Weibo Corp

HKEX:9898

Earnings Call Transcript

[Operator]

Good day, and thank you for standing by. Welcome to the Weibo Reports Second Quarter 2024 Financial Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Sandra Zhang. Please go ahead.

[Sandra Zhang, executive]

Thank you, operator. Welcome to Weibo's Second Quarter 2024 Earnings Conference Call. Joining me today are our Chief Executive Officer, Gaofei Wang; and our Chief Financial Officer, Fei Cao. This conference call is also being broadcasted on the Internet and is available through Weibo's IR website.

Before the management remarks, I would like to read you the safe harbor statement in connection with today's conference call. During today's conference 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 this 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 excludes stock-based compensation and certain other expenses. We use non-GAAP financial measures to gain a better understanding of Weibo's comparative operating performance and the future prospects. Our non-GAAP financials exclude certain expenses, gains or losses and other items that are not expected to result in future cash payments or [ are ] nonrecurring in nature, or are not indicative of our core operating results and outlook. Please refer to our press release for more information about our non-GAAP measures.

Following management's prepared remarks, we will open the lines for a brief Q&A session.

With this, I would like to turn the call over to our CEO, Gaofei Wang.

[Gaofei Wang, executive]

[Foreign Language]

[Sandra Zhang, executive]

[Interpreted] Thank you. Hello, everyone. Welcome to Weibo's earnings conference call.

[Gaofei Wang, executive]

[Foreign Language]

[Sandra Zhang, executive]

[Interpreted] Today, I will share with you highlights [ on ] Weibo's product monetization in the second quarter of 2024.

[Gaofei Wang, executive]

[Foreign Language]

[Sandra Zhang, executive]

[Interpreted] On the user front, by the end of the second quarter, Weibo's MAU reached 583 million and average DAUs reached 256 million, in line with an already sizable user community and a mature user mindset. We have proactively adjusted our user strategy this year with more channel budget allocated to the acquisition and engagement of the high-quality users. This quarter, our DAU versus MAU ratios increased year-over-year and quarter-over-quarter, reflecting further improvement of user engagement.

[Gaofei Wang, executive]

[Foreign Language]

[Sandra Zhang, executive]

[Interpreted] On the monetization front, in the past 2 years, we have been focusing on combining Weibo's hot trend products with advertising [ and ] marketing demand. And thus, our hot trend marketing has been recognized by a wider range of industries and advertisers.

In the second quarter, our total revenues reached USD 437.9 million, of which our ad revenues reached USD 375.3 million. On a constant currency basis, our total revenue would have increased 1% year-over-year, and our ad revenues would have decreased 1% year-over-year. Our non-GAAP operating income reached USD 157.6 million, representing a non-GAAP operating margin of 36%, a modest pickup year-over-year.

[Gaofei Wang, executive]

[Foreign Language]

[Sandra Zhang, executive]

[Interpreted] Next, let me share with you progress made in product and monetization in the second quarter. In 2024, we still focus on growing user scale and engagement, strengthening the competitiveness of content ecosystem and improving operating efficiency as our key strategies -- strategic objectives.

[Gaofei Wang, executive]

[Foreign Language]

[Sandra Zhang, executive]

[Interpreted] On the channel front, we maintained close cooperation with handset manufacturers focusing on the acquisition of high-value users and promotion of user engagement. We also invested to further refine accuracy of algorithm and targeting capability of our business model in order to create enriched content offerings for our channel users and increase their user engagement, which laid foundation for monetization.

[Gaofei Wang, executive]

[Foreign Language]

[Sandra Zhang, executive]

[Interpreted] On social attributes, in the second quarter, we are leveraging our relationship-based feed to further recover vertical content ecosystem. We strengthened the interaction between KOLs and fans, increased their user [ stickiness ] and improved user interaction efficiency of relationship-based feed.

Meanwhile, this year, we have also been investing in user-generated content by improving the growth [ task ] of high-quality UGC in Weibo to encourage more quality content generation around vertical content and boost user engagement.

In terms of user interest sharing, we further strengthened Super Topic community as the core domain for users to share interest-related content. In the first half of this year, users' social interaction increased significantly with double-digit growth year-over-year. For example, during the first half of this year, we increased the interaction between celebrity and fans by expanding campaigns of celebrity and their [ work ].

As a result, in the second quarter, the number of average data users who posted and the number of posts in the entertainment-related Super Topic increased over 50% year-over-year, respectively.

In terms of the daily [ life ] sharing content by ordinary users, we improved the distribution mechanism for those high-quality contents to be fairly distributed in core feeds and help users who consistently generate content to accumulate fan base.

For instance, in the second quarter, we launched Weibo photography to select high-quality UGC photography around daily life, aiming to encourage all users to record and share their daily life in multiple dimensions. During the first campaign in May and June, nearly 500,000 users shared their photography and contributed over 2.1 million photographs, attracting over 3 million users to engage and interact.

[Gaofei Wang, executive]

[Foreign Language]

[Sandra Zhang, executive]

[Interpreted] On the content ecosystem front, in the second quarter, while maintaining our competitiveness in the [ IP ]-related company ecosystem of hot trend entertainment and events, we focus on increasing investment in verticals such as digital products, automotive, game, fashion and beauty and health care to enhance Weibo's competitiveness in the content ecosystem and further improve monetization efficiency.

[Gaofei Wang, executive]

[Foreign Language]

[Sandra Zhang, executive]

[Interpreted] On hot trend [ and ] IP ecosystem, in the second quarter, with the release of [ plentiful ] entertainment work, we leverage our advantage of [ celebrity ] and fans and entertainment work as well as fans' interaction across verticals. We encourage more users to consume and discuss around entertainment contents. As a result, the number of user interaction in the entertainment vertical increased double-digit year-over-year.

For example, in the second quarter, we reached in-depth [ cooperation ] with the music variety show "Singer 2024" of Hunan TV station on cross-screen live streaming and viewed on hot topics to achieve user interactions. The show became a phenomenal ] hit in the first half of 2024 through launching innovative campaigns on Weibo, such as allowing users to recommend singer across platform. A [ star ] -- candidate post on Weibo and roll out real-time hot trends around the show.

The total views of the show "Singer 2024" exceeded [ 50 ] billion times and the number of user discussion exceeded 560 million times. This hot trend plus social interaction pattern between TV and the social media not only makes the show influential, but also provides brand advertisers with more diversified marketing solution and generated sustainable ad revenue growth for Weibo through hot trend marketing.

During college entrance exam season this year, we cooperated with People's Daily to boost discussion on university's major selection and application after the entrance exam and [ organized ] the [ expert ] and KOLs of over 10 verticals such as education, health care, digital products, automotive and finance, to share with examinees [ our ] [ suggestions ] of professional learning, application and industry employment. The total views of college entrance exam related content reached 38.9 billion times in June, and the number of user discussion exceeded 110 million times, representing an increase of over 50% compared with the same period last year.

[Gaofei Wang, executive]

[Foreign Language]

[Sandra Zhang, executive]

[Interpreted] On vertical content operations, we [ continued ] to focus on 2 aspects in Q2. First, we strengthened the construction of vertical content ecosystem, including supporting vertical content and engaging cross-field accounts and media outlet in the generation and distribution of vertical hot trends.

Second, we [ beef ] up the support of golden and orange verified accounts in vertical areas and empower them to earn higher commercial returns on our platform. In the second quarter, we continued to reinforce hot trend operations in automotive and digital product verticals with emphasis on industry, brand and product. As a result, the number of golden verified accounts in automotive and digital product verticals as well as their traffic interaction and ad revenue on our platform continued to increase year-over-year.

For example, for the automotive vertical, as competition in the new energy vehicle market intensified, OEMs step up their investment in content operation. In the first half of this year, over 30 auto manufacturers and around 100 executives of auto industry register were activated Weibo accounts. Thanks to the content contribution from [ these ] executives, KOLs and media accounts in the automotive industry also actively created follow-up hot topics.

We are pleased to see our clients join us, including the automotive content ecosystem, which not only help clients to [ refine ] brand operation and product promotion, but also lay the foundation for our long-term business cooperation with clients.

[Gaofei Wang, executive]

[Foreign Language]

[Sandra Zhang, executive]

[Interpreted] As for the online game vertical, [ built ] upon content construction of online game ecosystem over the past 3 years, we have covered over 80% of the top 100 games in terms of content operations. UGC creation and interaction stickiness continue to improve, leading to rapid growth of the golden verified accounts in the online [ game ] vertical.

In the second quarter, the number of golden verified accounts in this vertical increased by over 80% year-over-year. [ Visitor ] traffic and interaction grew over 50% on an annual basis, leveraging Weibo's expanded advantages in online [ game ] ecosystem and higher influence of golden verified accounts. We have built closer partnership with online game clients on content marketing.

In the second quarter, nearly 50% of the commercial project for [ paid ] promotion chose to cooperate with Weibo in hot trends marketing, demonstrating better recognition of Weibo's golden verified accounts among clients in this industry.

The ad revenue of golden verified accounts from the game industry increased by over 4 times year-over-year. We are delighted to see that the online game vertical has gradually entered the self-reinforcing cycles between content and monetization ecosystem, similar to the automotive and digital verticals.

[Gaofei Wang, executive]

[Foreign Language]

[Sandra Zhang, executive]

[Interpreted] Moving on to monetization. In 2024, we will continue to beef up our efforts to reinforce our monetization competitiveness. Leveraging Weibo strength in hot trend and IPs as well as rising vertical content ecosystem, we will sharpen the competitive edge of our content marketing and performance ad products in the hope of enhancing our capabilities to navigate through business risk in key industries.

[Gaofei Wang, executive]

[Foreign Language]

[Sandra Zhang, executive]

[Interpreted] Amid a relative soft end market in the second quarter, our ad revenue decreased 1% year-over-year on a constant currency basis. By industry, our [ representative ] industries such as handset and automotive industries sustained solid growth trend, benefiting from clients' recognition of Weibo's hot trend marketing.

Therefore, our ad wallet share of clients' marketing budget in this sector either remained stable or increased. Thanks to the impressive [ topic ] views and discussions generated by the blockbuster IPs, such as "Singer 2024."

Weibo attracted many clients to launch campaigns around this IP-related hot trend, which brought forth incremental hot trend marketing dollars to our platform. For example, in the second quarter, Vivo and Weibo reached a strategic cooperation in content marketing, achieving in-depth [ co-creation ] of content between Weibo platform and the brand.

To elaborate, we expanded the marketing initiative on new product launch to daily hot trend throughout the year, and thus comprehensively enhanced the user reach and nurtured user mindset of the brand and its products.

Take the Vivo X100 series launched in the second quarter as an example. After the new product release in May, Vivo took advantage of the peak period of offline concert in the second quarter and the popularity of variety show "Singer 2024" actively participated in the [ co-creation ] of hot trends and strengthened user awareness of the differentiated pack of the Vivo X100 series. Concerts go better to enhance user penetration of Vivo's portrait photography. We successfully helped Vivo achieve the first place in a [indiscernible] [ track ] of [ concerts ] and the telephoto.

In the current Internet IP market, clients will gradually concentrate on the top IPs. This trend can also be seen from the traffic structure of Weibo. The traffic and monetization opportunities brought forth by the top IPs was significantly higher than those from mid-tier IPs.

[Gaofei Wang, executive]

[Foreign Language]

[Sandra Zhang, executive]

[Interpreted] On the [ flip ] [ side ], in the second quarter, the sales of international cosmetic brands were still under pressure, which negatively affected the pace of new product launch and thus their scalable budget. Therefore, our ad revenue from the cosmetic and beauty sector continue on a descending trajectory year-over-year. In order to boost clients' willingness of new product marketing and its effectiveness, we step up our cooperation with e-commerce platform and domestic brands this year.

To elaborate, we actively explore the synergy of new product launch of the FMCG industry between social and e-commerce platforms and provide clients with better marketing support. We hope these efforts [ will ] translate into more stable growth in the FMCG sector in the coming quarters.

In the second quarter, we started the cooperation on new product launch marketing with Tmall, with focus on the cosmetic and beauty as well as footwear and apparel industries. Leveraging Weibo's strength in hot trend marketing, we offer full funnel value proposition to clients from social influence to e-commerce conversion.

With this partnership, we hope to enhance client recognition of the value of Weibo's hot trend marketing and also cultivate and reinforce users' mindset of discovering new product on Weibo. We will continue to explore this model with Tmall in the third quarter and try to penetrate into more industries and clients. With higher client recognition of Weibo's hot trend marketing and our broadening coverage of domestic beauty brands, we hope to see our ad revenue in the cosmetic and beauty sector stabilize or return to growth year-over-year in the fourth quarter.

[Gaofei Wang, executive]

[Foreign Language]

[Sandra Zhang, executive]

[Interpreted] Overall speaking, amid the current competitive landscape, based on the current brand [ plus ] performance ad offerings, Weibo's marketing service has upgraded to content-marketing solutions with emphasis on hot trend and IP, celebrity and KOL plus performance ad. Leveraging adjustment in the sales structure and ad product in the past 2 years, the market competitiveness of these 3 types of ad offerings has gradually improved and become the key driver of revenue. Ad revenue directly generated by these 3 types of ad offerings account for over 50% of our total ad revenues.

From industry perspective, the hot trend and IP marketing finally serve the FMCG, digital products and automotive industries. Clients in these industries seek to amplify their product influence, leveraging organic hot trends or even build market hype around their new products through Weibo's hot trend marketing. The celebrity and KOL marketing mainly caters to the luxurious goods, cosmetic and beauty as well as footwear and apparel industries. Clients can better reach fans and influence their consumption decision with higher accuracy by working with celebrities and KOLs in professional areas.

Finally, despite the fierce competition in the performance and marketing in recent years, we are gradually improving our competitiveness ad through algorithm optimization and social native ad offerings, although performance ad has now become the main contributor to revenue growth in the past 2 years. Performance ad offerings are crucial for us to broaden client coverage and identify high-quality clients.

[Gaofei Wang, executive]

[Foreign Language]

[Sandra Zhang, executive]

[Interpreted] In contrast to other platforms' competitive edge in traffic-based monetization, we have built our competitiveness on media-oriented and brand-oriented [ ad ] placement as well as content marketing based on hot trend IPs and celebrities. This differentiation are critical for us to obtain marketing budget for product promotion and user mindset.

Meanwhile, as we further strengthen the construction of content [ ecosystem ] in the entertainment, sports, events and industry-based verticals and better integrate organic content ecosystem with commercial content ecosystem, our business model, which is mainly based on brand plus celebrity marketing and content marketing, [ well ] supplemented by performance ad, will be more conductive to improving the platform's monetization efficiency. This is also our most important strategy and objective for strengthening our monetization competitiveness in future.

[Gaofei Wang, executive]

[Foreign Language]

[Sandra Zhang, executive]

[Interpreted] With that, let me turn the call over to Fei Cao for our financial review.

[Cao Fei, executive]

Thank you, Gaofei, and hello, everyone. Welcome to Weibo's Second Quarter 2024 Earnings Conference Call. Let's start with user metrics. In June 2024, Weibo's MAUs reached 583 million, and average DAUs reached 256 million. As communicated last quarter in 2024, we have proactively adjusted our user strategy to put more emphasis on the [ acquisition ] and engagement of high-quality users, as demonstrated by improved DAU versus MAU ratio this quarter.

Turning to financials. As a reminder, my prepared remarks would focus on non-GAAP results. Our monetary amounts are in U.S. dollar terms and all the comparisons are on a year-over-year basis, unless otherwise noted.

Now, let me walk you through our financial highlights for the second quarter 2024.

Weibo's second quarter 2024 net revenue was $437.9 million, a decrease of 1% or an increase of 1% on a constant currency basis. Operating income was $157.6 million, representing our operating margin of 36%. Net income attributable to Weibo [ reached ] $126.3 million, representing a net margin of 29%. Diluted EPS was USD 0.48.

Let me give you more color on the second quarter 2024 revenue performance. Weibo's advertising and marketing revenues for the second quarter 2024 was $375.3 million, a decrease of 3% or 1% on a constant currency basis, reflecting muted ad demand amidst [indiscernible] macroenvironment. Mobile ad revenue was [ $352.3 million ], contributing approximately 94% of total ad revenues.

In terms of growth, 3P products, e-commerce and entertainment, were the largest contributors to growth. We are delighted to see sustained [ advert ] [ of ] increase of handset sector this quarter, leveraging [ our ] robust content ecosystem and the dynamics with [ passionate ] [indiscernible] around 3P products.

The entertainment sector demonstrated good momentum this quarter, driven by blockbuster TV program and Weibo's unique value proposition for hot trends. [ On flip side ], the top line recovery will [ still ] [ track ] by underperformance of the FMCG sector.

Despite a modest growth of the food, of beverage and [ apparel ] sector, the cosmetic and the personal care sector still feel behind due to large ad budget from [indiscernible] [ feed ] and the intense competition among ad platforms. [ For ] ad product, promoting feed ad was the largest, followed by social display and topic and search.

Ad revenues from Alibaba for the second quarter was [ $32.4 million ], an increase of 21% or 23% on a constant currency basis. We are pleased to see the solid ad growth from Alibaba continue throughout the first half of 2024 as Weibo's brands plus performance [ solution ] resonated well with Alibaba to fulfill its funnel marketing goals.

Before turning to VAS segment, let me share some preliminary color on the trends entering the third quarter of 2024. On the [ upside ], Weibo continues to be the go-to platform to [ discover ] and discuss our own hot trends during the summer Olympics, which boosted user engagement and attracted intensive ad statement.

That said, with [ a ] [ chunk ] of advertising budget allocated to the Olympic games, we expect relatively [ look for ] ad demand post the Olympic season, [indiscernible] in sluggish consumption data. We will beef up our sales execution and enrich Weibo's content ecosystem in the second half of the year in the hope of mitigating [ macro ] and the industry headwinds.

Turning to VAS. VAS revenue was $62.6 million in the second quarter, an increase of 15% or 18% on a constant currency basis, primarily driven by revenue growth of membership services. We have benefited from improved ARPU for membership services. [ [ This ] [ result ] [ our ] [ premium ] VIP feature to cater to the need of [ sticky ] users.

Turning to cost and expenses. Total cost and expenses for the second quarter were [ $218.3 million ], a decrease of 2%. Operating income in the second quarter was $157.6 million, representing an operating margin of 36% compared to [ 35% ] in the same period last year.

Turning to income tax [ under ] GAAP measure. Income tax expense for the second quarter was $33.3 million compared to $25.5 million last year. The increase was mainly due to the withholding tax accrued related to earnings to be remitted from our [indiscernible] to our Hong Kong subsidiary, which is to [ fund ] our demand for U.S. dollars in business operations and the payments of dividends and that is [ safer ] in the future. Net income attributable to Weibo's shareholders in the second quarter was $126.3 million, flattish year-over-year. Net margin was 29%, flattish versus the same period last year.

Turning to our balance sheet and cash flow items. As of June 30, 2024, Weibo's cash, cash equivalents and short-term investments totaled $2.84 billion. We have made a special tax dividend payment of approximately USD 199.4 million in May. In the second quarter, cash provided by operating activities was around $132.1 million. Capital expenditures totaled $10.3 million and depreciation and amortization expenses amounted to $14.5 million.

With that, let me now turn the call over to the operator for the Q&A session.

[Operator]

[Operator Instructions] We will now take the first question from the line of Alicia Yap from Citigroup.

[Alicis a Yap, analyst]

[Foreign Language] [Interpreted] Can management comment a little bit how you build the overall macro outlook and how will that translate to your advertising outlook for the second half of this year? And then, can you share with us whether you have observed any meaningful change of the advertiser sentiment in the different industry vertical? Any particular shift of the sentiment from any advertiser that you might have observed? And also, does management believe the current macroenvironment could actually last into next year?

[Gaofei Wang, executive]

[Interpreted] So first of all, in terms of our advertisement revenue in Q2, from a renminbi standpoint, this was flat versus the last quarter and also year-on-year wise. And also you can see that although we've been experiencing some of the decline and also the decrease of the overall consumption, but still the willingness of placing the ad [ products ] from the advertisers was pretty much stable.

So in terms of the overall revenue, in Q2 we can see that [ there ] was particularly [ negatively ] impacted by the verticals like the cosmetics and beauty products by about 5%. But for the rest of the other industries, we're experiencing pretty much growth.

And also, in terms of the Q3 outlook and also the second half performance, there are still some of the uncertainties in terms of the macroeconomic development, especially about the consumption. So we remain very much [ precautious ] over the outlook for the rest of the 2024.

So still, we will be experiencing some of the challenges in terms of the resumption of the consumption and the macro economy in the first tier cities, for instance. And this is, of course, going to impact some of the willingness that we're placing the ads by the advertisers. But still, you can see that against the other players in this advertising industry, Weibo's advertising business is relatively not that big. And so still, we are seeing some of the [ precautious ] behaviors of the placing the ad by the advertisers.

But still, in terms of the new product launch and some of the other relevant advertisements related to the new products, the customers are tending to choose those top-notch IP and also top-notch platforms to do their advertisements and also promotion. So this is going to help us to acquire additional budget from this standpoint.

And also, furthermore, we can see that we are able to divide the customers into 3 categories or 3 kinds. The first category is in the FMCG industry, including the food and beverages, the apparels and shoes as well as entertainment and also [ development ] industries. So still, the scale of the consumption or the volume in total is pretty large. So even if the customers are pretty much [ precautious ] in allocating their budgets for advertisements, but still, they are quite [ intentious ] in searching for new IP and also concentrate on those top-notch platforms.

So for instance, in Q3, we had the [ bigger ] activities like the Olympic Games. And you can see that in terms of the hot trend selling rate and also the other parameters, we have seen a very good improvement and also the boost. So meaning that the customers are willing to spend budget on acquiring those top-notch IPs and also collaborating with the top-notch platform. So from this standpoint, Weibo still stands in terms of our advantages.

And also, for the other industries and verticals, for instance, the headsets and automotive and gaming as well as films and movies and those entertainment industries, for instance, we were experiencing pretty much pressure and stress over the consumption improvement and resumption. But still, most of the competitions are pretty much around the new products and some of the new movie marketing, for instance, and also promotion.

So people, and also different companies are competing with each other to get more market share around the marketing for new products and new launches. So Weibo still holds our advantage in this particular area in terms of hot trend social topics as well as the very good relationship with some of the customers.

So in that sense -- for instance, in this summer holiday, the box office of most of the new movies slowed down or decreased a lot year-on-year-wise comparing with the same period last year, almost half in terms of the total value of the box office. But still, because of a very good relationship and our customers are choosing Weibo to promote their new products and also increasing their budget on us, so from this standpoint, we are still increasing our revenue, and we do have our advantage in this area.

And also, for the third category, we're talking about those stressful industries, for instance, the cosmetics and beauty products and also some of the luxurious brands. We've been seeing a very stressful situation over the resumption and increase of the consumption as a whole. So in this particular industries, the customers are not choosing to launch any new products in order to get better results.

So as a result, we've been seeing most of the ads were pretty much performance-based ads or some of the discounts and promotional activities or campaigns. So Weibo is less competitive in this front. And so -- of course, we can still gain our revenue by getting the budget of the performance-based ads from our customers or organizing some of the campaigns for our customers, but still, Weibo is less competitive versus the previous 2 categories and also the marketing methods in this arena.

[Operator]

We will now take the next question from the line of Xueqing Zhang from CICC.

[Xueqing Zhang, analyst]

[Foreign Language] [Interpreted] My question regards AIGC. We noticed that the company self-developed the truly large language model, successfully pass through [ legislation ] in July. [ What's the ] latest development in AIGC? How does it help our content production and commercialization efficiency?

[Gaofei Wang, executive]

[Interpreted] Thank you for this question, and also -- first of all, previously, we've been sharing with everybody about the application of AIGC by Weibo and the standpoint of generating content for the platform and also enhancing the interaction between the users and among users. In the second half or later stage of the July, we were hearing about the approval of the LLM developed by Weibo and by the government.

And also, we use this technology to further boost and also enhance the AI products that we application -- we are applying now. For instance, the [ common ] -- robots and also some of the AI assistance in getting the response to the users. So we hope that the interaction based on the content by Weibo on our Weibo platform is going to be more intelligent and also timely fashion.

And also, the second thing that I would like to say is that in Q2, we've been -- or in the first half of this year, also, we had a better interpretation and understanding capability by this AI model, especially the [ multimodal ] understanding and also interpretation of the contents on Weibo because we know that there are millions of -- billions of contents generated by the random users. And also, because these contents were randomly generated by the users, it was not standardized and it was not structured and also, it was not that [ common ], I mean, following a certain pattern in terms of the total user.

So, also those contents were having the image form, the video and also text. So at the current stage, the recommendation of those contents to the relevant target users is still based on the correct emphasized interpretation and understanding of those contents.

So at the current stage, the large language models that we have got approval is primarily used in this front to better understand and also more precisely understand the main [ purpose ], the message and content in order to have a more precise recommendation to the users.

And now we have a coverage of almost 90% of the users. But of course, still, there are some of the works that we need to further working on in order to improve the [indiscernible] of the understanding and also we need to do some of the further assets to increase the computational power in this area as well. So still, we are observing the future potential of this particular feature.

And second point I'd like to say is that, now in terms of the [ search ] [ in ] results, there are some of the results that are from the media or [ V ] media or from the random users. So this particular AI is able to help the users within 1 minute to conclude and summarize the searched contents so that the user experience is going to be much better in using the search feature of Weibo. And because of this, in Q2, we had already MAU of this particular feature exceeding 10 million already.

But this is only one of the examples that we are trying the capability of AI. And also in the near future, we are going to have a better trial of this in helping us to better interpret and understanding the content and also to trigger -- and based on the information-based flow that we have and also based on the other capabilities that we have, we are going to have a better use and application of the AI feature and also this technology

[Operator]

There are no further questions at this time. I would like to hand over to Sandra Zhang for closing remarks.

[Sandra Zhang, executive]

Thanks, operator, and thank you, all, for joining our conference call today. We will see you next quarter.

[Operator]

This concludes today's conference call. Thank you for participating. You may now disconnect.

[Portions of this call that are marked [Interpreted] were spoken by an interpreter present on the live call.]