Yalla Group Ltd. Q4 FY2024 earnings call

• Robust fourth quarter and full-year results with revenue growth and increased operating profitability.
• MENA digital economy has potential with the digital transformation market expected to grow significantly.
• Leveraging AI in products, integrating AI-driven automation and data analytics to optimize R&D and user experience.
• Gaming product portfolio has mid-core games in development and testing, with plans for collaborations.
• Won awards such as the PowerHouse Partnership Award and GOLD Stevie Award, with product iterations and focus on local culture tailored content.

In the fourth quarter of 2024, Yalla Group's revenue reached US$90.8 million, a 12.2% year-over-year increase. Full-year 2024 revenue was US$339.7 million. MAU increased by 14.4% year-over-year to 41.4 million as of December 31, 2024. Paying users increased by 3.2% year-over-year to 12.3 million with ARPPU reaching 7.24%, an increase of 10.2% year-over-year. Revenue from 101 Okey Yalla reached new record highs. Yalla Ludo held offline events and won awards like the GOLD Stevie Award for Innovation in Entertainment applications. Revenue contribution from various segments was driven by user base growth and monetization efforts.

• For the first quarter of 2025, expects revenues to be between US$75 million and US$82 million.
• Committed to accelerating share repurchase program, aiming to at least double buyback activity to US$28 million in 2025.
• Anticipates maintaining current revenue size in 2025, with net profit margin around 40% without new product revenue, and around 35% with new product revenue once launched.

Q: Good morning, management. Thanks for taking my question. My question about your game business. Could management share the latest progress of new game products and what’s your insights into commercialization expectations?

A: Thanks, Xueqing, for your question. This is Jeff. I will take your question. Throughout 2024, we focused on advancing the research and development of our new gaming products, consistently exploring new avenues to expand our product portfolio. We have completed the version 1.0 development of two mid-core games and are now in the process of fine tuning them. Meanwhile, we have been proactively pursuing external collaborations that complement our business, leveraging Yalla’s extensive experience in the Middle East. We are working with more potential partners to unlock the local market opportunities and establish a deeper foothold in the Middle East. As the largest MENA-based online social networking and entertainment platform, we aim to curate top-tier games and upper game players a richer entertainment experience. We hope Yalla Games’ recent achievement will contribute new revenue streams to the Group this year. The specific financial guidance will be disclosed in due course. Thank you very much about your question.

Q: Hello, management. Thank you for taking my question. So, can management elaborate on the Company’s strategic priorities and the key initiatives for 2025?

A: Thank you, Xiaoyue. This is Yang. I will answer his question. I think 2025 marks the 10th anniversary of our Company’s founding. Our two flagship products continue to thrive and we are immensely grateful for our MENA-based users and wavering support and enthusiasm over the years. We will continue to iterate this flagship app by enhancing gamification and rolling out innovative new content, while leveraging advanced technology to offer diverse and engaging experience for our users. Additionally, as we mentioned earlier, we have a number of new apps in our pipeline that have potential to contribute to the Company’s revenue growth in the second half of this year. Going forward, we plan to further expand our local team in the Middle East to enhance our local presence and align with the region’s sweeping digital transformation trend. We will keep a sharp eye on MENA’s evolving user needs and stay open to the new market opportunities while consistently delighting local users with products that appeal to their culture values and taste. Thank you, Xiaoyue.

Q: Hi, management. Thanks for taking my question. I have a question about how should we think about the revenue and margin trades in 2025?

A: Hello, Kaifang. Glad to see you here. This is Karen. For 2025, even without factoring in potential revenue from new products, we anticipate at least maintaining our current revenue size. We also think that maintaining a net profit margin of around 40% is reasonable. Of course, our upcoming products are likely to generate new revenue streams this year, but we will wait until these products are launched to provide revenue guidance. Given the necessary marketing investments for these new products, we expect a margin of around 35%, but we will adjust our investment budget depending on the specifics of these new product launches. Thank you.

Q: Hi, good morning, management. Thanks for taking my question. My question is about your shareholder returns. Can management to provide an update on your share repurchase plan?

A: Thank you, Rachel. This is Yang. I think we are committed to delivering value to our shareholders through our share repurchase program. In 2024, we repurchased around 3 million ADS, amounting to approximately US$14 million. Moving into this year, we will accelerate shareholders’ returns through our share repurchase program. We are fully committed to achieving our target of at least doubling our buyback activity to US$28 million this year. We may escalate this amount later this year and we will provide quarterly updates on the plan’s progress. We host strong confidence in Yalla’s long-term potential and are dedicated to generating sustainable long-term value for all stakeholders. I hope that helps. Thank you.

Q: Thank you, management for taking my question. So, can management elaborate about our strategic vision for leveraging AI to drive our growth and innovation here?

A: Hi, Lincoln. This is Yang. Thank you for raising this. As we noted earlier, we have a dedicated algorithm team and proprietary AI task platform and we are already capitalizing on AI to empower our products, boosting efficiency and elevating user experience. Meanwhile, we see tremendous upside potential in further integrating AI into our ecosystem. We are actively evaluating various user cases across our products, exploring how to synergize our internal teams with external AI resources to deepen user engagement and expand our market reach. We aim to harness AI not only as a tool for enhancing efficiency, but also as a catalyst for innovation, ensuring that our products remain at the forefront of MENA’s digital entertainment market. I hope this offers a clear picture. Thank you, Lincoln.

Q: Thanks management for taking my question. My question is regarding our regional strategy. So, could you please provide any update on whether our Company’s future development will still be MENA-focused or if we have any plans to expand operations to other regions?

A: Thanks, Jenny. This is Saifi, and I’ll take this question. We have always viewed MENA as our core market and strategic home base, making it the solid foundation supporting our business growth. At the same time, as our products portfolio expands, we may reach users elsewhere, diversifying our user base. Some of our new products may also have the potential for distribution in other regions. We will also carefully evaluate such situations based on the market data and market prudent decisions that maximize our potential and enhance our ROI. However, wherever else we may go, the MENA region will always remain at the heart of our business and we will continue to deepen our presence in this region to strengthen our market leadership. Thank you.