Yalla Group Ltd. Q3 FY2024 earnings call

• The third quarter saw robust revenues of US$88.9 million, beating the upper end of guidance by 8%, and net income increased 11.2% year-over-year to US$39.2 million. - Continued to deepen localization capabilities, rolling out new gamification features and operating events. - Broadened user base with average monthly active users at 40.2 million and paying users at 12.6 million. - Upgraded flagship product Yalla with fresh features, like embedding a Crazy Soccer game in the chat room. - Expanded the regional footprint of Ludo Champion Offline Tournament Series, hosting tournaments in Abu Dhabi and Egypt and teaming up with the UAE Esports Federation. - Interviewed by Pocket Gamer, highlighting the importance of content localization in MENA's social networking and gaming industry.

In the third quarter of 2024, Yalla Group achieved record high revenues of US$88.9 million. Gaming Services became an increasingly important revenue contributor, with its proportion of revenues surpassing 30%. Average monthly active users grew to 40.2 million, up 14.5% year-over-year, and paying users increased to 12.6 million, up 12% year-over-year. Yalla Ludo and 101 Okey Yalla both set new quarterly revenue records.

• For the fourth quarter of 2024, revenue is expected to be between US$77 million and US$84 million. - Confident of maintaining a net margin of around 40% in Q4 and potentially reaching around 45% through continued operating efficiency improvements.

• Forward-looking statements involve inherent risks and uncertainties, and future results may differ materially from views expressed. Further information regarding risks and uncertainties is in the earnings release and annual report filed with the SEC.

Q: Can management share more information about new game products, such as testing and launching schedules, and game business performance in 2025?

A: Currently, there are three new self-developed mid-core games in the pipeline; some will enter testing in Q4 2024. Yalla Ludo's performance is expected to remain strong and stable with single-digit growth in 2025, and more growth will come from new products and potential external collaborations.

Q: Regarding flagship products, how are strategies moving forward and changes in Q4 and next year?

A: Will continue to roll out new features in Yalla during the last of 2024 and into 2025, launch interactive operational events and new game play to boost user engagement. Both flagship products are confident to maintain current scale and achieve single-digit growth in 2025.

Q: Could management elaborate more on drivers of growth for Yalla Ludo and 101 Okey Yalla?

A: Consistent efforts to optimize user experience and refine operational procedures paid off. Yalla Ludo had diverse operational events and held offline tournaments, strengthening brand impact. 101 Okey Yalla has been in the Turkish market for years, with enhanced user experience and a new feature getting excellent feedback.

Q: Can management give an update on shareholder return?

A: Yalla repurchased over 1.7 million ADS in the open market for approximately US$7 million in the third quarter. As of September 30, 2024, total share repurchases amounted to US$42.5 million. Will continue share repurchase program and consider cash dividends in due course.

Q: Could management share about updates on external cooperation and expansion into new areas?

A: Yalla is engaging in discussions with top-tier overseas Internet companies interested in MENA market. While MENA remains core focus, if suitable products are seen, may consider global promotions in other regions like Europe, South America, and Southeast Asia.

Q: How do we think about margin trend in the fourth quarter of 2024?

A: Confident of maintaining net margin of around 40% level and potentially reaching around 45% through continued operating efficiency improvements