Yalla Group Limited Q3 FY2025 earnings call

• Total revenue grew to USD 89.6 million, beating guidance, with net margin at 45.4% due to operational efficiency. - Middle East gaming market growing; soft launched Turbo Match, expect to launch Boom Survivor late this month, collaborating on SLG title. - AI initiatives: CMIS deployed across product line for content moderation, automated creative packing model improves ad efficiency, AI event orchestration engine boosts operational efficiency. - Shareholder return program: Repurchased over 7.7 million ADS totaling USD 51.9 million, on track to complete USD 150 million program by 2026. - MAUs increased 8.1% year-over-year to 43.4 million, flagship products saw momentum with new gaming modules, Yalla Ludo Carnival had record revenue, 101 Okey Yalla had highest quarterly revenue, and received an award for tech innovation.

In the third quarter of 2025, Yalla Group's total revenue grew to USD 89.6 million. Cost of revenue was USD 28.4 million (a 10.7% decrease from the same period last year), selling and marketing expenses were USD 9.6 million (a 30.3% increase), general and administrative expenses were USD 9.2 million (a 9% decrease), and technology and product development expenses were USD 8.6 million (a 21.4% increase). Net income grew by 3.9% year-over-year to USD 40.7 million, with net margin at 45.4%, up 1.4 percentage points year-over-year.

• Q4 2025 revenue expected between USD 78 million and USD 85 million. - Full year 2025 revenue broadly in line with 2024 or low single-digit growth. - Full year 2025 net margin expected around 40%. - Plan to maintain similar level of share repurchases as 2025, on track to complete USD 150 million share repurchase program by 2026 before launching new plan.

Q: Congratulations on another strong quarter. My question in regards on your game business. Can management brief us on the advancements in mid-core and hard-core games.

A: During the quarter, soft launched two match-3 titles, Turbo Match had good retention rates and will get more resources, localized product to launch soon, collaborative SLG project tested and expected to launch by end of year with second quarter 2026 as key inflection point for revenue impact.

Q: This is Chloe Wei 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?

A: Match-3 games have broad global user base, ideal for entering diversified regions; testing showed well received in Europe and North America, Yalla Parchis and Yalla Ludo have global reach, Middle East remains key strategic region but open to expanding into new ones.

Q: I also like to follow up on the gaming business. So could management share our company's upcoming gaming strategy, including one of the choices around the content and the market?

A: Gaming is a strategic priority; dual-track strategy: self-developed titles focus on casual and mid-core (Match-3, board games) with experience in Match-3, and game distribution partnering with leading global developers for Middle East localization.

Q: So can you please get management's view on the quarter performance of our flagship products, Yalla and Yalla Ludo, as well as they're also going forward.

A: Both flagship titles had breakthroughs: Yalla added in-app minigame modules, Yalla Ludo had 1 versus 1 mode driving engagement, tournaments and theme initiatives connected to off-line scenarios; expect stable business scale and incremental growth via new features and operations.

Q: I have two 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 quick follow-up question.

A: Successfully completed 2025 repurchase commitment, repurchased over 7.7 million ADS totaling USD 51.9 million, canceled over 6.2 million shares, plan to maintain similar share repurchases in 2026, on track to complete USD 150 million program by 2026 before new plan.

Q: That's very helpful. And could also -- the management also share your revenue and the profitability outlook for Q4 and 2026.

A: Q4 2025 revenue guidance between USD 78M and USD 85M; full year 2025 revenue broadly in line with 2024 or low single-digit growth; full year 2025 net margin expected around 40%; 2026 R&D spending similar to 2025, will adjust investments based on new product performance while investing in innovative initiatives for long-term growth and stable profitability.