Yalla Group Ltd (YALA) 2024 Q2 法說會逐字稿

Good morning and good evening, ladies and gentlemen. Thank you for standing by for Yalla Group Limited second-quarter 2024 earnings conference call. (Operator Instructions)

早安，晚上好，女士們先生們。感謝您出席 Yalla Group Limited 2024 年第二季財報電話會議。（操作員說明）

conference call is being recorded. Now I would like to turn the call over to your speaker host today, Mr. Logan Ye, IR Manager of the company. Please go ahead, sir.

電話會議正在錄音。現在我想把電話轉給今天的演講主持人，公司IR經理葉洛根先生。請繼續，先生。

Hello, everyone, and welcome to Yalla's second-quarter 2024 earnings conference call. We released our earnings press release earlier today, and the release is now available on our IR website, as well as our Newswire outlets. Before we continue, please note that the discussion today will contain forward-looking statements made under the safe harbor provision of the US Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties.

大家好，歡迎參加 Yalla 2024 年第二季財報電話會議。今天早些時候，我們發布了收益新聞稿，該新聞稿現已在我們的投資者關係網站以及新聞專線網站上發布。在我們繼續之前，請注意，今天的討論將包含根據 1995 年美國私人證券訴訟改革法案的安全港條款做出的前瞻性陳述。前瞻性陳述涉及固有風險和不確定性。

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. Yalla does not assume any obligation to update any forward-looking statements except as required by law. Please also note that Yalla's earnings release and this conference call include a discussion of unaudited GAAP financial information, as well as unaudited non-GAAP financial measures. Yalla's press release contains a reconciliation of the unaudited non-GAAP measures to the unaudited most directly comparable GAAP measures.

因此，我們未來的結果可能與今天表達的觀點大不相同。有關這些以及其他風險和不確定性的更多資訊包含在我們向 SEC 提交的收益發布和年度報告中。除法律要求外，Yalla 不承擔更新任何前瞻性聲明的義務。另請注意，Yalla 的收益發布和本次電話會議包括對未經審計的 GAAP 財務資訊以及未經審計的非 GAAP 財務指標的討論。Yalla 的新聞稿包含未經審計的非 GAAP 衡量標準與未經審計的最直接可比較的 GAAP 衡量標準的調整表。

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 strategy. He will be followed by Mr. Saifi Ismail, the company's President, who will briefly review our recent business developments. Mrs. Karen Hu, our Chief Financial Officer, 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. Mr. Jeff Xu, our Chief Operating Officer, will join the Q&A session.

今天，您將聽到我們的董事長兼執行長楊濤先生的講話，他將概述我們的最新成就和成長策略。緊隨其後的是公司總裁 Saifi Ismail 先生，他將簡要回顧我們最近的業務發展。我們的財務長胡凱倫女士隨後將提供有關公司財務業績的更多詳細資訊並討論我們的財務前景。在管理階層準備好發言後，我們將開始提問。我們的營運長 Jeff Xu 先生將參加問答環節。

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.

話雖如此，我現在想將電話轉給我們的董事長兼執行長陶陽先生。請繼續，先生。

Thank you, everyone, for joining our second quarter 2024 earnings conference call. We are pleased to report strong second quarter results, even with the impact of Ramadan, which lasted from March 11 through April 9 this year, our second quarter revenues reached $81.2 million, beating the upper end of our guidance. This outstanding performance underscores the remarkable popularity of our flagship applications, Yalla and Yalla Ludo, as well as our effective strategy for high-quality growth.

感謝大家參加我們的 2024 年第二季財報電話會議。我們很高興地報告強勁的第二季度業績，儘管受到今年 3 月 11 日至 4 月 9 日齋月的影響，我們第二季度的收入仍達到 8120 萬美元，超出了我們指導的上限。這一出色的表現凸顯了我們的旗艦應用 Yalla 和 Yalla Ludo 的顯著受歡迎，以及我們高品質成長的有效策略。

Our operating efficiency improvements are also yielding positive results, elevating our net margin to 38.6% in the second quarter. Throughout the second quarter, we remained dedicated to enhancing our operational procedures, boosting user engagement, optimizing technology utilization to improve efficiency, and refining our user acquisition strategy.

我們的營運效率改善也產生了正面成果，第二季淨利率提升至 38.6%。在整個第二季度，我們仍然致力於改善我們的營運流程，提高用戶參與度，優化技術利用以提高效率，並完善我們的用戶獲取策略。

This effort has empowered us to build a more engaged community of users, who exhibit high willingness to spend on our content and service. Supported by our solid business fundamentals and dedicated teams, we remain proud to capture new business opportunities and fulfill MENA users' evolving online social networking needs.

這項努力使我們能夠建立一個更積極參與的用戶社區，他們表現出很高的消費意願來購買我們的內容和服務。在我們堅實的業務基礎和敬業的團隊的支持下，我們仍然很自豪能夠抓住新的商機並滿足中東和北非用戶不斷變化的線上社交網路需求。

The ongoing digital transformation in the Middle East continues to attract attention globally in this year with international tech companies keen to explore opportunities in the region. 2024 marks Yalla's eight years in the Middle East and the eighth anniversary of our flagship product, Yalla. Over those years, Yalla has grown from our Group's first voice chat product into the world's most downloaded voice chat app for 2023 based on data.ai's research with a highly engaged and loyal user community.

今年，中東正在進行的數位轉型繼續吸引全球關注，國際科技公司熱衷於探索該地區的機會。 2024 年是 Yalla 進入中東八週年，也是我們的旗艦產品 Yalla 推出八週年。多年來，根據 data.ai 的研究，Yalla 已從我們集團的首款語音聊天產品發展成為 2023 年全球下載量最多的語音聊天應用程序，擁有高度參與和忠誠的用戶社區。

Keeping our user first philosophy in mind, we have consistently created memorable experiences and forged deep connections with our users by iterating and upgrading our products to meet their evolving needs. Meanwhile, as an industry pioneer, we have helped propel the evolution and development of Internet products and the broader internet sector in the MENA region.

我們牢記用戶至上的理念，透過迭代和升級我們的產品來滿足他們不斷變化的需求，不斷創造令人難忘的體驗，並與用戶建立深厚的聯繫。同時，作為行業先驅，我們幫助推動了中東和北非地區互聯網產品和更廣泛互聯網領域的演進和發展。

We will remain committed to driving the Middle East digital transformation, seizing emerging opportunities and growing with our users and the industry, as we lead the region's development chance. Turning to Yalla Game's development and future strategy. The gaming sector continues to demonstrate immense growth potential amid MENA's thriving digital transformation.

我們將繼續致力於推動中東數位轉型，抓住新興機遇，與用戶和產業共同成長，並引領該地區的發展機會。談談Yalla Game的發展和未來策略。在中東和北非地區蓬勃發展的數位轉型中，遊戲產業持續展現出巨大的成長潛力。

Yalla is capturing that potential with consistent investments in MENA's mid-core and hard-core game market, attracting MENA's users with a wider range of game options tailored to their unique preferences. This year, we have focused on the acceleration and divestment of mid-core and hard-core games, where we can leverage the extensive expertise, talented workforce and abundant resources we have accumulated in the casual gaming sector. Our product teams are currently developing and refining a strong pipeline of self-developed games set to debut throughout 2025.

Yalla 透過對中東和北非中核和硬核遊戲市場的持續投資來抓住這一潛力，透過根據中東和北非地區用戶獨特喜好量身定制的更廣泛的遊戲選擇來吸引他們。今年，我們將重點放在中硬派遊戲的加速和撤資，充分利用我們在休閒遊戲領域累積的豐富專業知識、人才隊伍和豐富資源。我們的產品團隊目前正在開發和完善一系列強大的自主開發遊戲，預計將於 2025 年首次亮相。

On a related note, we are proactively exploring AI technology applications to optimize our team's productivity, particularly in UI design, which has high requirements for detailed, time-consuming artistic work. By harnessing the power of AI, our UI team has notably enhanced efficiency, leading to substantial improvement in the team's capacity and facilitating faster innovation in product features and in gameplay.

與此相關的是，我們正在積極探索人工智慧技術的應用，以優化團隊的生產力，特別是在UI設計方面，這對細緻、耗時的藝術工作要求很高。透過利用AI的力量，我們的UI團隊的效率得到了顯著提升，團隊能力得到了大幅提升，促進了產品功能和玩法的更快創新。

We are excited about AI's transformative potential, and we will continue to seek creative applications across our business to drive product iteration and operational upgrades. As we mentioned on every call, our vision is for Yalla to become the largest online social networking and entertainment company in MENA.

我們對人工智慧的變革潛力感到興奮，我們將繼續在整個業務中尋求創意應用，以推動產品迭代和營運升級。正如我們在每次電話會議中提到的，我們的願景是讓 Yalla 成為中東和北非地區最大的線上社交網路和娛樂公司。

This quarter represented another solid start toward our vision. I'm proud of the many firsts we have achieved in this region and its Internet industry, creating a better digital life for our loyal users in the Yalla community. Our commitment to MENA, its people, and its rich culture is unwavering, inspiring our teams' ongoing generation of new ideas, as new products to meet MENA's users' evolving needs and facilitate digitalization throughout the region.

本季是我們實現願景的另一個堅實的開始。我為我們在該地區及其互聯網行業取得的許多第一感到自豪，為亞拉社區的忠實用戶創造了更好的數位生活。我們對中東和北非地區、其人民及其豐富文化的承諾堅定不移，激勵我們的團隊不斷產生新想法和新產品，以滿足中東和北非地區用戶不斷變化的需求並促進整個地區的數位化。

Now, I will turn this call over to our President, Mr. Saifi Ismail for a closer look at our recent developments.

現在，我將把這個電話轉給我們的總統賽菲·伊斯梅爾先生，以便更仔細地了解我們最近的事態發展。

Hello, everyone. Thanks for joining us today. Let's take a closer look at our second quarter operations and our product performance. We redoubled our efforts to enhance user experience and engagement this quarter, and we are pleased to see these efforts paying off across our vibrant Yalla community. Our average monthly active users increased by 14.1% year over year to 39 million, reflecting our products enduring appeal.

大家好。感謝您今天加入我們。讓我們仔細看看我們第二季的營運情況和產品表現。本季我們加倍努力增強用戶體驗和參與度，我們很高興看到這些努力在我們充滿活力的 Yalla 社群中得到回報。我們的平均每月活躍用戶年增 14.1% 至 3,900 萬，反映出我們的產品經久不衰的吸引力。

For example, our 8th anniversary celebration provided us with an opportunity to engage in new users and loyal fans alike with our [explored award] of Yalla event. This iconic online festival was featured in the Apple Store and Google store, [boosting] average daily consumption of gold coin game currency to record high for our anniversary events.

例如，我們的 8 週年慶典為我們提供了一個機會，透過 Yalla 活動的[探索獎]來吸引新用戶和忠實粉絲。這個標誌性的線上節日在蘋果商店和谷歌商店上架，[推動]金幣遊戲幣的日均消費量創下週年紀念活動的新高。

We are also leveraging offline events to strengthen our product and brand awareness, including our Ludo Champion Offline Tournament series. The two tournaments we have held thus far in Riyadh and Baghdad, where smash hits attracting over 150,000 registered players and garnering overwhelmingly positive feedback from participants.

我們也利用線下活動來加強我們的產品和品牌知名度，包括我們的 Ludo Champion 線下錦標賽系列。迄今為止，我們在利雅德和巴格達舉辦的兩場比賽吸引了超過 15 萬名註冊玩家，並獲得了參與者壓倒性的正面回饋。

In June, we celebrated their success with a magnificent slide show on the Burj Khalifa in Dubai, the world's tallest structure, and for Yalla, a symbol of MENA's endless possibilities. Offline events like these deepen gamers engagement with our products and enhance our brand influence locally, further unlocking the MENA region's potential.

六月，我們在杜拜哈利法塔（世界最高建築）和象徵中東和北非無限可能性的亞拉 (Yalla) 上舉辦了一場精彩的幻燈片放映，慶祝了他們的成功。這類線下活動加深了玩家對我們產品的參與度，增強了我們在當地的品牌影響力，進一步釋放了中東和北非地區的潛力。

We are also thrilled to announce that Yalla partnered with the Dubai Department of Economy and Tourism, DET for third Dubai Esports and Games Festival, DEF in April. As part of the collaboration, Yalla Ludo hosted an online tournament Game Battle with the DEF attracting over 4 million participants.

我們也很高興地宣布，Yalla 於 4 月與杜拜經濟和旅遊部 DET 合作舉辦了第三屆杜拜電競和遊戲節 DEF。作為合作的一部分，Yalla Ludo 與 DEF 舉辦了一場線上錦標賽 Game Battle，吸引了超過 400 萬名參與者。

We incorporated Iconic Dubai landmarks and symbols into Ludo's interface, including themed dice, board themes and avatar frames, providing players with an immersive gaming experience celebrating Dubai's vibrant culture. This collaboration underscores our commitment to innovation and promoting the Middle East rich heritage, while delivering unparalleled user experience.

我們將標誌性的杜拜地標和符號融入 Ludo 的介面中，包括主題骰子、棋盤主題和頭像框架，為玩家提供身臨其境的遊戲體驗，慶祝杜拜充滿活力的文化。此次合作凸顯了我們對創新和弘揚中東豐富傳統的承諾，同時提供無與倫比的使用者體驗。

Finally, we were extremely honored to receive the prestigious Dubai Games Star Award at the MENA Games Industry Award 2024, held at the world-renowned Dubai Games Expo Summit. The award celebrated the region's top talent in game development, publishing and support services. Yalla Group was selected by a panel of 80 industry experts for the top spot in the Dubai Games Star category, a testament to our remarkable success, influence and innovation in gaming, as well as our commitment to fostering growth across MENA's gaming industry.

最後，我們非常榮幸地在世界著名的杜拜遊戲博覽會高峰會上舉辦的 2024 年中東和北非遊戲產業獎中榮獲久負盛名的杜拜遊戲之星獎。該獎項旨在表彰該地區遊戲開發、發行和支援服務的頂尖人才。Yalla Group 由80 位產業專家組成的評審團評選為杜拜遊戲之星類別的榜首，證明了我們在遊戲領域的卓越成功、影響力和創新，以及我們對促進中東和北非遊戲產業成長的承諾。

We are grateful to the MENA Games Industry Awards organization for their recognition and look forward to further shaping the industry future, as the largest online social networking and gaming platform in the MENA region. In conclusion, throughout the past eight years, we have established a strong presence in the MENA by creating innovative products that align with local users' habits and preferences.

我們感謝中東和北非遊戲產業獎組織的認可，並期待作為中東和北非地區最大的線上社交網路和遊戲平台，進一步塑造產業的未來。總之，在過去的八年裡，我們透過創造符合當地用戶習慣和偏好的創新產品，在中東和北非地區建立了強大的影響力。

We have also consistently fostered extensive collaboration with the local channels and engagement with communities, [probing] the growth of the digital economy and the Internet industry. As the region's leader in online social networking and gaming, we are proud to play a key role in the MENA's digital transformation. As always, our vision is to become the number-one online social networking and entertainment platform in the MENA region.

我們也持續促進與當地通路的廣泛合作和社區參與，[探索]數位經濟和網路產業的成長。作為該地區線上社交網路和遊戲領域的領導者，我們很自豪能夠在中東和北非地區的數位轉型中發揮關鍵作用。一如既往，我們的願景是成為中東和北非地區排名第一的線上社交網路和娛樂平台。

With that, I will now turn the call over to our CFO, Karen, who will discuss our key financial and operational results.

現在，我將把電話轉給我們的財務長凱倫，她將討論我們的主要財務和營運表現。

Thank you, Saifi. Hello, everyone. Thank you for joining us today. Our financial performance remained robust through the second quarter of 2024. Our top line again exceeded our expectations and sustained our year-over-year revenue growth momentum, as we strove for high-quality development and user growth.

謝謝你，賽菲。大家好。感謝您今天加入我們。2024 年第二季我們的財務表現依然強勁。在努力實現高品質發展和用戶成長的同時，我們的營收再次超越預期，並保持了同比收入成長勢頭。

Our consistent operating efficiency enhancements also continued to yield positive results. Our net income -- our net margin rose by 2.9 percentage points year over year to 38.6%, while net income increased by 10.9% to USD31.4 million. By leveraging our solid business fundamentals, we will remain primed to capture new business opportunities and deliver sustainable value to our all stakeholders in the long run.

我們持續不斷的營運效率提升也持續取得正面成果。我們的淨利潤－淨利率年增2.9個百分點，達到38.6%，淨利成長10.9%，達到3,140萬美元。透過利用我們堅實的業務基礎，我們將繼續做好捕捉新商機的準備，並從長遠來看為所有利害關係人提供可持續的價值。

Let's move on to our detailed financials for the second quarter of 2024. Our revenues were USD81.2 million in the second quarter of 2024, a 2.5% increase from USD79.2 million in the second quarter of last year. The increase was primarily driven by the broadening of our user base and our enhanced monetization capability. Our solid revenue growth was also partially attributable to the significant increase in ARPU, which grew from USD5.8 in the second quarter of 2023 to USD6.6 in the second quarter of 2024.

讓我們繼續了解 2024 年第二季的詳細財務數據。2024 年第二季我們的營收為 8,120 萬美元，比去年第二季的 7,920 萬美元成長 2.5%。這一成長主要是由於我們用戶群的擴大和貨幣化能力的增強。我們營收的穩健成長也部分歸功於 ARPU 的大幅成長，從 2023 年第二季的 5.8 美元成長到 2024 年第二季的 6.6 美元。

Now let's take a look at our costs and expenses. Our total cost and expenses were USD51.6 million in the second quarter of 2024, a 6.8% decrease from USD55.3 million in the same period of last year. Our cost and revenues increased by 2.5% to USD29 million in the second quarter of 2024 from USD28.3 million in the same period of last year, primarily due to higher commission fees paid to third-party payment platforms, as a result of increasing revenue generated.

現在讓我們來看看我們的成本和費用。2024年第二季我們的總成本和費用為5,160萬美元，比去年同期的5,530萬美元下降6.8%。我們的成本和收入從去年同期的2830萬美元增長2.5%至2024年第二季度的2900萬美元，主要是由於收入增加而向第三方支付平台支付的佣金增加生成的。

Cost of revenues, as a percentage of total revenues remained relatively stable at 35.7% in the second quarter of 2024. Our selling and marketing expenses were USD8.5 million in the second quarter of 2024, a 31.4% decrease from USD12.4 million in the same period of last year, primarily driven by our more disciplined advertising and promotion approach. Selling and marketing expenses, as a percentage of total revenues decreased from 15.6% in the second quarter of 2023 to 10.5% in the second quarter of 2024.

2024 年第二季度，收入成本佔總收入的百分比保持相對穩定，為 35.7%。2024 年第二季度，我們的銷售和行銷費用為 850 萬美元，比去年同期的 1,240 萬美元下降 31.4%，這主要是由於我們更嚴格的廣告和促銷方法所致。銷售和行銷費用佔總收入的百分比從2023年第二季的15.6%下降至2024年第二季的10.5%。

Our general and administrative expenses was $7.6 million in the second quarter of 2024, a 5.5% decrease from USD8 million in the same period of last year, primarily driven by lower share-based compensation expenses recognized in the second quarter of 2024. General and administrative expenses, as a percentage of total revenues decreased from 10.1% in the second quarter of 2023 to 9.3% in the second quarter of 2024.

2024 年第二季度我們的一般和管理費用為 760 萬美元，比去年同期的 800 萬美元下降 5.5%，主要是由於 2024 年第二季度確認的股權激勵費用減少。一般及管理費用佔總收入的百分比從2023年第二季的10.1%下降至2024年第二季的9.3%。

Our technology and product development expenses were USD6.5 million in the second quarter of 2024, a 1.6% decrease from USD6.6 million in the same period of last year, primarily driven by lower share-based compensation expenses recognized in the second quarter of this year. Technology and product development expenses, as a percentage of total revenue decreased from 8.3% in the second quarter of 2023 to 8% in the second quarter of 2024.

2024 年第二季度，我們的技術和產品開發費用為 650 萬美元，比去年同期的 660 萬美元下降 1.6%，主要是由於 2024 年第二季度確認的股權激勵費用減少所致。技術和產品開發費用佔總收入的百分比從2023年第二季的8.3%下降至2024年第二季的8%。

As such, our operating income was USD29.6 million in the second quarter of 2024, a 23.8% increase from USD23.9 million in the second period -- in the same period of last year. Excluding share-based compensation expenses, our non-GAAP operating income in the second quarter of 2024 was USD33.5 million, up 13.9% year over year.

因此，2024 年第二季我們的營業收入為 2,960 萬美元，比去年同期的第二季 2,390 萬美元成長 23.8%。不計入股權激勵費用，2024年第二季我們的非公認會計原則營業收入為3,350萬美元，較去年同期成長13.9%。

Our interest income was USD7.1 million in the second quarter of 2024 compared with USD4.6 million in the same period of 2023, primarily due to an increase in the interest rates applicable to the company's bank deposits. Our income tax expenses was USD5.8 million in the second quarter of 2024 compared with USD821,000 in the same period of last year. The increase was primarily due to the introduction and implementation of UAE's Corporate Tax Law, which is effective for the financial years starting on or after June 1, 2023.

2024年第二季我們的利息收入為710萬美元，而2023年同期為460萬美元，主要是由於公司銀行存款適用的利率上升。2024 年第二季我們的所得稅費用為 580 萬美元，去年同期為 821,000 美元。這一增長主要是由於阿聯酋企業稅法的引入和實施，該法在 2023 年 6 月 1 日或之後開始的財政年度生效。

Moving to our bottom line, our net income increased by 10.9% to USD31.4 million in the second quarter of 2024 compared with USD28.3 million in the same period of last year.

說到獲利，2024 年第二季我們的淨利潤成長 10.9%，達到 3,140 萬美元，而去年同期為 2,830 萬美元。

Next, I would like to briefly review our liquidity and capital resources. Our cash position remains solid. As of June 30, 2024, we had cash and cash equivalents, restricted cash, term deposits and short-term investments of USD528.7 million compared with USD535.7 million, as of December 31, 2023.

接下來我想簡單回顧一下我們的流動性和資金來源。我們的現金狀況依然穩定。截至2024年6月30日，我們的現金及現金等價物、受限現金、定期存款及短期投資為5.287億美元，截至2023年12月31日為5.357億美元。

Under our USD150 million share repurchase program that began on May 21, 2021, and has since been extended by our Board through May 21, 2025. We have cumulatively repurchased 3,972,876 ADS all Class A ordinary shares in open market cash repurchases totaling approximately USD35.5 million, as of June 30, 2024.

根據我們於 2021 年 5 月 21 日開始的 1.5 億美元股票回購計劃，董事會已將該計劃延長至 2025 年 5 月 21 日。截至2024年6月30日，我們已透過公開市場現金回購累計回購了3,972,876股ADS全A類普通股，總額約3,550萬美元。

Moving to our outlook, for the third quarter of 2024, we expect our revenues to be between USD75 million and USD82 million. The above outlook is based on the current market conditions and reflects the company's management's current and preliminary estimates of the market and operating conditions and customer demand, which are all subject to change.

展望 2024 年第三季度，我們預計營收將在 7,500 萬美元至 8,200 萬美元之間。上述展望基於當前市場狀況，反映了公司管理層對市場和經營狀況以及客戶需求的當前和初步估計，這些估計均可能發生變化。

This concludes our prepared remarks for today. Operator, we are now ready to take questions.

我們今天準備好的演講到此結束。接線員，我們現在準備好回答問題。

Thank you. We will now begin the question-and-answer session. (Operator Instructions)

謝謝。我們現在開始問答環節。（操作員說明）

Sarah Hu, Haitong International.

Sarah Hu，海通國際。

Thank you, management for taking my questions and congratulations on a solid quarter. So could management elaborate more on the sales and marketing strategy and trends in 2024?

謝謝管理層回答我的問題，並祝賀這個季度表現出色。那麼管理階層能否更詳細地闡述 2024 年的銷售和行銷策略和趨勢？

Sarah, thank you for your question. We have insisted on quality growth strategy in 2024, which requires consistently optimizing our sales and marketing strategy and efficiency. This includes more detailed budget management, a focus on ROI and diversifying user acquisition channels, online and offline, among other things. As you can see from the financial report, our efforts have resulted in a solid improvement in our sales and marketing efficiency over the past 2 quarters. We think our sales and marketing expenses will remain at a similar level for the second half of 2024.

莎拉，謝謝你的問題。2024年我們堅持有品質的成長策略，這需要不斷優化行銷策略和效率。這包括更詳細的預算管理、對投資回報率的關注以及線上和線下用戶獲取管道的多樣化等。從財務報告中可以看出，我們的努力在過去兩個季度中使我們的銷售和行銷效率得到了紮實的提高。我們認為 2024 年下半年我們的銷售和行銷費用將維持在類似水準。

Though, we may launch new products for test in Q4, your feedback indicates we need to increase our sales and marketing budget to promote these products. We will adjust our guidance accordingly.

雖然我們可能會在第四季度推出新產品進行測試，但您的回饋表明我們需要增加銷售和行銷預算來推廣這些產品。我們將相應調整我們的指導。

Thank you.

謝謝。

Xueqing Zhang, CICC.

張學慶，中金公司。

Thanks, management, for taking my question. Congratulations on the solid quarter. You did well in the first half of this year. So how are the company's key products performing in third quarter and what's the management outlook for the full year in 2024?

謝謝管理層回答我的問題。恭喜本季業績穩定。今年上半年你做得很好。那麼公司第三季的主要產品表現如何，2024年全年的管理階層展望如何？

Hi, Xueqing. This is Yang. Thank you for your question. For 3Q 2024, according to what we have observed over the past month and a half, Yalla and Yalla Ludo, our flagship applications are performing well and stably, as we continue to roll out new features and operating events. And you can also see the trend from the guidance we provided earlier, we think Q3 is likely to outperform Q2 at this point.

嗨，雪晴。這是楊。謝謝你的提問。2024年第三季度，根據我們過去一個半月的觀察，我們的旗艦應用Yalla和Yalla Ludo表現良好且穩定，我們不斷推出新功能和營運活動。您也可以從我們之前提供的指導中看到趨勢，我們認為此時第三季的表現可能會優於第二季。

On the margin side, the Yalla Ludo team is organizing a series of offline tournament across different cities in MENA to increase our brand's local impact, efficiently penetrate the market and reach more users through offline channels with higher ROI. So you can see that our operating efficiency is consistently improving. For the rest of 2024, I think we will maintain this solid and stable trend with improved efficiency. Hope this answer your questions.

在利潤方面，Yalla Ludo團隊正在中東和北非地區的不同城市組織一系列線下錦標賽，以提高品牌在當地的影響力，有效滲透市場，透過線下管道接觸更多用戶，獲得更高的投資回報率。所以你可以看到我們的營運效率不斷提高。在2024年剩下的時間裡，我認為我們將保持這種堅實穩定的趨勢，並提高效率。希望這能回答您的問題。

Chenghao Li, CICC.

李成浩，中金公司。

Yes, Hi, management. Thanks for taking my question. Congratulations on a solid quarter. My question is about our game business. How should we view Yalla Game's strategy? And could management share more color on new games' test feedback and the launch timeline?

是的，嗨，管理層。感謝您提出我的問題。恭喜本季業績穩定。我的問題是關於我們的遊戲業務。我們該如何看待Yalla Game的策略？管理層能否就新遊戲的測試回饋和發佈時間表分享更多資訊？

Hi, Chenghao, thank you for your question. For Yalla Game, this year, we are allocating more resources to our in-house teams' self-developed products, mainly focusing on mid-core games. We are accumulating valuable experience and broadening our team's expertise through this process, which will empower us to move forward with confidence in the future.

你好，程浩，謝謝你的提問。對於雅拉遊戲來說，今年我們將更多的資源投入內部團隊的自研產品上，主要集中在中核遊戲。透過這個過程，我們正在累積寶貴的經驗並擴大我們團隊的專業知識，這將使我們對未來充滿信心地前進。

We currently have three self-development mid-core games in our pipeline and plan to start testing by the end of this year. Then we need some time to work on iterations based on the feedback we achieved from the users before we start on scale promotions.

目前我們有三款自主開發的中核遊戲正在籌備中，並計劃在今年底開始測試。然後我們需要一些時間根據用戶的回饋進行迭代，然後再開始大規模促銷。

Meanwhile, we are also proactively discussing collaborations with potential partners in the game industry. We'll let you know once there's anything we can share publicly.

同時，我們也積極與遊戲產業的潛在合作夥伴探討合作。一旦有任何內容可以公開分享，我們會通知您。

Kaifang Jia, CITIC.

賈開芳，中信銀行。

Hi, management. I have a question about your overseas markets. So would the company consider furthering your company's scope outside of the Middle East?

嗨，管理層。我有一個關於你們海外市場的問題。那麼，該公司是否會考慮將貴公司的業務範圍擴大到中東以外的地區？

Kaifang, thank you for the question. As always, we will remain dedicated to the Middle East market. We're also keeping our eye on opportunities in other markets. For instance, we currently have Parchis, which focuses on the South American market, which is one of our [ tests ] to explore the overseas market. Going forward, if we see that new products have popularization potential, not only in MENA, but also in other markets, we may consider conducting global promotions.

凱芳，謝謝你的提問。一如既往，我們將繼續致力於中東市場。我們也密切關注其他市場的機會。例如我們目前有Parchis，主打南美市場，這是我們開拓海外市場的【測試】之一。展望未來，如果我們看到新產品不僅在中東和北非地區，而且在其他市場都有普及潛力，我們可能會考慮進行全球推廣。

However, our main focus is undoubtedly on the Middle East markets, where we have unique advantages and continue to leverage our core capabilities to enhance our growth potential.

然而，我們的主要關注點無疑是中東市場，我們在中東市場擁有獨特的優勢，並不斷利用我們的核心能力來增強我們的成長潛力。

Lincoln Kong, Goldman Sachs.

林肯·孔，高盛。

Thank you, management for taking my questions. So my question is about capital allocation. So how does the company view in terms of increasing the shareholder return versus continue investing into any new initiatives or R&D process?

謝謝管理層回答我的問題。所以我的問題是關於資本配置的。那麼，與繼續投資任何新措施或研發流程相比，公司如何看待增加股東回報？

Lincoln, this is Karen. Thank you for your question. Yalla is dedicated to return value to shareholders through our share repurchase program. As of June 30, 2024, we have deployed a total of USD35.5 million for share repurchases. Given our solid fundamentals, we will continue to conduct our share repurchase program, while considering cash dividend payments in due course.

林肯，這是凱倫。謝謝你的提問。Yalla 致力於透過我們的股票回購計畫為股東回報價值。截至2024年6月30日，我們已累計投入3,550萬美元用於股票回購。鑑於我們堅實的基本面，我們將繼續進行股票回購計劃，同時考慮適時支付現金股利。

We will keep you posted if we have anything new to report. In terms of new initiatives, our strategy team is proactively looking into opportunities that may have synergies with our current businesses and fit with MENA culture and local users' needs, and we remain open to these possibilities. In short, we believe strongly in Yalla's long-term potential and dedicated to generating value for all parties involved. I hope that this answers your questions.

如果我們有任何新情況要報告，我們會及時通知您。在新措施方面，我們的策略團隊正在積極尋找可能與我們目前業務產生協同效應並符合中東和北非文化和當地用戶需求的機會，我們對這些可能性保持開放態度。簡而言之，我們堅信 Yalla 的長期潛力，並致力於為所有相關方創造價值。我希望這能回答您的問題。

Rachel Guo, Nomura.

雷切爾·郭，野村證券。

My question is that your -- the Yalla Ludo has already hosted several online and offline tournaments across MENA and can management share with us, is there any further plans in the future upon this?

我的問題是，Yalla Ludo 已經在中東和北非地區舉辦了幾場線上和線下錦標賽，管理層可以與我們分享嗎？

Rachel, thank you very much for your question. Since the end of last year, our team has been hosting a series of online and offline noodle Ludo tournaments with our local and global partners across several cities in MENA. We believe this move enhances our brand's local impact, helps penetrate the local market and further expands our user base. We have received very good feedback on the tournament series so far from both local users and our partners, and we are receiving more invitations from potential partners conducted similar tournaments in different cities and different countries across MENA. So far, we have 2 more tournaments scheduled for the second half of the year to engage more users in different countries, and we plan to keep building on this momentum.

雷切爾，非常感謝你的提問。自去年年底以來，我們的團隊與我們的本地和全球合作夥伴在中東和北非地區的多個城市舉辦了一系列線上和線下面條盧多錦標賽。我們相信此舉增強了我們品牌的當地影響力，有助於滲透當地市場並進一步擴大我們的用戶群。到目前為止，我們已經從當地用戶和我們的合作夥伴那裡收到了關於錦標賽系列的非常好的反饋，並且我們還收到了更多來自在中東和北非地區不同城市和不同國家舉辦類似錦標賽的潛在合作夥伴的邀請。到目前為止，我們還計劃在下半年舉辦 2 場錦標賽，以吸引更多不同國家的用戶，我們計劃繼續保持這一勢頭。

As there are no further questions now, I'd like to turn the conference back over to management for closing remarks

由於現在沒有其他問題了，我想將會議轉回管理層進行閉幕致辭

Thank you, once again, for joining us today. We look forward to speak with you in the next quarter. If you have further questions, please feel free to contact Yalla's Investor Relations or Piacente Financial Communications. Both parties' contact information is available in today's press release, as well as on our company's website.

再次感謝您今天加入我們。我們期待在下個季度與您交談。如果您還有其他疑問，請隨時聯絡 Yalla 投資者關係部或 Piacente Financial Communications。雙方的聯絡資訊可在今天的新聞稿以及我們公司的網站上找到。

The conference has now concluded. We thank you for attending the presentation, and you may now disconnect your lines.

會議現已結束。我們感謝您參加演示，您現在可以斷開線路了。