Weibo Corporation

Good day and thank you for standing by. Welcome to the Weirby Report's fourth quarter and fiscal year 2024 financial results. At this time, all participants are in a listen-only 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 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is now being recorded. I would now like to hand the conference over to your first speaker today. on Zhejiang Investor Relations represents the Weibo Corporation. Please go ahead.

Thank you, operators, and welcome to Weibo's fourth quarter fiscal year 2024 earnings conference call. Joining me today are Chief Executive Officer Gaofei Wang and our Chief Financial Officer Fei Cao. This 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 containing 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 20F and other filings with the SEC. All the information provided in this press release is occurring as the day hereof. Weibo assumes no obligation to update such information, except as required under applicable law. Additionally, I'd 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 the future prospects. Our non-GAAP financial includes 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 mentioned 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.

Hello, everyone. Welcome to the Weibo Group's telephone conference.

Thank you. Hello, everyone.

Welcome to Weibo's fourth quarter and full year 2024 earnings conference call.

On today's call, I will share with you highlights on Weibo's product and monetization, review the progress made in 2024, and elaborate our strategy for 2025.

First, let's take a look at the financial performance of Weibo in the fourth quarter. In the fourth quarter, Weibo's total revenue reached $4.568 billion, and the annual revenue dropped by 1%. Among them, the advertising revenue reached $3.859 billion, and the annual revenue dropped by 4%. The income from business growth reached $7,100 billion, and the annual revenue increased by 18%. Removing the exchange rate factor, the fourth quarter's total annual revenue was basically flat.

Starting from our financial performance in the first quarter, our total revenue in the first quarter reached $456.8 million, a decrease of 1% year-over-year. We're relatively flat year-over-year on a constant currency basis. Our total ad revenue reached $385.9 million, a decrease of 4% year-over-year. Our value-added service revenues reached $71 million, an increase of 18% year-over-year. Our non-GAAP operating income in the fourth quarter reached $136.2 million, representing a non-GAAP operating margin of 30%.

For full year 2024, our total revenue reached US$1.75 billion,

relatively flat year-over-year, or an increase of 1% year-over-year on a constant currency basis. Our total ad revenue reached $1.5 billion, a decrease of 2% year-over-year. The decrease was mainly resulting from the variance of ad performance across different industries. Our value added service revenue reached $256 million, an increase of 13% year-over-year, benefiting from the upgrade and restructuring of our membership service. For full year 2034, our non-GAAP operating income reached $584.1 million, representing a non-GAAP operating margin of 33%. In December, Weibo's MAU reached $590 million, and Average Day Use reached $260 million. Next, let me share with you our progress made in product and monetization in the fourth quarter.

In terms of social service, the work of the social service platform is divided into two parts. On the one hand, the strategy to continue the work of the social service platform in 2024 is to reduce the consumption of U-shaped content and promote the introduction of vertical content. At the same time, the social interaction issue is to improve the social connectivity of the social service platform. On the other hand, the social interaction issue is to improve the social connectivity of the social service platform. On the other hand, in order to further improve the social connectivity of platform users, In the fourth quarter, we began to promote the interoperability between Weibo and product services, including the planning of the planning of the personal homepage and the fan group. The clear focus of Weibo social media is based on the relationship network and social behavior between Weibo users and fans. To maintain the goal of each social product, in the fourth quarter, we have strengthened the planning content and the interoperability between the personal homepage and product groups, so that the quality content of the planning can be more efficient in promoting the emotional users of the interoperability. On social attributes, we have two undertakings on the product.

On one hand, we maintain our 2024 strategy for the relationship-based feed. by enhancing high-quality content consumption, accelerating the construction of vertical content ecosystems, promoting social interaction features, and increasing the social stickiness in the relationship-based feed. In the first quarter, both the number of interactive users in the relationship feed and interaction rate per thousand views saw a solid year-over-year growth. On the other hand, to further enhance users' social stickiness on Weibo, we initiated social product integration plan in Q4 to enhance synergies among super topics, individual page, and fans group. To align goals across all social product operations, we have clarified that Weibo's social features should focus on the relationship network and social interactions between content creators and fans. Specifically, in the first quarter, we focused on product integration of Super Topics with relationship-based feed and the My Profile, enabling high-quality content from Super Topics to naturally and efficiently reach users of interest in the relationship feed. This approach not only boosted content consumption and user interaction in a relationship-based feed, but also encouraged the user to engage more organically with super topics, fulfilling their long-tail interest-based social needs, and reinforcing user recognition of Weibo as a community. We expect to complete this integration plan in the first half of 2025.

In terms of the content and ecology, Cicada's key work is divided into two parts. On the one hand, we will seize the opportunity to reach users and traffic, and at the same time continue to support the construction and investment in the industry, and support the development of commercial ecology. Over the past 20 years, the scale of the entire industry has increased, and the number of interactive users has increased. With the change of AI, AI will focus on AI content and ecosystem construction in the next 20 years, and create AI-related topics on the platform. At the same time, we will increase the influence of AI in the field, and promote deep participation in technical analysis and industry innovation. We will also launch a series of AI production and interactive activities, which will allow AI to be more close to users, On content ecosystem, in the first quarter, we focused on two areas.

First, we seized opportunities in hot trends to acquire users and drive traffic while continuing to invest in vertical content to reinforce the development of monetization ecosystems. Throughout 2024, we saw significant growth in the scale, traffic, and engagement of the vertical golden and orange verified accounts compared to prior years. For instance, we kept up with the latest hot trends in advancement of AI technology and prioritized development of content ecosystem of AI-related verticals. On the one hand, we captured and operated hot trends of the AI industry on Weibo, generating discussion around AI-related hot topics on Weibo. On the other side, we built a metric of KOLs in the AI-related vertical, encouraging them to generate in-depth technology analysis and industry insights content. Besides, we also launched a series of activities to boost the AI-related content creation and interaction to attract users' participation and to make AI more accessible to them. Looking ahead, our ongoing investment in the AI vertical will not only support the growth of the AI industry, but will also generate more business opportunities in the interest-based user group agencies for the platform. Creating a mutually reinforcing relationship between the AI content ecosystem and the monetization ecosystem.

On the other hand, in the fourth quarter, we are trying to transform the vertical operating system of our platform. The core development of our vertical content ecosystem is based on the production of the neck of the head of the vertical, as well as the development of the distribution system. But now, under the recommendation of the consumer zone for the content of interest, our vertical management management and service are facing challenges. We need to try to establish a operating system of the neck of the head of the head, plus the content of interest. So, in the fourth quarter, we launched the Weibo cross-border plan to try to support the production of the core of the point of interest. In the fourth quarter, we started transforming the platform's vertical operating system.

Our vertical content ecosystem has been built around the content generation by top creators of all verticals. and the distribution system of the relationship-based feed. However, with the shift toward interest-based content consumption, our existing vertical operating and management model has been facing challenges. To address this, we recognize the need to form an integrated model to combine KOL account operation with interest-based content operation. Therefore, we launched the Weibo cross-vertical initiative in the fourth quarter, aiming to guide content generation around users' interests. The initiative encouraged top vertical KOLs to generate content with diversified interests, adjust the content incentive policy to foster wider participation, and enhance the distribution efficiency of hot topics and recommendation feeds. These efforts have provided preliminary validation for a new operation model of interest-based vertical concept and will guide our investment in the development of the interest-based recommendation mechanism in 2025.

Next, I will talk about the progress of the 4G group's commercialization. In the 4G group, we continue to focus on the customer's new business market, maximizing the customer's interest in promoting Weibo as a new business organization. Although the overall net income of Weibo has decreased by a small margin, the new scene of the key industry

Next, on the monetization front, in the fourth quarter, we continue to focus on strengthening clients' perception of Weibo as the primary platform for the new product launch marketing. Despite that Weibo's overall ad revenue in the fourth quarter decreased slightly year-over-year, As revenue from the new product launch marketing grew by several digits year-over-year, as we see opportunity of major industries in the new product launch marketing, increasing our investment to boost content discussion and distribution throughout the new product launch life cycle.

Let's take a closer look by industry.

Revenues from both automobile and handset sectors deliver solid growth in Q4, largely driven by Weibo's unique strength in new price launch marketing. and facilitating discussions on emerging technologies. For example, for the automobile industry, with the growing market penetration of new energy vehicles, namely NEV, in China throughout 2024, Weibo reinforced its position as the main platform for NEV-related discussion. As a result, car manufacturers have significantly increased their marketing budget on Weibo, contributing to another year of revenue growth in the automobile sector

for Weibo extending its multiple year of war trend.

On the flip side, in the first quarter, ad revenue from online game, cosmetic and personal care, and luxury industries were in the descending trend in the fourth quarter. The online game ad revenue saw a year-over-year decline, mainly due to the high base effect from Tencent and NetEase's major project investment in Q4 of 2023. For the cosmetic and personal care and luxury sectors, although the ad revenue from this sector declined in Q4, The impact of this sector on the overall revenue growth is very limited with the adjustment of its revenue scale.

From the market perspective, the government has issued a series of policies that stimulate the consumption. For example, the change of policy has made it clear that digital and e-commerce industries will have an important role to play. But there are more economic policies that require time to assess the return of the customer and consumer markets. We expect the policy to be able to have a significant impact on the global economy, consumption, and more industries. In such a large environment, Weibo's business performance strategy still needs to fully grasp the hot spots of the platform and the hot spots of customers to bring sales opportunities as a focus, and expand to more industries and customers. At the same time, in terms of customers' new products, it is important to increase the level of sales demand, and help customers' market activities and psychological marketing to achieve more advanced content transmission and effective feedback than the industry. Therefore, from the perspective of 2020, although the performance of individual industries is not as expected, and the growth of the main company is affected, but thanks to the effective management of the annual company cost, our operating profit is still fundamentally stable. For the overall ad market in Q4, the government introduced a series of stimulus policies to boost consumption.

For instance, the trading policy had a notable positive impact on the digital product and e-commerce sectors. However, it takes time to see when the broader set of economic stimulus measures will translate into the recovery of advertisers and the consumer market. With this policy gradually taking effect, we hope to see the macro economy, consumer spending, and more industries demonstrate a more meaningful rebound. Against this backdrop, Weibo's monetization strategy will continue to focus on leveraging marketing opportunities from the platform-wide and client-driven hot trends. while penetrating into a wider range of industries and clients. Meanwhile, in serving clients' marketing campaigns for the new product launch or key marketing window, we strive to deliver better performance in terms of the distribution effect and client feedback. Recapping on 2024, although revenues from a few industries feel short of expectations, which negatively impact on the overall revenue growth, our effective cost management enables us to sustain a stable operating income. The solid profitability gives us financial flexibility to support our investment in product, technology, and the AI area in 2025, which are cornerstones of the company's long-term development.

Overall, in the context of the uncertainty of the global business and industry environment in 2020, Weibui is aiming to strengthen the platform's user-friendly economy and increase platform-based efficiency. Through the management of cost-efficiency, the construction of an enhanced content ecosystem, and the competitiveness of content marketing, we have achieved the stability of all-year business profits. In 2025, we will continue to use value as the core, and ensure that Weibo is at the forefront of the hot spot of the cultural and ecological advantage, stabilizing the competitiveness of social media products, and building on the basis of beta, combining the focus of AI capabilities, and strengthening the construction of recommended systems. At the same time, we will continue to enhance Weibo's investment in vertical and visual content ecosystem, and establish a basis for long-term competitive development for the platform, and realize the growth of user size and activity,

Over speaking in 2024, against the backdrop of macroeconomic and industry uncertainties, we focus on beefing up Weibo's competitive edge of our company ecosystem and enhancing operating efficiency as our key goals. Entertained by the effective cost management, we enforce the content ecosystem and content marketing strategies we delivered stable profitability for 2024. Looking ahead to 2025, we'll continue to focus on user value, solidify our leading position in hot trends and the entertainment content ecosystem, and reinforce the competitiveness of our social products. On top of this, we'll also beef up our AI investments to enhance our recommendation system and further invest in vertical and video content ecosystem. This initiative will solidify the platform's long-term competitiveness, as well as drive user community growth and engagement. Next, let me briefly share some color on our key strategies for 2025 on three key fronts, user growth, company ecosystem, and operating efficiency.

From the aspect of user growth and activity, in 2025, the user product record will focus on the comprehensive service and recommendation of 11 products and improve the size and activity of users. First of all, we are going to improve the interaction experience of our bloggers and their social connections with our fans through the combination of our bloggers' social networks, member products, and social products, and expand our bloggers' space on the platform, and promote our bloggers' and fans' promotion on the platform. Second, we are going to upgrade our new products by optimizing our first-hand products and improving the competitiveness of our new products through the combination of our large-scale capabilities. It is recommended to use content recommendation as the core of the new mainstream consumption model, to improve the recommended traffic flow of the whole platform, to improve the consumer experience of users, and to better support the sustainable development of the content ecosystem. Third, we will continue to strengthen the competitiveness of hot-point products, combine the ability of open-end large-scale models to transform hot-point products, to improve the credibility and influence of hot-point collection, and to transform hot-point information system products, to strengthen the system effect of hot-point collection plus hot-point flow, and to increase the flow of users of hot-point distribution systems with more efficient hot-point distribution systems.

On the user front, in 2025, our key focus in the user product area is integrating Weibo's social products and revamping the recommendation system so as to drive user growth and engagement. To elaborate, first, we will consolidate key social products such as Super Topics, My Profile, and Sense Group to improve user interaction and strengthen the social stickiness between content creators and their fans. Additionally, leveraging the synergy between membership and social product, we aim to empower content creators to extend monetization opportunities based on their social network and thus foster greater engagement for both content creators and their followers on the platform. Second, we will upgrade our information feed product by optimizing the homepage interface. Coupled with the strengths of the large language model powered interest-based feed, We hope to nurture users' habit of consuming recommended content on the homepage, thereby raising the proportion of recommended content among traffic distribution. By doing so, we endeavor to offer fresh user experience while reinforcing the long-term development of the vertical content ecosystem. Third, we are dedicated to further solidifying our advantage in hot trends. Thanks to the introduction of the open source model, will revamp our trends product with focus on enhancing the credibility and influence of the hot search chart. We will also refresh the trending content feed and thus further unlock the synergies between the hot search and such feed. Leveraging a more efficient hot trend distribution system, we could improve the retention for those users recalled through hot trends. This effort would greatly benefit the sustainable development of Weibo's hot trend ecosystem in the long run.

In terms of changing the content ecosystem, 25 years of user-friendly product operation focuses on consolidating the priority position of the hot spot and virtual ecosystem, as well as continuing to invest in the construction of improved video content ecosystem. Increase the ability of the platform to promote users and users in the market. First, we will continue to enhance the hot spot operation ability of Weibo. In the media and self-media ecosystem, it is possible to invest and satisfy users' comprehensive and in-depth daily consumption and discussion needs. In terms of voice, continue to strengthen the public's heart in Weibo, strengthen the psychological ecosystem, and improve the interaction. At the same time, we continue to innovate the mode of interaction between the drama and the movie platform, strengthen the reputation and reputation of the works, and enhance the consumption and scale of the content. For example, the 25-year Spring Festival Party has invested in the reputation discussion of the drama and the movie, which has led to a 50% increase in the number of discussions of the Spring Festival Film Party. Among them, Nezha 2's key business hotline and reputation discussion, through the exclusive planning of the film series, . . . . . .

On the content ecosystem, in 2025, as for the user product and operation, we will focus on reinforcing Weibo's leading position in the hot trend and entertainment sector while continuing to invest in the vertical and video content ecosystem. These initiatives will further enhance Weibo's content capability to compete for users' engagement and time spent among the platforms. To elaborate, first, we'll beef up Weibo's hot trend operations through lifting investment in the content generation of both media outlets and self-media accounts, so as to cater to users' demands for comprehensive and in-depth culture and consumption and discussion. As for the entertainment vertical, we'll further drive the engagement of celebrities on Weibo and reinforce the celebrity fan ecosystem to boost social interaction. Additionally, we'll continue to innovate on the collaboration model with drama and variety show promotion platforms. as well as film studios leverage labor strength in amplifying World of Now spots and in expanding audience reach. These efforts will drive greater content consumption and discussion for the entertainment vertical. For example, during the 2025 Spring Festival, we are pleased to see a 50% year-over-year increase in the number of discussions related to holiday box office. Thanks to our operation efforts in the movie plot discussion, and audience reviews. Notably, for the blockbuster movie Noja the Second, we target at hot topics and audience reviews. Leveraging the exclusive initiative such as the relay of the celebrity image featuring top films in Chinese cinematic history and coordinated efforts with around 3,000 media outlets, the topic related to Noja the Second generated over 90 billion views and a 100 million discussion on Weibo. We are excited to see this campaign ignite public enthusiasm for domestic animated films, contributing to Noja's second success in surpassing 10 billion yuan in box office revenue.

Second, we will continue to enhance industry-based ecological construction, improve industry-based micro-scale influence, and improve the ability of new industries to transform. We will continue to implement the project of ecological and commercial ecological integration, to create a positive cycle. This year, we will also focus on the construction of the AI industry, expand the interest group of AI topics, and help the development of the AI industry. Thirdly, to better combine the improvement of the recommendation ability of the industry with the improvement of the recommendation ability of the industry, we will practice from the production of content to the distribution of products. We will continue to promote the transformation of the interest-based operating system, from the past management of the account activity to the management of the recruitment content, and support the improvement of the five-scale annual promotion of the industry's recommendation of the new industry, and promote the long-term development of the recruitment industry.

Second, we'll continue to strengthen the build-out of industry-specific vertical ecosystems, such as digital, automotive, and online games, etc. To elaborate, we strive to increase the number and influence of the Gildan Verify account and enhance the monetization capabilities of Gildan and Orange Verify accounts. This approach will enable us to further integrate Wave's industry-based accounting ecosystem and monetization ecosystem. creating a virtuous self-reinforcing cycle of user and monetization. This year, we'll work to build out an AI-related content vertical and thus support the AI transformation with focus on strengthening discussion around AI trends and extending content creators' interested user base in the AI field. Third, to better align homepage information feeds and improve recommendation accuracy, We will further optimize our approach to interest-based vertical content operations, establishing a closed-loop system from content creation to distribution. Instead of primarily managing the engagement of content creators, our focus will shift toward managing their vertical content. This initiative will help drive user base and the engagement of the recommendation-based feed on the front page and facilitate the long-term development of virtual content ecosystems.

In terms of improving platform efficiency, the second issue of advertising products and sales focuses on the marketing of Weibo content in more industries and codes of construction and consolidation, as well as improving the effect of advertising products. First, advertising sales will deepen the advantages of content marketing. According to the characteristics of the industry, with the contribution of top customers to further realize content and commercial ecosystem. At the same time, we will rebuild the form of content marketing service, adjust the sales structure, and fully promote content marketing in the industry and customer expansion. Second, advertising products will further enhance the percentage of original ads, enhance the marketing effect and experience of original ads, and assist in the acquisition of content marketing ads and budget. At the same time, we will continue to strengthen the application of AI technology in the business field, and enhance the implementation effect of marketing. Third, combine the reorganization of various rights of social members in order to dig up culture and game IP resources, to improve the value of Weibo members, to encourage members to use Weibo to improve, to achieve increased income and stable growth.

Moving on to operating efficiency, in 2025, for our ad product and sales strategy, we seek to create and solidify clients' mindset of Weibo as the go-to platform for counter-marketing across a broader range of industries and clients. while also improving our ad conversion efficiency. First, in ad sales, we'll further leverage Weber's core strengths in content marketing and optimize industry-specific marketing solutions tailored to different sectors to achieve win-win results in the content and business ecosystem with top clients. Additionally, we will reorganize our content marketing service and revamp our sales structure to extend the reach of content marketing across industries and clients. Second, in terms of ad products, we'll increase the distribution ratio of native ads, namely content marketing, and enhance the overall marketing experience and ad performance, which will enable us to capture incremental ad wallet shares from content marketing. At the same time, we'll continue to leverage AI technology in the monetization field to optimize marketing and execution efficiency. Third, we hope to deepen the engagement of VIP members and drive stable growth in the value-added service. By creating greater value for our members, we focus on integrating our various membership benefits and creation of entertainment and gaming IPs.

In 2025, we will also see a commercial product opportunity brought by the large-scale open source. In the past two years, our focus has been on various AI models and the ability to build infrastructure platforms, allowing our business to switch quickly on the use of AI models and constantly try to create new opportunities. At the same time, we have also actively tried in the product sector in the past 24 years. We have currently focused on the combination of business with AI in search, social interaction, content recommendation, advertising, and several other directions. In the beginning of 2015, we saw some exciting progress on the big model. Among them, the application of the latest high-end model on Weibo search has greatly improved the search ability. Based on the latest open model, the new version will open to all users in this quarter. From the side view, it can show the experience of improving the search on Weibo and the frequency of the user's search. Let the market positioning of Weibo search evolve from hot search and real-time search to comprehensive search, which will help Weibo to enter the search market. Of course, this also needs to be further improved in terms of product experience. In addition, AI's social advertising and product applications are also being experimented. We believe that the new technology will bring about a change in product capacity, and it will definitely further strengthen Weibo's unique advantages in social media, and it will help develop new activities in the long term.

Finally, this year, we are happy to see the product opportunities brought by the open source large language models. Over the past two years, we have focused on building our basic platform capabilities through integrating all kinds of AI models, which enable us to swiftly switch among AI models to innovate our product. In 2024, we proactively explore on the product front and gradually outline our roadmap with focus on several key areas, namely AI-powered search, social interaction, content recommendation, and advertising, et cetera. In early 2025, we are excited to see breakthroughs in the areas of large language models, particularly the application of the latest open source model to web or search function, which has significantly boosted the search capabilities The new version of Weibo's intelligent search function, powered by the latest open source model, will be rolled out to all users this quarter. Based on the current user group tested, the updated version will improve user search experience on Weibo and drive usage frequency of Weibo's search function. This will transform the positioning of Weibo search from hot trend and real-time search to general search, which will facilitate us to enter into the vertical search market This potential transformation will also set a high standard for our product experience. Additionally, we are also actively exploring AI applications in social and advertising products. These applications will position us well to reinforce our competitive strengths, expand our usage on ,, grow our user community, and as well as facilitate user interaction. We firmly believe that AI technology will transform our product capabilities and further strengthen Weibo's unique value proposition in the social media sector, and thus build momentum into our long-term growth. With that, let me turn the call over to Fei-Fei for a financial review. Thank you, Xiaofei and Heather, everyone. Welcome to Weibo's fourth quarter and fiscal year 2024 earnings conference call. Let's start with user metrics. In December 2024, we put any use and errors being used reached 590 million and 260 million respectively. In 2024, we have proactively adjusted our user strategy to focus on the acquisition and engagement of high quality users. leading to an uptake of our DAU versus MAU ratio throughout the year. On the content front, we further optimize our content ecosystem through reinforcement of our core strengths and solid execution of our vertical content strategy. Turning to financials, as a reminder, my prepared remarks will focus on the net results. All monetary amounts, like in US dollar terms, and all comparisons are on a year-on-year basis, unlike otherwise noted. Now, let me walk you through our financial highlights for the first quarter and fiscal year 2024. Weibo's post quarter 2024 net revenues were $456.8 million, a decrease of 1% of last year on a constant currency basis. Operating income was $136.2 million, representing an operating margin of 30%. Net income attributable to Weibo reached $106.6 million, and diluted EPI was $0.40. Before year 2024, total revenues raised to $1.75 billion, or an increase of 1% on customer currency basis. Operating income was $5,584.1 million, representing an operating margin of 33%. Net income on Tuesday, April, raised to $478.6 million. And then was $1.82. Let me give you more color on both quarter and full-year 2024 revenue performance. WebOS advertising and marketing revenues for the post-quarter 2024 was $385.9 million, a decrease of 4% or 3% on a constant currency basis. Mobile ad revenues was $363.5 million, contributing approximately 94% of total ad revenues. Value-added service, VAT revenue was 71 million in the first quarter, an increase of 18%. Full-year 2024, advertising and marketing revenues reached 1.5 billion, a decrease of 2%, or 1% on contract currency basis, with mobile ad revenue contributing 94% of total ad revenue. Full-year 2024, VAT revenue increased 13%. or 15% of concurrent currency basis to 256 million. First, we're cutting Q4 ad performance. Consistent with our expectations, the advertising business continues to stabilize. Low performance varied across our key ad verticals by industry. Our last is the three verticals for 3C products, e-commerce and FMCG in terms of growth. 3C products, automobile and internet services were the key drivers of our heavy revenue growth on the asset. We are encouraged to see early signs of a rebound in 3C product sales as trading subsidies took effect. The automotive sector continues to deliver solid growth, benefiting from the ongoing shift from traditional to electronic vehicles, as well as our robust accounting ecosystem supporting new car launches. As Liz said, our top-line recovery was driven down by the underperformance of the online game sector, as this is a top year-over-year comparison. due to the concentrated release of blockbuster party games in the fourth quarter last year. Additionally, although consumption data shows signs of bulking out, possibly supported by trading policies, certain discretionary categories such as cosmetics, luxury goods, and personal care products remain under pressure. Moving on to full-year 2024 ad performance, despite macro and competitive hedging, They maintained strong AdWords Tether engagement and continued to attract meaningful ad funds from key sectors while revitalizing the content ecosystem to enhance our monetization capabilities by industry. Our largest three verticals were SMCG, free-seat products, and e-commerce in terms of growth. Even as a service, free-seat products and automobiles were largest contributors to growth. We are delighted to see such growth in ad funding from concept and automobile sector this year, driven by several policies similar and strong engagement around new product launch. The internet service sector also achieved a priority role, as customers from this sector encouraged our platform to reach high quality users amid an intensified competitive landscape. However, the FMCG category continued on a downward trend. Within the FMCG, the cosmetics and personal care sector remained under pressure, mainly due to resales from multinational brands and heightened competition among ad platforms. The food and beverage industry experienced a solid growth, boosted by the Paris Olympics, as well as our strong sales capabilities. The ad products, promoting feed ads was the largest, followed by social distrust, under-talking, and search. In 2024, we further strengthened our market differentiation around hot trends, ITs, and celebrities, which resulted in decent growth in content marketing. Ad revenues from Alibaba for 12 quarters were $14.3 million, a decrease of 10% or 9% on constant currency basis, reflecting a relatively muted e-commerce shopping festival amid a tacit consumption environment. Full-year ad revenues from Alibaba were $116.8 million, an increase of 5% or 6% on constant currency basis, consistent with Alibaba's moderate pickup in the marketing market, Value-added service value was $71 million in the first quarter, up 18% year-over-year, driven primarily by growth in our membership and game-related services. For the full year 2024, VAT revenue increased by 13%, or 15% on a constant currency basis, to $256 million. This growth was largely due to the strong performance of our SVIT membership service, which effectively meets our users' social needs and by our successful efforts to attract high-quality users with greater purchasing power. Currently, total cost and expenses. Total cost and expenses for the post-order was $320.7 million, an increase of 1%. Both year cost and expenses totaled $1.17 million, largely sluggish. with increase in sales and marketing expenses offset by decrease in general and energy distribution expenses. Operating income in the fourth quarter was 1,536.2 million, representing an operating margin of 30%, compared to 31% in the same period last year. Operating income for full year 2024 was 584.1 million, representing an operating margin of 33%, compared to 34% in 2023. Current income tax. Under test, income tax expenses for the first quarter were $20 million compared to $72.6 million last year. This reduction is primarily due to the burn-out with OD tax of pools in the first quarter of last year compared with the normalized representation in 2024. Four-year income tax expenses were $110.6 million compared to $145.3 million in 2023. The decrease mainly reflected a record rise of the growth process in 2014, which is in line with our tax allocation plan, including dividend payments. Net income achievable in the first quarter was $106.6 million, representing a net margin of 23% compared to 16% last year, primarily due to the above-mentioned impact from income tax. National Comp for Fall Year 2024 was $478.6 million, representing a net margin of 27% compared to 26% in 2023. Turning to our balance sheet and tax items as of December 34, 2024, we saw cash, cash equivalents, and short-term investments totaled a $2.35 billion in the first quarter, cash provided by operating activities was $244 million. Taxable expenditures totaled $17.7 million, and depreciation and mortgages expenses amounted to $14.4 million on a four-year basis. Tax provided by operating activities was $639.9 million compared to 672.8 million in 2023. Taxable expenditures totaled 51.5 million, and the depreciation expenses amounted to 58.1 million. In light of people's robust strategy and healthy taxable provisions, may I please pronounce that our Board of Directors has adopted an annual tax dividend policy. Under this policy, the board has approved an annual tax dividend of 82 cents for ordinary share for ADI for the fiscal year 2022. The total dividend payout will be approximately $200 million, with payments expected to be made in May 2025. Over the past two years, they have successfully distributed two rounds of special tax dividends, each totaling approximately $200 million. Looking ahead, our top priority is to see the transformative AI opportunities while maintaining robust financial health. Our efficient capital allocation supports our strategic priorities and ensure long-term financial stability enable us to deliver presentable, predictable dividends to our shareholders. 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, you will need to press star 11 on your telephone keypad and wait for your name to be announced. To withdraw your question, please press star 11 again. We will now start with our first question. Please stand by. And the first question comes in the line of Xueqin Zhang from CICC. Please go ahead. Your line is now open.

Thank you, Ms. Guan. My question is about AI. I just heard that Proterra Max has made a lot of progress in terms of AI, including deepfake on Weibo recently. The experience in terms of use is not bad. I would like to ask the company to share with us what kind of strategic thinking we have in the future on AI applications. Thank you. Thanks, management, for taking my question, my question about AI. As your prepared remarks mentioned, you have a lot of progress on AI, and we both have also integrated DeepSeq, and the usage experience is quite good. So can management elaborate a little more on your future strategy of AI applications in the future? Thank you.

Thank you. In the past two years, we have been working on several aspects. On the one hand, we focus on introducing various AI models, including the ability of API, to build our own infrastructure platform. In this way, it is convenient for our own business to quickly switch models when doing AI testing. On the other hand, in the past two years, we have been trying out products, Then you will see that search, social media, and content ecology, including this kind of comment and dialogue, and commercial advertising have all made some attempts at business.

Okay, thanks for the question. So first of all, in the past two years, we've been doing some of the things to further consolidate our efforts in terms of AI. First of all, we have been doing the integration of multiple AI large models. For instance, we have been using the capability of API and also the others to emphasize the production, especially the basic products of ourselves, so that we are able to have a very good switch in between different models for the different needs to test our businesses. And also, second point is that during the past two years, we've been making some of the products based on the capability of large language models, for instance, the intelligent search, the social products, and also the content, as well as the commentating, and also the commercial ads, for instance. We've been doing a lot around those areas.

Okay. Since the beginning of 2025, we've seen some surprising progress in terms of the basic model. The AI discussion group on Weibo has expanded rapidly from the 24th year to the public participation in the AI technology group. This year, the number of deep-search discussions on Weibo is close to 10 million, and the number of readings is close to 2 billion. And also in 2025, we've been seeing a lot of progress that we made in terms of the development and also the research on basic models.

For instance, in 2024, We've been having a lot of discussions on Weibo about AI related to technical issues, but now we've been seeing a lot of more publics joining the discussion about AI. And also in terms of DeepSeek, we've been seeing a total number volume of discussion around 10 million, and also the number of reading volumes exceeding 20 billion already. So this has really helped us to see a very good popularization of the topic of DeepSeek and also the other AI-related topics. Of course, this is pretty much challenging in terms of the management of content, but still, this has quickened up the speed of integration between product and AI capabilities. Okay.

Now, we can see that in 2025, we will definitely increase our investment in AI. In the past, some of the testing businesses were on the verge of full capacity. Now, we can be more certain that the search will probably start to full capacity in this quarter. And also in 2025, we're going to be focusing further and continuously on the investment of AI-related technologies and also topics.

So for instance, in terms of the full volume realization, We've been seeing that this quarter we're going to realize the full volume of the search capability among all the businesses that are under testing. And also, second of all, I would like to say that while we are having a further integration of those new models and also the further driving down of the overall cost, this is going to enhance the speed and also accelerate the integration with more capabilities and also AI models.

In terms of sales, in 2024, we should have launched the self-serve 1.2 version at the end of the year. That is based on a model of about 72B. However, we can also see that after 25 years, we used two weeks to switch the model system to DeepSeq. Indeed, the product effect has been significantly improved. Moreover, it can clearly organize the information in various angles. . . . . . And also in terms of the intelligence search, we've been seeing that in the last year, especially in the middle of 2024,

We've been having the large language models of the Zhishou-100 based on the Qianwen model with a parameter of 72 billion. But in 2025, after the Chinese New Year, we've been switching to the DeepSeq large language models. And this has further enhanced the capabilities of this particular intelligent search, for instance, the product capability, and also with more fine details and all kinds of different angles in answering those questions. So that you can see that in terms of the total number of MAUs using the intelligence search, this has been increasing by 40% and given us a very good result. And you can see that among all the results that have been shown to the public, 25% of those results are based on these intelligence search results and integrating the capability with DeepSeq. And also, with a further enhancement of the computational power, I believe that starting from this year, this quarter, we're going to see the service open up to the full users, not only those users on the testing scope. And also, this is definitely enhancing the efficiencies of all kinds by double digits.

Okay. What I think is more important is that the big model The summary of the previous content and the logic-based mapping effect are very good, bringing us a significant improvement in our search capabilities. Although we will now see that the online AI search has a very large room for optimization in the front-end presentation, we will see that this version has been able to unify the Weibo content and views of users in the past ten years through a large model to organize and map the presentation. This still allows Weibo search to Hot-point search plus real-time search can better meet the needs of users or long-term search. I believe that with the current leading model, the perfection of multi-modal type, including the upcoming release of this new kind of model, the presence of a continuous continuation like Weibo can generate good content and diversify the platform. Through the assistance of these large models, we will play a greater role.

So also you can see that it's more important for us to see that because of this capability of large language models that we're using now, because it's a capability to summarize and also help to conclude all the content that we've been creating and presenting on Weibo platform for the past decade, this is really enhancing the capability of search. So for instance, of course, there are still rooms for improvement and optimization in terms of the capability of intelligence search based on AI. Still, we can see that those contents and also opinions that we have generated on the platform of Weibo during the past more than 10 years, which has been presenting and also organizing our platforms, we can help to summarize and also conclude all these contents. So that is going to add up more values to those long tail searches instead of just the searches based on hot trends and also the knowledge-based content. And also, with further optimizations and also further integration of multiple and diverse models and emergence of new models, we are going to see better content creating and also better presenting of those contents and also summary of the past year's contents, which is going to add a lot more values to the users.

In addition to search, we have already confirmed that we will give full power to AI. Other businesses, including commercialization, interaction, and content recommendation, are actually accelerating this part of the experiment and gradually expanding it. But in terms of commercialization, in 2024, we will actually have a few points, a few points of improvement. I expect that in 2025, there will be an improvement, that is, there will be a similar degree or higher improvement in advertising sales. However, the overall revenue of the sales ad is not high, so the overall revenue is not that big. However, we are also testing how to combine the brand ad with AI. In addition, we are also testing the individualized material presentation. In short, we will see the future records, and we hope to report some results in terms of AI usage. Thank you.

And also, lastly, I would like to say that apart from the capability of search, we have been also applying the AI capabilities on the other fronts, for instance, monetization, the interactions, and also better recommendations of more content. So in terms of monetization, we've been seeing several percentage points of increase in 2024, and I think that this momentum is going to be continuing in 2025, and especially around the area of performance-based ads. Of course, the total ad revenue of those performance-based ads is not that contributive to the overall ad revenue, so this is not impacting the overall ad revenue as a whole in 2025 and also in the future. But still, we are still actively thinking about the values that we could add to the brand-based ads, especially based on the better and more individualized materials and all the other fronts. which are still under testing. So we're going to see how much value we can have for the brand-based ads. So overall speaking, in conclusion, in the next several quarters, with the further optimizations and also the applications, we hope that we are able to announce to the public and also to investors more progress that we have been making in this front. Thank you.

Thank you. We will now take our next question. Please stand by. And the next question comes from the line of Felix Liu from UBS. Please go ahead. Your line is now open.

Thank you, Manager, for answering my question. Congratulations to the company on its stable profits in 2024, considering the background of income pressure. My question is about the company's growth in advertising business in 2025. Considering that economic stimulus policies have been falling since September, What are the company's observations on the trends and consumer trends for 2025? And what are the company's expectations for the advertising industry in 2025? In addition to the trends, I would also like to know what the company's strategies and layout are for improving the market competitiveness of advertising businesses in 2025. Thank you. Let me translate myself. Thank you, Maniphan, for taking my question and congratulations on the resilient and bottom line despite the slight revenue decline in 2024. My question is on the 2025 outlook for advertisement. Considering the economic policy stimulus since September last year, how does management see the macro and consumption trade in 2025? What's management's expectation on your ad performance by industry vertical in 2025? And last but not least, what are your strategies to improve the competitiveness of your advertisement business in 2025? Thank you.

Thank you. In addition to automobiles, mobile phones and e-commerce, there are no more industries that are fully integrated into the market. The policy of state-owned enterprises has had a very positive effect on the growth of 3C digital and e-commerce industries in the fourth quarter. However, we will also see that the consumption of cosmetic products that are not state-owned and most of them are non-must-have must-haves will continue to increase in the second half of last year. Thanks for this question.

So after Q4, we've seen a lot of implementations of the policies by the national government and especially around the area of national subsidies, for instance. So this is impacting immediately on the verticals like automotives and assets and also e-commerce. But still, for those other industries that are not enjoying this particular national subsidy policies, we're not seeing a very good progress made. So in terms of the national subsidy policy, this has been impacting immediately positively on the 3C products and e-commerce industries. So we've been seeing a very good growth of the revenue from these areas in Q4. However, in the other areas that are not enjoying this kind of policy, for instance, the beauty and personal care products and luxuries, and also the other discretory industries, we're getting a lot of pressures and also stress of growth. So, of course, in the near future, still we have to remain precautious on these areas, especially without those favorable national policies especially around the budget allocated by the customers in 2025. Okay.

If you look at it in terms of the industry, you will see that the e-commerce industry this year has a more definite growth, especially for some leading brands, such as the brands that are relatively strong, such as Ali and Jinzhong, there should be some more definite growth. Relatively speaking, we are also more confident in the marketing and auto products of them on Weibo. In terms of mobile phones and cars, these two industries have been doing well in the past few years from the combination of Weibo's content ecology and hot spot ecology. The competition in the car industry may still be more intense, including the price of the factory, which may continue to last for five days. However, in terms of Weibo's content marketing, we think that the competitiveness of our entire industry is relatively high.

Okay, and also second of all, you know, from the other verticals, for instance, in e-commerce, especially among those top platforms like Alibaba and JD.com, definitely speaking, there could be a very affirmative and also confirmative growth in this year in 2025. And in the other two verticals, assets and also automotives, we're seeing a very good integration into the content ecosystem of Weibo. And of course, it's very highly competitive for the automotive industry. And also, still, we're going to see a lot of subsidies implemented by the OEMs. So this is going to be very much a beneficial industry. And of course, because of the capability of a differentiated competitive strength of Weibo, and also a very good anti-stress capability of the Weibo as a platform. We're going to see a very good growth in this area. And of course, that we've been seeing a trend of decrease for the ICE vehicle, but still this is going to be offset by the growth of the new energy vehicle sector.

Okay. The other thing is that we were able to make a lot of investments in the commercial advertising department last year because of the ECPM CTR has been improving, and the number of users who download apps on the Internet has also maintained a good growth in the last 24 years. It is expected to maintain this trend for the next 25 years. However, I think the most uncertain industry in the last 25 years is the game industry, because in the last 23 years, no matter what year it is, every two seasons, there will be a relatively large number of head games. However, in the past 24 years, mobile games have not been able to support the market's budget or increase in volume. Although some medium-sized games have been put on the market, we can see from the pipeline of customers that in the past 25 years,

And also, just now we've been sharing some of the colors on our investments on the AI capabilities for the performance-based ads. And this has been given us very good results by improving the eCPM and also the other parameters. So we've been seeing a very good growth of the other customers, for instance, that are focusing on the app downloading, for instance. So this was good. And in 2025, the only industry I believe that is not certain, that is uncertain, for instance, is the gaming industry. So you know that since 2023, every year at the end of each year, we're going to see a very good publishing and also announcements of new large games every one or two quarters. But this trend has stopped in 2024. And throughout the whole year of 2024, we did not see a lot of announcements and also launch of the large mobile games and big mobile games. Although we've been seeing some of the announcements and launches of the medium-scale games, but still there are a lack of big blockbuster games launched throughout the whole year of 2024. So commenting on the pipelines of our customers, In 2025, we are not that optimistic in seeing a lot of large and blockbuster games launched throughout the year. So the gaming industry is the most uncertain industry in this front in 2025. Okay.

So as I said earlier, our overall prediction for 2025 is relatively simple. Because in this industry, the difference is still the same as before. China. In the case where the demand is uncertain, our focus is still on the strategic adjustment of the supply chain and the optimization of our advertising products. For example, we should strengthen the application in the field of commercialization to enhance the efficiency of our commercialization. Specifically, our customer service will try to catch up with the customer's new products, and increase the demand for marketing, which is a major hot point. We will continue to enhance the core advantages of Weibo in content marketing and new product marketing to enhance our market competitiveness.

And also in 2025, throughout the whole year, we have to be really precautious on this front. And of course, because different industries, as I have already stated, had all kinds of different performance and also different level of the pressure or optimistic growth. So what we have to do is that in 2025, we have to pay close attention to the implementation of the government's policies throughout the first half of 2025, and further to see that whether that is going to be further impacting the macro economy and also the overall consumption of China. Of course, that was ideal in the area of demand side. So we have to be really doing something to actively change our supply strategy, supply side strategies, and also the overall strategy of our company. For instance, as I have already stated, we have emphasized more on the investments on AI capabilities And the integration of AI communities can further help us to improve the efficiency of monetization. And also, we have to see the trend of our customers when they're launching new products and also emphasizing more budgets on the marketing when they're doing so, so that we are able to do more and better in the ad business and also further encounter competitive edges of Weibo in this area.

OK. In terms of the overall strategy, our content management strategy and our business management strategy are actually the same. For example, since the outbreak, we have been telling everyone that our main focus has always been on verticalization. Because during the outbreak, our new traffic ratio is actually too high. We need to use a few years to bring up the original verticalization content and the industry content ratio as much as possible. Now, in terms of the overall platform, The volume of vertical content has been restored to nearly 50%, but there is still a relatively high capacity. We believe that for the entire big plate, vertical traffic is actually more than news traffic. Its commercial value and its cable value and its user consistency are much higher. Just like we just mentioned, its 9 billion Neutra movie traffic and 2 billion Deep Seek traffic are much higher than some social media traffic. Its cable value and user signal value will be higher. And also, last but not least, I have to say that the strategies of our content operation is exactly the same as the strategies of the operation of our monetization.

So as I have already stated, after COVID-19, what we have to do is that emphasize more on the traffic grasp of the vertical related traffics. Because you know that during the COVID period, most of our traffics are related to news. So that has taken a larger proportion of the overall traffic allocated there during COVID. So after the COVID, we have to eradicate the traffic and also emphasize on different strategies. So after COVID and as of now, we've been recovering to almost 50% of the original level before COVID in terms of the traffic of the other vertical-related content, but still there are rooms for further improvements. So because you can see that for those vertical-related content, in terms of the capabilities of monetization and also the capabilities of the user stickiness, it is way much better than the other traffics. For instance, the 90 billion traffic for Noja II and 20 billion traffic for the DeepSeq-related topics. These topics have better capabilities of monetization. So while we are grasping these opportunities, this is going to help us to further consolidate our strength and also set up a better foundation for the capabilities of monetization in the future. This is what we have to do in 2025 in specifics. Thank you.

Thank you. We will now go to our next question. Please stand by. And the next question comes from the line of Daisy Chen from Haitong International. Please go ahead. Your line is now open.

Good evening, Manager Chen. Thank you for accepting my question. I see that this quarter we have still announced $200 million in shares. I would like to say that in the difficult situation of the advertising industry last year, we have maintained the high level of shares. Thank you, Benjamin, for taking my question. Weibo has announced a $200 million dividend. It's very delightful that the company still mentioned the same size and frequency. even under such difficult development for the online business last year. We really respect that. Can management share more color on shareholder return policy, such as the future plan and the method? Maybe do you want to share that? Thank you.

Thank you, Daisy. If you see other people's questions, Weibo is focused on a balanced capital allocation strategy that supports long-term growth while delivering value to our shareholders. As we mentioned, over the past three years, our NetApp operating margin has remained stable, and our operating cash flow reached around $600 million. giving us the flexibility to invest in AI, in product innovation, and shareholder returns. So we pay dividends, as we mentioned. And our capital allocation follows some key principles, many two key principles. First, driving business growth and staying competitive. AI is playing an increasingly important role in enhancing our product experience, as Gopi mentioned in his remarks in Waveboard Search, and we are actively expanding its application in social and ad products. We remain committed to investing in AI while maintaining a disciplined financial approach to ensure our long-term stability and a profit margin that remains competitive within the industry. And second, enhancing shareholder returns. As you have seen from our announcement, our board approved that annual dividend policy providing more predictable returns based on our financial performance and capital needs. This reflects our commitment to delivering sustainable shareholder value while maintaining the flexibility to invest in long-term growth opportunities, and we are open to other measures, such as buyback. So going forward, we will continue to defend our capital allocation strategy, leverage AI to strengthen our product capabilities, and create long-term value for our shareholders. I hope this answers your question. Thank you.

Thank you. We will now conclude the Q&A session, and I would like to hand back to Sandra Zhang for any closing remarks.

Thank you, operator, and thank you all for joining our conference call today. This wraps up our call. We'll see you next time.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.