay. And also in 2022, we did see the enhancement of our competitiveness and also…

The next question comes from the line of Thomas Chong from Jefferies.

My question is about our strategies in 2024 with regard to users and our content ecosystem. And on the other hand, how should we think about our AIGC strategies?

And also for this question, first of all, let me talk to you about the overall user strategy in 2024. So in 2024, still, we are going to maintain the same budget for the marketing activities that of 2023. So for the handset industry in 2023, we do see a decrease of our total shipments, but still we had a net gain of MAU of over 10 million and also over 5 million of net gain of DAUs because of a very deep strategic collaboration with the handset makers, so that you can see that we can have a very low user acquisition cost. And also, overall speaking, by focusing on the entertainment and also the hot trends and hot topics, we have also a very good positioning in getting the users from outside of the Weibo. And also, in 2024, as a result, we had almost a flat, or a little bit more budget allocated to this area than in 2023. We do see a very good recovery of the social hot trends and also the entertainment industry and improved by the performance during the Chinese New Year period. And so, thus, we are very confident to have a very good user gain and also user scale in 2024 than of 2023 and also a much better one. Also, the internal challenges still are that, first of all, we would like to focus on a shift of the traffic of entertainment and social hot topics to the verticals because by having more traffic of the vertical or vertical traffics, we are able to increase the user stickiness and enhance our monetization efficiency and also improve our competitiveness. So before the COVID, before 2019, we had almost 58% of our traffic allocated to vertical traffics. But still, during the COVID…

Our last question comes from the line of Xueqing Zhang from CICC.

We noticed that the company announced special dividend this quarter. So with the capital allocation and shareholder return plan this year, can management share more on the share buyback and dividend plan in the future?

Xueqing, thank you for your question. This is Fei. As mentioned in my prepared remarks, Weibo maintained a decent profitability and relatively strong capability to generate operating cash flows. In 2023, our non-GAAP operating income reached $592 million, representing a non-GAAP operating margin of 34%. We generated operating cash flow of approximately $673 million in 2023, representing a year-over-year increase of 19%. So if you can remember last year, when we distributed a special cash dividend for the first time, last May, we talked about certain principles we would adhere to in use of our cash. First of all, we always prioritize supporting business growth and strengthening our platform's competitive advantages such as investing in content ecosystem, in vertical areas and AIGC, and any opportunities which closely related to our business. And then, in addition to investing in our own business development, we certainly need to ensure shareholder returns. So as you know, our Board of Directors has approved the distribution of another $200 million special cash dividend, after we made the USD 200 million cash dividend last year. So going forward, we expect to continue paying out dividends to our shareholders and gradually formulate a new cash dividend distribution policy. The Board would primarily cite the dividend amount based on the -- our company's profit performance in the previous fiscal year, while also considering factors such as our cash flow, our financial condition and the capital requirements. So looking ahead, we will continue to explore various ways to reward our investors, our shareholders, including the dividend payouts and the stock repurchases. These measures will be carefully considered and aligned with our core objectives and subject to our Board approval. We will communicate the progress with market and with our investors in a timely manner. So I hope this can address your question.

There are no further questions at this time. I would like to hand the call back to management for closing.

Thank you all for joining us, and we will see you next time.

That does conclude today's conference call. Thank you for your participation. You may now disconnect your lines.