1st Quarter 2025 Earnings Presentation May 2025 Disclaimer The information in this presentation is provided to you by Yalla Group Limited (the "Company") solely for informational purposes and is not an offer to buy or sell, or a solicitation of an offer to buy or sell, any security or instrument of the Company, or to participate in any investment activity or trading strategy, nor may it or any part of it form the basis of or be relied on in connection with any contract or commitment whatsoever, in the Unite ...

Core Insights - Yalla Group Limited reported a strong performance in Q1 2025, with revenues of US$83.9 million, a 6.5% increase year-over-year, exceeding guidance despite the impact of Ramadan [8][10][13] - The company achieved a significant increase in average monthly active users (MAUs), rising by 17.9% to 44.6 million, attributed to refined user acquisition strategies and AI-driven optimizations [8][10][12] - Yalla plans to accelerate its share buyback program, increasing the target for 2025 by US$22 million to a total of US$50 million, reflecting a commitment to returning value to shareholders [9][12] Financial Performance - Revenues for Q1 2025 were US$83.9 million, up from US$78.7 million in Q1 2024, driven by a broader user base and enhanced monetization capabilities [10][13] - Chatting services generated US$53.5 million, while game services contributed US$30.1 million to total revenues [10][14] - Net income increased by 17.0% to US$36.4 million, with a net margin of 43.4% [10][25] User Metrics - Average MAUs rose to 44.6 million in Q1 2025 from 37.8 million in Q1 2024 [10][13] - The number of paying users decreased by 8.0% to 11.8 million, down from 12.8 million in the previous year [10][12] Cost Structure - Total costs and expenses were US$52.7 million, a 6.2% increase from US$49.6 million in Q1 2024 [15] - Selling and marketing expenses decreased by 14.3% to US$6.9 million, while general and administrative expenses increased by 30.8% to US$8.7 million [17][18] - Technology and product development expenses rose by 25.0% to US$7.8 million, reflecting increased headcount to support new business development [19] Shareholder Returns - The company repurchased 4,275,812 shares for approximately US$27.4 million from January 1 to May 16, 2025, with plans to cancel all repurchased shares [12][30] - Cumulatively, Yalla has repurchased 11,580,950 shares for about US$76.9 million since the inception of the share repurchase program [30] Outlook - For Q2 2025, Yalla expects revenues to be between US$76.0 million and US$83.0 million, based on current market conditions [31]

Core Viewpoint - Yalla Group Limited, the largest online social networking and gaming company in the MENA region, is set to announce its unaudited financial results for Q1 2025 on May 19, 2025, after U.S. market close [1] Company Overview - Yalla Group Limited operates two main mobile applications: Yalla, a voice-centric group chat platform, and Yalla Ludo, a casual gaming app featuring online board games popular in MENA [3] - The company has expanded its offerings through Yalla Game Limited, focusing on mid-core and hard-core games, and has developed additional products like YallaChat and WeMuslim to cater to Arabic users [3] - Yalla is also exploring opportunities outside MENA with Yalla Parchis, a Ludo game aimed at South American markets [3] Financial Communication - A conference call to discuss the financial results will be held on May 19, 2025, at 8:00 PM Eastern Time, with access numbers provided for various regions [2] - The replay of the conference call will be available until May 26, 2025, along with a live and archived webcast on the company's investor relations website [2]

Investment Rating - The industry investment rating is "Positive" (maintained) [2] Core Insights - The report highlights the continued high growth in social and gaming sectors, particularly in the MENA region, emphasizing companies with operational advantages and market positioning [4] - The report notes significant revenue growth for companies like Zhiyu City Technology, which achieved total revenue of 5.09 billion yuan in 2024, a year-on-year increase of 53.9% [4] - The report emphasizes the importance of AI applications and the ongoing development of domestic video models, which are expected to drive further growth in the industry [5] Summary by Sections Industry Overview - The report indicates that the A-share media sector underperformed compared to major indices, while the gaming sector showed better performance [9] - The report provides insights into the performance of popular games and films, with "Peace Elite" topping the iOS free and revenue charts in mainland China [12][16] Company Performance - Zhiyu City Technology's social business revenue reached 4.63 billion yuan, growing by 58.1%, while its innovative business revenue was 460 million yuan, up by 21.3% [4] - Yalla Technology reported a revenue of 339.7 million USD in 2024, with a net profit of 134.2 million USD, reflecting an 18.7% year-on-year increase [4] AI and Technology Developments - The report discusses breakthroughs in domestic video models, with Vidu achieving top rankings in evaluation benchmarks [5] - The report highlights the integration of AI capabilities in various applications, suggesting continued investment in AI technologies [5] Market Trends - The report notes the increasing popularity of AI-generated content and tools, with significant engagement on social media platforms [33][34] - The report emphasizes the ongoing demand for gaming and entertainment content, with several new titles gaining traction in the market [23][24]

Core Insights - Yalla Group Limited published its 2024 Environmental, Social and Governance (ESG) Report, highlighting its commitment to sustainable development across five key pillars: responsible governance, environmental stewardship, trust, people, and community engagement [1] - The company aims to become MENA's most popular destination for online social networking and entertainment, focusing on sustainability, innovation, and inclusivity [2] Company Overview - Yalla Group Limited is the largest MENA-based online social networking and gaming company by revenue in 2022, operating flagship mobile applications Yalla and Yalla Ludo [3] - The company has expanded its capabilities in mid-core and hard-core games through its subsidiary Yalla Game Limited, and is actively exploring markets outside of MENA with products like Yalla Parchis [3] ESG Initiatives - In 2024, Yalla made significant progress in its ESG initiatives, including expanding renewable energy use, promoting paperless operations, and integrating AI for efficiency and environmental impact reduction [2] - The company emphasizes cultural connection, environmental responsibility, and digital trust, aiming to address pressing ESG challenges and solidify its position as a responsible corporate citizen [2]

Core Viewpoint - Yalla Group Limited has filed its annual report for the fiscal year ended December 31, 2024, with the SEC, highlighting its position as the largest online social networking and gaming company in the MENA region [1] Company Overview - Yalla Group Limited is recognized as the largest MENA-based online social networking and gaming company by revenue in 2022 [3] - The company operates two main mobile applications: Yalla, a voice-centric group chat platform, and Yalla Ludo, a casual gaming app featuring popular board games in the MENA region [3] - Yalla has expanded its offerings through its subsidiary, Yalla Game Limited, focusing on mid-core and hard-core games, and has developed additional products like YallaChat and WeMuslim to cater to specific user needs [3] - The company is also exploring opportunities outside the MENA region with Yalla Parchis, a Ludo game aimed at South American markets [3] Financial Reporting - The annual report, which includes audited financial statements, is accessible on Yalla's investor relations website and the SEC's website, with hard copies available upon request for shareholders [2]

Financial Performance - For the fiscal years ended December 31, 2022, 2023, and 2024, the parent company received cash inflows of $90.0 million, $178.0 million, and $130.9 million from a UAE subsidiary, and $25.0 million, $46.1 million, and $48.0 million from Hong Kong subsidiaries[35]. - Revenues grew by 5.0% from US$303.6 million in 2022 to US$318.9 million in 2023, and further increased by 6.5% to US$339.7 million in 2024[80]. - The average monthly active users (MAUs) increased from 32.0 million in Q4 2022 to 36.2 million in Q4 2023, and further to 41.4 million in Q4 2024[80]. - The company has experienced growth in active users and revenues, but future performance is uncertain due to competitive pressures and market dynamics[80]. Dividend Policy - No cash dividends were declared or paid by the company for the fiscal years ended December 31, 2022, 2023, and 2024, and there are no plans to pay dividends in the foreseeable future[36]. - The company has not declared or paid any cash dividends since its public offering in 2020, focusing instead on retaining funds for business development and growth[36]. - The company does not expect to pay cash dividends in the foreseeable future, intending to retain available funds for business development and growth[218]. Regulatory Environment - The company is monitoring regulatory developments in China regarding necessary approvals for overseas listings, with no current inquiries or sanctions from PRC authorities[44]. - The PCAOB completed inspections of registered public accounting firms in mainland China and Hong Kong in 2023, allowing the company to avoid being identified as an SEC-identified issuer[33]. - The New Overseas Listing Rules effective March 31, 2023, require PRC domestic companies to complete filing procedures with the CSRC for overseas listings, but the company is not currently required to obtain additional permissions for past securities offerings[46]. - The company has not received any permissions or approvals from PRC authorities for its current operations, and all necessary permissions have been obtained[43]. - The company is subject to PRC regulations regarding offshore investments, which may limit overseas investments and expose it to penalties[190]. - The company may be classified as a "resident enterprise" for PRC tax purposes, potentially subjecting it to a 25% enterprise income tax on worldwide income[195]. - Compliance with evolving data security regulations in mainland China may require additional resources and could impact operational costs[187]. Market and Competition - The company faces significant competition from other social networking and gaming platforms, which may impact user retention and engagement[79]. - The company faces risks related to user retention and engagement, which are critical for maintaining its business model and profitability[61]. - The company emphasizes the importance of maintaining and enhancing its brand to attract and retain users in a competitive market[71]. - The company may face challenges in adapting its products and marketing strategies to diverse cultural preferences in new markets[74]. User Engagement and Growth - The company is focused on expanding its user base and increasing user engagement to leverage the network effect of its platform[63]. - User growth and engagement are dependent on effective interoperation with mobile operating systems, which the company does not control[105]. - The platform does not require real-name registration, which may lead to user misconduct and impact brand image[108]. - The company relies heavily on converting non-paying users to paying users, which poses a risk to revenue growth[82]. Risks and Challenges - The company is subject to various risks associated with doing business in emerging markets, including economic and political instability, regulatory challenges, and compliance costs[75]. - Political and economic instability in the MENA region may adversely affect user spending and overall business performance[98]. - The company acknowledges the potential impact of negative publicity on its brand and reputation, which could adversely affect its business[73]. - The company faces potential liability for user-generated content, which could lead to regulatory actions and affect business operations[110]. - Security breaches in third-party payment platforms could damage reputation and user confidence, impacting revenue from virtual currency sales[114]. - The company may incur significant legal and accounting expenses if required to be listed in the UAE, affecting corporate activities[177]. Intellectual Property and Compliance - The company may be subject to intellectual property infringement claims, which could divert financial and management resources and result in substantial liabilities[141]. - The company's trademarks and intellectual property may not provide adequate protection, risking unauthorized use by third parties and harming its competitive position[143]. - The company has registered software copyrights, patents, and trademarks in certain jurisdictions, including MENA and the PRC, but the effectiveness of intellectual property protection may not be as strong as in the United States[145]. - The company relies on open source software, which poses risks of unanticipated conditions or restrictions that could negatively affect its proprietary software and services[146]. Financial and Operational Controls - The company must maintain effective internal controls over financial reporting to meet regulatory obligations; failure to do so could adversely affect investor confidence and the market price of its ADSs[152]. - The company may require additional capital to grow its business, which could lead to dilution of shareholders or restrictive covenants if additional equity or debt securities are issued[156]. - The company has limited business insurance coverage, which may result in substantial costs and resource diversion in the event of uninsured disruptions[158]. Taxation and Economic Conditions - The UAE's corporate tax law, effective from June 1, 2023, imposes a 9% tax on taxable income above AED375,000, which could impact the company's financial condition[169]. - A top-up tax rate of 15% will apply to multinational enterprises with annual global consolidated revenues of 750 million Euros or more, effective January 1, 2025[171]. - VAT at a rate of 5% is imposed on the supply of goods and services in the UAE, which could increase costs for users and adversely affect revenues[173]. - The AED has been pegged to the U.S. dollar at 3.6725 AEDs per U.S. dollar since November 1997, but future adjustments could negatively impact economic activities in the UAE[174]. Shareholder Dynamics - Mr. Tao Yang controls 84.7% of the voting power due to ownership of Class B shares, which may limit other shareholders' influence on corporate matters[103]. - The concentration of ownership could discourage changes in control, potentially reducing the value of investments and the price of ADSs[104]. - Major holders of ordinary shares have the right to register their shares under the Securities Act, which could lead to significant price declines for the ADSs if sold in the public market[221]. - The trading price of the American Depositary Shares (ADSs) has fluctuated between US$3.00 and US$41.35 since listing on September 30, 2020, with a last reported price of US$6.44 on April 21, 2025[214].

Group 1 - The article reinforces a BUY thesis for Yalla (NYSE: YALA) based on its recently released 4Q24 results and the outlook for 2025 [1] - The author emphasizes the importance of a solid capital structure, future growth prospects, and efficient management when analyzing companies [1] - The report aims to provide unique insights based on extensive experience in uncertain markets, which influences a cautious approach to analyzing indicators and businesses [1] Group 2 - The author has over 10 years of experience analyzing and publishing reports on companies in Brazil, Chile, and the US, focusing on low market cap companies with a deep value approach [1] - The motivation for writing on Seeking Alpha is to document key points of the investment thesis for future reference and to share insights with the public [1]

这家中东社交媒体公司在筹备年内推出两款自研新游之际，录得两年来最强营收增长 ▶ 得益于成本控制与用户变现效率提升，雅乐科技四季度营收同比增长12.2%，净利润增长近10% ▶ 这家中东社交媒体公司，目前正测试两款自研的中核游戏，它们有望在下半年产生收入 Key takeaways: 在继续提高对中东及北非地区(MENA)庞大用户群的变现水平之际，社交媒体和游戏公司 雅乐科技 (YALA.US)上周一报告称，单季营收增速创两年多来的新高。下半年，随着两款新的自研游戏的推出，增 长还有望进一步加速。 最新季报还详细介绍雅乐科技为了在运营和应用程序中接入人工智能，进而持续提升效率和用户体验而采 取的举措。通过严格的费用管控，公司保持40%左右的净利润率，这在行业处于领先地位。不过随着公司 加大对两款中核新游戏的研发投入，季度内这个数字有所下降，但这两款游戏有望为公司带来新的增长动 力。 在过去两年里，雅乐科技持续探索中核游戏赛道机遇，试图突破传统上对休闲游戏玩家的关注，将目标瞄 准那些愿意在游戏爱好上投入更多资金的人群，实现多元化发展。 为了提升在区域内游戏行业的地位，雅乐科技开始在整个地区举办线下游戏活动和赛事。 ...

Financial Data and Key Metrics Changes - Revenue for Q4 2024 reached US$90.8 million, a 12.2% increase year-over-year from US$80.9 million [30] - Full-year 2024 revenue totaled US$339.7 million, reflecting strong growth [29] - Operating income for Q4 2024 increased by 29.4% year-over-year to US$30.1 million, while full-year operating income rose by 26% to US$121.4 million [31] - Net income for full-year 2024 was US$134.2 million, an 18.7% increase from the previous year [31] - Cash and cash equivalents as of December 31, 2024, were US$656.3 million, up from US$535.7 million a year earlier [38] Business Line Data and Key Metrics Changes - Monthly Active Users (MAU) increased by 14.4% year-over-year to 41.4 million, while paying users rose by 3.2% to 12.3 million [21] - Average Revenue Per Paying User (ARPPU) reached US$7.24, a 10.2% increase year-over-year [21] - Revenue from the flagship product 101 Okey Yalla reached a new record high, contributing significantly to overall growth [22] Market Data and Key Metrics Changes - The digital transformation market in MENA was valued at US$55 billion in 2024, expected to grow at a compound annual growth rate of 22.5% to reach US$418.54 billion by 2034 [11] - The MENA gaming industry continues to show strong growth, with a high willingness among users to download and pay for games [16] Company Strategy and Development Direction - The company aims to enhance user experiences and engagement through tailored content and operational efficiency improvements [9] - Plans to leverage AI for product development and user engagement, integrating AI-driven automation and data analytics into operations [15][66] - The company is focused on expanding its local team in the Middle East to align with regional digital transformation trends [51] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the evolving digital landscape and delivering value to stakeholders [19] - For Q1 2025, the company expects revenues between US$75 million and US$82 million, based on current market conditions [40] - The company anticipates maintaining a net profit margin of around 40% for 2025, with potential adjustments based on new product launches [56] Other Important Information - The company was awarded the PowerHouse Partnership Award at the AppGallery Developer Conference 2024 and Yalla Ludo won a GOLD Stevie Award for Innovation in Entertainment applications [25][26] - The share repurchase program has been extended to May 21, 2026, with plans to double buyback activity to US$28 million in 2025 [60] Q&A Session Summary Question: Update on new game products and commercialization expectations - Management highlighted the completion of version 1.0 development for two mid-core games and ongoing collaborations to expand market opportunities [45] Question: Strategic priorities and key initiatives for 2025 - Management emphasized enhancing flagship apps, launching new products, and expanding local teams to meet evolving user needs [50][51] Question: Revenue and margin expectations for 2025 - Management expects to maintain current revenue levels and a net profit margin around 40%, with adjustments based on new product launches [56] Question: Update on share repurchase plan - Management confirmed a commitment to accelerate shareholder returns, aiming to repurchase US$28 million worth of shares in 2025 [60] Question: Strategic vision for leveraging AI - Management discussed the integration of AI to enhance product efficiency and user experience, exploring various use cases across products [66] Question: Future development focus on MENA or other regions - Management reaffirmed MENA as the core market while remaining open to opportunities in other regions based on market data [71]