Good day, and thank you for standing by. Welcome to the Weibo Report Second Quarter 2024 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. 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 second quarter 2024 earnings conference call. Joining me today are our Chief Executive Officer, Gaofei Wang, and our Chief Financial Officer, Fei Cao. This conference call is also being broadcast on the Internet and is available through Weibo's IR website. Before the management remarks, I would like to read you the safe harbor statement in connection with today's conference call. During today's conference call, we may make forward-looking statements, statements that are not historical facts, including statements of our beliefs and expectations. Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statements. Weibo assumes no obligation to update the forward-looking statements in this conference call and elsewhere. Further information regarding this and other risks is included in Weibo's annual report on Form 20-F and other filings with the SEC. All the information provided in this press release is occurring as of the date hereof. Weibo assumes no obligation to update such information, except as required under applicable law. Additionally, I would like to remind you that our discussion today includes certain non-GAAP measures, which exclude 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 now expected to result in future cash payments or 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.

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 second quarter of 2024. On the user front, by the end of the second quarter, Weibo's monthly active users reached 583 million, and average daily active users reached 256 million. In light of our sizable user community and mature user mindset, we have proactively adjusted our user strategy this year by allocating more budget to the acquisition and engagement of high-quality users. This quarter, our daily active users compared to monthly active users ratio increased year-over-year and quarter-over-quarter, reflecting further improvement in user engagement. On the monetization front, we've been focusing on integrating Weibo's trending products with advertising and marketing demand over the past two years, leading to greater recognition of our hot trend marketing across various industries and advertisers. In the second quarter, our total revenues reached $437.9 million, with ad revenues amounting to $375.3 million. On a constant currency basis, our total revenue increased by 1% year-over-year, while our ad revenues decreased by 1% year-over-year. Our non-GAAP operating income reached $157.6 million, reflecting a non-GAAP operating margin of 36%, which shows a modest increase year-over-year. Next, let me share with you the progress made in monetization this quarter. In 2024, we continue to focus on growing our user base and engagement, strengthening the competitiveness of our content ecosystem, and enhancing operational efficiency as our strategic objectives. On the channel side, we maintained close cooperation with handset manufacturers, concentrating on acquiring high-value users and boosting engagement. We also invested in refining the accuracy of our algorithms and targeting capabilities to enrich the content offerings for our channel users. Regarding social interactions, we've leveraged our relationship-based feed to enhance our vertical content ecosystem. We have improved interaction between key opinion leaders and fans, increased user investment, and enhanced interaction efficiency. Additionally, this year, we are investing more in user-generated content to encourage quality content generation around vertical topics. For example, during the first half of the year, user social interaction grew significantly by double digits year-over-year, with increased interactions between celebrities and their fans. Moving on to the content ecosystem, we are focusing on enhancing our competitiveness in the IP-related content, particularly in entertainment and events. We are also increasing investment in verticals like digital products, automotive, gaming, fashion, beauty, and healthcare. We aim to enhance our content ecosystem competitiveness and further improve monetization efficiency. In the second quarter, with numerous entertainment releases, we leveraged our advantages in celebrity and fan interactions, leading to a notable increase in user interactions in the entertainment vertical. As for the online gaming vertical, we've built strong partnerships based on content construction over the past three years, covering over 80% of the top 100 games. This has led to significant growth in user-generated content and improved interaction within this vertical. In the second quarter, the number of golden verified accounts in gaming increased by over 80% year-over-year, alongside a rise in their traffic and interaction. Looking ahead to monetization in 2024, we will continue to strengthen our monetization competitiveness by leveraging Weibo's strengths in hot trends and IP while driving vertical content ecosystems. Despite facing challenges such as decreased ad revenue from international cosmetic brands, we are collaborating more with e-commerce platforms and domestic brands to enhance our marketing support. Overall, Weibo's marketing services have evolved into content marketing solutions emphasizing hot trends, IPs, and celebrity collaborations. This approach positions us favorably within key industries like FMCG, digital products, and automotive, as we aim to stay competitive in a challenging advertising landscape. With that, let me turn the call over to Fei Cao for a financial review.

Thank you, Gaofei, and hello, everyone. Welcome to Weibo's second quarter 2024 earnings conference call. Let's start with user metrics. In June 2024, Weibo's MAU reached the 583 million and average DAU reached the 256 million. As communicated last quarter, in 2024, we have proactively adjusted our user strategy to put more emphasis on the acquisition and engagement of high-quality users, as demonstrated by the improved DAU versus MAU ratio this quarter. Turning to financials. As a reminder, my prepared remarks would focus on non-GAAP results. All monetary amounts are in US dollar terms and all the comparisons are on a year-over-year basis unless otherwise noted. Now, let me walk you through our financial highlights for the second quarter of 2024. Weibo's second quarter 2024 net revenue was $437.9 million, a decrease of 1% or an increase of 1% on a constant currency basis. Operating income was $157.6 million, representing an operating margin of 36%. Net income attributable to Weibo reached $126.3 million, representing a net margin of 29%. Diluted EPS was $0.48. Let me give you more color on the second quarter 2024 revenue performance. Weibo's advertising and marketing revenues for the second quarter 2024 were $375.3 million, a decrease of 3% or 1% on a constant currency basis, reflecting muted ad demand amidst challenging macro environment. Mobile ad revenues were $352.3 million, contributing approximately 94% of total ad revenue. In terms of growth, 3P products, e-commerce and entertainment were the largest contributors to growth. We are delighted to see sustained ad wallet increase from the handset sector this quarter, leveraging a robust content ecosystem and the dynamic discussion around 3P products. The entertainment sector demonstrated good momentum this quarter, driven by blockbuster TV programs and Weibo's unique value proposition for hot trends. On the flip side, the top-line recovery will still drag by underperformance of the FMCG sector. Despite a modest growth of the food, beverage and apparel sector, the cosmetic and personal care sector still lagged due to large ad budgets from competitors and the intense competition among ad platforms. For ad product, promoting feed ads were the largest, followed by social display and topic and search. Ad revenue from Alibaba for the second quarter was $32.4 million, an increase of 21% or 23% on a constant currency basis. We are pleased to see the solid ad growth from Alibaba continue throughout the first half of 2024, as Weibo's brand plus performance solution resonated well with Alibaba to fulfill its professional marketing goals. Before turning to VAS segment, let me share some preliminary color on the trend entering the third quarter of 2024. On the upside, Weibo continues to be the go-to platform to discover and discuss around hot trends during the Summer Olympics, which boosted user engagement and attracted intensive ad placements. That said, with a chunk of advertising budget allocated to the Olympic Games, we expect relatively lukewarm ad demand post the Olympic season, reflected in sluggish consumption data. We will beef up our sales execution and enrich Weibo's content ecosystem in the second half of the year in the hope of mitigating macro and industry headwinds. Turning to VAS. VAS revenues were $62.6 million in the second quarter, an increase of 15% or 18% on a constant currency basis, primarily driven by revenue growth from membership services. We have benefited from improved ARPU for membership services since they rolled out premium VIP features to cater to the needs of 3P users. Turning to costs and expenses. Total costs and expenses for the second quarter were $218.3 million, a decrease of 2%. Operating income in the second quarter was $157.6 million, representing an operating margin of 36% compared to 35% in the same period last year. Turning to income tax. Under GAAP measure, income tax expense for the second quarter was $33.3 million compared to $25.5 million last year. The increase was mainly due to the withholding tax accrued related to earnings to be remitted from our Wuxi to our Hong Kong subsidiary, which is to fund our demand for US dollars in business operations and the payments of dividends and debt, etc., in the future. Net income attributable to Weibo's shareholders in the second quarter was $126.3 million, flattish year-over-year. Net margin was 29%, flattish versus the same period last year. Turning to our balance sheet and cash flow items. As of June 30, 2024, Weibo's cash, cash equivalents and short-term investments totaled $2.84 billion. We made a special cash dividend payment of approximately $199.4 million in May. In the second quarter, cash provided by operating activities was $132.1 million. Capital expenditures totaled $10.3 million, and depreciation and amortization expenses amounted to $14.5 million. With that, let me now turn the call over to the operator for the Q&A session.

Thank you. We will now take the first question from the line of Alicia Yap from Citigroup. Please go ahead.

Hello, thank you. Thanks management for taking my questions. Can management comment a little bit on how you view the overall macro outlook and how will that translate to your advertising outlook for the second half of this year? And then, can you share with us whether you have observed any meaningful changes in advertiser sentiment in the different industry vertical? Any particular shift of the sentiment from any advertiser that you might have observed? And also does management believe the current macro environment could actually last into next year? Thank you.

Thank you very much for the question. First, regarding our advertisement revenue in Q2, it remained flat compared to both the last quarter and the same quarter last year. Even though we have seen some declines in overall consumption, advertisers' willingness to place ads has remained stable. In Q2, certain sectors, particularly cosmetics and beauty products, negatively impacted revenue by about 5%. However, other industries experienced growth. Looking ahead to Q3 and the second half of the year, uncertainties remain regarding macroeconomic developments, especially concerning consumer spending. We are cautious about the outlook for the remainder of 2024 as we anticipate challenges in consumption recovery, particularly in first-tier cities. This could influence advertisers' willingness to invest in ads, although Weibo's advertising business is relatively smaller compared to competitors. Advertisers are exhibiting cautious behavior, yet there remains interest in launching new products and running advertisements related to those products, with customers preferring top-tier intellectual properties and platforms which can help us secure additional advertising budgets. Furthermore, we categorize our customers into three groups. The first includes fast-moving consumer goods such as food, beverages, apparel, and entertainment. Despite being cautious with their advertising budgets, these customers are eager to explore new IPs and focus on top-tier platforms. For instance, in Q3, significant events like the Olympic Games demonstrated improved sales trends, indicating customers' willingness to invest in high-quality IPs and collaborate with leading platforms, positioning Weibo favorably. In other sectors such as handsets, automotive, gaming, and entertainment, we face considerable pressure regarding consumption recovery. Yet, competition remains centered on marketing for new products and launches. Weibo retains its advantage through trending topics and solid customer relationships. This summer, while the box office for new films significantly decreased year-on-year, our strong relationships allowed customers to choose Weibo for promoting their new products, resulting in increased budgets for us and continued revenue growth. Lastly, in the third category of industries, including cosmetics and luxury brands, we observe substantial stress regarding consumption recovery. In these sectors, there has been little interest in launching new products, leading to performance-based advertising and promotional campaigns. While we can still generate revenue through these performance-based ads and customer campaigns, Weibo is less competitive in this segment compared to the other categories. Thank you.

Thank you. We will now take the next question from the line of Suocheng Zhang from CICC. Please go ahead.

Thank you to management for taking my question. I would like to inquire about AIGC. I noticed that the company developed a large language model and successfully passed legislation in July. What are the latest developments in AIGC? How does it enhance our content production and commercialization efficiency? Thank you.

Thank you for your question. First, we've been discussing Weibo's use of AIGC to create content for the platform and improve user interactions. In mid-July, we received approval for the large language model developed by Weibo and the government. We are leveraging this technology to enhance our AI applications, such as comment robots and assistance tools to respond to users. We expect that interactions based on Weibo's content will become more intelligent and timely. Additionally, in the second quarter and the first half of this year, our AI model has significantly improved in its ability to interpret and understand content on Weibo, especially given the vast amount of user-generated content. This content varies in form, including images, videos, and text, which makes it challenging to standardize. Currently, the recommendation of this content to users relies on correctly interpreting and understanding it. Our approved large language models are primarily focused on refining this understanding to ensure more accurate recommendations. At present, we cover nearly 90% of our users, but we still have work to do to enhance the precision of our understanding and to boost our computational capabilities in this area. We continue to see potential in this feature. Regarding search results, our AI can quickly summarize and conclude searched content, improving user experience with our search feature. In the second quarter, this capability had over 10 million monthly active users. This is just one example of how we are testing AI capabilities, and in the near future, we will continue to refine our ability to interpret and understand content, enhancing the use of this technology.

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

Thanks, operator, and thank you all for joining our conference call today. We'll see you next quarter.

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