Yalla Group Limited - ADR Aktie

Good morning, and good evening, ladies and gentlemen. Thank you for standing by for Yalla Group Limited Second Quarter 2026 Earnings Conference Call. [Operator Instructions] Today's conference call is being recorded. Now I will turn the call over to your speaker host today, Ms. Kerry Gao, IR Director of the company. Please go ahead, ma'am.

Hello, everyone, and welcome to Yalla's Second Quarter 2026 Earnings Conference Call. We issued our earnings press release earlier today, and it is now available on our IR website as well as on newswire outlets.

Before we continue, please note that the discussion today will contain forward-looking statements made under the safe harbor provision of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, our future results may be materially different from the views expressed today. Further information regarding these and other risks and uncertainties are -- sorry, is included in our earnings release and our annual report filed with the SEC. Yalla does not assume any obligation to update any forward-looking statements, except as required by law.

Please also note that Yalla's earnings press release and this conference call include a discussion of unaudited GAAP financial information as well as unaudited non-GAAP financial measures. Yalla's press release contains a reconciliation of the unaudited non-GAAP measures to the unaudited most directly comparable GAAP measures.

Today, we'll hear from Mr. Tao Yang, our Chairman and Chief Executive Officer, who will provide an overview of our latest achievements and growth strategies. He will be followed by Mr. Saifi Ismail, the company's President who will briefly review our recent business developments. Mrs. Karen Hu, our Chief Financial Officer, will then provide additional details on the company's financial results and discuss our financial outlook. Following management's prepared remarks, we will open the call to questions. Mr. Jeff Xu, our Chief Operating Officer, will join the Q&A session.

With that said, I would now like to turn the call over to our Chairman and Chief Executive Officer, Mr. Tao Yang. Please go ahead, sir.

Thank you, everyone, for joining our second quarter 2026 earnings conference call. We delivered a solid performance across our flagship products and growing momentum in our gaming business in the second quarter. Our revenues were USD 82.6 million, exceeding the upper end of our guidance, with revenues from games services growing by 11.6% year-over-year to USD 34.2 million. Non-GAAP net margin remained healthy at 41.7%, even as we doubled our selling and marketing expenses year-over-year to support the promotion of new games amid evolving regional environment. These results highlight both our effective strategy and strong business resilience.

Our gaming business continued to make meaningful progress during the quarter with new core games advancing smoothly and a clear growth road map taking shape for their next stage of development. Our first self-developed match-3 title, Turbo Match, continued to expand its user base and maintain a healthy user retention trend, not only in MENA but also in the U.S. and Europe this quarter. Notably, in mid-July, Turbo Match was featured by the Apple App Store in MENA markets such as Saudi Arabia, underscoring the product's high quality and further enhancing its market visibility. In the second half of this year, we will focus on scaling up product commercialization, further unlocking growth opportunities across high potential global markets and accelerating our global expansion.

For our desert-themed SLG title, we executed a paced launch in the first 2 months of this quarter to drive traffic, gradually ramping up user acquisition spending. Meanwhile, we completed a successful co-promotion campaign between this title and our flagship title, Yalla Ludo. We are currently working on the next major version update, which will feature richer gameplay content and other enhancements targeting deeper user engagement and improved conversion and monetization.

Regarding user acquisition, our near-term priority is to maintain our current scale and momentum while preparing for the next major user acquisition campaign once the new version is released. As these products gain traction, we continue to build our long-term growth strategy around the synergy between our social and gaming ecosystem. We remain dedicated to enriching our product portfolios with several self-developed products in our pipeline, spanning casual games, hyper-casual games, social products and AI applications.

We also keep a close eye on outstanding teams and products to strengthen our game distribution business and remain engaged with top-tier global game developers to explore potential opportunities for collaboration. I want to emphasize here that our focus is on new growth opportunities across MENA with a longer term eye on the wider global marketplace.

To drive product innovation, we have accelerated the adoption of cutting-edge technologies across our R&D process. Notably, in the second quarter, we -- our team deepened the integration of AI-assisted programming into our game development flow. And we launched a proprietary AI model-based system for match-3 level generation and difficulty evaluation. This initiative has significantly enhanced our game development efficiency by accelerating level design iteration and consistently provides users with more exciting, more engaging experiences. We will continue to invest in technology that boost R&D efficiency to accelerate iteration across our product ecosystem.

During the quarter, we continued to deliver on our shareholder return commitment under the company's 2 share repurchase programs launched in 2021 and 2026. The company repurchased 4.4 million ADS or Class A ordinary shares for USD 27.6 million in the first half of this year, of which 2.9 million shares were repurchased during the second quarter for approximately USD 18 million. Our 2021 program expired on May 21, 2026, and we repurchased a total of USD 126.5 million under this program. We will continue to execute our newly authorized 2026 program of up to USD 150 million over the 20 months starting from March 9, 2026.

Additionally, the company has canceled 12.7 million ADS or Class A ordinary shares as of August 14, 2026. This consistent shareholder return commitment reflects our confidence in the company's long-term growth prospects underpinned by our robust cash flow generation and profitability. We consistently place shareholder interest at the core of our capital allocation decisions, striking a dynamic balance between pursuing long-term business growth and maximizing shareholder value.

Looking ahead, we will continue to deepen the synergy between our social and gaming ecosystems while embedding AI at the core of our technology infrastructure to drive long-term competitiveness. Building on years of deep-rooted expertise in MENA, we will continue to unlock local opportunities while pursuing strategic partnerships to expand into new markets globally. We remain confident in our ability to drive sustainable growth and create lasting value for our shareholders.

Now I will turn this call over to our President, Saifi Ismail. Saifi, please go ahead.

Hello, everyone. Thanks for joining us today. Let's take a closer look at our second quarter operations and product performance. In the second quarter, our average MAUs reached 47.6 million, an increase of 12.3% year-over-year and an expected sequential moderation from Ramadan's exceptionally high levels in the first quarter, following a pattern similar to last year. From a broader trend, respective user engagement across our core products remain solid. With a strong pipeline of operational campaigns, we anticipate continued sequential MAU growth to resume in quarter 3.

On the operations front, I would like to highlight Yalla Ludo's solid quarter through performance, a clear recovery from quarter 1. This quarter, we continue to advance Yalla Ludo's iterations and further strengthen user engagement, driving a sequential rebound in paying users growth. Yalla Ludo Carnival Season 6 extended the success of previous seasons, highlighting its strong user traction and monetization impact. Building on this momentum, we launched the Yalla Season series, a new long-term operational campaign focused on strengthening user engagement, featuring an innovative range of sub-events. Yalla Season is boosting the boundaries of what social entertainment within games can look like.

Moreover, our brand anniversary celebration and community engagement initiatives were the highlights of the quarter. To mark the tenth anniversary of our flagship product, Yalla, we launched an array of locally resonant online campaigns featuring a strong sense of occasions tailored to Middle Eastern culture. Over the past decade, our deep-rooted presence and commitment to MENA have established Yalla as an integral part of local users' everyday lives, creating meaningful emotional connection within the community. Our tenth anniversary initiatives drove significant engagement and strong willingness to spend among our loyal high-level user.

We also continue to expand our regional presence through collaboration with local authorities. In the second quarter, we were honored to serve as the official event partner of Saudi eLeague 2026 and the presenting partner of Yalla Saudi eLeague Women 2026, playing an active role throughout the season. During SEL's live Championship Festival Finals held from May 1 to June 6, Yalla Group operated an activation zone at SEF Arena, showcasing diverse products and engaging deeply with visitors through immersive on-site activities. Our sponsorship and support of this top-tier regional esports event meaningfully strengthened our connection with younger generations of local users, reinforcing our leadership in MENA's digital entertainment market.

In the later part of the second quarter, we capitalized on the excitement surrounding the global World Cup with interactive soccer-themed campaigns featuring integrated sports and social experiences, such as customized event gifts and team chatrooms. These localized innovations significantly enhanced users' community engagement and enthusiasm for content creation. Beyond driving higher yield time interaction levels within chatrooms, they also translated into stronger user engagement and monetization results for relevant products during the second quarter. Looking ahead, we remain committed to serving the diverse needs of users across the MENA region with a growing product portfolio drawing on the local knowledge we have spent years accumulating to drive high-quality growth.

With that, I will now turn the call over to our CFO, Karen, who will discuss our key financial and operational results.

Thank you, Saifi, and hello, everyone. Thank you for joining us today. In the second quarter, we continue to pursue high-quality development while maintaining solid profitability. Our revenues reached USD 82.6 million, with revenues from games services growing by 11.6% year-over-year to USD 34.2 million and the segment's contribution to total revenues increasing to 41.4%. We continue to enhance our overall efficiency and maintain healthy margins. Though we doubled our selling and marketing expenses year-over-year to support the promotion of new business, our non-GAAP net margin stayed healthy at 41.7%.

With a robust balance sheet and cash flow, we will -- we are well positioned to invest in business expansion and existing shareholder returns. We remain committed to investing in the company's long-term growth while continuously enhancing shareholder value.

Let's move on to our detailed financials for the second quarter of 2026. Our revenues were USD 82.6 million in the second quarter of 2026 compared with USD 84.6 million in the same period of last year, primarily due to a decrease in paying users attributable to the impact of recent geopolitical events in the broader region, partially offset by an increase in revenues from games services.

Turning to the costs and expenses. Our cost of revenues was USD 26.8 million in the second quarter of 2026, a 4.1% decrease from USD 27.9 million in the same period of last year, primarily due to lower commission fees paid to third-party payment platforms. Cost of revenues as a percentage of total revenues decreased to 32.4% in the second quarter of 2026 from 33% in the same period of last year.

Our selling and marketing expenses were USD 17.8 million in the second quarter of 2026, a 106% increase from $8.7 million in the same period of last year, primarily due to higher advertising and marketing promotion expenses attributable to the company's continued user acquisition efforts and support for new games. Selling and marketing expenses as a percentage of total revenues increased to 21.6% in the second quarter of 2026 from 10.2% in the same period of last year.

General and administrative expenses were USD 8.6 million in the second quarter of 2026, a 4% decrease from USD 9 million in the same period of last year, primarily due to a decrease in the incentive compensation, partially offset by an increase in foreign exchange loss. GA expenses as a percentage of total revenues slightly decreased to 10.5% in the second quarter of 2026 from 10.6% in the same period of last year.

Technology and product development expenses were USD 9.9 million in the second quarter of 2026, an 18.9% increase from USD 8.3 million in the same period of last year, primarily due to an increase in salaries and benefits for our technology and product development staff, driven by an increase in headcount to support the development of new businesses and our product portfolio expansion. R&D expenses as a percentage of total revenues increased to 12% in the second quarter of 2026 from 9.9% in the same period of last year.

As a result, our operating income was USD 19.4 million in the second quarter of 2026 compared with USD 30.6 million in the same period of last year. Non-GAAP operating income in the second quarter of 2026 was USD 24.5 million compared with USD 33.5 million in the second quarter of 2025. Investment income was USD 5.1 million in the second quarter of 2026 compared with USD 0.02 million in the second quarter of 2025, primarily due to changes in the fair value of wealth management products.

Income tax expense was USD 0.6 million in the second quarter of 2026 compared with USD 1.5 million in the second quarter of 2025. As a result of the foregoing, our net income was USD 29.3 million in the second quarter of 2026 compared with USD 36.5 million in the second quarter of 2025. Non-GAAP net income in the second quarter of 2026 was USD 34.4 million compared with USD 39.4 million in the second quarter of 2025.

Moving to our liquidity and capital resources. Our cash position remains solid and healthy. As of June 30, 2026, the company had cash and cash equivalents, restricted cash, term deposits and short-term investments of USD 824.2 million compared with USD 754.6 million as of December 31, 2025.

Moving to our outlook. For the third quarter of 2026, we expect our revenues to be between USD 78 million and USD 85 million. The above outlook is based on current market conditions and reflects the company's management's current and preliminary estimates of market and operating conditions and customer demand, which are all subject to change. In the interest of time, please refer to our earnings press release for further details on the second quarter of 2026 financial results.

This concludes our prepared remarks for today. Operator, we are now ready to change -- take questions. Thank you.

[Operator Instructions] Our first question is going to come from the line of Xueqing Zhang with CICC.

My question about your new games. Can management share the latest progress of the core new games along with the operational and go-to-market plans for the next few quarters?

Thank you, Xueqing, for your question. Currently, our core new products are progressing at different paces with each title following its own development and commercialization time line. For Turbo Match, our self-developed match-3 title targeting global markets, we maintained healthy user acquisition and retention trends in the second quarter. Looking ahead to the second half of the year, we will focus on scaling up its commercialization and accelerating its global expansion, including the U.S. and Europe.

Regarding our desert-themed SLG title, we completed the co-promotion with Yalla Ludo in the second quarter to drive initial user acquisition during the early stage of the launch. We are now focusing on the next major version update, which will feature richer gameplay content and optimized monetization.

One important upgrade will be from our content provider, which intends to further increase its investment in the game's comprehensive UI to provide users with a better aesthetic experience. Our user acquisition may slow down in Q3 before the Q4 release, as we strategically prepare to deliver momentum for the next round of the user acquisition campaign. Thank you.

Our next question will come from the line of Chloe Wei with CICC.

So my question is about the capital allocation. With our net cash reserves exceeding $800 million, could management provide more color on the current cash flow conversion efficiency and also the strategic priorities for capital allocation going forward?

Chloe, this is Karen. I will answer this question. Regarding our cash allocation, we have always been committed to maximizing shareholder value. In March, the company announced a newly authorized 2-year share repurchase program of up to USD 150 million, and we remain committed to execute -- executing our shareholder return program.

Moreover, our ample cash reserves provide us with significant strategic financial flexibility. As we deepen our local advantages in the MENA region, we are evaluating strategic partnership opportunities and potential investments in -- or acquisition of top-tier R&D teams while further expanding our product pipeline and accelerating our penetration into overseas markets. Going forward, Yalla will continue to explore more high-quality growth opportunities and enhance shareholder value through disciplined capital allocation. Thank you.

Our next question comes from the line of Tianhao Liu with CITIC.

So let's turn to gaming. For in-house game development and the expansion of external partnerships, what are the growth opportunities and the strategic outlook?

Thank you for the question. In the second quarter, revenues from our games services grew 11.6% year-over-year to USD 34.2 million, demonstrating solid growth momentum. Looking ahead, we will continue to execute our strategy that pairs in-house game development with external distribution partnerships.

For self-developed games, we are steadily growing our team and attracting the experienced product and publishing professionals to join us. We've built a highly skilled team for match-3 games, positioning us to continue strengthening our presence in this category. We're exploring new growth opportunities. Meanwhile, we have been actively enriching our product portfolio. Since the end of last year, we have internally initiated the development of multiple new products across casual games and hyper-casual games, laying the foundation for growth in 2027 and 2028.

For game distribution partnerships, we continue to seek high-quality partners globally to bring more high-quality hardcore gaming contents to MENA. We'll share further updates with the markets when appropriate. Overall, we are confident that our deep MENA localization expertise, diversified self-developed product pipeline and collaborations with top-tier teams will further unlock growth potential for our gaming business. Thank you.

Our next question is going to come from the line of Rachel Wang with Haitong International.

Congratulations on a solid quarter. And my question is that in the second quarter, the company's performance exceeded the upper end of its guidance. And so could management share what are the key drivers behind this strong performance?

Thank you, Rachel, for your question. Our second quarter results beat the high end of our guidance mainly driven by the rebound of our flagship products, which validated the exceptionally strong user stickiness and sustainable resilience of our core products, while our new games contribution is in line with our expectations. In our social ecosystem, as part of Yalla's 10th anniversary celebration, we launched an array of operations and engagement activities deeply rooted in local culture. These initiatives significantly enhance interactions among our loyal users and their willingness to pay, driving strong growth in our social network business.

In our gaming ecosystem, Yalla Ludo achieved a strong sequential recovery in the second quarter, building on the success of Yalla Ludo Carnival Season 6. We launched the Yalla Season series, a new long-term engagement operational campaign. Through diverse engaging social interaction initiatives, we significantly enhance user engagement and monetization conversion. And going forward, centered around local user needs, we will continue to optimize our operation, further solidifying our flagship products as a core revenue contributor for the company. Thank you.

Our next question comes from the line of Lincoln Kong with GS.

My question is about AI. So could you provide more color how AI technology is applied in company's product R&D and daily operations?

Thank you for your question, Lincoln. This is Tao. Let me answer this question. In the second quarter, we accelerated the application of cutting-edge technologies in our R&D process, deeply integrating AI into the core of our technology infrastructure. Especially, our tech team has integrated AI-assisted coding into our development workflow. Meanwhile, for match-3 titles and a few other games, we successfully launched a proprietary AI-model-based system for newer generation and difficulty evaluation.

In practice, the system can rapidly generate high-quality levels at scale and use AI-powered automated testing to accurately evaluate level completion probabilities. For example, it can quickly identify simple levels with a 100% completion rate or highly challenging levels with only a 17% completion rate. This innovation has significantly shortened the cycle time for the level design and version iterations while reducing R&D costs.

More importantly, it enabled us to dynamically deliver levels that better match players' preferences and skill levels, significantly improving the player experience and effectively optimizing user retention and long-term stickiness. Going forward, we will further increase our investment in both productivity empowerment and user experience, leveraging AI technology to strengthen the long-term competitiveness of our entire product ecosystem. Thank you, Lincoln.

Our next question comes from the line of Jenny Yuan with UBS.

Could you please share an update on the company's latest shareholder return initiatives, including progress of the shareholder share repurchase program and the priorities for future capital allocation?

Thank you, Jenny. This is Karen. We consistently place shareholder interest at the core of our capital allocation decisions. In the first half of this year, the company repurchased a total of approximately 4.3 million shares under our 2021 and 2026 share repurchase programs, totaling around USD 27.6 million. Our 2021 program expired on May 2026, and we repurchased a total of USD 126.5 million under this program. Moving forward, we will continue to execute our new 2026 program with an authorization of up to USD 150 million.

Moreover, as of August 14, 2026, the company has canceled a total of 12.7 million repurchased shares. Again, we will remain focused on disciplined capital allocation, invest in long-term growth while maximizing shareholder value. I hope that answers your question.

Our next question comes from the line of Rachel Guo with Nomura.

Given the better expected performance in the second quarter, could management provide the guidance of the company's revenue trend and margin outlook for the second half of 2026?

Thank you, Rachel. Thank you for your question. As Mr. Saifi just mentioned, our Q2 revenues were mainly driven by the rebound of our flagship products. In the second half, we will continue to optimize the operations of our flagship products to drive sustainable contributions while advancing our new games to capture growth opportunities.

For the full year, we maintained the guidance we shared last quarter. We expect a slight decline in revenue from our core businesses, offset by contributions from our new games. We expect the company's overall revenues in 2026 to remain broadly in line with last year. If we see upside next quarter beyond our new guidance -- beyond our current guidance after we gain more visibility into the performance of our new games, we will update the market.

In the second half, we expect our cost and expenses to remain broadly similar to the first half of the year. We believe this is potential for our full year GAAP net margin to remain at around 40 -- 30%, sorry, 30%.

I still need to highlight if we -- if our new products receive a particularly strong market feedback, we may continue to increase user acquisition investment to pursue a greater market share. We will provide further updates on our full year outlook in the next quarter. Thank you.

There are no further questions. Now I'd like to turn the call back over to management for closing remarks.

Thank you once again for joining us today. We look forward to speaking with you in the next quarter. If you have further questions, please feel free to contact Yalla's Investor Relations team or Piacente Financial Communications. Both parties' contact information is available in today's press release as well as on our company website. Thank you.

This concludes today's conference call. You may now disconnect your lines. Thank you. Everybody, have a great day.

Good morning, and good evening, ladies and gentlemen. Thank you for standing by for Yalla Group Limited's First Quarter 2026 Earnings Conference Call. [Operator Instructions] Today's conference call is being recorded.

Now I will turn the call over to your first speaker host today, Ms. Kerry Gao, IR Director of the company. Please go ahead, ma'am.

Hello, everyone, and welcome to Yalla's First Quarter 2026 Earnings Conference Call. We issued our earnings press release earlier today, and it is now available on our IR website as well as on Newswire outlets.

Before we continue, please note that the discussion today will contain forward-looking statements made under the safe harbor provision of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, our future results may be materially different from the views expressed today. Further information regarding these and other risks and uncertainties is included in our earnings release and our annual report filed with the SEC. Yalla does not assume any obligation to update any forward-looking statements, except as required by law.

Please also note that Yalla's earnings press release and this conference call include a discussion of unaudited GAAP financial information as well as unaudited non-GAAP financial measures. Yalla's press release contains a reconciliation of the unaudited non-GAAP measures to the unaudited most directly comparable GAAP measures.

Today, you will hear from Mr. Tao Yang, our Chairman and Chief Executive Officer, who will provide an overview of our latest achievements and growth strategies. He will be followed by Mr. Saifi Ismail, the company's President, who will briefly review our recent business developments. Mrs. Karen Hu, our Chief Financial Officer, will then provide additional details on the company's financial results and discuss our financial outlook. Following management's prepared remarks, we will open the call to questions. Mr. Jeff Xu, our Chief Operating Officer, will join the Q&A session.

With that said, I would now like to turn the call over to our Chairman and Chief Executive Officer, Mr. Tao Yang. Please go ahead, sir.

Thank you, everyone, for joining our first quarter 2026 earnings conference call. We delivered resilient first quarter results with revenues of USD 79 million, in line with our expectations given the shifting geopolitical environment and the impact of Ramadan. Refined operations and focused market strategies drove a 7.7% increase in average MAUs, but notable uptick reflecting continued strong user reach and engagement, underscoring the essential role our platform plays in the daily lives of MENA users.

Our core product ecosystem performed steadily, and our gaming business reinforced its position as the company's key growth engine. We continue to monitor the impact of regional situation on our business with our March survey indicating a moderate effect on user sentiment supported by years of accumulated user loyalty and deep community connections as well as consistent upgrades. We are confident that our legacy product will continue to serve as a resilient foundation underpinning the company's overall stability. Once more, we expect our mid-core and hard-core games to contribute to revenues in the second half of this year and beyond boosting our Games segment performance and elevating the group's overall revenue scale.

Let's take a closer look at our mid-core and hard-core games business. First, for our SLG game initiatives. We are pleased to announce our partnership with BlazeAerie Interactive Entertainment, the International division of our top SLG game studio whose gross billing in the SLG category has ranked among the top 5 globally over the past 5 years. This partnership harnesses our complementary respective strength. The BlazeAerie team leads R&D, leveraging its proven game development expertise to craft a game rooted in MENA's heritage and visual taste, while Yalla Group leads distribution using its deep local know-how and accumulated gamer community to deliver the title across MENA. Our SLG title was officially launched on Android in April and has already shown stable performance and solid early user feedback. It's also debuted on iOS in early May. According to Sensor Tower data, it ranked as high as #1 on iOS in 5 GCC countries in terms of downloads under the strategy game category. We are closely monitoring data and managing marketing strategies accordingly, and we will keep you posted on the games progress and key milestones.

Our self-developed Match-3 title Turbo Match has also performed well in its early stage following our recent ramp-up of user acquisition campaigns. It ranked in the top 10 downloads under the puzzle games category across diverse MENA markets, including UAE and Saudi Arabia according to Sensor Tower data. Our recent co-promotion with Yalla Ludo resulted in improved user engagement and retention metrics. We will gradually increase our budget for user acquisition from external channels to steadily reach more users from additional overseas market in the upcoming months. We continue to see significant growth potential for SLG and Match-3 games, and we'll continue to invest in these two game genres. In both new titles early performance has been encouraging, laying the groundwork for future growth.

In addition, we continued to expand our games team over the past year and have been exploring additional gaming verticals, including the casual and hyper-casual sectors across more overseas markets. We will share a more detailed overview of these new initiatives in due course. Additionally, we keep leveraging AI technologies to enhance our product capabilities and overall operational efficiency. We are exploring in-product AI applications to further improve user engagement and drive interaction, including experimenting with new forms of social and interactive experiences.

Internally, we are encouraging employees to actively adopt AI tools in their daily work while providing the necessary resources and support. We are also building a dedicated management platform to better monitor and optimize token usage, thereby improving productivity and efficiency. These initiatives together with our SMEs model, not only help Safeguard community safety, but also leverage technology and local insights to continuously drive operational leverage and innovation. We continued to deliver on our shareholder return commitment. As of March 31, 2026, the company had repurchased 1,460,989 ADSs or Class A ordinary shares for an aggregate amount of USD 9.7 million in this year, bringing a total number of shares repurchased under the 2021 share repurchase program to 17,143,162 with an aggregate amount of USD 115.7 million. We will continue to execute the 2021 program through May 21, 2026, and subsequently implement our newly authorized 2026 share repurchase program of up to USD 150 million over the 24 months starting from March 9, 2026.

Once again, I would like to emphasize that we continue to consistently place shareholder interest at the core of our capital allocation decisions, maximizing shareholder value through continuously optimized return framework. 2026 will be a pivotal year for Yalla's evolution as a leader in MENA's digital transformation. We will continue to strengthen our products and maximize synergies between our social and gaming ecosystem, boosting cross-product engagement and user lifetime value. By leveraging our strong in-house R&D years of accumulated local resources and expertise and expanding collaboration with leading global partners, we will continue unlocking the MENA Market's immense growth potential. Supported by a strong balance sheet, solid profitability and healthy cash flow, we are confident in our resilience and our ability to capture growth opportunities, consistently creating long-term value for global investors.

Now I will turn this call over to our President, Saifi Ismail. Saifi, please go ahead.

Thank you. Hello, everyone. Thanks for joining us today. Let's take a closer look at our first quarter operations and product performance. Our operations continued to progress smoothly in the first quarter of 2026. Our team members in the areas impacted by the conflict are safe and have shifted to a flexible work from home arrangement with remote work and support and dedicated living allowances provided by Yalla. As the region celebrated Ramadan in the first quarter, we conducted a wide-reaching marketing campaign to better reach local users and support them in observing their traditions, driving a strong increase in average MAUs up 7.7% year-over-year to 48 million during the quarter.

This accelerated growth underscored our community's strong position and highlighted Yalla's growing role as a hub of the regional digital culture, social interaction and emotional connection. On the product side, Ramadan was a key focus this quarter. Through a wide array of culturally resonant online celebrations, we transcended physical boundaries enabling users to rediscover the holiday's traditional world in the digital world, notably 101 Okey Yalla's Ramadan campaign not only achieved record high participation, but also new historical highs in unique users across both the gaming and chatroom segments, driving all-time highs in 101 Okey Yalla's product DAUs and quarterly revenue.

Beyond our product platform, we continued to deepen our regional presence through strategic partnerships and high-level industry engagement. This year, we began building a partnership with the Saudi Esports Federation to drive growth across the regional esport ecosystem. We served as an official event partner for the SEF Saudi eLeague 2026. The nation's premier esports competition. Specifically, we are also pleased to announce that Yalla serves as the Presenting Partner of Yalla Saudi eLeague Women 2026. This event is designed to highlight and elevate female players in the professional environment across 4 major game titles. The Saudi eLeague is currently underway and attracting attention across the region, demonstrating the development potential of esport and particularly women's esports in Saudi Arabia and throughout MENA, a segment, we view as one of the most significant growth opportunities in competitive gaming today.

Looking ahead we will continue to refine operations and user experience while deepening content localization and leveraging AI tech to enhance user engagement, supported by deep insight into Middle Eastern culture and consistently strong execution. We are confident that Yalla is well positioned to strengthen its leadership of MENA's digital entertainment market.

Thank you, Saifi, and hello, everyone. Thank you for joining us today. In the first quarter, we continued to focus on efficiency enhancement and pursue high-quality development. Our revenues were USD 79 million, with revenues from Game services grew to USD 30.3 million, accounting for 38.3% of total revenues. We continue to enhance our overall efficiency and maintain healthy margins. Our non-GAAP net margin was -- non-GAAP net income was USD 33.3 million with a net margin of 42.1%. Our strong balance sheet and healthy cash flow continue to support our investments in business development as well as consistent shareholder returns. We will continue to invest in long-term growth opportunities to drive high-quality growth and maximize value for all stakeholders.

Let's move on to our detailed financials for the first quarter of 2026. Our revenues were USD 79 million in the first quarter of 2026 compared with USD 83.9 million in the same period last year primarily due to a decrease in paying users attributable to the impact of the recent geopolitical events in the broader region.

Turning to costs and expenses. Total costs and expenses were USD 55.5 million in the first quarter of 2026 compared with USD 52.7 million in the same period last year. Our cost of revenues was USD 26.5 million in the first quarter of 2026, a 9.3% decrease from USD 29.2 million in the same period last year, primarily due to lower commission fees paid to third-party payment platforms. Cost of revenues as a percentage of total revenues decreased to 33.5% in the first quarter of 2026 from 34.8% in the same period last year.

Our selling and marketing expenses were USD 9.7 million in the first quarter of 2026, a 40% increase from USD 6.9 million in the same period last year, primarily due to higher advertising and marketing promotion expenses attributable to the company's continued user acquisition efforts and expanding product portfolio. Selling and marketing expenses as a percentage of total revenues increased to 12.3% in the first quarter of 2026 from 8.3% in the same period last year.

Our G&A expenses were USD 10.3 million in the first quarter of 2026, a 11.9% increase from USD 8.7 million in the same period last year, primarily due to an increase in share-based compensation and foreign exchange loss partially offset by a decrease in incentive compensation. G&A expenses as a percentage of total revenues increased to 13% in the first quarter of 2026 from 10.4% in the same period last year. Our technology and product development expense was USD 9.1 million in the first quarter of 2026, a 16.2% increase from USD 7.8 million in the same period last year primarily due to an increase in salaries and benefits for our technology and product development staff driven by an increase in the headcount to support the development of new businesses and our product portfolio expansion.

Technology and product development expenses as a percentage of total revenues increased to 11.5% in the first quarter of 2026 from 9.3% in the same period last year. As such, our operating income was USD 23.5 million in the first quarter of 2026 compared with USD 31.2 million in the same period last year. Interest income was USD 5.9 million in the first quarter of 2026 compared with USD 6.6 million in the same period last year. Investment loss was USD 0.4 million in the first quarter of 2026 compared with USD 11,700 in the same period last year primarily due to the fluctuations in the fair value of wealth management products. Income tax expense was USD 0.6 million in the first quarter of 2026 compared with USD 1.4 million in the same period last year. As a result of foregoing, our net income was USD 28.4 million in the first quarter of 2026 compared with USD 36.4 million in the same period last year.

Our non-GAAP net income in the first quarter of 2026, was USD 33.3 million compared with USD 39.1 million in the same period last year. Moving to our liquidity and capital resources. Our cash position remains solid and healthy. As of March 31, 2026, the company had cash and cash equivalents, restricted cash, term deposits and short-term investments of USD 806.7 million, compared with USD 754.6 million as of December 31, 2025.

Moving to our outlook. For the second quarter of 2026, we expect our revenues to be between USD 75 million and USD 82 million. The above outlook is based on our current market conditions and reflects the company's management's current and preliminary estimates of the market and operating conditions and customer demand, which are all subject to change. In the interest of time, please refer to our earnings press release for further details on our first quarter 2024 (sic) [ 2026 ] financial results. This concludes our prepared remarks for today.

Operator, we are now ready to take questions.

[Operator Instructions] The first question comes from the line of Xueqing Zhang from CICC.

My question is about your core business. Given the complex geopolitical situation in the Middle East, how does management assess the future stability of your core business?

Xueqing, thank you for your question. As noted in our prepared remarks, our March survey shows the regional situation has impacted user sentiment to some extent. While we have no direct business presence in Iran, our users in the broader region have not been immune to the uncertainty, and we have seen a slight moderation in their willingness to pay. First quarter revenues declined modestly year-over-year and seeing the current conditions, we expect full year revenue from our legacy business to be down by a low to mid-single-digit percentage year-over-year.

Overall, the impact on our business is manageable. Thanks to our resilient business model and solid fundamentals, this is not the only challenging event we have endured over the past decades of operating in the Middle East. For more than 10 years, we have built strong brand loyalty and trust among local users, which has translated into clear business resilience during periods like this one. A complex macro backdrop places a premium on local operation -- operating experience and capability and ultimately tests the company's ability to sustain a long-term presence in any given region.

By that measure, Yalla's operational resilience and stability in the Middle East have been well demonstrated and thoroughly validated, and this continues to be a market where we -- where our competitive strengths are clear. We still believe strongly in the MENA region's long-term economic growth and digital transformation prospects. With that said, as our gaming business develops, we are also actively exploring overseas markets, including the U.S. and Europe as part of our broader diversification strategy. Overall, we see our legacy business remaining relatively stable and resilient, while our gaming business continues to create new energy. We are excited about the potential growth opportunities that our new game pipeline could bring in this second half of this year. I hope this answered your question, Xueqing.

Our next question comes from the line of Chloe Wei from CICC.

First, congratulations on your solid results. And my question is about -- can management maybe share some colors on the outlook for the full year 2026? And also, how do you think about the revenue trend heading to 2027?

Thank you, Chloe. This is Yang, and I will answer this question. As Mr. Yang just mentioned, factoring in the recent regional developments, we currently expect our legacy business revenue to decline by a low- to mid-single-digit percentage year-over-year in 2026. However, both of our new game titles, Turbo Match and our new themed SLG title have not officially launched and are in active promotion. We expect the new games to start contributing the total revenues gradually in the second half of the year, supporting group level revenue. As a result, for 2026 we expect our total revenues to be broadly flat compared with 2025. Looking into 2027, as the 2 new titles mature in terms of scale and revenue generation, this is a potential if everything progresses well for us to move towards double-digit year-over-year growth. We will closely observe the monetization performance and the user traction of both games before providing more specific guidance.

Our next question comes from the line of Tianhao Liu of Citic.

I think the market is highly focused on the performance of Yalla's mid- and hard-core games. So could management elaborate on the current rollout and the marketing cadence for the new games?

Thank you for your question, Tianhao. Entering the second quarter, we advanced an internal cross promotion initiative between Turbo Match and Yalla Ludo, driving increased Turbo Match downloads and stronger user retention. More recently, we have started to step up external user acquisition efforts for Turbo Match and will gradually roll out focused marketing campaigns across multiple markets. Given that Turbo Match is designed for global users, we plan to promote it across various international markets, including the U.S. and Europe. This means its market penetration time line will be relatively longer which also implies a larger potential user base and a longer product life cycle.

For the SLG title, the go-to-market pace will be faster. Following its recent official launch on both Android and iOS, we have already begun scaling paid user acquisition across the Middle East. If everything progresses as planned, we expand -- we expect marketing spending to ramp up significantly over the next 6 months driving a steeper revenue contribution curve.

Our next question comes from the line of Jenny Yuan of UBS.

My question is regarding our capital allocation plans. Also, we see the company's cash balance continues to increase. Could management please share its capital allocation priorities? Would you consider M&A or other investment opportunities going forward?

Thank you, Jenny. Our capital allocation strategy has always been centered on maximizing long-term shareholder value. We believe current market conditions present attractive opportunity to return capital to shareholders, which is why we just launched a new 2-year USD 150 million share repurchase program. We will maintain a strong cash position to support our business development, particularly our gaming marketing and R&D requirements.

As for M&A, we remain pretty open, but also highly disciplined. Any potential target must be a strong strategic fit for Yalla in terms of business synergies. For now, share repurchases remain one of our key tools to return value to our long-term shareholders.

Our next question comes from the line of Rachel Wang of Haitong International.

My question is that the official partner of the Saudi Esports League 2026. What tangible impact will this have on Yalla's business development in Saudi Arabia?

Thanks, Rachel, for the question. Our partnership with the SEF embeds Yalla deeply into Saudi Arabia's national esports ecosystem. It also reflects and further enhance Yalla's brand recognition in one of our strategically important markets. This year, we also served as the Presenting Partner of Saudi eLeague Women, enabling us to precisely reach female players, a high potential segment that represent an increasingly important part of the gaming community. In addition, we co-promoted our new game title with SEF during these national competition, reaching more local gaming users and further increasing our product visibility and user awareness.

Beyond the immediate brand impact, the SEF partnership helps us deepening our understanding of the strategic development direction and resources of the local esport and gaming ecosystem while also enabling us to actively participate and shape its long-term growth. We believe this partnership carriers meaningful strategic importance for Yalla's sustainable development in this core market.

Our next question comes from the line of Lincoln Kong from Goldman Sachs.

So could management share more color on the company's internal AI adoption and related strategic plan going forward?

Thank you, Lincoln. I'll take this question. Like many leading Internet companies, we are embracing this technological wave and have already deeply integrated AI into our operations and daily workflows. Our AI model, SMEs, has significantly improved Arabic content moderation efficiency, while lower costs. And we have recently begun accelerating the incubation of new AI-driven social networking products to enrich our future product pipeline with the goal of delivering a more vibrant and engaging user experience. We will deploy such investments prudently, consistent with our long-standing practice.

Additionally, for our legacy products, we have been exploring AI-powered interactive in-app features designed to diversify social game play and strengthen user retention. We are also actively encouraging employees to leverage AI tools to improve R&D efficiency while providing AI resources. We are building internal management system to better monitor token usage, manage resource allocation and improve overall ROI. The AI wave is irreversible. We remain committed to exploring AI applications tailored to Arabic language and local culture context and have established dedicated teams to closely track AI development and identify areas where we can meaningfully participate.

Our next question comes from the line of Rachel Guo of Nomura.

My question is about your profit margin. I noticed that the profit margins declined this quarter. Could management elaborate on the key reasons behind this compression? And what's your outlook for margin trend going forward?

Thank you for your question, Rachel. The margin fluctuations in Q1 were driven by a combination of factors. First, our legacy business revenue came under some pressure due to geopolitical events and adjustments during the Ramadan. At the same time, we increased the marketing spending for one of our social products to better engage local users for Ramadan in Q1. So, in addition, we kicked off several new products at the group level late last year. So we expanded our R&D team. These incremental investments in Q1 were mainly directed towards products that have not yet started to generate revenue, leading to some margin compression.

Looking ahead, given that neither marketing nor R&D expenses are expected to decline materially in the near term, we believe a margin level of around 35% is a reasonable expectation for our existing legacy business this year. On top of that, if the new gaming projects progress as planned, we may further increase marketing spend in the second half of the year. As we have previously guided, we intend to allocate around 5% of group revenue as promotion budget for the new games. That said, marketing spend and revenue will scheme together. And it is too early to pinpoint precisely where margins will settle given this dynamic relationship.

We will provide more specific guidance once the monetization models of the games become clear. Gaming businesses typically go through an upfront investment phase during which margins come under some pressure. Once our investment phase is completed, we expect marketing expenses will normalize and profitability to be achieved. We hope this helps clarify the margin dynamics going forward.

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

Thank you once again for joining us today. We look forward to speaking with you in the next quarter. If you have further questions, please feel free to contact Yalla's Investor Relations or Piacente Financial Communications. Both parties' contact information is available in today's press release as well as on our company website. Thank you.

This concludes this conference call. You may now disconnect your lines. Thank you.

Good morning, and good evening, ladies and gentlemen. Thank you for standing by for Yalla Group Limited's Fourth Quarter and Full Year 2025 Earnings Conference Call. [Operator Instructions] Today's conference call is being recorded.

Now I'll turn the call over to your speaker host today, Ms. Kerry Gao, IR Director of the company. Please go ahead, ma'am.

Hello, everyone, and welcome to Yalla's Fourth Quarter and Full Year 2025 Earnings Conference Call. We issued our earnings press release earlier today, and it is now available on our IR website as well as on Newswire outlets.

Before we continue, please note that the discussion today will contain forward-looking statements made under the safe harbor provision of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, our future results may be materially different from the views expressed today. Further information regarding these and other risks and uncertainties is included in our earnings release and our annual report filed with the SEC. Yalla does not assume any obligation to update any forward-looking statements, except as required by law. Please also note that Yalla's earnings press release and this conference call include a discussion of unaudited GAAP financial information as well as unaudited non-GAAP financial measures. Yalla's press release contains a reconciliation of the unaudited non-GAAP measures to the unaudited most directly comparable GAAP measures.

Today, you will hear from Mr. Tao Yang, our Chairman and Chief Executive Officer, who will provide an overview of our latest achievements and growth strategies. He will be followed by Mr. Saifi Ismail, the company's President, who will briefly review our recent business developments. Mrs. Karen Hu, our Chief Financial Officer, will then provide additional details on the company's financial results and discuss our financial outlook. Following management's prepared remarks, we will open the call to questions. Mr. Jeff Xu, our Chief Operating Officer, will join the Q&A session.

With that said, I would now like to turn the call over to our Chairman and Chief Executive Officer, Mr. Tao Yang. Please go ahead, sir.

Thank you, everyone, for joining our fourth quarter and full year 2025 earnings conference call. We capped off 2025 with a solid fourth quarter, thanks to continued execution excellence. Our fourth quarter revenues reached USD 83.9 million, approaching the high end of our guidance. For the full year, total revenues rose to USD 341.9 million, driven by exceptional performance across our product ecosystem. Our revenues from game services started to gain significant traction in 2025, growing 9.1% year-over-year, benefiting from our deep dedication to our gaming business and effective marketing campaigns. We also continued to enhance profitability with net income growing by double digits, up 10.4% to USD 148.1 million. Our solid balance sheet and healthy cash flows enabled us to actively pursue new opportunities across the Middle East while also consistently enhancing shareholder returns.

As highlighted in Sensor Tower's latest report, 2025 marked a year of structural divergence in the global mobile gaming industry, moving away from broad-based market growth towards submarkets with distinct economies, growth drivers and competitive dynamics. Industry performance varied significantly by region. MENA's digital entertainment market continues to surge, while mature gaming market growth pace has moderated. Amid this favorable trend, Yalla is poised to seize emerging opportunities in the MENA region and drive its next phase of growth.

Several of our highly anticipated new game titles are advancing according to plan, led by official launch of our first Match-3 title, Turbo Match, during the initial rollout, we strategically leveraged the group's internal traffic resources to cost-effectively drive users acquisition for the first stage, efficiently establishing an initial user base across the Middle East. We saw good data results from previous trials, and the team is now diligently working to ensure our readiness for serving users at potentially significantly larger scale. We will gradually scale our investment in external marketing to research a broader pool of potential users and progressively build this revenue stream.

Meanwhile, we -- our desert-themed SLG title co-developed with a top-tier studio and featuring rich Arabian aesthetics and the strategic gameplay will start official promotion in Q2. As is typical in the gaming industry, monetization and growth will ramp up in stages over time. We expect to see revenues from these 2 new games come in the second half of this year. We appreciate your patience with our team, and we will provide more specific guidance on revenue scale once we have better visibility.

We have been investing consistently in Match-3 and SLG games over the past few years and have built strong fundamental capabilities in both. We see great growth potential for these 2 genres in the Middle East and across global markets. Sensor Tower data shows that strategy games and puzzle games, which include the Match-3 game category were the 2 highest grossing genres worldwide in 2025, each generating annual revenues exceeding USD 10 billion. Given this industry trend and our expertise in the genres, we will remain focused on systematically expanding our Match-3 and SLG pipeline over the long term. Our development process is guided by data and learning from each iteration, strengthening our execution over time and positioning us to capture new opportunities and generate sustainable returns for the group.

Moving on to our AI initiatives. We continue to proactively enhance our AI tools, including [ CMIS ], our in-house developed multimodal AI model. [ CMIS ] is constantly learning from massive Arabic language data set and user behavior data, continuously refining content recognition accuracy, cultural context understanding and risk anticipation, seamless performance in analyzing text and images and detecting inappropriate content continues to lead the industry in MENA. Our team is also researching and testing AI-related integrations for our products to encourage engagement and interactions in our online community and drive users' enthusiasm. We will keep you posted on any meaningful progress.

Additionally, Yalla is strategically deepening its engagement in key regional markets as part of its growth strategy. In Saudi Arabia, we have entered into a strategic partnership with the Saudi Esports Federation to drive the continued expansion of the Kingdom's national esports system in line with Vision 2030 and the national gaming and esports strategy. Under this partnership, Yalla has been appointed official event partner of the Saudi eLeague 2026, the Kingdom's premier national esports competition, which enhances our brand visibility and local market engagement in one of the region's most important growth market.

Support for the women's Saudi eLeague will be a key focus of the partnership, aligning with Yalla's dedication to promoting inclusion, community development and broader participation in digital entertainment. In addition, Yalla will launch a talent development program in collaboration with the SEF, Saudi Esports Academy, designed to foster local esports talent through training, mentorship and competitive experience. We view this partnership as a disciplined approach to market development in Saudi Arabia, strengthening our connection with the local users and increasing our regional impact while positioning the company to capture sustainable growth opportunities and deliver long-term value.

In early 2025, we committed to accelerating the execution of our share repurchase program. We have delivered on that commitment. In 2025, we executed USD 56.6 million meaning of our USD 150 million share repurchase program, eliciting a positive market response. But the company has also decided to cancel all shares repurchased in 2025 as part of our commitment to generating sustained benefits for our shareholders. The aggregate value remaining available for purchase under the existing share repurchase program is USD 44 million. Additionally, the company's Board of Directors has authorized a new share repurchase program or the 2026 program for up to USD 150 million of the company's shares effective from March 9, 2026, through March 8, 2028.

Once again, I would like to emphasize that we constantly place shareholders' interest at the core of our capital allocation decisions, maximizing shareholder value through a continuously optimized return framework. 2026 will be a pivotal year for Yalla as we focus on executing our strategy for sustainable growth. We plan to unlock deeper synergies between our social and gaming ecosystems, boosting cross-product engagement and user lifetime value. Concurrently, we are embedding AI across content creation, risk management and operations to drive efficiency. With a pipeline of new products, we are diversifying our ecosystem to lead in the rapidly growing MENA market. We are confident Yalla is well positioned to deliver consistent growth and generate lasting value for our shareholders.

Now I'd like to turn the call over to Saifi for a closer look at our operational achievements. Saifi, please go ahead.

Hello, everyone. Thanks for joining us today. First, I would like to share our operational performance highlights in the fourth quarter. We increased MAUs by 8.2% year-over-year to 44.8 million. Refined operation and a wider variety of engagement initiatives drove user growth while also [Audio Gap] and leverage data-driven insights to enrich monetization scenarios. For paying users, we implemented targeted tiered strategies to fully unlock their spending potential. These efforts supported sustained improvements in overall user life value, highlighting an expertise and precision in guiding users throughout their life cycle.

In the fourth quarter of 2025, we celebrated 101 Okey Yalla's fifth anniversary with a special campaign that achieved record high single event participation and drove both quarterly revenue to all-time highs, up more than 20% year-over-year. As the group's third self-developed title to reach 5 years of operation, 101 Okey Yalla success demonstrates our deep understanding of MENA's culturally diverse user segments and validates our ability to replicate the gaming plus social model across MENA.

Last year -- in the late of last year, we received the Strategic Alliance Award at AppGallery HDC 2025 MEA Summit, recognizing our strength in technology and localization as well as our active role in promoting a more diverse, higher-quality digital entertainment ecosystem in the Middle East. This marks the second consecutive year we have earned this recognition, highlighting the depth of our commitment to technology synergy localization and joint user ecosystem development.

Going forward, we will continue to work closely with our channel partners to drive tech innovation and product excellence, creating an ever-growing variety of digital experiences tailored to local culture preferences for users across the Middle East. In 2026, we will continue to optimize our core product experience and deepen localization and community operations in new and existing market, supported by keen cultural insights and an effective data-driven approach. We are confident that Yalla is well positioned to strengthen its leadership of MENA's digital entertainment market.

With that, I will now turn the call over to our CFO, Karen, who will discuss our key financial and operational results.

Thank you, Saifi, and hello, everyone. Thank you for joining us today. In the fourth quarter, we continue to focus on efficiency enhancement to strengthen profitability. Our net income increased by 6.2% year-over-year to USD 34.5 million with a net margin of 41.2%, up 5.4 percentage points year-over-year. For the full year, we delivered both top and bottom line growth through our strong strategic execution and effective cost control.

Our consistent efforts in the game businesses and -- are bearing fruit, driving a 9.1% year-over-year increase in the segment's revenue. Our solid balance sheet and healthy cash flow position to continue returning value to shareholders, highlighted by USD 56.6 million returned in 2025 through our existing share repurchase program and the launch of a new share repurchase program for up to USD 150 million over the next 24 months. Looking ahead, we will continue to invest in long-term growth opportunities, delivering high-quality growth and maximizing value for all stakeholders.

Let's move on to our detailed financials for the fourth quarter of 2025. Our revenues were USD 83.9 million in the fourth quarter of 2025 compared with USD 90.8 million in the fourth quarter of 2024. The decrease was primarily due to a decrease in paying users as a result of few promotion events held by third-party payment platforms in the fourth quarter of 2025 compared with those held in the fourth quarter of 2024.

Turning to costs and expenses. Our total costs and expenses were USD 57.2 million in the fourth quarter of 2025, a 5.7% decrease from USD 60.7 million in the same period last year. Our cost of revenues was USD 26.3 million in the fourth quarter of 2025, a 15.1% decrease from USD 31 million in the fourth quarter of 2024, primarily due to lower commission fees paid to third-party payment platforms as a result of diversified payment channels. Cost of revenues as a percentage of total revenue decreased to 31.4% in the fourth quarter of 2025 from 34.2% in the same period last year.

Our selling and marketing expenses were USD 9.4 million in the fourth quarter of 2025, a 26.5% increase from USD 7.4 million in the fourth quarter of 2024, primarily due to higher advertising and marketing promotion expenses attributable to our continued user acquisition efforts and expanding product portfolio. Selling and marketing expenses as a percentage of total revenues increased to 11.2% in the fourth quarter of 2025 from 8.2% in the same period last year.

Our G&A expenses were USD 12.1 million in the fourth quarter of 2025, a 7.8% decrease from USD 13.1 million in the fourth quarter of 2024, primarily due to a decrease in incentive compensation. G&A expenses as a percentage of total revenues was flat at 14.4% in the fourth quarter of 2025 compared with the same period last year.

Our technology and product development expenses were USD 9.5 million in the fourth quarter of 2025, a 3.2% increase from USD 9.2 million in the fourth quarter of 2024, primarily due to an increase in the salaries and benefits for our technology and product development staff, driven by an increase in the headcount to support the development of new businesses and the expansion of our product portfolio. Technology and product development expenses as a percentage of total revenues increased to 11.3% in the fourth quarter of 2025 from 10.1% in the same period of last year.

As such, our operating income was USD 26.6 million in the fourth quarter of 2025 compared with USD 30.1 million in the same period last year. Interest income was USD 6 million in the fourth quarter of 2025 compared with USD 7.1 million in the same period last year. Interest income -- investment income was USD 1.1 million in the fourth quarter of 2025 compared with an investment loss of USD 1.7 million in the same period last year, primarily due to changes in the fair value of wealth management projects.

Income tax benefit was USD 0.6 million in the fourth quarter of 2025 compared with income tax expense of USD 3.4 million in the fourth quarter of 2024, primarily attributable to the preferential tax rate applicable to a subsidiary since the fourth quarter of 2025. As a result of foregoing, our net income was USD 34.5 million in the fourth quarter of 2025, a 6.2% increase from USD 32.5 million in the same period last year. Our non-GAAP net income in the fourth quarter of 2025 was USD 36.9 million, a 3.2% increase from USD 35.7 million in the same period last year.

Moving to our liquidity and capital resources. Our cash position remains solid and healthy. As of December 31, 2025, we had cash and cash equivalents, restricted cash, term deposits and short-term investments of USD 754.6 million compared with USD 656.3 million as of December 31, 2024. Moving to our outlook. For the fourth quarter of 2026, considering the impact of Ramadan, which falls completely within the fourth quarter of this year, we expect our revenues to be between USD 75 million and USD 82 million. The above outlook is based on the current market conditions and reflects company's management's current and preliminary estimates of the market and operating conditions and customer demand, which are all subject to change.

In the interest of time, please refer to our earnings press release for further details on our fourth quarter and full year 2025 financial results. This concludes our prepared remarks for today. Operator, we are now ready to take questions.

[Operator Instructions] We will now take our first question from the line of Xueqing Zhang from CICC.

And my question about your esports strategy. Could management brief us on the company's partnership with the Saudi Esports Federation, including the strategic focus and the key initiatives?

Thank you for this question, Xueqing. I will take this question. Our strategic partnership with the Saudi Esports Federation, also known as SEF, represents a key step in deepening our presence in Saudi Arabia, while aligning with the Saudi government's Vision 2030. Serving as the official event partner of the Saudi eLeague 2026 will meaningfully enhance our brand visibility in Saudi, one of our most important growth markets.

Moreover, we will also support women's Saudi eLeague, helping cultivate female esports models and encouraging significantly broader participation by Saudi women in digital entertainment. This closely aligns with our commitment to promoting inclusion and community development.

In addition, we will collaborate with the SEFs Saudi Esports Academy to launch a talent development program designed to foster local esports talent, through training, mentorship and competitive experience, the Saudi eLeague 2026 is now in progress. We look forward to sharing further details on our partnership as the event unfold. We believe this will enable us to cultivate deeper connection with users in Saudi market and strengthen our regional influence, positioning the company to capture sustainable growth opportunities and deliver long-term value.

Notably, this collaboration is not limited to a single tournament. It opens the door to broader possibilities. Looking ahead, we plan to explore additional partnerships with esports tournament operators top-tier game publishers and content creator ecosystem players across the Middle East and other high-growth emerging markets to jointly build a cross-regional digital entertainment ecosystem.

We will now take our next question from Chloe Wei from CICC.

So my question is about the macro environment. So could management maybe share the perspective on the evolving macro dynamics in the Middle East and its implications for the company?

Thank you, Chloe. This is Saifi. I will take this question. The recent developments in the Middle East are top of mind of investors. We do not have any operations in Iran or Israel. In the Gulf countries, we have responded promptly to government guidance and have arranged for our employees to work from home. Our immediate priority is ensuring the safety and well-being of our employees throughout the region. Operationally, based on our recent performance data, there has been no material revenue variation over the past 2 weeks. The overall impact appears limited at this stage. Given that our business operates online, user demand for community engagement and real-time emotional connection during these periods may still persist based on our recent observation. We will continue to closely monitor the situation. We stand ready to adjust our strategy as the situation evolves.

We will now take our next question from the line of Tianhao Liu from Citic.

I would like to follow up on the pipeline. Could management provide an update on the product rollout and the marketing schedule?

Thank you, Tianhao for your question. For our first Match-3 title, Turbo Match, during the initial rollout, we strategically leveraged the group's internal traffic resources to cost effectively acquire our first group of users. We saw encouraging test data, and our team is now diligently preparing to serve users at a potentially large scale. Starting Q2, we gradually increased our investment in external marketing to reach a broader pool of potential users and progressively build this revenue stream.

Meanwhile, our desert-themed SLG title collaborated with a top-tier studio is currently in the final stage of product optimization. We're targeting its official on-scale promotion in Q2. As is typical in the gaming industry for these 2 new games, monetization and growth will ramp up in stages over time. At this point, we expect our mid-core and hard-core games to start generating more meaningful revenue contributions in the second half of this year. We'll keep you updated.

We will now take our next question from Xiaoyue Hu from Haitong.

Can management share more details on the company's proprietary AI model and its future direction in the AI domain?

Thank you, Xiaoyue. We continue to ramp up our AI investment and have made notable progress. Our in-house developed multimodal AI model, [ CMIS ], is constantly learning from massive Arabic language data sets and user behavior data, continuously refining content recognition accuracy, cultural context understanding and risk anticipation. [ CMIS ] has achieved industry-leading performance in MENA in analyzing text and images and detecting inappropriate content, significantly enhancing our content moderation efficiency and platform safety.

The integration of AI in marketing also significantly helps us to optimize our marketing budget and reduce expenses. Beyond multimodal AI model, our team is also actively researching and testing AI-related integrations for our products, including AI-assisted content creation tools to encourage engagement and interactions in our online community and drive user enthusiasm. Looking ahead, we will deepen the integration of AI across product development, risk management and end-to-end operational workflows to improve efficiency and drive innovation. We will share additional product level developments once we achieve more substantive breakthroughs.

We will now take our next question from Lincoln Kong of Goldman Sachs.

So the first one, could management share your guidance for revenue and profitability for 2026? And I have another question is what's the company's medium-term to longer-term strategy for the gaming business?

Thank you, Lincoln. This is Karen. For the first question, looking ahead to 2026, our flagship products remain highly resilient, and we expect revenue from our mature existing businesses to remain flat and the margin to remain stable at around 40%. As we gradually launch and promote new gaming products, we expect our mid-core and hard-core gaming businesses generating revenue in the second half of this year and emerge as a new growth driver.

Regarding profitability, we will adopt a more dynamic management approach to optimize margins. We expect R&D spending to follow a trajectory similar to that of 2025, while marketing investments will be flexibly adjusted in line with new product performance. Our current sales and marketing budget for new game is 5% of group's revenue. So we will adjust it flexibly based on ROI and market feedback. We will continue to drive long-term growth through innovative business initiatives, ensuring a disciplined approach for margin stability.

For the second question, I will leave Jeff. Thank you.

Lincoln, for the second question, thank you for this insightful question. From a medium- to long-term perspective, our gaming strategy is built on the dual approach of consolidating our core portfolio while also expanding into new growth segments. On the core side, we continue to strengthen our casual gaming foundation. Beyond our flagship titles, Yalla Ludo and 101 Okey Yalla, we're adding new casual product lines and driving ongoing feature innovation to optimize user cycle value.

On the expansion side, we remain committed to investing in mid-core and hard-core games under a clearly defined 2-pronged road map, utilizing in-house development for mid-core titles and partnership-based publishing for hard-core games. In mid-core categories such as Match-3 and board games, we are leveraging years of accumulated expertise to scale in a systematic and disciplined manner. In hard-core genres, particularly SLG, we are collaborating with top-tier global developers. We are capitalizing on our competitive strength in localized publishing, distribution and operations.

From a market selection standpoint, we remain highly focused on the Middle East as our core strategic market, fully tapping its monetization upside. We're not ruling out global markets like North America and Europe markets for categories with global appeal such as Match-3 once product market fit and operating traction are validated. We believe this targeted yet flexible strategy positions us to build sustainable competitive advantages over the long term.

We will now take our next question from [ Tianyu Guo ] from Nomura.

My question is about the capital return. Could management share more details on the share repurchase program announced earlier?

Thank you. Thank you, Guo. So highlighting shareholder returns. In 2025, we efficiently delivered on our share repurchase commitment, executing a total repurchase of USD 56.6 million for the full year. The company will cancel all share repurchased in 2025, a process that is underway and has been well received by the market. Entering into 2026, we will first execute the remaining USD 44 million repurchase value available under the existing program before it expires.

Additionally, the company's Board of Directors has authorized a new share repurchase program effective from March 9, 2026, through March 8, 2028, for up to USD 150 million for the company's shares. This large-scale authorization reflects our commitment to maximizing shareholder value, directly underscoring management's strong confidence in the company's business outlook and the medium- to long-term value. We will consistently place shareholder interest at the core of our capital allocation decisions, returning value to investors through a continuously optimized return framework. Thank you for your question.

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

Thank you once again for joining us today. We look forward to speaking with you in the next quarter. If you have further questions, please feel free to contact Yalla's Investor Relations or Piacente Financial Communications. Both parties' contact information is available in today's press release as well as on our company website. Thank you.

This concludes this conference call. You may now disconnect your lines. Thank you.

Good morning, and good evening, ladies and gentlemen. Thank you for standing by for Yalla Group Limited's Third Group Quarter 2025 Earnings Conference Call. [Operator Instructions]. Today's conference call is being recorded.

Now I will turn the call over to your speaker host today, Ms. Kerry Gao, IR Director of the company. Please go ahead, ma'am.

Hello, everyone, and welcome to Yalla's Third Quarter 2025 Earnings Conference Call. We issued our earnings press release earlier today, and it is now available on our IR website as well as on newswire outlets.

Before we continue, please note that the discussion today will contain forward-looking statements made under the safe harbor provision of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, our future results may be materially different from the views expressed today. Further information regarding these and other risks and uncertainties is included in our earnings press release and our annual profile with the SEC. Yalla does not assume any obligation to update any forward-looking statements, except as required by law.

Please also note that Yalla's earnings press release and this conference call include discussion of unaudited GAAP financial information as well as unaudited non-GAAP financial measures. Yalla's press release contains a reconciliation of the unaudited non-GAAP measures to the unaudited most directly comparable GAAP measures.

Today, we hear from Mr. Tao Yang, our Chairman and Chief Executive Officer, who will provide an overview of our related achievements and growth strategies. He will be followed by Saifi Ismail, the company's President who will briefly review our recent business developments. Yang Hu, our Chief Financial Officer, will then provide additional details on the company's financial results and discuss our financial outlook. Following management's prepared remarks, we will open the call to questions. Mr. Jianfeng Xu, our Chief Operating Officer, will join the Q&A session.

With that said, I would now like to turn the call over to our Chair, Managing Executive Officer, Mr. Tao Yang. Please go ahead, sir.

Thank you, everyone, for joining our third quarter 2025 earnings conference call. We delivered another strong set of results in the third quarter -- our total revenue grew to 89.6 million, once again beating the high end of our guidance. Net margin came in at 5.4%, up 1.4 percentage points year-over-year, thanks to continued operational efficiency improvement and our commitment to high-quality growth. The Middle East each dairy economy continues to gain momentum in the third quarter. According to New Year's latest report, the region's gaming market is expected to reach around THB 7.1 billion in 2025 with 75% year-over-year growth, the highest regions globally. The increases we are seeing in a number of our mobile users and their interest, including more diverse game content, reflecting MENA gaming markets was potential. Our strategic direction, provisions to capture the churn and further more mature, more rule digital entertainment ecosystem across the region. Meanwhile, while also looking for opportunities to leverage our value and growing product portfolio to deliver more exceptional experience to many users.

Our strategy in game pipeline currently use at our primary market expansion driver. In the third quarter, a much petite between commodification, simulation, operations or MI. We were pleased to see the initial acquisition and retention metrics meeting our expectations.

With 2 years of cumulative experience in the margin, we are confident in our team's ability to create games that remits with our target. Furthermore, we expect to revert our self-developed loan boom survivors in late this month. Meanwhile, we continue to advance our game distribution initiatives. We are collaborating with the leading gaming studio on the distribution of new focus at LG title. The Hosco title is well on track for year-end launch full -- recent taking. We remain dedicated to providing MENA users with an ever growing selection of gaming and content to minus local culture. For our future MENA Haco game collaboration, we will continue to leverage our existing gaming user value for precise carpeting and efficient conversion to steadily deepen penetration of MENA nice and hardcore game markets.

Moving on to our AI initiatives. We are proactively developing it to fuel our growth, led by CIMIC, our in-house bid multi-module AI. SMEs is now fully deployed across our product line, serving as the intelligent back of our content moderation and security, supported by our experienced R&D games and extensive arrange and visual data test. Similar renew leading accuracy in annualized impact and images and detecting inappropriate content. Another self developed AI tool, our automated creative passing a significantly improved advertising and user acquisition efficiency.

Furthermore, our in-house AI rand orchestration engine has doubled the frequency of modular in-app campaigns for our flagship products, including Galana, driving the leap in operational efficiency. Together, this technological breakthroughs have elevated user experience and the boating app purchases, giving a powerful driver for revenue growth.

Next, an update on our USD 150 million shareholder return program, which we continue to execute sales with display. As of November 7, 2025, the company has repurchased a total of more than 7.7 million or a ordering shares totaling THB 51.9 million achieving our full year 2025 repurchase commitment of 30 million, well ahead of scale. As we mentioned on our last call, we will cancel all shares repurchased in 2025, and we have canceled a total of more than 6.2 million shares that are over -- the aggregate valuing mainly available for purchase. And there is the current share repurchase program with 48.6 million as of November 10.

For next year, we expect to maintain a similar level of share repurchases as in 2025. We are on track to complete our current USD 150 million share repurchase program within reduction, at which point, we plan to launch a new program. As always, I want to advertise that we will continue to play shareholder interest as the coal of our capital allocation decisions and optimize our shareholder return strategy to generate long-term value for our shareholders.

Last but not least, I'm happy to share that the other group celebrated the grand every of its public listing at the end of September, capped by evaluating their money at this profile has been an incredible journey, 1 of growth, learning, persistence and treatment. Yalla is now the largest mine-based online stone working and gaming companies. We are proud of the leading position we've established in this dynamic market. But our journey is far from over, looking ahead, we will remain dedicated to maximizing the synergy between our social and gaming ecosystem and enhancing our AI technological age, bringing us ever closer to our region of becoming a lot in the most popular platform, alone working and entertainment activity smile.

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

Hello, everyone. Thanks for joining us today. Let's take a closer look at our third quarter operations and our product performance. First, I would like to share our operational highlights in the third quarter. We increased average MAUs by 8.1% year-over-year to $43.4 million. Following last quarter's user acquisition channel optimization, our user growth make us again as expected, supported by AI Boat upgrades and innovation across our product portfolio. Our flagship products saw a fresh wave of momentum with the introduction of new gaming modules, users can now play a variety of popular mini games directly within the Yalla platform, significantly boosting engagement and user stickiness. These innovative initiatives also served as a springboard for integrating more interactive entertainment features into our core products going forward.

This quarter was also backed with engaging and precisely targeted online activities. A key operational strength for Yalla demonstrates our key user insights and content creativity. For example, our original event series YallaLudo Carnival just completed its third consecutive quarter with record high revenue its shortly crafted gameplay beared with stunning visuals drove strong growth in purchases and gifting activities. On Saudi National Day, Yalla launched the lesion campaign, creating a Vistive immersive atmosphere online to resonate with the read season. A major national fist well developed under Saudi Arabia's Vision 2030. Meanwhile, thanks to a diverse lineup of in-game and chatroom events.

101 Okey Yalla delivered its highest quarterly revenue ever in the third quarter, all innovation reach continues to extend well beyond our business, an honor of our contribution to the local tech industries development, we recently received our third award in the audio tech, media and entertainment category at AGM Business Review Magazine's Middle East Technology Excellence Award 2025. These prestigious awards judged by a banner of esteemed regional industry leaders, recognized companies that drive innovation through transformative products.

To sum up, I would reiterate what our CEO said. We are immensely proud of Yalla Group's achievements over the past years. Our deep cultural resonance with users in the MENA region and the likeness products innovation, are the cornerstones of our sustained growth moving forward. We will remain committed to those values, honoring the trust our users and stakeholders place in us while fostering a driving mutually beneficial ecosystem.

With that, I will now turn the call over to our CFO, Karen, who will discuss our key financial and operational results.

Thank you, Saifi, and hello, everyone. Thank you for joining us today. In the third quarter, we continued to pursue high-quality growth and profitability enhancement, through our excellent execution of ongoing cost management and efficiency improved initiatives, including AI development and application our net income grew by 3.9% year-over-year to USD 40.7 million, and our net margin increased by 1.4 percentage points, supported by the solid performance and the fundamentals, we have strengthened our efforts to return value to holders as of November 7, we have returned a total of USD 51.9 million in 2025 to our shareholders through our share repurchase program. We will deepen our commitment to shareholder returns going forward, delivering sustainable long-term value to all stakeholders.

Let's move on to our detailed financials for the third quarter of 2025. Our revenues were USD 89.6 million in the third quarter of 2025, a 0.8% increase from USD 88.9 million in the same period last year. The increase was primarily driven by our broadening user base and enhanced monetization capability.

Turning to our costs and expenses. Our total cost and expenses were USD 55.9 million in the third quarter of 2025, a 1% decrease from USD 56.4 million in the same period last year. Our cost of revenue was USD 28.4 million in the third quarter of 2025, a 10.7% decrease from USD 31.8 million in the same period last year, primarily due to lower commission fees paid to the party payment platform. As a result of diversified payment channels and lower share-based compensation expenses recognized in the third quarter of 2025. Cost of revenues as a percentage of total revenue decreased to 31.7% in the third quarter of 2025 from 35.8% in the same period last year.

Our selling and marketing expenses were USD 9.6 million in the third quarter of '25, a 30.3% increase from USD 7.4 million in the same period last year, primarily due to air advertising and marketing promotion expenses attributable to our continued user acquisition efforts and expanding product portfolio. Selling and marketing expenses as a percentage of total revenue increased to 10.7% in the third quarter of 2025 to 8.3% in the same period last year.

Our general and administrative expenses were USD 9.2 million in the third quarter of 2025, a 9% decrease from 1 in the same period last year, primarily due to a decrease in incentive compensation and professional service fees. G&A expenses as a percentage of total revenue decreased to 10.3% in the third quarter of 2025 from 11.4% in the same period last year.

Our technology and product development expenses were USD 8.6 million in the third quarter of 2025, a 21.4% increase from USD 7.1 million in the same period last year, primarily due to an increase in salaries and benefits for our technology and product development staff, driven by an increase in the headcount to support the development of new businesses and expansion of our portfolio. R&D development expenses as a percentage of total revenues increased to 9.6% in the third quarter of 2025 from 8% in the same period last year. As such, our operating income was USD 33.8 million in the third quarter of 2025, a 3.9% increase from $32.5 million in the same period last year.

Interest income was USD 6.3 million in the third quarter of 2025 compared with $7.8 million in the same period last year. Investment income was USD 2.2 million in the third quarter of 2025 compared with USD 0.1 million in the same period last year. primarily due to increase in investments in wealth management products. Income tax expense was USD 1.6 million in the third quarter of 2025 compared with $1.3 million in the same period last year. As a result of foregoing, our net income was USD 40.7 million in the third quarter of 2025, a 3.9% increase from USD 39.2 million in the same period last year.

And our non-GAAP net income in the third quarter of 2025 was USD 43.1 million, a 0.2% increase from USD 42.6 million in the same period last year.

Moving to our liquidity and capital resources. Our cash position remains solid and healthy. As of September 30, 2025, we had cash and cash equivalents, restricted cash, term deposits and short-term investments of USD 739.5 million compared with USD 656.3 million as of December 31, 2024. We continue to retain value through our share repurchase program as of November 7, 2025. The company had cumulatively complete cash repurchases in the open market of $50 million, 21621 ADS represents ordinary shares for an aggregate amount of 101.4 million since the inception of the current share repurchase program. The aggregate value that remained available for purchase under the current share repurchase program was USD 48.6 million as of November 7, 2025.

In addition, the company decides to cancel all share repurchase in 2025. As of August 11, 2025 the company has canceled 6,230,2998, all Class B ordinary shares.

Moving to our outlook. For the fourth quarter of '25, we expect our revenue to be between USD 78 million and USD 85 million. The above outlook is based on the current market conditions and reflects the company management's current and preliminary estimates of the market and operating conditions and customer demand, which are all subject to change. In the interest of time, please refer to our earnings press release for the further details on our third quarter 2025 financial results.

This concludes our prepared remarks for today. We are now ready to take questions.

[Operator Instructions]. Your first question comes from Xueqing Zhang with CICC.

And congratulations on another strong quarter. My question in regards on your game business. Can management brief us on the advancements in medical and hard car games.

Thank you for your question. During the quarter, we stop launched 2 Match-3 titles as and market a significant step forward in our mid- and hardcore gaming portfolio. Turbo Mac stood out in multi-region test worldwide with the unique blend of car modification and simulation operations gameplay, achieving retention rates that met our criteria for product expansion. As a result, we decided to invest more resources to focus on Turbo match in the next stage. Based on the test data, we're adding levels and diversifying size gameplay options set stage for the next wave of large-scale using acquisition. Meanwhile, our work life product is expected to launch officially Digonex -- we have also recently completed a round of testing for our collaborative project, SLG.

Given our high expectation for this title, we are working closely with the content provider to refine its same place, visuals and other details. We expect to launch it by the end of this year. It will take some time for this new product to generate meaningful revenue. For those expecting notable revenue impact from these new games, we see the second quarter of 2026 as a key inflection point.

Your next question comes from Chloe Wei with CICC.

This is Chloe from CICC. So I have a follow-up question about game. So how should we think about the strategic role of our match game? And can we think of it as an indicator for your push into the new regions? That's it.

That take this question. My 3 games do have a global rate base, making an ideal entry point was to grow diversified regional markets. Our recent testing has shown that math 3 titles particularly where we see the markets like Europe and North America. Given this positive user feedback, we certainly plan to increase marketing budgets for markets where performance is strong. Looking back at our growth journey, Galapagos has been steadily performing for years in South America, providing us with valuable cross market experience.

Additionally, the Yalla leader suppose 8 logs, reaching diverse countries worldwide. We are open to expanding our market boundaries, as we explore product net mine users may be interested. In that side, I want to emphasize that the Middle East remains our key strategic region -- we will continue to deepen our engagement in key markets of Cosmin while selectively expanding into new ones.

Your next question comes from Lincoln Kong with Goldman Sachs.

I also like to follow up on the gaming business. So to management share our company's upcoming gaming strategy. including 1 of the choices around the content and the market.

Lincoln, thanks for your in-depth questions. The company has identified gaming as 1 important inner for our strategic priorities for future growth and established a clear dual-track strategy featuring self-developed titles and game distribution. -- for self-developed games, we are focusing on casual and net core gaming segments, such as Mactan Workames. Our team has built substantial experience in the mash-3category over the past 2 years. If our Match 3 titles show positive results in the coming months, we look forward to consistently deepen our presence in this segment.

On the game distribution side, we're building a strategic partnership with leading global developers, leverage strengths in product localization, use acquisition and local operations to bring more high-quality gaming content for the Middle East. We continue to explore game distribution opportunities to further enrich and accelerate our product pipeline. We believe that the Setra strategy will enable us to quickly build a positive Agnico and hardcore teams.

Your next question comes from Sarah Hu with Haitong International.

So can you please get management's view on the cost performance of our flagship products, Balan YallaLudo as well as they're also going forward.

Thank you, CEO. During this quarter, both flagship titles achieved significant breakthroughs in product innovation and operational activities. For example, Lead and N-minigame modules to enrich users' entertainment experience. Meanwhile, the Laudon Get around versus 1 mode quickly become ahead with users. -- driving overall community engagement to a new high. Operationally, YallaLudo tournaments team initiatives and life a connection between our products and off-line entertainment scenarios in the Middle East. Looking ahead, we expect both mature products to remain stable in terms of business scale and we will continue to pursue incremental growth by introducing new features and strengthening operational activities and initiatives.

Your next question comes from Tianhao Liu with CITIC.

I have 2 questions on your future plan. So firstly, I think Yalla has completed a sizable share repurchase this year. So could management outline the plans for future shareholder returns? And I have a follow-up question.

Okay. Thanks, Tal. This is Karen. I will take this question. As we just discussed, we successfully completed the previously announced minimum full year 2025 repurchase commitment of USD 50 million. As of November 7, 2025, the company had repurchased over 7.7 million ADS for an aggregate amount of USD 51.9 million. Among that, over 6.2 million ordinary shares previous repurchases was canceled. And we will notify everyone once the remaining issues have been fully canceled. With this year's repurchase commitment achieved, the company continues to execute its share repurchase program based on market conditions. For next year, we expect to maintain a similar level of share repurchase as in 2025. We are on track to complete our USD 150 million share repurchase plan within the year of 26 before we launched a new plan. The company remains committed to prioritizing shareholder interest in all capital allocation decisions maximizing shareholder value through a consistently optimized return strategy.

That's very helpful. And could also the management also share your revenue and the profitability outlook for Q4 and 2020.

Okay. Given the revenue from new initiatives is expected to have a limited contribution in the fourth quarter and based on current business trends, -- we maintain our guidance that full year 2025 revenue will be broadly in line with 2014 or with low single-digit growth. We expect revenue from our new business initiatives to become more visible over the next 1 to 2 quarters. Regarding profitability, we expect our full year 2025 net margin to reach about 40%. Looking ahead to -- we expect R&D spending to follow a similar trend as in 2025, assuming broadly similar business conditions -- on the market side, we will dynamically adjust our investments based on the performance of our new products. While maintaining a healthy financial position, we will continue to invest in innovative business initiatives to view the company's long-term growth and ensure stable profitability through refined operations.

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

Thank you once again for joining us today. We look forward to speaking with you in the next quarter. If you have further questions, please feel free to contact Yalla's Investor Relations of Financial Communications. Both parties contact information is available in today's press release as well as on our company website. Thank you.

This concludes the conference call. You may now disconnect your lines. Thank you.