Ladies and gentlemen, thank you for standing by, and welcome to Weibo Reports Fourth Quarter and Fiscal Year 2020 Financial Results Conference Call. At this time, all participants are in a listen-only mode. There will be a presentation, followed by a question-and-answer session. [Operator Instructions] I must advise you that this conference is being recorded. I would now like to hand the conference over to your first speaker, Sandra Zhang, Weibo IR. Thank you. Please go ahead.

Thank you operator. Welcome to Weibo's fourth quarter and fiscal year 2020 earnings conference call. During today our Chief Executive Officer, Gaofei Wang; and our Chief Financial Officer, Fei Cao. The conference call is also being broadcast on the Internet and available through Weibo's IR website. Before the management remarks, I would like to read you the Safe Harbor statement in connection with today's conference call. During today's conference call, we will make forward-looking statements, statements that are not historical facts, including statements of our beliefs and expectations. Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statements. Weibo assumes no obligation to update the forward-looking statements in this conference call and elsewhere. Further information regarding this and other risks is included in Weibo's Annual Report on 20-F and other filings with the SEC. All the information provided in this press release is occurring as of the date hereof. Weibo assumes no obligation to update such information, except as required under applicable law. Additionally, I’d like to remind you that our discussion today includes certain non-GAAP measures, which excludes stock-based compensation and certain other expenses. We use non-GAAP financial measures to gain a better understanding of Weibo's comparative operating performance and future prospects. Our non-GAAP financials excludes certain expenses, gains or losses, and other items that are not expected to result in future cash payments or are non-recurring in nature or are not indicative of our core operating results and our outlook. Please refer to our press release for more information about our non-GAAP measures. Following management prepared remarks, we’ll open the lines for a brief Q&A session. With this, I would like to turn the call over to our CEO, Gaofei Wang.

[Foreign Language] Thank you. Hello everyone and welcome to Weibo's fourth quarter and fiscal year 2020 earnings conference call. On today's call, I'll share with you highlights on Weibo's user product and monetization review the progress made in 2020 and elaborate our strategies for 2021. [Foreign Language] Let me start with our fourth quarter financial results. In the fourth quarter our total revenue increased 10% to $513.4 million, mainly attributable to less impact from COVID-19 pandemic to the advertising business as well as our efforts to optimize the competitive strategy for brand and performance ad business. Advertising and marketing revenue reached $453.5 million, an increase of 12% year-over-year with 91% of ad revenue coming from mobile. In the fourth quarter, non-GAAP operating income reached $204.1 million, an increase of 12% to 21%, year-over-year, representing a non-GAAP operating margin of 40%. [Foreign Language] For full year 2020, Weibo's total revenues reached $1.69 billion, a decrease of 4% year-over-year. Advertising and marketing revenues were $1.49 billion, a decrease of 3% year-over-year. Non-GAAP operating income reached $579.6 million, representing a non-GAAP operating margin of 34%. [Foreign Language] On the user front Weibo's MAU reached $521 million. And average DAU reached to $235 million in December 2020. 94% of Weibo's MAU came from mobile. [Foreign Language] As we review 2020, we faced two major challenges. First, on the user front, although, the pandemic in the first half of the year brought us large scale users to consume pandemic-related needs and hot trends, it had a negative impact on the content generation of entertainment vertical and certain other areas such as, tourism and sports, which resulted in less user engagement in this sector. With progress made on the pandemic control, we adjusted our strategy accordingly in the second half of this year, putting more emphasis…

Thank you, Gaofei, and hello everyone. Welcome to Weibo's fourth quarter and fiscal year 2020 earnings conference call. Let's start with user metrics. In December 2020, Weibo's MAUs reached 521 million, representing a net addition of five million users on a year-over-year basis. Weibo's average DAUs reached 225 million, representing a net addition of three million users on year-over-year basis. Mobile MAUs represented approximately 94% of total MAUs. As a reminder, my prepared remarks would focus on non-GAAP results and all comparisons are on a year-over-year basis unless otherwise noted. Now let me walk you through our financial highlights for the fourth quarter and fiscal year 2020. Weibo's fourth quarter 2020 net revenues, was $513.4 million, an increase of 10%. Operating income was $204.1 million, an increase of 21%, representing an operating margin of 20%. Net income attributable to Weibo is $212.7 million, an increase of 21%, representing a net margin of 41%. Diluted EPS was $0.92 compared to $0.77 in 2019. For full year 2020, total revenues reached $1.69 billion, a decrease of 4%. Operating income was $579.6 million, a decrease of 12%, representing an operating margin of 24%. Net income attributable to Weibo is $547.5 million, representing a net margin of 32%. Diluted EPS $2.38 compared to $2.78 in 2019. Let me give you more color on our fourth quarter and full year 2020 revenue growth. Advertising and marketing revenues for fourth quarter 2020 was $453.5 million, an increase of 12%. Mobile ad revenues reached $413.8 million, representing 91% of our total ad revenue, up from 88% last year. Full year 2020 advertising and marketing revenues reached to $1.49 billion, a decrease of 3%. This mobile ad revenue is contributing 90% of total ad revenue, up from 87% in 2019. Beside unprecedented challenges from COVID-19 and resulted full…

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] Your first question comes from the line of Tian Hou of TH Capital. Please ask your question.

[Foreign Language] Gaofei has already elaborated our 2021 strategy, can you elaborate a little bit in detail about your outlook in user growth and as well as your channel strategy? Thank you.

[Foreign Language] So relating to this question, before answering the question about 2021 let's talk about the issues that we had in 2020. So, for example, due to the COVID-19 that we really had a historical high or reaching a peak of those number of users in Q1. But actually, normally in the past, after consuming some of our products like the hot topic products or hot trend products, those consumers or those users are going to be with us and retain with us, to further consume the entertainment and also the other vertical related products. But actually, because of the COVID-19, in the second half of 2020, we had a very good management and also the restrictions on the entertainment-related product consumption. So the retention rate, of those, kind of customers or users dropped. So those are the major reasons of causing us to have a decreased number of users in Q2 and Q3, majorly. So in Q4, we have been doing some kind of a work, for example, increasing the investment to the user acquisition cost. And also, we really increased some kind of productization, in order to attract and also retain those, kind of users. [Foreign Language] And also, you can see that, we have been doing some kind of things, right now, because rather than paying attention to MAU, now we pay more attention to the total consumption as well as the frequency of the consumption specific. So, we can interpret that into the following kind of parameters, for example, DAU, and also some kind of frequency of the consumption, and also the total scale of the consumption. So that is actually going to really help us to improve our competitiveness as well as our kind of inventory of the monetization. [Foreign Language] And also, in…

Very helpful. Thank you. That's all my question.

Your next question comes from the line of Miranda Zhuang of Bank of America. Please ask your question.

[Foreign Language] Thank you for taking my question. So my question is, can you please share the ad spend outlook for the 2021? And what, kind of, your ad products and services will particularly gain traction and gain incremental budget allocations among your KA and SME clients across different industry sectors? Thank you.

[Foreign Language] And so let me answer this particular question. So first of all, in 2020 Q4, we have been seeing a very good recovery of our KA ad customer, especially we returned to the triple-digit growth. And also, we although had a year-on-year decrease on SME in Q4, but still that particular decrease rate has been reduced. And also, further in 2021, we're going to really see a kind of a very good growth on the brand customers, especially at the FMCG and also automotives, as well as the luxury as well. And also, in 2021, we're going to see also a very good growth for entertainment as well. And also, next part is about the SME. So this year, for example, we have seen a very good trend for gaming or Internet service, as well as online education, et cetera, et cetera, but actually we're not quite sure, whether or not we are going to see another doubling effect or doubling results of the gaming industry this year. And also, talking about the other, traffic diverting related SMEs, without a very strong demand on branding, actually in 2020, we were talking about those O2O or e-commerce businesses. We had a little bit -- another ideal performance in 2020, but still in 2021, we are going to see a further intense competition in the area that I mentioned. And also, next part is about the products. So, based on the social nature of Weibo, so we are going to really focus continuously on the kind of the strategy of the brand plus performance and also the content and also IP-based marketing strategies. So based on this particular content and IP-based marketing, as well as the strategy of brand plus performance, we have very good advantage in gaining the budget…

[Foreign Language] Thank you.

We'll take the final question from Alicia Yap of Citigroup. Please ask your question, Alicia.

Hi, good evening. Thank you for taking my questions. Also, congratulations on the results and the guidance. My questions is related to the ad inventory and also the competitive landscape. So, how does management elaborate the situation you are seeing in 2021 versus last year in terms of the ad pricing pressure and the supply for these ad inventory as compared to last year and even as compared to 2019? And also, any comment on the margins trend for 2021. Let me translate very quickly. [Foreign Language]

[Foreign Language] So first of all, talking about the ad inventory, so before in the first question and also to that first question I already mentioned that actually this year in terms of our strategies for the users, we are going to actually see that more of our investment and also the product-related strategies are going to focus more on the DAU and also the consumption frequency of the users and the per capita consumption traffic of the users from the previous major focus on MAU. So that's to say this particular DAU increase and also more frequency of the consumption of users will definitely drive the development and growth of the ad inventory. However, kind of, speaking based on the Q1 result it's very difficult for me to give you a kind of forecast about this particular ad inventory in 2021, especially, for Q1. And of course, we do have seen very good growth on the other video platforms, but still we are very much focused on increasing the DAU and also the frequency of consumption of users and these strategies will definitely bring a growth on the ad inventory.

In terms of your margin question, I will try to take this question. With the revenue growth as our primary goal and at the same time, we want to enhance our competitiveness of our platform so we may increase our investment in marketing channels compared to last year 2020. So on this basis we expect our operating margin can still reach well in the high level that is to say maybe no less than 30%, but there still will be a certain decline maybe the impact the decline will be single-digit maybe 5% compared to the level of last year. So in summary in this year, the company's all of strategies is mainly focused on improving our revenue growth and continue to improve the competitiveness of the platform at the user product level so the cost and expenses level. The main areas of investment will be increased will improve the marketing channel investment. In last year 2020, due to the epidemic and other impact market channel investment was conservative that is down from the year 2019. So considering the competitive user market and leveraging Weibo's relatively advantaged new user acquisition costs, we will ensure our coverage of basic channels such as free installation and focus on increasing the investment in user engagement. And another area is personnel-related costs. To maintain -- in order to maintain our competitiveness in the market in some key departments as such our advertising business department and our R&D department there are certain personnel increase, headcount increase and also the salary raise. So last year due to the impact of the pandemic, the company also enjoyed some government benefit. This will impact our margin this year. So in summary, the effect on our margin will be dropped from year-to-year.

Okay. Thank you for the color. Yes, thank you.

This concludes our conference call today. Thank you for joining. We'll see you next quarter. Bye-bye.

Thank you. Ladies and gentlemen, that does conclude our conference for today. Thank you for participating. You may now all disconnect.