JOYY Inc.

Ladies and gentlemen, thank you for standing by and welcome to Joy Inc.' 's fourth quarter and full year 2025 earnings call. At this time, all participants are in a 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 fourth quarter and four-year 2025 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. The 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, including but not limited to the future development of our products and businesses, the expected future financial performance of the company, our shared purchases, and other future events which are inherently subject to risks and uncertainties that may cause actual results to differ from our current expectations. For detailed discussions of the risks and uncertainties, This refers to our latest annual report on Form 20F and other documents filed with the SEC. We will also discuss certain non-GAAP financial measures that are included as additional clarifying items to aid investors in further understanding the company's performance and the impact that these items and events had on the financial results. The non-GAAP financial measures provided above should not be considered as a substitute for or superior to the measures of financial performance prepared in accordance with GAAP you may find a reconciliation of differences between GAAP and non-GAAP financial measures in our earnings release. 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.

Hello, everyone. I'm Li Ting. Thank you for joining us today. In 2025, our group revenue and social entertainment business regained growth momentum since Q2. And we saw meaningful progress in our second growth curve of Aztec and other emerging areas. Together, these results are shaping our clear strategic framework as a global technology company with multiple growth engines. Let me start with the overview of our results. In Q4, live streaming maintained its sequential recovery trend, while our advertising platform saw accelerated top-line growth. Meanwhile, non-GAAP operating profit and cash flow remained robust. In the fourth quarter, total revenue reached $581.9 million. up 7.7% QQ and 5.9% YoY, representing our first positive YoY growth since the second half of 2024. Livestreaming revenue was 394.4 million, up 1.5% QQ. Marking three consecutive quarters, of sequential growth. Legal aid, including both first- and third-party aid, generated 128.1 million in revenue, up 61.5% year-to-year, with third-party audience network revenue growth accelerating to 82.5% year-to-year. Overall, non-livestreaming business contributed 32.2% of total group revenue. Now GAAP operating profit stood at 40.8 million and operating cash flow totaled 116 million. For the full year, total revenue was 2.12 billion. Livestreaming contributed 1.53 million. Well, BiggerAIDS contributed $398.5 million, up 38.5% year-to-year. In particular, BiggerAIDS third-party AIDS revenue audience network delivered 56.3% year-to-year growth. Non-live streaming businesses represented 28% of total revenue, an increase of 7.9 percentage point compared with 2024. In 2025, non-GAAP operating income and non-GAAP EBITDA were $150.8 million and $189.8 million, up 10.8% and 10.9% year-to-year, respectively. As of December 31, we held $3.26 billion in net cash. Our strong operating cash flow and balance sheet continue to support consistent shareholder returns. In 2025, we returned $332 million through shares, repurchases, and dividends. With improved business visibility and ongoing occupational optimization, we are confident we will continue to deliver solid performance. In light of our strong performance and continued to double-digit non-GAAP occupational profitability improvements in 2025, the Board has approved an additional cash dividend of approximately U.S. $20 million, representing approximately 10% of the total cash dividends declared for the year of 2025, on top of companies' regular quarter dividend schedule. This demonstrates our ongoing commitment to drive occupational improvement and enhance shareholder returns, Next, let me share our strategic forecast on Outlook. We are currently evaluating refinements to our segment reporter structure, and we are considering to report our results on the three major business segments. Social engineering, ad tags, and e-commerce starts beginning since the first quarter of 2026. This new structure will make it easier to see and understand the progress we make within each business. Our social entertainment business remains the cornerstone of our profitability and cash flow. Meanwhile, bigger ads and shoplights are filling our next stage of growth with improving need to long-term economics and expanding profitability potential. Together, these businesses position Joy for a return to sustainable and profitable growth. From a long-term perspective, their combined strengths and synergies will serve as an unserved engine through which we can eventually penetrate an adjustable market beyond what would be possible for each business individually. We believe 2026 will be a landmark year for Joy. the resolute beginning of our renewed growth journey and the defining step toward becoming a global diversified multi-engine technology company. Now, let's turn to our operating update. In Q4, our core social entertainment business achieved its third consecutive quarter of sequential recovery. Global social MLS reached 272.1 million, up 2.2% quarter over quarter. Traffic from our instant message increased 4.5% QQ, driven by high user thickness and user organic growth. Both average user time spent and retention improved year-to-year. On the revenue side, the black streaming revenue rose to $300 million and $94.4 million, up 1.5% QQ. The Western market recorded a strong recovery. with revenue climbing 3.4% QQ. Biggest total paying dozer rose 1.5% QQ. On our current four flagship products, we further enhanced our streamer incentive structure and integrated AI-driven features across critical stage of the user journey, boosting both engagement and payment efficiency. For example, by integrating LLM architecture and incorporating multi-model information into our recommendation system, we improved our ability to understand both live streaming content and the user interest. The optimized recommendation position and distribution efficiency led to a 5.6% QQ increase in video live average viewing time per user in Q4. Furthermore, user adoption of AI-generated vertical gives continues to grow. As of January 2026, the consumption of AI interactive GIFs on BeagleLive has surpassed 30% of total word code GIFs consumption. We are making solid progress on our new product lineup. Leveraging our established capabilities in product development, content, payments, infrastructure, and local operations. We are expecting new product incubation and growth. In Q4, revenues from new products increased 37.9% Q2, setting new monthly record. In 2026, We expect continued recovery of paying users of our pool for our flagship products. Driven by ongoing occupational refinements, meanwhile, we anticipate our new product lineup will sustain robot growth and bring further incremental live streaming revenue. We are confident our social entertainment segment will regain growth momentum, deliver healthy profitability and cash flow for the group. Turning to Big O Aids, in Q4, Big O Aids delivered $128.1 million in advertising revenue, exceeded 1.5% year-to-year and 23.3% QQ. third-party aid revenue, audience network grew 82.5% yearly and 27.3% QQ. Demonstrating accelerated growth momentum on the sequential basis for the third consecutive quarter. We filled this growth through border traffic coverage multi-vertical advertiser expansion, and ongoing algorithm optimization. First-party traffic expanded steadily, supported by higher MAOS, and at a few rates that drove sequential revenue and profit growth. Third-party traffic also increased, with FDT requests growing by 166% year-to-year and 23% QQ. Our diversified vertical strategy across insurance, e-commerce, and IAA games broadened market coverage and allowed us to capture seasonal advertising demands more effectively. 2004 was the peak season for U.S. insurance advertising and the prime outright for e-commerce campaigns such as Black Friday, web-based, demand primarily from insurance, and D2C e-commerce advertisers grew 20%, contributing to a boost in revenue. Enhanced placement performance led the IAA vertical, primarily casual games, to a 39% sequential increase. Overall, the number of key cohorts increased by 29% and the total spending of key cohort clients 34%. By writing, we believed the market continued to be our priority. with North America up over 21% QQ and Western Europe rising 46% QQ. To take advantage of society momentum, we will deepen our presence in key protocols, including lead generation aid, e-commerce, and games. This multi-vertical approach will serve as our structure and this relative competitive edge over the mid to long term. And currently, we will extend our advertiser base and penetrate deeper into development countries while continuously optimizing our algorithm. We have established a three-year roadmap for the bigger audience network, targeting a revenue milestone of one billion by 2028, accompanied by steady improvements in economics. Finally, a word on shop life. Beginning in 2026, we are considering to report Shopline as a separate business segment to reflect our confidence in its growth prospects. Over the past year, Shopline maintained double-digit revenue growth. Driven by the cross-border merchant basis, its double-digit expansion and its rising contribution to revenue. we have normalized the shop line's IMD spending. Backed by steady top line and growth profit gains, we see a clear and achievable path for shop line. To reach quick even, we are searching a double-digit revenue growth trajectory. Turning to capital return, in Q4, we repurchased 67.4 million of shares. For the four years, total repurchases reached 134.6 million, with momentum accelerating in the second half. We believe our current valuation does not fully reflect our intrinsic value. We remain committed to actively analyzing our buyback programs. Looking ahead, as we continue to scale our business and strengthen our operating profitability, we will work closely with the board to explore possible measures to further enhance our shareholders' return mechanisms. In summary, our strategic blueprint and ecosystem potential are only beginning to unfold. We view 2026 as a fresh start toward our next phase of growth. We remain focused on execution and we are confident that sustained growth and the profitability improvements will demonstrate our true value. Leveraging our integrated ecosystem, we remain committed to strengthen joint position and deliver a long-term value for our shareholders. Now, let's begin from Alex Liu.

In the close quarter of 2025, we recorded total net revenues of 581.9 million, securing a year-over-year growth of 5.9% and quarter-over-quarter growth of 7.7%. marks an inflection point of our top-line trend on an year-over-year basis since the third quarter of 2024. Our live streaming business delivered its third sequential recovery, with its live streaming revenue increasing by 1.5% quarter-over-quarter. Our advertising business, in particular, Figo Edge, continued to deliver exceptional growth, with its revenue up by 61.5% year-over-year and 23.3% quarter-over-quarter. Our operating cash flow remained strong at 160 million in Q4, and we ended the quarter with roughly 3.26 billion in net cash. As previously communicated, we accelerated share buyback during the quarter, buying back 67.4 million worth of our shares, nearly doubling our Q3 share repurchase volume. For the full year of 2025, we booked total net revenues of 2.12 billion. In particular, FICO X booked 398.5 million in total revenue, delivering 68.5% year-over-year growth. Third-party vehicle audience network achieved impressive growth of 56.3%, while sustaining profitability. Our non-GAAP objective income was $150.8 million, up by 10.8% year-over-year, and our operating cash flow was 305 million. So after the year of 2025, our total capital return to shareholders, including cash dividends, reached 332 million, which represents 108.8% of our operating cash flow. I will now dive deeper into our detailed financial performance. Looking at our live streaming business, our total live streaming revenues was $394.4 million for the first quarter, $331.8 million of which was from Beagle Secrets. Those up quarter of a quarter. Our refined streamer incentives and continued AI-driven optimization of our content distribution and paying user experience have contributed to improved paying sentiment because total paying users increased by 1.5%. Live streaming revenue from developed countries increased by 3.4%, quarter over quarter. Our total non-live streaming revenues were $187.1 million during the first quarter, up by 47.6% year-over-year. Non-live streaming now contributes 32.2% of our total gross revenues, up from only 23.1% contribution in the same period last year. Beagle's advertising revenues increased by 61.5% year-over-year and 23.3% quarter-over-quarter to 128.1 million. In particular, our third-party edge revenue, Beagle All Days Network, delivered exceptional results, recording 82.5% year-over-year and 27.3% sequential growth On the traffic from STT network, the request was up by 166% year-over-year and 23% cost-of-quarter in Q4. We continued to treat and optimize our August reserves to further improve our campaign performance, rich from advertiser spending in Q4. The number of key cohorts was up by 29% quarter-over-quarter, with total spending from key cohorts up by 64% quarter-over-quarter. Our multi-industry strategy has helped us capture the broadest market of utilities. Rate-based demand was up by 20% quarter-over-quarter. Mobile-based demand continues to be strong, with RSA spending up by 39% quarter-on-quarter. We have outlined our three-year strategic goal for legal audience network, which is maintaining high-velocity growth and reaching three-year annual milestones of one billion. In the near term, this means that we need to invest in the expansion of our R&D and capabilities as well as our network and computing infrastructure. But given the health economics of all this network at this stage, they are confident that as we scale, we will remain profitable and potentially further enhance all this network economics in the mid-term. Group's gross profit was 205.6 million in the quarter with a gross margin of 35.3%. Because gross margin was down quarter of quarter due to a shift in our revenue mix, we saw an increased contribution from our lower margin network and revenues. Our other segment's gross margin was up by 5.1%, year-over-year to 46.7%, primarily due to growth in high-margin non-live streaming revenues. Our group's operating expenses for the quarter were $187.8 million. Our operating expenses were higher last year due to certain non-cast goodwill impairment charges. Sales and marketing expenses were higher year-over-year as our ROI-focused user acquisition returned to a normalized level following one-off advertising savings associated with temporary APP store interruptions in Q4 last year. For our R&D and G&A expenses, we maintained prudence and disciplined our total spending through enhanced resources sharing and operating synergy across different business units. While strategically allocating incremental share of our R&D resources towards legal ads, our group's non-GAAP operating income for the quarter was 40.8 million. Our non-GAAP operating income was lower this year, primarily due to the impact of buy-off advertising savings last year. Non-cap net income attributable to controlling interest of Joy in the quarter was 17.3 million. The group's non-cap net income margin was 12.1% in the quarter. Our non-cap net income was lower due to the impact of buy-off advertising savings last year and higher FX loss due to For the fourth quarter of 2025, we booked net cash inflows from operating activities of $160 million. Our balance sheet remains healthy with a strong net cash producing of $3.26 billion as of December 31, 2025. Shareholder return continues to be an important component of our capital allocation strategy. We have returned 197.3 million to our shareholders through dividends, and we purchased 134.6 million worth of our shares during the year. We believe we are still sustainably undervalued We will continue to actively utilize our buyback program in 2026. Additionally, in light of our strong performance and the continued double-digit non-GAAP rating profitability improvements in 2025, the board has approved an additional cash dividend of approximately $20 million. representing approximately 10% of the total cash dividends declared for the year of 2025, on top of the company's regular quarterly dividends schedule. This demonstrates our ongoing commitment to drive operational improvement and enhance shareholder returns. Turning now to our business outlook, At the group level, we expect our net revenues for the first quarter of 2026 to be between $538 million and $548 million. This implies an 8.8% to 10.9% year-over-year growth for the gross revenue in quarter one. With live streaming revenues back to positive year-over-year growth, while vehicle ads deliver mid-to-double digits year-over-year growth in the first quarter despite the impact of salinity. As Mr. Timmy just mentioned, beginning in the first quarter of 2026, we are evaluating certain refinements to our segment reporting, and we are considering to report our results on the three business segments. which includes social entertainment, Google Ads, and e-commerce stuff. We believe the new segment will make it easier to see and understand our operational progress, particularly our new initiative. Looking ahead, We are extremely excited about their tremendous synergy potential and the powerful flow of momentum that our business segments will deliver in the medium to long term. That concludes our prepared remarks over here. We would now like to open up the call to questions. Thanks.

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 2. 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 today comes from Thomas Chong with Jefferies. Please go ahead.

Thank you for accepting my question. I have two questions. The first is about our live broadcast business. Guan Licheng can talk about the core driving factor behind this service. And how we should see the long-term development of the live broadcast business. The second question is about our income and will this year. Thank you. Good morning. Thanks, management, for taking my question. I have two questions. The first one is about the live streaming business. Can management talk about the key factors for recovery and how should we think about the long-term trend? And my second question is about the 2026 outlook. Can management talk about the full year and revenue and profit guidance? Thank you.

Thank you for your question, Thomas. I will answer the first question. In the fourth quarter, our live broadcast business continued to recover. This is brought about by the improvement of paid users and AppG's mood. So in terms of operation, in the fourth quarter, we continued to optimize in many aspects, such as the incentive mechanism of broadcasting, the ecological construction of content, and the improvement of the experience of AI in the distribution and consumption of user content, as well as the experience of VIP paid users. These AI-driven user experience improvements have also further promoted the continuous improvement of paid conversion rate. From this point of view, the recovery of this round is mainly driven by the recovery of the market of developed countries. In fact, the overall trend of new products has also achieved a good return on investment growth. Looking forward to 2026, as mentioned before, the one-time operating adjustment has been in place, and it will no longer affect 2026. Thank you, Thomas. This is Li Jing. I will take your first question.

In the fourth quarter, our live streaming business continued its sequential recovery with both paying users in our pool up sequentially. On operational side, we continue to make progress across several areas, including refining our streamer incentive system, strengthening our content offerings, and also applying AI optimizations across content distribution, content consumption, and also the overall paying experience of our VIP. And these AI-driven optimizations have continued to translate into meaningful and sustainable improvements in our paying conversion efficiency. Geographically speaking, this recovery has been primarily driven by the developed market. Our new product lineup continues to grow at a healthy rate and deliver solid QOQ growth, and we expect these products to continue to bring in incremental revenue as well. Looking ahead, as we have mentioned, these one-off operational adjustments have been fully implemented, and we no longer expect they to have any negative impact on our performance for the new year. And we will continue to advance, refine user segmentation and also incentive upgrades, expand our high-quality global content offerings, and also better strengthen our global payment infrastructure. And we also expect growing incremental contributions from our new product lineups. So on these basis, we expect our live streaming revenue to be back to steady positive year-over-year growth in the year 2026. Hi, Thomas.

For your second question, let me answer it. In the fourth quarter, we can see that the company's income has achieved a double growth in the same and in the same period. This business has continued to grow in the same period. It has been growing in the same period for three consecutive periods. The growth of advertising business is accelerating. In the first quarter of 2026, our company's net income was a growth of 88% to 10.9%. First of all, in the first quarter, we expected a growth of the same as in the first quarter. But from the point of view of the economy, this year's labor, annual and fiscal year are all concentrated in the first quarter, and last year's Q1 situation was similar. We expect that this year's Q1 will still have a seasonal impact. In addition, Q1 is also a traditional stage of advertising business, but we still expect BQS to perform strongly and continue to achieve a similar growth in both medium and medium-sized companies. Looking at the whole year, we are very confident in the growth of revenue in the year 2026. The growth path of the three business lines is very clear. First of all, live business, as we mentioned earlier, has been adjusted in a one-off way last year. We expect live business to restart . . . . . In terms of e-commerce SaaS, with the continuous improvement of product capabilities, the key market, the rapid growth of cross-border merchants, and the gradual expansion of the new market, SaaS business will maintain a double-digit sales growth, jointly promote corporate income, restore a stable track of same-sex growth, and open a wider track of sales. In terms of profit, while the live broadcast business is growing, our cost structure is also continuing to improve. The overall profit of the live broadcast will remain stable. But we will also put some of the profit into the new product system. The third-party advertising is currently in a state of rapid expansion. This year, in the development and sales team's construction, as well as infrastructure and broad investment, there will be more and more investment. But considering the current stage, our OE model is actually very healthy. We are confident that on the basis of maintaining profitability, with the increase in scale, the profitability of third-party advertising can continue to increase in the mid-term. And this is Alex. I will take your second question.

Let's first take a quick recap of Q4. Our group revenue in Q4 delivered very solid growth, both year-over-year and Q2, with live streaming continuing its sequential recovery for third consecutive quarters, and our ad-hoc business continuing accelerating its year-over-year growth. For Q1, Our current guidance implies a year-over-year growth rate of 8.8% to 10.9% for group's total revenue. Looking at live streaming, we expect live streaming revenue to be back to positive year-over-year growth since June 1. But on a sequential basis, considering that the Lunar New Year and Ramadan both fall into one this year, similarly as last year, we expect there will be a similar seasonal softness for live streaming on a sequential basis. For advertising, Q1 is also usually a stop to course of advertising as well, but we do expect very robust performance from Beagle Ads. Our current guidance implies mid-double digit year-over-year growth for Beagle Ads. For the full year, Based on the current momentum that we're observing across the three business units, we are very confident that we'll be able to achieve positive year-over-year revenue growth for the group in 2026. On live streaming, as we previously mentioned, those one-off adjustments from last year have been fully implemented, and we expect our revenues to return to steady year-over-year growth. On Aptac, entering into the year 26, we continue to see traffic expansion, deepening penetration across multi-verticals, and also ongoing model optimization to drive our revenue growth in year 26. And these drivers are mutually reinforcing. And together, we believe that they support our expectation for a very strong double-digit year-over-year growth for Beagle ads for the full year of 26. On our e-commerce SaaS business, with continued product capability development, rapid penetration in cross-border merchants in key markets, and also our gradual expansion into certain new markets in the new year. We expect our source revenue to sustain its double-digit growth as well. Taken together, we believe that these three engines will put our top line back to a very stable and positive year-over-year growth trajectory and enabling us to tap into the massively broader long-term market opportunities as well. Looking at our profitability outlook for the year 26, we expect stable operating profit contribution from live streaming. With live streaming now returns to growth, along with continued cost optimization, we expect live streaming to continue to generate a stable, improving although we do expect to selectively reinvest some of our incremental profit into the new social product lines. Our attack business, particularly our third-party ad revenue audience network, is still in a high-velocity growth phase, and in the near term, this means that we will need to invest in the expansion of our R&D and sales capabilities in addition to our network and computing infrastructure. But given the healthy unit economics of audience network at this stage, we are very confident that we will remain profitable. And as we scale, we believe that we can potentially further enhance audience networks economics in the midterm. Looking at our e-commerce source, we expect as its revenue continues to grow, we can continue to narrow its operating losses and that its loss reduction trajectory is very clear on track. And putting it all together, we expect the group non-GAAP operating income and EBITDA to continue our improving trend similarly as 25 and deliver a steady year-over-year growth in the teens in 2026. Thank you. Next question, please.

Your next question comes from Yuan Liao with CTCS. Please go ahead.

Thank you for accepting my question. Congratulations. This season has had a very strong performance. My question is actually about advertising. We also saw that in the last season, our first and third season ads also achieved a speedy growth. Thanks for taking my questions. Congratulations on the strong results. My question is regarding your advertising business. So in last quarter, both our first-party and third-party advertising business achieved accelerated growth. And you also get it that in the first quarter, 2026, you will realize a mid-double-digit growth rate in your advertising business. So cook management elaborates on the key drivers of your advertising growth rate in the first quarter, 2026. Thank you.

Thank you for your question. I will answer this question first. As mentioned in the prepared remarks, our advertising budget structure is diversified, including insurance-based trap advertising, independent e-commerce traps, and IA traps. Such a structure actually makes our advertising business have more obvious seasonal characteristics. So, Q4's e-commerce, network advertising, and return increase are actually stronger. And Q1's return ratio, compared to Q4, actually has a certain technical pressure. But we continue to upgrade the core of our entire advertising system. In Q4, our focus is on ROYCE. Thank you. At the same time, we have also promoted the algorithm adaptation of trap type, ILA, e-commerce, and other scenarios, improving the algorithm efficiency, algorithm and strategy optimization, making the Q4 advertisers continue to increase in the flow and average investment budget, and constantly attracting more new advertisers. At the same time, it also makes our traffic accumulation and transmission efficiency continue to improve, and forms a non-linear effect. Thank you for your question.

This is Li Ling. As we mentioned in the prepared remarks, our advertising mix is well-diversified across different industries, including lead generation ads for insurance direct to customer e-commerce, and also IAA, et cetera. Our current advertiser mix means that seasonality patterns could be very obvious, as shown in our sequentially very robust ad spend from e-commerce and interim lead generation ads in Q4, while Q1 is typically sequentially softer, particularly due to our Q4's high comparison base. That said, we kept upgrading our core algorithms in Q4. We focused on improving our ROAS and CPR models by adding additional AI signals and also multi-channel user behavior data while refining our targeting and delivery strategies. We also expanded our algorithm optimization across specific industries, across lead gen, IAA, and also e-commerce to boost efficiency. These improvements have lifted our advertiser retention rate, our average ad spend per advertiser, and also attracted new advertisers during the quarter. Such optimization also enabled us to effectively reach more traffic and also increase our monetization capability for publishers, which creates a flywheel effect And we believe that that creates a solid foundation for Q1. That's why even in a seasonally softer quarter, we still expect legal ads to deliver mid-double-digit year-over-year growth, as implied in our current Q1 guidance. Thank you. Next question, please.

The next question comes from Brian Gong with CIFI. Please go ahead.

Thank you, Manager Cheng, for accepting my proposal. First of all, congratulations on the very good performance. Manager Cheng seems to have mentioned that in 2008, the company expected a sales volume of more than $1 billion. This is a fairly positive signal and figure. I would like to ask what the driving factor is. And then, how does Manager Cheng look at how to look forward to the future profit potential of this business, a long-term profit potential? Thank you. I will translate myself. Thanks, management, for taking my question and congratulations on solid results. I think management mentioned that 3PS scale is expected to reach over $1 billion in 2028, which is a very positive number. What are drivers behind these numbers and how should we think about long-term profitability of 3PS business. Thank you.

Thank you for your question. I will continue to answer this part. Yes, I just clearly mentioned the long-term goal of our advertising. Because when I was just looking at the performance of the first quarter, I mentioned the improvement between the flow, budget, and advertising technology and strategy, and the continuous optimization and growth between them. These will go through the whole cycle of Big O's business development. So, to be more specific, on the chain side, first of all, we need to integrate more SDK traffic and integrated platforms, which will promote the internal growth of our entire traffic scale. At the same time, we will continue to expand multi-channel traffic and LS traffic expansion. In addition, we will accelerate the penetration of the Japanese market in the United States, Europe and Japan, as well as the expansion of the current new market. In the overall budget, in addition to the existing hammer types, we will continue to explore more trap type advertisements, IAP and e-commerce, to further improve the number and density of hammer type customers. In the platform side, with the expansion of traffic and budget, we will continue to alternate the algorithm and data, and refine the hammer type model, and optimize the investment strategy. All of the above measures are being promoted in parallel, and they are promoting each other and promoting each other. At the same time, this is also our first public announcement of our mid-term strategic goals for BeagleAIDS. Thank you, Brian. This is Li Ting. I will take your question.

Yes, I just mentioned our midterm strategic goal for bigger ads. When we were talking about our 2.1 outlook earlier, I mentioned the flywheel effect and the mutual reinforcement and continuous improvement across traffic, advertiser demand, and algorithm, and also our monetization strategies. will continue to be long-term drivers throughout the entire development of BeagleAds. And to be specific, on traffic side, first, we expect further organic traffic growth as we are being integrated with a rising number of SDK publisher partners and also mediation platforms. We'll also continue to expand multi-channel traffic and also iOS traffic. And second, we will accelerate our penetration into the U.S., Europe, and Japan, and also potentially other new regions. On demand side, in addition to our current verticals, we're simultaneously exploring new verticals, including sub-verticals of lead generation ads, IAP, and e-commerce. I expect to further increase both the number of clients and also our customer density in within each vertical. On platform side, with the rapid expansion in traffic and also in demand, we are continuously iterating and optimizing our algorithm and data capabilities, driving more vertical-specific optimizations and enhancing our bidding and delivery strategies. We believe that all of these initiatives are moving forward in parallel, and they reinforce each other. So this is the first time we're disclosing our midterm strategic goals for Beagle Ass. The team is exceptionally talented, and also the company has delegated additional resources to work together to that goal as well. And we deliver outstanding results in the year 25. Right now, the team and the company is fully committed and pushing forward aggressively toward our strategic targets for the year 26 and beyond, will remain highly confident in the continued high-velocity growth of video ads, particularly the third-party audience network proportion. Thank you. Next question, please.

The next question comes from Suqing Zhang with CICC. Please go ahead.

Thanks, Benjamin, for taking my question on shop line. Can Benjamin provide more color on the current business momentum of shop line and the key drivers behind its growth? And how should we think about the path towards narrowing losses and eventually achieving breakeven, both in terms of strategy and the timeline? Thank you.

谢谢您的问题。 关于Shopline的问题,继续由我来回答。 关于Shopline,它所在的服务型的电商SaaS一直是我们坚定看好的赛道。 It is different from the whole platform of e-commerce. The service-type e-commerce is open and connectable. The data is owned by the seller and can be continuously operated and marketed. And it is different from the traditional SaaS to sell this kind of seating style of this kind of shopping method. ShopLite's business model is more from the seller provides the growth power of GNV to bring the GNV T-Grade. So in the past few years, the core theme of ShopLite has always been product capability. We have invested in high-quality research to upgrade the thickness of our entire product to the entire ecosystem of e-commerce, to become an e-commerce SaaS plus payment solution, plus a complete GNV that can be driven by marketing integration. Since last year, our entire research investment has been very stable. We can see that the growth of revenue and profit has pushed the real business leverage, which has greatly reduced the loss of ShopLite. The verification of the entire business model and the growth of current business profit have made the trend of break-even very clear and sustainable. 所以我们期待并且全力地在推进Shopline会在2028年实现盈亏平衡。 Thank you.

This is Li Ting. I will take this question. We remain optimistic on the long-term prospects of the SaaS-based e-commerce sector. Unlike World Garden Marketplace platforms, Shopline provides an open and extensive solution to merchants, through which the merchants can have full data ownership for advanced operations. And also quite distinctive to traditional SaaS monetization model, we don't charge by usage per person. We charge by we realize our values through empowering our merchants to capitalize GMV growth and our monetization is based on the take rate of that growing GMV. In the past several years, Shopline's core mission has been product excellence, and we've made substantial investments in our R&D to evolve from a storefront builder to a full-stack e-commerce ecosystem, seamlessly combining SaaS infrastructure, payment, and also integrate the marketing tools into one powerful closed loop. And since last year, our R&D investments have greatly stabilized. Our cross-border merchants, particularly brand customers, have grown rapidly, and our revenue and gross profit growth have driven improving operating leverage, resulting in our significant reduction in shop lines operating losses. We believe that we are past the stage of of business model validation, and now our rising gross profit has put us on a clear and sustainable path to break-even. We look forward to and remain fully committed to achieving break-even for Shopline in 2028. One last question, please. Thank you.

Your final question today comes from Raphael Chen with BOCI Research. Please go ahead.

Your final question today comes from Raphael Chen with BOCI Research. Please go ahead. Your final question today comes from Raphael Chen with BOCI Research. Please go ahead. Could management share the underlying considerations behind this? Also, given current valuation, does the company intend to further accelerate share buyback? Thank you.

Thank you for your question. I am Alex. Let's first look back at 2015. In fact, our share return in 2015 was very, very positive. Under the current share return plan, the total annual revenue was 1.97 billion yuan. This is about 10.9% of our current market value. And then the entire industry is actually a very, very competitive level. In addition, considering that the business profit in 2025 is a two-digit increase, in addition to the current quarter share plan, the board approved an additional development of a cash share, the total amount is 20 million dollars. This reflects the firm's firm confidence in the success of the business, and the long-term commitment to continue to enhance the shareholder return with the improvement of the business. I'm back. Thank you.

Thank you, Rafael. This is Alex. I will take your question. First, looking back at 2025, capital return execution has been very, very robust. Under our current shareholder return program, we paid out approximately $197 million in dividends and repurchased approximately $135 million worth of shares throughout the year, bringing our total shareholder returns to surpassing 330 million, that represents around 10.9% of our current market cap, which we believe is a very, very competitive level within the industry. Additionally, in light with our strong operating performance and double-digit improvement in our non-GAAP OP in 25, the Board has approved an additional cash dividend of approximately 20 million on top of our regular quarterly dividend schedule. This demonstrates our strong confidence in operating performance and also our ongoing commitment to drive operational improvement and enhance shareholder returns. On buyback, we nearly doubled our repurchase execution in Q4, buying back additional $67.4 million in one quarter, We believe we're still undervalued, and we will continue to actively execute our buybacks going forward. So looking forward, we're entering into the new phase of growth with our revenue back to growth and also operating profits continuing to improve. We believe that our shareholders can look forward to sharing even greater returns. Okay, so that was the last question. Thank you so much for joining this 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.