{"text":[[{"start":8.18,"text":"This article only represents the author's own views."}],[{"start":12.2,"text":"Amid growing trade wars that have plunged the global economy into uncertainty, the Middle East has emerged as one region most likely to avoid resulting turmoil. That reality was underscored by the friendly overtones during a four-day whirlwind tour of the region last week by U.S. President Donald Trump, hinting at growing ties that could send more technology and Western investment to the strategically important region."}],[{"start":41.94,"text":"In the thick of that mix sits Yalla Inc. (YALA.US), a leading social media and gaming company in the Middle East and North Africa (MENA) region that is receiving strong backing from local governments eager to develop local high-tech industries to diversify their economies beyond energy. Nine years after launching its services, Yalla’s latest results, released on Monday, showed it continued to feed off the region’s social media and gaming scene in the first quarter."}],[{"start":74.12,"text":"The company posted its strongest user growth in more than two years during the quarter, as its revenue also continued to grow. It also revealed it is sharply accelerating its share buyback program dating back to 2021, which was likely a factor behind a rally that has seen its shares double since early March. More on that shortly."}],[{"start":96.56,"text":"While Yalla’s revenue growth has slowed considerably in the last two years from headier times in its early days, the company is hoping to pick up the pace with the rollout of new self-developed midcore games. It revealed the first of those is set to launch in the third quarter, with more in the pipeline for potential release as early as this year."}],[{"start":120.76,"text":"The company currently counts casual games as one of its two main revenue sources. But it believes it could significantly boost its revenue from that segment with midcore and hardcore games that enthusiasts are more willing to pay for."}],[{"start":136.64,"text":"“The MENA region, Yalla’s core strategic market, has maintained remarkable stability and immense potential upside,” Yalla Chairman Yang Tao said on the company’s earnings call. “Amid global economic volatility, MENA’s young population, enhanced digital infrastructure, and visionary government support for the culture and entertainment industries are generating unique growth momentum for the gaming sector.”"}],[{"start":163.12,"text":"Yalla’s standout business metric for the quarter was its monthly average users (MAU), which rose 17.9% to 44.6 million MAUs from 37.8 million a year earlier. That marked the fastest growth rate since the third quarter of 2022, with COO Jeff Xu attributing the strong gains to a refined user acquisition strategy during the holy month of Ramadan, as well as AI-driven traffic acquisition optimizations. But he cautioned that “this year’s MAU growth may not follow the smooth trajectory we saw in the past two years.”"}],[{"start":204.44,"text":"The strong user growth came as Yalla reported its revenue rose 6.5% year-on-year during the quarter to $83.9 million, similar to its mostly single-digit growth rates over the last two years. The company pointed out that the latest figure was affected by the timing of Ramadan, which fell entirely in the first quarter this year. By comparison, the month, which is marked by daily fasting and a somber mood in general, ran from March 11 to April 9 last year."}],[{"start":204.94,"text":"Gaming acceleration"}],[{"start":239.6,"text":"Within its revenue pie, the company’s gaming business performed particularly well. That segment rose 13.6% to $30.1 million during the three-month period, outpacing a 2.5% rise for chat services, its other major segment, which rose to $53.5 million. The company pointed out it achieved the strong gaming performance despite a cutback in marketing spending, which dropped 14.3% for the quarter."}],[{"start":272.38,"text":"While gaming still accounts for a minority of Yalla’s revenue, the company hopes to change that with its upcoming move into midcore games. After testing several titles over the last few years, Yalla has developed at least two that it thinks will be winners. One of those, which it referred to as “Match 3,” is slated for launch in the third quarter, following the completion of first-round product testing."}],[{"start":298.68,"text":"“We (also) have several additional mid-core games in the pipeline, with potential launches as early as the third quarter,” said Xu. “For these games, we are not only focusing on the Middle East but are also exploring several other overseas markets to expand our user base,” he added. While he was not more specific, Yalla currently operates services outside MENA in Turkey and Latin America."}],[{"start":324.28,"text":"To keep its name in the regional gaming headlines, Yalla began staging a series of offline events for gamers last year, including six such events in cities like Abu Dhabi, Baghdad, Cairo and Riyadh. It continued that campaign this year with its Yalla Ludo Friendship Tournament held in Iraq at the end of March."}],[{"start":346.32,"text":"Yalla is generally conservative when it comes to spending, and its ongoing cost controls and rising revenue helped to boost its net margin to 43.4%, up sharply from 35.8% the previous quarter when the company was spending more heavily on development of its upcoming new games. Those gains helped to boost Yalla’s net profit 17% during the quarter to $36.4 million from $31.1 million a year earlier."}],[{"start":379.52,"text":"Yalla’s shares are up more than 90% since the start of the year, and, following their recent rally, currently trade at a price-to-earnings (P/E) ratio of 11. That’s ahead of Chinese social media giant Weibo’s (WB.US: 9898.HK) 7.3, and not far behind similar-sized global peers Pinterest (PINS.US) at 12 and Match Group (MTCH.US) at 15."}],[{"start":410.08,"text":"Lastly, Yalla revealed plans to sharply boost its share buyback program for this year, raising its target to $50 million from a previous $28 million. The company has already come close to the original $28 million target, purchasing $27.4 million worth of its American depositary shares (ADS) this year through May 16."}],[{"start":435.28,"text":"Equally important, the company has decided to cancel all the shares it repurchases this year, which will drive up its earnings per share, and should boost its valuation multiples. The company has plenty of cash to execute such plans, and the amount is only growing. Yalla said it had $691 million in cash at the end of March, up from $656 million at the end of last year."}],[{"start":468.56,"text":""}]],"url":"https://audio.ftmailbox.cn/album/a_1748005190_4199.mp3"}