Good day and thank you for standing by. Welcome to the Weibo Reports Second Quarter 2021 Financial Results Conference Call. At this time, all participants are in a listen-only mode. And after the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to your first speaker for today, Ms. [indiscernible]. Thank you. Please go ahead.

Thank you, operator. Welcome to Weibo's second quarter 2021 earnings conference call. Joining our call today are our Chief Executive Officer, Gaofei Wang, and our Chief Financial Officer, Fei Cao. The conference call is also being broadcast on the Internet and is 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 may 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 second quarter 2021 earnings conference call. [Foreign Language] On today's call, I will share with you highlights in Weibo's user, product and monetization in the second quarter of 2021. [Foreign Language] On the user front, Weibo's MAUs reached 566 million and average DAUs reached 246 million in June 2021, adding approximately 43 million and 16 million users year-over-year and quarter-over-quarter respectively, which represented the highest net addition number among the recent four quarters. In June, 94% of Weibo's MAU came from mobile. [Foreign Language] On the monetization front, leveraging further optimization in our competitive strategy and ad product offerings for cine industries, our total revenues reached $574.5 million in the second quarter, an increase of 48% year-over-year. Advertising and marketing revenues reached $502.3 million, an increase of 47% year-over-year. 94% of our ad revenues came from mobile. Our non-GAAP operating income in the second quarter reached $223.2 million [Foreign Language] Next, let me elaborate on our progress made in the areas of product and monetization in Q2. [Foreign Language] On the product front, starting from 2021, we have further enhanced Weibo's differentiated platform in key features such as social functions and hot trends. Coupled with effective channel strategies, we have further grown our user base and engagement. Meanwhile, we beefed up the investments in video products to reinforce users' mindset of using Weibo for video posting and consumption, so as to enhance our product's competitiveness. [Foreign Language] On the channel front, we backed up our channel investment with focus on improving user engagement, leveraging Weibo's advantage in user acquisition costs. Meanwhile, we reinforced the synergy between channel investment and subsequent content consumption, and thereby improving user engagement and retention with better consumption experience and retention of our channel users with…

Thank you, Gaofei. And hello, everyone. Welcome to Weibo's second quarter 2021 earnings conference call. Let's start with user metrics. In June 2021, Weibo's MAUs and average DAUs reached 566 million and 246 million respectively, both surpassing the peak level in March 2020 during the pandemic outbreak. On an annual basis, we had a net addition of approximately 43 million MAUS and 16 million DAUs, a notable reacceleration compared with prior quarters, leveraging our strength in serving public conversation, initiatives on video front as well as the effective channel investment. Turning to financials. As a reminder, my prepared remarks will focus on non-GAAP results and old comparisons on a year-over-year, unless otherwise noted. Now, let me walk you through our financial highlights for the second quarter of 2021. Weibo's second quarter 2021 net revenues were $574.5 million, an increase of 48%, exceeding the high end of our guidance. Operating income was $223.2 million, an increase of 83%, representing an operating margin of 39%. Net income attributable to Weibo reached $182.8 million, an increase of 60%, representing a nice margin of 32%. Diluted EPS was $0.79 compared to $0.15 in second quarter 2020. Now, let me give you more color on revenues. Weibo's advertising and marketing revenues for the second quarter 2021 increased 47% to $502.3 million. Mobile ad revenues were $417.3 million, contributing approximately 94% of total ad revenues, up from 89% last year. On top of good user momentum, Weibo delivered joint ad revenue growth with monetization scale reaching a record high. We're delighted to see broad-based strength across key verticals. In terms of revenue contribution, our top three verticals were FMCG, e-commerce and 3C products. Leveraging the e-commerce peak season, Weibo reinforced its unique value proposition to advertisers in serving their integrated branding plus performance needs, and thus…

[Operator Instructions]. First question is from the line of Thomas Chong of Jefferies.

[Foreign Language] Congratulations on a very strong set of results and strong revenue guidance. I have three questions. My first question is about the second half advertising outlook. And followed after that, can management also comment about our assessment about the impact on the pop-up ads in open app ads as well as education regulations, together with more cautious industry outlook in the property, auto as well as travel sector. And my third question is about our feedback. Can management comment about the growth drivers, such as pricing as well as inventory?

[Foreign Language] Let me, first of all, answer the question about the drivers of the growth in the second half of this year. So, as you can see, even though we had the factor that, last year, we had a pandemic and base number was pretty low, however, if we're talking about the year-on-year performance comparing with the same period in 2019, we're still enjoying 36% to 40% of the growth. And also, in Q1, we are also accelerating the growth, overall speaking. As a result, what you can see is that talking about our strong abilities, especially talking about the commercial marketing capabilities, and especially we have a marketing strategy of focusing on the content and hot topic marketing and also the combination of brand and performance. So, what you're going to see is that in almost all industries, we enjoy pretty good growth on the app. And especially, in FMCG, which is a very promising industry, we enjoy over 50% of the growth. And also, in those not-that-promising kind of industries, for example, in digital and also automobile, still we enjoy 50% and more growth. So, as a result, what you can see is that we really focus on a lot the sales and also products as well, and especially targeting those industries with a great amount of combination and synergy between brand and performance as well. So, this particular method has been highly recognized by the customers. [Foreign Language] And also, second of all, I would like to comment on the other aspects, especially talking about the inventory and also the product of the ad. So, what you can see is that, in the remark, we already mentioned that, in the first half, we had actually a very good inventory created for the – because of the…

Congratulations again.

Our next question is from the line of Alex Ko of Morgan Stanley.

[Foreign Language] Congrats on the solid results. So, on the user front, we had a strong quarter with accelerated pace of growth. Can management share what we have observed quarter-to-date and the expectation in the following quarters. We're also aware Weibo recently launched a rectification on Fandom. So, how would that impact the user growth and traffic in the second half of this year?

[Foreign Language] And also, first of all, I would like to comment on the very first part of the question, especially talking about the growth – talking about traffic and also the future users. So, since Q4 of last year, we have already stated that we are going to invest and also focus more on the users acquisition as well as the users cost of acquisition and also the retention as well. So, first of all, in terms of the channels, we have been collaborating more widely with those different brands and also operators as well as the other apps. So, the user volume from this particular channel has been increased for about two times. And also, the next thing is that in terms of the strategy optimization, as well as our improvement over the user retention, et cetera, we have been reducing the overall cost of the user acquisition. So, as a result, what we can see is not a significant increase in terms of investment paid into this particular area. [Foreign Language] And also, what we can see is that talking about the products, as we have already stated that because of the generation of the interest feed and also the super topic and also growth on that, as well as the very good growth over the relationship based feed, we can see is that we have further improved the activity engagement of the users, as well as the total kind of a user number. So, for example, because of a lot of hot topics and also some of the big events happening, we can see is that comparing with those platforms offering short videos or long videos, on Weibo, we can have a better attention trap to the customers and also users. And also, we are going…

Our next question is from the line of Miranda Zhuang of Bank of America.

My question is about the video business. Can management elaborate more on the initiatives for Weibo's video ecosystem? For example, the expansion of the content category, the assistance for the content creation and content distribution, and how does Weibo video compete with other video platforms with different value propositions? And also, can you provide more color on the development of the video ad monetization?

First of all, talking about the whole ecosystem, as we have already stated that, in 2021, our ecosystem will be pretty much focusing on the development of the video accounts. And also, we are encouraging more video creators to opening up their accounts and also further to boost the consumption as well as the supply of the video products. So, as we have already stated that we are exceeding 10 million as the threshold of all the video creators and also 30,000 of them had already the followers reaching 1 million. So, that is to say that, in Q2, quarter on quarter, we can see that we nearly doubled this particular volume of the videos created. [Foreign Language] And also, next thing is about the kind of total consumption of the videos. So, that is to say that we are still leveraging the advantage of Weibo as a social media platform, which is a very important one and to really trigger the consumption of the videos and also the other kinds because what you can see that is that go along with the consumption of videos, we also have the consumptions by the users to the text and images, et cetera. And also, what you can see is that we are really triggering more kind of topics, as well as the consumption of videos around the social media platform. And also, we are really encouraging more KOLs and also the other media to really disseminate those knowledges and also those videos as well as the content as well. So, that is to say that we are trying our best to diversify the content that we are providing through Weibo. So, a very good example is that, during the Olympics, what you can see is that not only we can see people's and also users consumption around the videos, short videos, for example, as well as the other live streaming, but also all the discussions triggered by that is pretty much around the video as a product. So, that is one of the major differentiating strategies and also unique selling points of Weibo. [Foreign Language] And also, furthermore, in terms of the ad monetization, what we can see is that with the increasing of the number of video accounts and also the increasing traffic, we can see a very good contribution to our ad inventory. And also, we see more customers post their ads on us and also place their ads on us. So, with also the enabling of the full screen ad, we can see a kind of more placement as well as the enhancement of the efficiency of the advertisement. So, that is to say that, in Q2, we had enjoyed a higher growth on the video ad than the other format of the ad. And now the video ad already accounted for about one-third of our total ad products and formats.

All right. Thank you. As there are no further questions, I'd like to hand the conference back to the management for closing remarks. Please continue.

Yes, thank you for joining us today. See you next quarter.

Thank you. And this concludes today's conference call. Thank you for participating. You now all disconnect.