Yeahka Limited ($9923)

Ladies and gentlemen, good day, and welcome to Yeahka Limited 2025 Annual Results Announcement Call. [Operator Instructions]. Please be advised that today's conference is being recorded. I'll now pass the call to Mr. Vincent Chan, Head of Corporate Development and Capital Markets of Yeahka. Please go ahead, sir.

Thank you, and hello, everyone. Welcome to Yeahka's 2025 Annual Results Conference Call. Before we start, we would like to remind you that this presentation includes forward-looking statements that involve a number of risks and uncertainties. Information on general market conditions comes from a variety of sources outside of Yeahka's control. Please refer to our disclosure documents on our website IR section for a detailed discussion of risk factors. Now let me introduce the management team on today's call. Luke Liu, our Founder, Chairman and CEO, will kick off with a short overview. I will then provide a business review. John Yao, our CFO, will conclude with a financial review translated by Derek Lai, our Director of Finance, before we open the floor for questions. Without further ado, I will now turn the call over to Luke.

Thank you, Vincent. Hello, everyone. In 2025, we reached our product line and the commercialization to a new level. Core EBITDA rose 52.7% year-over-year. This extended [indiscernible] of around 50% in 202versus 2023 in core EBITDA -- sorry. Overseas expansion delivered another year of exponent growth. AI much more embedded into the [indiscernible]. Organizationally, we have a core competitive advantage in having a full stack technical architecture over a wide range of products that provides a structurally slight growth for AI to penetrate and scale up [ product activity ] last year and in turn increase our competitiveness in long-term [indiscernible]. Our product serving and brand lanes became more popular to clients globally. All these are testaments to our core advantage in innovation, talent and our digital ecosystem, hiring value based on [indiscernible] beyond payment. We scale each of our business with much higher quality. Our technology adoption also continue to raise revenue and book costs significantly. With this setup, we are better positioned to deliver long-term sustainable growth. First of all, we had a lot of big year of success in overseas markets with GPV over 4x of the last year. The merchant acquiring sector is big globally. With over USD 30 trillion in volume in 2024 according to industry reports. The market are also fragmented, particularly in the part of the world. Many [indiscernible] are still across verticals, not certified with existing players. Our dedicated team of experts place locally focused on solving these hiding values with our products and service innovation. We see in recently large room to grow and expand our proposition so therefore, with our current trajectory overseas will be a significant contributor to our earnings in the foreseeable years to come and on top. We continue to obtain more license channels and launching more products services for deliver growth. Other strategic focus is application of AI externally for customers and internally to enhance our operating efficiencies. For customers, we have launched wide series products. In payments, we provide merchants with apps to better monitor fraud, [indiscernible] and server inquiries were automatically [indiscernible] in we added services we provide customers with digital moments in live stream marketing, sharing their stories across regions instantly. We provided merchant AI tools to manage their unmet channels and the traffic flows more efficiently. And lately, we also developed AI shop to help F&B and retail merchants easily create digital interfaces and serve customers, just like a real human water for a salesperson. The results are customers more engaged sales conversion increase for merchants, fewer personnel, median and cost sales. Internally, with Yeahka, we have also scaled up AI usage to drive sales and administration and R&D efficiencies. Firstly, instead of programming investment, we have also launched fully customer AI-driven product, including cost generation and end-to-end testing being automated. It's hugely [indiscernible] the time of our product development and launch cycle. Secondly, we development towards operating under the life of [indiscernible] call, we have automated many routine day-to-day of original tasks from data alliances to customer and operational review. So we can address customers demand more precisely and more easier and earlier and free up personnel for other high-value strategic work. Yeahka's full-stack technical architecture play great foundation for AI to scale in each of our services and operating practice and share synergies across our organization will effectively. Looking ahead, in our domestic markets, we will continue to maintain market-leading position, increasing commercialization the successful experience accumulated will help our global expansion, fast and efficiently, leveraging our proven operating model and talent team overseas. We will enter more markets and provide more products and strengthen such that worker AFX globally. As a full-stack technology platform, AI will drive further with added services to our customers to have increase revenue, reduce costs and improve efficiency. AI will deeply integrate into the entire business system to deliver tangible value. This strategy will strengthen the company's long-term performance totality and continue to create great value for all shareholders. As such, may I pass it to Vince to give you a detailed business review.

Thank you, Luke. Yeahka delivered strong products better commercialization and more profit across all business lines last year. First, in one-stop payment services, our refined operations delivered 8% year-over-year increase in revenue and 10.1% year-over-year increase in gross profit in 2025. We increased our fee rate to 12.4 bps, leveraging our market-leading services and data-driven analysis on clients with high potential. We targeted higher-margin businesses, including marketing services on payment transaction pages and put more focus on key account customers who are more demanding on service scope and have higher willingness to pay. We introduced new products specifically for different verticals, too, like smart checkout scale for wet market industry and some boxes to taxi drivers. We also won customers from industries relatively new to us, such as education and tourism. Strategic partnerships expanded, including HSBC, Citi, JPMorgan and DBS. New merchant acquiring licenses obtained also include Japan and the U.S. in addition to the ones from Singapore, Hong Kong and China that we already have. These set up a great base for increasing volume revenue and margins. In particular, our overseas payment business won more high-profile customers like BYD, Oppo and [indiscernible] volume hit RMB 5 billion last year, maintaining another year of month-on-month double-digit growth. If this current overseas business maintains its current trajectory, even assuming trending down to single digits month-over-month growth forward, it will still be year-over-year growth in terms of multiples. Currently, overseas only contributed 0.2% of overall GPV, but already 3% of profit. As volume scales in multiples, we expect profit contribution scale even faster, with 30% to 50% being our midterm target. We look to further expand our licensed footprint and product suite to bring additional growth on top of those numbers mentioned. We focus on major developed economies with large TAM and attractive economics. The industry mode to this business is our merchant acquiring systems globally comprising license, rails and talent and our know-how and innovation in addressing each and every industry's pinpoint with solutions. We are seeing our competitive advantages playing out wider against both local and foreign players. Our merchant solutions are another profit growth driver. They posted 4.6% increase in revenue and 10.1% increase in gross profit in 2025. Gross margin also expanded to 91.8%, thanks to the continued penetration of AI into content generation and operations. In particular, production of AI and digital human marketing videos almost doubled in the second half of 2025. Our advertising transaction volume hit another record year in 2025. Yeahka self-developed AI advertising platform enables deep AI involvement throughout the entire process from initial planning content production to placement optimization based on customer needs. For each of these processes, the effect gets set back into the system and help it plan produce and allocate placements more precisely. Such intelligence model enables us to attract customers more efficiency. For example, it allows us to expand industry's coverage to e-commerce, insurance, new finance and so on to use our products. It helps us attract more large platform-based customers, including Taobao, [ Ctrip ] and DD. Our services continue to win industry accurate from sector partners such as [ Fidante]. As this business model increases commercialization and our footprint expands into more countries and regions, merchant solutions will further drive the company's overall profit growth. Our third business segment in-store e-commerce services also delivered better products and commercialization. Our e-commerce platform much more effectively create and matches merchants promotion with end customers' demands. AI-generated content accounted for over half of the total in 2025. Furthermore, AI virtual employees also enhanced service efficiency. Together with a business growth model, leveraging extensive channels and focus on increasing customers' repurchase rate, the [ TMB ] of in-store e-commerce grew nearly 50% versus 2024 and very importantly, it has also been delivering run rate net profit since 2025. We have accumulated much expertise in the sector and it allows us to grow in a much more sustainable manner. In 2025, we won well-known branded customers like [ Haidilao, Midea and Suli.] With trust in our track record and servicing capabilities. [indiscernible] also selected us to help expand the in-store e-commerce industry in Hong Kong, Macau and overseas. Notable overseas customers using our services include leading restaurant groups such as [ Lubert, Fulham ] and original taste workshop. Synergies increase between our payment services and our e-commerce value-added services. While in-store e-commerce services bring up transaction, hence payment volume for merchants, our foreign currency exchange channels also support local and cross-border merchants in fund collection processes. Such is a full-stack digital services proposition for merchants as a one-stop provider. As we scale our businesses internationally, we look to scale such synergies and profit delivery as well. The quality growth of all our 3 businesses globally will be further enhanced by our production capacity expansion as well as increase in operating efficiencies day-to-day, much driven by AI. In new product generation process is already automated by using AI to generate codes, iterate testings and convert ideas to tangible products from front to end. For example, some of the customer insight AITs themselves are created by our AI. By bringing AI to the front end, we have made customers more satisfied with faster speed to delivery. And on our day-to-day operations, AI does not just assist a portion but complete tough funds to end as well. For instance, with too similar to those running under cloud or open clock. Some of our business reviews are already actioned through AI, reducing even more manual labor than before. We are made by the effectiveness and efficiencies produced, and we look forward to more broadly implement our AI initiatives. As such, our technical architecture has also laid a foundation for business growth in volume, revenue and profits across our product lines and regions. We will continue to focus on increasing commercialization and product enhancements across our businesses going forward. With that, I will now turn the floor over to John, our CFO, to present a review of our business and financial results with translation provided by Derek, our Director of Finance. Thank you.

[Interpreted] Hello, everyone. Let me introduce the financial performance of Yeahka 2025. Our revenue increased by 7.3% from CNY 3.1 billion in 2024 to CNY 3.3 billion in 2025, mainly due to the growth of our one-stop payment service revenue. The GDP for domestic payments business increased by 0.1% year-on-year to CNY 2.34 trillion in 2025. The domestic payment fee rate further increased from 11.5 basis points in 2024 to 12.3 basis points in 2025, driving full year revenue of 1 store payment services by 8% year-on-year to CNY 2.9 billion. The overseas operations continued to demonstrate growth but growth momentum. In 2025, the group's GPV for its overseas payment business which is approximately CNY 5 billion, representing a substantial year-on-year increase of 323%. The overseas payment fee rate and gross profit margin was approximately 60 basis points and 50%, respectively, providing significant growth momentum for the [indiscernible] medium to long-term performance. Driven by the growth in transaction volume and revenue, the gross profit margin of both one-stop payment services and [indiscernible] added services improved accordingly. The overall gross profit margin further improved from 23.6% in 2024 to 23.8% in 2025. Gross profit for 2025 was CNY 788 million, representing a year-on-year increase of 8.1%. Our diversified product portfolio and full set technology architecture facilitate deeper integration of AI into business process, enhancing operational efficiency and long-term competitiveness. In 2025, the group selling, administrative and R&D related expenses decreased by 13.2% compared to 2024 demonstrating remarkable cost control effect. Through proactive financial cost control, the finance cost in 2025 decreased significantly by 7.8% compared to 2024. In terms of profit, our profit for the year actually [indiscernible] to equity holders reached CNY 92 million in 2025, representing an increase of 11.9% compared to 2024. In addition, our core EBITDA reached from CNY 352 million in 2025, representing a year-on-year increase of 52%, demonstrating a steady improvement in performance and continued new enhancement in profitability [indiscernible] and Derek. With that, may we open up the call to any questions from [indiscernible]. Operator, please go ahead.

[Operator Instructions] We will now take our first question from the line of Vicky Wei of Citi.

[Interpreted] So will management share what is the latest macro and off-line payment consumption performance? Are they getting better? And how should we think of competition landscape with other payment companies?

Thanks a lot, Vicky. It's good to see you. The macro environment in the Chinese Mainland is gradually recovering. There are certain areas that have been growing better than the others, particularly in the new consumption areas, such as travel, services, entertainment and health care products. People are more building spend on items that bring well-being fulfillment, safety and nice experiences. And we think such consumption patterns should continue to grow going forward. And we are quite well positioned in some of these verticals as we are bringing all around industry solutions tailored to the IT within these specific sectors. And because of that, we are also able to enjoy better and secure economics, growing along with these clients. In terms of competitive landscape, I think large major players in the industry, including ourselves, are gaining market share, especially for large-sized customers who have more sophisticated demands and focus more on service quality, stability and breadth of services, larger players are more equipped to address their needs. These customers also tend to have more needs on value-added services outside of payments which also tend to be more offered by larger service providers. For Yeahka, we are seeing increasing room to expand our market share and to enjoy better economics going forward. Our ecosystem remains market leading in China with hundreds of banks, agents and dozens of industry partners forming a very entrenched system that is hard to override. For example, [indiscernible] is also one of our partners where we enable payments or merchants domestically in the Chinese Mainland. So we will continue to increase collaboration all across.

We will now take our next question from Johnny Xie of Deutsche Bank.

[Interpreted] I will translate my questions. I got 3 questions. First, we are aware that the TPV has been trending to stabilization. So what do management anticipates the trading volume in 2026 and the take rate is -- in take rates reaching the bottom and is the driver for the improvement of take rates? And the second question is about merchant solution and in-store e-commerce. So what are the main drivers for the steady growth of these 2 segments and what's your outlook for the GP margin of these 2 segments? And the third question is about the AI development. So we want to know what are the major areas that the company will invest in 2026. And what are the key metrics that the management focus on in development?

Thank you very much. Thank you very much, Johnny. I will let [ Arnaud ] take the rate question, and I'll address the Merchant Solutions and questions.

Johnny, I don't know every what -- this is Arnold. So for the first question regarding the GPV outlook and the take rate outlook. We think that in China market, there is a gradual bottoming up of the off-line consumption as well as the merchant activities. So we are cautiously optimistic about the future outlook. First off, from the GPV perspective, we try to consolidate more on the channel strategy, bringing more leverage power to ourselves and take on more profit versus traditionally, we've been given out more commissions out to our ecosystem partners. So that's one strategy that we're focusing on. That is part of the profitability driven strategy that we try to focus on in Mainland China. And we feel pretty good about the strategy because going forward, we believe the overall payment -- competition landscape in China is gradually easing up. We don't have the regulatory overhang traditionally, we had a couple of years ago. So from our perspective, we try to control what we can and gradually move on to more profitability, first off, by remaining more profitability to ourselves. And the second thing about fee rates, I think in 2026, the outlook is pretty optimistic. I would say, because we've already bottomed up in -- for fee rate a couple of years ago. And you're seeing a trajectory to gradually increase the fee rate over the last couple of years. And in 2025, we got the fee rate up to 12.3 bps in China. And we think in 2026 we're more confident about raising fee rates. But of course, that would be built into our overall channel strategy as we cover more channels, more segments, more diversified channel partners such as SaaS partners, and the banks that we have. So I think in that sense, we're pretty optimistic about that.

And when it comes to merchant solutions, a lot of our AI products for customers in our emerging solutions as well as other value-added services, including in-store e-commerce. So the growth will continue to be charged by AI in the Chinese Mainland or overseas. AI-related services will be another important growth driver for the company, along with our very obvious overseas growth initiatives. Behind these segments are increasing [ Buchi ] customers in value-added services and emerging solutions such as Haidilao, Midea, [indiscernible] foreign names and local names and overseas lens. And our self-developed AI advertising platform enables deeper AI involvement throughout the entire process. As this model extends to overseas strategic partners and our business footprint expands into more countries and regions, they will definitely further drive Yeahka's overall profit growth. And AI is a very important initiatives for the company. We made a lot of progress last year, both on products as well as on operations. The impact on revenue and cost savings will be huge. On products, another example is our AI shop, our AI-generated marketing content and our digital influencers. All these are bringing increased revenue to Yeahka as we bring more convenience high-quality and better products with shorter time frame to our customers. Now over 40% of our marketing video production is already AI driven, and we expect that to increase. And the product creation cycle will continue to be short term with AI as well as making all these more efficient. In the production processes, we automate code generation and testing iteration using AI as well. That's a significant upgrade from co-piloting or other programming enhancements. Take value-added services, as an example, again, the efficiency of human personnel has increased over 60% in content production. Even in our day-to-day operations, we also use AI employees to finish tasks, whether it's data sourcing, compilation, analysis, report generation or everything from [indiscernible] to end, AI is already automating these work streams for us like we humans do. So in the process, we save a lot of manual labor or previous work that frees up resources on more important human work. Take payments fraud detection as an example, the accuracy and the intensity of work done by AI 247 has enhanced our process efficiency a lot. That's how we save another 13% of cost in our SG&A for year and other year in 2025. And as a native tech company, we think we can do more in this regard and continue to innovate. Our edge is our tech architecture that is proprietary and that goes through each of our products and business lines. So in the application of AI, we have much more leverage in scaling up efficiency without the burden of the past or reliance on a particular line. So we, for sure, will continue to produce more AI products and services and bring our efficiencies to the next level this year. If you look at our core EBITDA, which reflects 2 setters of business operations, we increased over 50% in 2025, after another 50% growth in 2024. We, as an organization, has been consistent in becoming more effective and efficient, and we will trend towards that direction going forward, too. Thank you, joining.

[Operator Instructions]. Next, we have [ Ian Tang ] of CICC.

[Interpreted] I have 3 questions. First, how do you see the future growth of overseas GPV and its long-term contribution to revenue [indiscernible]? Secondly, what other growth areas do you see from [indiscernible] solution and in-store e-commerce, and how will they contribute to revenue and profit over the long time? Third, what are your plans for overseas payments and sale on license?

[indiscernible] good to see you over here. For the first question regarding overseas outlook, we expect overseas GPV to maintain growing in multiples every year for the next 5 years. We aim to grow the business, maintaining overseas markets fee way as well as margins and we do so with expenses well kept under our strict ROI evaluation for each sales and projects. So that on a net profit basis, it will be a real significant mover to Yeahka's overall bottom line for many years to come. And we are confident about this 5-year plan as our existing overseas business already exceeds budgets across GPV, revenue and profit metrics in January, February and March. And we also haven't incorporated new products, new markets or geographies for conservative purposes. Now besides payments, value-added services outlook, we are also very optimistic as we mentioned, about AI adoption. It will continue to drive the growth of this business. To give you a sense, our AI video transaction volume more than doubled in the second half of 2025 versus the first half of the year already. This year, for example, in, in-store e-commerce segment, we will also use AI to automate more content production for customers from front to end. As we grow overseas with both payment and value-added services, we expect synergies between them for customers to increase to maintain, call it, 10% target of overseas revenue being [ rail-related ] services based on our current ratio also in the Chinese Mainland to be conservative. And the margins of these businesses have been high in our operations, they are currently at over 90%, and we expect them to continue to be high going forward given the AI component. So value-added services with the support of both overseas and AI initiatives, will be increasingly important growth drivers for our products. When it comes to our overseas expansion licenses and all that, we continue to expand our services and channel coverage to stay at the forefront of innovation and broadening our footprint geographically. So we are really expanding in many fronts. We continue to invest in licenses in selected areas and progress work with various regulators and [ acquisystem ] players overseas. In terms of geographies, we continue to prefer economically developed markets as they provide very favorable context to grow healthily and sustainably. And in terms of product sets, reside stable costs, online payments is another interesting trend we're following. The segment is global by nature and the market is huge. I mentioned about over USD 30 trillion in terms of market size for offline merchant acquiring based on third-party reports, that is off-line only. And it doesn't even come to the online auction to give you a sense of the market that we are looking at.

Right. This is Arnold. Just to add on to those points. We think the total addressable market that we're looking at right now, overseas is tremendous. For the countries that we already have [indiscernible], we are looking at a USD 15 trillion market size. That is to some third-parties research about 3 to 4x of that in China. So we're looking at a tremendous size overseas where we already have a head start. So over the next few years, you will see a I wouldn't say overly aggressive but very assertive growth strategy in terms of GPV. We have on-the-ground teams in all locations that we have licenses in we use asset-light models. We first cooperate with local banks and then we also cooperate with local e-wallets and card networks to expand in an asset-light mode. So you would expect us to expand our overseas business quite gradually. And for the value-add services, just like [indiscernible] just mentioned, we think -- and our top management already reiterated within our internal meetings that we are going to keep exploring AI-empowered solutions and processes within ourselves. With that being said, we can unleash 10x, if not 100x of efficiency foods for each and one of our employees. We've already seen what AI can be done what I can do in the last year, especially in 2026. So within ourselves, we think product innovation, research and development market research, new product trials. And all those points are all the things that we can explore we can empower by AI. So I think the future, we're at a inflection point where in the future, our 2B business nature would empower us to be one of the best or first movers to leverage AI tools, especially AI agents and so on. So that's something that I want to add. And in terms of stable comp plan, just as what [ Ranjan ] mentioned, we are closely monitoring that. And we also have online payments that we try to explore. So I think the room to grow is tremendous. Coming from a Chinese background -- we have the Chinese know-hows that to some point, some of the products and technologies that we have already far exceed what we are seeing in the market in Southeast Asia and beyond. So we are very optimistic about what we can do overseas.

[Operator Instructions] We will now take our next question from Yuxuan Chen of Huatai.

[Interpreted] I got one question. I would like to ask about the competitive landscape of the overseas payment business in the local market? And what is the company's advantage on it?

Thank you very much. Quick question. Our latest volume growth overseas is also very strong at about teens percentage growth month-over-month, continuing to take a lot of market share overseas versus competitors, local [indiscernible]. And we are quite confident on delivering annual growth in terms of [indiscernible] going forward just based on our existing overseas markets alone. And we are doing so with profitability, maintaining high, i.e., fee rate at about 60 bps and gross profit margin around 50%, vis-a-vis a few times higher than those in the Chinese inland as you can see. And we multiply the very solid growth drivers. Competitive edge overseas, we rely on our service quality and our ability to solve pain points. So while they're on price, we think that is a very sustainable game play, adding value to customers and local partners, including the banks with whom we cocreate together serving clients better. So effectively, we are standing in a sweet spot, more competing within the third-party nonbank provider segment. There's a long tail of smaller players, start-ups, et cetera, in these segments overseas. And our edge against them is to make good use of our scale, our products, our licenses, listed status, our compliance sectors and a wide network of partners that we have built over time overseas, that is very hard for smaller players to replicate. And on top of which, we also offer value-added services beyond payments. they drive digital payments overseas. For example, a local restaurant that we serve want our in-store e-commerce services to attract tows visiting them, and we can provide foreign payment acceptance matters to help them take payments from these tourists as well. That's what we call a complete solutions. It forms a virtuous a synergistic cycle that reinforces itself, bringing us increased volume overseas.

[Operator Instructions]. Okay. I'm showing further questions and that concludes the question-and-answer session. I'll now turn the conference back to the management for any additional or closing comments.

Thank you, everyone, again for joining our results today. We are now ending the call. If you have any further questions, please feel free to contact us directly. I'll contact together with other information in relation to our results can be found on our website at www.yeahka.com. Thank you, and see you again soon.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect your lines.