Yalla Group Q1 2025 Earnings Report

Yalla Group EPS Results

• Actual EPS: N/A
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Yalla Group Revenue Results

• Actual Revenue: N/A
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Yalla Group Announcement Details

• Quarter: Q1 2025
• Date: 5/19/2025
• Time: After Market Closes
• Conference Call Date: Monday, May 19, 2025
• Conference Call Time: 8:00PM ET

Yalla Group (NYSE:YALA) operates a social networking and gaming platform primarily in the Middle East and North Africa region. It provides mobile applications, including Yalla, a voice-centric group chat platform; and Yalla Ludo, a casual gaming application. The company's platform offers group chatting and games services; and sells virtual items, as well as provides upgrade services. The company was formerly known as FYXTech Corporation. Yalla Group Limited was founded in 2016 and is headquartered in Dubai, the United Arab Emirates.

Yalla Group Q1 2025 Earnings Call Transcript

Presentation

[Operator]

Good morning and good evening, ladies and gentlemen. Thank you for standing by for Yala Group Limited First Quarter twenty twenty five Earnings Conference Call. At this time, all participants are in a listen only mode. After management's prepared remarks, there will be a question and answer session. Today's conference call is being recorded.

[Operator]

Now I would like to turn the call over to your speaker host today, Ms. Carrie Gao, Investor Relations Director of the company. Please go ahead, ma'am.

[Kerry Gao, Director - Investor Relations at Yalla Group]

Hello, everyone, and welcome to Yala's first quarter twenty twenty five 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.

[Kerry Gao, Director - Investor Relations at Yalla Group]

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. Yala does not assume any obligation to update any forward looking statements except as required by law. Please also note that Yala's earnings press release and this conference call include a discussion of unaudited GAAP financial information as well as unaudited non GAAP financial measures.

[Kerry Gao, Director - Investor Relations at Yalla Group]

Yala'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. Sai Bismaru, the company's President, who will briefly review our recent business developments.

[Kerry Gao, Director - Investor Relations at Yalla Group]

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 and A session.

[Kerry Gao, Director - Investor Relations at Yalla Group]

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

[Tao Yang, Chairman & CEO at Yalla Group]

Thank you. Thank you, everyone, for joining our first quarter twenty twenty five earnings conference call. We kicked off 2025 with a strong first quarter. Even with the impact of Lamdaan, which fell entirely within the first quarter of this year, our Q1 revenue still reached USD 84,000,000, up 6.5% year over year and beating the upper end of our guidance. Our persistent efforts to deliver quality growth and enhance our overall efficiency are also yielding positive results.

[Tao Yang, Chairman & CEO at Yalla Group]

In Q1, our net margin improved substantially year over year from 39.5% to 43.4%. Our robust quarterly performance benefited from our effective growth strategy and efforts to enhance our flagship application's gamification and optimize user acquisition. And these initiatives ultimately delivered a better experience for our users, boosting Yala's and Yala Lido users' willingness to pay and stay. In recent months, shifting international economic policies have sharply impacted the global macro economy. Against this fast evolving backdrop, the MENA region, Yana's core strategic market, has maintained remarkable stability and immense potential upside.

[Tao Yang, Chairman & CEO at Yalla Group]

Historically, The Middle East served as a retail crossroads for cultural exchange and trade between East and West. Today, it is a thriving hub for digital services, thanks to its vibrant young demographics and high Internet penetration. Technology is actively embraced across the region, making MENA a prime incubator for ever lost tech development and AI innovation. To capitalize on these opportunities, Yela as Mina's largest destination for online social networking and entertainment activities, remains deeply committed to R and D and AI deployment. During the first quarter, we leveraged extensive localized materials from our products in The Middle East to train our self developed AI content moderation model to support recognition of both images and text.

[Tao Yang, Chairman & CEO at Yalla Group]

In Arabic as well as several of MENA's regional dialects. We are especially proud that our proprietary platforms' recognition speed and accuracy now lead in the MENA region. We also integrated our moderation platform into our flagship products during the quarter, a win win in terms of technological advancement and cost efficiency. Beyond moderation, we extended AI applications to user profile management. Our data integration and systematic management tools bring us deeper insights into user activity, spending patterns and other behaviors, further optimizing our customer acquisition efficiency.

[Tao Yang, Chairman & CEO at Yalla Group]

Moving to our gaming business. That means global economic volatility. Minas' young population enhanced digital infrastructure and visionary government support for the culture and entertainment industries are generating unique growth momentum for the gaming sector. With a robust product pipeline spanning casual and medical games, we have a much three titles slated for official release in Q3. We just completed one round of product testing, and the team is working to further improve various details before this Tideus launch.

[Tao Yang, Chairman & CEO at Yalla Group]

We made test in the water seeing a few additional regions outside MENA with this game. Moving forward, we will continue to build our product metrics with a steady displaying approach and collaborate with industry partners to foster the growth and prosperity of Mina's gaming ecosystem. Before I turn the call over to Saifi, update on our shareholder return program. We mentioned last quarter that we would accelerate our share repurchases this year, targeting at least double the amount of last year's buyback or a minimum of 28,000,000. As of 05/16/2025, Yala had repurchased over 4,200,000.0 ADS or Class A ordinary shares in 2025, totaling 7,400,000.0, bringing us close to fulfilling our commitment made this March.

[Tao Yang, Chairman & CEO at Yalla Group]

In line with our commitment to sustained shareholder returns, we have decided to raise this year's buyback target by additional US22 million dollars on top of the previously outlined US28 million dollars bringing our total planned share repurchases to USD 50,000,000 for 2025. We will provide another progress update next quarter and discuss whether to increase the buyback scale even further. Moreover, the company has decided to cancel all shares repurchased this year as part of our commitment to generating sustained benefits for our shareholders. In summary, Yala Group definitely capitalized on diverse opportunities during the fourth quarter amid a complex global landscape, achieving breakthroughs in both R and D and product offerings. Can you see Mina's vast potential and tech forward ESS?

[Tao Yang, Chairman & CEO at Yalla Group]

We continued to deepen our technological capabilities using AI innovation to drive efficiency improvements and optimize user experience while further strengthening our localized advantage. We remain committed to amplifying Yala Group's role in The Middle East digital transformation, creating value for all of our stakeholders. Now I will turn this call over to our President, Mr. Saifu Ismail, for a closer look at our recent developments.

[Saifi Ismail, Director & President at Yalla Group]

Hello, everyone. Thanks for joining us today. Let's take a closer look at our first quarter operations and our products performance. First, let me walk you through our operational and product performance in the first quarter. It is important to note that Ramadan in 2025 started earlier than usual, with the entire month falling within the first quarter.

[Saifi Ismail, Director & President at Yalla Group]

Even so, our products delivered impressive results, notably while our flagship application near Lalludo's user base continued to grow. Our WeMuslim organically gained broader popularity during Ramadan. Without raising our selling and marketing during expenses, we increased our group's average monthly active user by 17.9% year over year to 44,600,000, achieving an accelerating growth rate substantially higher that of previous quarters. We continued to roll out competing online and offline initiatives crafted to enhance user experience and boost engagement, and we are thrilled to see them drive meaningful results within Yalla's vibrant community. Yalla LUDO's sixth anniversary campaign was a resounding success, attracting around 3,000,000 participants, including a remarkable share of devoted users who have been with Ludo since its launch.

[Saifi Ismail, Director & President at Yalla Group]

For Ramadan, we introduced a spectacular array of month long celebratory events online across our mobile apps, drawing users closer to our products and each other. Participating in our activities and exploring Yallad's apps became a new part of our users' daily lives during Ramadan. To celebrate the close of Ramadan, we also hosted an Istar gathering in Dubai, showcasing the crucial role our offline activities play in driving industry progress. This event brought together over 100 government officials, business partners, tech industry leaders and regional media executives to engage in thought provoking discussions on the latest trend and innovation opportunities in technology, while sparking insightful exchanges of ideas. This gathering also expanded the region's cross segment partnership networks industry wide, laying a solid foundation for future synergetic growth.

[Saifi Ismail, Director & President at Yalla Group]

We were honored to host these distinguished guests and to extend our heartfelt gratitude to our partners for their continued trust and support. At the March, we hosted an additional offline event to amplify our regional presence and strengthening our brand impact, returning to Iraq with the Yalla Loudoun Friendship Tournament. Tens of thousands of users registered for the online qualifying rounds to compete for a competitive spot in the offline event. These events gave us invaluable insight into the passion of this region's players and their high regard for the La Lodo brand. Looking back at the first quarter of twenty twenty five, we see our success reflected in growth metrics as well as deepening user trust and market recognition.

[Saifi Ismail, Director & President at Yalla Group]

Looking ahead, we remain committed to harnessing technological innovation as our engine and user needs as our compass driving synergy between our social and gaming businesses, while expanding the boundaries of MENA's digital ecosystem. As always, our vision is to build the largest destination for online social networking and entertainment activities in MENA, and we will never lose sight of that goal. With that, I will now turn the call over to our CFO, Karen, who will discuss our key financial and operational results.

[Yang Hu, Chief Financial Officer at Yalla Group]

Thank you, Sophie, and hello, everyone. Thank you for joining us today. I'm pleased to report that we delivered a robust first quarter as we continue to execute our high quality growth strategy and enhance overall efficiency. Our revenues increased by 6.5% year over year to US83.9 million dollars despite the impact of Ramadan. Thanks to our disciplined cost control and stronger operating leverage across the business, we further enhanced our profitability with net income increasing by 17% year over year to US36.4 million dollars Our net margin also rose substantially to 43.4% from 39.5 in the same period last year.

[Yang Hu, Chief Financial Officer at Yalla Group]

And excluding share based compensation, non GAAP net margin increased to 46.6%, Supported by our solid fundamentals and a clear strategy road map, we remain confident in our ability to seize new opportunities across MENA region and beyond and deliver enduring value to our stakeholders. Let's move on to our detailed financials for the first quarter of twenty twenty five. Our revenues were US83.9 million dollars in the first quarter of twenty twenty five, a 6.5% increase from US78.7 million dollars in the same period last year. The increase was primarily driven by our broadening user base and the enhanced monetization capability. Turning to our costs and expenses.

[Yang Hu, Chief Financial Officer at Yalla Group]

Our total cost and expenses were US52.7 million dollars in the first quarter of twenty twenty five, a 6.2% increase from US49.6 million dollars in the same period last year. Cost of revenues was US29.2 million dollars in the first quarter of twenty twenty five, a 2.2% increase from US28.6 million dollars in the same period last year, primarily due to higher commission fees paid to third party payment platforms as a result of increasing revenues generated. Cost of revenues as a percentage of total revenues decreased to 34.8% in the first quarter of twenty twenty five from 26.3% in the same period last year. Our selling and marketing expenses were million dollars in the first quarter of twenty twenty five, a 14.3% decrease from US8.1 million dollars in the same period last year, primarily driven by a decrease in incentive compensation. Selling and marketing expenses as a percentage of total revenues decreased to 8.3% in the fourth quarter of twenty twenty five from 10.3% in the same period last year.

[Yang Hu, Chief Financial Officer at Yalla Group]

Our general and administrative expenses were US8.7 million dollars in the first quarter of twenty twenty five, a 30.8% increase from US6.6 million dollars in the same period last year, primarily due to an increase in incentive compensation and higher professional services fees. General and administrative expenses as a percentage of total revenues increased to 10.4% in the first quarter of twenty twenty five from 8.4% in the same period last year. Our technology and the product development expenses were US7.8 million dollars in the first quarter of twenty twenty five, a 25% increase from .3 million dollars in 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 headcounts of the staffs to support the development of new businesses and expansion of our product portfolio. Technology and the product development expenses as a percentage of total revenues increased to 9.3% in the first quarter of twenty twenty five from 8% in the same period last year. As such, our operating income was US31.2 million dollars in the first quarter of twenty twenty five, a 7.1% increase from US29.1 million dollars in the same period last year.

[Yang Hu, Chief Financial Officer at Yalla Group]

Interest income was flat at US6.6 million dollars in the first quarter of twenty twenty five compared with the same period last year. Income tax expense was US1.4 million dollars in the fourth quarter of twenty twenty five compared with US3.5 million dollars in the fourth quarter of twenty twenty four, primarily due to a decrease in UAE corporate tax. As a result of foregoing, our net income was US36.4 million dollars in the fourth quarter of twenty twenty five, a 17% increase from US31.1 million dollars in the first quarter of twenty twenty four. And our non GAAP net income in the first quarter of twenty twenty five was US39.1 million dollars a 10.9% increase from US35.3 million dollars in the same period last year. Moving on to our liquidity and capital resources.

[Yang Hu, Chief Financial Officer at Yalla Group]

Our cash position remains solid and healthy. As of 03/31/2025, we had cash and cash equivalents, restricted cash, term deposits and short term investments US690.9 million dollars compared with US656.3 million dollars as of 12/31/2024. We continue to return value through our share repurchase program. Pursuant to the company's current share repurchase program, from January 1 through 05/16/2025, the company repurchased 4,275,812 ADS or Class A ordinary shares, totaling approximately US27.4 million dollars including US5.4 million dollars in the first quarter of twenty twenty five. As of 05/16/2025, the company has cumulatively completed cash repurchases in the open market of 11,580,950 ADS of Class A ordinary shares, totaling approximately US76.9 million dollars since the inception of current share repurchase program.

[Yang Hu, Chief Financial Officer at Yalla Group]

The aggregate value of ADS or Class A ordinary shares that remain available for purchase under the current share repurchase program was US73.1 million dollars as of 05/15/2025. Furthermore, as our CEO just mentioned, we had reached our 2025 share buyback target to US15 million dollars strengthening our commitment to share our success with shareholders. We believe our solid fundamentals and ample liquidity will support us in returning value to shareholders while maintaining daily operations and investing in future growth. Moving to our outlook. For the second quarter of twenty twenty five, we expect our revenues to be between US76 million dollars and US83 million dollars The above outlook is based on the 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.

[Yang Hu, Chief Financial Officer at Yalla Group]

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

[Operator]

Thank you. We will now begin the question and answer session. And our first question will come from Shui Xing with CICC. Please go ahead.

[Xueqing Zhang, Analyst at China International Capital Corporation (CICC)]

Hi, good morning management. Thanks for taking my question and congratulations on another solid quarter. My question is about your financials. What's the main driver of the significant year over year increase in net margin and guidance for next quarter and this year? Thank you.

[Yang Hu, Chief Financial Officer at Yalla Group]

Thank you, Xueqing. I will take your questions. On the revenue side, revenues from game services are the main growth driver. Our flagship product, like Yalla Ludo, continues to progress mostly. And the 01/2010 Yalla has achieved record high revenues for three consecutive quarters.

[Yang Hu, Chief Financial Officer at Yalla Group]

On the expense side, we have significantly decreased our selling and marketing expenses, mainly thanks to enhanced user acquisition efficiency, driven by our innovative AI predictive model for analyzing users' lifetime value. Together, these factors support our robust net margin performance. Regarding next quarter's guidance, I would say it's fair to expect our net margin to remain at around 40%. It is a relatively sustainable level given our current business. Thank you.

[Operator]

The next question will come from Eksu Qiao with Haitong International. Please go ahead.

[Xiaoyue Hu, Equity Research Associate at Haitong International Securities Group]

Hello, management. Thank you for taking my question and congrats on a strong first quarter. So can management please share the recent developments of our two flagship products, so Yala and Yala Luedoc? Thank you.

[Saifi Ismail, Director & President at Yalla Group]

Hi, I'll take this question. Thanks. So Yala is celebrating its ninth anniversary today, coincidently on the same day as our earnings release. So we have kicked off a major in app celebration to mark this special occasion. We also have some iteration lined up for Yellow's operation and design this year to enrich user chatting experience, making it more fun.

[Saifi Ismail, Director & President at Yalla Group]

The goal is to keep things fresh and engaging of our users and draw in a wider audience. For Yalla Ludo, we continue to boost user engagement in our online community through high quality operational activities. We also continue to host highly braced tournaments across MENA countries, effectively expanding Yalla Loudo's brand influence from online to offline. So overall, we see both products performing solidly, generating steady and consistent cash flow for the company. Thank you.

[Operator]

The next question will come from Lincoln Kung with Goldman Sachs. Please go ahead.

[Lincoln Kong, Analyst at Goldman Sachs]

Thank you. Thanks for taking my question. So my question is about shareholder return. So we have seen actually the share price rally quite nicely in the past two months. So at this moment, could you share the latest sort of the mindset behind the shareholder return plan going forward?

[Lincoln Kong, Analyst at Goldman Sachs]

How should we think about the consistency of our buyback program? Thank you.

[Tao Yang, Chairman & CEO at Yalla Group]

Linggen. This is Tao. I will take this question. We are glad to see a market correction in the company's valuation. Our buyback program is definitely picking up speed.

[Tao Yang, Chairman & CEO at Yalla Group]

Two months ago, we committed to at least doubling last year's buyback amount for 2025, and we are close to achieving this goal. As we just mentioned, to further strengthen our efforts to return value to shareholders, we have raised this year's buyback target by additional US22 million dollars bringing our total planned share repurchase to US50 million dollars I also want to highlight that the company has decided to cancel all shares repurchased this year. As part of our commitment to delivering sustained benefits to our shareholders, we will provide another update next quarter and discuss whether to further ramp up the buyback. I hope that helps. Thank you, Lincoln.

[Saifi Ismail, Director & President at Yalla Group]

You. The

[Operator]

next question will come from Keifeng Zhi with Citi. Please go ahead.

[Analyst]

Hi management. Thanks for taking my questions. Could management brief us on the advancements in mid core and hardcore games?

[Analyst]

Thank you.

[Jianfeng Xu, Director & COO at Yalla Group]

Hi, Kaifeng. Thanks for raising this. Our CEO just mentioned the Match three titles set to be released in Q3, and we have several additional midcore games in the pipeline with potential launches as early as Q3. For these games, we are not only focusing on The Middle East, but also exploring several other overseas markets to expand our user base. We provide more details after the official rollout.

[Jianfeng Xu, Director & COO at Yalla Group]

Thank you.

[Operator]

The next question will come from Jenny Yuan with UBS. Please go ahead.

[Jenny Yuan, Analyst at UBS Group]

Hello. Thanks management for taking my question. So we see all have achieved very strong growth momentum this year with multiple new products. So looking ahead, where we see a more ambitious user acquisition plan in future? Thank you.

[Jianfeng Xu, Director & COO at Yalla Group]

Thank you, Jenny, for your question. I'll be taking this question. So MAU growth in Q1 indeed came in well above our expectations. Historically, our quarterly MAU growth has ranged from 2% to 3%, but in Q1 exceeded 7%. This was largely driven by our refined user acquisition strategy tailored for Ramadan as well as our UI driven AI driven traffic acquisition optimizations.

[Jianfeng Xu, Director & COO at Yalla Group]

Overall, this year's MAU growth may not follow the smooth trajectory we saw in the past two years. We will adjust and plan dynamically based on the needs of our products and communities. We are keeping a close eye on the ROI of our marketing initiatives. Currently, still expect full year MAU growth to be around 10% year over year. We will revisit this and keep you posted if anything new comes up.

[Jianfeng Xu, Director & COO at Yalla Group]

Thank you.

[Operator]

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

[Kerry Gao, Director - Investor Relations at Yalla Group]

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 Yala's Investor Relations or PSN Financial Communications. Both parties' contact information is available in today's press release as well as on our company website.

[Operator]

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

Participants

Executives

• Kerry Gao, Director - Investor Relations
• Tao Yang, Chairman & CEO
• Saifi Ismail, Director & President
• Yang Hu, Chief Financial Officer
• Jianfeng Xu, Director & COO

Analysts

• Xueqing Zhang, Analyst at China International Capital Corporation (CICC)
• Xiaoyue Hu, Equity Research Associate at Haitong International Securities Group
• Lincoln Kong, Analyst at Goldman Sachs
• Analyst
• Jenny Yuan, Analyst at UBS Group