YALA - Earnings call 3 2023 | Yalla Group Limited

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning and good evening, ladies and gentlemen. Thank you for standing by for Yalla Group Limited's Third Quarter 2023 Earnings Conference Call. [Operator Instructions] Today's conference is being recorded.

I would like to turn the conference over to your host today, Ms. Kerry Gao, IR management of the company. ahead. go Please

Yuwei Gao

website welcome Call. and today, Third XXXX our Quarter the outlets. on Hello, released to our Conference IR on available We is earlier well earnings Earnings as release Newswire everyone, now Yalla's as press and release

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

inherent involve and uncertainties. risks Forward-looking statements

today. release expressed information As is with different by annual not future from obligation update does and such, risks regarding report assume Yalla results materially other to required views our law. any these be included may the in and filed Further statements, and uncertainties forward-looking as any SEC. our the earnings our except

press release note unaudited and of a a information that call include GAAP earnings measures. GAAP press of as the as most non-GAAP well to also Yalla's conference contains Yalla's discussion measures. the this unaudited unaudited financial measures directly reconciliation comparable unaudited financial release non-GAAP Please

our review on Hu, then business provide discuss financial outlook. Mr. will the will Today, who Chairman the and Ismail, Chief will our and Mr. strategies. our latest followed who will Yang, additional and company's Financial Officer, company's Tao Officer, President, He briefly developments. Karen details Chief Mrs. be recent by from our of growth will an Executive achievements financial overview provide hear results our Saifi you

remarks, prepared management's open call Following will the questions. to we

the also Our COO, Jeff Xu, Q&A section. join will

sir. Tao Yang. Chairman to With ahead, that Mr. Chief call and I'd Executive turn over the go Officer, our like now said, Please to

Tao Yang

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

results. we third quarter report achieved to that pleased are We strong

of growth an gaming the services once XX% Our all-time million, revenue our of exceeded USD quarter supporting third again. from guidance, while year-over-year reached XX.X revenues end upper high

further yield increased USD improved by million, and And result, XX% positive margin Our continued as net XX.X cost outcomes. a to year-over-year efficiency to to initiatives XX.X%. net income

we refine Our strategy. reflects operational mechanics community users to These improve willingness to more enhance to continued on our strategies. a who processes, our execution high-quality user acquisition gaming third excellent performance gamification, financial engaged of have effective us our our build of empowered our development optimize spend and applications robust exhibit quarter, and In high the content efforts services. flagship

by we remain to capture Supported the healthy digitalization. fulfill position, business and users' in of needs fundamentals new networking opportunities business our solid online evolving era cash and MENA social and entertainment proud

MENA digital discussed initiatives region have growth, to continues new and we rapidly. to economic As on is last calls, the actively few drive pursuing the our transformation here advance

the our Amid and between the importance. However, region investors not is is and strategic East exchanges Throughout has for development its been cultural economic across hub gaining global today's the and businesses currently drawing commercial only the changing dynamics history, asset Middle MENA. important to increasing region's an West. the exciting East landscape,

Western economies talent capacity. from and MENA this and start-ups, as We observed vast thriving next the synergies a as business globe. outstanding opportunities ecosystem company's of Moreover, well testament important and growth region's mounting entrepreneurship with both potential unique to in considering MENA's year. is market around have their fostering attracting A number the Eastern its

for created and Yalla business wealth has initiatives. future a opportunities This of through iterations diverse

seize economies. development and global and company, progress across as the this gaming well the as chance networking Yalla largest well social is company's to online MENA-based to As propel positioned local

some updates Now Yalla developments. I'd on recent like to share important Game's

community, and Qatar and strategic have Play's role-playing XX region. top the while existing terms UAE quarter Google Kingdoms the to to Arabia terms progress with of on both quarter Saudi Age third spot hardcore this of Merge MENA and revenues Yalla Arabia, games in including our engagement consistent gained Gulf Saudi in Merge to also on and the top ranked Legends games First, respect Oman. of our an Kingdoms user was in climbed in games X our category games, Thanks Age revenues iOS, iterations in Notably, of our overview Legends. game of traction countries in of

with compared applications growth room are and we midcore hardcore making yet Although games flagship this a revenue, see to our immense sector. still substantial contribution our for not group's in

more developing strategy our local market of the process the X future have as of for gained Game's cooperation to games, methods operation our well growth. gaming Through as a Turning comprehensive we hardcore and strategies. Yalla understanding

midcore our in and experience more to hardcore determination strengthened in engage this Our business game games deeply MENA. with has

game noting It can are user changing and regions across is differ worth preferences that genres design and rapidly.

on will As our user's based and strategies closely iterate feedback, accordingly. adjust to we market the continue and games products our operation monitor such,

Moving market. will flourishing this midcore gradually investment in forward, our our growth hardcore games, we unleashing increase potential in and

exploring We presently are already various new games and pipeline. game have in our categories

our games coming the of new to years. expect the We in launch accelerate

with actively across look We considering production gaming communicate studios and excellent to teams will to industry also and the partnerships. forward potential continue

the for MENA's regions On growth brings ] X.X% year-over-year, China, given gaming of Meanwhile, [ with fastest-growing gaming note, Europe, rate the research, to market [indiscernible] in U.S. a annual USD in markets opportunities may a currently offer according worldwide. revenue those games. X.X market the considerable and size News mature related billion also among in of the

as MENA market distribute dedicated fit. and the remain games regions while additional our will examining We and the we possibilities modify see in to may

users online These and like that new to complement mention for in evolving a well as show great millions bring initiatives conclude, digital hardcore could MENA and I of products serve we Before midcore in potential to promise games, MENA Yalla's MENA's off-line businesses that as exploring transformation are portfolio. residents. to as addition I'd to traditionally services

details will progress. is with more We there share you meaningful when

growth stage role In pivotal rapid global this summary, we the confident opportunities presented region's MENA's digital the by in on remain and increasingly transformation.

locally and to to globally our MENA's and relationships social MENA-based business largest building economic company, online are gaming the we horizon As networking and broaden development. dedicated drive

develop new the assess to we our to sustainable as compelling continue value prospects of tailored products all of digital will for needs users, creating local stakeholders. growth We

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

Saifi Ismail

Hello, everyone, today. joining us for and thanks

a our We product take efforts to at closer the of performance. Let's products our continue and operations another our improve as our delivered bear quarter unification third look results robust fruit. to quarter

percentage enhancement As increased Tao have user led mentioned, average with across to million. to platform our rising level monthly XX.X by year-over-year users our active engagement XX.X

in spend to users last those exhibited in ARPU willingness to driving third year. X.XX enhanced high-value same period USD the Our great up of USD features, gamification the from quarter X.XX on

platform, our paying at boosting and certain overall This was quarter aimed a lower in slight led user consumption On of on delivering of total of a frequency game mechanism better user of related users. engagement third spend to decrease note, turn to experiences. one our X.X% number in which the in low adjustments resulted our

right fine-tuning we seek the we and the be adjustments these paying are such, We as expect still in balance, fluctuation will as temporary. users

the impact will monitoring closely adjustment this accordingly. are adapt and of We

commitment our engagement. Day platform. with in satisfaction Yalla, improve and of local user operational and gaming we festivals enhance to National user continue Activities New several MENA, of out an across event application, on flagship features and Yalla's our countries sense in to activity, Year strengthen Islamic events conjunction For these rolled including demonstrate to the like a series community

including mystery Yalla respect we event of operational launched a Year opening New and an event. events, a number store Islamic Ludo, to With

We compared previous to increase with which of also continue gamification improve that -- significant the app, drove the in the quarter. the a total consumption with of

Yalla At in quarter projects, like Group, I Chartered, with In highlights. August, are X world's against Yalla share to Chartered for our third sustainability some threats. Standard always long-term Deposits has Account would the referenced world's additional accounts Now Cash of gravest Standard a one to established the of sustainable bank. Sustainable international been integral corporate sustainable addressing values. leading Management sustainability

local will to sustainable MENA to as and leverage As management to incorporate strong our that Yalla's Ensuring insight and our the MENA economy reflects our throughout commitment continues region. overall sustainability cash procedure as international profound local cash the position to we well company-wide. contribute practices develop enhancing direction rapidly,

at GITEX to tech the XXXX, most founders, unites to tech world's venture Dubai Star established Expand and ecosystem. invited Expand capitals in start-up exhibition. recently large-scale North iconic Global's and were we technology largest GITEX leaders Global, event Furthermore, held North the world's in by speak inspired and start-up facilitate the among Star October, connections

stage. lively program features like GITEX tech experience to ecosystem the a honored story, content unicorn business founders, advantages on XXXX Yalla's at offers this recount were that region region's among start-ups. in unparalleled over business communicative to Yalla, event. companies the highlight including I'm global industry stories. and tech discussions and our proud open and prominent development MENA Its XX We Global Events unique for insights biggest showcase

this MENA's in users' while tech to to we MENA. the digital on list progress of to will continue and premium to unicorn development, throughout deeply participate digital propelling tech services local to the development the witness push preferences. boundaries habits products Yalla UAE-based offer first innovation community of and and to the driving excited is Riding across committed transformation. the economic tailored As NYSE, wave is start-up Yalla

always, MENA entertainment As platform dedicated and region. we remain in online #X to the social becoming networking

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

Yang Hu

and highlighted delivered everyone. impressive high third Hello, by margin Saifi. for you, We XXXX, results us today. of you all-time strong joining for the Thank revenues expansion. Thank net quarter our

as well costs our ROI-based yield continued positive as overall us marketing relentless to efficiency. to to enhanced Our streamline our outcomes, elevate efforts strategy enabling

high continue we interest rates returns. strategically higher achieve leverage addition, In to to

margin margin As rose a to net net and our result, XX.X% non-GAAP XX.X%. to rose

execute our we in opportunities. cash on support with As will will fundamentals profitability quarter, position continue strong and efficiency into and our fourth strategy believe We to enhancement. we future head capturing high-quality our us growth solid focus

As in run. always, the our long for shareholders dedicated creating to remain sustainable we value

to for Now XXXX. our detailed third of let's financials move quarter the on

was our base in the XXXX, USD broadening of XX.X quarter million year. last X.X% primarily third of enhanced third capability. Our the quarter monetization revenues USD increase user million by our were from XX.X of The in and increase our driven a

from growth to the $X.XX of which XXXX third significant partially to was also revenue quarter attributable X.XX of solid in the in XXXX. a in third ARPU, Our increase grew quarter USD

our take a at look costs let's Now expenses. and

of our third a decrease X% XX.X from USD XX.X XXXX, period year. expenses quarter the same in Our million cost USD of in million -- cost total and last were

USD of to XXXX, of of in of same percentage XX.X decreased year. revenues revenues from the in XXXX X.X% the period Our from compared last by quarter year. the as decreased XX.X% third million period down of quarter third USD total in same last with in revenues million of XX.X a of XX.X% cost Cost

third same lower Selling and percentage of the the period XX in were expenses a XX.X% of year. third this in X.X% decrease XXXX. in compensation XX.X third the marketing recognized year, expenses of million marketing share-based Our as quarter driven USD of the decreased from in of XXXX, quarter XXXX in third selling last and quarter by expenses million USD quarter total primarily revenues a XX.X% to of from

Our recognized in in USD XX.X% from general the expenses third decrease same period percentage quarter quarter the were as and compensation XXXX, from share-based to a decreased and our XXXX year, third USD quarter of this year. in X.X quarter General million of X.X XX.X% million expenses of admin by the of the lower third XXXX. in third of X.X% driven total last revenues administrative a in primarily expenses of

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

As such, of increase XX.X a USD income the the XXXX, period our quarter last million third from in operating XX.X% year. same was USD of in million XX.X

income operating quarter was third compensation of share-based non-GAAP in million, XXXX XX.X up XX.X% expenses, USD our year-over-year. Excluding the

quarter the third primarily XXXX, USD and the due in rates in in period million of XXXX company's applicable the X.X to increase in compared interest cash X.X with deposits a the same the USD significant of was income increase continued interest to position. company's Our million bank

period Our decrease same year. a the tax in USD of in was from USD XXXX, the quarter income XXX,XXX third XXX,XXX last XX.X% of expense

bottom Moving to our line.

quarter third net with XX.X increased Our XX.X% the of period the by USD income in to USD same million in compared last XXXX million year. of XX.X

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

position Our cash solid. remains

USD XXX of XXXX. cash, restricted we and December cash investments short-term equivalents, As with compared as of September XXX million XX, cash XXXX, million term and had XX, of deposits USD

million XXXX, ordinary be program repurchases, shares Cumulatively, market totaling approximately share repurchased third we December shares and extended A [ quarter Under May Class our as has ADS repurchased ]. in our XX.X A through Board in X,XXX,XXX or to XX, XX, repurchase of ordinary X.X by have repurchases, that XXXX, have (sic) May Class since million the or September totaling we market began X,XXX,XXX XXX USD open cash in USD cash approximately XXXX. ADS XXXX XXXX million XX, XX, open of USD

Moving to our outlook.

to customer XX quarter XXXX, estimates are the our The million preliminary reflects operating which revenues and For to USD change. current above management's fourth and market and of subject our is conditions current million. outlook marketing the conditions USD all based and the of expect XX and demand, be we between on company's

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

Operator

Xueqing [Operator question Instructions] first at Our comes Zhang CICC. from

Xueqing Zhang

the quarter. X. I strong on have Congratulations

one Yalla Ludo strong year. first have -- performance Yalla is about and The a seen we this by

we how of potential about should outlook. about the in the the financial So these think one flagship is growth second future? And X products

have this margin quarter. profit You revenues and strong high all-time recorded

management next trend share the on year? and revenue growth can So margin profit net color more

Tao Yang

and you second will our the the for take Karen, take one, will question. Thank I first the one. CFO,

have and products Ludo X our applications, now proven anticipate especially users to our both and loyalty influence Yalla will strategies cycles. we who and flagship among of enjoy considerable impressive over the their levels long Yalla past believe the we shown years. platform, have life Ludo, have Regarding Yalla Yalla successful

Another that quality like efforts to invest is -- emphasize would our to aspect we support on love to platform's development I effectively -- monetization our growth capability. and

to Yalla will And work more evolving maintain we Thank to iteration and are continue at least and XXXX, performances Ludo that you. needs. product Yalla confident we can year. explore to this features similar serve at on Looking new users'

Yang Hu

growth we levels of Xueqing, and business thank you as opportunities. the that current revenue for our with year, exploring are in we And while your expanding next for question. similar if we of new our confident terms our XXXX, maintain businesses, revenue in consider -- progress growth will XXXX

has On many MENA many for now have hand, companies we the for mentioned the opportunities. as leading times, other explore become destination growth next

will not guidance trend providing monitoring just potential included in have and opportunities. the provided. group's contributions We are partnership keep acquisition this for I All these

necessary. We will update our guidance later if

in XX%, performance margin, dedicated to you I into Thank new in of terms when In cost control. fair. This invest for account, is vary taking and an the year, of quarter's each you. question annual potential again. will products. margin think, investments depending on products we different continue how may through implement your Thank Across, we measures

Operator

question Chenghao next comes from The at Li CICC.

Chenghao Li

quarter. have a the I solid business. some on related questions Congratulations to gaming

And more hardcore schedule are updates lastly, on the company's about share recently gaming how the management performance the future? the First, the company could could X the for of any the evaluates and business? share mid management launched and that the launch pipeline strategy in color And games? game about there

Tao Yang

very questions. you thank for your Chenghao, much

earlier section, their substantial our I management's at more if As shared revenue. top our applications, compared categories a countries, although are remarks certain both XX the not Gulf look we hardcore rankings, games with the in in group's flagship to contribution in they still making were

and and we games experience see hardcore growth this important the we Through for midcore and in have process, room strategies, our operation regarding cooperation the gained immense business.

to to sector. in our hardcore and and are this developing we'll We committed games, midcore continue invest

disclose after on terms feedback and beta game we new receive we more the we of products, later versions. the several details pipeline, will In have further

considering expect the to Besides continue of we gaming we production Thank excellent developing in-house, in partnerships. games also studios with look Chenghao. accelerate And the communicate to of industry. our will year. new strategy, to the games potential coming terms we the and teams actively launch In you, across more forward

Operator

question next comes Jia Kaifang Citic. from at The

Kaifang Jia

Middle competitive trends in Congratulations on is, question the East recent the strong quarter. do market? view the we My how

Saifi Ismail

much. Kaifang, you very Saifi. This thank is

we significant more to One have peers. market second have MENA talent market. MENA's attracting discuss in with opportunities As businesses, investments, macro more since favorable now invited frequently year, remarks, we and and this aspect resources, half and our very environment is the at that last is of management noticed our including the to we is more highlighted been industry

it's we years. strength more all are happening, in to and through intentions the learn to to ways have go are conversations hard need More creative minds from that and and resources, to and With that X X point this party's able these discuss are see this collaborate strength from naturally the insights beneficial. what is to and also process, what they they to each next on at market not going

In the some in last the look the years. market competitive the still X very significant of players have been apps MENA performing well The gaming region sector, years at landscape, most in mobile in many terms China rest from is major the the are we of gaming the over MENA. TikTok. change for If

love in would than acquisition much However, bid that now expensive years MENA the the we more is what share we what X ago when is to expense I first traffic market. entered market the

on to could companies, they So this small-sized own. their for market challenge a some plan that be if explore

and I innovation. and us inspires industry users, and bad to thing. better that also never trends want It serve is also drive build research to collaboration competition a our new reiterate technologies and

player as this leading this in development an the see region, opportunity. we unfolding As

you. after position these confident proactive capabilities our all years. are taking in remain We leadership Thank and steps to our cement

Operator

The next Goldman Kong question at comes from Sachs. Lincoln

Lincoln Kong

X have I questions. So

market? second one, some through in of how new area strategy the company distribution traffic between and plays of can in platform investment, profitability business -- management high the does sort And the does continued So is, for provide insights balance or of one also maintaining or this Yalla in First business? in foresee either the short asset have terms the overseas development acquisition? plans especially

Yang Hu

I the and about you, Saifi. the leave margin will Thank Lincoln. question the first and is This Karen, question to take second

just mentioned or the year, XX% above, for level. we at decent a we our still keep margin As next net can very

are actively development, company if seize investments. looking also pursuing to opportunities. still to of that ready on maintain investment will is company's approach for focus However, the the opportunities opportunities. growth some long-term high-quality there are investing And course, to we to We a benefit prudent our these increase good

more growth exploring to us our can you. supports help position I you. cash strong opportunities I Thank unleashing and hope Our potential.

Saifi Ismail

very for question. your Lincoln, question, for you thank much second your

Regarding short the We exploring and we we mature that the short products for plays. very look global is for we at market, potential markets observed model are plays, time Concerning States the short saw early are the compared already these most destination and to plays popular If in takes and China, business Asia But MENA Southeast China, there. becoming the for United market. the it some at opportunities. example, stage. still educate with region, also very global users, are see new

Furthermore, to culture users' to Arabic tailored better essential. very content is needs, believe serve I

market insights. also production a We capitalize If local move our market companies. decides this into of be way to might Yalla Thank sector, the you. on understanding are talking and research conducting to some to to culture extensive evaluate believe better MENA's and I localization

Operator

Nomura. from comes [ Go The ] next question Rachel from

Unknown Analyst

for company quarter. Congratulate like position company has on has cash question a the very is And solid [indiscernible]. plans that strong the a made given my

Yang Hu

for drive to thank exploration question. growth. you much ], supports your further opportunities strongly of Rachel new Cash [ very us

As among are we markets, global I MENA opportunities. investment emerging and is acquisitions popular, the stated, and seeing

having for our reserves important company. strategically is So cash

repurchase our approximately we program. million totaling we This our conduct million. continue reflects out to X.X we actively and price, share repurchased value confidence our In share our addition, and in shareholders. In you. USD repurchase shares, carrying quarter, will X.X program Thank third to return around the are

Operator

comes question with next from The Wu Natalie Haitong International.

Yue Wu

in provide could Just Ludo management Jaco? by competition TikTok faced on some the wondering, color and Yalla and Yalla

Saifi Ismail

for you very thank question. Natalie, much the

for more in the MENA global are earlier, opportunities now companies looking we as region. So mentioned and more

in For well example, fast far. market performing moved very is TikTok, who and the so

products. video of streaming a TikTok has or short on terms impact live In competition, greater

share at If some because data, you TikTok. their them look are of market of third-party losing

for Of and competing course, users' all are time products attention.

good our However, at a I years, have the closer over taking look flagship past done applications performance say X job. would a our

are generating loyalty still users revenues strategy to are focus product because There our to localization. time from We Arabic our who record-high product always genuine on stronger for platform. probably have needs time shown

the We Tao X our Mr. in vitality And they flagship are confident of cycle. I Yang expect applications. a enjoy as just will life very mentioned, long

Jaco, recent Live don't face that just in years, many of live it's directly. the and competition direct MENA terms discussed, we streaming entered platforms with streaming think we platform. have In compete the as Thank live are more There one. other. market platforms a streaming also TikTok is biggest you. I each

Operator

would are remarks. to turn like to As there questions no further call management closing back the now, over for I

Yuwei Gao

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

further If website. available please contact or press Relations Both company our you parties' is feel Yalla's Communications. questions, as Financial information Investor have well on Piacente as in release free to contact today's

Operator

This concludes call. this conference

You disconnect lines. may your now

Yalla Group Limited (YALA) 21 Nov 232023 Q3 Earnings call transcript