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YALA Yalla Group Limited

Participants
Kerry Gao IR Director
Tao Yang Chairman, CEO
Saifi Ismail President
Karen Hu CFO
Jeff Xu COO
Feiya Zhao Haitong International
Bo Pei Oppenheimer
Kai Fang CITIC
Call transcript
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Operator

Good morning and good evening ladies and gentlemen. Thank you for standing by for Yalla Group Limited's First Quarter 2021 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, of 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 First as Earnings today, our the services. our

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

Forward-looking inherent statements and uncertainties. involve risks

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

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

Executive Mr. our that turn Officer, session. Xu Chief now will over Chairman Our the call to our I Officer Chief said, ahead, Please Yang. the to call go With for and Operating sir. join Mr. would Tao Jeff Q&A like

Tao Yang

first of by quarter our to we start. by to community, demonstrated capabilities guidance continued reached the advancement XX% you, of you conversion Thank end and by first almost and user upper further our call. X.X%. off into efforts active also net range thank Yalla the was Kerry, conference remarkable revenue This effective paying profitability, driven by earnings joining robust our stellar exceeding Group’s increased users of total and our grow Q-on-Q and XXXX XXXX maintained million as $XX.X the is margin of everyone our performance XX.X%. for initiatives. the XXXX, monetization quarter our In of users, non-GAAP a

active to monthly region, our $XX.X Africa million. With strong culture, efforts and tailored East the to our users Middle Q-on-Q campaigns we increased group raise the for execution the by XX.X% local and our awareness across of marketing effective and North brand reached

increasing on our Yalla addition, ratio paying X.X engagement million, to to users XX.X%. of outstanding user up Group’s by In quarter-over-quarter paying XX.X% leading platform drove

$XX.X in to as to XX.X% grew reaching QX. ARPPU by improve ability group's Our rapidly continued quarter-over-quarter, also our monetize

American and them these earnings Turkish of for available X XXX game and great the casual The previous made progress Three user pipeline. have announced including online, details technological interface new in and the products Parchis quarters. over During users of refining products been made beta platforms, products versions we Yalla for the three all countries, we Okey in of have past game are calls, also for our Gulf in users new Baloot South casual users.

Our part President more will Saifi his details with later. share you in

specifically Arabic message IM users. or product for designed fourth is new instant Our YallaChat, an product

supports desires. launch, video and enhance apps based refine and out synergistic development an of team the join more and teams. will months. and process, platform users strengthen the launched on iteration create integrated and aims chatting strategically an messaging user our stage this is significant ongoing the adopted beta our and this With ecosystem. Group chatting. we our local the of voice Since take has and that messaging, to YallaChat an and R&D share on to gradually and in initial its talent build product, individual based Yalla and XXXX. always version such than features pleased feedback several are on The beta to right attract instant We product product we This version connections continued product roll March among IM design to beta end, To new to and basic measures the feedback, functions, have improvement as the functions can

the of to to start details team product and the launch We are officially promotion. the decides full the before perfecting dedicated product

our out our build call, we As plan earnings base. user user base sales activities new marketing mentioned With year for up in top our for priority this expand an increase is these last official Yalla’s to launch, and we lined to products. initial to products

a synergies our in For don’t our related gradually two user build our ecosystem. we and two products. these continuously to expect expense our for and and as will Yalla base we products, steady portfolio, strategy see we comprehensive Ludo, and to Furthermore, maintain Yalla products, to existing among enrich growth develop aim Yalla much various amplify change

had and MENA on the strong entertainment and metrics. as days, years anniversary. financial voice more few the Yalla, in mobile few going social pioneered in suitable we of this uniquely just development region. voice-centric In outstanding an our social will to Xth operational marked across a in elaborate growth the We and be Yalla networking first ago, Five is minutes. Saifi a quarter its president chats platform identified and networking first to online for have primary Our entertainment by idea

to for MENA. networking leadership enriched entertainment the to strength in mission to social products gradually enhanced build our activities users field this popular we Over local in while affirming the destination past better the from we years, and went X as our and most strength offer serve online

we and local to trends watch continue MENA’s ahead, users' build with our needs. expand in friendly tailored to and culture, community, services local closely various Yalla's ecosystem Looking products

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

Saifi Ismail

Thanks for us joining today. everyone. Tao. Thanks Hello,

in going the from our in this improve especially of continue the new new to product to a chatrooms develop including integrated products. which our we looking and users products the we each move, users ecosystem, synergies help enrich Ludo, four With us efficiency increase apps application flow of an to see we pipeline, are between acquiring in individual to application, As Yalla portfolio, on expect Yalla, available the boost among to forward. more will

resulting increase base, multiple the Group, services to and seeing by time ecosystem We in an users' few Ludo a the in in larger the user and regions, brand provided which also and Yalla as We in of awareness deeper a spent longer lead gain anticipate advertising long was recently will run. whole, on products Yalla Yalla's effectiveness solid. a tested for loyalty the Yalla Yalla the traffic of

upcoming replicate to other countries collaborate in, other even in the first, new our apps with observed will all a plan we before decide Ludo, this that help have products, good we potentially to project concept progressively few officially promote it same Yalla and the or trials: cross-selling potential operate on the essentially, in countries process we more for test While we to run apply we future. launch to

exciting you product, our about our here update Yalla we share Another and with Parchis. to investors love is would new

the serving UAE's American overseas is As market. unicorn exploring technology users' on the also the internet South on besides Yalla NYSE, in needs opportunities first listed focusing our in MENA era,

beta Our first product America, very customized very and user in by constantly are metrices Parchis, its that evaluating. South has received for encouraged trial, feedback user we its are we good

to share will and leverage We Yalla insights development the will next the local continue remains deep users the Yalla to of dedicated with building as provide products keep it you time. Parchis' various updates needs and ecosystem. their with monitoring preferences, teams' to will and developing MENA local trend, more tailored to

online I Our well turn results. will we over MENA is to the key CFO, become region, our financial call our in now discuss way achieve our and the it. the provider who entertainment networking mission and for will social that, With Karen, and to are on to No.X operational

Karen Hu

you Saifi. Hello, for Thank us. Thank joining everyone. you,

performance steadfastly executed experience as our and sustained development. we the growth prioritizes that user the quarter, community Our strategy strong first into

grew with a revenues million year-over-year reached to rate XXX.X% quarter growth by first XXX% million Our $XX.X $XX.X income net while year-over-year. non-GAAP of our

margin elevated market Our non-GAAP strategy, unique and net remained at reflecting efficiency. monetization XX.X%, our operating strong positioning

XXXX. to our I details walk first Now would of quarter like for the financial through

capability. quarter were base $XX.X enhancement Group's period widening same the $XX.X by and the million XXX% the Yalla monetization in driven from primarily increase last increase revenues year. first of Yalla of XXXX, The Yalla's and was user million in both the in Our Ludo's a

the X.X XXXX from period of XX.X increased million last increased from to XXXX. in first year; MAUs in million XXXX quarter X.X of from average the the quarter same X.X XX.X % Our first the by the Ludo’s quarter XX.X first XXX.X% period in quarter of XXXX XXX.X% in MAUs MAUs and by last Yalla in of of million Yalla’s X.X million the to in same million to year. of first increased by million

XXXX. contributor the in which quarter XXXX the in X.X to of million our first growth from in number of In another primary X.X quarter revenue first users, addition, increase million the solid significant of paying grew to was the

our Now look costs let's expenses. at and

in million first quarter $XX.X XXXX. Our cost revenues of the of was

Excluding fees to quarter for scale. from primarily the The share-based due million, third-party the compensation from expenses, in XXX.X% revenues for increase $X.X in payment $XX.X a increase first quarter commission last year. expanding platforms million were resulting XXXX of cost increase our of business an was same

as the our of of share-based in at quarter components cost with relatively in other of expenses, Excluding total XX.X% XX% compared the a XXXX. percentage same revenues stable period in remained revenues XXXX, of first compensation

of selling Our in expenses XXXX. million marketing $X.X quarter first and the were

$X.X components and acquisition advertising XXXX promotional $X.X the user expenses, Excluding XX.X% an million first quarter and last result year. for marketing share-based efforts. increase higher our primarily continued expenses other compensation quarter were from marketing the due of of of The to million, increase same expenses a was for as selling

X.X% organic as through expenses, selling to in and revenues Excluding components and XXXX, our as XXXX primarily period in well total of same XX.X% due to referrals share-based from marketing effect, a brand decreased word-of-mouth of efficiency. the in enhanced growth marketing expenses the compensation acquisition quarter user as other strong in of first percentage

and expenses general XXXX. the in quarter million were administrative first of Our $XX.X

of XXXX XXX.X% expenses, same last of Excluding components year, general other million $X.X for and first the expenses a the share-based administrative were for quarter million, from $X.X quarter compensation increase primarily our general our of staff, and salaries and for in due to was which was staff. general an increase administrative benefits and which expansion by administrative turn other an in driven

revenues total first dropped general expenses, X.X% X.X% of share-based XXXX Excluding as in first economies of of a XXXX and percentage the from our the to scale. to other in quarter compensation expenses components of administrative due of quarter

quarter million Our technology and first expenses product $X.X in development of XXXX. were the

Excluding last and year. increase share-based enhancement technology arising and from product technology the of product $X.X expenses, of XXXX an development and driven primarily in in technology same $X.X product in services. and the million was quarter benefits expenses expansion investment for turn our other development staff, first and million, for compensation quarter staff higher components to a our increase by salaries due an from new XXX% development were products which The was for of

to components X.X% of our result and as a As of reasons, a product total X.X% percentage technology development other expenses rose revenues year-over-year. of from these

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

non-GAAP improvement a year. XXX.X% the $XX of compensation, was same from last income for XXXX quarter first share-based operating Excluding million, the quarter

quarter XXXX. in million first was the expense $X.XX quarter to million $X.XX tax in first income of of Our in comparison XXXX, the

XXX.X% line, million the $X.X to million first last in the was a of year. increase Moving same XXXX, the net period bottom $XX.X income our quarter from in

compensation a $XX.X net of income share-based non-GAAP was Excluding the expenses, XXX.X% XXXX first quarter improvement million, for year-over-year.

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

XX, million resolve capability $XXX.X cash and and our consistent Yalla to cash of and as As of Group's cash had compared This December million, of to demonstrates a improvement XXXX. cash XXXX, basis. equivalents XX, improve $XXX.X operations as on we of equivalents March

place and have relatively revenue taking May entered which is we XXth period annual April social through due to XXXX MENA XXth impact. the with fasting expect growth between to activities As second quarter, moderate Ramadan potentially reduced seasonal a an entertainment the in we across

between $XX be XXXX, the seasonality We revenues expect in quarter to million our consideration. and the into of $XX taking million second

growth, to Looking the further superb enhance users deep to as ahead, leverage returns we current to and take for we which to and building delivering market shareholders. concludes team's local Yalla for and Operator, the continue of and on pave prepared estimates subject to will meaningful ready develop today. the Company reflects current runway based The preliminary our customer are change. conditions and above insights, This conditions long-term is a brand remarks all demand, questions. the for outlook to ecosystem we our the experience now our and committed operating our marketing management's are are

Operator

Thank participants on to English. of the benefit question wish Chinese, to ask today's immediately all if you. For your your please [Operator in Instructions] question in repeat call, management you

with The ahead. first International. Haitong question go Zhao today comes from Please Feiya

Feiya Zhao

I Language] will translate [Foreign for myself.

your you congrats thank and for management taking strong quarter. on Now, my questions

MAU behavior? provide content some when are revenue, to paying product? the active Yalla and the mainly officially colors is page to And most the user Yalla as question profile what country you user for Parchis, of the launch going my So, related to Parchis such Parchis. current you Thanks. is and Could Yalla now please

Tao Yang

the Well, feedback I Yalla were will only American there's launched South hi received clearly But Feiya. showed Parchis market. in we which answer question. it that

Parchis region. this to has partner the believe become You'll product in a potential

And promotions started and in at from the Okey normally -- Interim Parchis need to you the already with Afghan category and have to worry Yalla part under according We took the countries joined. six QX.

use channel to Again to for look starting and be deeper for every with the opportunity strengthen will ride engagement will the the next you. to like a there back you in and We one are next in sharing campaigns monitor looking members The night we're with meeting they the too. more morning continue And to QX. and and we quarter. our forward other

Feiya Zhao

Mr. Thank you, Yang.

Operator

Please The go next Oppenheimer. question ahead. comes from with Bo Pei

Bo Pei

my management, Hi for question. taking thanks

I quick So, questions two have here. do

haven’t So, sequentially I because and they as guess, our ourselves on marketing, first started in is XQ? we standing guess non-GAAP I improve yes. that's margin

is question MAU then our new growth income our products, time quarter year. is second we about of tend do question when growth on net And the marketing and to to more on do about impact margin. XX% to talked So, going my XX% right? sales the spend we be sequential last we that, was what for this especially for for then, And outlook, each so our when

MAU So, can outlook that, and on then the should on new products. comment about any for how that update management think we the

with to Thank like the products? the by you. be in example this of For end year what's going size user new

Karen Hu

your question. you Thank you Bo, for thank

we QX, Yalla that margin for in. net for I from going put actually dynamic. intense Q we that have and are we to and delighted how in promotions with again. feedback margin. And searching I'm So, since new angry might in into increase of some last QX, -- going spend QX very that much our Insurance And and see to

accordingly mean But and We next have I strategy promotion efficiency just in outstanding. Group our the loops. the to that, use time month Yalla our so

knew XXXX. plans found outlook with outgrow new the user's to products in quarter-over-to-quarter that I the and XX% As And quarter, think change MAUs products, both for by that’s change we we is the last impacted, the mentioned in feedback. in on of

question. the for very Thank so, And much progress. there's you team of your

Bo Pei

Got it, you. thank

Operator

The with next question from Please comes CITIC. ahead. Kai go Fang

Kai Fang

management. my question congratulation Hi, done taking Thanks for quarter. for and

do Chat. you So, and products the [indiscernible] the hedge, my Thank instant How for Chat, other do like Yalla message from and question what on got interim see timeline competition is you voice-chat a product. Ludo Yalla some you.

Tao Yang

blue Kai in team A question. countered UAE. the good based Fang. company Hi, morning And well with coat

frontiers. user's and other try. the lots culture's pillar them Yalla difference seeing better? have own is the new terms for Which dedicated able user And product. will ready, Ludo this will That are Yalla data and that we with the is we gave product to over and local been that now from Yalla the we've the and chain main Chat feedback. give end Community. of have have introduce thing to we is encourage in be here. offering social And growth Yalla Yalla we're We find way, to to And to strategy, to WhatsApp. you user your a community and product leverage it a And to menus Arabic connections product on in many of localized and Chat bolstered the this continue features built. Where In when the its

Kai Fang

you. thank Okay,

Tao Yang

you. bless God

Operator

comes Chitty The go next with question from Ji CICC. [ph] Please ahead.

Unidentified Analyst

Thanks management for taking my question.

and Yalla's I in your voice-centric First Can entertainment color more like some congratulate video do to products of since products you. about strong the are share please have to for would you I you launch these Currently both video-centric, quarter. of another a Thank have video-centric regarding pipeline. lot applications attention days, product any have gained future. plans that. questions are

Tao Yang

Chitty. growth Hi, our have don’t video-centric only profile. have that product At we X% this remain an product. Well, strategy we in point, it

much We entertainment. to update accordingly. continue chatting our and you. a users mainly need will will our take Thank shorter networking strategy And we

Chitty Ji

Thank you.

Operator

The from go next Jefferies. [ph] ahead. with Cienna question comes Sam Please

Unidentified Analyst

taking thanks for management, my question. Hi

also. congratulations great I So, on you beta two questions. have know the

strategies this to differences first about the regions. in any acquisition strategies different ask So, question of these I would there for a is the different like are of obligation. product

product part launch for example we like a So, of new America. in

my the question be strategies will long-term about second what there? major outlook. is So, And marked

colours thought the -- like now you're expansion products from outlooks share for expansion about doing this and geographic management offers. So, business some Thanks. line

Jeff Xu

lasting five Cienna. Yalla the years. Good on answering question. Yalla past question. over campaigns is and Thanks, Ludo be Two This Jeff, really the I'll

which And the user demonstrated because product also high gives controls Yalla been advertising debloatization, free, consistent of Google. product excellent the has shown strong and acquisition recommended now Yalla reach profitability and and in can in the and acquisition, master. the masking Our be organic by quality same to high have -- also both top MAUs. our and Ludo our without input of the accent gradually at Without gained A team valuable tier like add they of experiences it's time growth. platforms our user the Yahoo for has media on our acquisition

user marketing magic characteristic own strategy they will keep adjust trend, With to to. to the on can it our give in the new our design successful every will our execution go patent and follow understanding feedback, acquisition. we We special product, we always and that transmit and or of product

maximize for As it's are We'll also always trends a payloads different paying. to then there programs. -- efficiency many credits of different have the

upcoming strong teams results. constantly new a our for achieve Entry the game. our inability promotion product, For to whether of passing

Tao Yang

And years, question. three will next our I'll be potential other these are we with, see answering data got second there to the be focus. Simply main on our keep will MENA certainly launch, a and opportunities. project marking market And eye any if we

to to to start Yalla community, product the introduced a another Yalla, In from the more continued work a Yalla then will longer to There'll integrated we've And ecosystem MENA name U.K. we build you, product and four or preferences. have reconfigurator brand to in addition deeper drive traffic earlier, loyalty user Thank whether earlier, new then look opportunities dedication we and long monitor five that to in lead time develop introduced for Ludo as when user in Cienna. one in and same be which time, At whole as gradually run. Yalla's another. spent

Operator

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

Kerry Gao

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

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

Operator

This the conference call. concludes

you attending. Thank disconnect now for may your You line.