Yeahka Ltd

Ladies and gentlemen, good day and welcome to Yeahka Limited 2026 Interim Results Announcement Call. At this time, all participants are in listen-only mode. After management's prepared remarks, there will be question-and-answer sessions. Please be advised that today's conference is being recorded. I now pass the call to Mr. Vincent Chen, Head of Corporate Development and Capital Markets of Yeahka. Please go ahead, sir.

Thank you and hello, everyone. Welcome to Yeahka's 2026 Interim Results Conference call. Before we start, we would like to remind you this representation includes forward-looking statements that involve a number of risks and uncertainties. Information on general market conditions comes from a variety of sources outside of Yeahka control. Please refer to our disclosure documents on our website IR section for a detailed discussion of risk factors. Now, let me introduce the management team on today's call. Luke Liu, our founder, chairman, and CEO, will kick off with a short overview. I will then provide a business overview. John Yao, our CFO, will conclude with a financial review, translated by Derek Lai, our director of finance, before we open up the floor for questions. Without further ado, I will now turn the call over to Luke.

Thank you, Winston. Hello, everyone. In the first half of 2026, we continue to up commercialization and increase profitability. We deliver this through overseas expansion, innovation, across product lines, and across marketplace. More than before, we are better positioned to deliver long-term sustainable growth in profitability and return to shareholders. Therefore, we are delighted to announce our first dividend insurance since Yeahka's listing, $13.8 million for interim results. Yeahka remains highly confident in a significant growth opportunity in global payments. The acquiring market is worth USD 36 trillion. Its digital payment penetration remains low in many markets, while mainland China has reached over 90% digital payment penetration with ECOS contribution. Countries such as Japan and other developed economies are still at around 50% or below, leaving significant room for growth. This creates strong entry points for e-commerce. Our overseas payment volume grew four-fold year-on-year to RMB 6 billion. Continually, it is an exponential growth trajectory. Going forward, our overseas payment strategy will be centered around three key points. Thank you for your attention. as we expand globally across the markets. Second, with a more comprehensive payment and merchant software product portfolio in our overseas competitors, we are uniquely positioned to expand in these markets. By integrating wide-area services with our payment solutions, we provide merchants with a one-stop service that help them reduce costs and increase revenue. Third, we have enhanced our team with leading international talent experienced in overseas payments and launched our online payment business overseas, extending our coverage into the Web3 sector. Our other strategic focus is the application of AI externally for customers and internally to enhance our operating efficiencies. We are closely tracking the application of AI in payments and merchant value added services. where AI agents initiate and complete transactions on behalf of users with authorized parameters are expected to become an important payment model across e-commerce, local services, gaming, advertising, and other digital scenarios. We have conducted in-depth research in this area and initiate R&D collaboration with international financial institutions. Further updates will be disclosed in due course. Separately, through our investment platform Fuxi, we have launched an AI agent-based merchant software product, which has already been commercialized and received positive market feedback. We have also scaled up AI usage to drive administration and R&D efficiencies. Our fully autonomous AI-driven product development lines hugely reduce the time of product development and launch cycle. Our digital employees which provide day-to-day tools with AI, automated mailing routing operational tasks. The combination of human talents and digital employees helped to address the evolving customers' demands more quickly, more precisely, and save resources for more strategic initiatives for the company. ECOS four-step technical platform lay a great foundation for AI to scale in each of our business lines and more globally share synergies across our operational best practice. Therefore, profitability has been increasingly across our business segments. in both payment and value-added services. In the Chinese mainland, we delivered our payment profit by almost 25% year-over-year. In value-added services, in-store e-commerce posted a first half of net profit together with a historic high of GNV. AI will continue to drive revenue increase. Cost reduction and efficiency enhancements And together with our faster overseas expansion as an international market leader These strategies will strengthen ECOS industry mode, long-term profitability and capability to create greater value for all shareholders As such, may I pass to Vincent to give a detailed business review?

Thank you, Luke. In the first half of 2026, e-car made substantial progresses in business commercialization, organizational efficiency, and ultimately delivery of more bottom line and return to our stakeholders. As overseas businesses coupled with AI has been empowering e-car as an increasingly global and AI-driven company, I would also like to share more about each of the business operations as well as the game plans forward that unites all our employees and partners. I'm very glad to report that our Hong Kong, Macau, and overseas operations broke record highs across the board, across different matrices in the first half of 2026. First, by volume. Monthly growth of double digit percentages or yearly growth of multiple times maintained year after year and this first half GPV achieved nearly RMB 6 billion. The book has been more diversified with brand name customers across industries. Second, by revenue and fee rate. As we attracted these new customers, we also increased our fee rates for the service quality and breadth of offerings differentiated from competitors. Revenue was more than five times of that last year. And thirdly, by margins and profitability contribution. With the relative underpenetration of our services and customers' ability to pay, these margins are four times versus that in the Chinese mainland. This region's contribution to our payment profits is expected to meaningfully increase further going forward. The business is already a significant part of the group. For that reason, we further made our disclosure more granular in disclosing our geographical splits across the Chinese mainland, Hong Kong China, Macau China, and overseas businesses across revenue, profit lines, and other operating metrics. We hope this helps the community to track our progresses with more ease and more regularly. Our Chinese mainland payments business increased its return of gross profits by almost 25% in the first half of this year, driven by our optimization in payments operational processes. We are confident about maintaining the exponential growth of Hong Kong China, Macau China, and overseas businesses for the rest of the year. First of all, this is a very big tent that we are addressing. It's not just about payments related to people traveling overseas or a specific payment corridor that's subject to any idiosyncrasies. We are addressing the local-to-local, merchants-to-customer payment scenarios in regions globally. According to WorldPay and third-party industry reports, the TAM of such markets are $36 trillion USD year-in, year-out. This provides one of the most attractive and well-defined growth segments out there in the industry. And that provides the backbone of our high and sustainable growth potential for many years to come. Second, by forming a very international talent task force across products, channels, regions, and innovation, we continue to leap the latest trends in the market globally. For example, We obtained digital currency license in the US and completed product R&D work for our online payment business and our agentic payment business internationally. We are extending our collaboration with Global Card Network Scheme to promote these more cohesively. We are also expanding geographical and channel work scope with global banks to benefit more merchants and customers internationally. by playing up our unique product advantage against competitors locally and internationally. That is a very comprehensive suite spanning payments, merchant solutions, e-commerce services, and business software that are interconnected. We are seeing increasing values delivery to customers and ecosystem proposition being played out globally in the industry. Effectively providing an AI business engine to assist merchants in enhancing customer acquisition, transaction conversion, and user retention. All these are evidenced by the transactional growth in both merchant solutions and in-store e-commerce solutions. In the first half of 2026, the transaction value of merchant solutions AI generated videos surged by over two times. the products were introduced into major platforms such as JD, Taobao and Ctrip and also won multiple marketing creativity and performance awards presented by the likes of ByteDance and Douyin. Our AI tools have enabled the operational efficiency and profit margin of this business to be maintained at very high levels of over 94% gross margin. Similarly for the in-store e-commerce business, AIQ significantly enhanced the operational efficiency of merchants and influencers, driving the segment's GMV to increase by over 75% year-on-year to hit a historical record high. We expanded the coverage of this business to large KA clients as well as merchants overseas, which provide a scalable growth channel going forward. By utilizing AI virtual employees to optimize service process efficiency and reduce costs, the gross profit margin of the segments improved to over 70%. Therefore, the net profit contribution from in-store e-commerce segments hit another record high in the first half of this year. Furthermore, across the organization, we continue to increase operational efficiency and maintain discipline on cost. We are given more asset rights with the introduction of digital employees into our front office, middle office, and R&D functions now. Administrative and research and development expenses decreased by 8.1% year over year in the first half of 2026. Now with a clear vision of global business development across merchant acquiring, offline, online, energetic payments, as well as a wide range of merchant value-added services powered by AI in both revenue generation, margins uplift, and cost reductions, we have a much stronger foundation of talent, footprint, and business models to deliver value to our customers, partners, and shareholders. With that, I will now turn the floor over to John, our CFO, to present a review of financial results with translation provided by Derek, our Director of Finance. Thank you.

Thank you, Mr. Wen. Hello, everyone. Now I would like to introduce the first half of the year of 2006. Thanks.

Thanks, Susan. Hello, everyone. Let me introduce the financial performance of ETA in the first half of 2026. In the first half of 2026, The domestic GDP decreased by 23% to RMB 880 billion, and the total revenue of the group also decreased by 23.9% to RMB 1,249 billion. 尽管如此,公司的国内市场份额仍保持明确, 支付费率保持稳定,

etc.

Nevertheless, the company retained a leading market share in the domestic market, and the payment fee rate remained relatively stable at 12.3 basic points compared to 12.4 basic points for the first half of 2025 and 12.3 basic points for the second half of 2025. The businesses in Hong Kong, Macau and overseas region continue to demonstrate In the first half of 2026, the overseas business record GPV of approximately RMB 6 billion, representing a year-on-year increase of 293%, and the fee rate rose to 63.1 basic points. 而以我们产业化率的提升以及客户结构的优化,

Benefiting from measures to optimize growth profit margin

The gross profit from one-stop payment services increased by 24.9% from RMB195 million in the first half of 2025 to RMB244 million for the corresponding period this year, while the gross profit margin for the same period also increased from 13.7% to 21.8%.

The group has continued to enhance efficiency throughout digital workforce and the optimization of its R&D processes.

In the first half of 2026, administrative and R&D expenses decreased by 8.1% year-on-year, reflecting the continued contribution of innovation technologies to cost control. The deeper integration of AI into business processes will continue to enhance the group's long-term efficiency and core competitiveness.

In the first half of 2026, the company's net profit reached RMB In the first half of 2026, the company's profit for the period amounted to RMB 41.9 million, recording the best

Half-year profit margin since 2023, and 15 year-on-year profit growth for the first half of the year for four consecutive years, reflecting the continued effectiveness of the company's profit-focused strategy.

We are fully confident in the long-term growth prospects of our company. The Board of Directors has recently announced that it will launch a medium-term stock period of 0.03 yuan per share.

We are confident about the company's long-term growth prospectus and solid financial position. The board is invited to declare the payment of interim dividend of HK$0.03 per share amounting to approximately Hong Kong dollar, $13.8 million in total. Going forward, the Board will consider measures such as share buyback and dividend payments as appropriate to increase returns to shareholders.

Mr. John and Derek, thank you. With that, may we open the call to any questions from the line, please? Operator, can you go ahead?

Thank you. We will now begin the question and answer session. To ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. There may be a short pause while we compile the Q&A roster. We will now proceed to take our first question. And the first question comes from the line of Yining Tang of CICC. Please ask your question, Yining. Your line is open.

Thank you for giving me the opportunity to ask this question. I am Tang Yiming, an analyst at Zhongjin Company. I would like to ask you two questions. The first is in terms of domestic payment business. We saw that the GDP of domestic payment business in the last half of the year has been slowing down, but the interest rate has improved significantly. I would like to ask the management to explain to us what are the main factors behind these two. and the company in the future to see how it will play a role in domestic payment business. The second one is about overseas payment business issues. We also saw that the income of overseas payment business in the first half of the year and GPV are all growing at a high speed. Now China's payment companies are all in the background of speeding up the sea. How does the company show the medium-term growth of overseas business and how to build a controversial competitive advantage? Thank you for taking my questions. I have two questions. First, on domestic payments. In the first half, GPV declined but growth margin rose sharply. Could you explain the key drivers behind both movements? And how do you see the role of the domestic payments business going forward? On Overseas Payments, both Renyu and GPV grew rapidly in the first half as Chinese payment peers accelerated their overseas expansion. How do you see the growth potential for this business? And what are the ECOS T-competitive advantages? That's all. Thank you.

Thank you very much, Ying, and I appreciate the questions. Regarding the local environment, first of all, in the first half of this year, we do see that the average dollar value spent per transaction is of a decreasing trend. That would not be different to some of the comments that you would have heard on earnings call of some big technology companies also listed in Hong Kong. So we think that that is a rather big macro backdrop that would affect the industry across the board. At the same time, within the company, we also cut down on customers that are of lower profitability. because as we have consistently shown in the past period and stated on earnings call, our steadfast focus of driving the business going forward is ROI and delivery of bottom line profit and return because that ultimately matters the most from a shareholders, investors, and stakeholders perspective. And from that point of view, we are very focused on ultimate profit lines delivery rather than TPV or revenue per se. So what we have done in the first half of this year is that we did have cut down quite significantly some of the lower profit customers and the reason is that they can release resources and time of our higher business management to focus on the right set of customers that can in turn not just compensate for the profit loss but actually deliver even more profit on a very sustainable manner going forward. So what we do is that we focus on larger chain customers Brand names customers and also customers that require a little bit more differentiated services or more customized solutions that by definition takes more time and resources to focus but the reward for that is that we earn a higher margin a much more meaningful higher margin and that's why we see that the gross profit as well as the gross margin this year for the China business actually increases quite substantially and that's not just one off that's not just for this period of time In fact, this is the fourth year, consecutively, that we have been increasing our gross profit from a China payment perspective. This is also the highest margin that you would have seen for the company in the past six years. So again, this is a very steadfast, long-term, key focus of ours, and it will continue going forward. Now, you mentioned about the strategic value of the China business, given this type of background. I think this is very, very important. First of all, it is a very large space. last set of customers where we have refined our products to the extreme, to the ultimate value to customers. As Luke mentioned, the 10, the market of merchant acquiring is largely, is very, very big. And China has been leading the way globally with over 90% penetration rate. And therefore, there's a lot of things that we can export from a product service perspective and very ultimately, as you rightly point out, China merchants going overseas. We think it is a very secular and long-term thing. And we haven't really capitalized on that yet, because it is still very nascent stage compared to others. So when they go overseas, we indeed help a lot of these big merchants go overseas as well. For example, Dajiang, DJI, BYD, all these big brand names, as they go overseas, we're actually serving them as merchant acquirer overseas as well. So this continues to be a very important business of ours. Now, going forward, from a profit driver perspective obviously the overseas business is a very natural extension as we grow bigger out from China where we are the dominant market leader already and we see even more opportunities to grow in terms of profit and deliver that to our shareholders in the overseas countries. First of all, our numbers in terms of GPV, revenue, profit, fee rate, margin are very different from the structural set of metrics that you see in the Chinese mainland. And it has been the case period over period. We believe that this will continue to stay, and we will continue to deliver that multiple type of growth going forward. Even though it is a relatively short period, business in terms of the starting age of it, but now it's already contributing 7% of the gross profit within the payments business, and from a net profit perspective, it's already double-digit percentage. So we would not be surprised that over the next few years, that would substantially increase, and more than half of the company's net profit would be driving from the overseas businesses. This is really the opportunities that we are seeing. Why we are delivering all that and why we have a high moat, you ask about that we can continue to defend ourselves. First of all, it is a highly regulated business. You have the licenses, the regulatory bodies, bank channels, ecosystem partners, a very huge system that is not easy to replicate over the years. And therefore, we are seeing other peers entering into the space, but at the same time, we also collaborate with them We have the license, we have the background channels, we have the underlying. This is actually confirming that this is a very interesting space to get into while at the same time our infrastructure and our moat has been quite obvious to the others. And secondly, from a product proposition perspective, all the way historically on top of payments. We also have the combination of that versus other value added services, be it merchant solutions, e-commerce services, AI software, and the energy that we can provide to merchants to help them grow their businesses as well. We continue to see this being very differentiated, not just locally, but also overseas as well. And we believe that we will continue to be uniquely positioned to expand with this set of product suites. and again that is very hard to replicate within a short period of time.

Right, thank you. We will now proceed to take our next question and our next question comes from the line of Vicky Wei of Citi. Please go ahead Vicky, your line is open.

Thanks management for taking my question. Will management share your thoughts on the gross margin trend of domestic payment business and your thoughts on shareholder return program? Thank you.

Thank you very much Ricky for your question. Regarding gross margin, as I mentioned before, debt and profitability continues to be the focus of the company going forward. So it's not surprising to see that we deliver an other record high for our gross profit within the Chinese mainland business. So going forward, we expect that to be staying at a relatively high level compared to the past. We continue to increase monetization, increase the commercialization of our business as well. There are a few ways to do it. First of all, we focus on higher profitability customers and cut down on the lower profitability segments. That would help us to continue to pick up and focus more on customized solutions for the right set of customers that can sustainably deliver this higher growth profit and growth margins going forward. Another tool that we have is on AI. as we input more AI elements into the business processes, for example, on fraud detection, transaction control, that also help us eliminate more high-risk customers and focus on those who can deliver more sustainable profits going forward. So we have a lot of new ways that we haven't really fully leveraged in the past. As the technology tools, as our processes become more optimized, we believe that this is something to be leveraged for the next few years. In terms of the capital market return as we focus on the profits and bottom line delivery, we are very confident about sustaining that going forward and that's why we think that this is probably the right time to start doing that. So this is the first dividend issuance since our listing. In the past we have also been doing share buyback. So going forward, a combination of that all together would be a lot of the tools that we can continue sustainably going forward. So we intend to increase our profits and also deliver the return to our shareholders on a long-term basis.

Thank you. We will now take our next question. And the next question is from Yuxuan Chen of Huatai Securities. Please go ahead, Yuxuan. Your line is open.

Good evening, Manager Chen. Thank you for the opportunity to ask me a question. I have two questions about overseas business that I would like to ask. I noticed that the net profit of overseas business has dropped in the first half of the year. I would like to ask what is the reason behind the management level and what is the outlook for the future? The second question is to ask if the management level Thank you for taking my question. I have two questions about the overseas business. First, I noticed that the gross margin of the overseas business declined in the first half. Could the management share some color on what drove the decline and how you see the margin outlook going forward? Second, how do you see the competitive landscape in the overseas market Thank you very much for your questions.

First one about the decrease in margins in our overseas business. I think this is a short-term fluctuation. Largely, it's a very small percentage change within a half-year period. It's still at a very different level, much higher than the one that you see in the Chinese mainland. So we think that this is due to the mix of the portfolio, rather than the fact that structurally there's a difference between the margins between the two. So we think that both margins, fee rate, and the economics of overseas continue to be attractive and here to stay. And secondly, in terms of the questions about our strategies overseas, first of all, we continue to focus on the local payments between merchants and consumers. That is the bigger segment, the bigger pie of the 10 that I just mentioned, and this is still hugely underserved, under-penetrated, and we believe that our products and our business models have a lot to add value, as we have demonstrated in the past. The Chinese going out is part of the thing, but that's not the only thing. The bigger thing is really the local merchants out there. And secondly, in terms of products, from doing offline, we are also launching our online payment businesses which are already generating revenue today. So that is a very promising area because it's by definition a much bigger avenue to go for and web-free payments as well as stablecoin, agenda payments, they are all very attractive topics that companies and merchants and even consumers are thinking about. To that end, we actually have already done our work in R&D, product development, as well as collaboration with some of the largest players in this space globally. So soon enough, we will make some announcement on that and you will see that in the news. And we think that by focusing on the right areas with high demand areas, whether it's e-commerce, whether it's advertisement or local services, online payments, agenda payments, have a lot of value to offer.

Thank you. We will now move to our next question. And this question comes from Johnny Xie of Deutsche Bank. Please go ahead, Johnny. Your line is open.

Thank you. I want to ask if the adjustment is over, and then in the second half of the year, will we see a reversal? Or do we need more time to make adjustments to the business? The second question I want to ask is still about the overseas part. I would translate my question. This is Johnny Hsieh from Deutsche Bank. I got two questions. First one, we noticed that the domestic GPV are still contracting in the first half, so I'm wondering if the contraction has bottomed out or if we need more time for this transformation. The second question is about overseas payments. We noticed that the overseas payment tick rate declined last year, so we are wondering what's the normalized tick rate in the future. Thank you.

Hi, Johnny. This is Arnold. I'm here to answer your questions. So first off, for domestic payment business, our top priority is to focus on the profitability of our overall payment business rather than focusing on the GPV growth, which we've already explained earlier that we, you know, strategize to focus more on business segments, customer segments that are more profitable and intentionally drop lower profit margins. So going forward, I think this trend will continue. We're not going to put GPV growth as our top priority, but rather we want to focus more on the GP margins and operating margins going forward. So I think in the future you will see this trend continues in the next few years domestically because on the bigger picture, China's non-cash penetration rate is already there. We are already dominating or we're first-tier players in the market. We have all the capabilities and tactics to drive our profitability. There are There are certain phases that we can ramp up GPVs, but we just intentionally choose at this time that we want to focus more on profitability, which we've shown to you all that we are announcing a first-time dividend payout. So I think in short term, our GPV will remain at a at this level, if not, you know, a little bit upwards. And in the next three to five years, we want to expand our GP margins. And, you know, right now our GP margins are around 20%, and we want to see, you know, the expandability of that. So second question on the fee rate. I think the international market overseas payment business is on the early stage. So right now our focus is to ramp up the GPVs and the businesses. So we want to take in as many different kinds of merchants as possible. So there are different countries and different regions within those different countries and regions different types of merchant profiles that they require lower or higher rates. But I think right now the ups and downs of fee rates of our international business is of a less observation. Rather, we want to focus on the improvement of our GDP growth and our merchant base growth. Also, on top of that, how we add other values such as AI agents and other value added services on top of the existing payment businesses. So in the near term, our overseas business will remain at this high level. We've explained to the market for the past year that our overseas fee rate is four to five times of our domestic fee rate. Differentiator will stay the same for the foreseeable future. Thank you.

Yeah, so just to add we have different products, regions, Geographies and therefore as we expand our product and diversity as we mentioned do expect that this would not be a stagnant number but the overseas number overall would still be a very very high meaningfully higher than the one in our original Chinese mainland business. So we target the 60 pips but at the same time we will continue to focus on GPV revenue and the businesses that can provide higher value.

Thank you. We will now move to our next question. And our next question comes from Erica Cho of Jefferies. Please ask your question, Erica. Your line is open.

Let me translate. Thank you for taking my questions. Could management share more about the overseas strategies and given the current macro and regulatory environment, what's the management of the domestic payment business? Also, how should we think about the operating expenses in the following quarters? Thank you.

Thanks a lot Erica. The first question in terms of overseas strategy, I think first of all we need to beef up our international talents team. We have been doing that. We need to continue to do that in order to cater all the new needs, demands from the merchants as well as the ambitions that we have just mentioned about. So from that end we hired many talents from the likes of global card networks, global banks to beef up our team and we also strike and so on. Online payments, agenda payments being very hot, we would continue to strike new products channels and deliver revenue and GPV from that perspective. I mentioned about some announcements in the prep break to come soon. Please stay tuned on that. And last but not least, our value-added services is indeed one of the key differentiators from a product perspective alongside all the online payments, agenda payments, and the innovation that we are doing on the payment side. and therefore as payments has gone overseas to become the leading force of driving the overseas growth of the company, the next curve of growth, so to speak, will be coming from the value added services that we can combine over there and that will be a very powerful combination. In terms of the domestic strategies, The environment over there is obviously different, but it doesn't mean that we cannot up our profit delivery and our margins as we have demonstrated in the first half of this year. We think that we have a lot of room to continue to provide that going forward by means of optimization of our business processes. It could be the increase of fee rates. It could be the sharing of the scheme profits. It could also be the increase of tools in AI that can maximize the margins as well as focusing on the right customers that can deliver higher margins. And therefore, we have quite a combination of different set of variety of tools that we can leverage. This is dynamic and we will continue to leverage that given our market leadership. We are seeing that in the payment space in China, The market leaders, the bigger companies continue to have an edge over the smaller ones, and we will continue to leverage on that. Now, when it comes to internal cost control, we mentioned about our digital employees being increased in usage within our system. That's really one of the driving forces of the decrease in administrative expenses. and on the R&D side actually reduced by even more than 10%. A lot of it is really putting R&D forces into shortening the cycle of product creation and maintenance, AI generation. And all of these stuffs are proprietary, created by us and therefore will continue to be innovative not just on the external business model footprint Thank you. I am showing no further questions and that concludes the question and answer session. I would now like to turn the conference back to the management for any additional or closing comments. Thank you everyone again for joining our results today. We are now ending the call, but if you have any further questions, do feel free to contact us directly. Our contact together with other information in relation to our results can be found also on our website at e-card.com. Thank you again, and see you again very soon.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.