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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Thank you for standing by, and welcome to the Weibo First Quarter 2020 Financial Results Conference Call. [Operator Instructions] I would now like to hand the conference over to Sandra Zhang, Weibo Investor Relations. Please go ahead.
Thank you, operator. Welcome to Weibo's First Quarter 2020 Earnings Conference Call. Joining me today are Chairman of the Board, Charles Chao; our CEO, Gaofei Wang; our SINA Group CFO, Bonnie Zhang; and our VP Finance and Interim CFO, Fei Cao. 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 safe harbor 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 statements 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 a better understanding of Weibo's comparative operating performance and future prospects. Our non-GAAP financial excludes certain expenses, gains or losses and other items that are not expected to result in future cash payment or are nonrecurring in nature or will not be indicative of our core operating result and outlook. Please refer to our press release for more information about our non-GAAP measures. Following management's prepared remarks, we'll open the lines for a brief Q&A session. With this, I would like to turn the call over to our CEO, Gaofei Wang.
[Foreign Language]
[Interpreted] Thank you. Hello, everyone, and welcome to Weibo's First Quarter 2020 Earnings Conference Call.
[Foreign Language]
[Interpreted] 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.
[Foreign Language]
[Interpreted] Let me start with our first quarter financial results. In the first quarter, our total revenue reached $323.4 million, a decrease of 19% year-over-year or 15% on a constant currency basis. Advertising and marketing revenue reached $275.4 million, a decrease of 19% year-over-year or 16% on a constant currency basis. 89% of our ad revenues came from mobile.
[Foreign Language]
[Interpreted] On the user front, Weibo's MAU grew 18% year-over-year to 550 million in March 2020, representing a net addition of approximately 85 million users year-over-year. Average DAUs grew 19% year-over-year to 241 million, representing a net addition of approximately 38 million users year-over-year. This is the highest reported year-over-year user growth to date in terms of net addition of MAUs and DAUs. 94% of Weibo's MAU came from mobile.
[Foreign Language]
[Interpreted] 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 user and traffic to our platform, with feed refreshment growing 50% year-over-year. On monetization front, advertisers in broad range cut back or suspended their budget in response to the business disruptions resulting from the pandemic in short or midterm. That said, the silver lining behind this is that the pandemic has driven the transformation of a lot of industries and their marketing approach, presenting long-term opportunities for both our customers and us. Coupled with the ramp-up in traffic, Weibo is well positioned to further grow its social ad wallet in the long run.
[Foreign Language]
[Interpreted] In discussing our operating update for the first quarter, I will elaborate our progress made in areas of product monetization.
[Foreign Language]
[Interpreted] The strong growth in user and traffic in March was mainly driven by seasonal strength and public conversation related to the COVID-19 pandemic. To be specific, first, it is a typical season for Weibo to grow users and improve user engagement around Chinese Spring Festival. Second, in response to the pandemic, we will have to marshal operating resources and product development to enable wider dissemination of official information from government and media, bringing 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.
[Foreign Language]
[Interpreted] First, on [ Haoqen ], in order to distribute timely 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-19 feed within recommended feed and discovery zone. In the first quarter, the pandemic relief held by media and government reached nearly 6 million with total views over 400 billion. On a daily basis, over 200 million users consume pandemic-related content, among which 70 million users consume COVID-19 feed. And the daily views of pandemic-related content exceeded 12 billion. And meanwhile, we, along with CCTV News, verify nearly 1,500 new Weibo accounts of medical experts, medical care staff, patients and their family members and help and accumulate approximately 150 million followers through content distribution on Weibo.
[Foreign Language]
[Interpreted] Second, on virtual content. In the early stage of the pandemic, Weibo has proactively encouraged platforms' content creators to participate in the distribution and discussion around the pandemic-related contents. As the pandemic evolved, Weibo has diversified content offering to some of our users through initiating online events with stay-at-home themes across 8 verticals, such as entertainment, food and humor, aiming to alleviate public anxiety over the pandemic and encourage users 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 levels.
[Foreign Language]
[Interpreted] Let's talk about video and live streaming business. For video, we are ramping up our investment around both PGC and UGC video content this year. In March, our daily video views and the number of user 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 optimized user consumption experience, enhanced distribution efficiency and reinforced traffic support for UGC video content and, thus, enhanced our monetization efficiency around the video content. The daily video views of UGC videos grew 50% quarter-over-quarter, leading to an over 50% sequential growth in ad revenues from UGC videos.
On PGC video front, we further optimized social interaction experience through ramp up on the layout of PGC 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 3 feeds, one with recommended PGC video, one with popular ones and the third one with vertical UGC videos. Since the rollout of the new version in early April, we are glad to see positive trends in terms of user retention and video consumption, which, in turn, encouraged professional video content creators 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 gained recognition from users and content creators. In March, PGC content creator who uploaded contents on Weibo reached nearly 1 million, with their daily video posts growing over 20% quarter-over-quarter.
[Foreign Language]
[Interpreted] 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 on our platform quickly embraced live streaming, too, as a desirable communication channel. With this understanding, we beefed up our investment around live streaming from both product and operational fronts, underpinned by the showroom and the e-commerce live streaming facilities we already had last year. In addition to facilitating over 30,000 government and media live events around the pandemic, we've encouraged our partners and clients to go live on Weibo, such as in the case of online concert and product launch events. We also leveraged short-feed clips and KOLs to distribute and raise awareness about live events, leading to 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, Rene Liu. The live concert itself drew over 10 million total views, with nearly 300 celebrity and KOLs creating publicity for the event. We also added its highlights of the concert into short-video clips as a way to achieve viral distribution for the event. We are pleased to deliver over 100 million views on the video clips and over 700 million views on related topics. This distinct advantage we have 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 1 million, doubled 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 offerings.
[Foreign Language]
[Interpreted] Lastly, let me talk about the progress we made on Oasis. The pandemic naturally impacts users' willingness to post unlimited content generation by a certain degree. However, as people's lives in domestic areas gradually return to normal, we saw the active user and content generation at Oasis in April resumed to the pre-pandemic level and continued 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 and engagement with the proper channel investments.
[Foreign Language]
[Interpreted] Weibo's advertising revenue decreased by 19% on a year-over-year basis, while 16% on a constant currency basis due to the adverse impact from the coronavirus pandemic.
[Foreign Language]
[Interpreted] Our KA ad revenue decreased 24% year-over-year or 18% excluding negative impact from currency translation and barter transaction, as several industries 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 in the case of cosmetic and luxury brands, who defer 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. Industries that were 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 pivoted quickly and rolled out an online product launch solution to address OPPO's need to release its new model, Find X2. We successfully built hype for OPPO Find X2 through the HD live stream event, leveraging improved watching and interaction experience, rich traffic exposure, compounding influence of over 2,000 KOLs. The ad solution resonated greatly with our customers, delivering over 1.8 billion total views on the related topics. The successful campaign with OPPO showcase the potential of the online product launch during the pandemic and, thus, entice other customers from the handset and the auto sector to have a slice. We believe that advertisers 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, short videos, 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.
[Foreign Language]
[Interpreted] 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 with large marketing spend in response to the pandemic due to disruption in work and logistics from the current time.
On the other hand, the pandemic has structurally benefited a few industries, which delivered much better results than we had expected. For example, ad revenues from the online education and gaming sector grew by triple digits on a 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 sector, with the pandemic accelerating Internet penetration in our daily lives. Our differentiated value proposition resonated well amongst those customers with an integrated branding plus user acquisition objectives. For instance, traditionally, customer from the online education vertical came to us, mainly for conversion purpose and spend on feed ads. During the pandemic, market leaders, such as Yuanfudao and TAL, also reached with brand awareness on top of this acquisition. With this understanding, our sales team adapts 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 the user acquisition aspects. The differentiated ad solution earned great resonation from SME customers. On top of that, we also made strides in improving our service capabilities to top customers, while continuously enhancing our feed ad offerings. As such, we see potential headroom in growing our SME ad revenues built upon such integrated branding plus performance needs.
[Foreign Language]
[Interpreted] Finally, let me share some color on our progress around ad products. On the programmatic buying front, namely oCPX, we focused on delivering higher ROI for customers by introducing deep learning to improve the automatic bidding process. As a result, ad spend through 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 video, underpinned by the healthy growth in the user who consume video content as well as the overall video views. 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 undermonetized. 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 H5 serving, et cetera. Such direct response features will give user a shortcut to the conversion end, leading to optimized ad performance around short video and photos. Consequently, we believe this initiative can further enhance marketing efficiency among SME customers on Weibo.
[Foreign Language]
[Interpreted] With that, let me turn the call over to Fei Cao for a financial review.
Thank you, Gaofei, and hello, everyone. Welcome to Weibo's First Quarter 2020 Earnings Conference Call.
Let's start with user metrics. In March 2020, Weibo's MAU reached 550 million, representing a net addition of approximately 85 million users on a year-over-year basis. Weibo's average DAUs reached 241 million, representing a net addition of approximately 38 million 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 MAUs and the DAUs, demonstrating Weibo's indispensable value as the leading social media platform in China and further solidifying our strategic moat in the China Internet space. Mobile 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 first quarter of 2020. The unprecedented COVID-19 has a broad impact on our business operations, revenues and expenses in the first quarter 2020. Weibo's first quarter 2020 net revenues were $323.4 million, a decrease of 19% or 15% on a constant currency basis. Operating income was $74.1 million, representing operating margin of 23%. Net income attributable to Weibo was $67.4 million, and diluted EPS was $0.30. Now let me give you more color on revenues. Weibo's advertising and marketing revenues for the first quarter 2020 reached $275.4 million, a decrease of 19% or 16% on a constant currency basis. Mobile ad revenues were $246.4 million, contributing approximately 89% of total ad revenues, up from 85% last year. Moving on to KA. In the first quarter, Weibo's KA ad revenues reached $127.6 million, a decrease of 24% and 21% on a constant currency basis. Excluding the barter transaction revenue impact, KA ad revenues would have decreased 18% on a constant currency basis. The performance of KA ad business in the first quarter is generally in line with our expectations, as pandemic had the overall adverse impact on advertising business since late January. On the positive side, with gradual stabilization of the spread of virus, domestically since March, we saw a general recovery trend from the trough in February. From industry perspective, consumer staples such as food and beverage did well and exhibited resilience during the challenging period. Moreover, the pandemic had also altered people's way of life with more time spent online, with accelerated trend of ad budget shift from offline to online, leveraged only 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 advertisers to promote products and service online. Social media platform is better positioned in the budget shift, as it builds direct connection between brands and potential customers, and to a larger extent, take a vital role in brand marketing funnel through engaging platform influencers in the marketing process.
On flip side, the evolving situation of the pandemic in global areas still caused uncertainties to the macro economy and with impact on advertising budget of those with higher exposure to global business operations and supply chain such as leisure industry. Ad revenues from Alibaba for the first quarter were $27.6 million, an increase of 66% or 73% on a constant currency basis. The strong momentum of Alibaba advertising business has led the resilience of the e-commerce trend against the challenging environment as well as our strengthened cooperation in driving value for brands and merchants to achieve higher brand recognition and fast sales conversion through integrated branding campaigns on both platforms.
Turning to SMEs. In the first quarter, Weibo's SME ad revenue reached $120.2 million, 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 are offline categories, which lost marketing spend in the first quarter, as their business is nearly slowed since the COVID-19 outbreak. E-commerce sectors have experienced a drop 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 sector that took advantage of the rising Internet usage during the pandemic quarantine.
We also made progress in delivering integrated service and driving adoption and optimize the business among SME clients, especially the aforementioned online sectors, which leads to a relatively stabilized ad pricing trend on a sequential basis despite the constraints in ad demand. Value-added service, VAS, revenues was $48 million in the first quarter, a decrease of 17% or 14% on a constant currency basis, primarily due to the decrease of leading -- of live streaming business and was partially offset by the increase in membership revenue. Turning to cost and expenses. Total cost and expenses for the first quarter decreased 5% to $249.3 million. Operating income in the first quarter was $74.1 million, representing operating margin of 23% compared to 34% last year, as the disciplined spending in response to the pandemic could not fully offset its impact on revenue set in worse-impacted quarter. Turning to income tax. Under GAAP measure, income tax expense for the first quarter was $15.9 million compared to $21.1 million last year. The decrease was partially resulted from the reduced earnings and was partially offset by 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 $67.4 million, representing a net margin of 21% compared to 32% last year. Turning to our balance sheet and cash flow items. As of March 31, 2020, Weibo's cash, cash equivalents and short-term investments totaled $2.35 billion compared to $2.4 billion as of December 31, 2019. In the first quarter of 2020, cash provided by operating activities was $63.6 million. Capital expenditures totaled $7.3 million, and depreciation and amortization expenses amounted to $6.8 million. 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 2020 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 preliminary view and is subject to change. With that, let me now turn the call over to the operator for the Q&A session.
[Operator Instructions] The first question today comes from Alicia Yap with Citigroup.
Congrats on the solid result. Can management elaborate on the recovering status and also the budget willingness for the KA account versus the SME? And any specific trend we are seeing from multinational KA accounts showing more cautious in spending? And if we could give some colors on major industry verticals, how are some of the impacted sectors seeing the recovering trend and their willingness to spend?
[Foreign Language]
[Interpreted] First, let me share some color on Weibo's first quarter performance and the recovery shown that we have seen so far.
[Foreign Language]
[Interpreted] For KA 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 broad range had either cut back or postponed their ad budget in response to the pandemic.
Entering into April, things again 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 ad spend, given the significant headwind from the pandemic in their home market, which might have a ripple effect on the China ad budget.
[Foreign Language]
[Interpreted] For FMCG industries, consumer staples, such as food and beverage, demonstrate resilience and exhibit a generally stabilized trend in the first quarter, while discretionary categories such as cosmetic and personal care subsector was negatively impacted in the first quarter, as several customers reduced or postponed their ad spend in reaction to the delay in the new product launch. For the second quarter, ad budget from the top customer in FMCG vertical are picking up sequentially.
[Foreign Language]
[Interpreted] As for the handset and auto sectors, ad revenue from these 2 sectors actually increased year-over-year in the first quarter despite disruption in their production and offline promotion in the first quarter. During the pandemic, we introduced online product launch solution 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 accelerated trend of their budgets shift from offline to online, so we will further emphasize -- optimize the ad products for this sector and capture the ad dollars from the handset sector. And we actually saw nice growth of the handset sector on Weibo so far. And for the auto sector, due to high exposure to the global supply chain, the global pandemic disrupted auto production and may pose uncertainty to the ad budget for the sector in the second quarter.
[Foreign Language]
[Interpreted] For the e-commerce sector, since March, since late March, the sector rebounded very nicely from February trough following the logistics and work resumption. And we believe that e-commerce will see further uptick as the Q2 is the industry's traditional peak season.
[Foreign Language]
[Interpreted] Lastly, luxury brand and entertainment sectors. These 2 sector were significantly impacted by the pandemic in the first quarter, and we also anticipate a generally prudent attitude toward ad budget allocation from the luxury industry, as operational pressure and demand side softening caused by the pandemic weigh on the sector growth, and for the entertainment, which we also anticipate similar kind of trends due to the impact from the pandemic and also the regulation impact.
[Foreign Language]
[Interpreted] 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 largely exceeding our expectations, leveraging the synergy between our product and operational team. We piloted quickly to fulfill online customers' integrated branding plus the user acquisition objective, helping us to capture additional ad dollars from the online sector.
[Foreign Language]
[Interpreted] As we enter into April and May, with work resumption underway, users' online time spent has gradually normalized, and we did see some product of ad spend for the gaming and education category on a sequential basis, while on an annual basis, the growth trend is still quite encouraging. And on the flip side, the offline industry, such as the wedding service and the medical service, is -- took a hard hit during the pandemic period, which offset robust growth of the online sector. And it might also take a while to see a recovery from these offline sectors.
[Foreign Language]
[Interpreted] Moving on to Alibaba. We are delighted to see nice growth from Alibaba in the first quarter. For one thing, the e-commerce sector demonstrated resilience and solid recovery during the period. Weibo took the opportunity to capture additional ad budgets from the Alibaba ecosystem, such as from [indiscernible], the cloud service, Ding Ding and [indiscernible]. For another, we have deepened our strategic collaboration with Alibaba in areas of branding plus performance ad and e-commerce live streaming. This initiative amplify Weibo and Alibaba's advantage in social e-commerce and big data and, thus, provide a better conversion for advertisers within Alibaba's ecosystem. See, with this positive development, Weibo's differentiated ad offerings and better recognition from Alibaba leading to growth in the Alibaba ad spend.
[Foreign Language]
[Interpreted] From full year perspective, we have enhanced our competitive edge in the brand advertising and e-commerce based upon the surge in traffic and reach more content per system, 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 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 demand side, especially for the offline sectors. And we also are seeing the pressure on the supply side with oversupply of inventory, especially from the short-video platform. So we expect the overall SME performance for the full year to experience some industry-wide headwinds and also intense market competition.
The next question comes from Binbin Ding with JPMorgan.
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 the COVID-19? 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 COVID-19. 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 or online product launch. Can you elaborate on the topic? And how is Weibo positioned to capture these opportunities?
[Foreign Language]
[Interpreted] Worldwide, we see unfavorable supply/demand dynamic in the overall advertising market with some softness in the demand side, especially for the SME sector and the oversupply of inventory in the market. And we're well positioned to capture the opportunity brought by the ad budget shift from offline to online. As a leading social media platform, we have influenced our media celebrity and KOL resources, and we also have a very strong growth in our user -- overall user base and also the -- we could also tap into new opportunity with the online product launch, which will help us to capitalize on the ad budget shift. And we still see ample room to improve our per user monetization rate considering the impressive traffic scale and the growth of our platform.
[Foreign Language]
[Interpreted] And the pressure we see from the video platform is still pretty -- it's still challenging for the short-video platform, and we will focus on 3 areas to improve our overall competitive edge in the market to acquire more ad budget on time.
[Foreign Language]
[Interpreted] First, for another trend, we see the integrated branding plus performance advertising is a very important trend in the market, and it's also an area we keep focus on for our product and operations.
[Foreign Language]
[Interpreted] Amid an overall ad budget cutbacks led by the pandemic, we expect the KA customer to emphasize more on the conversion front on top of the existing brand needs -- spending needs. Therefore, new product launch and various e-commerce-related promotion by brands 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 FMCG vertical as well. And for the e-commerce-related promotion by brands, Weibo has reinforced our social ad offerings and social e-commerce ecosystem and beefing up our cooperation with Alibaba in cultivating users' purchasing intention, KOL marketing as well as sales conversion, which enable us to attract incremental ad wallet from KA customers.
[Foreign Language]
[Interpreted] On the other hand, our top SME customers also have incremental branding needs on top of their traditional performance-based objectives. In fact, this incremental branding budget was one of the main drivers of the growth of the gaming and education customer in the first quarter. And we also cooperated with -- coordinated our activity and KOL resources and also integrated branding and advertising solutions to our customer, leading towards a significant uplift in our competitive edge among these 2 industries, especially the online education sector. With the consumption upgrade underway, we'll roll out more integrated branding plus performance ad solution to our top SME customers.
[Foreign Language]
[Interpreted] Besides the branding plus performance -- branding plus performance trend, KOL marketing is also a very important trend as well and is Weibo's key differentiation in the market.
[Foreign Language]
[Interpreted] Still, we may have some disadvantage for the ad design compared with the short-video platform. But we have a very -- plenty of celebrity and KOL resources on our platform, and it's a very important social asset in facilitating the brand strength recognition to sales conversion and play a very crucial role in enhancing the conversion performance of the brand ad. And Weibo's public social feature enable KOLs' marketing content to achieve viral reach and also help brands accumulate social assets and help to differentiate our ad product in the market.
[Foreign Language]
[Interpreted] In the second and third quarter, we'll upgrade our KOL marketing systems along with the performance ad offerings and to advance our facilitating capability between customer and KOL as a step further to differentiate us in the performance market. We will also drive up the adoption of the KOL marketing, provided that customers from various industries find the optimal match for the ad campaign.
[Foreign Language]
[Interpreted] And for the ad technology, we're focused on driving the oCPX -- improving the ad technology through the oCPX adoption and also in enhancing the conversion performance, which largely helped to increase the sales rate of our ad product in the first quarter. And on the other side for our watch-plus kind of product, which is the upgraded version of the photo-based product, it also help us to improve the conversion kind of effects for the product platforms through the upgrade of this kind of watch-plus product.
[Foreign Language]
[Interpreted] And in terms of the -- while the pandemic has altered or 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 summer vacation, these activities, is that we are seeing much live content streaming being promoted on the platform and also seeing more time spent on the platform as well.
[Foreign Language]
[Interpreted] So on a content generation side, we see a lot more live broadcasting coverage on the vertical area other than the typical sector where in the past, we're strong at the live broadcast in the showroom than media and e-commerce. We see significant expansion of the vertical segment in this -- in using live broadcasting tools.
[Foreign Language]
[Interpreted] We look at the number of live broadcasting we held on our platform. This number is over 1 billion, which is more than double the same period of last year, 80% higher than the quarter-over-quarter basis. And most of the live broadcasting events were focused on the e-commerce, the media and the enterprises level.
[Foreign Language]
[Interpreted] Yes. So from a short-term perspective, we see quite limited revenue growth directly -- can be directly derived from the live broadcasting growth. Even for the showroom live broadcasting, we anticipate there will be short-term reduction in revenue in the foreseeable future. However, we believe with the more adoption of live broadcasting, e-commerce and such as live concert, there will be increased demand from brands to participate in events like this.
[Foreign Language]
[Interpreted] So we look at the enterprise and the e-commerce live broadcasting. We'll convert these demand into our standard product and push to the KOL enterprise for them to -- using live broadcasting as a sales channel to facilitate their branding.
[Foreign Language]
[Interpreted] In terms of media, celebrity and live concert broadcasting, so far, they have been providing quality content and potential commercial inventory to us. We believe a brand -- owned 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 that in the second half of this year, more brands will likely to look into this type of inventory to have opportunity to present themselves.
[Foreign Language]
[Interpreted] At this moment, most of live broadcasting was more focused on the content generation and from a user consumption perspective has brought quality content to the platform. We're promoted to commercialize or monetize these content using different trial products.
This concludes our question-and-answer session. I'd now like to hand the back call to Ms. Sandra Zhang for any closing remarks.
So thank you, operator. This concludes our call. Thank you for joining us. We'll see you next quarter.
This does conclude our conference for today. Thank you for participating. You may now disconnect. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]