Good day, and thank you for standing by. Welcome to the Weibo Reports First Quarter 2024 Financial Results. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to our first speaker today, Sandra Zhang, IR Head. Please go ahead.

Thank you, operator. Welcome to Weibo first quarter 2024 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 the 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 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.

[Foreign Language]

[Interpreted] Thank you. Hello, everyone. Welcome to Weibo's first quarter 2024 earnings conference call.

[Foreign Language]

[Interpreted] On today's call, I'll share with you highlights on Weibo's product and monetization in the first quarter of 2024.

[Foreign Language]

[Interpreted] On the user front, in the first quarter, Weibo's MAU reached 588 million and average daily use reached 255 million. In light of an already sizable user community and increasingly mature user mindset, we have proactively adjusted our user strategy in 2024 with more channel budget allocated to the acquisition and engagement of high-quality users. We are dedicated to further enhancing Weibo's product competitiveness, leveraging optimized channel strategy, social features and differentiation in hot-trends.

[Foreign Language]

[Interpreted] On the monetization front, in the last 2 years, we have been focusing on increasing commercial value for Weibo's hot-trends through combining entertainment and IP-related hot-trends content with advertising and marketing demand. This quarter, we enhanced the hot-trends effect of the spring festival, leveraging Weibo's advantage in hot-trends marketing. Despite the overall sluggish end market in the first quarter of 2024, our total revenues reached USD 395.5 million and our total ad revenues reached USD 339 million. On a constant currency basis, both our total revenues and ad revenues will be flat year-over-year. For the first quarter of 2024, our non-GAAP operating income reached USD 125.8 million, representing a non-GAAP operating margin of 32%, a modest pickup year-over-year.

[Foreign Language]

[Interpreted] Next, I'll introduce our progress in product operation and monetization in the first quarter. In 2024, we still focus on growing user scale and engagement, strengthening the competitiveness of content ecosystem and improving operating efficiency as our key strategic objectives. We keep optimizing channel collaboration, improving the competitiveness of social and hot-trend products and strengthening key content verticals to further enhance the overall competitiveness and healthy development of Weibo's content ecosystem. We believe execution of this strategy will lay a solid foundation for our top line recovery from user, content and monetization side, enabling us to capture market opportunities once macro economy gets better and brand ad demand improves.

[Foreign Language]

[Interpreted] On the channel front, we maintained close collaboration with handset manufacturers, focusing on the acquisition of high-value users and promotion of user engagement. We also invested to further refine accuracy of algorithm and targeting capability of our business model in order to create enriched content offerings for our channel users and increase user engagement, which lays foundation for monetization.

[Foreign Language]

[Interpreted] On social attributes, in the first quarter, we continue to execute strategies to focus on the development of content verticals to further recover the vertical content ecosystem. On the one hand, we focus on adjusting the algorithm of relationship-based feed and interest-based feed to distribute personalized vertical content for users reinforce recommendation on real-time feedback and promote social conversion. As a result, the per capita content consumption and interaction efficiency of these 2 feed continue to increase sequentially. On the other hand, in 2024, we stepped up investment in UGC content and improved generation of high-quality UGC content on Weibo. We encourage users to create more high-quality content around hot-trends and verticals on Weibo to improve user engagement and enrich and diversify content in vertical areas. For example, in the Weibo mobile photography content, we introduced long-term stream tracks, co-created content with media and handset manufacturers and open off-line of photography exhibition to encourage ordinary users to share photography of scenery, culture and life et cetera, on Weibo. As a result, over 6 million users participated in the contest in 5 months and contribute approximately 3 million photos. This year, we will recognize more similar activities and encourage users to participate in the content generation, leveraging Weibo's influence and enrich Weibo's company ecosystem. Additionally, we further upgraded the posting and interaction functions for the Super Topic products. In order to boost the user engagement within the community, that is to say users can gain traffic incentives on high-quality content they posted while also enjoy the social interaction around the interest-based content within the Super Topic community. In the first quarter, the number of post users who posted an interaction in the Super Topic community all grew double-digit compared with Q4 last year. The Super Topic has become an important channel to [ copy the ] interest-based to high-quality content creators.

[Foreign Language]

[Interpreted] On content ecosystem, in the first quarter, while maintaining our competitiveness in hot-trends, entertainment and other advantaged IP-related verticals, we focus on increasing investment in verticals such as digital, automobile -- automotive, game, fashion and beauty and healthcare to enhance the competitiveness of Weibo's ecosystem and further improve monetization efficiency.

[Foreign Language]

[Interpreted] On hot-trends and IP content, in the first quarter, with about entertainment content released during the Spring Festival, we integrated content operation of hot-trends entertainment and various vertical areas to engage broader users to consume and interact around the content related to the Spring Festival, leveraging our advantages in these areas. As a result, the overall traffic of the platform increased significantly during the period. Total views of content related to Spring Festival Gala this year reached 100 billion, and related discussions surpassed 300 million, up 50% year-over-year. The increase of traffic in hot-trends in the Spring Festival also created significant commercial value. On the one hand, such cross-vertical operations amplified the hot-trends and the IP effect on the platform and improve the platform's operating efficiency and establish Weibo's influence in key industries. On the other hand, as hot-trends become increasingly standardized and the process of hot-trends marketing becomes smoother we will also bring a sustainable revenue growth going forward. We are confident that Weibo will maintain its leading position in the industry in the future hot-trends operation and marketing.

[Foreign Language]

[Interpreted] On industry-related content verticals, this year, we will continue to execute against some of the key strategies we adopted in the fourth quarter last year. First, we strive to strengthen the construction of vertical company ecosystem. To elaborate, we will beef up our support of vertical content, engaging cross-vertical accounts and media outlet in the generation and distribution of popular vertical content. Second, we will divert more traffic to vertical accounts to promote the growth of high-quality accounts in vertical areas and empower them to gain higher commercial returns with their own content on Weibo platform. In addition to the healthcare industry mentioned in last quarter's conference call, we also achieved notable growth in automobile, digital products and online games in this quarter. We are encouraged to see significant increase in the number of golden and orange verified accounts and their traffic interaction as well as ad revenues generated on an annual basis. In particular, for the online game vertical, the number of golden and orange verified account increased by nearly 50% year-over-year with traffic and interaction increasing over 20% and the revenues from marketing activities yearly triple. As a result, we have gradually integrated the content and monetization ecosystem in a closer and healthy manner for the online game vertical. In terms of the cosmetic and beauty vertical, we achieved notable growth in the number of hot-trends and the golden verified accounts in the past 2 quarters, leveraging our traffic support and hot-trends operations. However, due to the fierce competition from other platform and accounts, Weibo's content ecosystem in the cosmetic and beauty vertical has now returned to an effective growth trajectory. We need to keep up our investment, find a stable and effective road map to optimize the content ecosystem in order to reinforce our competitiveness in this vertical.

[Foreign Language]

[Interpreted] Moving on to monetization. In 2024, we will continue to beef up our efforts to reinforce our monetization competitively. Leveraging Weibo strength in hot-trends and IPs as well as driving vertical content ecosystem, we will sharpen our competitive edge of our content marketing and performance ad products in the hope of enhancing our capabilities to navigate through business risk in key industries.

[Foreign Language]

[Interpreted] Amid a relative soft end market in the first quarter, our ad revenue were flattish year-over-year on a constant currency basis. During the Spring Festival, we accustomed the platform resources to customers' marketing campaigns by integrating the hot-trends of Weibo and market hype for clients. We seek to accommodate customers' promotion budget as much as possible. As a result, our gross ad revenues related to the Spring Festival ad placements increased by 50% year-over-year, of which gross ad revenues connected to the Spring Festival IPs doubled year-over-year with our diversified marketing offerings and products, customers from more industries can participate in the Spring Festival marketing campaigns. Therefore, our gross ad revenue from e-commerce, online games, footwear and apparel, healthcare, digital products and food and beverages sectors, et cetera, all more than doubled year-over-year. For example, during the Spring Festival, the beverage brand [indiscernible] launched the Send Good Wishes campaigns on Weibo through the hot topics around the brand ambassador, [indiscernible] such as Spring Festival greetings, auspicious words and the popularity of works. Over 300 celebrities posted good wish under the topic of good luck in the Year of the Dragon to create auspicious atmosphere and enhance the brand mindset of the auspicious culture. As a result, the customer successfully built market hype with its brand exposure on Weibo increasing 290 percentage, which drove the growth of e-commerce sales of the brand during the Spring Festival season growing 20% year-over-year.

[Foreign Language]

[Interpreted] On industry, we are pleased to see the handset online game industry sustained double-digit growth year-over-year. The handset sectors continue to grow off a high base as we capture higher volume share among customers and budget, thanks to the customers' recognition of hot-trends marketing offerings. As for the online games with the tailwinds from game license approval and the client's growing demand in content marketing. Ad revenue from the game sector also grew significantly.

[Foreign Language]

[Interpreted] On the flip side, despite a sequential recovery, the cosmetic and beauty sector continued to decline year-over-year as we previously expected. This was mainly because the consumers concept and trends are gradually shifting toward more cost-effective products. As a result, the sales of the international beauty brands were still under pressure, which negatively affected the pace of new product launch and thus, their scalable budget. That said, we are pleased to see continuous improvement of domestic beauty brands in product quality and brand marketing, leading to increased brand ad placement on Weibo since the second half of last year. In the first quarter, ad revenues from domestic beauty brands grew over 50% year-over-year. However, the growth still cannot fully offset the impact of the decline in the international brands on our overall revenue yet. In order to boost client willingness of new product marketing and improve its performance, we will strengthen cooperation with e-commerce platforms and domestic brands and actively explore the synergistic promotion of new product in the FMCG industry on social and e-commerce platforms and provide clients with better marketing support. We hope these efforts will translate into more stable growth in the FMCG industry in the coming quarters. In the second quarter, we will test the in-depth cooperation with Tmall focusing on the beauty, footwear and apparel industries, leveraging Weibo's strength in hot-trends marketing, we aim to create full funnel value to customers for their new product launch from social influence to e-commerce conversion and thus enhance customers' perception of Weibo's value in hot-trends marketing.

[Foreign Language]

[Interpreted] Overall speaking, although revenues from certain industries such as cosmetic and beauty industry fell short of expectation and dragged the overall revenue growth, we delivered decent operating profit, which further increased from last year, thanks to solid execution of our efficiency initiatives, leveraging improved operating efficiency, stable profitability and healthy cash flow. We further elevated our financial flexibility, giving us ample room to invest in the vertical company ecosystem to drive user growth and engagement as well as strengthen our monetization competitiveness.

[Foreign Language]

[Interpreted] With that, let me turn the call over to Fei Cao for a financial review.

Thank you, Gaofei, and hello, everyone. Welcome to Weibo's First Quarter 2024 Earnings Conference Call. Let's start with user metrics. In March 2024, Weibo's MAUs reached 588 million and average DAUs reached 255 million. Given our massive user base and increasingly mature under mindset, we have proactively adjusted our user strategy in 2024, which puts more emphasis on the acquisition and engagement of high-quality users leveraging effective channel investments, optimize the social features and our differentiation in hot-trends. Turning to financials. As a reminder, my prepared remarks will focus on non-GAAP results. All monetary amounts are in U.S. dollar terms and all the comparisons on a year-over-year basis, unless otherwise noted. We continue to experience happiness to our financials due to the volatility of foreign exchange rates in the last 12 months. Since our business primarily operates in China, while we report our financials in U.S. dollars. Our financial performance was affected by adverse currency movements. Now let me walk you through our financial highlights for the first quarter 2024. Weibo's first quarter 2024 net revenue was USD 395.5 million, a decrease of 4% or flattish on a constant currency basis. Operating income was USD 125.8 million, representing an operating margin of 32%. Net income attributable to Weibo reached USD 106.6 million, representing a net margin of 27%. Diluted EPS was USD 0.41. Let me give more color on the first quarter 2024 revenue performance. Weibo's advertising and marketing revenues for the first quarter of 2024 was USD 339 million, a decrease of 5% or flattish on constant currency basis, reflecting low seasonality and the past macro environment. Mobile ad revenue was [ USD 322.5 million ], contributing approximately 95% of total ad revenue. In terms of growth, the online game and the [ 3P ] product sector demonstrated strong…

[Operator Instructions] We will now take our first question which is from Felix Liu from UBS.

[Foreign Language] Congratulations on the first quarter B2 consensus expectations. My question is on your outlook for the advertisement business in second quarter and second half. How is advertiser sentiment trending? And how do you expect your advertisement business to perform? And could you maybe elaborate a little bit more on your ad strategy?

[Foreign Language]

[Interpreted] First of all, let's talk about our expectation on Q2 and also the second half overall speaking. So in last year, from Q1 all the way to Q4, we have been seeing an increasing of the certainties of the advertisement industry. And in 2024, each quarter, but still, we are keeping a very cautious manner in this area in terms of our expectation of the recovery of the sentiment. So of course, in Q1, this was more optimistic than our expectations. Apart from the cosmetic and beauty products industry, we've been seeing a slow recovery and also a quite normal sentiment of the rest of the other advertisers from the other industries. And also in Q2, especially in March and also in April, of course, that we have seen some of the positive trend, except that seems that the consumption seems to be slowing down. However, still, we believe that the expectation in the second half in Q3 and Q4 is more optimistic than the Q1 and also Q2 of this year. And also with the limited budget on the advertising, most of these budgets went to the effective based advertisement, for instance, the live stream advertisement. And also, it is pretty much focusing on the branding as well as some of the promotion of the new brands. This is going to be focused on the, for instance, some of the hot topics like the IP of the entertainment programs or the holidays like the Chinese New Year, et cetera. So we've been seeing a pretty much obvious trend of the indication of the budget in these areas in the past quarters. And of course, another very important thing is that we have to refocus on the hot topic marketing and also some of the relevant areas like the…

Next question is from Daisy Chen from Haitong International.

My question is about the user base. This quarter, we noted that the number of active users have decreased. But a good point is that the revenue per user has improved in a time. We think that indicates the improvement of our user quality. As you just mentioned that you will adjust your user growth strategy this year, can you tell us more about the adjustment and what kind of user data will be the forecast this year? And maybe is there any -- is there a saving of the user base that you feel comfortable?

[Foreign Language]

[Interpreted] So actually, in last year, Q4 and also the overall second half of the year, we were already discussing our strategy on this particular area. And now, of course, that we are focusing on DAU and also MAU but still, we truly believe that not only that, we have seen that the ARPU generated from the different asset types and also different brands is actually pretty much different. For instance, we've been seeing actually the ARPU for those smartphone brands like Huawei and also iPhone is 2x to 4x higher than the other brands. So as a result, we have to really focus on those really competitive ones. For instance, especially focusing on those users that is actually able to generate more opinions on the social top or hot-trends and also the -- in terms of the UGC as well. So that is to say that if we need to spend the budget in acquiring those users, we are going to focus on those users with a higher ARPU and also the users that are able to generate more content and also are more interactive. So normally, of course, the overall spending is around 2x to 3x more expensive than those users with a lower performance, but still, we've been seeing a very good positive trend. So still, we have tested that notion last year, and we're going to keep doing so. So for instance, in Q1 of this year, we purposely gave up on some of the cheap to get or low-cost to get users in terms of their interactivity and also the ARPU generation. So we expect to have a very good DAU increase because of this focus. And also second, we do expect some of the frequency of the use and by switching on the Weibo…

And we have no further questions. In that case, I will hand the conference back to the speakers for closing remarks.

Thanks, operator. This wraps up our conference call today. Thank you for joining us. We'll see you next quarter.

Thank you. This does conclude the conference for today. Thank you for participating, and you may now disconnect.