Good day, and thank you for standing by. Welcome to Weibo Reports Third Quarter 2024 Financial Results. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Sandra Zhang. Please go ahead.

Thank you, operator. Welcome to Weibo's third quarter 2024 earnings conference call. Joining me today are our Chief Executive Officer, Gaofei Wang; and our Chief Financial Officer, Fei Cao. The conference call is also being broadcasted on the Internet [Technical Difficulty]

Please standby. Your conference will resume shortly. Please remain on the line. Your conference will resume shortly. Please continue.

Yeah, sure. Sorry. Yeah. 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 statements 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 Form 20-F and other filings with the SEC. All the information provided in this press release is occurring as of date hereof. Weibo assumes no obligation to update such information, except as required under applicable law. Additionally, I would 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 the future prospects. Our non-GAAP financials exclude 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 outlook. Please refer to our press release for more information about our non-GAAP measures. Following management's prepared remarks, we will 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] [Interpreted] Thank you. Hello, everyone. Welcome to Weibo's earnings conference call. Today, I will share with you highlights in Weibo's product monetization in the third quarter of 2024. On the user front, in September, Weibo's MAU reached approximately 587 million and the average DAUs reached approximately 257 million. This improvement is partly due to the adjustment in the user acquisition and growth strategy this year with a focus on attracting higher-quality users with -- through optimized channel strategy. Additionally, our product operation has prioritized at enhancing user engagement and retention on the platform. Combined with the boost from the Olympics, these efforts have led to an increase in overall DAU versus MAU ratio year-over-year. On the monetization front, driven by our enhanced marketing competitiveness in key industries, the positive impact from Olympic hot trends, as well as the strong momentum of the value-added service, Weibo's total revenue in the third quarter reached $464.5 million, up 5% year-over-year, of which ad revenue reached $398.6 million, up 2% year-over-year; and VAS revenue reached $65.9 million, up 25% year-over-year. Our non-GAAP operating income reached $164.5 million, representing a non-GAAP operating margin of 35%. Next, let me share with you our progress made in product and monetization in the third quarter. On the channel front, this year, we'll continue to enhance the display of Weibo's hot trend and social content in key positions of handset devices and improve the targeted reach and content consumption experience of high-quality users in collaboration with manufacturers, aiming to enhance the engagement and retention of channel users. In the third quarter, we partnered with handset manufacturers to particularly increase user reach and the content consumption of Olympic-related hot trends, and as a result, the average DAUs from this channel represent double-digit growth compared to the second quarter.…

Thank you, Gaofei, and hello, everyone. Welcome to Weibo's third quarter 2024 earnings conference call. Let's start with user metrics. In September 2024, Weibo's MAUs reached 587 million and average DAUs reached 257 million, reflecting a pullback from the Olympics peak as we enter back-to-school season. Additionally, in 2024, we have proactively adjusted our user strategy to put more emphasis on the acquisition and engagement of high-quality users, which resulted in improved DAU versus MAU ratio and strong social interactions this quarter. Turning to financials, as a reminder, my prepared remarks will focus on non-GAAP results. All monetary amounts are in US dollar terms and all comparisons are on a year-over-year basis, unless otherwise noted. Now, let me walk you through our financial highlights for the third quarter 2024. Weibo's third quarter 2024 net revenue was $464.5 million, an increase of 5%, or 3% on a constant currency basis, exceeding our own and Street expectations. Operating income was $164.5 million, representing operating margin of 35%. Net income attributable to Weibo reached $139.2 million, representing a net margin of 30%. Diluted EPS was $0.53. Let me give you more color on third quarter 2024 revenue performance. Weibo's advertising and marketing revenues for the third quarter 2024 was $398.6 million, an increase of 2%, or flattish on a constant currency basis. Mobile ad revenues were $374.2 million, contributing approximately 94% of total ad revenue. In terms of growth, FMCG, Internet services, and automobile were the largest contributors to growth. Among FMCG sector, we are encouraged to see strong momentum of food and beverage and apparel industry, driven by robust end demand during the Summer Olympics. That said, the overall FMCG growth was still dragged by the underperformance of cosmetics and personal care industry. The automotive sector continued to deliver solid growth, benefiting…

Thank you. [Operator Instructions] We will now take the first question from the line of Felix Liu from UBS. Please go ahead.

[Foreign Language] Let me translate myself. First, let me -- congratulations on the strong Q3 despite the challenging macro condition in the quarter. My question is on the fourth quarter advertisement outlook. In the light of the recent series of macro stimulus, how does management see the policies impacting your advertisement outlook in Q4? And can management share more details by industry verticals for Q4? Thank you.

[Foreign Language] [Interpreted] All right. Thank you very much for the question. So, in Q3, judging from the consumption related order indexes and also indicators, you've been seeing a slight decrease trend. So this is due to the lack of demand due to the weak economy of China. So, as a result, we do not see a very good performance in this consumer market area. So, in Q3, the ad revenue increase was primarily due to the hot trends topics, for instance, the Olympics and also some of the summer holiday dramas. Okay. And also, in Q4, still we have seen a lot of uncertainties. First of all, the overall trend is still pretty optimism. And also, we do need -- also, we do see the government implementing the policies to boost the internal and domestic demand. But still, there is a difficulty for us to see a recovery of the ad revenues from the luxury products industry and also the real estate. And also, we can see -- okay. And also, we can see that, for the government, we have been seeing some of the policies, for instance, the Olympics and also some of the subsidy policies, for instance, national subsidy policies, at the current stage targeting the 3C products and consumer electronics. So we've been seeing a very good boost in these industries immediately due to this particular policy of subsidy. So because in these industries and the verticals in Q3, they were experiencing the pressures, but still in Q4, we are expecting to see a year-on-year double-digit growth. And also, this kind of a national subsidy policy will still last until next year or even a year after next, further expanding from 3C and consumer electronics industry and vertical to the other areas like the decoration and…

Thank you. We will now take the next question from the line of Timothy Zhao from Goldman Sachs. Please go ahead.

[Foreign Language] Thank you, management, for taking my question. My question is regarding the VAS services segment. As we have seen very good growth for this segment over the past few quarters, could management share what are the drivers behind? And what is our expectations for the upcoming fourth quarter and in future in terms of our monetization strategy in VAS? Thank you.

[Foreign Language] [Interpreted] Thanks for this question. So, Weibo's VAS, value-added business or services, maintained a double-digit growth for two consecutive quarters this year, primarily due to the continuous growth of the membership business revenue. And on one hand, as we have already shared in the prepared remarks, as you can see that our channel strategy is pretty much focused on the acquisition and also the activity of the high-quality users, and this is our focus in 2024. And this has enabled our platform to retain a high proportion of high-value users. And also, this particular user group has a very strong and also even stronger demand for value-added services. Okay. And also, around and focusing on this high-value users, our -- also we have been doing some of the R&Ds of the new products according to their needs, for instance, the launch of SDIP, which has further upgraded the social rights and also interests. And also, we can see that starting from Q2, we began to promote the identity authentication rights and interests of the social media-based members. And also, this has helped us to enhance the conversion efficiency of the other social rights and also interests. Okay. And also, at the same time, in terms of the V-Plus added value services that provided to those key accounts, the Big Vs, this year also, we have been seeing a very good growth and rapid growth. And this has helped us to really enrich the content ecosystem for finance, education, and also the other sectors as well. This is not that helpful per se to the revenue growth, but still, this is really helpful for us to construct a much better and integrated ecosystem. And also, we expect that in Q4, the value-added services revenue will still keep a very high growth rate. Thank you.

Thank you. We will now take the next question from the line of Miranda Zhuang from Bank of America Securities. Please go ahead.

[Foreign Language] Can management provide some updates about the progress in AI in the second half this year in aspects like the content production, commercialization, and like operational efficiencies? What kind of tangible benefits are you seeing? Thank you.

[Foreign Language] [Interpreted] Thanks for this question. Last quarter, we have already shared with everybody the large model independently developed by Weibo has successfully passed the filing. And also, we've been using this a lot to really improve the efficiency and also the operation capabilities by making a lot of AI applications. So, today, I'm going to share with you my opinions from two aspects. One is the product, and second one is the monetization strategies. Okay. So, first of all, in Q3, we primarily applied the AI-based intelligent search functions. And also, you can see that in Q3 versus that of Q2, we've been seeing around 10% growth for both DAUs using intelligent searching and also the traffic as well. And at the current stage, in terms of the total MAUs of using intelligent search and features, this has -- this number has already exceeded 20 million, which is the -- doubled, actually, based on the number of the last quarter. Okay. And also, as we have already mentioned in the previous quarter earnings call that we have been having the AI assistant features for those Big Vs and also important account users, and based on the previously generated content, this AI assistant is going to be helping them to having the new content generated. And also in Q3, we've been adding some of the new features to this AI feature, for instance, the summary of the key questions and also the self-training for the bloggers. And also, the total number of trial users in Q3 has already been increasing a lot, comparing with that of Q2. And also, for those accounts that are already applied for the trial and also for the test use, the retain rate is already exceeding 85%. Okay. And also, in Q3, we've been already applying the AI in the technology department of Weibo and to facilitate the product R&D and also technological R&D as well. And also, we've been actively using the V-code feature in Q4 to further increase the efficiency of the coding and programming of the technicians now. But of course, at the current stage, we do not have a lot of figures to be shared with everyone. So, please stay tuned for another one quarter or two quarters before you are able to see a lot of statistics coming out from this application. Okay. Thank you.

Thank you. There are no further questions at this time. I would like to hand back over to management for closing remarks.

Thanks, operator. This wraps up our conference call today. Thank you for joining us. We'll see you next quarter.

This concludes today's conference call. Thank you for participating. You may now disconnect.