Yalla Group Limited

Good morning and good evening, ladies and gentlemen. Thank you for standing by for Yellow Group Limited's second quarter 2023 earnings conference call. At this time, all participants are in listen-only mode. After today's prepared remarks, there will be a question and answer session. Today's conference call is being recorded. Now I will turn the call over to your speaker host today, Carrie Gao, IR Director of the company. Please go ahead.

Hello, everyone, and welcome to YALA's second quarter 2023 earnings conference call. We released our earnings press release earlier today, and the release is now available on our IR website as well as on Newspile outlets. 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 annual report filed with the SEC. YALA does not assume any obligation to update any forward-looking statements except as required by law. Please also note that YALA's earnings press release and this conference call include a discussion of unaudited GAAP financial information as well as unaudited non-GAAP financial measures. YALA's press release contains a reconciliation of the unaudited non-GAAP measures to the unaudited most directly comparable GAAP measures. Today we hear from Mr. Tao Yang, our Chairman and Chief Executive Officer who will provide an overview of our latest achievements and growth strategies. He will be followed by Mr. Saif Ismail, the company's president, who will briefly review our recent business developments. This is Karen Hu, our chief financial officer, who will then provide additional details on the company's financial results and discuss our financial outlook. Following the management's prepared remarks, we will open up the call to questions. 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.

Thank you, everyone, for joining our second quarter 2023 learnings conference call. We delivered robust performance this quarter, growing both our top and bottom line. Despite the impact of the Ramadan holiday, our Q2 revenue reached $7,000. 9.2 million USD, showing Q1Q growth of 7.8 percent. This exceeds the upper end of our guidance by 5.7 percent, manifesting the popularity of our products. Our continued efforts to drive quality growth and enhance our operating efficiency are also paying off. In Q2, Our non-GAAP net margin reached 42.6%. Our robust quarterly performance showcases our dedication and ability to successfully refine our operations, enhance the identification of our flagship applications, and optimize our user acquisition strategies. All of this holistically elevated the experience for our users, further boosting Yala and Yala leaders' users' willingness to stay and pay on our app. As we discussed on our last call, 2023 has been a year of growth and development. We are witnessing a rapid digital transformation in the Middle East. The momentum we are seeing is arising from from the recognition that the region's market opportunity may be strategically significant for global Internet gens, as well as robust support from local MENA governments who are determined to build local industries. They are dedicated to fostering collaboration with various nations worldwide, actively participating in local ventures to draw up global investment to domestic industries and increasing investment in disruptive projects overseas to create future strategic opportunities. As the largest media-based online social networking and gaming company, Yala is committed to facilitating this change in the media market. And we are glad to see more conversations taking place. As we discussed last quarter, external collaborations are an important component of our go-forward growth strategy. We're happy to share our experiences and localization capabilities with more industry peers who are interested in exploring the MENA market. Our goal is to secure mutually beneficial collaborations that expand businesses in our dynamic market where we see great potential in working together. Next, I'd like to share some important updates on Yala Games' recent development. We're happy to report that Merge Kingdom has been officially launched across MENA and is now available on both the Apple Store and Google Play. Merge Kingdom is a strategy game that takes players on a fun journey through an Arabian-themed landscape. It brings a world of Arabian folklore to life with stunning visuals, rich landscapes, and beautiful Middle Eastern music. The integration of Yala's unique voice chat engine enhances the game's real-time strategy elements. is the first hardcore game to collaborate with Yellow Group on distribution. The game is being promoted on the home pages of both the Apple Store and Google Play for free, and was ranked as the number two downloaded game in Saudi Arabia on iOS after its launch. We plan to gradually increase our investment in user acquisition in the next couple of months to increase the game's reach. In terms of Yala's first self-development, Yala's hardcore game, Age of Legends, the team has been working on a new game in iteration. The first step, Age of Legends, was first launched in Turkey. And at the beginning of August, we successfully launched the Arabic version across Gulf countries. The game was the number one downloaded game in the role-play game category on iOS in both UAE and Saudi Arabia. We will continue to monitor Age of Legends operating and financial performances, and we look forward to sharing more details with you on our next earnings call. The establishment of Yellow Game is an important strategic move for us. we will keep exploring opportunities in mid-core and hard core games. For the two hard core games we just launched, we will continue to work on future iterations to gain original traction. We will also continue to expand our pipeline of games through both staff development and external distribution collaboration. We look forward to building our mid-core and hard core game and expect these to serve as important growth drivers going forward. Our vision is for Yella to become the largest online social networking and entertainment company in China. We have high aspirations in this region, and the whole team has been working tirelessly to achieve this goal. We are exploring many possibilities and identifying how we can better serve MENA users' evolving needs for online services. Our strong cash flow and solid cash positions are well suited to support this journey. Digital transformation in the Middle East is foreseeable, and in the next three to five years will be a crucial period of development. We are confident in our ability to capture growth opportunities in this promising and growing market. We will continue to enhance our investment in research and development and further explore new business opportunities while we work with potential partners from around the world to generate more global participation in MENA's exciting future of digital transformation. Now, I will turn this call over to our president, Mr. Saifi Ismail, for a closer look at our recent developments.