Yalla Group Limited

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

Hello, everyone, and welcome to YALA's third 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 useful 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 Security Certification 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 an audited gap 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, you will 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. Sathish Mayu, the company's president, who will briefly review our recent business developments. This is Karen Hu, our Chief Financial Officer. We will then provide additional details on the company's financial results and discuss our financial outlook. Following management's prepared remarks, we will open the call to questions. Our COO Jeff Xu will also join the QA section. 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, Karen. Thank you, everyone, for joining our so-called 2023 earnings conference call. We are pleased to report that we achieved strong third quarter results. Our third quarter revenues reached an all-time high of 85.2 million USD, surpassing the upper end of our guidance, while year-over-year revenue growth from gaming services exceeded 30% once again. Our cost efficiency initiatives continued to yield positive outcomes. and as a result, net income increased by 44% year-over-year to 35.2 million USD, and net margin further improved to 41.4%. Our robust financial performance reflects excellent execution of our effective high-quality development strategy. In the third quarter, we continued to refine our operational processes, enhance flagship applications gamification, improve our gaming mechanics, and optimize our user acquisition strategies. These efforts have empowered us to build a more engaged community of users who exhibit high willingness to spend on our content and services. Supported by our solid business fundamentals and healthy cash position, we remain proud to capture new business opportunities and fulfill MENA users evolving online social networking and entertainment needs in the era of digitalization. As we have discussed on our last few calls, the MENA region is actively pursuing new initiatives to drive economic growth and the digital transformation here continues to advance rapidly. However, our region's exciting economic development is not the only asset drawing businesses and the investors to MENA throughout history. The Middle East has been an important hub for cultural and commercial exchanges between East and West. Amid today's changing dynamics across the global the region is currently gaining increasing strategic importance. We have observed a mounting number of outstanding business, considering MENA as their company's next important growth opportunity this year. A testament to the region's unique synergies with both eastern and western economies, as well as its vast potential and market capacity. Moreover, Mina's thriving tech ecosystem is fostering entrepreneurship and startups, attracting talent from around the globe. This has created a wealth of opportunities for Yela to iterations and diverse future business initiatives. As the largest Mina-based online social networking and gaming company, Yella is well-positioned to seize this chance to propel the company's development as well as progress across local and global economies. Now, I'd like to share some important updates on Yella Games' recent development. First, an overview of our third quarter progress with respect to our two hardcore games, Morchekillems and Age of Legends. Thanks to our consistent game iterations and engagement of our existing Yala user community, both games have gained traction in the mid-region. Notably, Merge Kingdoms was ranked in the top 10 strategy games in Gulf countries, including Saudi Arabia and Qatar this quarter in terms of revenues on iOS, while Age of Legends also climbed to the top spot on Google Play's role-playing games category in terms of revenues in Saudi Arabia, UAE, and Oman. Although compared with our flagship applications, mid-core and hardcore games are still not making a substantial contribution to our group's revenues, we see immense room for growth in this sector. Turning to our strategy for Yala Games' future growth, through the process of developing our two hardcore games, we have gained a more comprehensive understanding of the local gaming market, as well as operation methods and cooperation strategies. Our experience with these games has strengthened our determination to engage more deeply in mid-core and hardcore games business in MENA. It is worth noting that the use of game Genres and design preferences can differ across regions and are changing rapidly. As such, we will continue to iterate our games based on users' feedback, closely monitor the market, and adjust our products and operations strategies accordingly. Moving forward, we will gradually increase our investment in mid-core and hard-core games unleashing our growth potential in this flourishing market. We are presently exploring new game categories and already have various games in our pipeline. We expect to accelerate the launch of our new games in the coming year. We may also continue to actively communicate with excellent gaming studios and production teams across the industry and look forward to considering potential partnerships. On a related note, according to NewZoo's research, Mina's gaming market currently brings in $7.2 billion USD in annual revenue, with a growth rate of 6.9% year-over-year, among the fastest-growing markets worldwide. Meanwhile, given the considerable size of the mature gaming market in China, the US, and Europe, Those regions may also offer opportunities for suitably themed games. We will remain dedicated to the middle market while examining the possibilities and may modify and distribute our games in additional regions as we see fit. Before I conclude, I'd like to mention that in addition to midcore and hardcore games, We are exploring new products and businesses that could bring traditionally offline services online for MENA users as a complement to YALA's portfolio. These initiatives show great promise in advancing MENA's digital transformation, as well as the potential to serve millions of MENA residents. We will share more details with you when there is meaningful progress. In summary, we remain confident in the growth opportunities presented by Mina's increasingly pivotal role on the global stage and the region's rapid digital transformation. As the largest Mina-based online social networking and gaming company, we are dedicated to building relationships locally and globally to broaden our business horizons and drive MENA's economic development. We will continue to assess new growth prospects as we develop compelling digital products tailored to the needs of local users, creating sustainable value for all of our stakeholders. Now I will turn this call Over to our president, Mr. Saifi Ismail, for a closer look at our recent developments.