[Management View]
Yalla Group reported Q1 2025 revenue of $83.9 million, a 6.5% YoY increase, driven by user base growth and enhanced monetization. Net margin improved to 43.4% from 39.5% YoY due to disciplined cost control and operational efficiency. The company emphasized its strategic focus on the MENA region, leveraging AI for content moderation and user acquisition, and highlighted its commitment to shareholder returns through an expanded buyback program.

[Outlook]
Management provided Q2 2025 revenue guidance of $76 million to $83 million, with net margin expected to remain near 40%. Three new mid-core game titles are set for release in Q3, with additional regional market tests planned. Full-year MAU growth is projected at approximately 10% YoY, with quarterly variability based on product and community needs.

[Financial Performance]
Revenue grew 6.5% YoY to $83.9 million, exceeding guidance. Net income rose 17% YoY to $36.4 million, supported by reduced selling and marketing expenses (-14.3% YoY) and increased efficiency from AI-driven user acquisition models. Cash and short-term investments increased to $690.9 million as of March 31, 2025, up from $656.3 million at year-end 2024.

[Q&A Highlights]

Question 1: What is the main driver of the significant year-over-year increase in net margin? And guidance for next quarter and this year?
Answer: Revenue growth was primarily driven by game services, particularly Yalla Ludo. Selling and marketing expenses decreased significantly due to AI-driven user acquisition efficiency. Net margin is expected to remain around 40% in the next quarter, reflecting sustainable business performance.

Question 2: Can management share the recent developments of Yalla and Yalla Ludo?
Answer: Yalla celebrated its ninth anniversary with in-app celebrations and operational upgrades to enhance user experience. Yalla Ludo continued to expand its brand influence through high-quality online activities and offline tournaments across MENA, maintaining steady cash flow generation.

Question 3: Could you share the latest thoughts on shareholder return trends and the consistency of the buyback program?
Answer: The buyback program has been accelerated, with the 2025 target raised to $50 million, including an additional $22 million increase. All repurchased shares will be canceled to deliver sustained benefits to shareholders. Further updates on buyback scale will be provided next quarter.

Question 4: Could management brief us on advancements in mid-core and hardcore games?
Answer: Three mid-core game titles are set for release in Q3, with additional games in the pipeline. The company is exploring overseas markets beyond MENA for user base expansion.

Question 5: Will we see a more ambitious user acquisition plan in the future?
Answer: Q1 MAU growth exceeded expectations at 7%, driven by AI optimizations and Ramadan-specific strategies. Full-year MAU growth is expected to be around 10% YoY, with dynamic adjustments based on product and community needs.

[Sentiment Analysis]
Analysts expressed optimism about Yalla's strong financial performance, AI-driven efficiency, and strategic expansion in MENA. Management maintained a confident tone, emphasizing sustainable growth and shareholder returns.

[Quarterly Comparison]
| Metric | Q1 2025 | Q1 2024 | YoY Change (%) |
|---------------------------------|---------------|---------------|----------------|
| Revenue | $83.9 million | $78.7 million | +6.5% |
| Net Income | $36.4 million | $31.1 million | +17% |
| Net Margin | 43.4% | 39.5% | +3.9% |
| Average Monthly Active Users | 44.6 million | 37.8 million | +17.9% |
| Selling & Marketing Expenses | $6.9 million | $8.1 million | -14.3% |
| Cash and Short-term Investments | $690.9 million| $656.3 million| +5.3% |

[Risks and Concerns]
1. Potential variability in quarterly MAU growth due to product and community needs.
2. Dependence on MENA market stability amid shifting global macroeconomic conditions.
3. Increased general and administrative expenses (+30.8% YoY) due to expanded operations.

[Final Takeaway]
Yalla Group delivered robust Q1 2025 results, driven by AI-driven efficiency and strategic focus on the MENA region. The company demonstrated strong financial performance, with significant revenue and net margin growth, while maintaining disciplined cost control. Management's commitment to shareholder returns through an expanded buyback program and its focus on product innovation and regional expansion position Yalla for sustained growth. Investors should monitor MAU growth trends and the rollout of new game titles in Q3 as key drivers of future performance.