Good day and thank you for standing by. Welcome to the Weibo report second quarter 2026 financial results conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, please press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 1 again. Please note that today's conference is being recorded. I would now like to have the conference over to your speaker, Sandra Zhang, IR. Please go ahead.

Thank you, operator. Welcome to Weibo's second quarter 2026 earnings conference call. During our chief executive officer, Gaofei Wang, and our chief financial officer, Fei Cao, this conference call is also being broadcasted on the internet and is available through Weibo's IR website. Before the management remarks, I would like to read you the Safe Harbor Statement in connection with today's conference call. During today's conference call, we may make forward-looking statements, statements that are not historical facts, including statements of our beliefs and expectations. Forward-looking statements involve inherent risks and uncertainties. A number of important factors would cause actual results to different materials than those containing any forward-looking statements. Weibo assumes no obligation to update the forward-looking statement in this conference call and elsewhere. Further information regarding this and other risks is included in Weibo's annual report on Form 20F and other filings with the SEC. Other information provided in this press release is occurring as of today hereafter. Weibo assumes no obligation to update such information, except as required under applicable law. Additionally, I would like to remind you that our discussion today includes certain non-GAAP measures, which includes stock-based compensation and certain other expenses. We use non-GAAP financial measures to gain a better understanding of Weibo's comparative operating performance and future prospects. Our non-GAAP financials include certain expenses, gains or losses, and other items that are not expected from future cash payments or are not recurring in nature. who are not indicative of our core operating result and outlook. Please refer to our press release for more information about our long-term measures. Following management prepared remarks, we open the lines for a brief Q&A session. With this, I would like to turn the call over to our CEO, Gaofei Wang. Thank you. Hello everyone. Welcome to Weibo's second quarter 2026 earnings conference call.

On today's call, I will share with you highlights on Weibo's product and monetization in the second quarter 2026. Wang Wei, Zenghui Cao, Wen Li, Fei Cao, Gaofei Wang On the user front, in June 2026,

Weavers' annual use reached 561 million, and average day use reached 254 million. This year, we have proactively rationalized our channel budget allocation strategy. Instead of scaling up user acquisition, we shift our focus toward improving the conversion rate of newly acquired channel users into active users. Concurrently, as the homepage information fee revamp is still in the face of continuous optimization, Some low-frequency users will need time to adapt to the changes. As a result, our DAU base declined slightly year-over-year in June, but remained largely flat quarter-over-quarter. Now let me walk you through the financials. Our total revenues in the second quarter reached $453.8 million, an increase of 2% year-over-year. Our total ad revenue reached $381 million, a decrease of 1% year-over-year. That revenue reached $72.9 million, an increase of 19% year-over-year. Although our advertising business was impacted by the consumption market headwinds and tightened budget from advertisers in certain industries, advertising revenue from automobile, internet service, and food and beverage still achieved solid year-over-year growth this quarter. Ad revenues from celebrity marketing also maintained year-over-year growth trends. Our non-GAAP operating income in the second quarter reached US$125.4 million, representing a non-GAAP operating margin of 28%.

In 2016, we continued to experience and improve the operating efficiency and capacity of the platform. Increase the ability of AI to invest in product operations, and enhance the long-term activity and usage of users on Weibo. In terms of product operations, we will continue to optimize our first-hand information flow, and play an important role in promoting social interaction and related discussions on Weibo. Wang Wei, Zenghui Cao, Wang Wei, Zenghui Cao, Wang Wei, Zenghui Cao, Wang Wei, Zenghui Cao,

In 2026, we will continue to enhance user experience, improve platform operating efficiency and content quality, continuously stepping up AI investment in product operation, and strengthening user retention and long-term engagement. On the product and operation front, we will continue to refine the homepage information feeds. By leveraging trending topics dissemination, For this social interaction and hot topic discussion, we aim to ensure that users gain timely access to the key trending content, content worth discussing and sharing, as well as high-quality posts tailored to their interests when they access Weibo. Furthermore, we will continue to strengthen product capabilities across core consumption scenarios, such as video, interest-based community, and search. thereby enrich user experience in video content consumption, interest-driven interaction, and information discovery, and further enhance the platform's long-term competitiveness. The use of AI in both product and operation this year has also delivered tangible results in new features and product development, as well as operational strategy optimization.

In terms of user growth, we will continue to strengthen the optimization of the industry's information flow. In terms of stabilizing relationships, On the user growth and engagement front, we continue to optimize the homepage information feed product in the second quarter.

while maintaining a stable social consumption experience in the relationship-based feed. We focus on strengthening the capability of interest-based feed to distribute relationship-based content, trending topics, and video content, and sustain user engagement and consumption. By doing so, we aim to improve content matching efficiency while further highlighting Weibo's differentiated advantages in social interaction, trending topics, and opinion discussion. which ultimately increase users' willingness to open Weibo and stay engaged.

Specifically,

With the continuous improvement of distribution capability of the interest-based feed, the platform has strengthened its ability to better organize and distribute content. Social content that users have a strong demand for, trending discussion, and high-quality video content receive greater exposure through the interest-based feed. This, in turn, drove overall increase in the time spent, the number of engaged users, and the interaction for the homepage information feed. since second quarter. At the same time, we have observed that for some low-frequency users, we still take time to adapt to new product formats, and thus, recovery of their visits frequency and retention continue to lag behind the improvement in the overall consumption metrics, boasting challenges in timestamp and retention. Going forward, we will continue to optimize product experience, keeping a better balance between improving recommendation efficiency and accommodating different user habits, thereby strengthening the homepage feed's ability to drive user visits and long-term engagement.

In terms of video business, in the second quarter, we will continue to promote optimization of both distribution and attack, enhance video sales efficiency, and expand the attack of useful videos. In the distribution stage, with the increase in the power of mobile recommendation, the platform can more effectively identify and distribute useful videos, and promote the flow of useful content to the platform, Zenghui Cao, Wen Li, Fei Cao, Gaofei Wang On the video front, in the second quarter, we continue to optimize video distribution and supply with a focus on improving video consumption efficiency and expanding the supply of high-quality video content.

On the distribution side, with enhanced recommendation algorithm of interest-based feed, we are able to more effectively identify and distribute high-quality video content, shifting traffic towards the high-quality content. This helps reduce the negative impact of repetitive and low-quality videos on the user experience. In the second quarter, total time spent on video views continued to grow double-digit year-over-year, and average time spent produced on video views grew even more meaningfully, indicating deeper video consumption. On the supply side, the supply of high-quality video content across the platform continued to grow double-digit quarter-over-quarter in the second quarter, as the upgraded interest-based feed continued to drive greater distribution and consumption of high-quality video content We further beef up our efforts to expand the video content creator base and strengthen content operation. By improving our content creator acquisition mechanism, enhancing traffic support, and sustaining operation, we have gradually established a clear-run framework for creator onboarding, content production, and creator retention. As a result, the scale of video production from newly acquired content creators and their corresponding user consumption performance have largely met our expectations and gradually forming a positive cycle between video content supply and consumption.

In the second half of this year, we will further step up our efforts to expand our video creator base

accelerated onboarding of the high-quality creators with stable production capabilities and strong content influence. We also leverage traffic support to strategically supplement key video content in alignment with our users' consumption needs. At the same time, through ongoing operation, we will help video content creators better understand the type of content that resonates on Weibo's platform and establish consistent production. As the supply of high-quality video content expands, the recommendation algorithm will also be able to better understand users' video consumption preference, improving the efficiency of matching quality content with targeted users. By simultaneously improving video creator supply, content distribution, and content consumption, the video business will more sustainably drive user timestamp, long-term engagement, and monetization efficiency. will further enhance the vitality and competitiveness of the platform's content ecosystem.

Moving on to content ecosystem competitiveness, throughout 2026, we will continue to focus on three core areas, trending topics, social network, and search.

will further enhance the health and core competitiveness of our content ecosystem.

In terms of social media, superimposition is the core of Weibo's social media community, and it is also an important scene to strengthen the competitiveness of social media. In the second quarter, we will allow different social media communities to provide core needs, speed up product and data transfer, and enhance the competitiveness of Weibo in the social media scene. For example, in the star superimposition, we can perfectly lead to the introduction of star commemorative functions and online and offline online play. On social attributes, SuperTop is a core interest-based community on Weibo and an important area for

strengthening our competitiveness in the interest-based social engagement. In the second quarter, we accelerated product and feature integration around the core needs of users across different interest-based communities, aiming to further reinforce Weibo's competitiveness in the interest-based social scenarios. For example, in celebrity super topics, we enhanced the checking experience and introduced a celebrity common memory album feature. as well as online to offline engagement initiatives. In sports and esports super topics, we introduce features for event reviews, ratings, and discussion, and leverage the World Cup to strengthen user awareness, driving a significant increase in the sports super topics user base. These new features further encourage users to move from content consumption to interaction and deeper participation. As a result, both daily active users and the number of users participating in discussion on super topics, so double-digit year-over-year growth in the second quarter.

In the second quarter, we continue to enhance the ability of multi-person dialogue with the user to understand On search, building on the skills rollout of Weibo intelligence search last year, our focus this year has shifted further toward deepening the use of multi-term conversations

and integrating AI search more naturally into content consumption experience. In the second quarter, we continue to enhance intelligent search stability to understand context and user intent in multi-term conversations with a particular focus on enhancing the search experience in areas where Weibo has differentiated content strengths such as trending topics, public figures and IPs. At the same time, we are embedding search entry points more deeply into users' journey for browsing posts, videos, and trending topics, allowing us to promptly address such needs as they arise during content consumption and continue to improve the efficiency and user experience of information discovery.

In terms of professionalization, in the last half of the year, our advertising products and sales have met two major challenges. One is to promote the unique content marketing value of Weibo to more industries and customers. and Zenghui Cao, Wang Wei, Zenghui Cao, Wang Wei, Zenghui Cao, Wang Wei, Zenghui Cao, have a strong budget capacity, but at a certain extent, these factors have affected Weibo's second-degree market share, which is 1% lower.

On monetization, in the first half of the year, our advertising product and sales team focused on two key strategies. First, we sought to bring Weibo's unique content marketing value to more industries and advertisers. Second, we systematically enhanced the advertising performance and conversion through AI integration. In the second quarter, the recovery in the domestic consumption market remained relatively subdued, with divergent trends across industries and advertisers. Some advertisers continue to face challenges, such as limited recovery in consumption demand, intensifying industry competition, and rising costs and margin pressures. As a result, they become more cautious with their marketing budget, placing greater emphasis on the measurable returns and ROI certainty. Although Weibo continues to be well-positioned to capture advertising budget in areas such as new product launch, celebrity marketing, and sports event marketing, these affirmation factors weigh on our advertising business to a certain extent. Consequently, Weibo's ad revenue experienced temporary pressure in the second quarter and decreased 1% year-over-year.

In terms of the industry, the current industry is a new generation of new products that have been released immediately. Advertising revenue has increased significantly. are all customers of AI and software services for the transformation of the business and the improvement of the content transmission demand. The net income has also been growing. The growth of the food and beverage industry is mainly due to the push of the world cup, mass marketing, and the promotion of new products. At the same time, the department industry is still under a lot of pressure. The retail industry has gradually returned to normal after a fierce competition in the last year. Although the overall net income has remained stable during the 628 period, But last year, part of the business line was formed by the increase in revenue technology, which brought obvious pressure on the growth of this year. The mobile industry is under the influence of cost and profit pressure, and the overall public budget is shrinking. But Weibo's budget in this industry is basically stable. For customer budget trends, next year, we will focus on perfecting content marketing-related products and service capabilities, using more standardized product solutions and more convenient investment tools. by industry.

Advertising revenue from the automobile sector grew year-over-year, driven by intensive launch of new energy vehicles. The internet service sector continued to book solid growth, primarily benefiting from the increased demand among AI and software service advertisers for performance-driven advertising and content distribution. The food and beverage sector also delivered growth, mainly fueled by the World Cup, celebrity marketing, and the promotion of key new products. On the flip side, some industries continue to face headwinds. Following intense competition last year, the e-commerce sector has gradually returned to a more normal market condition. Despite overall stable ad spend during the June 18th shopping festival, the relatively high revenue base from certain business lines last year posted noticeable pressure on the revenue growth this year. In the handset sector, overall ad budget contracted aimed at the cost and the margin pressure, but Weibo's wallet share within the sector remained largely stable. In light of Adoptisys' budget trend, in the second half of the year, we have focused on further strengthening our content marketing products and services. By offering more standardized product solutions and more convenient advertising tools, we aim to lower the barriers for advertisers across content planning, resource allocation, and information feed placement, thereby further enhancing Weibo's ability to capture ad budgets.

In the above-mentioned marketing scenario, the 2.9 trend of celebrity sales is one of the most important trends. We also see that customers' demand for celebrities is growing. Last year, we not only accepted customers' all-star posts on Weibo, will also participate in the design and resource matching of some customers' celebrity marketing plans and provide more complete services around brand demands and general goals. Through the improvement of the resource investment and service capability of the company, we will encourage customers to continue to expand their investment in foreign celebrity marketing, and use Wang's cooperation with Highlander as an example to combine the brand positioning of customers with the marketing nodes of the business class. We will assist in the completion of celebrity resource matching and link the brand, celebrity, and many more. During the break, their related topics gained a lot of attention on Weibo, and the number of views grew to more than 140,000. Wang also introduced star content for the break, and further improved brand exposure and user attention. In this process, Weibo heated up star resources to discuss effective integration, and provided customers with resource matching, content co-creation, and broadcast service.

among these marketing scenarios celebrity marketing was one of our key focus area in the second quarter we are pleased with the growing demand from advertisers for celebrity marketing in the first half of the year we not we not only supported advertisers with celebrity marketing campaigns on weibo but also became involved earlier in campaign planning and resource matching providing more comprehensive service aligned with their brand objectives and communication goals. Leveraging measured resource investment and enhanced service capabilities, we successfully expanded their ad spend on celebrity marketing products. Taking one of these partnerships with Erling Haaland as an example, we helped match the brand with the right celebrity resource and work with both the brand and the celebrity to co-create content and drive engagement around key event-related topics. During the World Cup, topics related to Erling Haaland attracted broader attention on Weibo, generating over 5 billion topic views and 1.4 million discussions. Wang Laoji also further enhanced its brand exposure and user engagement thanks to the celebrity content and the World Cup-related discussion. During the campaign, Weibo effectively integrated celebrity resources, event-related trending topics, and social discussion to provide the advertiser with one-stop service spending resources matching, content co-creation, and campaign execution. This empowered the brand to extend a single celebrity collaboration into sustained content buzz and brand exposure.

and many more. Smart investment and material quality management continuously improves customer investment efficiency and user advertising experience. Secondary, as the video production model is more and more mature, we provide automatic creative production capabilities for e-commerce customers with relative insufficient video materials. In terms of AI material production, the AI video production coverage rate of target products and the usability of raw materials are both improved. The production efficiency and quality of AI raw materials continue to improve. In terms of actual investment, A.I. material consumption has increased by 50% in the recent advertising of the information stream. At the same time, we use A.I. to identify low-value and high-reference advertising materials and perform targeted optimization. In the e-commerce industry, the rate of re-reference of A.I. after optimization of A.I. has dropped by more than 30%, effectively improving the sales experience of advertising content. In the future, we will continue to improve the quality and evaluation ability of advertising entrepreneurship, and optimize the livelihood and investment of A.I. entrepreneurship based on different investment scenarios.

On advertising products, Weibo continues to apply AI across key stages of the advertising process, focusing on creative supply, intelligent ad placement, and creative quality management to improve advertisers' campaign efficiency and user experience. In the second quarter, driven by the advancement of video generation models, we automatically generated viable ad creatives for e-commerce advertisers facing a shortage of video materials, resulting in solid improvement in the coverage and usability of AI-produced videos for target products with continued gains in efficiency and quality of AI-created production. On the ad placement front, the consumption share of AI-generated ad creatives in the promoted feed ad offerings and the real-time billing system continued to increase, reaching 50% in June. Meanwhile, we used AI to identify AI creatives with low quality and those generating high levels of negative feedback and apply targeted optimization accordingly. In the e-commerce sector, AI optimized materials saw a drop of over 30% in negative feedback rate compared with clients' original materials. effectively enhancing the user experience in ad content consumption. Going forward, leveraging an increasingly mature creative quality evaluation system and implementing differentiated generation strategies for various distribution scenarios, we aim to continuously improve the adaptability of AI creatives to their respective scenarios. With these initiatives, We hope to further improve advertising performance and campaign efficiency.

We hope to further improve advertising performance and campaign efficiency. Looking ahead to the second half of the year, we believe the recovery in consumer demand will take some time.

will pressure on advertisers from cost, profitability, and industry competition is likely to persist. Competition for advertising budget is also expected to remain intense. It's worth mentioning that the food delivery price war in the third quarter of last year created a relatively high revenue base for comparison. And moreover, due to factors such as primary match broadcaster times, and Advertiser Dynamics during this year's World Cup, the incremental boost to the related ad budget was lower than that of the previous tournament. These factors are expected to put some pressure on year-over-year advertising revenue growth in the third quarter. Faced with this market environment, we'll continue to invest in building Weibo's differentiated commercial service capabilities, keep pace with shifts in clients' marketing needs and budget structures, reinforce our content marketing value proposition and add conversion effectiveness and enhance our capability to capture clients at budget with more certainty to stabilize our overall revenue base. With that, let me turn the call over to Fei Cao for a financial review.

Thank you, Gaofei, and hello, everyone.

Welcome to Weibo's second quarter 2026 earnings conference call. Let's start with user metrics. In June 2026, Weibo's MEUs and average DEUs reached 561 million and 254 million respectively. During this quarter, our user strategy continued to focus on improving user quality, driving retention, and deepening engagement, while MEUs saw a modest sequential decline. remained resilient and broadly stable quarter over quarter. We continued to see solid engagement among our core users, along with improving consumption and engagement in the recommendation feed. Video consumption also continued to improve, supported by better content distribution within our revamped feed. AI continued to serve us an important enabler across our product and others, helping us better understand user interests, improve ad targeting and delivery, and enhance operating efficiency. Turning to financials, as a reminder, my prepared remarks will focus on non-GAAP results, on monetary amounts in US dollars, and all comparisons on a year-over-year basis, unless otherwise noted. Let me walk you through our financial highlights for the second quarter, 2026. We vote second quarter 2026 net revenues were $453.8 million, an increase of 2% or a decrease of 4% on a constant currency basis. Operating income was $125.4 million, representing operating margin of 28%. Net income attributable to Weibo reached 102.7 million U.S. dollars, and the deleted EPS was 38 cents U.S. dollar. Let me give you more color on the second quarter 2026 revenue performance. Weibo's advertising and marketing revenues for the second quarter 2026 was 381 million U.S. dollars, a decrease of 1% or 6% on a constant currency basis. The decrease was mainly reflecting software demand in certain key advertising verticals and was partially offset by the favorable foreign exchange impact on reported numbers on a year-over-year basis by industry. Our top three verticals were FMCG, e-commerce, and automobiles. In terms of growth, internet services and automobiles were primary contributors Despite softness in overall automobile sales, ad revenues from the auto sector delivered solid year-over-year growth, supported by Weibo's strong content ecosystem and frequent new energy vehicle launches during the quarter. Advertising revenues from internet companies also increased, driven by stronger marketing demand for AI-related products and services. as leading internet platforms increased marketing activities around their AI offerings. As for industries facing headwinds, the handset sector remained under pressure in the second quarter. Software ad demand continued to weigh on smartphone shipments, while rising component costs put additional pressure on handset manufacturers' profitability and marketing budgets. As a result, advertising revenues from the sector declined year-over-year. The FMCG sector saw divergent performance during the quarter. Food and beverage delivered solid growth, benefiting from the early release of World Cup-related marketing budgets during the quarter. The cosmetics vertical remained soft as certain international brands reduced the marketing spend amid break sales and intensified competition. In addition, game developers remained cautious on advertising spend amid continued softness in the online game market. The ad product, promoted feed ads remained our largest format, followed by social display ads and search and topic ads. eCPM continued to improve both year-over-year and for the reporter. supported by deeper AI integration in creative generation, targeting, and bidding. These improvements helped enhance ad delivery efficiency and advertise ROI. Our IP and content marketing solutions also continued to see solid demand. Ad revenues from Alibaba for the second quarter were $39.2 million, an increase of 10% all represent on constant currency basis. During the quarter, higher spending on AI related activities will offset software spending in local services. As they have noted previously, Alibaba's advertising spend on Weibo is closely tied to its own marketing priorities and pace of product launches, which may therefore vary from quarter to quarter. Value-added service revenues were $72.9 million in the second quarter, an increase of 19% or 12% on a constant currency basis. The increase was primarily driven by run-off ticket policies from offline activities held by Weibo. Some of these growth from membership services as well as favorable free exchange impact on reported numbers on a year-by-year basis. Turning to cost and expenses. Total cost and expenses for the second quarter was $328.4 million, an increase of 16%, mainly due to higher ad production costs and the marketing expenses. Operating income in the second quarter was $125.4 million, representing operating margin of 28% compared to 36%. in the same period last year. Turning to income tax under GAAP, income tax expenses for the second quarter were 23 million US dollars compared to 31.7 million US dollars last year, mainly due to lower income before taxes. Net income attributable to Weibo in the second quarter was 102.7 million US dollars, representing a net margin of 23%. Turning to our balance sheet and cash flow items, as of June 30, 2026, Weibo's cash, cash equivalents, and short-term investments totaled $2.64 billion, compared to $2.41 billion as of December 31, 2025. In the second quarter, cash provided by operating activities was $15.5 million. The decrease in operating cash flow for the quarter was primarily resulted from settlement of corporate income taxes, collection schedule of receivables, as well as payment schedule of any receipts compared with the prior quarter. Capital expenditures totaled $3.1 million, and depreciation and amortization expenses amounted to $15.7 million. We remain disciplined in capital allocation with measured capital spending and continue to support shareholder returns. We closed the first half of 2026 with continued progress across our product, content, and monetization initiatives. While soft consumer demand and intensified industry competition continued to weigh on advertising demand, we are encouraged by measurable improvements from our product revamp and AI initiatives. particularly in user engagement and advertising efficiency. Entering the second half, we will focus on advertising opportunities with better budget visibility while carefully managing the pace of investment and maintaining our focus on operating efficiency. Our priority remains to balance near terminal with sustainable profitability and the financial flexibility while strengthening the foundation for Weibo's long-term development. With that, let me now turn the call over to the operator for the Q&A session.

Thank you. As a reminder to ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Once again, please press star 1, 1 to ask a question. And to withdraw your question, please press star 1, 1 again. Thank you. We are now going to proceed with our first question. And our first questions come from the line of Timothy Zhao from Goldman Sachs. Please ask your question.

Great. Thank you, Magdalene, for taking my question. I think my question is regarding the outlook of the advertising revenue into the second half of this year. I was wondering, can Magdalene share more detail on your expectations on the ad revenue growth and what is the trend for different subsectors and what is the latest updates on your advertising strategy? And more specifically on AI, I just wonder if you can share more color how AI has increased the overall eCPM of the advertising business and what other operating metrics that you may share. Good evening, Mr. Gaofei, Ms. Cao. Thank you for accepting my question. My question is about Weibo's outlook on advertising in the second half of this year and the expectations of various industries, including what updates we can share in the second half of this year on advertising strategies. In addition, can you share with us some changes in advertising indicators related to AI, such as eCPM, Thank you. Okay, thank you. Let me first talk about the next half of the year.

In the second quarter, I briefly talked about it. In the second quarter, in addition to the car industry, the food and beverage industry, as well as the APB industry, a lot of industries are still I think it's mainly because of the current domestic consumption pressure, which has led to a reduction in customer budget. Gordon.

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

From the next year, we will see that the customer base is still uncertain. First of all, from the main industries, from the car industry, we can see that the sales of the car industry is still falling this year. However, because there are more new energy vehicles on the market this year, Weibo has announced new products, including the release of are still very competitive. So our car industry is still doing well. We expect to continue to do well in the second half of the year.

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

Okay. In addition, we expect the next half of the year to be similar to the next half of the year of Internet software and application services, but we will also see that customers' budget and R&D requirements are getting higher and higher. I don't think the government in the second half of the year will have as much as in the first half of the year, but it should be able to maintain stability or growth in the Internet and software. In the mobile phone industry, in fact, there has been a decline in the first half of the year. Zenghui Cao, Wen Li, Fei Cao, Gaofei Wang Next I would like to talk about the internet industry especially the vertical of the software and application services

So we believe that the second half of the year will be quite similar to that of last year, but still because the customers are having high requirements over the ROI as well as the allocated budgets on advertisements. As a result, we did not expect too much of the growth in the second half of the year. So I believe that this particular industry, the software and application services, are going to be having a flat performance or a little bit increase in the second half of the year. And next vertical is the headset industry. So in the first half of year, we did see the down performance and mainly due to the decrease for most of the customers. So except for Apple, the rest of the other headset makers were having double digit decrease in terms of the total performance. So in the second half of the year, of course, we might be expecting some of the new products launch in the market. So, but still we are observing that, you know, in September for the Apple new product launch event, whether or not this is going to trigger more allocation of the budget from the other asset makers to, you know, launch or to allocate to the new product availability, the medium to high end of the products. So in Q3, we had not that optimistic view on the hazard industry, but still keeping observation into the Q4 performance of this year. Okay.

我觉得下半年压力最大的我们会看还是在电商和外卖这个行业。 因为去年,因为外卖大战其实主要发生在三季度和一部分四季度。 So the income of the second half of last year still has a big impact. This part of this year, we will see that it has almost been a very obvious decline compared to last year. And by the second half of the year, I estimate that the impact of this country's anti-globalism may be that the competition on this platform may be weaker. And next, in the second half of the year, we had some of the really bad expectations

Over the industries of e-commerce and the food delivery as well. So you know that China last year, primarily the food delivery price war was happening in about Q3 and Q4. So that actually did have a lot of impacts on the air revenues to this. So this year still, we have been seeing some stressful situations. and in the second half of the year, I believe that the anti-involution policies from the Chinese government will continue on this one. So this is going to be weakening this competition among different food delivery brands. So as a result, this was impacting our overall ad budget for this year as well. So it is still uncertain for the industries like the local service or local lifestyle and also food delivery and e-commerce, etc. So really how the action loads there. Okay.

And then about the advertising strategy, let's take a look at it separately. First of all, from the effect advertising level, the ECPM control ratio itself has a certain improvement. But I think at the moment, this improvement does not represent too much for the actual growth of the effect advertising itself. Because I just introduced our current strategy, In the past year, the structure of our products has changed significantly. This has a certain impact on the user reception in our core users and our low-end users. In the second half of last year, especially in the second half of this year, we have done a lot of work to optimize this part, including some of the user advertisements. Wang Wei, Zenghui Cao, Wen Li, Fei Cao, Gaofei Wang And on these particular ad-related strategies, first of all, in terms of the performance-based ads,

Of course, we did see an ACPM increase, but, you know, quarter by quarter. But that does not represent that the revenue was going to also increase. Because, you know, last year we had a lot of restructuring of the ad products. So that did impact some of the core users. So in the first half of this year and also second half of last year, we have been doing some of the optimizations of this part. For instance, in terms of this bad user experience of the ads and some of the negative experience, the products had some elimination process conducted. So, you know, reduce the exposure of those low frequency ad users or low frequency users exposure. So that caused a stressful situation to our ad logs. So in the second half of the year, while we are seeing a tendency of increased time users spent and also the kind of other relevant situations, we are expecting to have a little bit of improvement, but still, and also a little bit release of the ad-log to this. The eCPM a little bit increase does not represent an overall growth momentum of this site. Okay.

In terms of brand ads, in fact, ECM does not represent, because it is a pricing system. In fact, we pay more attention to brand ads when it comes to sales. If you look at our current users and traffic, it is slowly returning this year. In fact, if you compare it with sales, in fact, our sales rate is decreasing in a significant degree. For example, because we now have some of the most top-notch customers, in fact, due to the impact of market competition, its demand or its priority reduction will directly affect the sales rate of our brand customers. At this time, we will say that we will now spend more money are the main sources of support for star marketing, including content marketing. Because when we promote our mid-term customers, for example, when we post on Weibo that we have 5 million to 20 million mid-term customers, star marketing is actually a great way for customers to put their main budget in Weibo. For example, during the World Cup, Alander's collaboration, through this star collaboration, Wang put his main marketing position in Weibo. He will greatly contribute to the demand for our brand ads. So whether it's celebrity marketing or content marketing, we are actually a catcher so that the platform can get more from our central department customers, so that they have more sales opportunities and sales clues to put in Weibo to do brand marketing. This is one of our current main benefits in brand marketing and content marketing. In fact, the core is to improve our

And in terms of the brand-based ads, we can see that except for having an optimized pricing scheme, we believe that the most important parameter here is the sales rate of our core resources. So you can see that this particular parameter has been shown in a decline tendency if we're comparing that with the ad revenue trend. So because of the, you know, decrease that amount from our ad users or ad customer side, So of course, at this current stage, that's the very reason why we are now trying to actually focus more on the celebrity-based or KOL-based marketing or the content-based marketing. So especially for those ad customers that may actually have the budget of in between $5 million and $20 million, I believe that the KOL-based marketing would be the best option for these customers. and they're going to be putting most of their available budget or ad budget with Weibo so that, for instance, especially for the example of Wang Aoji of having most of their budget left on the Weibo platform to actually use the KOL marketing because this is going to help them to actually really help to catch the attentions of those medium level users and the consumers. So this is actually going to help us to increase also the budget attraction as well as the revenue on this front. So the very important core part is to improve the parameter of the sales rate of the core resources

Thank you. We are now going to proceed with our next question.

And the questions come from the line of Jenny Yuan from UBS. Please ask your question.

So let me translate myself. So could you please provide an update on user growth and engagement trends, including content consumption, In addition, in terms of our visualization strategy and AI initiatives, could you please share the latest progress and the main areas of focus for the second half of the year? Thank you. Okay.

In the first two seasons, we made some major adjustments. In the first half of this year, In the second half of last year, there was a lot of pressure. For our core applications, including low-end users, the rules are still quite strict. Although some of their efficiency levels are rising, some users have some pressure on their habits. This year, the core applications, regardless of the overall market, or our interactions, are all starting to recover. But our low-end users still have some pressure. Wang Wei, Fei Cao, Wang Li, Fei Cao, Gaofei Wang and many more. The year-to-year pressure has dropped by about 10%. On the other hand, when our overall product becomes a recommended product, our product is no different from other low-priced products. The flow of low-priced products is also a challenge for us. This is a direction that we will optimize in the first half of this year and the second half of this year.

So for this question, first of all, for the previous two quarters of this year, we did see, as I have already alluded to just now, we have some of the adjustments of our product structure. So in the last year's second half, this did have some... ...the low frequency users as well, especially because of the changes of their using habits. So, you know, this year, of course, in terms of the core users, we did see a very good trend of increasing the time span on Weibo as well as the interactivity with Weibo. But still, this is quite stressful for the low frequency users still because of two reasons. First reason is that, you know, previously we were pretty much in a focus on the pre-installed app of Weibo. and those assets. But this year we had lower shipments of those assets with the pre-installed app. So that did help us to impact the overall parameter of traction of users using those pre-installed app. So this had around 10% of the impact on to our overall business and second reason is that now at the current stage, we are primarily focusing on the recommendation-based feed and because of that, if we're competing with our peers, we do not see that much of a difference if we're talking about the, you know, In the second half of this year, we are going to focus on this particular issue and hope to have some better achievements in the second half of the year. Okay.

and many more. In terms of video, just now Scribd also introduced the overall market, including video production and consumption, which is actually a growth of more than a few. This year, actually, we started from the second quarter. Because of this kind of growth, we started to spend a lot of resources and investment to expand the video user-oriented Weibo. I should have mentioned last year that in the past few years, we have also tried a lot of Wang Wei, Zenghui Cao, Wen Li, Fei Cao, Gaofei Wang

And the next part is about the video-related consumption. As we have already stated in this preparing mockdown, Wang Wei, Zenghui Cao, Wang Li, Fei Cao, Gaofei Wang Those video users or video accounts to be created and enter the Weibo or we are attracting the video content creators from other platforms to enter the Weibo platform. But of course, in the past, it was quite difficult to actually create the new accounts if it was purely based on the relationship they see it. but at the current stage we're now converting to the recommendations that they see and that really gives us an advantage of giving more traffic to those video content creators so that they are more willing to open accounts on our Weibo platform. And I believe that at the current stage the overall trend is pretty good in terms of video content created and also the consumption as well. So we are going to keep investing on this front. Okay.

Okay. In this short period of time, we will actually mention, because we support these users, part of it is through Beijing's base. On the other hand, it is mainly through the broadcast division. Now, this ROI at the end of this year, that is, within that year, we think it can reach 70% to 100%. But our goal is around 70%. For example, this part of this year, we brought in the advertising storage, and we gave it a division. and so on.

and you know in terms of the number of those video content creators at the current state or accounts at current stage it is amounting to around 10,000 of them so in terms of the retention rate it is about 70% or so so meaning that those accounts keep updating the video related contents now so this and second part is about you know incentives that we are providing to those content creators or the video content creators and, you know, the ROI then was about 70% to 100%. And, you know, this did help to contribute a lot to the analogs of the current year. And also, of course, that we believe in terms of the impact of this part to the gross margin of Weibo of a little bit negative. So if you're talking about... Sorry. and also in terms of the long term I do believe that there is going to be a lot of benefits added to our overall business because this did help us to increase the ad log at the same time you know having better attraction to the users and the improve

Okay, then I'll say it myself.

Hello. In terms of AI, I've already talked about it in terms of product and business. Let me talk about self-search. Last year, Search used AI, strictly speaking, a year earlier than we did with Agenda, and launched a self-search on Weibo. If we look at the second half of this year, although there is an increase in year-to-year growth, the ratio has actually decreased. Zenghui Cao, Wen Li, Fei Cao, Gaofei Wang Zenghui Cao, Wen Li, Fei Cao, Gaofei Wang We will see that users are more and more active in searching. In fact, in such a platform, the behavior of the user may be weakened to a certain extent in the long run. And more and more users are using it through guided searching or Q&A search in some content scenarios. This year, in terms of the second quarter and the current situation, the growth and average growth is very fast. But can it be in the future? I think that now I would like to talk a little bit

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

In our company, we don't have much to share about core products. Wang Wei, Fei Cao, Gaofei Wang are all able to customize some of their own applications. This way, in fact, has led to the participation and enthusiasm of these users. This means that we will see the beginning of the second quarter, in fact, this year, the application will be close to a historical trend. It is mainly due to the continuous increase in the individualization and play of these applications.

And the next part is about the AI application and its overall impact to enhance the R&D efficiency operation and maintenance as well. So at the current stage, we do see some of the positive impacts of the AI use to facilitate the R&D of the products. But first of all, in terms of the core product R&D, there's not much to be shared because this is actually kind of quite standardized. But especially on the product of the super topics, I think that this is really important in my opinion. And for this Super Topics, because of the efficiency of generating the Super Topics by AI, we did see more kind of sub-apps to be created by those content accounts from the game industry or the sport industry, etc., So you can see that this particular supertopic interaction and the activity rate at the current stage is already reaching the historical high status just because of this facilitation by the AI technology to this particular area. And we're seeing a very good trend of supertopics. Okay.

Thank you. Thank you for that.

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

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

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