This meeting is the quarterly financial report conference call for Huang Group in the second quarter of 2025. After the meeting started, the host first thanked the participants and introduced the meeting agenda. The meeting was then handed over to the company's IR director, who welcomed the participants and mentioned that the financial report has been released on the company's IR website and news channels.

At this performance release conference, the management detailed the company's latest achievements, business development dynamics, and financial situation, including a comparison analysis of GAAP and non-GAAP financial indicators, as well as future financial forecasts. In addition, the management also emphasized the potential risks and uncertainties faced by the company, and promised to comply with legal requirements to update relevant information in a timely manner. After the conference, the management will accept on-site questions.

In the second quarter of 2025, the company achieved a total revenue of 846 million US dollars, exceeding expectations, with a net profit margin increasing to 43.2% year-on-year. By optimizing user acquisition strategies and internal processes, the company has continued to expand its user base while increasing operational efficiency, particularly making progress in the field of game distribution services. In the future, the company will increase its investment in Mico and Hackle games, expect to launch multiple new games, and deepen cooperation with universities on AI application projects to drive technological innovation and talent development. Additionally, the company is actively repurchasing stocks, having repurchased 6.2 million shares, completing 82% of the annual target, and plans to cancel the repurchased shares within the year, in order to enhance shareholder returns.

The company shared the successful cases of increasing monthly active users in the second quarter through adjusting user acquisition strategies, as well as enhancing user engagement and commercial value through brand partnerships and event design. Looking ahead, the company plans to continue innovating products, deepening strategic partnerships, fulfilling social responsibilities, and striving to become the leading online social entertainment platform in the Middle East region.

In the second quarter, the company achieved a revenue of 846 million US dollars, a significant year-on-year growth, benefiting from the expansion of user base and enhanced monetization capabilities. With effective cost management and operational efficiency improvements, net profit has increased significantly, with a net profit margin expanding to 43.2%. Additionally, the company is accelerating its stock repurchase plan, committed to product innovation, operational optimization, and increasing shareholder value, with the goal of becoming a leading online social entertainment platform in the Middle East.

In the second quarter of 2025, the company's total costs and expenses were $53.9 million, an increase of 6.5% compared to the same period last year. Among them, revenue costs were $9 million, a decrease of 25.7% year-on-year, mainly due to diversified payment channels and lower stock-based compensation expenses. Sales and marketing expenses, general and administrative expenses, and technology and product development expenses all increased. Operating income was $30.9 million, an increase of 3.8% year-on-year. Net profit was $36.5 million, an increase of 16.4% year-on-year. Non-GAAP net profit was $39.4 million, an increase of 11.7% year-on-year. As of June 30, the company's total cash and cash equivalents, restricted cash, term deposits, and short-term investments amounted to $704.1 million. Revenue for the third quarter is expected to be between $78 million and $85 million.

Discussed the possible year-on-year decline in revenue for the upcoming quarters, as well as an estimated low single-digit growth in 2025 with around 40% net profit margin. The plan is to adjust the marketing budget flexibly based on user feedback on new products to drive revenue growth for the company.

The management team shared adjustments to the user acquisition strategy, including optimizing channel evaluation criteria and allocating resources to attract highly engaged users. It is expected that MAU will recover and accelerate growth in the future quarters, with the long-term goal of building an active community.

The management team has updated the development progress of music and hardcore games, indicating that two music games targeting different user groups are in the final adjustment stage, planning to release the first Roguelike mobile game in the third quarter, and are collaborating with top game developers to prepare to launch hardcore games within the year. The company emphasized that the game pipeline for the coming quarters is very robust and is seeking to improve game distribution efficiency through collaboration, continuously updating progress on new initiatives.

In the dialogue, the management detailed the execution of the company's buyback plan, including the completed amount and quantity of buybacks, as well as future plans to continue executing and possibly exceeding the buyback commitments. At the same time, the management expressed the intention to timely update the buyback plan to enhance shareholder confidence. In addition, the distribution strategy for new casual and hardcore games in the gaming business was discussed, demonstrating the company's layout and thinking in the gaming industry.

The conversation focuses on the distribution strategy of games in the Middle East market, emphasizing three core advantages: deep localization, efficient user acquisition, and strong community operation. By integrating Arab design principles and narratives to ensure cultural resonance; utilizing existing user base for targeted marketing to reduce costs and increase conversion rates; and enhancing user emotional connection and community cohesion through customized in-game activities and a large-scale customer service team. These strategies will help expand the influence in the Middle East market.

The conversation discussed the potential of the Middle East as a market with a young population and high mobile internet penetration rate, emphasizing the opportunities to digitize offline activities. The company plans to invest long-term in medium to heavy game development, while also exploring new opportunities in social networks and local life services, in order to capitalize on the growth potential brought about by digital transformation.

The host announced the end of the question and answer session, and handed the meeting back to the management for final remarks. They thanked the participants for their attendance, and invited those with further questions to contact the Investor Relations Department or the Financial Communication Department, providing contact information. The meeting concluded, and participants were invited to enjoy the rest of their day.