Weibo Corporation

Welcome to Weibo Report's third quarter 2024 financial results. At this time, all participants are in a listening mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. You will then hear an automated message advising the 100th race. To withdraw your question, please press star, one, one again. Please be advised that today's conference is being recorded. I will now like to hand the conference over to your speaker today, Sandra Zhang. Please go ahead.

Thank you, operator. Welcome to Weibo's third quarter, which is 2024, earnings conference call. Joining me today are our Chief Executive Officer, Gaofei Wang, and our Chief Financial Officer, Faith Tao. The conference call is also being broadcast on the internet, and it's available through the IA 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 containing any forward-looking statements. Weibo assumes no obligation to update a 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 20F and other filings with the SEC. All the information provided in this press release is occurring as of date here. 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 includes 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 payments, 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 management prepared remarks, we will open the lines for a brief Q&A session. With this, I would like to turn the call over to our CEO, Gao Fei Wang. Thank you. Hello, everyone. Welcome to Weibo's earnings conference call.

Today, I will share with you highlighting Weibo's product monetization in the third quarter of 2024. 用户方面,截至三季度末,9月份,5月月活用户达到5.87亿,平均日活用户达到2.57亿。 On the user front, in September, Weibo's MEU reached approximately 587 million, and the average daily use reached approximately 257 million.

This improvement is partly due to the adjustment in the user acquisition and growth strategy this year, with the focus on attracting higher quality users through optimized channel strategies. Additionally, our product operations have prioritized enhancing user engagement and retention on the platform. Combined with the boost from the Olympics, these efforts have led to an increase in the overall DAU versus MU ratio year-over-year.

In terms of commercialization, 3G is able to contribute to the improvement of our marketing competitiveness in the heavy industry and the growth of real estate business. Weibo 3G total revenue reached 4.645 billion US dollars, year-on-year growth of 2.5%. The total advertising revenue reached 3.986 billion US dollars, year-on-year growth of 2%. The real estate business revenue reached 6590 million US dollars, year-on-year growth of 25%. The 3G company's turnover and operating profit reached 1.645 billion US dollars, operating profit reached 3.5%.

On the monetization front, driven by our enhanced marketing competitiveness in key industries, the positive impact from Olympic hot trends, as well as the strong momentum of the value-added service, Weibo's total revenue in the third quarter reached $464.5 million, up 5% year-over-year, of which our revenue reached $398.6 million, up 2% year-over-year, and vast revenue reached $65.9 million. up 25% year-over-year. Our non-GAAP operating income reached $164.5 million, representing a non-GAAP operating margin of 35%.

Next, let me share with you our progress made in product and monetization in the third quarter. On the channel front, this year will continue to enhance the display of Weibo's hot trend and social content in key positions of handset devices.

and improve the targeted reach and content consumption experience of high-quality users in collaboration with manufacturers, aiming to enhance the engagement and retention of channel users. In the third quarter, we partnered with hands-on manufacturers to particularly increase user reach and content consumption of Olympic-related hot trends. And as a result, the average daily use from this channel represents double-digit growth compared to the second quarter.

In terms of social activity, the information flow is more than 3G, which continues to be the key point of this year's work. The flow of relations and recommendations strengthens the activity of users in the consumer of high-quality content. On the one hand, this is the warm smile of the summer and the Olympic Games, and the strong experience of the development and real-time promotion of information content, which satisfies the consumer needs of different groups of customers. On the other hand, it strengthens the exposure of high-quality relationship accounts and high-capacity accounts. Increase user interaction and improve the quality of the platform. On social attributes,

In the third quarter, for information feed products, we continue to increase high-quality content consumption for both relationship-based and interest-based feed, aiming to improve user social interaction. On one hand, leveraging the summer vacation and Olympics-related hot trend effect, we enhance vertical interest-based content distribution and instant recommendation feedback, catering to the personalized content consumption needs of various user groups. On the other hand, we boost the exposure of account and content with high quality relationship and interaction, aiming to promote user interaction and enhance social stickiness. As a result, the total interaction on the front page increased by double digit, quarter over quarter. And meanwhile, we further improved the growth path of user generated content on Weibo by analyzing user profile, interest, frequency of content generation, and other characteristics we provided personalized guidance and tips on the content generation and encouraged content sharing and help users with continuous content generation to gain traffic and accumulate fans. In the third quarter, the number of users who generate UGC increased by 8% quarter-over-quarter, while the number of relationships built among ordinary users rose double-digit quarter-over-quarter.

In terms of content quality, the 3G UA802 meeting was held On the content ecosystem, in the third quarter, we fully leveraged the marketing advantages of Olympic-related hot trends, amplifying the influence of Weibo's Sports IP.

Meanwhile, we strengthen content operation across entertainment, digital, automated, and game verticals, seizing every opportunity to create top-trending topics on the platform and strengthening Weibo's user mindset and competitive edge in hot-trend marketing.

This year's Paris Olympics has attracted the attention and discussion of the general public. We have engaged in a group discussion by actively mobilizing the media to participate in the hot spot, from the gold medalist to the gold medalist and the athletes. The focus of the event is on the hot spot. Pay attention to the increase in the hot spot volume and the influence of the event. The total hot spot volume of the Paris Olympics is more than 4,000 meters, and the body weight is more than 4,000 meters. At the same time, we continue to improve the hot spot efficiency. This year's Paris Olympics brought us a lot of revenue, and we achieved the highest record in the event. The Tokyo Olympics has been promoted. In addition, Weibo is also the main site of Chinese athletes' social activities. The number of Chinese athletes on the national team is 93%, and the number of athletes on the national team is 100%. The number of athletes on the national team is 100%. The number of athletes on the national team is 100%. The number of athletes on the national team is 100%. The number of athletes on the national team is 100%. The number of athletes on the national team is 100%. The number of athletes on the national team is 100%. The number of athletes on the national team is 100%. The number of athletes on the national team is 100%. The number of athletes on the national team is 100%. The number of athletes on the national team is 100%. The number of athletes on the national team is 100%. The number of athletes on the national team is 100%. The number of athletes on the national team is 100%. The number of athletes on the national team is 100%. The number of athletes on the national team is 100%. We have seen the performance of top Chinese athletes such as Zheng Qingren, Tan Zhanle, Fan Zhennong. We have also seen the performance of top Chinese athletes such as Zheng Qingren, Tan Zhanle, Fan Zhennong. We have also seen the performance of top Chinese athletes such as Zheng Qingren, Tan Zhanle, Fan Zhennong. We have also seen the performance of top Chinese athletes such as Zheng Qingren, Tan Zhanle, Fan Zhennong. We have also seen the performance of top Chinese athletes such as Zheng Qingren, Tan Zhanle, Fan Zhennong. We have also seen the performance of top Chinese athletes such as Zheng Qingren, Tan Zhanle, Fan Zhennong. We have also seen the performance of top Chinese athletes such as Zheng Qingren, Tan Zhanle, Fan Zhennong. We have also seen the performance of top Chinese athletes such as Zheng Qingren, Tan Zhanle, Fan Zhennong. We have also seen the performance of top Chinese athletes such as Zheng Qingren, Tan Zhanle, Fan Zhennong.

This year, the Paris Olympic Games captured extensive user attention and discussion. We will actively engage media accounts to generate content and lead discussion around Olympic Games, expanding the hot trends from potential gold medal games to gold medal athletes and key sports events. which helped boost the hot trend traffic and elevate the Olympic Games' impact. The Olympic-related topic on Weibo surpassed 400 billion views, with total user discussion over 400 million. Meanwhile, we continue to improve the monetization efficiency of hot trends. The air revenue from the Paris Olympics set a historical high for Weibo's event-based sales, significantly surpassing that of the Tokyo Olympics. Weibo remains the primary social platform for Chinese athletes, with 93% of the Chinese Olympic delegation open their Weibo account. And Weibo is the only social platform with all the Chinese gold medalists have an opening account. Athletes share their competition record and insights in videos or text and images on Weibo. And their average daily posts significantly outnumbered their daily posts on the other platforms. During the Paris Olympics, the total number of their fans doubled compared to that of during the Tokyo Olympics. Throughout the Games, we witnessed not only the outstanding achievement of the Chinese team, but also the outstanding sports competition skills and the massive influence across platforms of Chinese top athletes like Zheng Qingwen, as well as the impressive performance of the younger athletes born in the 2000s. Over the past four years, from the Tokyo Olympics to the Beijing Winter Olympics and now the Paris Olympics, we have continuously refined our operation strategy of event-driven hot trends and improved our operations of the athlete-fan ecosystem, achieving a year-over-year increase of active users of sport vertical and a more diverse sports content ecosystem. From a perspective of monetization, we have progressively overcome the limitation of event-based sales, achieving significant revenue growth. These achievements have reinforced our confidence in the development of labor sports content ecosystem in the long run.

At the same time as the full name for the Olympics, it is also a hot topic in the field of 3G and digital games. In 2018, a wide range of discussions were held in the field of video games, and we have announced that we are preparing to cooperate with the Chinese film and television industry, which is familiar with the film industry, to assist in the production of films and TV shows. The number of discussions on video games has reached more than 20% in the same range. In the field of digital media, Apple and Huawei, which are two major manufacturers, As the entire country cheered for the Olympics, numerous hot trends emerged in the entertainment

entertainment, digital, and game verticals in the third quarter, sparking extensive user discussion. For example, in the entertainment vertical, we enhanced collaborations with the newly returned comedy variety shows and summer movies, leveraging Weibo's strengths in driving up discussion. This helped boost the popularity and reputation of productions like the movie Successor and the variety show stand-up comedy 2024. As a result, for entertainment work in this quarter, the discussion increased over 20% both year over year and quarter over quarter. In the digital vertical, Apple and Huawei, the two major handset manufacturers, both launched a new product on September 10th, which became the focal point of industry discussion in the third quarter. Weibo, together with two handset manufacturers, engaged several tech influencers to experience, review, and post content around the new products, providing users with timely and professional appraisal on the report. On that day, for both models together, Huawei's Trifield Mate XT and Apple's iPhone 16, the related content viewership and discussion surpassed 2 billion and 1.7 million times, respectively. This further demonstrates the stability and the value we create in the business partnership with advertisers in the long run while we build the content ecosystem together with our clients, the mobile and the mobile manufacturers.

In the third quarter, the growth trend in the gaming industry has increased by more than twice as much as the growth in the game industry. This has also boosted the development of the game industry. This has also boosted the development of the game industry. This has also boosted the development of the game industry. This has also boosted the development of the game industry. This also boosted the development of the game industry. In the third quarter, the scale and engagement of Golden and Orange verified accounts in-game vertical continued to grow, with the number of such KOLs doubled year-over-year,

and their average daily post increasing by more than two-fold. This growth further boosted user engagement among game verticals on Weibo, and in turn, supported our partnership with China's AAA title, Black Myth, Wukong, for its new game release. On launch day of August 1st, Weibo fully leveraged its cross-field strength, engaging 30 golden and orange verifier counts across various interest verticals, including media, digital, cultural tourism, and finance to promote and discuss the new release. Within 24 hours of the launch, this verifier can generate 35,000 posts with related topics garnering over 4.5 billion views, over 8.6 million interactions, and over 200 million video views on Weibo, generating substantial online buzz on the launch day. The popularity of this game even influenced the local culture tourism, which facilitates the offline local economy.

Let's talk about the commercialization progress. In the third quarter, Weibo's stock price reached $3.980 million, which is 2% of the total profit. This shows that Weibo has the ability to obtain customer budget in terms of IP heat points. As the third quarter has the heat point of February 30, there is also a period of time to use the stock market, and the gathering is finally more concentrated. Moving on to monetization, in the third quarter, our ad revenue reached $398.6 million of 2% year-over-year, demonstrating Weibo's ability to capture clients' marketing budget around mega events and IP-related hot trends.

With the Olympic and intensive release of dramas and variety shows during the summer break, we focused on effectively integrating Weibo's hot trend resources in the third quarter. By aligning organic hot trends on Weibo with clients' market hype, we swiped to attract and accommodate clients' promotion budget as much as possible.

In terms of brand IP hot spot sales, the biggest brand hot spot IP is the Paris Olympics. Through the practice of the Tokyo Olympics and Beijing Olympics in the past, Weibo helps Olympic competition customers to combine the sports hot spot and the athlete's endorsement hot spot, and through advertising products to spread the value of the brand and increase the sales volume of customers. This unique sports hot spot marketing model has been widely recognized by customers. This year, we saw users focus on the Olympic discussion on Weibo, from the past sports competition results discussion to the internal discussion of athletes outside the field. And the change in the trend of users' discussion of sports competition is partly due to the preemptiveness of Weibo for users, In the past two years, we have continued to use the hot spots of sports to promote athletes and fans to come alive. So, this year's Olympics, we have pre-planned the direction of operation, cooperated with the media, sports, and cross-border sports, along with the investment of sports athletes, to increase the influence of Olympic hot spots and at the same time enrich the type of hot spot discussion. In terms of hot spot marketing, we have also broken through the customer group of sports-related marketing, covering more customers who want to take advantage of Olympic hot spots or brand sales. The Paris Olympics and the Tokyo Olympics On IP-based hot trends, the biggest hot trend on Weibo in the third quarter was the Paris Olympic Games. Leveraging our experience with the Tokyo Olympic Games and the Beijing Winter Olympic Games, Weibo could better support the Olympic-related sponsors

to enhance their brand value and amplify marketing hype with our ad offerings. To elaborate, we focused on integrating the sports and athlete endorsement hot trends with marketing objectives of the sponsors. This unique event-driven marketing model has been widely embraced by clients. This year, we observed a shift in user engagement around the Olympics on Weibo, with users focusing more on athlete stories on and off the field. than just the event outcomes. This shift is actually partly due to Weibo's proactive approach in anticipating users' interest and cultivating ecosystem around sports. Over the past two years, we have consistently leveraged sports events to create hot trends around sports stars and thus deepen engagement of athletes and their fans. For this year's Olympics, we set a clear direction for hot trends operation in advance working closely with media big V in sports and cross-vertical big Vs. By highlighting events and athletes, we not only amplify the influence of Olympic-related hot trends, but also broaden the scope of discussion. This approach enabled us to expand our client base beyond traditional event sponsors to any client who wished to leverage Olympic buzz for brand exposure. Compared with the Tokyo Olympics, we are pleased to see a significant increase in both the number of clients and the total revenues from the Paris Olympics. Notably, driven by the Olympic events, our ad revenue from the food and beverage sector delivers strong year-over-year growth, making it one of the primary contributors to ad growth this quarter.

In terms of customer freedom and sales, we are more focused on the customer's new product sales market. In the customer new product launch conference, the new sponsor Guan Xuan, the current big show sales venue, Weibo organizes and guides innovative advertising products through the re-publishing of the crowd, increasing the popularity and concentration of customers' new products in the release cycle, and maximizing the quality of promoting Weibo's new product marketing team. In the third quarter, the new car marketing cooperation in the consumer industry covers nearly 90%, and the new product marketing income contributes nearly 70% of the industry income, promoting Weibo and the car industry. In the third quarter, the income increased by the same ratio. In the mobile phone industry, due to the slow pace of customers, the number of customers has declined. However, with the rapid pace of travel, we have been able to maintain the same rising trend. In the mobile car industry, the budget gap between Weibo and Weibo in the past few years has increased significantly, mainly due to the development trend of the industry, which has strengthened the development of high-end mobile phone image and electric car content generation, as well as the service capability of hot-point marketing, so that we have maintained a good budget gap. For example, we have achieved content marketing cooperation with Weibo this year, Weibo continues to talk about the image brand story of Weibo, assisting Weibo to occupy the high-end market. Since the 4th quarter of last year, we have successfully reached Weibo's X100 image-destroying trend. In the second quarter of this year, we will carry out a series of new products for the X100 series, and successfully reach Weibo's X200 series of new products in October this year. We contacted the media and bloggers to promote Weibo's brand technology, and to attract the attention and enthusiasm of users. In terms of client-based hot-trend marketing, we increasingly focus on their new product launch efforts.

In series such as product launch events, announcement of collaborative endorsement and offline fashion showcase, we will leverage content operation, innovative ad products, and repeated targeting of key audience to boost the popularity and richness of content, content related to clients' new products during the release cycle. Thanks to this effort, we reinforce clients' mindset of choosing Weibo as the go-to platform for product launch marketing. In the third quarter, Weibo covered nearly 50% of the new model launch in the automotive industry, with new product contains contributing approximately 70% of ad revenue from this sector. As a result, we booked solid year-over-year revenue growth in the automotive industry. As for the handset industry, however, revenue modestly declined year-over-year due to private launch pipeline in the third quarter. We expect to see the handset return to growth trajectory in the fourth quarter with an eventful new phone release schedule. Over the past few years, Weibo has notably expanded its wallet share from both the handset and automotive industries Tapping into industry trends, we have beefed up our content ecosystem around high-end photography for handsets and electric vehicles, and also strengthened our culture marketing capabilities. For example, this year, we entered a strategic content marketing partnership with Vivo to continuously tell Vivo's brand story around photography, helping the brand gain traction in a high-end market. Following the successful campaign, for the Vivo X100 as the photography panels. In the first quarter last year, we introduced a campaign for the X100 series in the second quarter this year, branding it as the Concert Go Better by aligning with the concert and variety show IPs. Then, for the launch of the X200 series in October, we collaborated with the media and influencers to highlight Vivo's technological innovation especially the telephoto lens features, which generated significant user interest and discussion. This approach led to record-breaking engagement for the product launch, with first-day sales across all channels surpassing 2 billion, maybe 2 billion, doubling the record of the previous model.

Today, we are strengthening the hot spot in the customer show industry, and the content of the outdoor sports industry. In the third quarter, through the promotion of multiple customers, and the promotion of the top-level marketing opportunities, we will also promote the business growth of the corporate industry. The new marketing revenue standard has also reached the highest level in the past two years. For example, in the past two years, Weibo and Postone have achieved deep marketing cooperation, helping Postone to achieve the number one position in the retail brand. In September this year, Postone officially announced the promotion of the new brand. Knowing for the frequent new product launches, we also step up our hot trend marketing efforts for footwear and pairwear clients, such as expanding our coverage of hot trends in scenarios of fashion shows,

and celebrity endorsement. In the third quarter, we also strengthened content operations for sports and outdoor products, leveraging multiple celebrity endorsements and the launch of new outdoor jackets. As a result, the footwear and apparel sector delivered double-digit year-over-year growth this quarter, with revenue contributions from new product launches reaching record highs in the past two years. For instance, Weibo has established a deep strategic marketing partnership with Boston over the past two years, helping the brand secure its position as the leading down jacket brand. In September, Boston announced actor Yu Shi as its new brand ambassador. We maximized this endorsement by creating trending topics, engaging fans in brand promotion, and aligning the launch with the Mid-Autumn Festival and National Holiday travel trends. By linking Boston's outdoor jacket features with travel series, we emphasize the brand's unique selling points, such as the three-in-one design and functional versatility. The campaign led to a notable sales increase for Boston's outdoor jacket line in the third quarter on the e-commerce platform.

From the overall advertising market, this three-way map shows the reaction of the consumer. The overall consumer market is weak, and the demand for customer sales is also very low. Although due to the effect of the Olympics and the summer season, Weibo's broadcast revenue has maintained the same level of growth, but the growth rate of some industries is still not as good as expected. Of course, we also pay attention to the rapid growth of the state-owned enterprises in the nine states, and look forward to the gradual landing of any policy that can actively contribute to the promotion of the macroeconomic, economic, consumer and commercial industries. Under such a large market environment, our business competition strategy is still to strengthen Weibo's hot spot sales and internal sales performance advantages, to focus on the advantage of the brand in this direction. This is also the core of our management efficiency. Based on this, we will try to optimize our brand and effect network investment, and enhance our market share in these markets.

Despite tailwinds from the Olympics and the summer break, for the overall air market as shown by the Q3 consumer data, we continue to face a relatively sluggish consumer environment and thus subdued client marketing demands. Although we will achieve both year-over-year and quarter-over-quarter growth in our revenue driven by summer season and Olympic effect, growth in certain industries still fell short of our expectation. That said, we are encouraged by the stimulus policy measures introduced by the government in September, and we hope to see this policy gradually take effect and stimulate the macroeconomy, consumer spending, and related sectors. In light of such market environment, We will continue to focus on reinforcing Weibo's competitive strength in hot trend marketing and content marketing by concentrating our content and product resources. Weibo's unique value proposition of hot trend and content marketing is also the key to sustain our high operating efficiency. On top of that, we are also committed to optimizing our brand and performance at offerings so as to improve our competitiveness and expand or market share in this area. With that, let me turn the call over to Fatah for a financial review.

Thank you, Zaofei, and hello, everyone. Welcome to Weibo's third quarter 2024 earnings conference call. Let's start with user metrics. In September 2024, WeWork's annual use reached 587 million, and average DA use reached 257 million, reflecting a pullback from the Olympics peak as we entered back to school season. Additionally, in 2024, make us proactively adjust our user strategy to put more emphasis on the activations and the engagement of high-quality users, which resulted in improved DAU versus MAU ratio and strong social interactions this quarter. Turning to financials. As a reminder, my preparatory remarks were focused on my GAAP results. For monetary amounts, I mean your solar terms, and all comparisons on a year-to-year basis, unless otherwise noted. Now, let me walk you through our financial highlights for third quarter 2024. We were third quarter 2024 net revenue was $464.5 million, an increase of 5% or 3% on contract basis, exceeding our own expectations. Operating income was $164.5 million, representing operating margin of 35%. Net income attributed to Weibo reached $139.2 million, representing a net margin of 30%. Selling to the EPS was $16.3 billion. Let me give you more color on third quarter 2024 revenue performance. Weibo's advertising and marketing revenues for third quarter 2024 was $398.6 million, an increase of 2%. for flattage on constant current basis. Mobile ad revenue was $374.2 million, contributing approximately 94% of total ad revenue. In terms of growth, FMCG, internet services, and automobiles were the largest contributors to growth among the FMCG sector. They are encouraged to see strong momentum of food and beverage and apparel industries driven by robust energy lines during the Summer Olympics. That said, the oral asymptomatic growth was still jacked by the underperformance of cosmetics and the personal care industry. The automotive sector continued to deliver solid growth, benefiting from the secular shift from traditional to electronic vehicles. as well as our competitiveness in field availability and the cultivation of content ecosystems in these verticals. The ad product. Promoted fees ad was the largest, followed by social display and topics and search. Ad revenue from Alibaba for third quarter was 21.5 million, a decrease of 1%. Alibaba, who promoted the decrease this quarter, following strong momentum in the first half of 2024. The decrease was primarily due to low seasonality in Q3, with e-commerce platforms increasingly concentrated ad budget towards shopping festivals. Before turning to web segments, let me share some preliminary color on the trend entering the fourth quarter of 2024. On the upside, Authorities have unveiled a string of stimulus measures since late September to reignite macroeconomy with a ramp-up in stimulus package and a double 11 shopping festival ahead. We hope to see a selection point of consumption sentiments. That said, we do not expect a V-shaped recovery, given that it takes time for stimulus slams to translate into confidence. and product launch template for advertisers and lend to meaningful customer recovery. Despite uncertainty and bumpy recovery in certain sectors, we are certainly cautiously optimistic on the overall advertising market. We will pick up our sales execution and highlight unique value proposition in the market in the hope of enhancing monetization efficiency and capturing incremental ad warning. Turning to VAST. VAST revenue was $65.9 million in the first quarter, an increase of 25%, primarily driven by revenue growth of membership and games-related services for membership service. We have benefited from improved R2 for membership services since we rolled out creating an SDIT feature to cater to the needs of CC users. Turning to cost and expenses, total cost and expenses for third quarter were $299.9 million, an increase of 8%, primarily due to higher marketing plans and personnel related expenses. Operating income in the third quarter was $164.5 million, representing an operating margin of 35%, compared to 37% in the same period last year. Turning to income tax and the gap value, income tax is run for third quarter was $32.2 million, compared to $25.4 million last year. The increase was primarily due to withholding tax of food related to earnings to be remitted to Weibo Hong Kong Limited from its wholly owned subsidiary in China. Net income attributable to Weibo's shareholders in the third quarter was 1,539.2 million, an increase of 2%. Net margin was 30% compared to 31% in the century last year. Turning to our 7 sheets and cash flow items, as of September 30, 2024, Weibo's cash, cash increases, and short-term investments totaled $2.2 billion. In the third quarter, cash provided by operating activities was $124.2 million. Capital expenditures totaled 11.8 million, and depreciation and amortization expenses amounted to 14.4 million. With that, let me now turn the call over to the operator for the Q&A session.

Thank you. As a reminder, to ask a question, please press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. We will now take the first question. From the line of Felix Liu from UBS, please go ahead.

Good evening, Manager. Thank you for accepting my question. Congratulations on our very good three-season performance. My question is about the four-season ad, How Look. Let me translate myself. First, let me congratulate you on the strong Q3 despite the challenging macro condition in the quarter. My question is on the fourth quarter advertisement outlook. In the light of the recent series of macro stimulus, how does management see the policies impacting your advertisement outlook in Q4? And can management share more details by industry verticals for Q4? Thank you.

Thank you. First of all, if we look at the third quarter, we can see from the overall trend and consumption indicators that consumption is indeed in an obvious decline. The trend economy is also facing a problem of lack of total demand. According to our client's business demand, the demand is also very high. The growth of our third quarter is mainly due to the heat of the summer, including the increase in demand brought by the Olympic Games.

All right, thank you very much for the question. So in Q3, judging from the consumption-related order indexes and also indicators, you've been seeing a slight decrease in time. So this is due to the lack of demand due to the weak economy of China. So as a result, we do not see a very good performance in this consumer market area. So in Q3, the air revenue increase was primarily due to the hot trans topics, for instance, the Olympics and also some of the summer holiday dramas. OK. OK.

OK.

And also in Q4, still we have seen a lot of uncertainties. First of all, the overall trend is still pretty optimism. And also we do need, also we do see the government implementing the policies to boost the internal and domestic demand. But still, there is a difficulty for us to see a recovery of the revenues from the luxury products industry and also the real estate. Okay.

However, the government's investment in the state-owned companies and the state-owned companies, we will see that 3C digital e-commerce in the fourth quarter has actually had a significant effect. In these industries, there is a certain pressure in the third quarter, but in the fourth quarter, it should be that the number of double-digit increases year by year. From our understanding, the strategy of the state-owned companies will have a relatively large scale next year and the following year. We think this is actually for e-commerce platforms and these customer platforms in Weibo's advertising needs are still relatively obvious. From this double 11, we can also see

And also, we can see that for the government, we have been seeing some of the policies, for instance, the O4NEW and also some of the subsidy policies, for instance, national subsidy policies at the current stage targeting the 3C products and consumer electronics. So we've been seeing a very good boost in these industries immediately due to this particular policy of subsidies. So because in these industries and the verticals in Q3, they were experiencing the pressures, but still in Q4, we are expecting to see a year-on-year double-digit growth. And also, this kind of a national subsidy policy will still last until next year or even the year after next, further expanding from 3C and consumer electronics industry and vertical to the other areas like the decoration and indoor design, etc., So we do see a very good increase of the demand of those advertisers on the e-commerce platforms. And actually, we saw a very good effect taking place in the Double Eleven Shopping Festival. Okay.

In terms of the industry, I just talked about it in the Scribble. And I think it's back to our own competition strategy. I think on the one hand, from the third quarter, Our focus is still on the marketing of hot spots. This is the first one. For example, the Olympics in the third quarter, we will see that the number of customers and income of the Paris Olympics and the Tokyo Olympics has almost tripled or tripled. Then, food, drinks, clothing, cars, and these industries have double growth. On the one hand, I think it's because of Weibo. In these hot spots, if we compare it to the products of the industry, our characteristics will be more prominent and almost become everyone's must-select. Another trend we see is that many marketing clients are moving from TVC to social media based on the trend of marketing budget for hot spots. In the past, many social hot spots, public hot spots, such as the Olympics, were all focused on TVC or video websites. But from this year's situation, we still think that on social media, the user discussion will be stronger, and the interaction and recognition of the platform will be stronger.

So in terms of the verticals, actually, we've been mentioning that in my prepared remarks already. But still, I think that has everything to do with the strategies that Weibo is taking now. For instance, in Q3, we're pretty much focusing on the hotline-related marketing strategies. For instance, the Paris Olympics. Comparing with the Tokyo Olympics, we've been seeing a very good double growth or even several times of growth in terms of air revenue and number of customers in this Paris Olympics. And also we've been seeing a very good double-digit growth in the verticals like the food and beverage, apparels and automotives as well. Because Weibo has already become a must-have platform and we do have very strong characteristics in offering the hot track-based marketing activities. And also in terms of those advertisers that are doing marketing, we've been seeing a shift of their budget allocation from the traditional TVC channels to the social medias. Because in the past, most of the budgets for advertisement were pretty much allocated on the TVCs or the video-based websites. But now, due to a better discussion capabilities and also interactivity on the social media like Weibo, we've been seeing a very good detraction of those budgets for advertisements in Q3. And we had a very good growth because of that in Q3. Okay.

In addition to this, as I mentioned earlier, new products marketing is still our focus. We are strengthening the trend of new products marketing in the US market. In the past, we talked about cars and mobile phones, but this year, we see that the contribution of new products in clothing, including in the market, is relatively obvious. And now we see that the entire weight of the car industry is basically from new products. So from the current point of view, the characteristics of new products also allow us to open a certain gap between new products and brand sales. This is our future direction of strengthening.

And also, apart from the hot trend based marketing, also, we pretty much focus on the new product marketing strategies and campaigns. And this has already become a very good ground base for the whiteboards advertisement business. So in the past, this was pretty much sharing colors on automotive industry and headsets industry. But now we've been seeing a very good budget or I mean, the revenue contribution from apparel and luxury products industries. And also now you can see for the automotive industry, most of the revenues were driven due to the new product marketing from this sector. And also this is going to become our focal point in the future. And this is the main strategies that Weibo is taking to further enlarge our gap versus the competitors and also consolidate our leadership positioning. Okay. Okay.

Thank you.

That's the end of this answer. Thank you.

Thank you. We will now take the next question. From the line of Timothy Tsao from Goldman Sachs, please go ahead.

Thank you for accepting my question. My question is about our VAS income. Because I saw that VAS has made good results in several consecutive seasons this year. Thank you, Benjamin, for taking my question. My question is regarding the VAS services segment. As we have seen very good growth for this segment over the past few quarters, could Benjamin share what are the drivers behind and what is our expectations for the upcoming fourth quarter and in future in terms of our monetization strategy in VAS? Thank you.

First of all, our VAS has maintained a double growth in almost two quarters this year. This is mainly due to the continuous growth of membership business. On the one hand, as the press conference shared in the previous few quarters, our 24-year channel strategy is to focus on high-quality users. Thanks for this question.

So Weibo's VAS, Variety Business Services, maintained a double-digit growth for two consecutive quarters this year, primarily due to the continuous growth of the membership business revenue. And on one hand, as we have already shared in the prepared remarks, as you can see that our China strategy is pretty much focused on the acquisition and also the activity of the high quality users. And this is our focus in 2024. And this has enabled our platform to retain a high proportion of high value users. And also this particular user group has a very strong and also even stronger demand for value added services.

And also around and focusing on this high value users,

Also, we have been doing some of the R&D of the new products according to their needs. For instance, the launch of SDIP, which has further upgraded the social rights and also interests. And also, we can see that starting from Q2, we began to promote the identity authentication rights and interests of the social media-based members. And also, this has helped us to enhance the conversion efficiency of the other social rights and also interests. Okay.

In addition, this year, the growth of the VF service is relatively fast. This growth is because we have enriched the content and ecological services of the financial education industry. This part is actually not very helpful for profits, but it is more important for income, including the content and ecological construction of VE. We will see that with these measures, this kind of gradual improvement, we expect the Q4 political service should still be able to maintain a higher growth rate.

And also at the same time, in terms of the V-plus added value services that are provided to those key accounts, the big Vs, this year also we have been seeing a very good growth and rapid growth. And this has helped us to really enrich the content ecosystem for finance, education, and also the other sectors as well. This is not that helpful per se to the revenue growth, but still this is really helpful for us to construct a much better and integrated ecosystem. And also, we expect that in Q4, the value-added services revenue will still keep a very high growth rate. Thank you.

Thank you. We will now take the next question from the line of Miranda Chuang from Bank of America Securities. Please go ahead.

Can management provide some updates about the progress in AI in the second half this year? In aspects like the content production, commercialization, and operational efficiencies, what kind of tangible benefits are you seeing? Thank you.

In the previous three episodes, we shared with you the development of the GV model and its background. In the previous three episodes, we continued with the previous ideas and Thanks for this question.

Last quarter, we have already shared with everybody the large model independently developed by Weibo has successfully passed the binding. And also, we've been using this a lot to really improve the efficiency and also the operation capabilities. by making a lot of AI applications. So today I'm going to share with you my opinion from two aspects. One is the product, and the second one is the monetization strategies. Okay.

we have improved significantly in terms of AI collection. And then, compared to the second quarter of the third quarter, we have seen that the GAU and traffic of the entire search have increased by about 10%. And then, in terms of our self-collection, the search results of the AI summary, the user size is already more than 20 million times that of the third quarter. Yes, we believe that this scale will gradually improve in the future.

So, first of all, in Q3, we primarily applied the AI-based intelligent search functions. And also, you can see that in Q3, versus that of Q2, we've been seeing a round attempts and growth for both DAUs using intelligent searching and also the traffic as well. And at the current stage, in terms of the total MAUs of using intelligent searching features, this number has already exceeded 20 million. which is doubled actually based on the number of the last quarter. Okay. .

And also, as we have already mentioned in the previous quarter earnings call, that we have been having the AI assistant features for those big Vs and also important account users. And based on the previously generated contents,

this AI system is going to be helping them to having the new content generated. And also in Q3, we've been adding some of the new features to this AI feature. For instance, the summary of the key questions and also the self-training for the bloggers. And also the total number of trial users in Q3 has already been increasing a lot comparing with that of Q2. And also for those accounts that are already applied for the try and also for the test use, the retain rate is already exceeding 85%.

With 3G, we have integrated AI technology into most of our work in this field, and we have covered multiple levels of product operation and development. We have also started to introduce vCode as a supporting tool in this area, which has effectively improved the efficiency of our programmers. At present, the data on this aspect is relatively low. We believe that there will be a significant improvement in the next one or two seasons. Thank you.

And also in Q3, we've been already applying the AI in the technology department of Weibo and to facilitate the product R&D and also technological R&D as well. And also we've been actively using the vCode feature in Q4 to further increase the efficiency of the coding and programming of the technicians now. But of course, at the current stage, we do not have a lot of figures to be shared with everyone. So please stay tuned for another one or two quarters before you are able to see a lot of the statistics coming out from this application. Okay.

Thank you.

Thank you. There are no further questions at this time. I would like to hand back over to management for closing remarks.

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

This concludes today's conference call. Thank you for participating. You may now disconnect.