JOYY Inc.

Ladies and gentlemen, thank you for standing by, and welcome to the Joy, Inc.' 's third quarter 2024 earnings call. At this time, all participants are in listen-only mode. After the management's prepared remarks, there will be a question and answer session. I'd now like to hand the conference over to your host today, Jane Shear, the company's senior manager of investor relations. Please go ahead, Jane.

Thank you, Operator. Hello, everyone. Welcome to Joy's third quarter 2024 earnings conference call. Joining us today are Ms. Ting Lee, Chairperson and CEO of Joy, and Mr. Alex Liu, the Vice President of Finance. For today's call, management will first provide a review of the quarter, and then we will conduct a Q&A session. The financial results and webcasts of this conference call are available at ir.joy.com. A replay of this call will also be available on our website in a few hours. Before we continue, I would like to remind you that we may make forward-looking statements, which are inherently subject to risk uncertainties that may cause actual results to differ from our current expectations. For detailed discussions of the risk uncertainties, please refer to our latest annual report on Form 20F and other documents filed with the SEC. Finally, please note that unless otherwise stated, all figures mentioned during this conference call are in U.S. dollar. I will now turn the call over to our chairperson and CEO, Ms. Ting Li. Please go ahead, Ms. Li.

Hello, everyone. I'm Li Ting. Welcome to our third quarter 2024 earnings call. Let's begin with a review of our overall performance during the third quarter. During the third quarter, we effectively executed our strategic priorities, maintaining a strong focus on optimizing our products, defending our market penetration in developed countries, and enhancing our global operational capabilities and efficiencies. These efforts yielded solid results in the third quarter, our group revenue reached $558.7 million. Our core business segment, Siegel, recorded revenues of $496 million, delivering a slight year-over-year increase. Our disciplined execution has led to improvements in operational efficiency at both the bigger segment and group level. Our group non-GAAP operating profit came in at $34.9 million, up 16.4% quarter-over-quarter. Bigger non-GAAP operating profit expanded to $72.9 million, up 5% quarter-over-quarter. exceeding our expectations excluding the impact of FX losses because non-GAAP net profit was also up quarter over quarter. We briefly outlined our strategic priorities in our previous earnings call. Now, let me quickly touch on each of these. we continued to advance our globalization strategy in rating users' interactions and content offerings, while building on our unique position as a global social platform. As we have previously mentioned, BeagleLive is a highly globalized product, offering content across 30 languages and fostering meaningful cross-regional connections. This is particularly evident among our users in diverse countries who actively engage in cross-cultural interactions. What truly sets us apart is the global nature of our user community and the organic social connections that flourish across our platform. a unique value proposition that we are committed to amplifying. To further enhance our global ecosystem, we have implemented a series of upgrades to boost the creation, quality, and distribution of content on our platform. For example, we fine-tuned our content recommendation algorithm to better facilitate content sharing within same language regions and expand cross-regional content flow between highly interactive markets such as North and South America. We also launched global cross-regional initiatives based on user interaction patterns, such as this quarter's Biggest Most Talent competition, organized by our North American team. The event brought together creatures from America, Southeast Asia, and Africa, highlighting our ability to unite diverse talent across high-engagement gradients. On the technology front, we are preparing to introduce standardized global content guidelines and comments over testing of AI-powered real-time caption translation in the select languages. This enhancement will streamline our cross-regional content delivery and better serve our users' growing appetite for global content and social connection. Second, we are listing forecasts on operational efficiency by optimizing every aspect of our global localized operations from user acquisition to KOL management to our user engagement and monetization mechanisms we aim to comprehensively strengthen the efficiencies and capabilities of our global operations and drive data expansion in product and group profitability. During the quarter, we conducted comprehensive ROI analysis across products, regions, and user acquisition channels. Leveraging this insight, we optimize our resource allocation, redirecting our advertising spending from underperforming regions toward developed countries, and forecast on the acquisition of premier users with greater monetization potential. As a result, Big O Life has achieved consistent year-over-year and sequential user growth in developed countries, with overall ROI improving by double digits from the previous quarter, even with a 7.3% sequential reduction in its total user acquisition spending. In other underperforming regimes, we have shifted some of our efforts from traditional advertising channels to more cost-effective user acquisition methods, such as KOL partnerships and elaborate social features like RealMatch to expand our product reach. These targeted initiatives underscore our commitment to cultivating a sustainable, high-quality user base will substantially enhance content quality and social experience to drive long-term user monetization potential. For Lighty, we have MendingTree, a strategy forecast on our core market in the Middle East and Europe. Successfully implementing monetization through both live streaming and advertising. This targeted approach has enabled us to achieve our initial milestone and profitability. To further unlock Lite's monetization potential, we recently redirected some of its operational resources, including personal and traffic. toward a new social live streaming product. This means that the resources currently allocated to non-core markets, which do not contribute much to LightEase monetization, will be further optimized, potentially leading to declines in LightEase user metrics in the near term. However, we believe this advertising strategy will accelerate our new product development, strengthen our position in Leica's core market, and ultimately enhance Leica's monetization potential in the long run. Third, we have continued to cultivate long-run initiatives that will further diversify our revenue streams. In the third quarter, our group non-live streaming revenue grew 13.1% sequentially to $119.2 million, representing 21.3% of group revenue. Because non-live streaming revenue primarily is generated from advertising, increased 15.5% quarter-over-quarter to 78.2 million. This growth was followed by strong momentum in Europe and North America, underscoring our strategic initiatives and commitment to expanding our footprint in this market. Building these new initiatives into meaningful revenue streams requires patience and sustained investment. We remain committed to nurturing these opportunities to realize their full potential. We sustained our positive operating cash flow in the third quarter. generating $61.1 million at the group level. Supported by our strong cash flow and healthy financial position, we actively advanced our shareholder return initiative. In the third quarter, we accelerated our share repurchase, buying back an additional $117.8 million worth of our shares, with $283 million remaining anonymized under our repurchase program. We will continue to actively execute share buybacks to reward our shareholders' ongoing support. Now, let's take a closer look at our product, starting with BeagleLive. In the third quarter, we sharpened our operational strategy by prioritizing our advertising, investment, and operational resources toward developed countries and premier users. This targeted approach yielded strong results in developed countries, where end-use grew 3.4% year-over-year and paying users increased 9.1% year-over-year. We also saw encouraging momentum in the Middle East, where big-of-life revenue increased 5.6% sequentially. During the quarter, Biggles Live successfully organized the third season of Biggles Most Talented, featuring categories including music, dance, and beauty. The event attracted outstanding creatures from around the world. Building on previous seasons, we introduced a more comprehensive judging system incorporating key audience engagement metrics. This allowed a seamless merger of interactive live streaming with traditional talent show elements. The season culminated in a grand final broadcast from Los Angeles on October 16th. Captivating a global audience, the event resonated strongly with viewers amassing an impressive 5.79 million audience votes, highlighting the high level of engagement surrounding the competition. We also strengthened bonds with our business partners and our user community through a series of mid-year gathers across Saudi Arabia, Vietnam, Thailand and the Philippines. These gatherings brought together the cornerstone members of our ecosystem, top creators, users and partners to celebrate their achievements and vital contributions to our progress in the first half of the year. Throughout the quarter, We further developed BeagleLive's social engagement features, prioritizing improvements to real-match and messaging functionality. These upgrades drove deeper user connections and more efficient follow-up conventions. Notably, real-match average DAU penetration rate increased significantly to 23.4%, where the number of direct chat messages rose by 15.9% from the previous quarter. We also saw a 4.3% rise in average new followers per user, indicating stronger community building. By directing traffic to premier hosts and upgrading interactive features, we saw broader creature participation and user engagement in multi-guest rooms. We achieved a 3.9% sequential increase in the penetration rate of user hosting a live session in multi-guest rooms. Alongside a 3.6% sequential increase in the overall rate of users going live as guest speakers. Next, moving to lighting. Our strategy for lighting remains rooted in the Middle East and European markets, where we continue to build momentum and enhance monetization across both live streaming and advertising. As a result, Leike's advertising revenue grew 33.4% year-over-year in the third quarter, and Leike mentioned its profitability. During the quarter, we elevated Leike's user experience across its core markets through enhanced content quality interactively, and community engagement. A standout community building initiative was our August music festival tour across five European cities, which brought together lighted top creators, from music bloggers to dance groups, alongside established performers and celebrities. This unique event delivered an unprecedented interactive experience for the Leike community. In September, Leike served as the official media partner for Physical Games 2024, providing eight days of live streaming coverage to immersed users. In the competitive prowess of top athletes, in digital football, basketball, laser shooting, and simulated dance. Our expanded premium content offerings and content diversity drove a 12.3% quarter-over-quarter increase in users' video time spent. Finally, turning to Huggle, in the third quarter, Our targeted incentive strategy across different paying user segments drove improved monetization metrics. We saw positive momentum in Haggle's paying users and approved, with its total revenue growing 6.1% quarter-over-quarter. Haggle's operating losses further narrowed from the previous quarter and its operating cash flow remained positive. HAGO's social engagement metrics remained strong in the third quarter. Average time spent in social channels increased 2.5% quarter-over-quarter to 105 minutes. And the next day, retention rates showed significant improvements. These positive trends underscore the success of our engagement strategy and reflect our commitment to enriching user experiences while advancing monetization efforts within the platform. Looking ahead, our strategic roadmap continues to center on three core priorities, strengthening our position as a distinctive global social platform through enhanced user experiences, developing diverse revenue streams to drive sustainable growth, and advancing excellence across our global operations. Anchored by our strong cash flow and solid financial footing, we are dedicated to driving profitable growth and creating enduring value for our shareholders. I will now turn the call over to Mr. X Liu, the Vice President of Finance, to provide our financial update. Thank you.

Thanks, Misty. Hello, everyone. Before I go into the details, we would like to remind you that despite the latest development in the sale of VavaLife. To the date of this press release, we have not opted control over VavaLife and therefore have not consolidated the business. The financial results presented in our press release and this conference call primarily consisted of Beagle and all other segments, excluding VavaLife. I will now provide a recap of some key financial highlights for the third quarter. Our total net revenues were $558.7 million in the third quarter, compared with $567.1 million in the same period last year. Revenues from the vehicle segment were $496 million, up slightly year over year. In particular, Pico's non-live streaming revenues were $78.2 million, which was up substantially year-over-year, primarily due to the increase of advertising revenues. Pico's live streaming revenues were down year-over-year, mainly due to our proactive actions to optimize PicoLive's content and user acquisition costs. and adjustments to Beagle's non-core-audio live streaming product in certain markets. We believe these changes in turn enhance our marketing profile and contributed to long-term business sustainability. Geographically speaking, as we prioritize to allocate our operational resources towards developed countries, and the acquisition of premium users with great monetization potential. Our group revenues from developed countries and regions was up by 25.6% year-over-year, with revenues from the Middle East back to sequential growth of 2.1%. Cost of revenues for the quarter decreased by 2.1% to $350.5 million, primarily driving by a decrease in cost of revenues of our other segment, which was consistent with its revenue trend, partially offset by increase in cost of revenues of Bigelow. Beagle's cost of revenues was $312.6 million, which was up by 4.5% year over year, mainly driven by increased traffic acquisition costs paid to third-party partners in relation to our advertising business.

Gross profit was $208.1 million in the quarter,

with a gross margin of 37.3%. FICO's gross profit was 183.4 million with a gross margin of 37%. FICO's gross margin was lower year over year due to a safety in our revenue mix, which saw an increased contribution from our lower margin audience network advertising revenues. However, during the third quarter, our digital planned execution has significantly improved the operational efficiency of Beagle's live streaming business, effectively offsetting their dilution impact on Beagle's gross margin. As a result, we observed a meaningful sequential improvement in Beagle's gross margin during the quarter. Our gross operating expenses for the quarter were 192 million compared with 191.3 million in the same period of 2023. Among the operating expenses, sales and marketing expenses decreased to 83.5 million from 92.5 million in the same period of 2023. primarily due to our reduced spending on user acquisition through advertising as we continued to focus on ROI and the effectiveness of user acquisition. General and administrative expenses increased to 36.1 million from 27.1 million in the same period of 2023. primarily due to increase in salary and welfare expenses. RICO's total operating expenses for the quarter were 120.7 million, decreased from 126.7 million in the same period of 2023, primarily due to decreased in sales and marketing expenses.

Our digital plan execution has slightly enhanced operational efficiency at both the group and vehicle segment.

Our group's gap operating income for the quarter was $16.4 million, up by 623.5% quarter-over-quarter. Our group's non-gap operating income for the quarter, which excludes FPC expenses, Amortization of intangible assets from business acquisitions. Gain on deconsolidation and disposal of subsidiaries as well as impairment of goodwill and investments was $34.9 million in this quarter, up by 16.4% quarter over quarter. BigGo's gap of net income for the quarter was $62.7 million, and BigGo's non-gap of net income was $72.9 million, up by 5% quarter-over-quarter. And the group's gap net income attributable to controlling interest of joint in the quarter was $60.46 million. compared to 72.9 million in the same period of 2023. Gap net income margin was 10.8% in the third quarter of 2024 compared to 12.9% in the same period of 2023. Our gap net margin was lower this year due to larger foreign currency exchange losses and a lower net interest income due to the decreased net cash balance after we fully repaid our CPE in the second quarter. Beagle's gap net income in the quarter was 63.3 million compared to 70.2 million in the same period of 2023. Beagle's gap net margin was lower this year due to foreign currency exchanges losses of 10.3 million in the third quarter of 2024. Non-GAAP net income attributable to controlling interest of joint in the quarter was 61.2 million compared to 81.2 million in the same period of 2023. The group's non-GAAP net income margin was 10.9% in the quarter compared to 14.3% in the same period of 2023. Beagle's non-gap net income was 67.1 million compared with 81.9 million in the same period of 2023. Beagle's non-gap net margin was 13.5% in the quarter compared with 16.6% in the same period last year. For the third quarter of 2024, we booked net cash inflows from operating activities of 61.1 million. Our balance sheet remains healthy with a strong net cash pricing of 3.3 billion as of September 30th of 2024. In the third quarter, we continued to enhance returns to shareholders, repurchasing an additional approximately $117.8 million worth of our shares. During the first three quarters of 2024, we have altogether repurchased $7.3 million of our ADS for a total of $243.7 million. This was approximately 12% of our outstanding ADS as of December 31st, 2023. Turning now to our business outlook. As mentioned previously, we are fully dedicated to strengthening the efficiency and sustainability of our global operations. We have taken some proactive actions to optimize our content costs and introduced certain adjustments to Beagle's Audio Live Streaming product to enhance risk control in recent quarters. We anticipate such adjustments might negatively affect Beagle's top line in Q4. At group level, we expect our net revenues for the first quarter of 2024 to be between $546 million and $563 million. This implies that for the full year of 2024, Bitcoin is still present for moderate top-line growth. Looking forward, We will remain dedicated to our strategic priorities enhancing our unique value provision as a global social platform, exploring diverse growth revenues, and actively driving operational efficiency at all levels. Supported by our strong capital and healthy financial provision, We are well positioned to deliver sustainable, profitable growth and create enduring value for our shareholders. That concludes our prepared remarks. Operator, we would now like to open up the call to questions. Thank you.

Thank you. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question. When asking a question, please state your question in Chinese first, then repeat your question in English for the convenience of everyone on the call. Your first question comes from Thomas Chong with Jefferies. Please go ahead.

Good morning, thanks management for taking my question. My question is about 2025 outlook. Can management comment about the trend in user as well as our revenue? On top of that, The management also comments about the trend in operating expenses and profit. Thank you.

好的,我来回答这个问题。 首先谢谢您的这个提问和关注。 那关于第三季度的表现的话,我想先补充几句。 在第三季度,我们可以看到BIGO的非直播收入同比保持了高速的增长。 There is a decrease in live streaming revenue. The reason behind this is what S and I mentioned earlier. Part of it is because we have optimized the content cost for the Beagle Live part of the global operation. The other part is because we are based on the demand for regularity and long-term development. In Q3, we made some adjustments to the non-core audio live streaming products of the Beagle version. These two adjustments have brought some short-term fluctuations to the live income of the Beagle version of Q3. This is also reflected in our current performance guidance for Q4. Thank you, Thomas, for your question. I will take your first question first.

First of all, I'd like to add a few more comments regarding our performance in the third quarter. You can see that in Q3, Beagle's non-livestreaming revenue continued to grow substantially year-over-year, while our livestreaming revenue experienced a year-over-year decline. We've mentioned the reasons behind the decline of our livestreaming revenues, which reflect the combination of two factors. First, we have optimized content cost in certain regions of Beagle Live. And second, we have made proactive adjustments to the features of Beagle's non-core audio live streaming product in Q3 to enhance compliance and also for building up a sustainable ecosystem. These adjustments together did have led to a short-term fluctuation in Beagle's live streaming revenues in Q3, which we believe would likely continue in Q4, and it has already been taken into account in our current revenue guidance in the fourth quarter. However, as we've mentioned in the last quarter, these proactive adjustments that we're making now are aimed at developing a healthier profit model for our products and also for building a sustainable growth ecosystem. We've already seen some positive outcomes from these adjustments, in Q3, including sequential improvements in Beagle's gross margin, ROI, and also operating profit. And looking ahead to the year 2025, as we're still in the process of formulating detailed operational plans for the next year, and we believe that our expected growth would be varied based on the estimated operating resources that we intend to allocate. So I'd like to share a few key trends first.

As a series of adjustments have been made in the past 24 years, in 2025, Beagle will be a brand new start for Joy. As for the Beagle version, we will continue to focus our operating resources on the acquisition of developed countries and high-quality paid users. We expect that the paid users of Beagle will have the opportunity to gradually recover and grow in 2025, and UP will also have the opportunity to rise steadily. And the live income of Beagle's core overseas products will return to the same growth track. In addition, for Beagle's non-live income, we expect to continue to maintain the same growth of the two numbers. However, considering the impact of the high-tech number, the adjustment of non-core voice products will bring some pressure on the same growth in the first half of next year to eliminate some of the increases mentioned above. For the AOR version, we expect that the non-live income will continue to grow and drive the revenue recovery of the version. Regarding the size of the users, there will be some fluctuations in our global MAU in the next two seasons. This is mainly because of our current optimization of resource configuration, which will clean up the investment budget and operation resources to core developed countries and high-quality users, and strategically abandon some users whose long-term commercial value is not high. With the series of adjustments have already been implemented throughout the year 24,

We believe that both Beagle and Joy is poised for a fresh start for the year 25. For Beagle segment, we will continue to concentrate our operating resources on developed countries and the acquisition of premium users. We expect Beagle's paying user will gradually return to sequential and even year-over-year growth in year 25, together with a stabilizing art pool, which we believe can drive the live streaming revenue of Beagle to be back on a growth trajectory compared to a previous year. Additionally, we expect the non-live streaming revenue of Beagle segments will continue to maintain double-digit growth year over year. However, as we've mentioned just now, the adjustments to Beagle's non-live streaming non-core audio live streaming product would still exert certain negative impact on Beagle's overall growth rate, particularly when you consider the high base in the first half of year 24, which could still possibly offset some of the positive momentum that we've just mentioned. And for the all other segments, we expect its non-live streaming revenue to continue to grow driving a top line growth of the whole segment. As for our group MAU, I believe you can observe that it's been under some fluctuation over the past two quarters, and this is primarily due to our current proactive strategy of optimizing resources towards core developed countries and premium users. while strategically direct some of our resources away from areas and users with limited long-term monetization potential. While this strategy might have a short-term negative impact on our overall MAU, we believe that by focusing on high-quality premium users, we would be able to drive and also an ROI-driven growth strategy would be able to enhance our user equality and monetization efficiency, and therefore laying a more solid foundation for our long-term sustainable growth. And Alex will take your second question.

Hi, Thomas. I'm Alex. For your second question, I would like to answer your question about the operating cost and profit trend. In the third quarter, we steadily promote global operations and innovation, promoting the continuous growth of the Group and two business blocks. In fact, we have achieved a relatively obvious result. The non-GAAP net profit rate of the Group in the third quarter is 37.3%, compared to the 35.3% in the second quarter, which increased by 2%. The non-GAAP operating profit rate of the Group is 6.2%, which increased by 0.9% in the second quarter. The net profit of non-GAAP increased by 16.4%. Now, let's take a look at the B2B. The net profit of non-GAAP in the third quarter is 36.9%. Compared to the 35.5% in the second quarter, it increased by 1.4%. The net profit of B2B increased by 40.7%. Compared to the previous quarter, it increased by 1%. The net profit of non-GAAP increased by 5%. This is mainly due to the big live broadcast content cost optimization, and the investment cost in market sales has been significantly reduced compared to the previous year. As for the non-GAAP interest rate, the ratio has also improved significantly, from 30.5% to 40% in the second quarter, and the ratio has increased by 5.5% per year. The main reason behind this is the increase in the ratio of conversion. This is Alex. So in the third quarter, our discipline execution has driven enhanced operational efficiency at both segment level and also the group level.

The group's non-GAAP gross margin was 37.3%, which is up by nearly 2 percentage points compared to 35.3% in Q2. And the group's non-GAAP operating profit margin was 6.2%, which was up by 0.9 percentage points compared to Q2. and its absolute amount of non-GAAP operating profit increased by 16.4% quarter-over-quarter. If you look at Beagle's segment in Q3, we saw a non-GAAP gross margin of 36.9%, which is up by 1.4 percentage points from 35.5% in Q2, and Beagle's non-GAAP operating margin was now expanded to 14.7% up by one percentage point compared to Q2 with an absolute amount of non-GAAP operating profit extending by 5% quarter over quarter. And that was mainly due to optimized content cost of Bevo Live and also savings of our sales and marketing expenses particularly our user acquisition spending. And if you look at all other segments, the non-GAAP growth margin was also substantially improved in the quarter, up from 34.5% in Q2 to 40% in Q3, which is up by 5.5 percentage points in the quarter. And that was mainly due to sequential quarter-over-quarter revenue And the operating, the non-GAAP operating loss was 38 million during the quarter, narrowing by 3.7% compared to Q2, mainly due to our effective expenses control, particularly a steady decline in our R&D expenses as a percentage of our revenue.

Looking at the fourth quarter, we expect that the profit margin of Beagle Live will continue to remain stable. However, due to the adjustment of non-core audio products and the increase in seasonal market sales costs, we expect that the profit margin of the fourth quarter Beagle version of non-GAB will slightly drop compared to Q3. The loss margin of the non-GAB version of AllOther will be further reduced. In 2025, we will continue to use ROI as a guide to continue to accelerate the optimization of Beagle's content and investment strategy. We expect that the profit rate and profit margin of BeagleLive will rise steadily. However, considering that under our Beagle platform, the adjustment made by the non-core voice live broadcast product play method also has a negative impact on profits. Under the same influence of these two factors, the overall non-GAF profit margin of Beagle platform in 2025 will remain stable and look forward to growth. For AllOther, we expect that the non-GAAP capital loss will be further reduced in the next two to five years. At the group level, we expect that the overall non-GAAP capital loss will be improved in the next two to five years. So looking ahead to the fourth quarter for Beagle segment, we anticipate Beagle Live's profit contribution to remain relatively stable. However, due to the adjustment that we made to our non-core audio live streaming product,

together with this seasonality impact as our sales and marketing expenses might increase in the end of the year, we expect a slight decline in Beagle's non-GAAP operating profit as compared to Q3. For all other segments, we expect its non-GAAP operating loss amount to further narrow into fall. Looking ahead for the year 2025, We will continue to execute an ROI-oriented operational strategy, persistently optimizing content cost and user acquisition strategies within Beagle segments. We anticipate the profit margins and absolute amount of profit contribution from Beagle Live to likely increase in the year 25. Nonetheless, due to the adjustments that we've just mentioned that we made to the non-core audio live streaming products under the Beagle segment, which we believe will have a negative impact on the segment's profit, considering the above-mentioned two factors together, we expect that the overall non-GAAP operating profit for Beagle's segment will likely remain stable with certain potential for growth for the new year. And in terms of the all other segments, we expect improving under the assumption of improving monetization, discipline spending with our R&D expenses as a percentage of our revenue continue to likely decline in the new year. We foresee a potential further narrowing of non-GAAP operating losses in the year 25 compared to 24. group level, we believe that our non-GAAP operating profit amount will continue to show an improving trend in the year 25. All in all, we believe that efficiency optimization requires ongoing efforts. Therefore, we'll continue to optimize every aspect of our global localized operation, enhance our operational efficiency in order to drive a sustainable profitable growth of our business. Thank you. Next question, please.

Thank you. Your next question comes from Rafael Chen with BOCI Research. Please go ahead.

I will translate myself. Thanks, management, for taking my question. Could mayors share their general monetization trends across different key regions in fiscal year 2035? Thank you.

Okay, thank you for your question. Let me answer it. From the group's point of view, the development of developed countries continues to be our main source of growth. In the third quarter, the income of developed countries increased by 21.6% compared to the income of developed countries, leading other regions. The income ratio increased to 54.9%. This is Liti. I will take your question.

At group level, the developed countries region continues to provide momentum of growth. In the third quarter, revenues from developed countries increased by 21.6% year-over-year, outperforming all other regions with its revenue contribution to the group increasing to 54.9%. In terms of sequential trends, the group's revenues from the Middle East region grew by 2.1% quarter over quarter, showing signs of rebound. Looking at the long term, as we continue to execute on our ROI-oriented operational strategy and prioritizing operational resources towards regions with high monetization potential, we expect that both the developed countries and also the Middle East will remain our top priority. Thank you. Next question, please.

Thank you. Your next question comes from Derek Fay with Morgan Stanley. Please go ahead.

Thank you for accepting my question. My question is, I would like to ask about the progress of the company's shareholding. As of 2025, the shareholding I will translate myself. Thank you, Benjamin, for taking my question. My question is, could you give us a little bit more color on the progress in capital return? Should we expect the company to fully utilize the repurchase program in 2025? Thanks.

Hi, Derek. Let me answer your question. In general, we are The shareholder return is still very positive. In the third quarter, we have invested a total of $1.18 billion to buy back. In the first three quarters of 2020, we have invested a total of $2.44 billion to buy back. We have bought back a total of 7.31 million shares of ADS. At the end of last year, we had a total share of 12%. Thank you, Derek, for the question.

This is Alex. I will answer your question. So if you look at our four years execution so far, we've been very, very active in our shareholder return initiatives throughout the year. And in Q3, we purchased an additional of 118 million worth of our shares and for the first three quarters of the year we have in total bought back 7.31 million ADS for a total of 244 million which accounts for an impressive 12 percent of our total shares outstanding as of the end of last year. While looking ahead to the year 2025 We will continue to consider shareholder returns as one of our strategic priorities and continue to create value for our shareholders. Next question, please. And due to the limited time, I believe this will be our last question.

Thank you. Your next question comes from Yiwang Zhang with China Renaissance. Please go ahead.

Thank you, Ms. Guan. This is my question. So thanks for taking my question. Can I just discuss the outlook for our advertising and other new initiative business into 2025? Thank you.

Thank you for your question. I will answer the question about the new advertising business. In the third quarter, Bigo's advertising revenue has maintained a high-speed growth. The overall revenue contribution ratio of the Bigo version of advertising has now increased to 15.8%. Among them, the advertising revenue of the free-flow platform Lighty has reached 33.4% in the same ratio, and the growth ratio has also increased by 8.9%. The income growth of the advertising platform will continue to be strong. The growth of our free-flowing platform advertising revenue is mainly due to the optimization of advertising storage and pricing strategies. The continued growth of the future will also depend on the expansion of DAU. The dynamic energy of advertising platform business growth is more diverse, including the expansion of the three-party cooperation flow and the expansion of the needs of new market and new customers. In general, our advertising business still needs time to accumulate scale. We will still be the spirit of long-term idea, continue to polish products, steadily promote the improvement of the occupancy rate of core market.

Thank you for your question. This is Leiting. I will take your question. In the third quarter, Beagle's advertising revenue remained robust growth, which significantly increased its contribution to the segment's total revenue, now reaching 15.8%, among which the advertising revenue from our own social platform, Likey, deliver a year-over-year growth of 33.4% and a sequential growth of 8.9%. Revenues from our advertising platform, Beagle Audience Network, continue to show strong momentum with a sequential growth exceeding 20%, primarily driven by Europe and North America. Notably, the operating profit and OP margins of Beagle's audience network business have been improved sequentially during the quarter. Well, so far, the growth in our revenue, advertising revenue from our own social platforms such as Likey, is mainly attributed to optimization of our ad inventory and our bidding strategies. future sustained growth will be dependent on the expansion of its own DAU while the growth of our advertising platform or Beagle Audience Network has been driven by multiple factors including the expanding network DAU pool entering into new markets or the exploration of new vertical or new clients. However, It always takes time to accumulate scale in order to drive further profit growth. In order to drive further growth, we will again take a long-term view, continue to explore and refine our operations and drive a steady increase of our market share over time. So that's the end of our questions, and thank you so much for joining our call. We look forward to speaking with everyone next quarter. Thank you.

This conference is now concluded. Thank you for attending today's presentation. You may now disconnect.