Good morning and good evening, ladies and gentlemen. Thank you for standing by for Yalla Group Limited’s Fourth Quarter and Full Year 2020 Earnings Conference Call. [Operator Instructions]. After management’s prepared remarks, there will be a question-and-answer session. Today’s conference call is being recorded. Now I will turn the call over to your speaker host today, Ms. Kerry Gao, IR Director of the company. Please go ahead, ma'am.

Thank you. Hello, everyone, and welcome to Yalla's Fourth Quarter and Full Year 2020 Earnings Conference Call. We have released our earnings results earlier today, and it is now available on our IR website as well as on Newswire services. Before we continue, please note that the discussion today will contain forward-looking statements made under the safe harbor provision of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, our future results may be materially different from the views expressed today. Further information regarding this and other risks and uncertainties is included in our earning release and our registration statements filed with the SEC. Yalla does not assume any obligation to update any forward-looking statements, expect as required by law. Please also note that Yalla's earnings press release and this conference call include discussion of unaudited GAAP financial information as well as unaudited non-GAAP financial measures. Yalla's press release contains a reconciliation of the unaudited non-GAAP measures to the unaudited most directly comparable GAAP measures. Today, you'll hear from Mr. Tao Yang, our Chairman and Chief Executive Officer, who will provide an overview of our recent achievements and growth strategies. Mr. Yang will be followed by Mr. Saifi Ismail, the company's President, who will give a brief review of our recent development. Finally, Ms. Karen Hu, our Chief Financial Officer, will provide additional details on the company's financial results and discuss its financial outlook. Following management's prepared remarks, we'll open up the call to questions. Our Chief Operating Officer Mr. Jeff Xu will join the call for our Q&A session. With that said, I would now like to turn the call over to our Chairman and Chief Executive Officer, Mr. Tao Yang. Please go ahead, sir.

Thank you, Kerry, and thank you, everyone, for joining our fourth quarter and full year 2020 earnings conference call. 2020 was a milestone year for Yalla. We became the first UAE technology unicorn to be listed on the New York Stock Exchange, an accomplishment we are very proud of and a testament to our business model, our fundamentals and our perseverance. Operationally, we also saw strong growth momentum across the board as we continued to expand our user community and advance our monetization capabilities. We are pleased to report a very strong fourth quarter where Yalla Group’s total revenue increased 42.9% Q-on-Q and reached USD48.3 million in Q4, exceeding the upper end of the guidance range. We also maintained our non-GAAP net margin at 48.3%. While our successful IPO event in Dubai generated far-reaching brand awareness in the Middle East and North Africa region, also known as MENA, our highly experienced marketing team has been running innovative and resonating campaigns, tailored to the local culture. Monthly active users for our Group increased 15% Q-on-Q and reached 16.4 million. In addition, our ability to monetize our user base also continued to improve, as our group’s ARPPU grew rapidly by 38.5% quarter-over-quarter and reached 9.2 in 4Q. Yalla Group’s paying users also increased to 5.2 million. Let me provide an example of how we are approaching monetization. A great example is Yalla Ludo. It started as a casual game platform and has shown strong user growth since the beginning of 2020. To boost its monetization capabilities, in July 2020, we introduced chat room functionality into the platform, in an effort to strengthen the social connections amongst our casual game users. With improved user engagement and further monetization, Yalla Ludo accounted for more than half of our group’s quarterly revenue in Q4. Going…

Thanks, Tao. Hello, everyone. Thanks for joining us today. During our last earnings call, we introduced 2 new products to our pipeline: Yalla Baloot, which is a traditional card game favored by a lot of people in Saudi Arabia, and 101 Okey, which is also a popular traditional board game in Turkey. The Beta versions of both have been made available online, and we will launch these 2 products officially in quarter 2 with full-on promotional campaigns. We also have more exciting new products lined up for this year. One important new product that we would love to share with you is Yalla Chat, an instant message or IM product, designed specifically for Arabic users. IM products are closely related to people’s daily life, and it serves as an important part of the social infrastructure in modern society. Looking around the world, many countries or regions, like United States, China, Japan, Korea, Russia and Vietnam, to name just a few, have their own IM products that are designed based on local culture and catering to local users’ needs. Keeping Yalla’s mission in mind, we believe it will be meaningful for Arabic users to have their own IM products, and thus, we aim to launch Yalla Chat this year. The plan is to start it off as a communication platform and continue to add additional functionalities that serve MENA users’ particular needs over time. This new product will be an important strategic effort for Yalla Group, as it has the potential to significantly expand our scope of business. Leveraging our existing highly active user base, we look forward to cultivating another growth engine for our business. Another product we would love to share here is Yalla Parchis. We found that Ludo game is not only popular around the MENA area, but…

Thank you, Saifi. Hello, everyone. Thank you for joining us. Our leadership position as a voice-centric social networking and entertainment platform in MENA is clearly being demonstrated by our robust top line and bottom line growth that continued in the quarter. Our fourth quarter revenues grew 150.9% year-over-year to USD48.3 million, while our non-GAAP net income reached USD23.3 million with growth of 181.6%. Our non-GAAP net margin remained elevated at 48.3%, reflecting our unique business strategy, market positioning and strong operating efficiency. With 2021 well underway, we are very confident we can deliver another year of strong growth and profitability as we continue to execute on our strategic roadmap. Now I would like to walk through our financial details for the fourth quarter of 2020. Our revenues were USD48.3 million in the fourth quarter of 2020, a 150.9% increase from USD19.3 million in the same period last year. The increase was primarily driven by the widening of both Yalla’s and Yalla Ludo’s user base and the robust enhancement in chatting services’ monetization capability. Our average MAUs increased by 295.4% from 4.2 million in the fourth quarter of 2019 to 16.4 million in the fourth quarter of 2020. Yalla’s MAUs increased by 94.8% to 6.4 million in the fourth quarter of 2020 from 3.3 million in the same period of last year. And Yalla Ludo’s MAUs increased by 1057.5% to 10 million in the fourth quarter of 2020 from 0.9 million in the same period of last year. In addition, another primary contributor to our solid revenue growth was the significant increase in the number of paying users, which grew from 0.7 million in the fourth quarter of 2019 to 5.2 million in the fourth quarter of 2020. Now let's look at our costs and expenses. Our cost of revenues was…

We will now begin the question-and-answer session. [Operator Instructions]. For the benefit of all participants on today’s call, if you wish to ask your question to management in Arabic or Chinese, please immediately repeat your question in English. [Operator Instructions]. The first question comes from [Feiya Hao] of Haitong International.

Congrats on a solid quarter. I have one question for you. What is the MAU also for Yalla and Yalla Ludo in 2021? And what are your key strategies to reach a new target?

Thanks, Feiya. Actually, we expect both Yalla's and Yalla Ludo's MAUs to grow by 10% to 15% quarter-over-quarter this year. And that's around 50% to 70% growth (inaudible). But please note, this number is only for Yalla and Yalla Ludo. We haven't included potential contributions from our new products in this outlook. In terms of growth of the new products, we will need to get more feedback from the markets to get a better sense of it. We will keep monitoring the performance of our new products after we officially launch them, and we will keep you posted of our progress. Thank you.

Thanks.

Kai Fang from CICC.

Congratulations for a strong quarter. So I have a question about the competition. So we see some Chinese game companies had entered in the MENA market. How does management see the competition? And what's our strategy for this?

Hi, Kai Fang, this is Tao Yang. I'd like to take this question. Actually, we were not the first company that launched mobile games in MENA market. There were more than 100 ludo games apps in the MENA market before we introduced the Yalla Ludo. In addition, Yalla Ludo is also competing with other ball games, so it has been facing competition since day one. Against the competition, Yalla Ludo is the number-one ball game in the MENA region in terms of revenue generation. And the most important difference between Yalla Ludo and the other ludo platforms is that we have built very strong social features into it. And we run Yalla Ludo as not only a game platform, but also a social community. At this point, we haven't seen strong competitors in this vertical, but we will be alert to dynamic competitive landscape.

Okay. A follow-up question about the platform -- so we have several games and social networking apps. So can you give us more details about your plan about in the platform and the Yalla Chat?

Oh, yes, that is a very interesting question. Yes, building Yalla platform is important strategic move for us. We aim to build and strengthen the connections among our individual apps and create a synergistic ecosystem. We can draw our traffic from one of our apps to another through [as] or operating activities. At this stage, we think Yalla Chat can be a good starting point to facilitate our implementation of this strategy. As Saifi mentioned earlier, our plan is to start Yalla Chat off as a communication platform and continue to add additional functionalities, connecting all of our apps and services into one large platform. Thank you, Kai Fang, for your question.

Okay. Very clear, thank you. Thank you.

[Operator Instructions]. Bo Pei of Oppenheimer.

Congrats on the strong results. So I have two questions. First, can you talk about what percentage of Ludo users use the Chat feature in 4Q? And then I notice we’ve entered South American market. Can you briefly discuss the geographic expansion of [QT], for example, the total addressable market in South America? And also in terms of the competition, how does that compare with the MENA market? And then is there any other market, for example, Southeast Asia, or any other regions, you plan to enter as well?

Thank you, Bo Pei, and good morning. Currently, there's over 20% of the users from Yalla Ludo are using our matching function. And I think MENA -- and for the second question, I think MENA, for sure, it is our most important market and main focus for Yalla. One of the most important advantages we have is our team's deep understanding into the Arabic culture and our strong localization capabilities. When we consider expanding into other regions, we usually begin with countries, having seen the culture background. For example, our first flagship app, Yalla, only supported Arabic in the beginning, and we gradually added Turkish, Hindi, Urdu and Indonesian, etc. And our app is also available for download in more than 100 countries around the world. In addition, we also offer Spanish and Portuguese on Yalla. The culture of people who speak Spanish and Portuguese is very different from the cultures of other countries, and regions in which Yalla usually operates. Through operating products in Spanish-speaking countries and serving local users there, our team has gained valuable consumer insight and experiences from this market over the past 3 years. That's a good example. We found that Parchis is a very popular traditional board game in the South American market, and it's similar to Ludo. And with Yalla Parchis launch this year, we expect to grow our presence in this market. We will continue to monitor the South American market closely for future opportunities. Thank you.

Thank you.

Iris Guo of CICC.

Congrats on your strong financial performance. My question is regarding your expense plan and the margins because historically, the non-GAAP net margins have been very high, almost 50%. I'm wondering can you please share more color on your investment and expense spend on sales, marketing, R&D and others? And how do you expect them to impact your margin level?

Thank you. That's a really interesting question. Our net margin has been at a very good level by about around 45% in the past several quarters. But this year, we don’t think retaining our margin is our top priority. With a new product line, app launch, we expect to increase our efforts to pursue new users, hence, our budget in the marketing. This is important for the company from a growth perspective and will benefit the company in the mid-to-long run. Thank you.

Thank you. That's very helpful.

Vincent Yu of Needham & Company.

My question is about monetization, a very general question. So we're seeing products in our products in the beta testing version. Any other -- any monetization opportunity that the company is most excited about in the next few years?

Thank you, Vincent. The current monetization capability is already very healthy and strong, I think. In the foreseeable future, social networking and entertainment will still be our main focus. And for apps, if we decide to give it a try, we will do it gradually and cautiously. For the other businesses, like e-commerce, it's not in our plan at this point. We will share with our investors if we have any OpEx on our company strategy or pipeline. Thank you, Vincent.

Thank you.

As there are no further questions now, I’d like to turn the call back over to management for closing remarks.

Thank you once again for joining us today. We look forward to speaking with you in the next quarter. If you have further questions, please feel free to contact Yalla’s investor relations through the contact information provided on our website or The Piacente Group Investor Relations.

This concludes this conference call. You may now disconnect your line. Thank you.