Weibo - Earnings Call - Q1 2020

Transcript

Speaker 0

Thank you for standing by, and welcome to the Weibo First Quarter twenty twenty Financial Results Conference Call. I would now like to hand the conference over to Sandy Zhang, VIVO Investor Relations. Please go ahead.

Speaker 1

Thank you, operator. Welcome to Weibo's first quarter twenty twenty earnings conference call. During the day, our chairman of the board, Charles Chao our CEO, Gao Phei Wang our senior group CFO, Bonnie Zhang and our VP finance and interim CFO, Fu Tao. The conference call is also being broadcast on Internet and is available to Weibo's IR website. Before the management remarks, I would like to read you the forward statement in connection with today's conference call.

During today's 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 could cause actual results to differ materially from those contained in any forward looking statements. Weibo assumes no obligation to update the forward looking statement in this conference call and elsewhere. Further information regarding these and other risks is included in Weibo's annual report on Form 20 f and other filings with the SEC.

All the information provided in this press release is occurring as of the date hereof. 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 exclude stock based compensation and certain other expenses. We use non GAAP financial measures to gain better understanding of risk comparative operating performance and future prospects. Our non GAAP financial excludes certain expenses, fees or losses and other items that are not expected to rebound in future cash payment or are not of not of recurring nature will not be indicative of our core operating results and outlook.

Please refer to our press release for more information about our non GAAP measures. Loi mentioned prepared remarks. We'll open the lines for a brief Q and A session. With this, I'd like to turn the call over to our CEO, Gaofei Wang. Thank you.

Hello, everyone, and welcome to Weibo's first quarter twenty twenty earnings conference call. On today's call, I'll share with you highlights on Weibo's user product and monetization as well as progress we made on our key initiatives in 2020. Let me start with our first quarter financial results. In the first quarter, our total revenue reached 322 23,400,000.0, a decrease of 19% year over year or 15% on a constant currency basis. Advertising and marketing revenue reached 275,400,000.0, a decrease of 19% year over year or 16% on a constant currency basis.

89% of our ad revenues came from mobile. On the user front, we would end the use to 18% year over year to 550,000,000 in March 2020, representing a net addition of approximately 85,000,000 users year over year. Average DAUs grew 19% year over year to 241,000,000, representing a net addition of approximately 38,000,000 users year over year. This is the highest reported year over year user growth to date in terms of in terms of net addition of MAUs and DAUs. 94% with MAUs came from mobile.

This quarter, amid the coronavirus outbreak in China, Weibo demonstrated its indispensable value as a social media platform, leveraging unique strength in serving public conversations between government, media, and general public. We are delighted to see strong growth in both use and traffic to our platform with fees refreshment growing 50% year over year. On monetization front, advertisers in broad range cutback was suspended their ad budget in response to the business disruptions resulting from the pandemic in short or mid midterm. That said, the silver lining behind this is that the pandemic has driven the transformation of the legacy industry and their marketing approach, presenting long term opportunity to both our customers and us. Supposedly, ramp up in traffic, Weibo is well positioned to further grow its social ad wallet in the long run.

In discussing our operating update for the first quarter, I'll elaborate our progress made in areas of product monetization. The strong growth in youth and traffic in March was mainly driven by seasonal strength and public conversation related to the COVID nineteen pandemic. To be specific, first, it is typical season for Weibo to grow users and improve user engagement around Chinese Spring Festival. Second, in response to the pandemic, Weibo has marshaled operating resources and product development to enable wider dissemination of official information from government and media, bring professional opinion and discussion to the public, and more importantly, help general public to seek quick response from government agencies. This initiative allow us to acquire users at a relatively lower cost and further solidify our competitive edge in the market.

Now let me elaborate. First, on hot trend, in order to distribute tiny update of the pandemic, Weibo has facilitated official information dissemination from over 70,000 media outlets and government agencies in the form of video and live streaming and responded quickly to launch the COVID nineteen feed within within recommended feed and discovery zone. In the first quarter, the pandemic relief helped by media and the government reached nearly 6,000,000 with total views over four four hundred billion. On a daily basis, over 200,000,000 users consume pandemic related contents, among which 70,000,000 users consume COVID nineteen feed. And the daily views of pandemic related content exceeded 12,000,000,000.

And meanwhile, we, along with this TV news, verified nearly 1,500 new Weibo accounts of medical experts, medical care staff, patients, and their family members, and help them accumulate approximately a 150,000,000 followers through content distribution on Weibo. Checking on virtual content. In the early stage of the pandemic, Weibo has to actively encourage the platform's content creators to participate in the distribution and discussion around the pandemic related content. As the pandemic evolved, Weibo has diversified content offering to Hong Kong users to initiating online events with a stay at home scene across eight verticals such as entertainment, food, and humor, aiming to alleviate public anxiety over the pandemic and encourage user to return to normal life. As a result, the number of daily posts by top content creators in the first quarter grew over 50% year over year, and traffic for top non pandemic related verticals resumed to the pre pandemic level.

Let's talk about video and live streaming business. For video, we are ramping up our investment around those PGC and UGC video content this year. In March, our daily video views and the number of users who consume videos on Weibo grew over 30% year over year, driven by the over traffic growth and ongoing product improvement. On the UGC video front, we further optimize user consumption experience, enhance distribution efficiency, and reinforce traffic support for UGC video content and thus enhance our monetization efficiency around the video content. The daily video views of UGC videos grew 50% quarter over quarter, leading to an over 60% sequential growth in ad revenues from UGC videos.

On PTC video front, we further optimized social interaction experience to ramp up on the layout of PTC video main page, resulting in robust growth in the user time spent and interaction on the main page compared to the previous one. Meanwhile, we have restructured the video community to aggregate video consumption with three fees. One with recommended PC video, one with with popular ones, and the third one with vertical UTC videos. Since the rollout of the new version early April, we are glad to see positive trends in terms of user retention and the video consumption, which in turn encourage professional video content creator to upload content on Weibo. And moreover, benefiting from user search demand for video consumption during the pandemic along with our further optimized content offering mechanism, our video community has seen recognition from users and content creators.

In March, PGC content creator who uploaded content on Weibo reached nearly a million with their daily video post growing over 20% quarter over quarter. Moving on to live streaming. Driven by the pandemic, Weibo's live streaming products saw wider adoption in an increasing number of vertical scenarios as enterprise celebrity and KOL platform quickly embrace live streaming tool as a desirable communication channel. With this understanding, we beef up our investment around live streaming from both product and operational front, underpinned by the showroom and the ecommerce live streaming facilities we already had last year. In addition, to facilitating over 30,000 government and media live events around the pandemic, We encourage our partner and clients to go live on Weibo, such as in The Cape online concert and product launch events.

We also leverage short speed clips and KOLs to distribute and raise raise awareness about the live event, leading to better promotion better promotion results for our content partners and customers. For instance, Weibo together with Tencent Music hosted the first virtual live concert for the famous singer, the The live concert itself to over 10,000,000 total views with nearly 300 celebrity and KOLs creating publicity for the event. We also edited highlights of the concert into short video clips as a way to achieve viral distribution for the event. We are pleased to deliver over a 100,000,000 views on the video clips and over 700,000,000 views on related topics. This distinct advantage we around the live streaming video event promotion will enrich Weibo's content offerings.

In the first quarter, the total number of the live video exceeded a million, double from the same period last year. And going forward, we will continue to optimize our product and improve content distribution efficiency through more traffic support and further enhance marketing efficiency for our clients through more diversified ad offering. Lastly, let me talk about the progress we made on OAT. The pandemic impacted users' willingness to post and limited content generation by certain degree. However, as people's lives in domestic areas gradually returned to normal, we saw the active user and content generation on Oasis in April redeemed to the pre pandemic level and continue its growth trajectory even without large scale channel marketing activities.

We will further optimize user product to promote video content generation and distribution on top of the total community and further drive user growth engagement with the proper channel investment. Weibo's advertising revenue decreased by 19% on a year over year basis with 16% on a constant currency basis due to the adverse impact from the coronavirus pandemic. Our KA ad revenue decreased year over year or 18%, excluding negative impact from currency translation and data transaction as several industry which were directly hit by the domestic coronavirus outbreak cut back or suspended their overall ad budget in the first quarter. That's the case with the movie industry where the withdrawal of new movie release left nothing to be promoted. And meanwhile, with the epidemic evolving into a global pandemic, there were other industries such as the in the case of cosmetic and luxury brands who deferred their ad spend following the delay in new product launch caused by the global supply chain disruptions.

On the flip side, the pandemic has further driven the ad budget shift from offline to online. Industry that was traditionally opted for offline product release have begun piloting to the online model, bringing forth new opportunities as well as in the top line growth for us in the long run. Taking Oppo as an example, we piloted quickly and rolled out an online product launch solution to address Oppo's need to release its new model, Find x two. We successfully built hype for Oppo Find X two through the HD live live stream event, leveraging improved watching and interaction experience, reached traffic exposure, compounding influence of over 2,000 KOLs. The ad solution resonated greatly with our customer, delivering over 1,800,000,000 total views on a related topic.

The successful campaign with Opel showcased the potential of the online past launch during the pandemic, and thus, entice other customers from the handset and auto sector to to have a try. We believe the advertiser will continue to migrate their ad budget from offline to online. And furthermore, we expect a notable trend of integrating marketing featuring elements of live streaming, video, e commerce, and KOLs. In light of this trend, we have focused on ad product upgrade in order to further enhance our social ad wallet share. Moving on to the SME.

Our SME ad revenue decreased 23% year over year or 19% on a constant currency basis. On the one hand, the pandemic has put pressure on the most offline merchants who slashed marketing spend in response to the pandemic due to disruption in work and logistics from the from the quarantine. On the other hand, the pandemic has structurally benefit a few industries, which deliver much better results than we had expected. For example, our revenues from the online education and gaming sector grew by triple digit on year over year basis in the first quarter. We took the opportunity to tap into a broader customer base, notably in the education, cloud, and gaming sectors with the pandemic accelerating Internet penetration in our daily life.

Our differentiated value proposition resonate well among those customer with an integrated branding plus user acquisition objectives. For for instance, traditionally, customer from the online education vertical came to us mainly for conversion purpose and spend on feed app. During the pandemic, market leaders such as Yuan Tudao and TAL also reached to reach reach, brand awareness on top of this acquisition. With this understanding, our sales team adapt quickly by rolling out an integrated branding plus performance ad solution and leverage the synergy with the vertical content operational team to deliver on both the branding and user acquisition aspects. The differentiated ad solution earned great recognition from SME customers.

On top of that, we also made strides in improving our service capabilities to top customers while continuous enhancing our feed ad offerings. As such, we see potential headroom in growing our SME ad revenues built upon such integrated branding plus performance Finally, let me share some color on our progress around ad products. On the programmatic buying front, namely OCPX, we focus on delivering higher ROI for customers by introducing deep learning to improve the automatic bidding process. As a result, ad spend to OCPX grew over 50% on a sequential basis. For gaming and education industry, which we put more efforts on optimizing algorithms, OCPX spend accounted for over 60% of the total ad spend.

On the video front, over the years, we have gradually enhanced our monetization efficiency around videos, underpinned by the healthy growth in the user who consume video content as well as the overall video view. We are encouraged to see substantially higher revenue contribution from ads in video format this quarter. That said, a chunk part of the incremental ad inventory released through video consumption remain untapped or under monetized. To address this opportunity, we have been continuously innovating our video ad offering. For instance, in the second quarter, we are upgrading our watch plus series of video ad products by introducing more direct response features to the video playing page, such as watch plus download, watch plus purchase, watch plus flowing, and watch plus h five serving, etcetera.

Such direct response features will give you a shortcut to the conversion end, leading to optimized ad performance around short video and photos. Consequently, we believe these initiatives can further enhance marketing efficiency among SME customer on Weibo. With that, let me turn it over to Deepak for financial review. Thank you, Dongfei, and hello, everyone. Welcome to Weibo's first quarter twenty twenty earnings conference call.

Let's start with user metrics. In March 2020, Weibo's MAU reached 550,000,000, representing a net addition of approximately 85,000,000 users on a year over year basis. Weibo's average DAUs reached 241,000,000, representing a net addition of approximately 38,000,000 users on a year over year basis. This is the highest reported year over year user growth to date in terms of net additions of MAU and the DAUs, demonstrating Weibo's indispensable value as the leading social media platform in China and further solidify our strategic mode in the China Internet space. Total MAUs represented approximately 94% of total MAUs.

Turning to financials. As a reminder, my prepared remarks will focus on non GAAP results and all comparisons on a year over year basis unless otherwise noted. Now let me walk you through our financial highlights for the 2020. The unprecedented COVID-nineteen has a broad impact on our business operations, revenue, and expenses in the first quarter twenty twenty. Weibo's first quarter twenty twenty net revenues were 323,400,000.0, a decrease of 19% or 15% on a constant currency basis.

Operating income was 74,100,000.0, representing operating margin 23%. Net income attributable to Weibo was 67,400,000.0, and diluted EPS was 30¢. Now let me give you more color on revenue. Weibo's advertising and marketing revenues for the first quarter twenty twenty reached 275,400,000.0, a decrease of 19% or 16% on a constant currency basis. Mobile ad revenues were 246,300,000.0, contributing approximately 90 89% of total ad revenues, up from 85% last year.

Moving on to k eight. In the first quarter, Weibo's k ad revenues reached 127,600,000.0, a decrease of 24% or 21 on a constant currency basis. Excluding the further transaction revenue impact, paid ad revenues would have decreased 18% on a constant currency basis. The performance of paid ad business in the first quarter is generally in line with our expectations as pandemic has the overall adverse impact on advertising business since late January. On the posted side, with gradual stabilization of the spread of virus domestically since March, we saw general recovery trend on the trough in February.

From industry perspective, consumer staples such as food and beverage fared well and exhibited resilience during the challenging period. Moreover, the pandemic has also altered people's way of life with more time spent online with accelerating trend of ad budget shift from offline to online. Leverage on it with a solid performance of ad spend from handset and automobile sectors on our platform, especially in March, as there are growing demand from these advertiser to promote products and the service online. Social media platform is better positioned in the budget shift as it builds direct connections between brands and potential customers. And to a large extent, take a vital role in brand marketing funnel through engaging platform influencers in the marketing process.

On Flipsch, the evolving situation of the pandemic in global areas still pose uncertainties to the macro economy and its impact on advertising budget of those with higher exposure to global business operations and supply chain, such as luxury industry. Ad revenues from Alibaba for the first quarter were 27,600,000.0, an increase of 66% or 73% on a constant currency basis. The strong momentum of Alibaba advertising business is like the resilience of the ecommerce giant against the challenging environment, as well as our strength in the cooperation in driving value for brands and merchants to achieve higher brand recognition and fast sales conversions through integrated branding campaigns on both platforms. Turning to SMEs. In the first quarter, Weibo's SME ad revenue reached 120,200,000.0, a decrease of 23% or 19% on a constant currency basis.

In the first quarter, we witnessed divergence in marketing spend by industries amid the pandemic. The harder hit sectors offline categories, which lacked a marketing spend in the first quarter as their businesses nearly sold since the COVID nineteen outbreak. E commerce sector has experienced trough in February and entered recovery trends in March as work resumption and logistic capacity improved. Helping mitigate the decline has been a significant ramp up in marketing spend by gaming and online education sectors that took advantage of the rising Internet usage during the pandemic quarantine. We also made progress in delivering integrated service and driving adoption of optimized business among SME clients, especially the aforementioned online sectors, which lead to a relatively stabilized ad pricing trend on a sequential basis despite the constraints in ad demand.

Value added service net revenues was 48,000,000 in the first quarter, a decrease of 17% or 14% on a constant currency basis, primarily due to the decrease of leading of lighting synergies and was partially offset by the increase in membership revenue. Turning to cost and expenses. Total cost and expenses for the fourth quarter decreased 5% to $249,300,000 Operating income in the first quarter was $74,100,000 representing operating margin of 23% compared to 34% last year. Our participant is funding in response to the pandemic do not fully offset its impact on revenue side in worst impacted quarter. Turning to income tax and the GAAP measure.

Income tax expense for the first quarter was 15,900,000.0 compared to 21,100,000.0 last year. The decrease was partially resulted from the reduced earnings and was partially offset by an increase of effective tax rate, primarily due to the expiration of the preferential tax treatment of one of the company's PRC subsidiaries in 2020. Net income attributable to Weibo in the first quarter was $67,400,000 representing a net margin of 21% compared to 32% last year. Turning to our balance sheet and cash flow items. As of 03/31/2020, we booked cash, cash equivalents, and short term investments totaled 2,350,000,000.00 compared to $2,400,000,000 as of 12/31/2019.

In the 2020, cash provided operating activities was 63,600,000.0 Capital expenditures totaled 7,300,000.0, and depreciation and amortization expenses amounted to 6,800,000.0. Now let me turn to financial outlook. In light of the uncertainties from the pandemic and the rapidly changing market conditions, we anticipate our second quarter twenty twenty net income net revenues to decrease by 7% to 12% year over year on a constant currency basis. This forecast reflects Weibo's current and the preliminary view and is subject to change. With that, let me now turn the call over to the operator for the q and a session.

Speaker 0

Thank you. If you wish to ask a question, please press star then 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star then 2. If you are on a speakerphone, please pick up the handset to ask your question. The first question today comes from Alicia Yap with Citigroup.

Please go ahead.

Speaker 1

Hi. Thank you. Good evening, management. Thanks for taking my questions. Congrats on the solid results.

Can management elaborate on the recovering status and also the budget billing list for the k a account versus the SME? And any specific trend we are seeing from multinational k a accounts showing more cautious in spending? And if we could give some colors on major industry verticals, how are some of the impacted factors seeing the recovering trend and their willingness to spend? Thank you. Okay.

Mhmm. First, let me share some color on Weibo's order performance and the copy we have For k business, we actually saw healthy year over year growth trend in January prior to the coronavirus outbreak. However, after the coronavirus outbreak since late January, advertiser in Walgreens have either cut back or postponed their attack in the car to the pandemic. Entry into April, things are getting normalized with domestic epidemic being effectively contained and business resumption underway. Accordingly, we are seeing a sequential recovery of ad spend from those advertisers with either flattish or modest growth trend on an annual basis.

However, multinational brands probably would take a more cautious view in their global aspect given the significant headwind from the pandemic in the home market, which might have a ripple effect on their China ad budget. For FMCG industry, consumer vehicles such as food and beverage, demonstrate resilience and exhibit a genuine stabilized trend in the first quarter. While discretionary categories such as cosmetic and personal care subsector has not to be impacting the first quarter as several customer reduced or postponed their accent in the in the action to the delay in the new new product launch. For the second quarter, as such, from the top customer in FMCG vertical are picking up sequentially. As for the handset and auto sector, our revenue from this two second actually increased year over year in the first quarter, despite disruption in their production offline promotions in the first quarter.

During the pandemic, we introduced our product launch solution to tap to further tap into the ad budget shift from offline to online sectors. And looking ahead, since the mobile handset production is mainly concentrated in the domestic area, and this accelerating trend of your budget, budget shift from offline to online. So we will further emphasize on, optimize the car by products for this sector and capture the ad dollars from the handset sector. And we actually saw a nice growth of the handset sector on Weibo so far. And for the auto sector, between high exposure to the global supply chain, the global pandemic is blocking auto production and may cause uncertainty to add budget for the sector in the second quarter.

So the ecommerce sector, since March since this March, the sector rebound very nicely from settling the logistics and work consumption. And we believe that ecommerce will see further uptake as the q two industry traditional peak season. Lastly, brand and entertainment sector. These two sector were a significant impact of the pandemic in the fourth quarter, and we also anticipate genuine prudent attitude toward advertising allocation from the luxury industry as the operational operational pressure and demand has softened caused by the pandemic to weigh on the sector growth. And for the entertainment, which we also anticipate similar kind of trend due to the due to the impact from the pandemic and also recederation or impact.

So the SME for the SME business, the pandemic has actually structurally benefit the online sector, among which the gaming and education vertical delivered very strong growth double from the same period last year and that should exceed our expectations. Leveraging the synergy between our product and operational team, we piloted quickly to fulfill online customers' integrated branding plus the user acquisition Abducted, helping us to capture additional ad dollars from the online sector. As we enter into April and May, with what presumption underway, users online time spent has gradually normalized, and we did see some of that spent for the gaming and education category on a sequential basis. Well, on any basis, the growth trends feel quite encouraging. And on the flip side, the offline industry, such as, you know, the the the wedding service and the medical service is hit during the pandemic period, which offset low robust growth of the online sector, and it might also take a while to see a recovery from this offline sector.

Moving on to Alibaba, we are delighted to see nice growth from Alibaba in the first quarter. For one thing, the ecommerce sector demonstrated relief resilience and solid recovery during the period. Weibo took the opportunity to capture additional ad budget from the Alibaba ecosystem, such as from the cloud service, Bingbing, and Ele. For another, we have beaten our strategic collaboration with Alibaba in areas of spending plus performance, ad, and ecommerce live streaming. This initiative amplified Weibo and Alibaba's advantage in social ecommerce, and this data has thus provided better conversion for advertisers within Alibaba's ecosystem.

With with this topic development, we could differentiate ad offerings and better explanation from Alibaba leading to growth in the Alibaba ad spend. From full year perspective, we have enhanced our competitive edge with the brand advertising and e commerce speed upon searching traffic and reach more in the public system, such as such as live streaming amid the pandemic outbreak. And we expect a solid ad growth from ad and Alibaba sector in the second half upon normalization after the outbreak. However, in the SME sector, despite despite nice nice growth in ad inventory and strong performance in the gaming and education sector through our product optimization, we still see some pressure on the client side, especially for the offline sectors. And we also are seeing the, you know, the the pressure on the supply side with oversupply of industry, especially from the short video platform.

So we expect all the SME performance for the for the full year, it's been some industry wide happenings and also intense it's in intensemarketcom market competition. Okay. Thank you.

Speaker 0

Next question comes from Binbin Zhang with JPMorgan. Please go ahead.

Speaker 2

Good evening, management. Thanks for taking my question. My first question is regarding the competition in the online ad market. I think in last year, one of the major concerns among investors is oversupply of ad inventory, and management just mentioned that again. How does management view the supply demand situation in this year, especially post COVID-nineteen?

Will there be any changes to the competitive landscape because of the pandemic? And I have a follow-up question on the potential opportunity from the COVID-nineteen. So have you identified any new user behavior changes during the pandemic? And I think you mentioned a number of new initiatives such as live concert online product launch. Can you elaborate on the topic?

And how is Weibo positioned to capture these opportunities? Thank you.

Speaker 1

Overall wise, we see a unfavorable supply with demand demand over advertised market with some softening in the demand side, especially for the SME sector and over supply of inventory in the market. And we're very well positioned to capture the the opportunity brought by the ad budget shift from offline to online as a leading social media platform. We have influence on media celebrity and the KOL resources, and we also have a very strong growth in our user overall user base and also the you know, we could also tap into new opportunities with the online product launch, which will help us to capitalize on the ad that we shipped. And we still see ample room to improve our produced monetization monetization rate considering the impressive traffic scale and the growth of of our platform. And we the the pressure we see from the from the short video platform is still pretty pretty it's it's it's still challenging for the for the short short video platform.

And we will focus on three areas to to improve our overall competitive edge in the market to to apply more First, we never try and we see the integrated branding plus performance advertising is is a very important trend in the market, and it's also area we we keep keep focus on for our product and operation. Amid an overall ex budget CapEx led by the pandemic, we expect the key customer to enter enter that more on the conversion conversion front on top of, like, existing brand needs spending needs. If a new product launch and various ecommerce related promotion by brand is becoming kind of must have scenario in their budget allocation. For new product launch, as I mentioned earlier, our product our online product release resonated well with the handset customers, and we are also penetrating to the s m FMCG vertical as well. And for the ecommerce related promotion by brand, Weibo has waiting for some social ad offerings and social ecommerce ecosystems and basing our our cooperation with our Avaya as that of calculating users purchase purchasing intent intention, payroll marketing as well as sales conversion, which enable us to attract incremental app wallet from paying

Speaker 2

K

Speaker 1

On on the other hand, our top SME customer also have incremental branding needs on top of their traditional performance driven objectives. In fact, this incremental branding budget was one of the main drivers for the growth of the gaming and education customer in the first quarter. And we also cooperated with our core coordinated our activity and KOL resources and also integrated branding of our solution to our customer, leading to a significant in uplift in our competitive edge among these two industries, especially the online education sector. With the consumption upgrade, I think they will roll out more integrated lending plus performance and solution to our top SME customers. Besides the planning plus performance planning plus performance trend, Kira market is also a very important trend as well, and it's Weibo's key differentiation in the market.

Have some disadvantage for the ad design compared with the short video platform, but we we have a very plenty plenty of celebrity and pure resources on our platform, and it's a very important social asset in in facilitating the brand brand recognition for self conversion and play a very crucial role in enhancing the conversion performance of the brand app. And so we put a public social feature in Maple Keylox marketing content to achieve buyer reach and also help them accumulate social assets and help to differentiate our ad product in the market. The second and third quarter, we upgrade our QR mapping system with the performance ad offering and to advance our facilitating capability between customer and KOLs as a step further to differentiate us in the performance ad market. We'll also drive up the adoption of the KOL marketing provided that customers from to find the optimal match for their campaign. And for our ad technology, we're focused on driving the OCPX, improving the ad ad technology through OCPX adoption and also in enhancing the conversion performance, which largely helps to to increase the sales rate of our ad product in the first quarter.

And on the other side, for our for Watch plus kind of product, which is a upgraded version of the social based photo based product, it also help us to improve the conversion kind of feedbacks for the for the for the product platform through the upgrade of this kind of watch class product. In terms of the with the pandemic has has also changed the user behavior, we see a very meaningful increase of the traffic and also the user content generation kind of activities. But what's different from the from the summer vacation that we are seeing we're seeing a much live content being being promoted on the platform and also use the increase more time spent on the on the platform as well. Oh, wow. On the content generation side,

Speaker 3

we see a lot more live broadcasting coverage on the vertical area other than the typical segment where, you know, in the past, we're strong at the live broadcasting. The show showroom, the media, and e commerce, we see significant expansion of the vertical segments in this in in using live online broadcasting tools. We look at the number of live broadcasting we we held our platform. This number is over a billion, which is more than double over the same period of last year, 80 higher than the the quarter over quarter basis. And most of the live broadcasting events were focused on the ecommerce, the the the media, and the the enterprise level.

Yes. So from a short term perspective, we see quite limited revenue growth directly can be directly derived from the live broadcasting growth. Even even for the showroom showroom live broadcasting, we anticipated there will be a short term reduction in revenue in the foreseeable future. However, we believe with the more adoption of live stream live broadcasting e commerce and such as live concert, there will be increased demand from brands to participate in events like this. So we look at the enterprise and the ecommerce live broadcasting.

We we're convert these demand into a standard product and to push to the care enterprise for them to using live broadcasting as a a sales sales channel to to to facilitate their their brand brand. In terms of media, celebrity and live live concert broadcasting, so far, they they have been providing quality content and and potential commercial inventory to us. We believe a brand will brand are typical buyer of these commercial inventory. Even though at this moment, we have very limited exposure on the brand revenue for the second quarter. However, we believe the that in the second half of this this year, more brands will likely to look into these these type of inventory to have opportunity to present themselves.

At this moment, most of live broadcasting was more focused on the content generation and from a user consumption perspective have brought quality content to the platform. We're we're we're promoted to to to commercialize or monetize these contents to try using different trial products. Okay.

Speaker 0

This concludes our question and answer session. I'd now like to hand the back call to miss Sandy John for any closing remarks.

Speaker 1

Well, thanks a for me, and this comes to our call. Thank you for joining us. We will see you next quarter. This

Speaker 0

does conclude our conference for today. Thank you for participating. You may now disconnect. Hi.