Good morning, and good evening, ladies and gentlemen. Thank you for standing by for Yalla Group Limited Third Quarter 2024 Earnings Conference Call. At this time, all participants are in listen-only mode. After management’s prepared remarks. 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, Kerry Gao, IR Director of the company. Please go ahead.

Hello, everyone, and welcome to Yalla's third quarter 2024 earnings conference call. We released our earnings press release earlier today, and the release is now available on our IR website, as well as our Newswire outlets. 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 these and other risks and uncertainties is included in our earnings release and our annual report filed with the SEC. Yalla does not assume any obligation to update any forward-looking statements except as required by law. Please also note that Yalla's earnings release and this conference call include a 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 will hear from Mr. Tao Yang, our Chairman and Chief Executive Officer, who will provide an overview of our latest achievements and growth strategies. He will be followed by Mr. Saifi Ismail, the company's President, who will briefly review our recent business developments. Mrs. Karen Hu, our Chief Financial Officer, will then provide additional details on the company's financial results and discuss our financial outlook. Following management's prepared remarks, we will open the call to questions. Mr. Jeff Xu, our Chief Operating Officer, will join the 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, everyone, for joining our third quarter 2024 earnings conference call. We are thrilled to report a robust third quarter marked by record marked by record high revenues and enhanced profitability. Our third quarter revenues grew to US$88.9 million, beating the upper end of our guidance by 8%, while our net income increased by 11.2% year-over-year to US$39.2 million behind this impressive performance with our continued commitment to deepening our localization capabilities, which enabled us to keep rolling out new gamification features and operating events that fulfill media usage social and Entertainment needs. Driving quality revenue growth while where including operating efficiencies has been a key company objective this year. To that end, the team has consistently refined operational procedures and optimized user acquisition strategies over the past several quarters. Moving forward, we will remain focused on user experience and product excellence in reaching our product ecosystem and pursuing high quality attainable developments. MENA’s digital transformation has drove a record year this year drawing the series of global attention talent and investment. We have seen gaming emerge as one of the critical drivers of this digital transformation. – countries by introducing supportive policies and initiatives to facilitate this development of the gaming and involved sectors. In this summer, the Esports World Cup put Saudi Arabia in the Global Spotlight for gamers and industry professionals worldwide. With over 1,500 players worldwide competing a clubs, multiple games for a record-breaking USD16 million. The event showcased key in a country's policy commitment to the gaming industry and their infrastructure capacity for large scale events as a crucial growth market for the global gaming industry. Mena still holds immense potential for further development, which is gradually being unleashed. Looking at the Group’s business, Gaming Services now a revenue contributor was growing in importance…

Hello everyone. Thanks for joining us today. Let's move on to our third quarter operations, and the performance of our products. We continued to broaden our user base. Thanks to our strong execution of effective user acquisition strategy. Our average monthly active users grew to 40.2 million, up 14.5% year-over-year. As we dedicated to enhancing our products gamification and user experience, our paying users increased to 12.6 million, up, 12% year-over-year. During the quarter, our products demonstrated remarkable strength with Yalla Ludo and 101 Okey Yalla, both setting new quarterly revenue records. We were delighted to reach new heights within our casual game metrics and look forward to replicating the Yalla Ludo's success with other products. As we advance the company's developments, we continue to identify and create products with deep cultural roots that attract a strong user base in MENA, while keeping a close eye on market dynamics and user changing needs. Our highly skilled team pushed a profound understanding of MENA users their preferences empowering the consistent development of products, as well as online and offline events with enduring appeal. For instance, this quarter we expanded the regional footprint of our Ludo Champion Offline Tournament Series. Our team not only hosted two tournaments in Abu Dhabi and Egypt, but also teamed up with the UAE Esports Federation to host an additional Yalla Ludo Offline Tournament in Abu Dhabi. This steady stream of offline event has deepened our brand awareness, solidifying the Yalla Ludo’s industry leadership, while also meeting MENA users’ entertainment needs. We will continue to cooperate with local and global industry participants to increase user engagement and facilitate development across MENA’s gaming industry. We also upgraded Yalla our flagship products with a diverse array of fresh features. We were pleased to see Yalla users investing the significant…

Thank you, Saifi. Hello, everyone. Thank you, for joining us today. During the third quarter, we continue to execute high quality growth strategies, leading to our revenues reaching an all-time high. We also continue to boost the efficiency and operating leverage. As a result, we enhanced our profitability with expanded net margin of 44.1% and excluding share-based compensation, non-GAAP net margin of 47.9%. Our fundamentals remain solid strongly supporting our current business operations, as well as our investments in further developments. We will continue to pursue high-quality sustainable development creating long-term value for all our stakeholders. Let's move on to our detailed financials for the third quarter of 2024. Our revenues were US$88.9 million in the third quarter of 2024, a 4.4% increase from US$85.2 million in the third quarter of last year. The increase was primarily driven by our broadening user base and enhanced monetization capability. This growth was also partially attributable to the significant increase in the number of paying users, which grew to US$12.6 million in the third quarter of 2024 from US$11.2 million in the third quarter of 2023. Now let's take a look at our costs and expenses. Our total costs and expenses were US$56.4 million in the third quarter of 2024, a 6.9% increase from US$52.8 million in third quarter of last year. Our cost of revenues was US$31.8 million in the third quarter of 2024, a 14.6% increase from US$27.8 million in the same period last year, primarily due to higher commission fees paid to third-party payment platforms as a result of increasing revenues generated. Cost of revenues as a percentage of total revenues increased to 35.8% in the third quarter of 2024 from 32.6% in the third quarter of last year. Our selling and marketing expenses were US$7.4 million in the third…

[Operator Instructions] Thank you very much. We will now begin our question and answer session. [Operator Instructions] Today's first question comes from Xueqing Zhang with CICC. Please go ahead.

Thanks management for taking my question. Congratulations on another solid quarter. I have two questions. The first one is about game business. Can management share more information about your new game products, such as testing and launching, schedules and how does management see all the performance of game business in 2025? And my second question is about flagship products. Regarding flagship products, how we have seen some new pin play attempts on Yalla this year. Can management share your strategies for our Flagship products moving forward? And what's the change for Flagship products in Q4 and next year? Thank you.

Thank you, Xueqing for your question. I'll be taking the first one and leave the second to our CEO Mr. Tao Yang. Currently, we have three new self-development mid-core games in our pipeline. Some of these will enter testing Q4 2024. After collecting user feedback and then refining the products, we will start promoting them at scale. Looking ahead as a game business in 2025, first of all, we expect Yalla Ludo’s performance to remain strong and stable with single-digit percentage growth next year. Besides that, more upsides or additional growth will come from our new products as mentioned, as well as potential external collaborations. We will provide more accurate guidance on that after we get a better sense of their product potential from the testing. Thank you.

Good morning, Xueqing. This is Tao. Regarding our flagship products, as you mentioned, we upgraded Yalla with the diverse areas of fresh features with projects we will continue to rollout new features with Yalla during the last of 2024 and into 2025. We get a Ludo. We will also keep launching interactive operational events and maybe even new game play to boost user engagements. In terms of our revenue growth, we are confident that in 2025, both structured products will maintain their current scale and have the potential to achieve single-digit-growth. Hope this answers your question. Thank you, Xueqing.

Thank you. The next question comes from Chenghao Li with CICC. Please go ahead.

Hi management. Thanks for taking my question and congratulations on a robust quarter. My question is about our game business regarding casual game products, we mentioned that Yalla Ludo and the 101 Okey Yalla both achieving new quarterly revenue records. Could management elaborate more on drivers of growth on these two products? Thank you.

Thank you., Chenghao. This is Saifi. I will answer your question. So, overall, our consistent efforts to optimize user experience and refine operational procedures have paid off. In the second half of the quarter, user info statistically appreciated the Yalla Ludo diverse operational event. Meanwhile, Yalla Ludo once again successfully held two offline tournaments, further strengthening our brand's local impact. Regarding 101 Okey Yalla it has been deeply involved in the Turkish market for a few years now. And our team has been constantly enhancing the user experience. One of the new features we launched this quarter has gained excellent feedback, which I believe underscores our long-term localization capability and deep understanding of our user needs. Thank you.

Thank you. The next question comes from Sarah Hu with Haitong International. Please go ahead.

Hello management. Thank you, for taking my questions, and congratulations on a solid quarter. So, can management give us an update on the shareholder return? Thank you.

Hello, Sarah. Morning. This is Karen. I will answer your question. Yalla is committed to return value to shareholders through our share repurchase program. This quarter, we repurchased more than 1.7 million ADS in the open market for an aggregate amount of approximately US$7 million. As of September 30, 2024, we had deployed a total of US$42.5 million for share repurchases. Given our solid fundamentals, we will continue to conduct our share repurchase program, while considering cash dividend payments in due course. We will keep you posted if we have more updates. In short, we believe strongly in Yalla’s long-term potential and dedicate to generating value for all parties involved. I hope this answers your question. Thank you.

Thank you. The next question is from Kaifang Jia with CITIC. Please go ahead.

Hi management. Thanks for taking my question and congratulations for a solid quarter. So could management share about any updates about the external cooperation and expansion into new areas? Thank you.

Good morning, Kaifang. Thank you for the question. With MENA’s ongoing digital transformation, and our company’s people local rules and business development experience in the region, Yalla has begun engaging in more discussions with top tier overseas Internet companies interested in exploring this market. When will take in, we will take pride in our localization utilization capabilities and potential productive, which position us well to assist in the development of localized content, as well as game distribution in the MENA region. In terms of our workers, social networking and gaming remain our core focus areas. To address your second question, while the Middle East market remains our traveling focus as we've consistently enter sites, we have already gained a certain level of users in Europe, in South America and Southeast Asia, if in the future, we see new products with suitable content, we may consider conducting global promotions. Thank you, Kaifang.

Thank you. The next question is from Rachel Guo with Nomura. Please. Go ahead.

Hi hello. Thanks to management for giving me this opportunity to ask the question. My question is about your margin. How do we think about your margin trend in the fourth quarters of 24? Thank you.

Hi, Rachel. Thanks for your questions. Regarding our profitability for Q4, as we continue to improve our operating efficiency, we are confident that we can maintain our net margin of the 40% level and post - potentially reach around the 45%. Hope this answers your question. Thanks,

As there are no further questions now, I would 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, or Piacente Financial Communications. Both parties’ contact information is available in today's press release, as well as on our company website. Thank you.

This concludes today's conference call. You may now disconnect your lines. Thank you.