Weibo Corporation

Good day, and thank you for standing by. Welcome to Weibo Reports' third quarter 2025 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 need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. Please be advised that today's conference is being recorded. I would now like to hand the call over to your first speaker today. This is Sandra Zhang from IR. Thank you. Please go ahead.

Thank you, operator. Welcome to Weibo's third quarter 2025 earnings conference call. Joining me today are Chief Executive Officer Gaofei Wang and our Chief Financial Officer Fei Cao. The conference call is also being broadcasted on 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 will make forward-looking statements Statements that are not historical facts, including statements of our beliefs and expectations. Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Weibo assumes no obligation to update the forward-looking statement in this conference call and elsewhere. Further information regarding these 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 dead heroes. 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 exclude 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 include 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 a core operating result and outlook. Please refer to our press release for more information about our non-GAAP measures. Following management prepared remarks, we open the lines for a brief Q&A session. With this, I would like to turn the call over to our CEO, Gao Feiwang.

Thank you.

Hello, everyone.

Welcome to Weibo's Q&A call.

Thank you. Hello, everyone. Welcome to Weibo's third quarter 2025 earnings conference call.

In this Q&A call, I would like to focus on Weibo's third quarter 2025 earnings conference call and the progress in commercialization. On today's call, I will share with you highlights on Weibo's product and monetization in the third quarter of 2025.

On the user front, in September 2025, Weibo's MAUs reached $578 million and average DAUs reached $257 million. In the third quarter, Weibo's total revenues reached $442.3 million, a decrease of 5% year-over-year. Our total ad revenues reached 375.4 million U.S. dollars, a decrease of 6% year-over-year. Our non-GAAP operating income reached 132.0 million U.S. dollars, representing a non-GAAP operating margin of 30%.

In 2025, the company's growth strategy is still to improve value as the core, keeping Weibo at the forefront of the content growth advantage, stabilizing the growth of social products,

In 2025, our overall corporate strategy continues to focus on enhancing user value, sustaining Weibo's leading position in hot topics and the entertainment content ecosystem, while reinforcing the competitiveness of our social products. Building on this, We also leverage large language model to enhance our recommendation fees and search products, aiming to increase our user base and engagement.

Next, I'll share with you highlights in Weibo's product operation and monetization in the third quarter. On user growth and engagement, in 2025,

Our key product revamp is the upgrade of the homepage information feed, which put the recommendation feed as the default core feed. The revamp has largely rolled out in all users by late July. Alongside the information feed revamp, we also optimize our recommendation algorithm, especially for video content recommendation. During the summer vacation, leveraging the active entertainment events and hot topics during the summer vacation we saw significant improvement in user engagement of the mid and low-frequency user group. The per capita viewership, timestamp, and retention of the mid and low-frequency user group through double-digit quarter-over-quarter, which in turn drove per capita timestamp in the recommendation feed for the whole user group to increase for Q3 quarter-over-quarter.

We have two key strategies in the third quarter. First, strengthen the algorithm's algorithm recommendation ability to increase the customer's interest and consumer satisfaction. For example, in terms of hot-point content distribution, recommending and searching to achieve the behavior of the user is linked. After the user goes to the server scene to consume and interact with the hot-point content, he will see more accurate recommendations of relevant hot-point content in the recommendation stream. This strategy is very obvious to the active and accurate effects of the platform's central platform users in Weibo.

Second,

The algorithm strengthens the content of the video in the recommended stream to improve the deep consumption of users. With the structure of the mobile information flow product from the relationship to the recommended stream, this is the basic algorithm for the distribution of social relations. This content can rely more on the algorithm ability to perform more accurately and more comprehensively. This transformation has contributed to the original video, the medium video, and the improvement in the distribution of the recommended stream. In the third quarter, we implemented two key strategies.

First, we enhanced the algorithm of the recommendation feed to improve users' satisfaction with content which matches their real-time interest. For example, In hot topic distribution, we established user behavior linkage between the recommendation feed and the search function. When user view and engage with the hot topics in search function, they are shown more precisely targeted contents in recommendation feed. This strategy has been proven particularly effective in enhancing engagement and retention among mid and low frequency users of Weibo. we enhance our algorithm to better integrate video content into the recommendation feed, driving deeper content consumption. With the homepage information feed shifting from a relationship-based model to a recommendation-based one, video contents could be distributed through our recommendation algorithms to reach more precise and broader user group on top of the traditional social distribution mechanism. As a result, We saw a notable increase in the distribution of original and mid-to-long-form video content in the recommendation feed. The enriched mid-to-long-form video content extended user time span in the recommendation feed and supported healthy development of the content ecosystem.

At the same time, the user continued to advance the upgrade of the interest content user system. In short, the experience of some user groups is indeed facing a challenge.

Meanwhile, we continue to enhance our interest-based content operation, strengthening large-scale content production by content creators around user interest, and thereby improving the quality and diversity of content supplied to the recommendation feed. The restructuring of the information feed holds strategic significance for Weibo, which is comparable to our transition from the chronological to algorithm-based sorting several years ago. In the short term, user experience for certain user groups may face some challenges. However, from a long-term perspective, the increased weight of recommendation content and video content

will strengthen Weibo's core competitiveness as a social media platform while laying a solid foundation for the sustainable and healthy development of our content ecosystem. First of all, in terms of improving the interaction between bloggers and fans, we have upgraded the application mechanism and optimized the delivery and distribution mechanism, which significantly improves the interaction efficiency of the relationship network, as well as the proportion of interaction volume and reading volume. The third quarter, the same amount of money has been increased by 2%. It also stimulates the positivity of the bloggers and fans to continue to produce high-quality content. Seventh, in terms of upgrading the normal user-friendly social media, we continue to deepen and diversify the community, focusing on the key nodes of the host. around concerts, animation shows, and other interesting scenes for young users. It encourages users to share valuable and emotional content. It creates an interesting and useful space for interest sharing and communication. The number of people who post and interact in the 3G platform has increased significantly. These effective work measures consolidate Weibo's advantage in digital competition, and promote the stable development of the platform ecosystem by recommending popular users.

While improving the efficiency of the homepage recommendation feed, we also strengthen social discussion in a relationship feed, ensuring its role as the cornerstone of Weibo's differentiated competitiveness. In the third quarter, our efforts focus on two key aspects, driving interaction between content creators and their followers, and stimulating interest-based social engagement among users to fully boost the social engagement across the platform. First, To further drive the interaction between content creators and their followers, we upgraded the core fan mechanism and optimized the content reach and distribution. This significantly improved interaction efficiency in the relationship feed, which is measured by the ratio of total interactions versus total viewership, resulting in double-digit growth of this ratio both quarter-over-quarter and year-over-year in Q3. while further driving content creators' motivation to consistently produce high-quality content with text and image. Second, to enhance ordinary users' social interaction around interest-based content, we continue to develop the Super Topics community, focusing on key summer events, concerts, and anime conventions which young people are interested in. we encourage users to share meaningful and emotional content around their interests, positioning Supertopics as a fun and useful space for interest-based sharing and interaction. In the third quarter, the number of users who posted and engaged in Supertopics grew double-digit year-over-year. This effective initiative has strengthened Weibo's differentiated advantages in text and image, complementing the homepage recommendation feed

and contributing to the solid development of the platform's ecosystem. and the upgrade of the search module, from the single-time information reduction of the product to the continuous network-based dialogue of the product. Users can receive more consistent conversations and more intelligent and consistent information without any experience. Secondly, in terms of the integration of the environment, we promote the application of the application in the information flow field, and build the utility of search and service. The application is deeply integrated into the business scene of the platform blogging. By perfecting the blogging correction and content summary functions, and use AI to read original content into real-life analysis, key information training, and extension reading, helping users to quickly obtain structured and reliable information support while browsing the blog. Thirdly, the number of MAUs has not exceeded 70 million, DAO and query volume increased by more than 50%. This growth not only reflects the user's recognition of the product, but also further promotes the growth of the microblogging ecosystem. The total query volume of microblogging increased by more than 20%. In the future, we will continue to develop the core application of AI in search products. Basically, let the search understand the user more, experience the use of more related intelligence, and make the service closer to the scene in the ecosystem. This will provide the user with a more intelligent and convenient search experience. Turn into search product.

In the third quarter, we continue to reinforce AI application in search function, focusing on technical infrastructure upgrades and integration across ecosystem scenarios. First, in upgrading technical infrastructure, we continue to enhance intelligent search capability to understand user search intent and content matching capability. which effectively improves the relevance and accuracy of search results and making it easier for users to find desired content. At the same time, we upgraded the search model from conventional one-time information search to continuous exploratory dialogue, enabling users to engage in coherent conversations with intelligent search and enjoy a more intelligent and seamless information across experience. Second, the integration across ecosystem scenarios. We focus on expanding intelligent search application in information feed, fostering a search as a service user mindset. We deeply integrated intelligent search into the content consumption experience with enhanced content verification and content summary features. The system leveraged AI to assess the authenticity of the original post, extract key information, and provide extended insights, helping users quickly access structured and reliable information while consuming contents. In the third quarter, the MAUs of Weibo Intelligent Search product exceeded 70 million, with its DAU and search queries increasing more than 50% quarter-for-quarter. This momentum not only reflects users' recognition of Weibo's intelligent search product, but also further contributes to the expansion of Weibo's search ecosystem. As a result, the total search queries on Weibo increased 20% quarter-for-quarter in the third quarter. Looking ahead, we are continuing to deepen the innovative application of AI in search products. On the technology front, we aim to make search more user-aware. As for user experience, we strive to deliver a more seamless and intelligent usage journey. And in terms of the ecosystem, service will become more contextually relevant. These efforts will continuously provide users with a smarter, more convenient search experience and further unlock the value of Weibo's content ecosystem.

In terms of commercialization, in 2025, the advertising product and sales team will focus on two main directions. One is to promote the mindset of Weibo content marketing to consolidate and consolidate more industries and customers. The other is to continue to improve the efficiency of advertising products. The third quarter is affected by the high-end advertising revenue during the same period of the Olympics last year. Weibo's advertising revenue is 6% lower than before. From the overall market environment, under the guidance of expanding internal demand and increasing consumption, e-commerce platforms and related industries maintain a higher level of investment and provide support for the three-quarter revenue growth. From customer feedback, over the past few years, a large number of customers have continued to invest in the effect of advertising budget. The competition for commercial traffic has been fierce, and the cost has continued to rise. In addition, recently, companies have invested in information traffic advertising, which has broken the policy of three steps. This makes it possible for customers to re-evaluate the value of brand ads when allocating budget. Especially in the marketing of celebrity endorsements, it is currently one of the most frequently considered options for customers. Moving on to monetization.

In 2025, the ad product and sales team focus on two main priorities. First, to expand and solidify customers' mindset of choosing Weibo as a go-to platform for content marketing. across more industries and clients. Second, to continuously enhance the performance and conversion capabilities of our ad products. In the third quarter, due to the high base effect from the Olympics last year, we both ad revenue decreased 60% year-over-year. From the overall market perspective, thanks to the stimulus policy aimed at driving domestic demand and consumption, e-commerce platform and related industry maintain a relatively high level of advertising spend, which supported our third quarter ad revenues. According to client feedback, after several years of substantial and continuous budget allocation toward performance ad, the bidding for the commercial traffic has become increasingly intense, which pushed their cost upward. In addition, The government recently issued tax policies that limit the cap of the feed ad spend for tax deduction purpose. This dynamic has driven clients to re-evaluate their budget allocation, placing renewed emphasis on the value of the brand advertising. In particular, marketing approaches such as celebrity endorsement have generally become a key option for clients to consider. In light of this trend, Leveraging Weibo's strengths in celebrity resources, we aim to better facilitate clients' needs across the full celebrity endorsement and marketing lifecycle. We hope to create richer celebrity marketing playbook together with clients, helping them enhance their marketing effectiveness.

In terms of the industry, the competition between e-commerce platforms has continued for more than two decades. We have been able to work closely with e-commerce platforms Weibo's e-commerce revenue has increased significantly in the last three seasons. We agree that other product lines in e-commerce platforms should gradually develop cooperation relationships to promote a more harmonious income structure. The stability of the future is also the foundation. In the automotive industry, Weibo continues to consolidate the advantages of the new energy car content ecosystem. This year, the relevant income of fuel cars has also remained stable, making the overall income of the automotive industry more stable. Let me share more color from an industry perspective.

Competitive dynamics within the e-commerce sector has persisted since the second quarter, benefiting from deep-level partnership with leading e-commerce platforms, and revenues from e-commerce sector achieved notable year-over-year growth in the third quarter. Meanwhile, we have been gradually cultivating partnership with other business lines within this e-commerce group, promoting a more balanced revenue mix and thus laying a solid foundation for the future revenue stability. And revenues from the automobile sector sustained year-over-year growth trend in third quarter. Weibo has continued to solidify its strength in the new energy vehicle company ecosystem. Revenue from traditional fuel vehicles also remained stable this year, contributing to improved revenue stability for the automobile industry. In the online game and smartphone sectors, revenue declined due to overall budget contraction. As for the food and beverage, dairy products, and footwear and apparel sectors, revenue fell year-over-year, primarily due to the tough comparable base from last year's Olympics. However, with the recovery and strengthening of celebrity marketing in clients' mindset, ad revenues from celebrity endorsements continue to grow year-over-year.

In the third quarter, AI is able to produce advertising material, optimize the model, and improve the hair effect. Among them, the second quarter's fully online clinical platform has been widely used by customers, realizing the production of AI image, scale, and individualized content. Further, AI advertising material is expanded into video content in the third quarter. Through smartly improving the front and back cover of high-light highlights, not only improved the efficiency and versatility of video advertising production, but also improved user experience. As of the end of October, the consumption of AI materials in information flow advertising has reached nearly 30%. In addition to the use in information flow advertising, the common demand for brand customers to release new products via live broadcast will be increased. We will use live broadcast adjustment to convert the material to be spread by QoL and then expand the spread effect through information flow. This mode has solved the problem of customers' hard-to-earn live content turning into disseminated material, and through the combination of high-quality materials and high-quality hair, it helps customers achieve valuable live content or secondary transmission. For example, a mobile phone brand live press conference. The percentage of AI-assisted production materials has reached 10%, but the percentage of the amount of interaction of these materials has reached 30%. We plan to promote this mode to more customer products at press conferences, On the app product front, we have continually strengthened the application of AI technology

across the entire advertising life cycle this year to enhance ad efficiency. By the third quarter, we have deployed AI capabilities throughout the process from the ad creative production and bidding model optimization to campaign performance improvement. Notably, Weaver's AI ad creative platform, Lingchuan, launched in the second quarter has been widely adopted, enabling even scalable and personalized ad production in both text and image formats. Furthermore, in the third quarter, we have extended AI-generated ad creatives to video contents. This upgrade enables intelligent extraction of key highlights for the pre-roll segments and the generation of eye-catching cover images. This not only improves the efficiency and diversity of video ad creative production, but also enhanced targeting precision and user viewing experience. As of the end of October, AI-generated ad creatives accounted for nearly 30% of the consumption of the real-time video information feedback. Besides this, to address the common needs of the brand clients to launch new products via live streamed press conference, we leveraged AI to live streams in real time, extract the most engaging highlights, and transform them into high-quality material suitable for KOL distribution. These highlights are further distributed through our feed ad product, amplifying the overall content reach and influence. This model not only addresses clients' difficulties in efficiently converting live stream content into shareable materials, but also enable clients to achieve secondary distribution of valuable live stream content through a combination of high quality materials and precise targeting. For example, in a live stream product launched by a smartphone brand, AI generated material make up 10% of all materials. It contributed to as much as 30% of total interactions. We plan to roll out this model to more brand clients hosting product launch, thereby further unlocking the potential of AI in brand marketing. In terms of ad performance, the upgraded AI-powered ad performance model has demonstrated impressive results in key scenarios. Experimental data shows that the conversion efficiency of both app download ads and the form submission campaigns have improved. AI-powered performance ad models have enabled us to better deliver on client campaign objectives.

Fourthly, we need to focus on determining better marketing opportunities such as e-commerce. We need to further expand brand and content marketing in our key industries, continue to consolidate the growth patterns of the car industry, and fight the chaos in the consumer sector. Entering into the fourth quarter, we will focus on capturing marketing opportunities from sectors with high budget visibility, such as the e-commerce sector.

We will beef up our efforts to further extend the penetration of our brand-plus-company marketing approach across key industries, sustain the growth momentum in the automobile sector, and strive for recovery in the consumer goods. At the same time, we will continue to drive the application of AI in ad-creative generation and AI placement optimization with the hope of offering smarter and more efficient advertising solutions to clients of all sizes, and thus further strengthening Weibo's differentiated competitiveness in the advertising market. Next, let me turn the call over to Fisa for a financial review.

Thank you, Gaofei, and hello, everyone. Welcome to Weibo's third quarter 2025 earnings conference call. Let me start with operating metrics. In September 2025, with both MEUs and average DEUs reached the first $578 million and $257 million respectively with a steady improving DEU versus MEU ratio year-over-year. The modest year-over-year decline in MEUs was primarily due to the high traffic base during the Paris Olympic Games in the same period last year. On the other side, in third quarter, We completed the revamp of our information feed and prioritized the recommendation feed for content consumption. We are encouraged by early signs of improvement in user engagement with interest-based feed and video content on Weibo. In addition, user skills and search priorities from Weibo's intelligent search feature continues to grow robustly with portal reporters. with intelligence search and heavy use exceeding 70 million in the third quarter. This growth was mainly driven by our AI technology upgrades, which allow us to better meet users' content search and discovery needs on the platform. Turning to financials, as a reminder, my prepared remarks will focus on non-capitalized loans. For monetary amounts in US dollar terms, And all comparisons are on a year-over-year basis, unlike otherwise noted. Now, let me walk you through our financial highlights for third quarter 2025. We were third quarter 2025 net revenues were $442.3 million, a decrease of 5% or 4% on constant currency basis. Operating income was $132 million, representing operating margin of 30%. Net income attributable to Weibo reached $110.7 million, and the diluted EPS was $0.42. Let me give you more color on third quarter 2025 revenue performance. Weibo's advertising and marketing revenue for the third quarter 2025 was $375.4 million. down 6% or 5% on a common currency basis, while value-added service vast revenues were $66.9 million, up 2%. Weave was advertising business through a modest decline, primarily due to the high base effect from last year's Paris Olympics. By industry, our top three verticals were FMCG, e-commerce, and 3C products. In terms of growth drivers, e-commerce, internet services, automobiles, and local services were the key contributors. Notably, the e-commerce sector recorded over 50% year-over-year growth, driven by similar policies amidst boosting domestic demand and consumption. We are pleased to see increased ad budget across multiple business lands within these platforms. including traditional e-commerce activities and local service initiatives. Weibo has continued to demonstrate its unique value in driving brand awareness and user acquisition for e-commerce platforms amid intensified market share competition. The automobile sector's trend solidly grows this quarter. Thanks to Weibo's thriving auto-related content ecosystem, a dynamic EV launch season, and a stable ad spend from ICE vehicle brands. On the other hand, we face a significant year-over-year decline in food and beverage and apparel industries, again, due to the high base effects from the last year's Olympics. And as for 3C products, this year, government-backed trading subsidies encouraged many consumers to upgrade their phone or home appliance earlier this year, which leads to software shipments and lower ad spend from advertisers in the second half. Other underperforming sectors that weighed down overall top-line recovery included online games, largely due to a tough year-over-year comparison and overall ad budget contraction in the sector. by ad product category. Promotive feed ads remained the largest contributor, followed by social display ads and topic and search placements. AAX has progressively transformed the entire lifecycle of Weibo's ad products, from creative generation to ad placement. Notably, our real-time bidding feed products sustained double-digit growth driven by AI-powered ad tech upgrades that enhance the conversions and ROI for advertisers, particularly for app download and lead generation campaigns. Ad revenues from Alibaba reported a robust growth of 112%, reaching $45.5 million in the third quarter. We are pleased with the strong momentum from Alibaba this year. driven by deeper collaboration during key marketing windows and Alibaba's increased ad spend on its local services initiative. Value-added service raised revenues through 2% to 66.9 million US dollars in the third quarter, mainly due to modest increase in revenues from game-related business and membership services. Turning to cost and expenses, Total cost expenses for the third quarter was $310.3 million, an increase of 3%. Operating income in the third quarter was $132 million, representing an operating margin of 30% compared to 35% last year. Turning to income tax, under the gap measure, income tax expenses for the third quarter were $57.2 million, compared to $32.2 million last year, primarily due to the recognition of $29.4 million before the tax liability related to in the third quarter of 2025. That income attributable to Weibo in the third quarter was $117.7 million, representing a net margin of 25% compared to 30% last year. primarily attributable to top-line traders. Turning to our balance sheet and cash flow items, as of September 30, 2025, WebOS Cash cash equivalents and short-term investments totaled $2.04 billion, compared to $2.35 billion as of December 31, 2024. The decrease of WebOS Cash cash equivalents and the short-term investment was mainly resulted from the purchase of long-term wealth management products and the payment of the annual dividend to our shareholders, and was partially offset by the operating cash flows in the past three quarters this year. In the third quarter, cash provided by operating activities was $200 million. Capital expenditures totaled $5.1 million, and the depreciation and amortization expenses amounted to $15.4 million. With that, let me now turn the call over to the operator for the Q&A session.

Thank you, management. We will now begin the question and answer session. To ask a question, please press star 11 on your telephone and wait for a name to be announced. To cancel a request, please press star 11 again. Our first question comes from the line of Alicia Yup of Citigroup. Please go ahead.

Hello, thank you. 管理層晚上好,謝謝接受我的提問。 我有一個問題是關於4Q這個廣告的展望。 能請管理層跟我們分享一下, 就是說怎麼看四季度廣告收入的一個增長, 然後如果有預期2026年整體廣告收入的一個預期, Thanks management for taking my questions. Can management share with us the overall advertising outlook for the fourth quarter and also 2026. So any colors that you can provide in terms of the growth rate for fourth quarter and also how should we be thinking about the overall ad revenue growth into next year? And then what is your future strategy for the overall advertising product upgrade? How has AI been helping or will be benefiting the click-through rate or even the advertising monetization, and also how AI could be also improving, help advertisers to improve their ROI. Any kind of attention would be great.

Thank you. Thank you.

As I said, the decline of our 3G network is mainly due to the high technology of the Olympics last year. On the other hand, there are also some industries like games and mobile phones that are actually worse than what we originally expected. Although some industries, such as e-commerce, including chess, are better than what we expected, in general, they are still within our expectations. From the perspective of the four seasons, I think on the one hand, we will see that the entire consumption data of the second half of the year is still relatively slow. And many provincial state stocks actually have a sign of limit and release. This is actually very obvious to some of our customers in the second half of the year, such as cell phones. I estimate that the policy change in the national policy of cars starting next year may also have a certain continual impact.

All right, thank you for the question.

So according to the financial report that we have just delivered in Q3, we've been seeing the overall decrease of the ad revenue, primarily due to several reasons. The first one is that we had a high base last year due to the Olympic Games. And also second is that even if we had a poorer performance of the headset industry and the verticals of gaming, And also we had a little bit better performance from the e-commerce and automotives. But I think that on the overall basis, this is actually the performance within our expectation. Looking forward to Q4, we have been seeing that in the second half of this year, overall speaking, the overall figures and statistics of the consumption-related figures are actually slowing down and we've been seeing that in some certain provinces and cities the national subsidy policies have been seeing some kind of a you know headwinds like the limitations on the spending as well as the exiting so i think that this is going to you know have a continuous impact on the hessa industry as well as you know the automotive industry next year because we are you know foreseeing a kind of exiting of the national subsidy policy for this industry for certain regions. Okay.

这些不确定性之外, 当然我们也会看到明年来讲的话, 还是有一定的相对上确定性的信息。 一方面来讲, 2025年其实没有太多的大的广告的热点事件, 比如像去年的世界杯, 但是2026年一个是有东西奥运会, 再一个是2026年有世界杯。 Good.

um so these are some of the uncertainties that we've been witnessing but still except for these uncertainties we could see some of the certainties for next year and also 2026 in specifics so you know that in 2025 we did not have any hot topics or you know hot trends or events happening but in 2026 we are expecting several important events like the winter olympics and also the world cup as well So this will be actually bringing a better placement of the advertisers from the consumer goods verticals. And you know that in Q3, the decreased performance of the ad revenue primarily was due to the decreased performance of the ad placement from the consumer goods industry. Okay.

So it's hard to predict what will happen next year. In terms of the four seasons, the first one, e-commerce, will be more competitive this year than it was last year, especially in the field of offline services. In the past, we had a relatively low number of customers in the field of offline services. But this year, e-commerce and offline services So as a result, it is very difficult for me to give you a very precise prediction of our performance in 2026.

Having said that, in Q4, we've been seeing some of the important things. First of all is that there are actually more fierce competition for the e-commerce industry, especially from the offline scenario and targeting the lifestyle service. and we used to have way more used to have actually quite low you know percentage or the market share in this particular segment and but still you know we do see a fierce competition going on for the you know food delivery and lifestyle service and as well as the other relevant ones so that is to say that you know in q4 we are you know expecting a huge demand increase in this particular area okay

In addition to that, the automotive industry, as Grimley said, is still in a good state. And due to the policy of the country's anti-intrusion, in fact, in the first half of the year, the automotive industry has been relatively fierce in terms of price competition. In contrast, the investment in the product itself, including the rotation aspect, has actually decreased significantly. This situation will become better in the second half of the year. In the mobile phone and gaming industry, we will see that the mobile phone market is declining because of the national stock market. In the second half of the year, in addition to Apple, the sales of other mobile phone manufacturers may still have a certain degree of decline compared to the previous year's expectations. This also reduces the frequency of mobile phone customers sending new products and new machines. The gaming industry has actually declined this year, mainly because I want everyone to look at Gordon.

And also for the e-commerce, of course, I've already shared some of the colors on this. And second is that in terms of the automotive industry, we believe that it will be actually performing quite good in Q4. First of all, due to the anti-evolution policies, we've been seeing that some of the customers or advertisers from this particular industry had issues like the price competition or price war. And in the first half of this year, those advertisers did not pretty much focus a lot of their revenues on the product promotion or the mindset establishments. So I think that this situation will be getting better in the second half of the year. And talking about the automotive, I mean, headsets and also gaming industries. For headset industry, we know that this was primarily impacted negatively by the trend of exiting the national subsidy policy. so in the second half of this year we've been seeing that except for apple the rest of the other hazard makers were having a deteriorating um you know sales volume and that's the reason why we do see a lower frequency of the new phone launch and for gaming industry you could see that from a financial report of netease or tencent They did not have that lot of new game release in the second half of this year. But, of course, they are claiming that in 2026 Q1, we're going to see some of new games launch from these two major game makers. But still, as for whether or not they're going to be allocating more budget on this, this is still uncertain. All right.

In terms of our strategy, I think there are two main directions. On the one hand, we can see that the customer budget has increased a lot in terms of efficiency in the past few years. In order to save money after the pandemic, customers have been working hard to save money and do live broadcasts. So the customer budget for the entire brand has been decreasing. But from this year on, we will see a lot of customer brands, including new budget and content marketing budget, will obviously have a rebound. So this opportunity, in fact, for a platform like Weibo, we think we still need to be able to grasp it. In the future, we will definitely be involved in the hot spots, including the comprehensive marketing of stars and global KR, and we can strive for the budget to gradually warm up. Gordon.

And second point on the overall strategies. So we're talking about two directions. The first one is that, you know, in the previous years, a lot of those budget of advertisements actually was pretty much placed on the performance-based ad. And we did not see a lot of spending from those advertisers on the mindset-related areas. And also after COVID-19, in order to consume more airlocks, we do see the behaviors of focusing on the live stream e-commerce. So I think that this year we've been seeing a very obvious trend that there are more budget allocated to the areas of establishing and building the mindset. So as the traditional advantageous platform on this particular area, Weibo is definitely going to seize this opportunity. And I think that we're going to focus on the hot topics and KOL, especially top-notch KOLs, in terms of the integrated marketing. So we do actually see the trend of increasing budget from these advertisers on those fronts. Okay.

On the other hand, we are talking about the price increase in effect advertisements. In the past few years, this has been gradually decreasing in our income gap. But in the past two years, on the one hand, we have done a lot of product and opportunity upgrades for effect advertisements. At the same time, this year, the improvement in the performance of AI, which has helped us in the market, is quite obvious. In the third quarter, the number of effective ads in our overall ad revenue is actually rising. The absolute value has also maintained a rapid growth. This is due to some of our own traffic, including adjustments to our product strategy. On the other hand, it is also due to the application of AI technology. We see for ourselves that in the future, hopefully next year, effective ads may still maintain a growth.

and the second point is on the bidding ad and also performance-based ads so you know last year we've been seeing a decrease of our overall you know revenue ad revenue contributed to the overall you know ad revenue from the performance-based ad but you know recently in the past years we've been dedicating a lot of efforts in making wonderful products in a performance-based ad and also increasing and updating our technologies. And also, most importantly, we've been applying a lot of AI technologies to really have a very good boost of the revenue from the performance-based ad. So you can see that in Q3, we had a lot of increase on this area. So not only because of the overall data and traffic and also the adjustments of our strategies, but most importantly, I think that the overall use of the AI technology is really important. So we will be actually now expecting a very good increase of this performance-based ad.

Okay.

All right, pretty much for the answer for this question. Thank you.

Thank you for the questions. One moment for the next question. The next questions will come from the line of Leo Yu from CLSA.

Please go ahead. Good evening, Mr. Guan. Thank you for accepting my question. I have two questions about the commercialization of products. First, we see that the AI search engine has a lot of examples of increasing advertising revenue in the industry. And then, since our search products have achieved very good user and activity-oriented progress, This product has already started commercialization in the fourth quarter. In addition, are there any other applications that the AI management can share? The second question is that the management mentioned that after the change of the information flow product, the user consumption and the degree of activity of the user changes. Can you share with us further? How will the changes in this area affect the income? Thanks, management, for taking my question. And I have two questions on the product commercialization. And first is on the strategy and the progress of intelligent search. Do we have the commercialization attempts already in the fourth quarter? And what other AI application can management share? And second question is on the information feed revamp. What are the initial feedbacks on users' content consumption engagement, and how would that translate into revenue growth in the future? Thank you.

On the one hand, as you just mentioned, the revenue growth of a product in 3G is relatively fast. In September, the revenue growth of MAU exceeded 70 million. Compared to the previous quarter, DAU and query volume increased by more than 50%. But in terms of commercialization, I think it's a few aspects. On the one hand, the use of revenue can drive an increase in our overall search volume. The entire third quarter was actually forced because of the gradual increase in revenue. It also drives the overall heat capacity. It's about 20% higher than last quarter. This is a more effective commercialization flow for us. This is one aspect. On the other hand, we don't have a plan to look at the online ads now, but because there are more customers, there is still a lot of demand to make a certain impact through some content. So, in fact, on the one hand, it is an advantage, for example, the optimization of generation engine. As a drive, we will drive our customers to produce more high-quality content on Weibo, including some The response of the information, including the common problems of the customer's new products, can also help our customers to generate more content and better advertising materials in Weibo. These contents will be presented in the result of the order. However, we do not directly charge the customer for this part. But the customer, in order to promote this part of the content to get a higher weight in the result of the order, it will increase the effect of this content. So thank you for this question.

First of all, we could see that in terms of the intelligence search, as we have already said, that this has been increased a lot in Q3 in terms of the overall products. So resulting in a very good performance, for instance, in September, the MAU exceeded 70 million. And in terms of the DAU and also the query number, we had a quarter by quarter increase of over 50%. So, of course, in terms of the monetization of the intelligence search, first point is that we do see a very good increase of the overall intelligence search-based volume, and that was resulted in the performance. Like in Q3, we had a query and an increase by about 20% quarter by quarter, and this actually provided with us a very good traffic to actually have a better performance on this. and second point is that of course at the current stage we do not have the ability of you know all the consumers i mean the customers are not having this particular requirement of you know placing the ad precisely just based on the intelligence search results but this did actually know provided some of the impacts to the customers because for instance you know we are able to use the geo technology to actually facilitate better product and better content creations And helping the customers in understanding or advertisers in understanding the new product related issues and some of the other important things and also issues as well. So this is going to be generating a lot of ad assets for advertisers so that they are able to use in the near future. Of course, this is not going to be directly charging from the customers, but I think that in the future, the customers and advertisers are able to put more weight on this particular part of the intelligence search. So I do think that in the future, we're going to see a very good increase be it the brand-based ad revenue or the overall budget of the performance-based ad.

Okay.

Okay. uh uh

And also the second question is pretty much based on the information feed. So as we have already stated that we had an updated version or modification of this information-based feed in 2025 and already provided to the users So we've been already finishing the first page switch for information feed in July. But of course, it takes time for the users to get used to this and nurture their habit of using. But still, I think that this particular new information feed is going to be very useful and beneficial. to the overall activity of the users and also improving the overall retention and a total time spent on the consumption as well. So I think that this is also going to be lowering the threshold for the users of using Weibo. Okay.

We just mentioned that our revision this time is actually quite similar to the one that went to do the information flow from the market to the non-market. With such a revision, I think in the short term, no matter if a part of the user's experience or consumption behavior is slightly improved, but it is also true that there will be a part of the user who is relatively different from his original consumption habits.

Of course, I think that this particular kind of, you know, modification or the version update is pretty much like what happened, you know, years ago from the time span based to the non-time span base. And of course, at the current stage, we think that there are a lot of variations between different versions. So it still takes time for the user to adopt this new kind of a platform, or it takes time for them to nurture their habits of using. But still, I think that on the overall basis, this did have a lot of benefits. on impacting the overall consumption behaviors. And also, of course, in Weibo, we are going to continuously focusing on the upgrades and optimization of our products as well. Okay.

But from our point of view, on the one hand, such a new version is the most important thing for us to improve. On the other hand, it is a change in the use process of new users. Because when new users came up, they needed to build a relationship first in order to consume more content. Today, such a recommendation is online, so that new users can come in and consume the best content on some Weibo platforms. I think this is . . Also, I think that this is very good to have certain kinds of improvements on QFunds.

The first one is that, you know, of course, it is going to impact some of the new users, you know, using a process of this particular product. Because it used to be the case that the users need to log on the Waveboard and establish, you know, following a relationship before they could take any action on consumption of the content. But at the current stage, this particular process is, you know, waived. so that we are at the same starting point as the other competitors for this particular part. So the users are able to actually consume very good quality or content at the very beginning. And second is that for the existing users, of course, from an experience standpoint, it still takes time. time for them to be adopted, adopting this new concept and also establishing a new using habits. But still, I think that at the current stage, this is primarily giving us better opportunities, especially for those new users, to take actions on consumption more frequently without even establishing a following relationship as the prerequisite. Okay. Okay.

Then the third point is that I think the core is the problem of video in our entire system. Because everyone knows that there are more and more consumer videos in this era. But the original social media relationship of Weibo is mostly based on the era of non-video. In a system like this, it's hard for many new video bloggers to get exposure and traffic on Weibo. Even in a hot-sale situation like this, it's hard to get traffic because of the timing problem. Thank you.

And also I need to add another point, which is the third point, that is for the video-based consumption. So we know that in the past, for those of consumers, I think that the videos are actually very difficult for the users to actually consume upon. So that was impacting a lot of the original social-based relationship. And you know that in the past, for those content creators, especially the video content creators, it is very difficult for them to establish a social relationship with the users and also consumers as well. So even if on the relationship-based feed, it is also very difficult for those video content creators to expose their content in front of a wide audience. So also for the Hot Topic search, because of the real-time list, of their content, especially the video-based content, it is also very difficult for them to expose their content as well. But now, after the change, we can see that we are going to proactively recommending more video-based content to the users. And this is going to be very, very important for Weibo in the long run, be it from a growth standpoint or from the standpoint of enhancing our core competitive edge. Okay. Thank you.

Thank you for the questions. That's the end of the question and answer session. With that, I would like to conclude the conference call today. Thank you all for participating. You may now disconnect your lines.