Yalla Group Limited

Good morning and good evening, ladies and gentlemen. Thank you for standing by for YALA Group's limited third quarter earnings conference call. At this time, all participants are in a listen-only mode. After management's prepared remarks, there will be a question and answer session. Today's conference is being recorded. Now I will turn the call over to your speaker, host today, Ms. Carrie Gao, IR Director of the company. Please go ahead, ma'am.

Thanks. Hello, everyone, and welcome to Yela's third quarter 2020 earnings conference call. We have released our earnings results earlier today, and it is now available on our IR website as well as on Newswell services. Before we continue, please note that the discussion today will contain forward-looking statements made under the safe harbor provision of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, our future results may be materially different from the views expressed today. Further information regarding these and other risks and uncertainties is included in our earnings release and our registration statements filed with the FEC. YALA does not assume any obligation to update any forward-looking statements, expect as required by law. Please also note that YALA's earnings press release and this conference call include discussion of unaudited gap financial information as well as unaudited non-gap financial measures. YALA's press release contains a reconciliation of the unaudited non-gap measures to the unaudited most directly comparable gap measures. Today, you will hear from Mr. Tao Yang, our Chairman and Chief Executive Officer, who will provide an overview of our recent achievements and growth strategies. He will be followed by Mr. Saifi Ismail, the company's president, who will give a brief review on Yala's IPO ceremony in UAE and the support we received from the local government and media. And he will be followed by Mrs. Karen Hu, our chief financial officer, who will provide additional details on the company's financial results and discuss the financial outlook. Following management's prepared remarks, we will open up the call to questions. Our Chief Operating Officer, Mr. Jeff Xu, will join the call for our Q&A session. Just want to kindly remind Yala's 3Q earnings presentation slides are now available on Yala's IR website for investors to download. With that said, I would now like to turn the call over to our Chairman and Chief Executive Officer, Mr. Tao Yang. Please go ahead, sir.

Okay. Thank you, Carrie. Good morning and good evening, ladies and gentlemen. Thank you for joining us today. on our third quarter 2020 earnings call. This is our first earnings call as a public company following our IPO in September this year. We appreciate having the opportunity to communicate directly to you all and share our insights on our business operations and financial performance. We are very pleased to announce that in the third quarter of 2020, we delivered robust group performance. further strengthening our position as a pioneering world-centric mobile social networking and entertainment platform in MENA. And our revenue and non-gap net income reached to 33.8 million and 15.5 million USD, increasing 90.4% and 68.3% year-over-year, respectively, driven by the strong growth of Yala and Yala Ludo, and the proliferation of our highly engaged and interactive user community. Strategically and operationally, during the quarter, we continued to emphasize our core competitive strengths. As a first mover in developing a voice-centric mobile social networking and entertainment platform in META, we have achieved a leading position based on our innovative business model, which focuses on user interaction and the social networking theory on our platform and our deep understanding of the local culture. As a pure UGC platform, we encourage users to share and participate actively and bring them a sense of belonging as well as a culture identity, which helps build a healthy and cohesive user communities. Going forward, we will continue to further penetrate into both existing markets and new markets to expand our user base, as well as respond to users' involving demands and add new features to optimize the user experience and enhance their engagement. We differentiate from other online social networking and entertainment platforms with our superior social leaders for users as we provide highly localized and customized product offering. Our platform interaction and communication features are based on different cultural backgrounds of users, which underpins the foundation for social interactions in Nina. In addition, none of our products and services currently have any advertising tied to it in order to ensure the highest quality user experience. The uniqueness of our business model and the premium user experience we offer on our platform has contributed to strong monetization capabilities for us. In the first quarter and the first nine months of 2020, we adjusted. Our adjusted net margin was 45.8% and 47% respectively. Through the sale of virtual items and operating services such as VIP rights or premium memberships on our platform, we will further capitalize on the immense market opportunities in Nina, which stable economic development and well-established mobile internet infrastructure have created a positive environment for the online social networking and entertainment market. Now let's take a closer look at the third quarter performance of our core products, Yala and Yala Ludo. Yala primarily features Yala rules, which can be viewed as the online version of modules or cafes, where people spend their leisure time in casual chat. For Yala, we maintained a sharp focus on building a tight-knit and high-quality user community. In the third quarter, Yala's average MAUs and paying users both more than doubled year-over-year, exceeding 5.5 million and 1 million, respectively. We will continue to enrich Yala with new localized features and new mobile social leisure activities tailored to users' needs in an effort to improve user engagement. And let's turn to our second flagship mobile application, Yela Ludo, for which we have been growing the user base and strengthening our monetization capability significantly. Yela Ludo resembles a family living room where family members and friends play simple board games that are highly popular in Nina, such as Ludo and Domino. While playing games, users can web chat and bond with other players, as well as engage in social networking through chat rooms. We also organize various types of tournaments to enrich users' gaming experience on our platform. Since its introduction in the third quarter of 2018, Yellow Ludo has rapidly gained popularity and has become a significant driver of our user community expansion. And now, also important contributors of our revenue growth. In the third quarter of 2020, the average MAUs of Yela Ludo increased by more than 20 times to 8.8 million. The rapidly growing popularity of Yela Ludo which was recommended by numerous app stores, including Apple Store and Google Store on their home pages. It's a testament to its superior foundation of social features tied to the culture norms of the region, with users able to enjoy real-time voice interaction while playing board games. Looking ahead, we are confident that we are continuing We can continue to capitalize on the significant growth potential in MENA's underserved online social networking and entertainment market. With our continued product innovation and our committed vision to cultivating an online voice-centric social community, we are optimistic we can continue to strengthen and broaden our monetization capabilities. And now I will turn this call over to our president, Mr. Saifi Ismail, to give you a closer look at the jealous appeal ceremony in UAE and the support we received from local governments and media.