Weibo Corp-class A Aktie

Good day, and thank you for standing by. Welcome to the Weibo Reports Second Quarter 2026 Financial Results Conference Call.

[Operator Instructions] Please note that today's conference is being recorded.

I would now like to hand the conference over to your speaker, Sandra Zhang, IR. Please go ahead.

Thank you, operator. Welcome to Weibo's Second Quarter 2026 Earnings Conference Call. Joining me today are our Chief Executive Officer, Gaofei Wang; and our Chief Financial Officer, Fei Cao. This 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 forward-looking statements 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 current 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 the future prospects. Our non-GAAP financials exclude certain expenses, gains or losses and other items that are not expected 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 prepared remarks, we will 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.

[Interpreted] Hello, everyone. Welcome to Weibo's Second Quarter 2026 Earnings Conference Call. On today's call, I will share with you highlights on Weibo's product and monetization in the second quarter 2026.

On the user front, in June 2026, Weibo's MAUs reached 561 million and average DAUs reached 254 million. This year, we have proactively rationalized our channel budget allocation strategy. Instead of scaling up user acquisition, we shift our focus towards improving the conversion rate of newly acquired channel users into active users. Concurrently, as the homepage information feed revamp is still in the phase of continuous optimization, some low-frequency users will need time to adapt to the changes. As a result, our DAU base declined slightly year-over-year in June, but remained largely flat quarter-over-quarter.

Now let me walk you through the financials. Our total revenue in the second quarter reached USD 453.8 million, an increase of 2% year-over-year. Our total ad revenue reached USD 381 million, a decrease of 1% year-over-year. VAS revenue reached USD 72.9 million, an increase of 19% year-over-year. Although our advertising business was impacted by the consumption market headwinds and tightened budget from advertisers in certain industries, advertising revenue from automobile Internet service and food and beverage still achieved solid year-over-year growth this quarter. Ad revenues from selective marketing also maintained year-over-year growth trends.

Our non-GAAP operating income in the second quarter reached USD 125.4 million, representing a non-GAAP operating margin of 28%. In 2026, we will continue to enhance user experience, improve platform operating efficiency and content quality, continuously stepping up AI investment in product operation and strengthening user retention and long-term engagement. On the product and operation front, we will continue to refine the homepage information feed. By leveraging trending topic examination, social interaction and hot topic discussion, we aim to ensure that users gain timely access to the key trending content, content worth discussing and sharing as well as high-quality posts tailored to those to their interest when they access Weibo.

Furthermore, we will continue to strengthen product capabilities across core consumption scenarios such as video, interest-based community and search, thereby enrich user experience in video content consumption, interest-driven interaction and information discovery and further enhance the platform long-term competitiveness. The use of AI in both product and operations this year has also delivered tangible results in new feature and product development as well as operational strategy optimization.

On the user growth and engagement front, we continue to optimize the homepage information feed product in the second quarter, while maintaining a stable social consumption experience in the relationship-based feed, we focus on strengthening the capabilities of interest-based feed to distribute relationship-based content, trending topics and video content and sustained user engagement and consumption.

By doing so, we aim to improve content matching efficiency while further highlighting Weibo's differentiated advantages in social interaction, trending topics and opinion discussion, which ultimately increase users' willingness to open Weibo and stay engaged. Specifically, with the continuous improvement of distribution capability of the interest-based feed, the platform has strengthened its ability to better organize and distribute content, social content that users have a strong demand for, trending discussion and high-quality video content received greater exposure through the interest-based feed. This in turn drove overall increase in the time spent, the number of engaged users and the interaction for the homepage information feed since second quarter.

At the same time, we have observed that for some low-frequency users still take time to adapt to new product format and thus, the recovery of those, their visit frequency and retention continue to lag behind the improvement in the overall consumption metrics, posing challenges in time spent and retention. Going forward, we will continue to optimize product experience, keeping a better balance between improving recommendation efficiency and accommodating different user habits, thereby strengthening the homepage feed ability to drive user visits and long-term engagement.

On the video front, in the second quarter, we continued to optimize video distribution and supply with a focus on improving video consumption efficiency and expanding the supply of high-quality video content. On the distribution side, with enhanced recommendation algorithm of interest-based feed, we were able to more effectively identify and distribute high-quality video content, shifting traffic towards high-quality content. This helped reduce the negative impact of repetitive and low-quality videos on the user experience. In the second quarter, total time spent on video views continue to grow double digit year-over-year and average time spent per user on video views grew even more meaningfully, indicating deeper video consumption.

On the supply side, the supply of high-quality video content across the platform continued to grow double-digit quarter-over-quarter in the second quarter. As the upgraded interest-based feed continue to drive greater distribution and consumption of high-quality video content, we further beefed up our efforts to expand the video content creator base and strengthen content operation. By improving our content creator acquisition mechanism, enhancing traffic support and sustaining operation, we have gradually established a clear framework for creator onboarding, content production and creator retention. As a result, the scale of video production from newly acquired content creators and their corresponding user consumption performance has largely met our expectations and gradually forming a positive cycle between video content supply and consumption.

In the second half of this year, we will further step up our efforts to expand our video creator base, accelerate the onboarding of the high-quality creators with stable production capabilities and strong content influence. We also leverage traffic support to strategically supplement key video content in alignment with our users' consumption needs. At the same time, through our ongoing operation, we will help video content creators better understand the type of content that resonates on Weibo's platform and establish consistent production.

As the supply of high-quality video content expands, the recommendation algorithm will also be able to better understand users' video consumption preference, improving the efficiency of matching quality content with targeted users. By simultaneously improving video creator supply, content distribution and content consumption, the video business will more sustainably drive user time spent, long-term engagement and monetization efficiency, while further enhancing the vitality and competitiveness of the platform's content ecosystem.

Moving on to content ecosystem competitiveness. Throughout 2026, we will continue to focus on 3 core areas: trending topics, social network and search, while further enhancing the health and core competitiveness of our content ecosystem. On social attributes, Super Topic is a core interest-based community on Weibo and an important areas for strengthening our competitiveness in the interest-based social engagement. In the second quarter, we accelerated product and feature integration around the core needs of users across different interest-based communities, aiming to further reinforce Weibo's competitiveness in the interest-based social scenarios.

For example, in celebrity Super Topic, we enhanced the check-in experience and introduced a celebrity memory album feature as well as online to offline engagement initiatives. The sports and e-sports Super Topics, we introduced features for event reviews, ratings and discussion and leverage the World Cup to strengthen user awareness, driving a significant increase in the sports Super Topic user base. These new features further encourage users to move from content consumption to interaction and deeper participation. As a result, both daily active users and the number of users participating in discussion on Super Topics double-digit year-over-year growth in the second quarter.

On search, building on the scaled rollout of Weibo Intelligent Search last year, our focus this year has shifted further towards deepening the use of multi-turn conversations and integrating AI search more naturally into content consumption experience. In the second quarter, we continued to enhance intelligent search ability to understand context and user intent in multi-term conversations with a particular focus on enhancing the search experience in areas where Weibo has differentiated content strength such as trending topics, public speakers and IPs. At the same time, we are embedding search entry points more deeply into users' journey for browsing posts, videos and trending topics, allowing us to promptly address the needs as they arise during content consumption and continue to improve the efficiency and user experience of information discovery.

Monetization in the first half of the year, our advertising product and sales team focused on 2 key strategies. First, we sought to bring Weibo unique content marketing value to more industries and advertisers. Second, we systematically enhanced advertising performance and conversion through AI integration. In the second quarter, the recovery in the domestic consumption market remained relatively subdued with divergent trends across industries and advertisers. Some advertisers continue to face challenges such as limited recovery in consumption demand, intensifying industry competition and rising cost and margin pressures.

As a result, they become more cautious with their marketing budget, placing greater emphasis on the measurable returns and ROI certainty. Although Weibo continue to be well positioned to capture advertising budget in areas such as new product launch, celebrity marketing and sports event marketing, the aforementioned factors weigh on our advertising business to a certain extent. Consequently, Weibo's ad revenue experienced temporary pressure in the second quarter and decreased 1% year-over-year.

By industry, advertising revenue from the automobile sector grew year-over-year, driven by intensive launch of new energy vehicles. The Internet service sector continued to book solid growth, primarily benefiting from the increased demand among AI and software service advertisers for performance-driven advertising and content distribution. The food and beverage sector also delivered growth, mainly fueled by the World Cup, celebrity marketing and the promotion of key new products.

On the flip side, some industry continue to face headwinds. Following intense competition last year, the e-commerce sector has gradually returned to a more normal market condition. Despite overall stable ad spend during the June 18 shopping festival, the relatively high revenue base from certain business lines last year posted noticeable pressure on revenue growth this year. In the handset sector, overall ad budget contracted under the cost and margin pressure, but Weibo's wallet share within the sector remained largely stable.

In light of advertisers' budget trends, in the second half of the year, we will focus on further strengthening our content marketing products and services. By offering more standardized product solution and more convenient advertising tools, we aim to lower the barrier for advertisers across content planning, resource allocation and information feed placement. Thereby further enhancing Weibo's ability to capture ad budgets.

Among its marketing scenarios, celebrity marketing was one of our key focus area in the second quarter. We are pleased with the growing demand from advertisers for celebrity marketing. In the first half of the year, we not only supported advertisers with celebrity marketing campaigns on Weibo, but also became involved earlier in campaign planning and resource matching, providing more comprehensive service aligned with their brand objectives and communication goals.

Leveraging measured resource investment and enhanced service capabilities, we successfully expanded their ad spend on celebrity marketing products. Taking Mono's partnership with Erling Haaland as an example, we help match the brand with the right celebrity resource and work with both the brand and celebrity to co-create content and drive engagement around key event-related topics. During the World Cup, topics related to Erling Haaland attracted broader attention on Weibo, generating over 5 billion topic views and 1.4 million discussion. Mono also further enhanced its brand exposure and user engagement thanks to the celebrity content and World Cup-related discussion.

During the campaign, Weibo effectively integrated celebrity resources, event-related trending topics and social discussion to provide the advertiser with one-stop service spanning resources matching, content co-creation and campaign execution. This empowers the brand to extend a single celebrity collaboration into sustained content buzz and brand exposure.

On advertising products, we will continue to apply AI across key stages of advertising process, focusing on creative supply, intelligent ad placement and creative quality management to improve advertisers' campaign efficiency and user experience. In the second quarter, driven by the advancement of video generation models, we automatically generated viable ad creatives for e-commerce advertisers facing a shortage of video materials, resulting in solid improvement in the coverage and usability of AI produced videos for target products with continued gains in efficiency and quality of AI creative production.

On the ad placement front, the consumption share of AI-generated ad creatives in the promoted feed ad offerings and the real-time bidding system continued to increase, reaching 50% in June. Meanwhile, we use AI to identify ad creatives with low quality and those generating high levels of negative feedback and apply targeted optimization accordingly. In the e-commerce sector, AI optimized materials saw a drop of over 30% in negative feedback rate compared with client original materials, effectively enhancing the user experience in ad content consumption.

Going forward, leveraging an increasingly mature creative quality evaluation system and implementing differentiated generation strategies for various distribution scenarios, we aim to continuously improve the adaptability of AI creatives to their respective scenarios. With these initiatives, we hope to further improve advertising performance and campaign efficiency.

Looking ahead to the second half of the year, we believe the recovery in consumer demand will take some time, while pressure on advertisers from cost, profitability industry competition is likely to persist. Competition for advertising budget is also expected to remain intense. It's worth mentioning that the food delivery price war in the third quarter of last year created a relatively high revenue base for comparison. And moreover, due to factors such as prime match broadcaster times and the advertiser dynamics during this year's World Cup, the incremental boost to the related ad budget was lower than that of the previous tournament.

These factors are expected to put some pressure on year-over-year advertising revenue growth in the third quarter. Faced with this market environment, we will continue to invest in building Weibo's differentiated commercial service capabilities, keep pace with shift in clients' marketing needs and budget structures, reinforce our content marketing value proposition and add conversion effectiveness and enhance our capability to capture clients' budgets with more certainty to stabilize our overall ad revenue base.

With that, let me turn the call over to Fei Cao for a financial review.

Thank you, Gaofei, and hello, everyone. Welcome to Weibo's Second Quarter 2026 Earnings Conference Call. Let's start with user metrics. In June 2026, Weibo's MAUs and average DAUs reached 561 million and 254 million, respectively. During this quarter, our user strategy continued to focus on improving user quality, driving retention and deepening engagement, while MAUs saw a modest sequential decline, DAUs remained resilient and broadly stable quarter-over-quarter.

We continued to see solid engagement among our core users, along with improving consumption and engagement in the recommendation feed. Video consumption also continued to improve, supported by better content distribution within our revamped feed. AI continued to serve as an important enabler across our product, content and monetization systems, helping us better understand user interest, improve ad targeting and delivery and enhance operating efficiency.

Turning to financials. As a reminder, my prepared remarks will focus on non-GAAP results. All monetary amounts are in U.S. dollars and all comparisons are on a year-over-year basis, unless otherwise noted. Now let me walk you through our financial highlights for the second quarter 2026. Weibo's second quarter 2026 net revenues were USD 453.8 million, an increase of 2% or a decrease of 4% on a constant currency basis. Operating income was USD 125.4 million representing operating margin of 28%. Net income attributable to Weibo reached USD 102.7 million and diluted EPS was USD 0.38.

Let me give you more color on the second quarter 2026 revenue performance. Weibo's advertising and marketing revenues for the second quarter 2026 were USD 381 million, a decrease of 1% or 6% on a constant currency basis. The decrease was mainly reflecting softer demand in certain key advertising verticals and was partially offset by the favorable foreign exchange impact on reported numbers on a year-over-year basis by industries.

Our top 3 verticals were FMCG, e-commerce and automobile. In terms of growth, Internet services and automobile were primary contributors despite softness in overall automobile sales, ad revenues from the auto sector delivered solid year-over-year growth, supported by Weibo's strong content ecosystem and frequent new energy vehicle launches during the quarter. Advertising revenues from Internet companies also increased, driven by stronger marketing demand for AI-related products and services as leading Internet platforms increased marketing activities around their AI offerings. As for industries facing headwinds, the handset sector remained under pressure in the second quarter.

Softer ad demand continued to weigh on smartphone shipments while rising component costs put additional pressure on handset manufacturers profitability and marketing budgets. As a result, advertising revenues from the sector declined year-over-year. The FMCG sector saw divergent performance during the quarter. Food and beverage delivered solid growth, benefiting from the early release of World Cup-related marketing budgets during the quarter. The cosmetics vertical remained soft as certain international brands reduced marketing spend amid weak sales and intensified competition.

In addition, game developers remained cautious on advertising spend amid continued softness in the online game market. The ad product, promoted feed ads remained our largest format followed by social display ads and search and topic ads. ECPM continued to improve both year-over-year and quarter-over-quarter, supported by deeper AI integration in creative generation, marketing and bidding. These improvements helped enhance ad delivery efficiency and advertiser ROI. Our IP and content marketing solutions also continued to see solid demand.

Ad revenues from Alibaba for the second quarter was USD 39.2 million, an increase of 10% or 3% on a constant currency basis. During the quarter, higher spending on AI-related activities more than offset softer spending in local services as we have noted previously. Alibaba's advertising spend on Weibo is closely tied to its own marketing priorities and pace of product launches, which may therefore vary from quarter-to-quarter. Value-added service revenues were USD 72.9 million in the second quarter, an increase of 19% or 12% on a constant currency basis. The increase was primarily driven by one-off ticket proceeds from offline activities held by Weibo, solid growth from membership services as well as favorable foreign exchange impact on reported numbers on a year-over-year basis.

Turning to costs and expenses. Total cost and expenses for the second quarter were USD 328.4 million, an increase of 16%, mainly due to higher ad production costs and marketing expenses. Operating income in the second quarter was USD 125.4 million, representing operating margin of 28% compared to 36% in the same period last year.

Turning to income tax and GAAP. Income tax expenses for the second quarter were USD 23 million compared to USD 31.7 million last year, mainly due to lower income before taxes. Net income attributable to Weibo in the second quarter was USD 102.7 million, representing a net margin of 23%.

Turning to our balance sheet and cash flow items. As of June 30, 2026, Weibo's cash, cash equivalents and short-term investments totaled USD 2.64 billion compared to USD 2.41 billion as of December 31, 2025. In the second quarter, cash provided by operating activities was USD 15.5 million. The decrease in operating cash flow for the quarter was primarily resulted from settlement of corporate income taxes, collection schedule of receivables as well as payment schedule of annual rebate compared with prior quarter.

Capital expenditures totaled USD 3.1 million and depreciation and amortization expenses amounted to USD 15.7 million. We remain disciplined in capital allocation with measured capital spending and continued support shareholder returns. We closed the first half of 2026 with continued progress across our product, content and monetization initiatives. While soft consumer demand and intensified industry competition continued to weigh on advertising demand, we are encouraged by measurable improvements from our product revamp and AI initiatives, particularly in user engagement and advertising efficiency.

Entering the second half, we will focus on advertising opportunities with better budget visibility while carefully managing the pace of investment and maintaining our focus on operating efficiency. Our priority remains to balance near-term sustainable profitability and financial flexibility while strengthening the foundation for Weibo's long-term development.

With that, let me now turn the call over to the operator for the Q&A session.

[Operator Instructions] Our first questions come from the line of Timothy Zhao from Goldman Sachs.

Great. I think my question is regarding the outlook of the advertising revenue into the second half of this year. Just wondering, can management share more detail on your expectations on the ad revenue growth? And what is the trend for different subsectors? And what is the latest update on your advertising strategy? And more specifically on AI, just wondering if you can share more color on how AI has increased the overall eCPM of the advertising business and what are other operating metrics that you may share?

[Interpreted] Yes. Thank you very much for the question. First of all, I'd like to talk about my expectations over the second half of this year. First of all, as I have already stated just now for the performance in Q2, except for some of the verticals that were increasing the performance, for instance, automotive and food and beverages, for the rest of the other verticals, we did see some of the stressful situations. It was because of the overall macro economy, especially on consumption, we have seen some of the pressure the customers were decreasing their budget on advertisement. Okay.

And let's talk about some of the performance in the second half of the year. First of all, there are still a lot of uncertainties first in terms of the automotive industry. We did see the less sales and also poorer performance in terms of the sales and production of the first half of the year. But still, in the first half of the year, we did see a lot of launches and new energy [indiscernible] launched and available to the market. So Weibo is actually a very strong platform in doing the advertisement for the new product launches and new product availability. So you can see that on this front, we did see actually an increase in ad revenue for that. And that particular increase and that particular momentum could be kept until the second half of the year.

And next, I would like to talk about the Internet industry, especially the vertical of the software and application services. So we believe that the second half of the year will be quite similar to that of year still because the customers are having high requirements over the ROI as well as the allocated budget on developments. As a result, we do not expect too much of the growth in the second half of the year. So I believe that this particular industry, the software and application services are going to be having a flat performance or a little bit increase in the second half of the year.

And next vertical is the headset industry. So in the first half of the year, we did see the down performance and mainly due to the decrease for most of the customers. So except for Apple, the rest of the other handset makers were having double-digit decrease in terms of the total performance. So in the second half of the year, of course, we might be expecting some of the new products launched in the market. So -- but still, we are observing that in September for the Apple new product launch event, whether or not this is going to trigger more allocation of the budget from the other handset makers to launch or to allocate to the new product availability of the medium to high end of the products.

So in Q3, we had not that optimistic view on the handset industry, but still keeping observing observation into the Q4 performance of this year, and next, in the second half of the year, we had some of the really bad fluctuations over the industries of e-commerce and the food delivery as well. So you know that last year, primarily the food delivery price war was happening in about Q3 and Q4.

So that actually did have a lot of impact on the ad revenues to this. So this year, still, we have been seeing some situations. And in the second half of the year, I believe that the anti-involution policies from the Chinese government will continue on this one. So this is going to be weakening this competition among different food delivery brands. So as a result, this was impacting our overall ad budget of this year as well. So it is still uncertain for the industries like the local service or local lifestyle and also food delivery and e-commerce, et cetera. So we had actually [indiscernible].

And on this particular ad-related strategies, first of all, in terms of the performance-based, of course, we do see an eCPM increase but quarter-by-quarter, but that does not represent that the ad revenue was going to also increase because last year, we had a lot of restructuring of the ad products. So that did impact some of the core users. So in the first half of this year and also second half of last year, we have been doing some of the optimizations of this part. For instance, in terms of this bad user experience of the ad and some of the negative experience products had some elimination process conducted. So reduce the exposure of those low-frequency users or low-frequency users exposure. So that caused a stressful situation to our ad load.

So in the second half of the year, while we are seeing a tendency of increased time user spend and also the kind of other relevant situations, we are expecting to have a little bit of improvement, but still -- and also a little bit release of the ad to the eCPM a little bit increase does not represent an overall growth momentum of this site.

And in terms of the brand-based ad, we can see that except for having an optimized pricing schemes, we believe that the most important parameter here is the sales rate of our core resources. So you can see that this particular parameter has been shown a decline tendency if we're comparing that with the ad revenue trend. So because of the decreased demand from our ad users on ad customer side. So of course, at this current stage, that's the very reason why we are now trying to actually focus more on the celebrity-based or KOL-based marketing or the content-based marketing. So especially for those ad customers that may actually have the budget of between 5 million and 20 million, I believe that the KOL-based marketing will be the best option for these customers and they're going to be putting most of their available budget or ad budget with Weibo so that, for instance, especially the example of P&G of having most of the budget left on the Weibo platform to actually use the KOL marketing because this is going to help them to actually really help to catch the attention of those medium-level users and the consumer.

So this is actually going to help us to increase also the budget attraction as well as the ad revenue on this front. So the very important core part is to improve the parameter of the sales rate of the core resources.

We are now going to proceed with our next question and the questions come from the line of Yicheng Yuan from UBS.

[Interpreted] So let me translate myself. So could you please provide an update on user growth and engagement trends, including content consumption, time spent and usage frequency, et cetera. In addition, in terms of our digitalization strategy and AI initiatives, could you please share the latest progress and the main areas of focus for the second half of the year?

[Interpreted] So for this question, first of all, for the previous 2 quarters of this year, we did see, as I have already elucidated just now, we have some of the adjustments of our product structure. So in the last year's second half, this did have some of the low-frequency users as well, especially because of the changes of the using habits. So this year, of course, in terms of the core users, we did see a very good trend of increasing the time spent on Weibo as well as the interactivity with Weibo. But still, this is quite stressful for the low-frequency users still because of 2 reasons.

First reason is that previously, we were pretty much focused on the pre-installed app of -- in those handsets. But this year, we had lower shipments of those handsets with the pre-install app. So that did help us to impact the overall parameter of attraction of new users using those pre-installed app. So this had around 10% of impact to our overall business.

And second reason is that now at the current stage, we are primarily focusing on the recommendation-based feed. And because of that, if we are competing with our peers, we do not see that much of a difference if we're talking about the low-frequency user attraction. So that did give us actually a quite stressful situation. But I believe that in the second half of this year, we are going to focus on this particular issue and hope to have some better achievements in the second half of the year.

And the next part is about the video-related consumption, as you -- as we have already stated in the prepared remarks that time spent on the Weibo video and production as well as the consumption of Weibo video, we did see actually a double-digit growth on these parameters. And especially after Q2, we did see some of the particular resources and investments invested by us in order to attract those video users or video accounts to be created entered Weibo or we are attracting the video content creators from other platforms to enter the Weibo platform.

But of course, in the past, it was quite difficult to actually create new accounts if it was purely based on the relationship-based feed. But at the current stage, we're now converting to the recommendation-based feed. And that really give us an advantage of giving more traffic to those video content creators so that they are more willing to open accounts on our Weibo platform. And I believe that at the current stage, the overall trend is pretty good in terms of video content created and also the consumption as well. So we are going to keep investing on this front.

And in terms of the number of those video content creators at the [ current account ] at current stage, it is amounting to around 10,000 of them. So in terms of the retention rate, it is about 70% also. So meaning that those accounts keep updating the video-related content now. So this -- and the second part is about incentives that we are providing to those content creators or the video content creators. And the ROI then was about 70% to 100%. And this did help to contribute a lot to the ads of the current year. And also, of course, that we believe in terms of the impact of this part to the gross margin of Weibo a little bit negative.

So if you're talking about -- and also in terms of the long term, I do believe that there is going to be a lot of benefits added to our overall business because this did help us to increase the ad at the same time, having better attraction to the users and improve.

I think that now I would like to talk a little bit about the Intelligent Search, Weibo Intelligent Search. So we've been launching this in the past years and especially the agentic AI and AI Intelligent Search. And so in terms of the year-on-year performance, we did see actually an increase. But here, if you're talking about the quarter-by-quarter performance, this did have some of the negative trend. But still, in Q1, we had a massive update of the capabilities of LLM, and at this stage, we are focusing on the upgrading of the technology as well as improving the user experience, especially changing the user behaviors from those fixed box based and typing kind of a search to an interactive search and Q&A-based search or the introduction based or guidance -- or guided search in this front. So hopefully, that we are going to see a very positive overall trend of this particular user behavior and some of the other relevant areas. Okay.

And next part is about the AI application and its overall impact to enhance the R&D efficiency and maintenance as well. So at the current stage, we do see some of the positive impacts of AI use to facilitate the R&D of the products. But first of all, in terms of the core product R&D, there is not much to be shared because this is actually quite standardized. But especially on the product of the Super Topics, I think that this is really important in my opinion. And for the Super Topics, because of the efficiency of generating the Super Topics [indiscernible] by . We did see more kind of sub apps to be created by those content accounts like from the game industry or sport industry, et cetera.

So you can see that this particular super topic interaction and the activity rate at the current stage is already reaching the historical high status just because of this facilitation by the AI technology to this particular area. And we're seeing a very good trend of Super Topics.

We appear to have no further questions at this time. So I will now hand back to Sandra Zhang for closing remarks.

This wraps up our conference call today. Thank you all for joining us. We'll see you next quarter.

This concludes today's conference call. Thank you all for participating. You may now disconnect your lines. Thank you.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live 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 Internet and is available on 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 containing any forward-looking statements. Weibo assumes no obligation to update the forward-looking statements 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 at the date hereof. Weibo assumes no obligation to update such information, except as required under applicable law.

Additionally, I'd like to remind you that our discussion today includes certain non-GAAP measures, which excludes 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 the 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 will open the lines for a brief Q&A session.

With this, I'd like to turn the call over to our CEO, Gaofei Wang.

[Interpreted] Thank you. Hello, everyone. Welcome to Weibo's First Quarter 2026 Earnings Conference Call. On today's call, I'll share with you highlights of Weibo's product monetization in the first quarter 2026.

On the user front, in March 2026, Weibo's MAU was 562 million and average daily users reached 254 million. Our MAUs is still in a modest decline on both a year-on-year and a quarter-over-quarter basis. This is primarily driven by our strategic focus on enhancing this experience and driving user retention. We have proactively rationalized our channel budget allocation, shifting our focus towards improving the conversion rate of newly acquired users into active users. Concurrently, driven by our recent efforts to optimize information feed products [indiscernible] for our core business, which includes engaged users and click-oriented users, [indiscernible] sustained growth in video content consumption on the platform, the scale and engagement frequency of our core users have maintained a solid trend. As a result, our DAUs achieved modest growth quarter-over-quarter. Our total net revenues for the first quarter reached USD 421.3 million, an increase of 6% year-over-year. Our total ad revenues reached USD 369.8 million, an increase of 9% year-over-year. Our non-GAAP operating income [indiscernible] reached USD 119.8 million, representing a non-GAAP operating margin of 28%.

Next, we will highlight Weibo's key development in the first quarter across user growth and engagement, content ecosystem competitiveness and monetization. On user growth and engagement, in 2026, we will focus on improving user retention and building a high-quality, highly engaged and sustainable user growth framework.

Information feed still remains in optimization stage post the product update last year and related strategies began to deliver positive results starting in March, with content consumption and interactive measures among our [indiscernible] users beginning to improve. And meanwhile, the sustained growth in [indiscernible] on our video playback pages has served as a more solid foundation for the growth of our overall user time spent and retention.

Moving on to information feed product. In 2026, [indiscernible] the strategy focuses on the product optimization after the information feed upgrade, which aligns with our long-term direction. Building on Weibo's strength in social network and [indiscernible] discussion, we will further enhance the distribution capabilities of Weibo's distinctive native content, establish a more stable and consistent content consumption experience and continue to strengthen users' trust in the information feed.

Specifically, in the first quarter, we focused on a series of optimization initiatives aimed at balancing the distribution of social content, trending topics and vertical interest-based content. For Weibo's engaged core users, while ensuring their consumption of social content, we also prioritize improving recommendation efficiency for trending and interest-based content. Meanwhile, we further strengthened the distribution of content from authentic accounts, high-quality original content and reposted content, while stepping our governance over low quality and overly promotional content to enhance the consumption experience within our information feeds. These strategies were gradually rolled out throughout the first quarter and began to make positive impacts in March.

Looking at the preliminary results, the scale, time spent and engagement modeling of the social engaged users within our information feed have all shown [indiscernible] improvement demonstrating that our strategy to [indiscernible] retaining and serving this specific user cohort.

These preliminary results have boosted our confidence to further advance the optimization of information feed products. In the second quarter, building upon the experience improvement for our socially engaged users, we will place greater focus on user groups that rely more heavily on the recommendation feed and have higher expectations for content matching efficiency through the continued optimization of product strategies and content matching algorithms, we aim to improve the seamless content consumption for these users [indiscernible] the recommendation feed and further strengthen Weibo's competitiveness in recommendation driven content consumption scenarios.

Moving on to video. Our video business is set to serve as a crucial driver for increasing user time spent and retention throughout 2026. In the first quarter, we continued with the proven path established in the second half of 2025 and saw continued improvement on video consumption. During the first quarter, total time spent on the video playback pages achieved double-digit year-over-year growth, while also maintaining an upward trend quarter-over-quarter. Notably, the growth in [indiscernible] time spent on video playback pages was even more pronounced.

Specifically, during the first quarter, our video business initiatives centeed around 2 key aspects: distribution and supply. On the distribution side, we continue to optimize the recommendation conversion efficiency for videos across core scenarios such as information feeds and trending feeds. At the same time, we reduced the distribution rate of repetitive low quality and excessively commercialized the content. This ensures that the growth in video [indiscernible] time is increasingly driven by high-quality content and the rising users' meaningful viewing behaviors.

On the supply side, we further strengthen the supply of high-quality video content by investing more resources to attract high-quality video content creators and incentivize their content production. This includes celebrity and top [indiscernible] [ live vlogs ], trending target analysis and derivative creation of popular content, all of which are distinctive to our platforms and strategically speed our traffic distribution toward this high-quality offerings.

In the first quarter, both the number of top-tier accounts, for example, the golden and orange verified accounts, publishing original videos and the number of original videos post recorded double-digit year-over-year growth. Meanwhile, we are also exploring and validating the introduction of more diverse video content formats such as short play and video podcast.

In the first quarter, leveraging the continued integration of our video AI large model, we further build down the platform strength in vertical IP by opening up AI creation tools to the creators, enabling them to produce derivative video content and expand IP-related content. As of April, we had made copyright materials available from over 20 top-tier TV drama and variety show IPs on the platform and have actively collaborated with partners to launch AI-driven content recreation initiatives, which have attracted nearly 3,000 creators and generated nearly 8,000 [ pieces ] of AI content.

Meanwhile, we further enhanced Weibo's AI creation platform by providing creators with resources such as graphic text generation tools, trending topics creation tools, video generation capabilities, copyright material and campaign templates. This empowers creators with richer materials and inspiration, allowing them to translate their content expertise and creative ideas into publishable videos and text-based post at a significantly lower cost. This, in turn, has helped improve content production efficiency for creators on Weibo.

Moving on to company ecosystem competitiveness. Throughout 2026, we will continue to focus on our 3 core businesses: trending topics, social network and search, while further enhancing the health and core competitiveness of our company ecosystem.

In the first quarter, our focus within the company ecosystem was on enhancing the quality of trending topic consumption, deepening community interactions and advancing our AI search capabilities. Through these efforts, we aim to significantly improve users' content consumption efficiency and their overall engagement experience on the platform.

With respect to hot trends. In the first quarter, we focused on strengthening the influence and the credibility of our trending list. We optimize the ranking mechanism, improve the quality of content presented on the list and enrich the content supply and discussion atmosphere on the landing pages. These efforts drove higher content consumption and more vibrant discussion under the hot trend scenarios. Compared with the fourth quarter last year, both average time spent and average discussion volume per user under the hot trend scenarios increased in the first quarter. The strength and stickiness of user engagement around hot trends further reinforced Weibo's competitive position as a go-to platform for hot trend discovery and a public discussion.

On social attributes, in 2026, we aim to [indiscernible] the engagement and increase revisit intention within interest-based communities, leveraging richer community engagement features and stronger interaction mechanisms. In the first quarter, the super topics community continued to enhance its product capabilities and standardized event-based operations across categories such as celebrities, IPs and sports events, which sustainably drove user engagement. As a result, both [indiscernible] and engaged users of super topics recorded year-over-year growth. With AI further integrated into product development efficiency and content understanding, we will continue to center on core needs of users of [ community ] products, accelerating its iteration of interactive community products and features and thereby further improving research, social fulfillment and sense of belonging on Weibo.

On search products, as we continue to enhance our AI capabilities, in the first quarter, we have upgraded our Weibo intelligent search function from a single [ turn ] Q&A [indiscernible] into an AI-powered multi-term of follow-up queries and can understand multimodal content, including videos and image with text. Meanwhile, we integrated AI agent capabilities into key scenarios such as public figure search and hot trends search and conducted product experiments on search landing pages and comment sections. Leveraging AI agent capabilities will enhance the user search experience and efficiency and further reinforce Weibo's differentiated value proposition in the search market.

Moving on to monetization. We have continued to execute on 2 key strategies that have underpinned our ad products and sales teams since 2025. First, driving broader adoption of Weibo's unique content marketing value across more industries and clients. And second, systematically improving ad conversion effectiveness by leveraging AI capabilities. In the first quarter, Weibo's ad revenues increased 9% year-over-year.

Overall, we will continue to leverage differentiated strength in hot trends plus social plus content marketing across proven marketing scenarios such as new product launches, Chinese New Year campaign, sports events and celebrity marketing, leading to growth across multiple key industries.

By industry, the main growth contributors in the first quarter were verticals such as Internet service, local service and automobiles. The Internet service sector delivered robust year-over-year growth, primarily driven by incremental budget we captured from the Internet service companies. For example, during the Chinese New Year period, various AI large language model players ramp up their marketing investment, leveraging Weibo's strong KOL ecosystem and professional discussion environment in the digital and technology verticals.

We effectively fulfilled AI company's market needs in [indiscernible] such as new product launches, technology, education and word-of-mouth building, which resulted in a notable increase in related marketing revenues. We believe that as AI technologies and applications continue to evolve, AI-related content will become a major incremental driver of Weibo's content ecosystem.

In May, the number of AI-focused professional content creators, the average daily number of AI-related hot trends and the discussion volume of AI content [indiscernible] all increased more than 30% compared with January this year. This technological transformation in AI have been continuously stimulating content-creation and user discussion on our platform and will further build us flywheel between content ecosystem engagement and monetization growth.

The local service sector was also among the fast-growing sector in the first quarter, supported by ongoing competition in food delivery as well as seasonal boost from the Chinese New Year holiday.

The automobile sector delivered double-digit year-over-year growth, primarily driven by favorable policies and new vehicle launches, relatively stable ad spend around new product launches, users reputation building and brand awareness.

The hot trends sector recorded modest year-over-year growth in the first quarter. But looking ahead, market competition in the sector continues to intensify despite ongoing support from trading subsidies, [indiscernible] and memory costs continue to put pressure on hot trends manufacturers' profitability, which may weigh on their ad budget going forward. We will closely track new product launch cycles and client budget dynamics and optimize our sales strategy accordingly to ensure solid coverage of key clients.

Among other verticals, the apparel and footwear sector achieved double-digit year-over-year growth in the first quarter, primarily fueled by the Winter Olympics, concentrated marketing campaigns by sports and outdoor brands and celebrity endorsement activities through [indiscernible] advertiser effectively leverage events and celebrity moments to improve the brand awareness.

As mentioned last quarter, we have seen a recovery trend in demand for celebrities and [ IP-based ] content marketing from certain brand advertisers. In the first quarter, this trend continue to play out in a number of key industries and campaigns with related revenues maintaining solid year-over-year growth and providing a meaningful supplement to our overall content marketing business.

Celebrity marketing has always been a distinctive component of Weibo's content marketing capabilities. Over the past quarter, we focused more on enhancing [ service tests ] and ad placement efficiency for clients in this area. Based on clients' brand objectives, budget levels and target audience, we integrated Weibo resources in hot trends, IP, celebrities and KOL ecosystems to provide more tailored resource matching, content planning and campaign execution services. This initiative enables clients to effectively achieve brand exposure and user engagement. While our products and service capabilities are still being further refined, we have already seen encouraging execution results and the client feedback in some of the pilot projects.

Looking forward, we will continue to advance our celebrity and IP content marketing services, positioning them as a key component to deepen collaboration with brand advertisers and enhance our content marketing competitiveness while driving greater synergy with our overall ad product portfolio.

With that, let me turn the call over to Fei Cao for the financial review.

Thank you, Gaofei, and hello, everybody. Welcome to Weibo's First Quarter 2026 Earnings Conference Call. Let's start with user metrics. In March 2026, Weibo's MAUs and average DAUs reached 562 million and 254 million, respectively. During the first quarter, we continued to focus on user quality, retention and engagement. MAUs saw more of this sequential decline, mainly reflecting our ongoing rationalization of channel investment and the transition forming our information feed revamp. At the same time, DAUs remained resilient and improved slightly quarter-over-quarter, supported by better retention of core users, continued optimization of the [indiscernible] experience and improving video consumption.

AI continued to serve as an important enabler across our product, content and monetization systems. On the monetization side, AI-powered targeting, bidding and ad creative generation continued to support promoted feeds and real-time bidding ad products. Internally, we are also expanding the use of AI tools to improve execution efficiency across products, operations and sales teams.

Turning to financials. As a reminder, my prepared remarks would focus on non-GAAP results. Monetary amounts are in U.S. dollar terms and all comparisons are on a year-on-year basis, unless otherwise noted.

Now let me walk you through our financial highlights for the first quarter 2026. Weibo's first quarter 2026 net revenues were USD 421.3 million, an increase of 6% or 1% on a constant currency basis. Operating income was USD 119.8 million, representing operating margin of 28%. Net income attributable to Weibo reached USD 91.9 million, and diluted EPS was USD 0.34.

Let me give you more color on the first quarter 2026 revenue performance. We started the year with our advertising business returning to year-over-year growth supported by improving demand from selected verticals and continued execution in content marketing and performance-based ad products. Weibo's advertising and marketing revenues for the first quarter 2026 was USD 369.8 million, an increase of 9% percent or 3% on a constant currency basis.

By industry, our largest verticals were FMCG, e-commerce and 3C products in terms of growth. Internet services, automobile and local services were the major contributors. Advertising revenues from Internet companies increased primarily due to incremental advertising spend from leading players in the sector. The automobile sector also saw [ substantial ] growth, supported by auto-related content ecosystem and ad spend from electric vehicles for [indiscernible] sector. Advertising revenues recorded a modest growth, but we remain mindful that their marketing budgets may face pressure amid intensified competition with the handset market as well as rising component costs.

As for areas facing headwinds, FMCG continued to face a year-over-year gap, although we saw sequential recovery as certain advertisers resume spending in celebrity and KOL marketing campaigns. The online game sector was still on a descending trend due to lack of blockbuster release this quarter. By ad product, promotive feeds ad was the largest, followed by social display and search and topic. Promoted feed delivered solid growth, benefiting from better ad matching in revamped information feed, continued demand for Weibo's differentiated IP and content marketing solutions and a deeper AI integration in targeting, bidding and creative generation. This product improvements helped advertisers [indiscernible] brand exposure with more measurable conversion objectives.

Ad revenues from Alibaba for the first quarter were USD 43.3 million, an increase of 2% year-over-year or a decrease of 4% on a constant currency basis. The modest decline of revenues from Alibaba was primarily due to high sales last year, which included [indiscernible] revenues from promotional ad budget for Alibaba's sponsorship of Spring Festival in 2025 and AI-related budget in the first quarter last year. Ad spend from Alibaba highly correlated to its own marketing strategies, which may fluctuate with Alibaba's campaign priorities and product launch schedule, et cetera.

Value-added services revenues were USD 51.6 million in the first quarter, a decrease of 11% or 15% on a constant currency basis. The decrease was primarily attributable to decline in game-related revenue.

Turning to costs and expenses. Total cost and expenses for the first quarter were [ USD 301.5 million, ] an increase of 13%, mainly due to higher ad production cost and marketing expense, partially offset by the decrease of general and administration expense.

During the quarter, we continued to make major investments in selected monetization-related initiatives primarily around advertising product capabilities, content marketing ecosystem and client service offerings. We will continue to manage the pace of these investments with ROI discipline and within a controllable budget framework.

Operating income in the first quarter was USD 119.8 million, representing operating margin of 28% compared to 33% in the same period last year. While operating margin declined year-over-year due to these investments, we remain focused on balancing near-term execution needs with sustainable profitability and healthy cash flow generation.

Turning to income tax. Under GAAP, income tax expenses for the first quarter were USD 15.7 million compared to USD 24.3 million last year, mainly due to a decrease in deferred tax liability related to equity pickup adjustment. Net income attributable to Weibo in the first quarter was USD 91.9 million, representing a net margin of 22%.

Turning to our balance sheet and cash flow items. As of March 31, 2026, Weibo's cash, cash equivalents and short-term investments totaled USD 2.59 billion compared to USD 2.41 billion as of December 31, 2025. In the first quarter, cash provided by operating activities was $164 million. Capital expenditures totaled USD 11.9 million, and the depreciation and amortization expenses amounted to USD 15.5 million.

Let me share some color on our shareholder returns. We have completed the distribution of the annual cash dividend of [ $0.34 ] per ordinary share or EPS for fiscal year 2025 with aggregate amount of approximately USD 150 million in 2026. We will continue to take our disciplined approach to capital allocation, balancing shareholder returns with the financial flexibility needed to fund our long-term product, AI and the content ecosystem initiatives.

Overall, first quarter was a quarter of continued transition and steady execution, while macro consumption sentiment and industry competition remain uncertain with the initial size of stabilization in core user engagement and advertising demand. We will continue to balance investment needs with operating efficiency and healthy cash flow generation as we build a more sustainable foundation for long-term development.

Before turning to the Q&A session, let me provide you a brief update on ESG front. In April, we published our ESG report, highlighting our efforts across social value, tech empowerment, information security, employee development, content ecosystem and green operations. MSCI also recently upgraded our ESG rating from BB to AA, recognizing our progress in sustainability, innovation and social responsibility. Please visit our IR website for more information.

With that, let me now turn the call over to the operator for the Q&A session.

[Operator Instructions] And now we're going to take our first question, and it comes from the line of Thomas Chong from Jefferies.

[Foreign Language]

Based on the trend so far we see in Q1 and recent months, can management comment about Weibo's advertising outlook in Q2? In addition, can management also comment about our advertising strategies, any updates for the full year? And separate today on AI. Can management share about how it benefits advertising and monetization?

[Interpreted] Thank you for the question. So first of all, let's talk about the overall recap of Q1 performance as well as the expectation of the second half of the year. First of all, we had a year-on-year growth of about 9% of the advertising revenue in Q1. If we're talking about the definition of RMB, it was about 3% of the growth. And in Q1, primarily the advertising revenue growth was driven by the Internet-based software deployment and AI-related investments as well as the other local lifestyle and automotive industry related.

Okay. And next, I would like to say that in Q1, overall speaking, we had a better than expectation growth of our ad revenue in terms of the consumption area. But if you're talking about the key accounts that we have, especially from different verticals, we've been seeing a stressful situation. For instance, in terms of automotive sales, they've been experiencing double-digit decrease. And for the handset, they had also a decrease in terms of their overall revenue because of the additional cost of the memory, and they have to -- most of the handset makers have to adjust their overall price. And also for e-commerce, we've been experiencing also a stressful profitability situation. So even if our ad revenue was growing, we have still a stressful operation for our customers.

Okay. And next, in terms of Q2 and also the future outlook, I think that although we've been seeing a stressful operational situation for consumption industry, we did have the different responses from different customers. First of all, in terms of automotive industry, at the current stage, they've been experiencing some of the decrease of their sales volume. However, they were not just stopping in terms of the promotional activities for their new products and new product launch as well. So this year, we've seen more new product launches than that of last year. In Q1 and Q2 as of the near future, I think that this is going to be accelerated. As you can see that we always have more and more frequent launches of new EVs. And also, Weibo is a very good and natural ecosystem to generate and stimulate the discussions around the topics of technology-related and new energy related.

At the same time, for the handset industry, as you can see that, it is difficult for us to have a very correct prediction of the performance in the second half of the year. But the industry did experience a drop of the sales volume in the first half of this year. Of course, this year, however, still we are seeing more launches of new products and new smartphones and especially increasing the frequency of the smartphone launches for the medium to high-end segment.

In summer holiday, we might have been experiencing some of the adjustments of the strategy from the handset industry. And of course, this year, we've been seeing Apple proactively adjusted their price, causing some of the stressful situations to some of the Chinese handset makers. So as a result, our ad revenue and ad budgets was primarily related to the frequency of the new product launches of the different verticals as well as the sales, but not necessarily related to the operational result of the customers in different verticals.

And also lastly, let's talk about some of the other industries like the e-commerce and local lifestyle as well as the FMCG industry. First of all, for the e-commerce, we've already had a very high base number in entering to Q2. And of course, also for those -- for the industry, some of the promotional activities and especially budget allocated to the fast food delivery was not as intense as before. So this is going to be a lot [indiscernible]. And also, I would like to comment on FMCG. Entering to the second half of the year, we are going to have the World Cup activities. So I believe that we are trying our best to catch the opportunity to gain that ad revenue or ad budget from that customer.

And also, you can see that talking about the AI topic, as we have already previously stated, that the AI was primarily very effective on the -- effective based or performance-based ads. So you can see that AI was quite useful in terms of the ad material generation, [indiscernible] and also the recommendations as well. So in terms of those generated materials for the advertisements, the primary consumption rate was already reaching to about like 40%. And in Q1, in the information-based fees, we had a double-digit growth, especially talking about [indiscernible] and the other relevant areas.

Also, of course, you know that Weibo is very good at doing the business in the advertisement industry for the brand-based advertisement and key customers' advertisements. So we are very good at doing the business of the celebrity based or the content-based marketing. And at the current stage, we've been having a very good progress in terms of adoption of the AI among those KOLs and also the celebrities as well.

So AI is pretty much useful in generating those ad materials for those KOLs to be very much facilitative. But of course, in Q1 and Q2, we've been seeing some of the headwinds in terms of the adoption rate as well as the acceptance by the public in terms of those ad generated by AI or those contents generated by AI. So at the current stage, we're not doing a massive commercialization as for the front. But still, we are going to wait still. We are doing some internal testing among the KOLs and the public acceptance is the criteria for us to evaluate the [ 4-week old ] massive commercialization.

Now we're going to take our next question, just give us a moment. And the question comes line of [ Jenny Huang ] from UBS.

[Foreign Language]

Could you please share some updates on the impact of the state of events on the [indiscernible]? Now last quarter, you highlighted video strategy as a key focus for this year. Could you please provide an update on the progress so far as well as the key priorities and targets for the next phase? And lastly, could you please also share the developments on the AI front in terms of user facing products.

[Interpreted] Okay, thank you for this question. So first of all, as for the update of the information-based feed, we've been seeing that this was actually completed in about Q3 of -- in the mid of Q3 of 2025. And before which we had primarily based on the recommendation base feed. But when we actually had that update and the adjustments, we've been seeing a very good improvement of the user experience in the front. And in Q1, we had a little bit decrease of MAU and DAU of the site primarily due to the strategic -- or strategy changes of channel placement and also some of the low shipments of the handset. So we had a lower number of pre-installments and also the user side as well.

And in Q1, you can see that we've been seeing a very good user acquisition. We can see a user acquisition cost increase because it was actually the [ hot ] season in terms of the AI application adoption and also the usage. But at the same time, still, we are keeping a very good number in terms of the social-based users and also the click-based users. And after Q2, we are going to see a very good improvement both in terms of the time spent, total time spent as well as the interactive volume.

So in the long run, our overall objective of doing the update and changes of this existing product is that we would like to, first of all, get rid of those user experience that was primarily based on the relationship-based feed. And of course, at the current stage, there are still some of the challenges from the user side in terms of the acceptance and getting used to this new version. But still, in the long run, we have 2 objectives by doing this kind of change.

First is that we hope that we are going to fully release the value of Weibo to those consumers. At the same time, using our algorithm to better enhance the user experience and also the depth of the user interaction on the social media. And second point is that we hope that our total video consumption in terms of the time spent and also the total video-based consumption could be further improved because of this kind of a strategy. Also, we would like to attract more bloggers to be on the Weibo to open an account and generate more video content. And also this would be helping them to do more deployment and the placements as well as the generation and production of the video-related content. So this will be really helpful for us to increase the time spent on video-related content on Weibo.

And also in terms of the overall results of the [indiscernible] strategy for the video front, first of all, of course, we've been seeing actually a very good growth of the number of users consuming the video-related content on Weibo, and you can see that this was pretty much forming a new mindset of the consumers on the video-related content. And we had a very good double-digit growth year-on-year in terms of the time spent on the video related content on Weibo.

And on the supply side of the video content, because of this recommendation based fees, we hope that we are able to attract more creators and bloggers from outside of Weibo to actually by providing them with more resources and also more budgets. And based on this, the new algorithm and new incentives plan and encouragement plans, we hope that we are able to attract more of those external bloggers and also content creators to be landing on Weibo and helping us to enrich the supply of video content.

In terms of the AI, we had a lot of R&D investments and try to encourage people to actually use AI to facilitate what they do. And when we launched the [indiscernible] in 2025, we had actually a very good boost in terms of the total volume of search. But still in Q1, we had some of the challenges because at the current stage, we've been seeing a lot of AI tools that were emerging. And on the consumption side or on consumer side, they're actually now -- more and more consumers are now trying to use the interactive and dialogue-based search instead of just a pure search function. So in Q4, we made that interactive dialogue-based search available and experiencing 100% of the growth in terms of users and adoption in Q1. But still at the current stage, the base number of the user for these bigger features only at a level of 1 million. So we hope that in the future, we are able to further boost that and further strengthen our AI-related strategy on this front.

So in Q1, yes, in Q1, especially targeting those content creators, we are now establishing an AI content creating center, facilitating those content creators to generate the text and images as well as video content as well. So at the current stage, you can see that we had a lot of important key account or the key content creators that had a very good video generated through -- in the center and those text and images as well.

Also, we've been seeing a very good collaboration with [indiscernible] to actually have the capability to help the content creators to generate video with a length of 1 minute long, which primarily it's about like several seconds or 10-or-so seconds, but we are able to help to generate the videos of 1 minute long. So this, of course, is the feature that is not accessible by all users, but at the current stage, we're only providing this to some of the new certified users. But in the future, we hope that we are able to have a rollout. But before that, we are going to have further consolidation internally.

Dear participants, due to time constraints of today's call, we will not be addressing any further questions. Thank you very much for taking participation. You may now all disconnect. Have a nice day.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

Good day, and thank you for standing by. Welcome to the Weibo Reports Fourth Quarter and Fiscal Year 2025 Financial Results Conference Call. [Operator Instructions]

Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Sandra Zhang, IR Representative. Please go ahead.

Thank you, operator. Welcome to Weibo's Fourth Quarter and Fiscal Year 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 on 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 statements 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 the date hereof. Weibo assumes no obligation to update such information, except as required under applicable law.

Additionally, I'd like to remind you that our discussion today includes certain non-GAAP measures, which excludes 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 the 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 will open the lines for a brief Q&A session.

With this, I would like to turn the call over to our CEO, Gaofei Wang.

[Interpreted] Thank you. Hello, everyone. Welcome to Weibo's Fourth Quarter 2025 Earnings Conference Call. On today's call, I'll share with you highlights on Weibo's product and monetization, review the progress made in 2025, elaborate our strategies for 2026.

Starting from our financial performance in the fourth quarter, our total revenues in the fourth quarter reached USD 473.3 million, an increase of 4% year-over-year. Our total revenues reached USD 403.8 million, an increase of 5% year-over-year. Our value-added service revenues reached USD 69.5 million, a decrease of 2% year-over-year. Our non-GAAP operating income in the fourth quarter reached USD 100.4 million, representing operating margin of 21%.

For full year 2025, our total revenues reached USD 1.76 billion, relatively flat year-over-year. Our total ad revenues reached USD 1.5 billion, relatively flat year-over-year. Our value-added service revenues reached USD 255.6 million, relatively flat year-over-year. For the full year 2025, our non-GAAP operating income reached USD 523.6 million, representing a non-GAAP operating margin of 30%.

On the user front, in December 2025, Weibo's MAUs reached 567 million and average DAUs reached 252 million. Throughout 2025, we focused on enhancing user value, solidifying Weibo's leading position in hot topics and entertainment content ecosystem and strengthening the competitiveness of our social products. At the same time, we leveraged to improve our recommendation and search systems, driving both user base and engagement.

Next, I will highlight key development in Weibo's product operation and monetization in the fourth quarter. On user growth and engagement, in late July, we completed a structural upgrade of our core homepage and officially rolled out the new homepage with interest-based feed as a primary interface. Our key objective of this upgrade was to leverage in social products while expanding from only relying on relationship-based mechanism to distribute content -- user to discover high-quality content more efficiently and providing greater visibility for vertical content across the platform.

In terms of execution in the third quarter, we focused on ensuring smooth transition of the product and minimize the impact on user behaviors. In the fourth quarter, we prioritized 2 key initiatives. First, we continue to refine our recommendation algorithm to improve recommendation to efficiency by leveraging real-time user behavior, coding clicks, time spent and engagement. We strengthened our instant recommendation capabilities and facilitated more in-depth content consumption.

As a result, in the fourth quarter, both the average information feed viewership and time spent per user increased quarter-over-quarter. That, we rolled out an algorithm-driven audience segmentation strategy to deliver more granular targeted content recommendation for users to engage on the platform. We maintained a stable distribution of relationship-based content within their interest-based feed, keeping a balance between relationship-based content and interest-based content, satisfying users' demand for social content consumption while improving the precision of content.

Among the social users, the average viewership and time spent per refresh and engagement per 1,000 viewership all increased quarter-over-quarter in the fourth quarter. We also revamped the new homepage with easier onboarding experience for new users. With continued recommendation algorithms, new users average information feed consumption per refresh and have exhibited upward trends.

In the meantime, we also recognize that compared with the relationship-based feed, the market for the interest-based recommendation feed is highly competitive. In the transitional period, some user metrics remain volatile, which is within our expectation. Nevertheless, the strong content consumption by social users and new users have fully validated our current direction. Going forward, we will continue to leverage Weibo's social product and hot topics, further enhance the distribution of Weibo's unique content.

Meanwhile, we will focus on establishing a more stable and predictable content consumption experience and enhancing user trust and stickiness with the homepage information feed, which laid a solid foundation for long-term user growth, engagement and monetization.

As the interest-based feed became the core scenario for distribution, this will facilitate the distribution of our video content, which were previously mainly through relationship-based feed. For video strategy in the second half 2025, we focused on 2 key initiatives: first, enhancing video efficiency by strengthening the synergy between content and scenarios; second, improve the quality of video content. This involves incentivizing top-tier KOLs to produce more competitive content for the platform, while systematically managing low-quality video content to optimize the supply structure. In the second half of 2025, both the average daily video view time and the per user video view time on the video playback page achieved double-digit growth compared with first half of 2025.

Furthermore, during the spring, the release and widespread adoption of AI video technology and tools significantly lowered the barrier for video creation. During the period, both the number of original videos and the number of original video content creators among Golden and grew over 40% year-over-year. Looking ahead, as AI technologies continue to evolve and advance video production efficiency and quality are expected to improve further.

In response, we will leverage the product in content in hot topics and vertical IPs, providing content creators with AI creation tools to support secondary content production and content expansion around vertical IPs. This further strengthen the competitiveness of Weibo video content ecosystem. For example, among those movies released during the spring festival, we will partner with the Belgian, the Blade launch a fan creation contest where content creators use AI tools to produce creative adaptation based on the flow and characters.

Over 100 creators participate through the contest and over -- the main production team interacted active platform. The campaign sparked a diverse discussion and engaged audience from all verticals, providing a replicable marketing model. Subsequently, this AI-powered edition model is also being used for the current hit drama, helping to boost the show's visibility.

Turning to search products. In the first quarter, we continued to focus on providing users with more intelligent and convenient search experience. First, we continue our AI capabilities to improve the accuracy of understanding users' needs and content. In high-frequency search scenarios such as hot topics and public figure search, we leveraged intelligent search to optimize search effectiveness and user experience, strengthening the mind share of search among Weibo users.

Second, we upgraded the product form, evolving Weibo intelligent search from a single round Q&A model to a multi-round conversational assistant, which better meets users' needs for more coherent and in-depth information discovery and exploration. Third, we expanded implementation of intelligence more key scenarios, including content consumption and social interactions, reaching a broader user base. These initiatives lead to continued growth in intelligent search user scale and engagement in the fourth quarter.

In December, Weibo's intelligent search MAU surpassed 80 million with average DAUs and search queries booked double-digit growth quarter-over-quarter, driving overall platform search query volume further to improve.

Moving on to monetization. In 2025, our ad product and sales teams consistently focused on 2 strategic priorities. First, continuing to promote Weibo's unique content marketing positioning across all industries; and second, systematically improving ad performance and conversion capabilities by leveraging AI technologies. In the fourth quarter, Weibo's ad revenues grew by 5% year-over-year.

By industry, in the fourth quarter, we focused on capturing marketing opportunities sector with high budget visibility with e-commerce, automobile and local service serving as the primary driver of top line growth. Leveraging Weibo's strength in social products and hot trends, Weibo gained stronger recognition from e-commerce clients in delivering key and acquiring high-value users.

As a result, the e-commerce sector booked notable year-over-year growth. Meanwhile, we successfully replicate this model to local service sectors, helping service-oriented advertisers such as food delivery platforms to achieve effective user acquisition in a highly competitive environment. We are pleased to see solid ad growth from local service sector.

The automobile sector also sustained steady growth, underpinned by Weibo's vertical ecosystem advantages. On flip side, the handset industry experienced traction factoring into product launch, product launch schedules and subsidy policy fluctuations. The online game sector continued to face pressure, mainly due to the lack of blockbuster game releases. Since the fourth quarter, with the tailwind from intensive release of large language models, Weibo has become the go-to platform for companies to launch new products, promote AI technologies and build brand awareness, leveraging Weibo's well-established KOL ecosystem and professional discussion environment in the digital and technology sectors.

Recent integration of major AI models such as in Qwen by Alibaba and Doubao by ByteDance drove nearly 50% increase in related discussion on Weibo compared with that around 50 rollout last year. This technological upgrade went viral on our platform, which also attracted trends-related ad budget. The AI sector is becoming a clear growth driver for our platforms.

For the full year, despite temporary fluctuation in ad budget due to macroeconomics and industry-specific factors, our revenue structure demonstrated stronger resilience with content marketing consistently contributing 50% of total ad revenues. Throughout 2025, we continuously optimize the marketing combo of high-quality native content production by KOLs and precise information feed targeting, thereby enhancing Weibo's overall competitiveness in brand awareness and conversion. Taking the new product we launch programs as an example.

In 2025, we serve over brand clients across 22 industries, leveraging synergy between high-quality celebrity and KOL content and feed ad placement. We established a full funnel campaign model from amplify brand awareness to drive conversion. This campaign model significantly improved clients' marketing effectiveness of our trends, creating a positive synergy between our monetization and -- in performance-based advertising, our AI application made notable progress.

In December, AI-generated ad creatives already accounted for 40% of consumption in promoted feed ad offerings and the real-time bidding systems. AI integration has not only enabled us to greatly reduce advertisers' creative cost, but also improve traffic monetization efficiency through ongoing optimization of bidding models and conversion paths.

Overall, Weibo has achieved its annual ad revenue target as we beef up organizational execution, AI-empowered capability in 2025. We are pleased to further solidify and enhance competitiveness of Weibo's monetization ecosystem.

Entering 2026, we will continue to create value for users with focus on optimizing user experience and driving long-term retention. By balancing traffic operation efficiency with quality, we are committed to strengthening Weibo's ecosystem and reinforcing its long-term competitiveness while further growing our user community and engagement.

Next, let me share some color on our key strategies for 2026 on 3 key fronts: user growth and engagement, content ecosystem and monetization. On user growth and engagement, we will prioritize retention of quality users in the hope of building a sustainable growth path featuring high value and deeply engaged user community. First, on the channel strategy, we will upgrade our full life cycle operation framework to optimize the entire new user journey from activation and onboarding to stable usage and thus enhancing the conversion of acquired users into core active users.

Second, for the information feed products built upon the homepage revamp and capability building in 2025, '26 will mark a new phase of user experience improvement and refined operation. We will continue to optimize Weibo's algorithm and strengthen engagement with the homepage information feeds so as to drive steady growth in both user engagement and time spent.

Third, video will become our key strategic driver of user retention and time spent in 2026. The homepage revamp in 2025 has paved the way for more efficient video distribution across the platforms. We have already achieved solid progress in improving content quality and fostering user mindset of video consumption on Weibo.

In 2026, we will step up investment and leverage AI technologies to enhance video understanding and recommendation efficiency. Meanwhile, we will work to diversify our video content offerings, including original videos, mindshare-focused videos and short format. Through comprehensive upgrade across content, algorithms and product experience, we expect video to play an increasingly important role in driving user time spent and retention, supporting continued growth of our user base.

On the content, in 2026, we will continue to focus on 3 core pillars: our trends, social product and search products to further our content ecosystem and strengthen our core competitiveness. First, on hot trends, we'll explore the synchronization of feed distribution and hot trend charts. On top of reinforcing the credibility of the hot search product, we aim to enhance recommendation efficiency of hot topics within the information feed and expand the scale of users engaging in discussion, which will enable us to reinforce core advantages in hot topic consumption and fashion.

Second, on social product, we will continue to beef up investment in super topic products. We will focus specifically on the interest-based needs of young users, deepen the operation of interest-based communities and enhance their experience. By cultivating social relationship and interactive mindset on the platform, we aim to further boost user sense of belonging and engagement on Weibo. Third, on search product, building on the full rollout of Weibo intelligent search capability in 2025, we will focus on cultivating a differentiating of our search product in 2026. To elaborate, we seek to highlight in our search features, including searching people, IPs and hot trends. By integrating intelligent Q&A and conversational search experience, we aim to provide users with more accurate, efficient and differentiated search services.

Moving on to monetization. In 2026, our key initiative is to capture our volume share in the brand and market through resource investment, specifically towards invest, leveraging Weibo's cumulative strength in IP hot trends, celebrity ecosystem, we are pleased to see a broad-based trend with more and more brands showing recognition to step up ad budgets in our celebrity and web marketing. In light of this trend, we upgrade our full-service IP marketing framework to enhance Weibo's competitive edge in brand and market, leveraging service and a comprehensive metric of celebrity ad playbook.

We will try to deepen partnership with clients and participate in their decision-making process, thereby wallet share in the brand and content marketing ad budget. Meanwhile, we will make the prudent resource allocation among selected core marketing scenarios to build a portfolio with stronger competitive moats. This resource deployment will largely be structured around our existing marketing ecosystem. While the fluctuation in profit margin in the short term, the overall pacing will be strictly managed based on the ROI and kept within a controllable budget cap.

As we continue to refine product ecosystem and client service capabilities, we expect this initiative to gradually yield returns from the second half of 2026 onwards. In the mid to long term, this initiative will help further elevate Weibo's position within clients' marketing decision-making chains, driving more sustainable revenue growth. In terms of performance-based advertising, we maintain steady operations across core industries.

Furthermore, empowered by AI technology, we will focus on further enhancing both ad targeting position, the overall user experience. Finally, on value-added service, we aim for steady growth by refining the privilege system for paid users and expanding the coverage of V plus membership among top-tier content creators in the hope of promoting the creation of the V plus ecosystem to achieve significant revenue breakthroughs.

On organizational efficiency, in 2026, AI to drive front-end business growth, we will focus on expanding AI adoption across internal operations, enabling teams in product development, operations and monetization to drive AI tools to enhance execution efficiency. We believe enhanced technological capabilities and organizational efficiency will be the cornerstone for achieving our strategic goals for 2026.

With that, let me turn the call over to Fei Cao for the financial review of the fourth quarter and fiscal year 2025.

Thank you, Gaofei, and hello, everyone. Welcome to Weibo's Fourth Quarter and Fiscal Year 2025 Earnings Conference Call. Let's start with user metrics. In December 2025, Weibo's MAUs and average DAUs reached 567 million and 252 million, respectively, in 2025. Thanks to the tailwinds of ever-evolving AI technologies, they are highly focused on exploring AI features to transform the whole user experience. AI is now deeply integrated into Weibo's recommendation engine, content generation and search functions, et cetera.

Notably, user sales and search queries from Weibo intelligent search feature grew robustly this year with intelligent search MAUs exceeding -- heading into 2026, we will continue to invest in AI as the cornerstone and growth multiplier for our business, driving a more engaging experience for Weibo's user community.

Turning -- as a reminder, my prepared remarks will focus on non-GAAP results. Monetary 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 and fiscal year 2025. Weibo's fourth quarter 2025 net revenues were USD 473.3 million, an increase of 4% or 1% on a constant currency basis. Operating income was USD 100.4 million, representing operating margin of 21%. Net income attributable to Weibo reached USD 66.4 million, and diluted EPS was $0.25.

For full year 2025, total revenue reached USD 1.76 billion, relatively flat year-over-year. Operating income was USD 523.6 million, representing operating margin of 30%. Net income attributable to Weibo reached USD 439.8 million and diluted EPS was $1.65. Let me give you more color on fourth quarter and full year 2025 revenue performance. First, our advertising business. Weibo's advertising and marketing revenues for the fourth quarter 2025 were USD 403.8 million, an increase of 5% or 2% -- Mobile ad revenues were USD 379.2 million, contributing approximately 94% of total ad revenues.

We ended 2025 on a solid note. Advertising business for the fourth quarter trended better than our expectations despite weak consumption data by industry. Our largest 3 verticals were e-commerce, 3P products and FMCG. In terms of growth, e-commerce, local services, Internet services and automobile were the key contributors. We are pleased to see strong momentum of the e-commerce and local service sectors.

Weibo has not only demonstrated its value proposition in driving brand exposure during mega shopping festivals, but also fulfilled the platform user acquisition needs amid intensified market share competition. The automobile sector sustained solid growth this quarter, benefiting from Weibo's robust auto-related content ecosystem and ad spend from ICE vehicle brands. On top line growth -- pull back from the product sector. We faced tough comparison with handset manufacturers for the fourth quarter last year when the trading subsidies took effect.

The online game sector continued to underperform, mainly due to budget contraction from game developers. Full year 2025 advertising and marketing revenues reached USD 1.5 billion, largely flat compared to 2024, reflecting diverging performance across our key verticals. Mobile ad revenues contributed 95% of total ad revenue. Our largest vertical FMCG, e-commerce and 3C products, where e-commerce, Internet services and automobile growth.

Leveraging closer partnership and stimulus policies, we captured higher wallet share from both the e-commerce and automobile sectors. However, our pillar industries, FMCG, 3C products and online games were on a descending trend, partially due to tough comparison resulting from incremental ad budget from the Paris Olympics and blockbuster game releases in 2024.

By ad product, promoted feed ad was the largest, followed by social display and topics and search. In 2025, we further amplified the synergy between content and monetization ecosystem, reinforcing Weibo's market differentiation around celebrities, IP and content marketing. On top of these initiatives, we focus on AI-powered ad technology upgrade to revamp Weibo's ad infrastructure. Our real-time bidding feed ad was a clear beneficiary of AI integration, which could facilitate smarter ad targeting and generative AI ad creative solutions.

Ad revenues from Alibaba for the fourth quarter were USD 50 million and 24%, taking the year 2025 with sustained robust growth. We are encouraged to see Weibo's content and celebrity ad playbook regain traction with Alibaba amid the current competition and budget allocation dynamics. Full year ad revenues from Alibaba were USD 173.8 million, an increase of 49%, driven by a deeper collaboration during key e-commerce marketing windows and Alibaba's increased ad spend on its local services initiatives.

Moving on to value-added service, VAS. VAS revenues were USD 69.5 million in the fourth quarter, a modest decrease of 2%. For full year 2025, VAS revenues recorded a flattish trend, reaching USD 255.6 million, which reflected a small increase in membership revenues, offset by decrease in game-related revenues.

Turning to costs and expenses. Total cost and expenses for the fourth quarter were USD 372.8 million, an increase of 16%, mainly attributable to higher ad production costs and the step-up in marketing expenses. Full year cost and expenses reached USD 1.23 billion, an increase of 5%. Operating income in the fourth quarter was USD 100.4 million, representing operating margin of 21% compared to 30% in the same period last year. Operating income for full year 2025 was USD 523.6 million, representing operating margin of 30% compared to 33% in 2024.

Turning to income tax under GAAP measure. Income tax expenses for the fourth quarter were USD 31.3 million compared to USD 20 million last year. The increase of income tax expenses was primarily due to withholding tax accrued related to all the company's wholly foreign-owned enterprises of earnings to be remitted to Weibo Hong Kong Limited in the foreseeable future to fund its demand for U.S. dollars in business operations and potential investments, et cetera.

Full year income tax expenses were USD 144.5 million compared to USD 110.6 million in 2024. The increase was primarily due to withholding tax accrued related to all of the company's WUFI entities earnings to be remitted to Weibo Hong Kong Limited in the foreseeable future to fund its demand for U.S. dollars in business and potential investments, et cetera as well as the recognition of deferred tax liabilities related to equity pickup gains in 2025.

Net income attributable to Weibo in the fourth quarter was USD 66.4 million, representing a net margin of 14% compared to 23% last year, primarily due to above-mentioned impact from operating margin and income tax. Net income for full year 2025 was USD 439.8 million, representing a net margin of 25% to 27% in 2024.

Turning to our balance sheet and cash flow items as of December 31, 2025, Weibo's cash, cash equivalents and short-term investments totaled USD 2.41 billion. Fourth quarter cash provided by operating activities was USD 181.4 million. Capital expenditures totaled USD 10.4 million. And depreciation and amortization expenses amounted to USD 15.3 million on a full year basis. Cash provided by operating activities was USD 519.5 million. Capital expenditures totaled USD 42.4 million. And depreciation and amortization expenses amounted to USD 59.1 million.

In light of Weibo's solid profitability and healthy cash flow, we are pleased to announce that our Board of Directors has approved an annual cash dividend of $0.61 per ordinary share or ADS for the fiscal year 2025 under Weibo's annual dividend policy. The total dividend payout will be approximately USD 150 million with payment expected to be made in May 2026.

Looking ahead, we are committed to capitalizing on the transformative AI opportunities and unlocking the potential of our social media platform while maintaining robust financial health despite uncertainties with consumption sentiment and competition landscape. Our disciplined capital allocation supports our long-term strategies and ensures financial stability, enabling us to deliver sustainable returns to our shareholders.

With that, let me now turn the call over to the operator for the Q&A session.

[Operator Instructions] Our first question comes from the line of Alicia Yap from Citigroup. Due to no response, we'll move on to the next question. Our next question comes from the line of Xueqing Zhang from CICC.

[Interpreted] My question about AI strategy. As you mentioned in the prepared remarks, since the beginning of 2026, we have seen rapid development across AI landscape, including significant improvements in AI video generation models as well as the increasing adoption of AI agents on the application side. We think this could fundamentally reshape both content creation and user interaction. So could management share what's your strategy in the AI era and what's our key focus for AI application in 2026? In addition, what's the plan to integrate the latest AI technologies into platform operations, for example, in content distribution, user engagement, video strategy and monetization. And lastly, could management give us an update on, including its current progress and the role in your AI strategy?

[Interpreted] This is actually a very good question. I would like to answer this from 2 points. The first one is that what is the AI role and also what is the AI planning on Weibo as a product and also what is our competitive positioning of AI if we regard Weibo as a platform. First part is about the Weibo as a product. Last year, in 2025, I think that the only product that we have launched targeting the consumer side was intelligence search. But of course, on back of that, we had a lot of other plans and strategic plans related to the launch of AI capabilities.

Of course, in the past, in terms of the capabilities of the large language models, most of them were focusing on the improvement of the capabilities that are non-multimodel related. So if you're talking about the only product that we have launched in 2025 targeting the user side, this will be with the tens of millions of users at a scale. So of course, we have been doing a lot of trials and experiments on the other related model capabilities.

So in 2025, Q4, especially in December and in Q1 of 2026, we have been doing a lot of researches and also focus on the improvement of the capabilities. The first one is that I think that is a very good timing in terms of the front-end use by having a very good improvement of the capabilities by combining agents with skills altogether.

And of course, second point I would like to say is that in terms of the AI product, of course, you could see that we've been seeing a very good improvement of the capability of -- and especially this year, combining the capability of agents and multimodel based. So for instance, in the past, this particular as a product was pretty much focusing on the summary based on text. But now it is able to have the dialogue generation and also multi-question and query answering capability.

And if you're interested, you can actually test this feature of -- on the website of Weibo or on the app of Weibo. And second part is about the productization of other ends. So in the past, you know that our Weibo's core capability was still based on the text and image, and of course, we try to make some of the core content creators of those text and images to commit them or -- I mean, to shift them to become the video creators. Of course, in the past, that kind of transformation was quite successful. But later on, we have been seeing some of the constraints and limitations.

So now with the improvement of the capabilities of AI, those content creators are going to be more creative and also increasing the capabilities of the storytelling and expressions as well. So that is exactly the reason that we've been investing a lot on this particular technology related to video generation and also we've been investing heavily into the computational power improvement and increasing. And also in Q1 of this year, you've been seeing a very good growth of our video generation and video content on Weibo platform quarter-by-quarter or year-by-year. And also, we've been seeing a very good profitability against this.

And I believe that this is going to be the major source of our revenue growth as well as the profit growth. So the AI enhanced content creation or those content creators are now going to be having more capabilities with the empowerment of AI to actually generate more videos directly or using the AI or Gen AI capability to actually convert the text images into videos.

And the second big part of the answer would be that we regard Weibo as a platform and how we are facilitating this particular AI notion. So first of all, that now on Weibo platform, we were actively disseminating the knowledge related to the AI and AI application and also promoting the AI-related content. Because of our large user base, and especially those active content creators on the science and technology realm or on a digital product realm still -- are still quite active in generating content and helping disseminate knowledge about AI on Weibo platform and using Weibo platform.

So as a platform, we are going to keep continuously doing that. And also this help us to generate a lot of traffic and attract the users, especially during the Chinese New Year period, for instance. So last year, it was pretty much about DeepSeek and the connectivity with that. But still this year, we've been seeing more AI models and getting connected on Weibo platform like the Qwen or OpenClaw, which is getting very, very popular recently.

But still relating to those new models, I think that the major content on our platform will be the discussions that we have promoted to generate in terms of how to use and how to apply those new model -- new AI or Gen AI. So in the past, we always regarded as the open platform and of course, provide our capability to connect with the large language models like Kiwi, Qwen or -- recently, which are all doing their own version of the OpenClaw-related agentic AI. So we are now getting a very good connectivity with those Claw like agentic AI capabilities.

And of course, now Weibo as a platform has already been successfully switched to a platform that is servicing the need of AI application and also the dissemination of AI-related content. So for instance, with Qwen, we have been successfully getting API connection in terms of the commenting features. So the volume of the comment through Qwen has already been reached to the same level as for that of the feature or commenting feature. So in total, I believe that all those AI models or agentic AIs we're actively using the large user base of Weibo and also on our platform doing a lot of more interactions with the users about AI-related content.

Our next question comes from the line of Alicia Yap from Citigroup.

[Interpreted] Can management share with us in light of the current macro situation and also the intensified competition of the AI product, how is management see the advertiser budget sentiment and their ad spend? And what is the growth expectation that management has set for Weibo for 2026? And what is the overall advertising strategy and how Weibo can leverage and embrace the AI applications to enhance the ad growth? And also how Weibo has been using the AI to improve the operating efficiency.

[Interpreted] So thank you for this question. First of all, we had about the ad revenue growth of about 2% to 3% in Q4. And in Q1, in terms of the growth rate itself, we had a single-digit growth. We're going to have a single-digit growth versus the same period of last year. And also second point I would like to say is that because of the traffic growth, especially the AI-related traffic growth, we have been bringing in a lot of new customers onto our platform. And of course, in February, we had the Winter Olympics took place in Milano and that helped us to also generate a little bit on the revenue as well.

And in terms of consumption, so we had a slowdown in Q4 versus the Q3 area in terms of the ad revenue from the consumption area. But still this year, the national government has made a plan of having around 4% of the growth in the total consumption area. So talking about different verticals. So first of all, e-commerce and automotive, we believe that there will be a very good growth happening to these 2 verticals in 2026 as well as for the handset and the gaming industries, there are some of the uncertainties. For the handset, I would like to say that probably the growth is happening on a periodic basis.

Now because of the memory price is increasing. So we've been seeing a lot of the selling price increase for some low to medium-end models of the handset. But still, on our platform for most of the advertisers of the mobile phone makers, most of them are actually spending money to do advertisements on the medium to high-end models. So still there are some of the uncertainties. So approximately, the handset industry is going to be experiencing a flat performance of this year.

So the next point I would like to answer is for the point about different kind of advertisements. So according to what we have mentioned in the prepared script, in 2026, we've been seeing a kind of very good improvement of that. But still, we experienced a very intense competition in terms of the performance-based ad and something like that. So of course, in 2025, we have been observing that some of the advertisers were coming back to the original marketing mechanisms, for instance, the KOL celebrity-based or the event-driven.

So in 2025, we've been seeing a very good increase in terms of the celebrity-based advertisements in terms of the sales volume, but not necessarily the improvement of the ARPU itself. So in 2026, we have certain strategies to deal with that situation. First of all, as we have already mentioned that the service provision system is going to be totally updated. So now we focus more on the quality service provision and helping us to actually embed into the upstream of the decision-making chain of our customers, i.e., advertisers.

And in 2026, we've been seeing a lot of -- we are very confident to generate a lot of ad revenue growth from this area. And also second point is for those return trends, which is KOL-based marketing or the celebrity-based marketing. And we've been seeing a very positive trend of some of the advertisers of coming back to this notion of doing marketing.

So of course, at the current stage, as I have already said that the ARPU wasn't that much improved because of less than -- or because of less diversification of the choices of the KOLs. So I think that we will, first of all, put some several products into one as a package and deliver to our customers. And second, that we provide a very good cost base advantage to our customers in order to deal with the situation, helping to actually improve and increase the ARPU in the same place at the same time.

And the third one will be the content-based marketing. And for different verticals, we had been experiencing some volatility there. But still, overall speaking, the content-based marketing had been seeing a very good growth. And at the current stage, of course, we've been seeing that it is contributing to about 50% of our total ad revenue. And in 2026, we will be focusing more on the investment onto those KOLs and trying to actually achieve a very good momentum carrying on effect.

And the next point I would like to say is the performance-based ad, of course. So we had a very good growth in 2025. And this performance-based ad is contributing or is accounting for about 17% of our total revenue -- ad revenue and which increased by about 3 to 4 percentage points versus the year before. So now what we have as strategies are, first of all, optimizing the algorithms and second of all, helping to actually improve and increase the CPI based effects.

There are no further questions at this time. So I'll hand the conference back to Sandra for closing remarks.

Thank you, operator. This wraps up our conference call today. We'll see you next quarter.

This concludes today's conference call. Thank you for participating. You may now disconnect. Speakers, please stand by.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

Good day, and thank you for standing by, and welcome to Weibo Reports Third Quarter 2025 Financial Results. [Operator Instructions] 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 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 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 excludes 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 the 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.

[Interpreted]  Thank you. Hello, everyone. Welcome to Weibo's Third Quarter 2025 Earnings Conference Call.

On today's call, I will share with you highlights on Weibo's product and monetization in the third quarter 2025. On the user front, in September 2025, Weibo's MAUs reached 578 million and average DAUs reached 257 million. In the third quarter, Weibo's total revenues reached USD 442.3 million, a decrease of 5% year-over-year. Our total ad revenues reached USD 375.4 million, a decrease of 6% year-over-year. Our non-GAAP operating income reached USD 132.0 million, representing a non-GAAP operating margin of 30%.

In 2025, our overall corporate strategy continued to focus on enhancing user value sustaining Weibo's leading position in hot topics and the entertainment content ecosystem while reinforcing the competitiveness of our social products. Building on this, we also leverage large language model to enhance our recommendation feeds and search products, aiming to increase 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 in 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 the summer vacation, 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 matches their real-time interest. For example, in hot topic distribution, we established user behavior linkage between the recommendation feed and the search function. We use the view and engage with the hot topics in search function. They are showing more precisely targeted content in recommendation feed. This strategy has been 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 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 extending user time spent in the recommendation feed and supporting 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 strategic significance for Weibo, which is comparable to our transition from the chronological to algorithm-based sorting several years ago. In the short term, user experience for certain user group 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 focus on two key aspects: driving interaction between content creators and their followers, and stimulating interest-based social engagement among users to fully boost the 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 which is 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, concert and anime conventions, which young people are interested in. We encourage users to share meaningful and emotional content around their interest, 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 digit 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 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 and making it easier for users to find desired content. At the same time, we upgraded the search model from conventional onetime information search to continuous exploratory dialogue, enabling users to engage in coherent conversations with intelligent search and enjoy a more intelligent and seamless information across experience.

Second, the integration across ecosystem scenarios, we focused on extending intelligent search application in information feed, fostering a Search as a Service user mindset. We deeply integrated intelligent search into the content consumption experience with enhanced content verification and the 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 contents. 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 contribute to the expansion of Weibo search ecosystem. As a result, the 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. And 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 Olympic 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 platform and related industry 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 ad, the bidding for the commercial traffic has become increasingly intense, which pushed their cost upward. In addition, the government recently issued tax policy that limit the cap of the feed ad spend for tax deduction purpose. This dynamic has driven clients to reevaluate their ad budget allocation, placing renewed emphasis on the value of the brand advertising. In particular, marketing approaches such as celebrity endorsement 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 life cycle. We hope to create 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 has persisted since the second quarter, benefiting from deep partnerships with leading e-commerce platforms. Ad revenues from 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 thus laying a solid foundation for the future revenue stability. Ad revenues from the automobile sector sustained year-over-year growth trend in 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 life cycle 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 contents. 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 the consumption. Besides this, to address the common needs of the brand clients, we launched new products via live stream the press conference. 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 enable clients to achieve secondary distribution of valuable live stream content through a combination of high-quality materials and precise targeting.

For example, in live stream product launched by a smartphone brand, AI-generated material make up 10% of all materials. It contributed towards much as 30% of total interactions. We plan to roll out this model to more brand clients hosting product launch, 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 sector 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 the growth momentum in the automobile sector and strive for recovery in the 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 strengthening 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 steady 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 Olympic game 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 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 mainly 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 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 was 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 3 verticals were FMCG, e-commerce and 3C products. In terms of growth drivers, e-commerce, Internet services, automobile and local services were the key contributors. Notably, the e-commerce sector recorded over 50% year-over-year growth, driven by similar policy amid a boosting domestic demand and consumption.

We are pleased to see increased ad budget 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 the last year's Olympics. And as for 3C products, this year, government-backed trade-in subsidies encouraged many consumers to upgrade their phones or home appliance earlier this year, which leads 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 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 [ 36% ] last year. Turning to income tax under GAAP measure. 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 of Weibo's cash, cash equivalents and short-term investments was mainly resulted from the purchase of long-term wealth management products and the payment of the annual dividend to our shareholders and was partially offset by the operating cash flows in the past 3 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.

[Operator Instructions] Our first question comes from the line of Alicia Yap of Citigroup.

[Foreign Language]

Can management share with us the overall advertising outlook for the fourth quarter and also 2026. So any color that you can provide in terms of the growth rate for fourth quarter? And also how should we be thinking about the overall ad revenue growth into next year? And then what is your future strategy for the overall advertising product upgrade? How is AI been helping or will be benefiting the click-through rate or even the advertising monetization and also how AI could be also improving -- help advertisers to improve their ROI. Any color that you can share would be great.

[Interpreted] All right. Thank you for the question. So according to the financial report that we have just delivered in Q3, we've been seeing the overall decrease of the ad revenue primarily due to several reasons. The first one is that we had a high base last year due to the Olympic Games. And also, second is that even if we had a poorer performance of the headset industry and the verticals of gaming, and also, we had a little bit better performance from the e-commerce and automotive. But I think that on the overall basis, this is actually the performance within our expectations. Looking forward to Q4, we have been seeing that in the second half of this year, overall speaking, the overall figures and statistics of the consumption-related figures are actually slowing down. And we've been seeing that in some certain provinces and cities, the national subsidy policies have been seeing some kind of headwinds like the limitations on the spending as well as the exiting. So I think that this is going to have a continuous impact on the headset industry as well as the automotive industry next year because we are foreseen a kind of exiting of the national subsidy policy for this industry for certain regions. Okay.

So these are some of the uncertainties that we've been witnessing, but still, except for these uncertainties, we could see some of the certainties for next year and also 2026 in specifics. So you know that in 2025, we did not have any hot topics or hot trends or events happening. But in 2026, we are expecting several important events like the Winter Olympics and also the World Cup as well. So this will be actually bringing a better placement of the advertisers from the consumer goods verticals. And you know that in Q3, the decreased performance of the ad revenue primarily was due to the decreased performance of the ad placement from the consumer goods industry. Okay.

So as a result, it is very difficult for me to give you a very precise prediction of our performance in 2026. Having said that, in Q4, we've been seeing some of the important things. First of all, is that there are actually fierce -- more fierce competition for the e-commerce industry, especially from the off-line scenario and targeting the life service -- lifestyle service. We used to have -- Weibo used to have actually quite low percentage of the market share in this particular segment. But still, we do see fierce competition going on for the food delivery and lifestyle service as well as the other relevant ones. So that is to say that in Q4, we are expecting a huge demand increase in this particular area. Okay.

And also for the e-commerce, of course, I've been already shared some of the colors on this. And second is that in terms of the automotive industry, we believe that it will be actually performing quite good in Q4. But first of all, due to the anti-evolution policies, we've been seeing at some of the customers or advertisers from this particular industry had issues like the price competition or price war. And in the first half of this year, those advertisers did not pretty much focus a lot of their revenues on the product promotion or the mindset establishment. So I think that this situation will be getting better in the second half of the year. I'm talking about the automotive -- I mean headset and also gaming industries. For headset industry, we know that this was primarily impacted negatively by the trend of exiting the national subsidy policy. So in the second half of this year, we'll be seeing that except for Apple, the rest of the other headset makers were having a deteriorating sales volume. And that's the reason why we do see a lower frequency of the new phone launch. And for gaming industry, you could see that from a financial report of NetEase or Tencent, they did not have that lot of new game release in the second half of this year. But of course, they are claiming that in 2026, Q1, we're going to see some of the new games launched from these two major game makers. But still as for whether or not they're going to be allocating more budget on this, this is still uncertain. All right.

And second point on the overall strategies. So we're talking about two directions. The first one is that in the previous years, a lot of those budget of advertisements actually was pretty much placed on the performance-based ad and we did not see a lot of spending from those advertisers on the mindset related areas. And also after COVID-19, in order to consume more ad locks, we do see the behaviors of focusing on the live stream e-commerce. So I think that this year, we've seen a very obvious trend that there are more budget allocated to the areas of establishing and building the mindset. So as the traditional advantageous platform on this particular area, Weibo is definitely going to seize this opportunity. And I think that we are going to focus on the hot topics and KOL, especially top notch KOLs in terms of the integrated marketing. So we do actually see the trend of increasing budget from these advertisers on those fronts. Okay.

And the second point is on the bidding ad and also performance-based ad. So last year, we've been seeing a decrease of our overall revenue -- ad revenue contributed to the overall ad revenue from the performance-based ad. But recently, in the past years, we've been dedicating a lot of efforts in making wonderful products in the performance-based ad and also increasing and updating our technologies. And also, most importantly, we've been applying a lot of AI technologies to really have a very good boost of the revenue from the performance-based ad. So you can see that in Q3, we had a lot of increase on this area. So because -- not only because of the overall data and traffic and also the adjustments of our strategies, but most importantly, I think that the overall use of the AI technology is really important. So we will be actually expecting a very good increase of this performance-based ad. All right, pretty much for the answer for this question.

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

[Foreign Language]  I have two questions on the product commercialization. And first is on the strategy and the progress of intelligent search. Do we have the commercialization attempts already in the fourth quarter? And what other AI application could management share? And second question is on the information feed revamp. What are the initial feedback from users' content consumption, engagement? And how would that translate into revenue growth in the future?

[Interpreted]  So thank you for this question. First of all, we could see that in terms of the intelligent search, as we already said that this has been increased a lot in Q3 in terms of the overall products. So resulting in a very good performance. For instance, in September, the MAU exceeded 70 million. And in terms of the DAU and also the query number, we had a quarter-by-quarter increase of over 50%. So of course, in terms of the monetization of the intelligent search, first point is that we do see a very good increase of the overall intelligence search-based volume, and that was resulted in the performance like in Q3, we had a query increase by about 20% quarter-by-quarter. And this actually provided with us a very good traffic to actually have a better performance on this. And second point is that, of course, at the current stage, we do not have the ability of all the consumers. I mean the customers are not having this particular requirement of placing the ad precisely just based on the intelligent search results. But this did actually provide some of the impacts to the customers because, for instance, we are able to use the GEO technology to actually facilitate better product and better content creations and helping the customers understanding or advertisers in understanding the new product-related issues and some of the other important things and also issues as well. So this is going to be generating a lot of ad assets for our advertisers so that they are able to use in the near future. Of course, this is not going to be directly charging from the customers, but I think in the future, the customers and advertisers are able to put more weight on this particular part of the intelligent search. So I do think that in the future, we are going to see a very good increase, be it the brand-based ad revenue or the overall budget of the performance-based ad.

And also, the second question is pretty much based on the information feed. So as we have already stated that we have an updated version or modification of this information-based feed in 2025 and already provided to the users. So we've been already finishing the first stage switch for information feed in July. But of course, it takes time for the users to get used to this and nurture their habit of using. But still, I think that this particular new information feed is going to be very useful and beneficial to the overactivity of the users and also improving the overall retention and the total time spent on the consumption as well. So I think that this is also going to be lowering the threshold for the users of using Weibo. Okay.

Of course, I think that this particular kind of modification or the version update is pretty much like what happened years ago from the time spent based to the non-time spent base. And of course, at the current stage, we think that there are a lot of variations between different versions. So it still takes time for the user to adopt this new kind of a platform or it takes time for them to nurture their habits of using. But still, I think that on the overall basis, this did have a lot of benefits impacting the overall consumption behavior. And also, of course, in Weibo, we are going to continuously focusing on the upgrades and optimization of our products as well. Okay.

And also, I think that this is very good to have a certain kind of improvements on two fronts. The first front is that, of course, it is going to impact some of the new users using a process of this particular product because it used to be the case that the users need to log on the Weibo and establish following a relationship before they could take any action on consumption of the content. But at the current stage, this particular process is waived so that we are at the same starting point as the other competitors for this particular part. So the users are able to actually consume a very good quality or content at the very beginning. And second is that for the existing users, of course, from an experience standpoint, it still takes time for them to be adopted -- adopting this new concept and also establishing a new using habit. But still, I think that at the current stage, this has primarily given us better opportunities, especially for those new users to take actions on consumption more frequently without even establishing a following relationship as the prerequisite. Okay.

And also, I need to add another point, which is the third point that is for the video-based consumption. So we know that in the past, for those of consumers, I think that the videos are actually very difficult for the users to actually consume upon so that was impacting a lot of the original social-based relationship. And you know that in the past, for those content creators, especially the video content creators, it is very difficult for them to establish a social relationship with the users and also consumers as well. So even if on the relationship-based feed, it is also very difficult for those video content creators to expose their content in front of the wide audience. So also for the hot topic search because of the real timeliness of their content, especially the video-based content, it is also very difficult for them to expose their content as well. But now after the change, we could see that we are going to proactively recommending more video-based content to the users. And this is going to be very, very important for Weibo in the long run, be it from a growth standpoint or from the standpoint of 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.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]