Good day, and thank you for standing by, and welcome to Weibo Reports Third Quarter 2025 Financial Results. Please be advised that today's conference is being recorded. I would now like to hand the call over to your first speaker today, Ms. Sandra Zhang from IR. Thank you. Please go ahead.

Thank you, operator. Welcome to Weibo's Third Quarter 2025 Earnings Conference Call. Joining me today are Chief Executive Officer, Gaofei Wang; and our Chief Financial Officer, Fei Cao. The conference call is also being broadcasted 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 statement 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 future prospects. Our non-GAAP financials exclude certain expenses, gains or losses and other items that are not expected to result in future cash payments or are nonrecurring 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'll 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 Third Quarter 2025 Earnings Conference Call. On today's call, I will share highlights on Weibo's product and monetization for the third quarter of 2025. In September 2025, Weibo's monthly active users reached 578 million, and average daily active users reached 257 million. In the third quarter, Weibo's total revenues were USD 442.3 million, representing a decline of 5% year-over-year. Our total ad revenues were USD 375.4 million, down 6% year-over-year. Our non-GAAP operating income amounted to USD 132.0 million, reflecting a non-GAAP operating margin of 30%. In 2025, our overarching corporate strategy continued to prioritize enhancing user value, maintaining Weibo's leading role in trending topics and the entertainment content ecosystem, while also strengthening the competitiveness of our social products. Additionally, we utilized a large language model to improve our recommendation feeds and search products, aiming to boost our user base and engagement. Next, I'll share with you highlights in Weibo's product operation and monetization in the third quarter. On user growth and engagement, in 2025, our key product revamp is the upgrade of the homepage information feed, which put the recommendation feed as the default core feed. The revamp has largely rolled out for all users by late July. Alongside the information feed revamp, we also optimized our recommendation algorithm, especially for video content recommendation. During the summer vacation, leveraging the active entertainment events and hot topics during this period, we saw significant improvement in user engagement of the mid- and low-frequency user group. The per capita viewership, time spent, and retention of the mid- and low-frequency user group grew double digits quarter-over-quarter, which in turn drove per capita time spent in recommendation feed for the whole user group to increase for Q3 quarter-over-quarter. In the third quarter, we implemented two key strategies. First, we enhanced the algorithm of the recommendation feed to improve user satisfaction with content, which matched their real-time interest. For example, in hot topic distribution, we established user behavior linkage between the recommendation feed and the search function. We used views and engagements with the hot topics in search function to show more precisely targeted content in the recommendation feed. This strategy has proven particularly effective in enhancing engagement and retention among mid- and low-frequency users of Weibo. Second, we enhanced our algorithm to better integrate video content into the recommendation feed, driving deeper content consumption. With the homepage information feed shifting from a relationship-based model to a recommendation-based one, video content could be distributed through our recommendation algorithms to reach a more precise and broader user group on top of the traditional social distribution mechanisms. As a result, we saw a notable increase in the distribution of original and mid- to long-form video content in the recommendation feed. The enriched mid- to long-form video content extended user time spent in the recommendation feed and supported the healthy development of the content ecosystems. Meanwhile, we continue to enhance our interest-based content operation, strengthening large-scale content production by content creators around user interest and thereby improving the quality and diversity of content supplied to the recommendation feed. The restructuring of the information feed was of strategic significance for Weibo, comparable to our transition from chronological to algorithm-based sorting several years ago. In the short term, user experience for certain user groups may face some challenges. However, from a long-term perspective, the increased weight of recommendation content and video content will strengthen Weibo's core competitiveness as a social media platform while laying a solid foundation for the sustainable and healthy development of our content ecosystem. While improving the efficiency of the homepage recommendation feed, we also strengthened social discussion in a relationship feed, ensuring its role as the cornerstone of Weibo's differentiated competitiveness. In the third quarter, our efforts focused on two key aspects: driving interaction between content creators and their followers, and stimulating interest-based social engagement among users to fully boost social engagement across the platform. First, to further drive the interaction between content creators and their followers, we upgraded the core fan mechanism and optimized the content reach and distribution. This significantly improved interaction efficiency in the relationship feed, measured by the ratio of total interactions versus total viewership, resulting in double-digit growth of this ratio, both quarter-over-quarter and year-over-year in Q3 while further driving content creators' motivation to consistently produce high-quality content in text and image. Second, to enhance ordinary user social interaction around interest-based content, we continue to develop the Super Topics community, focusing on key summer events, concerts, and anime conventions, which young people are interested in. We encourage users to share meaningful and emotional content around their interests, positioning Super Topics as the front-end useful space for interest-based sharing and interaction. In the third quarter, the number of users who posted and engaged in Super Topics grew double digits year-over-year. This effective initiative has strengthened Weibo's differentiated advantages in text and image, complementing the homepage recommendation feed and contributing to the solid development of the platform's ecosystem. Turning to search products. In the third quarter, we continued to reinforce AI application in the search function, focusing on technical infrastructure upgrades and integration across ecosystem scenarios. First, in upgrading technical infrastructure, we continue to enhance intelligent search capability to understand user search intent and content matching capability, which effectively improve the relevance and accuracy of search results, making it easier for users to find desired content. At the same time, we upgraded the search model from conventional one-time information search to continuous exploratory dialogue, enabling users to engage in coherent conversations with intelligent search and enjoy a more intelligent and seamless information experience. Second, the integration across ecosystem scenarios, we focused on extending intelligent search application in information feeds, fostering a Search as a Service user mindset. We deeply integrated intelligent search into the content consumption experience with enhanced content verification and content summary features. The system leveraged AI to assess the authenticity of the original post, extract key information, and provide extended insights, helping users quickly access structured and reliable information while consuming content. In the third quarter, the MAUs of Weibo intelligent search product exceeded 70 million, with its DAU and search queries increasing more than 50% quarter-over-quarter. This momentum not only reflects users' recognition of Weibo's intelligent search product but also further contributes to the expansion of the Weibo search ecosystem. As a result, total search queries on Weibo increased 20% quarter-over-quarter in the third quarter. Looking ahead, we will continue to deepen the innovative application of AI in search products. On the technology front, we aim to make search more user-aware. As for user experience, we strive to deliver a more seamless and intelligent usage journey. In terms of the ecosystem, service will become more contextually relevant. These efforts will continuously provide users with a smarter, more convenient search experience and further unlock the value of Weibo's content ecosystem. Moving on to monetization. In 2025, the ad product and sales team focused on two main priorities: first, to expand and solidify customers' mindset of choosing Weibo as a go-to platform for content marketing across more industries and clients; second, to continuously enhance the performance and conversion capabilities of our ad products. In the third quarter, due to the high base effect from the Olympics last year, Weibo's ad revenue decreased 6% year-over-year. From the overall market perspective, thanks to the stimulus policy aimed at driving domestic demand and consumption, e-commerce platforms and related industries maintain a relatively high level of advertising spend, which supported our third-quarter ad revenues. According to client feedback, after several years of substantial and continuous budget allocation towards performance ads, the bidding for commercial traffic has become increasingly intense, pushing costs upward. In addition, the government recently issued tax policies that limit the cap of the feed ad spend for tax deduction purposes. This dynamic has driven clients to reevaluate their ad budget allocation, placing renewed emphasis on the value of brand advertising. In particular, marketing approaches such as celebrity endorsements have generally become a key option for clients to consider. In light of this trend, leveraging Weibo's strength in celebrity resources, we aim to better facilitate clients' needs across the full celebrity endorsement and marketing lifecycle. We hope to create a richer celebrity marketing playbook together with clients, helping them enhance their marketing effectiveness. Let me share more color from an industry perspective. Competitive dynamics within the e-commerce sector have persisted since the second quarter, benefiting from deep partnerships with leading e-commerce platforms. Ad revenues from the e-commerce sector achieved notable year-over-year growth in the third quarter. Meanwhile, we have been gradually cultivating partnerships with other business lines within this e-commerce group, promoting a more balanced revenue mix and laying a solid foundation for future revenue stability. Ad revenues from the automobile sector sustained year-over-year growth trend in the third quarter. Weibo has continued to solidify its strength in the new energy vehicle content ecosystem. Revenue from traditional fuel vehicles also remained stable this year, contributing to improved revenue stability for the automobile industry. In the online game and smartphone sectors, revenue declined due to overall budget contraction. As for the food and beverage, dairy products, and footwear and apparel sectors, revenue fell year-over-year primarily due to the tough comparable base from last year's Olympics. However, with the recovery and strengthening of celebrity marketing in clients' mindset, ad revenues from celebrity endorsements continue to grow year-over-year. On the ad product front, we have continually strengthened the application of AI technology across the entire advertising lifecycle this year to enhance ad efficiency. By the third quarter, we have deployed AI capabilities throughout the process from the ad creative production and bidding model optimization to campaign performance improvement. Notably, Weibo's AI ad creative platform, Lingchuang, launched in the second quarter has been widely adopted, enabling even scalable and personalized ad production in both text and image formats. Furthermore, in the third quarter, we have extended AI-generated ad creatives to video content. This upgrade enables intelligent extraction of key highlights for the pre-roll segments and the generation of eye-catching cover images. This not only improved the efficiency and diversity of video ad creative production but also enhanced targeting precision and user viewing experience. As of the end of October, AI-generated ad creatives accounted for nearly 30% of consumption. Besides this, to address the common needs of brand clients, we launched new products via live stream press conferences. We leveraged AI to click live streams in real time, extract the most engaging highlights, and transform them into high-quality material suitable for KOL distribution. These highlights are further distributed through our feed ad product, amplifying the overall content reach and influence. This model not only addresses clients' difficulties in efficiently converting live stream content into shareable materials but also enables clients to achieve secondary distribution of valuable live stream content through a combination of high-quality materials and precise targeting. For example, in a live stream product launched by a smartphone brand, AI-generated material made up 10% of all materials, contributing to as much as 30% of total interactions. We plan to roll out this model to more brand clients hosting product launches, thereby further unlocking the potential of AI in brand marketing. In terms of ad performance, the upgraded AI-powered ad performance model has demonstrated impressive results in key scenarios. Experimental data shows that the conversion efficiency of both app download ads and form submission campaigns have improved. AI-powered performance ad models have enabled us to better deliver on client campaign objectives. Entering into the fourth quarter, we will focus on capturing marketing opportunities from sectors with high budget visibility such as the e-commerce sector. We will beef up our efforts to further expand the penetration of our brand plus content marketing approach across key industries, sustain growth momentum in the automobile sector, and strive for recovery in consumer goods. At the same time, we will continue to drive the application of AI in ad creative generation and AI placement optimization with the hope of offering smarter and more efficient advertising solutions to clients of all sizes and thus further strengthen Weibo's differentiated competitiveness in the advertising market. Next, let me turn the call over to Fei Cao for our financial review.

Thank you, Gaofei, and hello, everyone. Welcome to Weibo's Third Quarter 2025 Earnings Conference Call. Let me start with operating metrics. In September 2025, Weibo's MAU and average DAU reached 578 million and 257 million, respectively, with a steadily improving DAU versus MAU ratio year-over-year. The modest year-over-year decline in MAU was primarily due to the high traffic base during the Paris Olympics in the same period last year. On the user product side, in the third quarter, we completed the revamp of our information feed and prioritized the recommendation feed for content consumption. We are encouraged by early signs of improvement in user engagement with interest-based feed and video content on Weibo. In addition, user scale and search queries from the Weibo intelligent search feature continued to grow robustly quarter-over-quarter with intelligent search MAU exceeding 70 million in the third quarter. This growth was primarily driven by our AI technology upgrades, which allow us to better meet users' content search and discovery needs on the platform. Turning to financials. As a reminder, my prepared remarks will focus on non-GAAP results. Commentary amounts are in U.S. dollar terms and all comparisons are on a year-over-year basis unless otherwise noted. Now let me walk you through our financial highlights for the third quarter 2025. Weibo's third quarter 2025 net revenues were USD 442.3 million, a decrease of 5%, or 4% on a constant currency basis. Operating income was USD 132 million, representing an operating margin of 30%. Net income attributable to Weibo reached USD 110.7 million, and diluted EPS was $0.42. Let me give you more color on third quarter 2025 revenue performance. Weibo's advertising and marketing revenue for the third quarter 2025 was USD 375.4 million, down 6% or 5% on a constant currency basis, while value-added service (VAS) revenues were USD 66.9 million, up 2%. Weibo's advertising business saw a modest decline, primarily due to the high base effect from last year's Paris Olympics. By industry, our top three verticals were FMCG, e-commerce, and 3C products. In terms of growth drivers, e-commerce, Internet services, automobile, and local services were critical contributors. Notably, the e-commerce sector recorded over 50% year-over-year growth, driven by similar policies amid boosting domestic demand and consumption. We are pleased to see increased ad budgets across multiple business lines within these platforms, including traditional e-commerce activities and local service initiatives. Weibo has continued to demonstrate its unique value in driving brand awareness and user acquisition for e-commerce platforms amid intensified market share competition. The automobile sector sustained solid growth this quarter, thanks to Weibo's thriving auto-related content ecosystem, a dynamic EV launch season, and stable ad spend from ICE vehicle brands. On the other hand, we faced a significant year-over-year decline in the food and beverage and apparel industry, again, due to the high base effect from last year's Olympics. As for 3C products, this year, government-backed trade-in subsidies encouraged many consumers to upgrade their phones or home appliances earlier this year, leading to softer shipments and lower ad spend from advertisers in the second half. Other underperforming sectors that weighed on overall top-line recovery included online games, largely due to a tough year-over-year comparison and overall ad budget contraction in the sector. By ad product category, promoted feed ads remained the largest contributor, followed by social display ads and topic and search placements. AI has progressively transformed the entire life cycle of Weibo's ad products from creative generation to ad placement. Notably, our real-time bidding feed products sustained double-digit growth, driven by AI-powered ad tech upgrades that enhanced conversion and ROI for advertisers, particularly for ad download and lead generation campaigns. Ad revenues from Alibaba reported robust growth of 112%, reaching USD 45.5 million in the third quarter. We are pleased with the strong momentum from Alibaba this year, driven by deeper collaboration during key marketing windows and Alibaba's increased ad spend on its local services initiatives. Value-added service (VAS) revenues grew 2% to USD 66.9 million in the third quarter, mainly due to a modest increase in revenues from game-related business and membership services. Turning to cost and expenses. Total cost and expenses for the third quarter was USD 310.3 million, an increase of 3%. Operating income in the third quarter was USD 132 million, representing an operating margin of 30% compared to last year's 36%. Turning to income tax under GAAP measures. Income tax expenses for the third quarter were USD 57.2 million compared to USD 32.2 million last year, primarily due to the recognition of USD 29.4 million deferred tax liability related to equity pick-up gains in the third quarter of 2025. Net income attributable to Weibo in the third quarter was USD 110.7 million, representing a net margin of 25% compared to 30% last year, primarily attributable to top-line pressure. Turning to our balance sheet and cash flow items. As of September 30, 2025, Weibo's cash, cash equivalents, and short-term investments totaled USD 2.04 billion compared to USD 2.35 billion as of December 31, 2024. The decrease in Weibo's cash, cash equivalents, and short-term investments was mainly the result of purchasing long-term wealth management products and the payment of the annual dividend to our shareholders, partially offset by operating cash flows in the past three quarters this year. In the third quarter, cash provided by operating activities was USD 200 million. Capital expenditures totaled USD 5.1 million and depreciation and amortization expenses amounted to USD 15.4 million. With that, let me now turn the call over to the operator for the Q&A session.

Our first question comes from Alicia Yap of Citigroup.

Can management share the overall advertising outlook for the fourth quarter and for 2026? What can you tell us about the growth rate for the fourth quarter? Also, how should we view the overall ad revenue growth for next year? What is your future strategy for upgrading the advertising product? How has AI been helping or how will it benefit the click-through rate and advertising monetization? How could AI assist advertisers in enhancing their ROI? Any insights you can provide would be appreciated.

Thank you for the question. According to the financial report we just delivered for Q3, we've observed a decline in ad revenue for several reasons. Firstly, last year we had a high base because of the Olympic Games. Secondly, the headset industry and gaming sectors did not perform as well, although the e-commerce and automotive sectors performed slightly better. Overall, this performance aligns with our expectations. Looking ahead to Q4, we are seeing a slowdown in consumption-related figures in the latter half of the year. In some provinces and cities, national subsidy policies are facing challenges such as spending limitations and exits. This will likely impact the headset and automotive industries next year, as we anticipate the exit of the national subsidy policy for these sectors in certain regions. While we are encountering these uncertainties, we also recognize some certainties for the upcoming year and into 2026. In 2025, we did not have any hot topics or hot trends or events happening. In 2026, we expect several important events like the Winter Olympics and also the World Cup, which will bring a better placement for advertisers from the consumer goods verticals. You know that in Q3, the decreased performance of ad revenue primarily was due to the decreased performance of ad placements from the consumer goods industry. As a result, it is very difficult for me to give you a precise prediction of our performance in 2026. However, in Q4, we have observed some important trends. First, there is fierce competition in the e-commerce industry, especially from the offline scenarios and targeting lifestyle services. Weibo has had a low market share in this segment, but competition is increasing for food delivery and lifestyle services as well. This indicates that in Q4, we expect a huge demand increase in this particular area. For the e-commerce sector, as I have shared, there are fierce dynamics occurring. Regarding the automotive industry, we believe that it will perform quite well in Q4. But first, because of the anti-evolution policies, some customers or advertisers from this industry are facing price competition or price war issues. In the first half of this year, those advertisers didn't focus much on product promotion or establishing a mindset. I believe that this situation will improve in the second half of the year. I'm referring to the headset and gaming industries. For the headset industry, we know this was primarily impacted negatively by exiting national subsidy policies. In the second half of this year, with the exception of Apple, other headset makers experienced deteriorating sales volume, which is why we see a lower frequency of new phone launches. As for the gaming industry, from financial reports of NetEase or Tencent, we saw fewer new game releases in the second half. However, they are claiming that in Q1 of 2026, we will see some new games launched from these two major game makers, although it is still uncertain whether they will allocate more budget to this. Regarding our overall strategies, we're focusing on two directions. First, in previous years, much advertisement budget was allocated to performance-based ads, with little spending on mindset-related areas. After COVID-19, we are seeing a trend where advertisers are focusing more on live stream e-commerce content. This year, we’ve observed a clear trend of increased budgets allocated to establishing and building the mindset. As a traditional platform with advantages in this area, Weibo is definitely going to seize this opportunity. We plan to focus on hot topics and top-notch KOLs in terms of integrated marketing, seeing an increase in budgets from advertisers in these areas. The second point revolves around bidding ads and performance-based advertising; last year, we witnessed a decrease in revenue from performance-based ads. However, we have dedicated considerable efforts to developing excellent products for performance-based advertising while enhancing our technology. Most importantly, we have been applying a lot of AI technologies, which have significantly boosted revenue from performance-based ads. Consequently, you can see that in Q3, we had a lot of increases in this area, not only due to overall data and traffic and strategy adjustments but, more importantly, the overall application of AI technology is crucial. We expect a substantial increase in performance-based ad revenue.

The next questions will come from the line of Leo You from CLSA.

I have two questions about product commercialization. My first question is about the strategy and progress of intelligent search. Have we made any commercialization efforts in the fourth quarter? What other AI applications can management disclose? My second question concerns the revamp of the information feed. What initial feedback have we received regarding user content consumption and engagement? How do we anticipate that will contribute to revenue growth in the future?

Thank you for your question. We have seen a significant increase in intelligent search. In the third quarter, we achieved excellent performance, with monthly active users surpassing 70 million, and daily active users and query numbers growing by over 50% compared to the previous quarter. In terms of monetizing intelligent search, we saw a good rise in overall search-based volume, leading to a query increase of about 20% quarter-over-quarter. This provided us with a substantial traffic boost for improved performance. Secondly, at the current stage, our customers do not have the ability to place ads precisely based on the intelligent search results. However, this has created some impacts on customers. For example, we are utilizing GEO technology to facilitate product and content creation, helping customers understand new product-related issues and other important topics. This will generate numerous ad assets for our advertisers to use in the near future. Although we don't charge customers for this at present, I believe that in the future they will place more weight on intelligent search in their advertising budget, leading to increased brand-based ad revenue and overall performance-based ad budgets. Regarding the information feed, as previously mentioned, we updated the information feed in 2025, and it was made available to users. We finished rolling out the first stage of the switch for the information feed in July. However, it requires time for users to adapt to this change and develop their usage habits. That said, I believe this revamp will significantly benefit overall user activity and improve retention, leading to increased time spent on content consumption. Moreover, this modification resembles our earlier transition from time-based consumption to algorithm-based consumption. Although there are variances across different versions, it takes time for users to adapt to this new platform and nurture their habits. Still, it provides us with better opportunities, especially for new users, to engage in consumption more frequently without establishing a relationship as a prerequisite. Furthermore, for existing users, adopting this new concept will still require time, but I believe that this change will result in enhanced consumption behavior overall. In Weibo, we will continue to focus on upgrades and optimization of our products. This change is particularly significant for video-based consumption. In the past, users found it challenging to consume video content, restricting social relationships. In the past, video content creators faced difficulties establishing relationships with users. With the changes, we now proactively recommend more video content to users, crucial for Weibo's long-term growth and enhancing our core competitive edge.

That's the end of the question-and-answer session. With that, I would like to conclude the conference call today. Thank you all for participating. You may now disconnect your lines.