JOYY Inc.

Ladies and gentlemen, thank you for standing by, and welcome to Joy Inc.'s second quarter 2026 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, Xinyuan Liu, the company's head of investor relations. Please go ahead, Xinyuan.

Thank you all, Peter. Hello, everyone. Welcome to JOY's second quarter 2026 earnings conference call. Joining us today are Ms. Ting Li, Chairperson and CEO of JOY, and Mr. Alex Liu, Vice President of Finance. For today's call, management will provide a review of this quarter, followed by a Q&A session. The financial results and webcasts of this conference call are available on our IR website, ir.joy.com. Please note that today's call contains forward-looking statements made under the safe harbor provisions of the US Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations. For detailed discussions of these risks and uncertainties, please refer to our latest annual report on Form 20F and other documents filed with the SEC. Please also know that Hello, everyone. I'm Ling Ting. Thank you for joining us.

Building on the strong first quarter, we delivered another solid result in Q2, recording accelerated revenue growth and a notable improvement in upgrading profit. Our social entertainment, legal aid, and the shop line business all advanced in tandem, while our globally diversified ecosystem continued to unlock growth momentum. propelling our long-term value to its next level. In the second quarter, we generated total revenue of 591 million, up 16.3% year-to-year and 6.3% QQ. Social entertainment revenue was 423 million, up 7.4% year-to-year and 5.6% QQ. Beagle 8, including both first-party and third-party businesses, generated $134 million in revenue, up 53.1% year-to-year. With our third-party, Beagle Audience Network sustained a strong growth of 74.1% year-to-year. Shopline revenue reached $34 million with year-to-year growth further accelerating to 28.6%. Now, live streaming revenue surpassed 31.8% of total revenue for the quarter. Now, gap upgrading profit reached $49 million up 28.2% year-to-year. and Nungab EBITDA reached $57 million, up 18.1% year-to-year. Operating cash flow for the quarter was $65 million. As of March 30, 2026, we held $3.06 billion in net cash. Since the start of this year, We have accelerated our capital returns year-to-date through August 21, 2026, with a cumulative $216 million in shares and paid $142 million in dividends for a total return of $359 million in shareholders. meaningful shareholders returns remain a key part of our strategy as we continue to execute on the 1.5 billion shareholder return program running through the end of 2028, which our board resides this May. At this mid-year mark, I would like to take a few minutes to share our perspective on our overall strategy. Today, Joy is steadily evolving into a multi-engine global technology company. In the first half of this year, the core social entertainment business maintained a steady recovery, with all flagship products returning to solid growth and profitability continuing to improve. This further validates the effectiveness of the judgments we have made to our content ecosystem, user experience, and lookalike operations over the past several quarters. At the same time, our second growth curve, comprising ad tech and smart commerce, sustained a strong performance are making an increasingly greater contribution to the group. Looking ahead, we remain committed to building a global technology ecosystem driven by AI. By leveraging the synergies of social entertainment, programmatics, advertising, and omni-channel e-commerce, we are fueling our growth Fuyong Liu, Ting Li, Ting Li These initiatives are expected to further reinforce the recovery trend and growth resilience of our core business, providing a stable foundation for profitability cash flow generation. At the same time, we are co-inviting our ad tech and smart commerce businesses to boost overall revenue expansion. We will prioritize enhancing the standalone competitiveness of each business, expanding our customer base and business footprint, and further expanding our data, technology, and product capabilities. Looking ahead to 2028, As this business continues to scale, we currently expect non-live streaming segments to contribute close to half of the group's total revenue and operating profit. We see this as a testament to the strength of our multi-engine growth strategy and the validation of our long-term strategic approach. AI is a critical, foundational technology supporting our long-term strategy across all of our businesses. We continue to leverage AI to drive measurable products, enhancements, and efficiency gains across a range of scenarios, including our streamer ecosystem, content distribution, payment experience, advertising vertical models and the shop-line merchant operations. We are also applying AI to enhance our team's data analysis, decision-making, and execution capabilities. By turning proven experience and the workflow into replicable AI capabilities, we can accelerate knowledge sharing and skill best practices for their improving overall operating efficiency. In addition to our long-term business development, shareholder returns remain a persistent strategic priority. Our strong cash position and robust operating cash flow provide a solid foundation for ongoing business investment and shareholder returns. We expect to continue actively advancing our share reportures and dividend programs as the company grows over the long term. We remain committed to validating the strategic path through solid operating results, driving great market recognition of our long-term value. Next. I will walk through our Q2 results and share our outlook for the future. In Q2, social entertainment revenue grew 7.4% yearly and 5.6% QQ. Within this segment, live streaming revenue grew 7.3% yearly and 5.9% QQ. Call live streaming paying users grew 3.9% QE and 1.7% QQ. On the traffic side, our global average mobile MUs reached 277 million, up 5.5% year-to-year, supported by strong user engagement and organic growth. Our instant messaging product increased its contribution towards total annuals to 82%. LegalLife, our flagship product, recorded stronger sequential growth in Q2. This momentum was driven by ongoing enhancements to our streamer incentives and growth mechanisms, a digital content ecosystem, and AI-powered improvements to content distribution and payment experiences. Alongside localized upgrading campaigns, together, this effort effectively drove user engagement and greater willingness to pay. In Q2, Big O Life's average daily active streamers increased 4.4% Q2, while newly signed Streamer Building Life increased 5.4% KQ. As we further enhance our streamer recruitment, incubation, and development mechanism, the supply of high-quality content on our platform should continue to expand. In content distribution, we continue to develop and refine our AI-driven content understanding capabilities. In particular, our focus is on improving onboarding content for a few users and the dependent users' consumption. By most distinguishing identifying and distribution high-quality content across regions, we can better match content with users' interests and improve their consumption experiences. To improve payment experience, we have been expanding our AI-generated content and interactive virtual gifts. In May, these gifts accounted for 34.3% of total virtual gift consumption, further validating the value of AI in reaching our content supply and enhancing users' interactive experience. At the same time, our few new voice products continued to drive solid growth. In Q2, revenue from these new products increased more than 400% year-to-year and 39% QQ, grandly becoming a meaningful Our current Q3 guidance projects moderate single-digit year-to-year growth for social entertainment revenue. In the second half, we will continue to strengthen localized operations, enrich content supply, and further optimize user and payment experiences. As call live streaming paying users expands steadily and our new voice product portfolio contributes to further incremental growth, we expect stronger momentum for our social entertainment business. Based on current trends, we are confident that our social entertainment business will achieve four-year revenue growth in 2026 and such trends A Deadly Growth Trajectory Beyond In Q2, BiggerAids generated $134 million in revenue, up 53.1% year-to-year and 7.1% QQ. Notably, our third-party business, the BiggerAudio Network, continued its strong momentum. delivering 74.1% year-to-year growth and 9.3% QQ growth. Accelerating traffic expansion, a more diversified advertiser mix, omni-channel positioning, and significant algorithm efficiency gains are all strengthening the fly-view effect. On the supply side, Beagle 8's developer ecosystem and global traffic coverage continued to expand. Our SDK traffic maintained a steady increase of 37.7% year-to-year in Q2. On the demand side, our strategy presents across multiple verticals, combined with AI-driven of Rizun, Intuition, Turing Traffic Scale, and Regional Market Expansion Job Strong Advertiser Demand. As a result, performance advertising demand across multiple channels, including web and IAA, delivered standout results. Web-based demand, primarily from lead generation and e-commerce, grew 91.7% yearly and 14.4% QQ. In Q2, we continued to expand our advertiser base in sub-verticals such as base-based e-commerce. Further, in rating our advertiser mix, as we approach the peak season in the second half, we are making early perished in Q3 and remain optimistic about the growth prospects of WEG-based demand. Meanwhile, NIA spending recorded 70.3% year-to-year growth. On the algorithm side, continued investments in algorithms and engineering infrastructure platform algorithm capabilities and cost efficiency and converting into positive circle that will drive the next stage of bigger AIDs development. As we accumulate our customer feedback data and refine our multi-channel attribution capabilities, our user profiling and targeting capabilities are improving. Building on this, we continue to integrate our vertical-specific models and strengthen our platform algorithm capabilities. We are focusing on traffic segmentation and budget matching, traffic bidding, and post-campaign optimization. Together, these efforts are improving the matching efficiency between budget and traffic and overall monetization efficiency. At the same time, we are advancing upgrades to our algorithm and engineering system and continuously optimizing compute scheduling and several costs, which allow us to meditate infrastructure costs more efficiency even as required values scaled rapidly. As we build our three-layer system of vertical algorithms, platform algorithm capabilities, and engineering infrastructure, the data accumulated from a growing customer and traffic base will feed back into model optimization its efforts. We expect this will drive value circle across delivery performance, advertiser budgets, and traffic monetization efficiency, and provide stronger technological momentum for the next stage of skill growth in our advertising business. Looking ahead, we will continue to deepen our focus on key verticals such as lead generation, e-commerce, and gaming. We aim to further bolster our different shortage competitive advantage by expanding customer skills and density, entering more regional remarks, and improving our algorithms and product capabilities based On our progress to this stage, we remain confident in our established long-term targets for the third-party advertising business. We are continuing to scale. We expect a steady structural improvement in profitability as the ag-tech business gradually becomes are integral drivers of group's revenue and profit growth. Turning to ShopLine, in Q2, ShopLine generated revenue of $34 million, up 28.6% year-to-year and 12.5% QQ. With revenue growth speeding up from Q1, business from cross-border merchants sustained strong growth of 73.5% year-to-year, driving the acceleration in overall revenue expansion. Last quarter, we reported ShopLine as a standalone segment for the first time and defined it as an AI native one-stop omni-channel commerce infrastructure. What we offer I would like to take this opportunity to share how AI is bringing new changes to the e-commerce industry and to shop life. is fundamentally reshaping the way consumers discover products, compare options, and complete purchase. A new traffic and transaction entry points emerged. Commercial scenarios were becoming more diverse and fermented. Against this backdrop, merchants need a unified open and connectable e-commerce infrastructure more than ever when that links products, transactions, and customer relationships across different channels. As commercial interpoints diverge and diversify, merchants demand for the unified operating system growth, making shoplines valued as omni-channel commerce In the first half, for Shopline, merchant page views from AI channels grew nearly 15 fold a year-to-year, and the order volumes grew over 35 fold a year-to-year. It's gradually becoming a common ecommerce scenario for consumers to discover products through AI entry, point and complete transactions directly in merchant stores. ShopLine has expanded its integration with multiple leading AI agents, including TriGPT, Cloud, and Cursor. This enables merchants to capture the traffic and a transaction from these new entry points. Well, converting orders, customer relationships and operating data across channels into a lasting asset for merchants. Drawing a more complete operational data accumulated on the shop line. AI can better process and interpret a merchant's attitude operating conditions and use that understanding to improve operations and decision-making efficiency. In addition, shopless co-pilot, which allows merchants to manage their online stores more efficiently using natural language, has entered an internal testing. Our goal is not only to leverage AI to unlock new traffic entry points for merchants, but also to gradually integrate AI across the entire merchant operating journey, helping merchants connect with consumers, manage operations, and drive growth more efficiently in an increasingly Our revenue is powered by two engines. On one hand, high retention subscription services provide a stable revenue foundation. On the other, value-added services such as payments and marketing allow us to participate more deeply in merchants' GMV growth. As merchants reach consumers through more channels, driving continued growth. In other volumes and GMV, shop lines' revenue will expand accordingly. In Q2, value-added services maintained rapid growth and continued to increase their share of revenue. Because value-added services like payments, technically, carry lower cross-margin and subscription services. This revenue makes shift tilt to the modest sequential pullback and goes margin from Q1. What matters more to us is that value-added services can scale on our exciting margins based on platform capabilities without a proportional increase and Skill and R&D Investment. As a result, their ongoing growth is expected to deliver stronger operating leverage, driving steady improvement in shop life operating profit and margin. As margin base and GMV continue to increase, we expect value-added services to make a great contribution to shop-line revenue and profit expansion in the future for the alliance of long-term growth with merchant subsidized. Our current Q3 guidance implies shop-line revenue growth rate in the middle 20th year year as revenue and growth profit continue to increase and operating efficiency further improves. ShopLine remains firmly on track along its established path in profitability. Moving on to the share buybacks. In Q2, we repurchased a total of 108 million in shares through August 21 of this year. We have repurchased a company check total of $216 million. maintaining an accelerated buyback pace. Given our strong operating momentum and long-term prospects, we believe our current share price does not yet fully reflect the company's intrinsic value. Going forward, we will continue to actively advance our share buyback program while balancing business, investment, and the long-term development as our social entertainment and advertising businesses grow in scale and profit contribution. We will continue to work with our board to further refine our shareholders' return framework, allowing shareholders to more fully benefit from the company's upgrading results. In closing, Our Q2 results fully validate our mountain entry growth strategy. The value of our strategic positioning and the ecosystem is only beginning to unlock. Looking ahead, as each of our three business segments become stronger and more competitive, we expect greater synergies across the group. driving our long-term value creation to its next phase. With that, I will now hand the call over to X Liu, our vice president and finance to walk through our financial results in detail.

Thanks, Misty. Hello, everyone. In the second quarter of 2026, recorded total net revenues of $591 million, securing a year-over-year growth of 16.3% and quarter-over-quarter growth of 6.3%. Our non-GAAP EBITDA for the quarter was $57 million, up 18.1% year-over-year and 24.4% quarter-over-quarter. Our operating cash flow was 65 million and we ended the quarter with roughly 3.06 billion in net cash. As previously communicated, we accelerated our share buybacks since the start of 2026. As of August 21, we have bought back 128 million. both of our shares under the up to 600 million share repurchase program authorized in May bring total share repurchase to 216 million year-to-date. I will now dive deeper into our detailed financial performance. Social entertainment revenues were 423 million for the second quarter. up 7.4% year-over-year and 5.6% quarter-over-quarter. In particular, live streaming revenue growth accelerated to 7.3% year-over-year and 5.9% quarter-over-quarter, further confirming the recovery momentum of our call business. Call live streaming paying users increased by 3.9% year-over-year, while up retained to positive growth up 2.4% year-over-year. Live streaming revenues from developed countries continued to deliver strong growth, increasing by 11.8% year-over-year. Beagle Edge revenues increased by 53.1% year-over-year and 7.1% quarter-over-quarter to $134 million. In particular, our share-party advertising business, Beagle Audience Network, delivered another exceptional result, recording 74.1% year-over-year and 9.3% sequential growth On the traffic front, SDK network and ad request increased by 37.7% year-over-year in the second quarter. We continued to optimize our organization to improve ad campaign performance and drive advertiser spending. Our multi-vertical strategy also helped us capture broader market opportunities Web-based demand increased by 91.7% year-over-year, while mobile-based demand remained strong, with RAA spending up 70.6% year-over-year. We remain firmly committed to our three-year strategic goal for big goal audience network of one billion in revenue. As the business continues to scale, We are confident in its ongoing profitability, with room to further improve its economics over the medium term. Supply generated revenue of $34 million, with growth accelerating to 28.6% year-over-year and 12.5% quarter-over-quarter. Revenue from cross-border merchants increased by 33.5% year-over-year, while its revenue contribution rose by 7.2 percentage points compared with Q2 last year, making it an increasingly important driver of supply's overall growth. Growth's gross profit was $202 million in a quarter, up 8.8% year-over-year and 6.5% quarter-over-quarter, with gross margin remaining sequentially flat at 34.1%. Social entertainment's gross margin was up quarter-over-quarter as we continued to improve user engagement and monetization. was down quarter over quarter due to a shift in revenue mix, reflecting a higher contribution from lower margin advertising revenues. Supply's gross margin was also down quarter over quarter, primarily driven by a higher contribution from lower margin value-added service, particularly payments and marketing. While these surveys carry lower growth margin than subscription revenues, they technically require less incremental sales and R&D investment to scale. We therefore believe this makes safety fuel benefit supplies of reaching leverage and longer profitability. Our operating expenses for the quarter were $188 million, up 4.7% year-over-year and 2.6% quarter-over-quarter. Sales and marketing expenses were higher year-over-year, consistent with the revenue increase. G&A expenses were also higher year-over-year, primarily due to increased share-based compensation expenses. R&D expenses were lower year-over-year as we remained prudent and disciplined in our total spending through enhanced resource sharing and operational synergy across different business units, while strategically allocating incremental shares of our R&D resources towards BQX. Our non-debt operating income for the quarter was $49 million, up 28.2% year-over-year and 29.4% quarter-over-quarter. Non-GAAP net income attributable to controlling interest of joy in the quarter was 63 million, representing a non-GAAP net margin of 10.7%. Our non-GAAP net income was lower year-over-year due to a higher FX loss of 14 million as the U.S. dollar vacant. Excluding the impact of FX losses, our non-GAAP net income would have been 77 million, broadly in line with the prior year. For the second quarter of 2026, we booked net cash inflows from operating activities of 65 million. Our balance sheet remains healthy with a strong net cash position of 3.06 billion as of June 30, 2026. Now, moving to capital allocation. Shareholder returns continued to be an important component of our capital allocation strategy. As of August 21, 2026, we have retained have donated $359 million to our shareholders through dividends and share repurchase this year, already exceeding the total amount returned to shareholders for the full year of 2025. We believe we remain substantially undervalued and will continue to actively execute our share repurchase program. Turning now to our business outlook, Driving by continued growth momentum across our social entertainment, legal ads, and supply business. We expect our total net revenues for the third quarter of 2026 to be between $602 million and $622 million, implying year-over-year revenue growth of 11.4% to 15.2%. For the full year of 2026, we remain confident in delivering solid revenue growth across the group. On the profitability front, backed by a better than expected operational performance in the first half of the year, and enhanced operating leverage from improved efficiency across our business segments. We now expect the group's full-year 2026 non-GAAP operating income to grow around 20% year-over-year, up from our previous expectations of 10th-level growth. To summarize, we delivered a strong set of results in the second quarter. with all three business segments delivering, encouraging growth, and operating profitability continue to improve. Looking ahead, we remain confident in our growth outlook and the views they focus on improving operating efficiency, sustaining profitability growth, and creating long-term value for our shareholders. That concludes our prepared remarks. Operator, We would now like to open up the call to questions.

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 comes from Suqing Zhang with CICC. Please go ahead.

Thank you management for taking my question and congratulations on this, John Carter. My question about live streaming business. We see live streaming revenue return to both year-on-year and quarter-on-quarter growth in the second quarter. Can management elaborate on the sustainability of this recovery and share your view on the longer-term outlook for the live streaming business? Thank you.

Okay, thank you, Xueqin. I'll answer this question first. In the second quarter, our live broadcast business increased by 5.9%, from 7.3% to 7.3%. This is driven by the double growth of paid users and up value. In terms of operation, in the second quarter, we continued to optimize the motivation mechanism of the streamer, the ecological construction of the content, the distribution and consumption of content by AI, and the experience improvement of paid users. These AI-driven user experience improvements further promoted the continuous improvement of paid conversion rate, so the core live paid users increased by 3.9%. Fuyong Liu, Ting Li, Tingzhen Xie

Thank you for your question. In the second quarter, our live streaming business grew 5.9% sequentially, with year-over-year growth further accelerating to 7.3%, driven by growth in both paying users and app pools. On the operational side, in Q2, we continue to optimize across multiple areas, including streamer incentive mechanisms, content ecosystem development, and AI-driven improvements across content distribution, user content consumption, and payment are the first AI-driven enhancements to the user experience. These AI-driven enhancements to the user experience further drove sustained improvements in pain conversion rates. Therefore, our core live streaming pain users grew through 3.9% year-over-year. From a regional perspective, this recovery continues to be driven by brand new growth in developed markets. The Middle East market also delivers solid sequential growth driven by our new voice product portfolio. Our current third quarter guidance projects moderate single-digit year-year growth for social entertainment revenues. As QuadLab Streaming Paying users continue to grow steadily and the new voice product portfolio contributes further incremental gains, we expect the growth momentum of our social entertainment business to continue strengthening. Based on current trends, we are confident that our social entertainment business will achieve full-year revenue growth in 2026 while maintaining steady business momentum. Operator, next question, please.

Your next question comes from Daniel Chen with J.P. Morgan. Please go ahead.

谢谢管理层接受我的问题。 恭喜业绩非常强。 我是想问一下广告业务。 我们看到二季度的广告业务增长是非常强劲的。 I will translate myself. So we actually see that the second quarter advertising revenue, the advertising business is growing very strong. So how should we look at the outlook for the third-party advertising in the second half of this year in terms of Thank you, Daniel. Thank you, Daniel.

Thank you, Daniel. This is the mutual promotion between our traffic, advertising budget, and advertising technology, so it further strengthens the flying effect of our business. In terms of traffic, our collaboration with Max, Levelplay, and other integrated platforms has continued to grow. The coverage of global traffic has expanded further, and the traffic of SDK has maintained a steady growth. In terms of budget, the performance of multi-tank strategic layout will show further. Fuyong Liu, Ting Li, Tingzhen Xie In the platform side, with the expansion of traffic and budget, we have continued to develop the ability of algorithm and data, fine-tune the hammer model, optimize the investment strategy, and at the same time continue to promote the intelligent upgrade of the algorithm and engineering system, optimize the computing, scheduling, and machine cost. At the same time, the demand for business increases rapidly, and the cost of basic facilities is more efficiently controlled, and the core support is provided for the expansion of the scale. Fuyong Liu, Ting Li, Tingzhen Xie Thank you, Daniel, for your question. I will take your question. In the second quarter, our third-party advertising business sustained a strong growth momentum, with revenue increasing 74.1% year-over-year and 9.3% quarter-over-quarter, exceeding our previous expectations.

Growth in traffic and advertiser budgets, together with continued improvements in our advertising algorithms, further strengthened our business flywheel. On the traffic side, we continue to deepen our partnerships with mediation platforms, such as Max and LevelPlay, further expanding our global reach while maintaining steady growth in SDK traffic. On the demand side, our strategic presence across multi-verticals continue to drive strong advertiser demand. Leveraging our established capabilities across lead generation, web e-commerce, and in-app advertising, our second quarter web-based demand grew 91.7% year-over-year, while IA spending grew 70.6% year-over-year. At the same time, we continue to expand our advertiser base in sub-verticals. across lead generation and other key verticals, further enriching our advertiser mix. On the platform side, as traffic and budgets expand rapidly, we are continuously iterating our algorithms and data capabilities, creating more vertical-specific optimizations and enhancing our bidding and delivery strategies. At the same time, We are advancing AI-driven upgrades to our algorithm and engineering systems, optimizing compute scheduling to manage infrastructure costs efficiently, even as request volumes grow rapidly. Based on current business trends, we are highly confident that our third-party advertising business will continue to deliver strong growth. Turning to profitability, Our third-party advertising business is doing a rapid expansion phase, requiring continued investment in research and development, sales capabilities, and infrastructure this year. That said, this business has healthy unit economics, giving us confidence that we can remain profitable while steadily improve margins over the medium term as we scale. Operator, next question, please.

The next question comes from Thomas Chong with Jefferies. Please go ahead.

早上好,謝謝管理層接受我的提問。 也恭喜很好的一個結果。 我的問題是關於我們傳聯的營收還有利潤的經營的。 管理層可以分享一下在不同的各個業務線那邊 我們今年年的營收還有利潤的經營。 Hi, good morning. Thanks, management, for taking my questions, and congratulations on a very strong set of results. My question is about the full-year outlook. Can management comment about the 2026 revenue and profit guidance across different business segments?

Thank you.

Thomas, good morning. Thank you for your question. I'm Alex. Let me answer it. Fuyong Liu, Ting Li, Tingzhen Xie Fuyong Liu, Tingzhen Xie Subline's three-week revenue will remain at more than 25% per share. In the whole year, we expect the social entertainment industry to achieve a stable growth of shares. As we just introduced, Beagle Ads, whether it's from the size of the traffic, the ability of the model, or the budget of the advertising team, has a very high certainty growth power, which will push Beagle Ads to achieve a steady growth of shares per share all year round. Fuyong Liu, Ting Li, Tingzhen Xie We are very confident in the growth of the company's revenue in 2026. In terms of business profits, we expect that the business profits of the Group Gap will continue to grow in the third quarter. From the whole year's point of view, while social entertainment business returns to steady growth in the live broadcast business, the overall business profits of the live broadcast business will maintain a small growth. Fuyong Liu, Ting Li, Tingzhen Xie Fuyong Liu, Ting Li, Tingzhen Xie Good morning, Thomas.

Thank you for your question. Looking ahead to the third quarter of 2026, our current guidance implies 11.4% to 15.2% year-over-year growth for our total revenues. For social entertainment, we expect the third quarter revenue to deliver moderate single-digit year-over-year growth. CQS will continue to deliver strong double-digit year-over-year growth in Q3. For ShopLine, we expect it to remain more than 25% year-over-year growth. For the full year 2026, we expect social entertainment to deliver steady year-over-year growth. For BigOS, with continued traffic expansion, deepening multiple vertical advertiser base, and ongoing algorithm optimization, we expect strong mid-double-digit year-over-year growth for the full year. For ShopLine, supported by maturing product capabilities accelerating cross-border merchant penetration and new market expansion. We expect its year-over-year growth to further accelerate, exceeding 20% year-over-year growth for the full year 2026. With all these three segments on an upward trajectory, we are confident in the solid revenue growth for 2026. Regarding operating profit, looking at the third quarter, We expect our non-GAAP operating profit to continue its year-over-year growth trend, while operating expenses are expected to rise slightly, quarter-over-quarter, due to the seasonality of certain cost items. For the fall year 2026, regarding social entertainment, as live streaming returns to steady growth, overall live streaming operating profit will maintain modest year-over-year growth. As we mentioned earlier, with continued skill expansion. Big US mid-term profitability is also expected to steadily enhance. For ShopLine, with relatively fixed operating expenses, the growth of revenue and gross profit will continue to grab narrowing of its operating losses. In summary, based on the better than expected overall operating performance in the first half of the year, as well as the operating leverage brought about by improved operating efficiency across businesses. We expect our full-year net gap operating profit to achieve around 20% year-over-year growth in 2026. We guided up our guidance. On net profit, I would like to add on a little bit regarding the foreign exchange loss items. Due to the continued weakening of the US dollar We recorded significant unrealized foreign exchange losses in the first half, and we expect a similar trend in the third quarter. However, these are not operational mark-to-market fluctuations and are unrelated to our underlying operating performance. Conversely, a strengthening US dollar would also result in unrealized foreign exchange gains. Operator, next question, please.

Your next question comes from Brian Gong with Citi. Please go ahead.

各位管理層早上好。 首先恭喜非常好的這個業績。 然後我想問一下關於Shopland這一塊的。 就是公司明確Shopland目標在2028年實現盈虧平衡。 能不能請管理層展開講一下目前的這個業務的狀態和增長的這個driver以及未來扭虧的一個路徑。 Thanks management for taking my question. I have a question on Shopline. We target to achieve profit breakeven for Shopline in 2028. The management gave us an update on the latest development and the growth drivers for Shopline and what would be the profit breakeven roadmap for the business. Thank you.

Thank you, Bryn. I will answer this question. As we shared before, AI is becoming a new opportunity for the e-commerce industry and the shop line. As the new traffic and the entry of the trade continues, the commercial scene becomes more diverse and fragmented, and the demand for a unified operating system is getting stronger and stronger. In this trend, we will further highlight SHOPLINE as the value of e-commerce infrastructure. We firmly look forward to the long-term development of this track. Our business model is highly consistent with the growth of businesses. Positioned income provides us with a stable income base, and payment and marketing and other increased services allow us to participate more in the growth of business transactions and GNV. Fuyong Liu, Ting Li, Ting Xie Inc., Fuyong Liu, Ting Li, Tingzhen Xie Thank you, Brian, for your question. As we discussed earlier, AI is creating new growth opportunities for both the e-commerce industry and ShopLine. As the new traffic and transaction entry points continue to emerge,

The commerce landscape is becoming increasingly diverse and fragmented, driving stronger demand for a unified operating system from merchants. This trend will further underscore ShopLine's value as an omnichannel commerce infrastructure. We remain firmly confident in the long-term prospects of this market. Our business model is closely aligned with the success of the merchants. Subscription fees are providers with a stable and recurring revenue base. Value-added services, such as payments and marketing services, enable us to participate more directly in the growth of the merchants' transactions and GMV. As merchants expand across more channels and scale their businesses on ShopLine, they tend to adopt more of our services, making the platform increasingly valuable to them. As a result, Our growth is driven not only by new merchant acquisition, but also by the continued growth of existing merchants and the increasing penetration of our services. We have already seen this dynamic play out in our cross-border business. In the second quarter, revenue from cross-border merchants, mainly led by brand customers, grew 73.5% year-over-year. helping drive a further acceleration in ShopLine's overall revenue growth. On the roadmap to break even, our R&D expense, which has been our primary OPEX for ShopLine, has largely stabilized. Continued growth in revenue and gross profit is driving operating leverage, resulting in significant narrowing of ShopLine's losses. With gross profit continuing to grow and operating expenses remaining relatively stable. We are confident that ShopLine will further narrow its losses in 2026 and reach operating break-even by 2028. Operator, next question, please.

Your next question comes from Sardona Song with UBS. Please go ahead.

Thank you, Mantran, for taking my question. 谢谢管理层接受我的提问。 再次恭喜这次强劲的业绩。 My question is on shareholder returns. The company has a three-year, $1.5 billion U.S. shareholder return program with ample net cash at present. Observe that measurement has accelerated buyback in 2Q and quarter-to-day. What will be the pace of future buybacks ahead? And how does the group balance growth-oriented investments versus cash return to shareholders? Thank you.

Thank you, Sedona. Alex, please answer your question. In fact, it is mentioned in my speech that we have raised $2.16 billion on August 21st this year. Even from the new shareholder return plan in May to now, under the new plan, we have already repaid $1.28 billion. So in terms of growth investment and shareholder return balance, in fact, there is no conflict for us. Everyone knows the characteristics of our company. The stock price is very thick. Fuyong Liu, Ting Li, Tingzhen Xie Thank you, Sato, for your question. As I just mentioned,

Since the beginning of the year to August 21, we have already bought back $216 million of our shares in total. Even under the new share buyback program authorized this May, as of August 21, we have bought back $128 million of our shares. There is no inherent trade-off between investing for growth and returning capital to shareholders. We are backed by a strong net cash balance and robust cash generating capabilities. Firstly, we held a net cash position of 3.06 billion US dollars on our balance sheet by the end of the second quarter. Secondly, all these three of our business segments have embarked on a well-defined growth trajectory, which will drive continuous improvement in underlying business fundamentals and cash flow contribution. Therefore, Our shareholder return framework is built on an exceptionally solid and resilient foundation. We believe that the current share price still does not fully reflect the long-term growth potential of our three businesses. And our active share buybacks demonstrate the confidence from the senior management team in the company's longer-term value and prospects. Going forward, we will continue to actively return capital to shareholders. As our operating profit continues to grow, we believe shareholders can look forward to greater returns in the long run. Thank you.

There are no further questions at this time. I'll now hand back to the company for closing remarks.

Thank you. Thank you for all of the questions. We may conclude the call today. If you have any further questions, please feel free to reach out to the IR team. Thank you.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.