- Earnings call transcript Q3 2022

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Operator

Good morning and good evening, ladies and gentlemen. Thank you for standing by for Yalla Group Limited Third Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. After management's prepared remarks, there will be a question-and-answer session. Today's conference call is being recorded.

the to turn today, speaker will Ms. I call your over host Now, Director the Gao, for Kerry IR company. ahead, go Please ma'am.

Kerry Gao

earlier release Hello, everyone, IR call. earnings conference quarter website XXXX and and welcome on to We Yalla's as well released Newswire on now available is third as earnings today, our the services. our

XXXX. under Securities please provision of harbor note continue, today Litigation we safe Act the discussion will US the Private contain Before that forward-looking Reform of statements made the

Forward-looking inherent statements and uncertainties. involve risks

details our additional developments. Karen provide Hu, Ms. by Mr. Financial discuss the Jeff measures provide brief will unaudited Please be our achievements may this Yalla's today. filed press measures. Mr. contains financial our results Chairman release to non-GAAP Xu, our different from results Chief this followed future be other Tao to and update Chief strategies. our any unaudited who not and Yalla's expressed our such, call then comparable annual GAAP uncertainties most forward-looking Operating non-GAAP recent with conference earnings materially information, outlook. a review the of views unaudited Yalla release statements, measures. hear our Today, does of Officer, in law. note assume Yang, Further release who as earnings and the of and also Officer, except report unaudited As He and company's SEC. and financial our will our Executive will a press regarding by as any of financial give discussion from an information directly Officer, include the as is GAAP reconciliation overview obligation financial you will risks will Chief the well growth on that latest and a required included

would said, the personal prepared Officer, go President call With Mr. to Tao Saifi Chairman over sir. Executive that to Please we call the turn unavailable a due questions. like up emergency. will to Yang. for now is the call open Following I Ismail, our to company’s Chief management's remarks, today’s ahead, and Mr.

Tao Yang

Kerry, you, XXXX joining Thank earnings thank and everyone, third our quarter conference for call. you,

our pleased are of integrated have the X.X%. unique higher continuous and business culture projects, by optimize a for quarter our operational capability are third the our million, thereby of results our efforts Yalla's end results user these as product This ecosystem. a pace, to experience, Such improvements. revenue robust collaborating to solid are our our strategy, continuing with acquisitions quarterly US$XX.X to of operational Also, well by on our exceeding marketing record as driving further guidance pay also underpinned our to Together, willingness underscores our actions to impressive delivered user platform. strong company engagement Ludo testament We represents another effectively our and develop quarterly for in users growth Yalla refine drive core product a at have conductive and while and monetization. revenue improved our

MENA, we in confident growth deepen and are potential. portfolio building further our our we As in expertise product our future

casual at we MENA, hard-core our entertainment online show distribution the established leveraging our Yalla a to social in portfolio. take mid-core new the game let's experience Now, and update, business look industry-leading extensive in to complement closer again our product game

a taken step. crucial For quarter, this Yalla Game has

mobile several Kingdom a game, have studio gaming with you we of months We in, Merge of MENA version we of our the to first collaboration share that country. hard-core in are the invested better after lot excited launched with

product full-on through paving the We fine the feedback will soon actively user for stage, way begin to and get the promotion. our beta tune

more details and next call. our on We metrics will share you with

more launched be attention RPG further look emerging updates the plan explore to hard-core next to open EMEA whom The in attract MENA good track that remain of and the by market with gaming with the year. the this to game market. from popular end potential distribute in region, jointly game the more is more continues studios. we is to second Moreover, on forward to and We our sharing near discovering gaming We can and investors the we future. content collaborators becoming

customized X.X, very have we functions unified messaging into a area we this the product the report localized with functions. instant we more We by And that previously, enhancing YallaChat also launched are we we to are quarter, a added developed leveraging shared of which into excited recently login system. already YallaChat and broad engaging product. as In version

operated the Over Ludo register log to have account Yalla chat Yalla encourage into using for Group account. motivate YallaChat to Yalla their hosted campaigns and platform to to and past our users two quarters, and more we users YallaChat

in Yalla quarter Yalla app. game In one their Ludo access to have YallaChat now the is within to product stickiness crucial in and Yalla time, the at number addition, get increase is mini our app. program game to the this MENA. using and when table top we believe step launched build Yalla a users assets synergies Ludo better the Ludo full program app this user We across mini gaming Ludo same YallaChat. the

designed to Waha new features. region. entertainment Waha’s the a out functions our at MENA QX, look enhance a take rolled the and communication first-ever In metaverse product, for let's we of number Next, social

continue including users of stage. to new play we which quarter, on role and First, disco the this can scenes in dance DJ social scene launch Waha, in in

while their their [indiscernible]. Waha chatting for just now favorite creating users play video, friends entertainment, beyond theater space Second, with with scenes, virtual out and music can in hiring also sharing a

boosting to Waha interactions. Ludo, out further out began user user encouraging engagement [indiscernible], our the product mini team In and roll games addition, build in to

firm tailored upgrade We will monitor true and continue to local keep culture functions trend that providing chat. to are and and latest the with Waha to our users accordingly

resource Arabian regions one the from conclusion, is East. multi-bearing features region's around people for leaders and Middle up, wrap our world's interviews I'm magazine features By President, with Saifi. XX Middle the Business of ongoing to happy output been business top In of Ismail informed which Mr. includes leading of the solid our with I and East with the commentary. like quarter. has long-form XXXX. Before Its news, share some that you this results the prestigious business Saifi named Congratulations,

the dedicated We past information users to Over and shown MENA and new MENA, six throughout years, products culture. commitment to and have the facilitating to strong its its region. explore needs meet digital focus evolving remain to on we our people strive

MENA and stretch brand and loyalty MENA, As while of deepening different to module our a in boundaries further business, from our services we drive will service cap to rate and services products expand the our we platform's continue our Once synergies pursuit popular remain our online is region path this in most improve entertainment again, with and destination business. for and brand call. our the to networking of activities in social build

Xu at I call our closer COO, Now Jeff recent Mr. for turn look a to over divestments. our this will

Jeff Xu

joining everyone. Thanks today. Hello, for us

environment and Yalla and of we discuss speaker First where From panel, youth Entrepreneurship investors of world's the to Youth audience. Seed is to and Empowering Yalla talent participate in demonstrating foremost that local Institute. innovation, Future and together global invited featured attend entrepreneurship, proud to development broader and titled Humanity, promote Yalla’s pleased the a community. story Xth was Initiative Future discussed talent, I'm of and the the Unicorn all, unique Riyadh, order potential enabling to of our tell in brought a our various such Investing international promoting economy. was Yalla Investment intersection perspective to a contribute to the local only investments throughout shared investment the entrepreneurs helping to and international local you participate MENA, sector and to economies. policymakers, a to to Investment posted [ph] the group with by on digital that event shape healthy Initiative future well-managed the as global recently commitment new events CEOs, the The

let's capability. user our turn ratio monetization to our in operations our team's offerings Next, further our content as and well user refine advanced engagement performance operations, and product as bolstered this well as our efforts our paying ongoing to as quarter,

we company's As a total with are US$XX.X Group the million, to beating quarter report robust guidance. revenue of higher the of pleased result, another Yalla end

monthly paying million. users year-over-year, $XX.X increased our XX.X% users addition, to increased Yalla also In Group million. reaching $XX.X active

ramped category in game look casual Chile closer portfolio. our a five Board game Mexico, countries, and Colombia, at top the in the Parchis including in Yalla Now XX revenue in of Spain. terms

During events the QX, hosted to we a of encourage hosted on number activity user platform.

Tomatina, than La diamond fight which traditional Festival, tomato our more XX% users the daily by inspired than improved the XX%. our active attractive Spanish example, more For by platform consumption participation by was on and the events, of

strengthen and We to use capability. find ways products community continue the to will build its monetization innovative the

months, our we monetization several its XXX been the the or expanded function Yalla, after monitoring to Okey as closing product function operations chatting an for effective to proving For add in boosting app decided has capability. messages

we our Beyond on that, decided OUS sales also to acquire and this to invest to and more product marketing users. increase spend

number As than a and paying both the compared by a paying improved decent XXX% Yalla’s revenue we of total result, of improvement while Okey with have XXX users quarter. in ratio, witnessed previous its that more

group's encouraging improvement for current accounts stage. products only of part in limited Okey as XXX revenue, still Although see the a Yalla an this in we

MENA, well targeting fueling For during as product modes preferences launched important market feedback. we app we respect and several the to Yalla to new Baloot and players the the across while continued and upgrade and for we quarter, specification Yalla as overall, game With innovative explore gamification. in increasing portfolio. to Baloot, diversity user methods will tailor of design its to our continue monetization collecting product continue channels

gift we one example. flagship as generally Let's boostered paying our sport the product, partner Yalla Yalla look successful to great a for the This efforts more with campaign products, of in potential, distribution enabling channel demonstrate appeal. to reach its and its Ludo, popularity at has widespread, Ludo monetization users. marketing monetization promotion us This thanks Ludo cards. Yalla for of further potential an partner even launched joint our MENA,

gift gaming of As came attract certain a creatively the XX%, account us Yalla users cards majority channel first-time with while unfulfilled monetization Ludo I lease by Ludo to and purchasers gift cards, than new from the of opportunity campaign. sales for compared our sales grew sales Interestingly, the the presenting more the portfolio. result, an of Yalla and across improving before recharging

further payment our improve expand and by this experience streams revenue our We will methods encouraged more our users' company. continuously to while for progress creating are

to the to countries in we Yalla Jordan. extremely we influencers that XXX marketing board Yalla varied to from privileged industry mention which together a sponsor honored and Group, influencer core, at of brought financials, media is Before Yalla October like social platform. content in a move in new on be Talk, the growth I'd games more than City user-generated

for conjugate with beneficial deep We experience. identify ideas, online. in to sharing [ph] community, the relationships providing mutually new keep have part investors of current empower remain and up connections opinions Yalla trends, and a conversation These opportunities

online largest mission we in entertainment digital development influencers MENA's valuable social economy, a share. all to platform, also are partner of As networking a promoting the and the we

and become networking reiterate region. the every the we one entertainment quarter, As social platform online in number Yalla asset MENA

We service partnerships offerings and with to we access have a the always to communities medicine committed and people product channels board. the consistently enrich strengthen of life Yalla our better local MENA assist providing digital with our post been and throughout to and

call will key well are all Karen, delivering try forward now our the in to financial to to to growth our achieve discuss results. the mission. MENA potential opportunities look positioned I we stakeholders operational will our of and who turn as on region our We CFO, With and to value over that, capitalize

Karen Hu

we ratio in and Furthermore, our non-GAAP compensation, portfolio both paying the margin XX.X%. Hello, record innovation group in set spend. we entertainment results in with GAAP our financial revenues third with delivered a also you a healthy outstanding year-over-year. in our while quarter the profitability And maintained users, enhanced margin group's XXXX you, our and a communication Thanks for excluding of investing US$XX.X across features, share-based us. net robust net growth another We Thank Thank million, everyone. XX.X% up of Jeff. saw marketing reaching paying driving of to joining strategically of to all XX.X%. XX.X%

long-term forward, optimizing expand efficiency operational and our Going sustainable to and we propel Yalla continue and integrate support explore returns will new to our monetization ecosystem, to growth avenues shareholders.

quarter the would of through I our to financials detailed you XXXX. for third like Now, walk

was were XX.X% Group's US$XX.X Group's US$X.X the in Yalla primarily period in a million base the increase by XXXX, monetization year. of the broadening quarter capabilities. last revenues third Our increase The same enhancement user from million to and of Yalla driven

XXXX. XX.X the Our average by quarter XXXX XX.X MAUs the quarter to of of third from million increased million XX.X% in in third

at let's Now, our look and costs expenses.

resulting in period product Our service quarter million in third increased XXXX. same third cost from US$XX.X increase and quarter revenues the a in expansion third million an salaries increase fees last total in from revenues to the and US$XX.X of maintenance team. of from the due a Cost as revenues in operation and to year, our benefits from our portfolio the primarily percentage increase XX.X% XXXX, was of expansion XXXX of of our the quarter in XX.X% the the of of resulting XX.X% of technical the

from XX.X% Our decreasing selling in Selling X% XX.X% million as our the advertising due and last third were the marketing expenses $XX percentage marketing product same same our and expenses in in of increase led quarter last marketing million were total by period of period promotion in quarter and year, a of continued user expanding XXXX, from third expenses revenues the $XX year. acquisition to the a efforts primarily XXXX, portfolio. higher and

and professional General Our in quarter in administrative XX.X% administrative total XX.X% a period fees. to the increase $X.X the a the million third last primarily third and of due quarter increased general service $X.X expenses and percentage an to expenses increase million an were performance-based same increase in from XXXX, XX.X% compensation the of incentive year, from quarter as in in XXXX. of revenues in

to primarily expenses Our our benefits the quarter Technology increase headcount to of in driven a in expansion technology X.X% This development a quarter expenses and to product and increase in salaries and $X.X of staff all technology the quarter an and and million support in increase total and product period from an $X.X the from as development technology last XXXX. our third the new increased portfolio. staff, development XXXX product of in in third third development percentage our of year. development for XX.X% product businesses of the was same product XXXX, of were of by million due X.X% revenues

As operating same the was such, compared in of million period year. with last $XX.X income XXXX million our third in $XX.X quarter

Excluding the $XX.X million. of share-based in XXXX compensation, non-GAAP income quarter third was operating

million same expense with the period XXXX tax operating $X.XX was year. of million the quarter in compared Our $X.XX last in third

income same Moving to in in was million period XXXX last the of net $XX.X third with million compared bottom-line, the our $XX.X the the quarter in quarter third year.

million. XXXX for third income quarter net non-GAAP expenses, compensation share-based Excluding the of was $XX.X

our like capital liquidity would I Next, resources. to briefly go through and

and As XX, as to announced program. as June XX, cash equivalents commitment equivalents compared of share May On XXXX, $XXX.X the of demonstrates Group's September and refining improvement of with XXXX, million XXXX. operations. cash had streamlining ongoing we cash cash million our repurchase of and Yalla This XXXX we $XXX.X XX,

and on quarter million. approximately estimates US$XX million with from market current American September an which fourth revenues X,XXX,XXX be subject A conditions prepared XX, operating of have between US$XX current reflects the demand, market X,XXX,XXX conditions take of we today. and amount of questions. XXXX, As depository shares, management repurchased now to the Operator, concludes shares and ordinary XXXX, representing to all our The Class remarks and change. are This the open our cash we above for expect million. market of customer we In preliminary outlook the is aggregate ready company's for to and are US$XX based

Operator

Please [Operator section. Instructions] First question be now of answer you. ahead. from and the Thank go We'll will Kaifang Jia begin CITIC. question

Kaifang Jia

me? Hi, management, can you hear

Kerry Gao

Yes.

Kaifang Jia

question Okay. for my I Thanks two. have taking and

over next management the the you second monetization the my OpEx the management and new and The like question quarters? year? see will next is, first how and have a business is details several margin moving does plan some can provide in gaming about chatting, And

Tao Yang

Thank will Kaifang. question and by good morning. much, I very our think taken first the be Good you Hey, morning. second take will I the question CFO.

to app and has with needs Our YallaChat new top entertaining continued diverse ranking MENA in [indiscernible] download localized lacked November, instant habit regions. launched store, users various YallaChat may of features on product and the YallaChat marketing have preferences. in local we for ramped new observations seen the and to users, our IM you out some campaign among accepting products. social roll And message three the certain We already a have

still that the time need performance. on XXXX, the listing, it's and still The achieve this strongly least the dedicated stage We at a expect But the will we monetization in short for IM to product will strong very test We are expanding and we this more for start strive to to will a excited user in is be product customized the features market. or goal. early run, focus we community. In in YallaChat. don't about users stage, believe with MENA in

Our the of we expectations scale our give our user of gaming for launched account are next revenue Gaming for will year, distribution different. time an does recently take collect revenue. think expectations it business in, some and for its on just estimate I but part to the feedback

will next Thank the you. Karen more We quarter. second details question. take will with share you

Karen Hu

Thank margin Yang. with year. XX% around Karen. I you pace Kaifang. the that our the can This current think much, the very non-GAAP Mr. of development, maintained the moving, you, About Thank this net is be margin OpEx and

in in marketing the November, sales However, during need we for QX. invest just more and launched and we campaign since marketing to YallaChat may

feedback. of a more adjustment fixed of to of our aim In product our continue change. years, to for development subject the XXXX portfolio. is is will is add focus our strategy We budget we market It flagship -- our successful to year a to on two as applications year And the applications. for campaigns adjust Therefore, past YallaChat for these number. campaign to according we the the not

with diversifying into more future larger We our building have a goal streams revenue and portfolio Yalla of to Internet this platform. invested successfully expansion the complete

are R&D the business of contributing distribution to marketing. like in YallaChat as we our in mentioned to products our would it's their we the and company's I some all we next Giving that, fair I in because few this and expect remains During say sales will still that, your Kaifang. XX% need and game target current revenue, not benefit new invest last unchanged, quarters. the and questions. goals. I to answer hope you, net our think around margin quarter, to long-term Thank significantly the remain non-GAAP The process, this

Kaifang Jia

That’s helpful. very you. Thank

Kerry Gao

ready we're operator, next So question. for the

Operator

your Shen, please Thomas ahead questions, with go please.

Thomas Shen

a taking have for morning management. multiple question. I Hi, you Thank good my questions.

first The have pipeline going more on Thank another can also game you. details company's on year? I on management could share question the one games, is the strategies forward? marketing elaborate management for more next

Jeff Xu

Thank you for very much, your Shen Thomas Jeff. This question. is

You asked a question. very good

So first question, our marketing the that an discussed team issue the and strategy about constantly. thinks is for

First, I important dynamic highlight to we may our market factor want the accordingly again adjust is an marketing strategy anytime. environment and that

you similar view say ask if acquisition I now, the these on next pretty pace years. to will For my user year's be would plan,

We sales on spending. will and maintain our our ROI marketing and focus of disciplined strategy

The regarding game second the question pipeline.

the have or we for mid-core to may Beyond with started games. we game collaborate also the on, look also SLG game explore studies and in hardcore our games. may good to with we previously are we RPG some, as that working some did We invest

We early stage. in are an still

with question you So the you more for in details future. again. I Thank will share your

Operator

of will question next Please from The Edward Suisse. you. Credit ahead. Thank be go Wang

Edward Wang

appreciate the robust congratulations management, results. presentation Hi on for quarterly and the

be mini launched questions of would Thank YallaChat program follow several mini in like What quarters. has the you.\ future? or the in I two about on up to positioning programs will two the So past functions YallaChat.

Jeff Xu

It to you diverse many expand and way significant to to we mini see potential morning, provide our name good services very our we that fulfill efficient provide Yes, questions. users thank and for the in to much our your is a YallaChat. functions programs roll continue We flexible out of with can Edward, programs. [ph]. Hi

It's then is we many do think early and team the a we social out games more have program. Our I feature stage, can the now there that lot program. attend and hook but Yalla in up Ludo with mini the still

progress. the you. We posted on Thank will keep you

Edward Wang

Thanks. That's a helped lot.

Jeff Xu

Thank you

Operator

Thank will go Please Xueqing next question be of from ahead. you. The Zhang CICC.

Xueqing Zhang

for taking questions. Thanks I question. Good my have two morning, gentlemen.

revenue first the in The quarter, company's this as guidance market the that one company's third is the patients.

second is wondering, driver just Yalla dominated it's is ARPU? Yalla what's related by So the or to Luda And by driving paying and question by my user purchase.

remarks, due mention to a tier of number have to your Just paths in events prepared committee.

improve the can user us Thank share So, with monetization and its management capabilities? current we level you. how

Karen Hu

your Good for two Thank morning, you questions. Xueqing.

good been over quarter. have products Our making past progress the

can see hard QX, mainly feedback. growth paying growth you whether in As in sales and our will and to determine ARPU in We by it's according dynamically operational user the strategy situation paying future. determine to the increase user adapt or driven the strategy But marketing was and market the users.

and strategy And general, in group on of for user focus So investments marketing. purchase, only and contently use more disclose so it in level. quarter. sales we our varies every at the acquisition ROI But our

around monetization, Our profit. We is group excellent rate you gross of revenue, work growth MAU Thank at this performance we product on purchase only is sign. next Xueqing. encouraging. with X% quarter-over-quarter. but doing Thank also And the That's remains quarter. product. now And of installation more in are not generating details terms And you, more to sharing in forward look you. the booking

Xueqing Zhang

you. you, Thank Thank Karen.

Operator

you. Thank

Please question Li CICC. next Chenghao will be from go Our of ahead.

Chenghao Li

MENA quarter. have And share ratio management please competitive I question on my congratulations secondly, the questions. can another paying change recent improve solid quarters. taking the landscape on some Could see for in two and management to continues the we Hi, or in region. color

ratio So we to ARPU and future? change the expect should paying Yalla’s in the how

Karen Hu

ago. recent many more Internet Thank have to reiterate market, In great the you, to the reporting certain and been back. we which [indiscernible] our and the six some morning. refine important entered competition peers users, And gaming region's years milestones a as MENA started years, template more potential. industry business setting such -- from expensive mentioned as our potential, is strong mobile exciting. the is industry leading in for have company region, the emerging change market, innovation. investors apps. now other good have and recognized a by that to achieved industry. also were and also with We business that Chenghao, And product our last in It's we I new it's and quarter, very market And [indiscernible] this in drive market design fact It's are to want never technologies and growing here

in will player years. take all region, leading step this and we examine after a proactive to in competition you, remain Thank position As Chenghao, these comforted our our

Chenghao Li

Thank you.

Operator

Thank ahead. you. The Yulin Please next Haitong from will of Zhong question International. go

Yulin Zhong

Thank question. going on you. I two June have number two, questions. how macro results the you for the my one, Number Thanks incurring And could strategy. taking that cement could refined impact impact you area? operational your color share in saw And day more forward? MENA as in some your

So about products, negative could change? metrics the and Yalla try user you such elaborate to you. Thank as change operating to team more your in

Tao Yang

not oil After will Good price Last we also easing environment mentioned previous COVID are are changes. and quarter, take two big year. morning. is compared rising. is these and Good the to that I morning, still another quarter, questions. seeing macro improving MENA’s we

think record I continuously remains we performance, delivered of quarter look -- if product at high our revenue. another we confident

is government of the Also, strong [ph] to the more momentum economy. are far. digital so Our seeing development paying specificating we attention

performance And Baloot, are and quarter believe getting [ph] their metrics than and and Yalla QX attention Sport significantly and are hot these in and the revenue I our operations our products. Yarchis next signs. topic good strategy more as year. company's to for Second, user main important serving our and operation our development Ludo every are applications Yalla contributors such resources are flagship about group's before.

We will our continue operational refinement strategy. with

development to play Yulin. Yalla roles still in user our acquisition will of year. as and pace Yalla be you, Thank the terms strategy, mentioned, In crucial the just group Ludo Yalla similar will next

Yulin Zhong

you. Best of luck. Thank

Operator

Thank Huafu you. go from ahead. The be Zemin Chen of question next will Securities. Please

Zemin Chen

and in performance. apps. morning, connected can for have about Good you. management how question good and gentlemen. traffic you coverage across the share Thank our different traffic ecosystem a the I Thank is

Tao Yang

question. Hi. Thank you for your

between encouraging. So apps actually, effective is conversion the very our rates

products services the Group you. When Yalla think sectors these convert entertainment users on data. another, possibly usually, and users' from app to represent and provides we we I answered feedback online different decide LTV product platform. Yalla our social question, well. that provide total conversion two users users promising the seeing are of LTV, impact fulfill ecosystem Also, leads. of distinct networking diverse built your Thank services. Gradually one we that long-term Thank to you, a improvement We hope to the facilitating and

Zemin Chen

Thank you.

Operator

prepared Thank concludes our That remarks. you.

session question-and-answer Our I'd There to now turn over for over. no statements. are is the call to now further closing questions. their back like management

Kerry Gao

you again, to quarter. next Thank for the you look with today. in us speaking We forward once joining

free Yalla's If through on Investor you have Piacente our the to website further questions, please Group contact feel contact Relations Investor the information or provided Relations.

Operator

concluded. The conference is now

may you. Thank You you. now Thank disconnect.

Yalla Group Limited (YALA) 15 Nov 222022 Q3 Earnings call transcript