Yalla Group (YALA) AI Stock Analysis

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Yalla Group

(NYSE:YALA)

Rating:79Outperform

Price Target:

$7.50

▲(20.39%Upside)

Yalla Group's stock score is driven by its strong financial performance and positive earnings call sentiment. The company's low valuation indicates potential for appreciation, though technical analysis suggests some caution in the short term. The absence of current cash flow data and rising costs should be monitored closely.

Yalla Group (YALA) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$1.02B

Dividend YieldN/A

Average Volume (3M)1.12M

Price to Earnings (P/E)8.4

Beta (1Y)1.13

Revenue Growth6.40%

EPS Growth9.72%

CountryUS

Employees815

SectorTechnology

Sector Strength79

IndustrySoftware - Application

Share Statistics

EPS (TTM)0.20

Shares Outstanding132,801,830

10 Day Avg. Volume840,922

30 Day Avg. Volume1,123,122

Financial Highlights & Ratios

PEG Ratio-0.94

Price to Book (P/B)1.22

Price to Sales (P/S)0.00

P/FCF Ratio5.21

Enterprise Value/Market Cap0.13

Enterprise Value/Revenue0.10

Enterprise Value/Gross Profit0.61

Enterprise Value/Ebitda0.29

Forecast

1Y Price TargetN/A

Price Target UpsideN/A

Rating ConsensusN/A

Number of Analyst Covering0

Yalla Group Business Overview & Revenue Model

Company DescriptionYalla Group Limited is a leading voice-centric social networking and entertainment platform, primarily operating in the Middle East and North Africa region. The company offers users a range of online social networking and entertainment services, mainly through its flagship applications, Yalla and Yalla Ludo. Yalla provides a platform for voice-based group chat and social interaction, while Yalla Ludo offers popular board games with integrated voice chat capabilities. Yalla Group leverages its deep understanding of local cultures and preferences to deliver engaging and socially interactive digital experiences.

How the Company Makes MoneyYalla Group generates revenue primarily through in-app purchases and, to a lesser extent, from advertisements. The company monetizes its platforms by offering virtual items and enhancements that users can purchase to enrich their social interactions and gaming experiences. These virtual goods include gifts, stickers, and other interactive elements that enhance user engagement and satisfaction. Additionally, Yalla Group benefits from its premium membership offerings, which provide users with exclusive features and privileges. The company's revenue model is predominantly driven by user spending on virtual items, supported by a growing user base and strong engagement metrics.

Yalla Group Earnings Call Summary

Earnings Call Date:May 19, 2025

(Q1-2025)

% Change Since: -20.33%|

Next Earnings Date:Aug 11, 2025

Earnings Call Sentiment Positive

The earnings call revealed strong revenue growth, increased net margin, successful share repurchases, and a growing user base, demonstrating positive business momentum. However, rising costs and technology expenses, along with cautious revenue guidance, present challenges that the company must manage. Overall, the highlights significantly outweigh the lowlights.

Q1-2025 Updates

Positive Updates

Strong Revenue Growth

Q1 revenues reached $83.9 million, up 6.5% year-over-year, exceeding the upper end of guidance.

Increased Net Margin

Net margin improved from 39.5% to 43.4% year-over-year.

Successful Share Repurchase Program

Yalla repurchased $27.4 million in shares, raising the 2025 buyback target to $50 million.

Growth in User Base

Average monthly active users increased by 17.9% year-over-year to 44.6 million.

Expansion in AI Integration

Self-developed AI content moderation model for image and text recognition in Arabic and MENA dialects.

Negative Updates

Increased Costs

General and administrative expenses rose by 30.8% due to increased incentive compensation and professional fees.

Rising Technology Expenses

Technology and product development expenses increased by 25% due to higher salaries and headcounts.

Revenue Guidance

Q2 revenue guidance is between $76 million and $83 million, indicating potential challenges.

Company Guidance

During Yalla Group Limited's first quarter 2025 earnings call, management provided guidance reflecting a positive outlook despite global economic volatility and the impact of Ramadan. The company reported Q1 revenues of $83.9 million, representing a 6.5% year-over-year increase, with net margin improving from 39.5% to 43.4%. Management highlighted a net income rise of 17% to $36.4 million, driven by enhanced monetization capabilities and disciplined cost control, specifically a 14.3% decrease in selling and marketing expenses. The company expects Q2 2025 revenues to range between $76 million and $83 million. Furthermore, Yalla Group announced an increase in their 2025 share buyback target to $50 million, underscoring their commitment to shareholder returns.

Yalla Group Financial Statement Overview

Summary

Yalla Group exhibits strong financial health with robust revenue and profit margins, minimal leverage, and excellent equity positioning. While historical cash flow performance has been solid, the absence of current cash flow data in 2024 requires attention to ensure liquidity and operational efficiency. The company's financial statements reflect a well-managed, growing enterprise positioned for continued success in the software industry, albeit with a watchful eye on cash flow management.

Income Statement

Very Positive

Yalla Group has demonstrated strong revenue growth over the years, with a notable increase of 6.52% from 2023 to 2024. The company maintains a high gross profit margin of 64.55% and a robust net profit margin of 39.94% in 2024. The EBIT margin of 35.74% and EBITDA margin of 36.34% also reflect operational efficiency and profitability. These metrics indicate a solid financial performance and growth trajectory in the competitive software industry.

Balance Sheet

Very Positive

The balance sheet of Yalla Group shows a very strong position with a low debt-to-equity ratio of 0.0015, indicating minimal leverage. The company has a high return on equity (ROE) of 19.26%, reflecting effective use of shareholder funds to generate profits. The equity ratio stands at 87.85%, showcasing Yalla's strong capitalization and low reliance on debt. This stability provides a solid foundation for future growth and resilience against market fluctuations.

Cash Flow

Positive

Yalla Group's cash flow statement reveals a lack of positive operating and free cash flow in 2024, posing potential risks to liquidity. The company has historically shown strong free cash flow growth, but the lack of current data prevents a complete analysis. While past performance shows effective cash generation, the absence of current cash flow metrics suggests a need for careful monitoring of cash reserves and operational cash management.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
339.68M	318.88M	303.60M	273.13M	134.93M
	Gross Profit
219.20M	204.35M	189.80M	177.99M	73.66M
	EBIT
121.40M	96.35M	78.70M	83.03M	3.76M
	EBITDA
123.42M	98.37M	82.77M	83.88M	4.34M
	Net Income Common Stockholders
135.68M	117.34M	79.76M	82.60M	3.21M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
654.30M	535.27M	453.05M	354.39M	237.65M
	Total Assets
801.63M	638.95M	506.34M	380.81M	254.62M
	Total Debt
1.03M	2.10M	1.60M	668.33K	0.00
	Net Debt
-487.35M	-309.78M	-405.65M	-350.82M	-236.88M
	Total Liabilities
103.82M	76.29M	66.47M	44.93M	21.08M
	Stockholders Equity
704.35M	567.69M	440.59M	335.89M	233.53M
Cash Flow		Free Cash Flow
171.97M	137.67M	103.22M	142.75M	63.76M
	Operating Cash Flow
172.81M	139.32M	119.55M	144.24M	64.79M
	Investing Cash Flow
18.58M	-226.12M	-62.57M	-5.36M	2.48M
	Financing Cash Flow
-12.82M	-7.55M	371.00K	-24.56M	123.77M

Yalla Group Technical Analysis

Technical Analysis Sentiment

Neutral

Last Price6.23

Price Trends

50DMA

6.90

Negative

100DMA

5.68

Positive

200DMA

4.95

Positive

Market Momentum

MACD

-0.14

Positive

RSI

41.21

Neutral

STOCH

22.54

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For YALA, the sentiment is Neutral. The current price of 6.23 is below the 20-day moving average (MA) of 7.01, below the 50-day MA of 6.90, and above the 200-day MA of 4.95, indicating a neutral trend. The MACD of -0.14 indicates Positive momentum. The RSI at 41.21 is Neutral, neither overbought nor oversold. The STOCH value of 22.54 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for YALA.

Yalla Group Risk Analysis

Yalla Group disclosed 66 risk factors in its most recent earnings report. Yalla Group reported the most risks in the "Finance & Corporate" category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Yalla Group Peers Comparison

Overall Rating

UnderperformOutperform

Sector (62)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
YALA	79 Outperform	$1.02B	8.42	21.03%	―	6.40%	9.72%
OPFI	77 Outperform	$1.06B	50.49	-47.39%	―	3.82%	-251.96%
VTEX	71 Outperform	$1.18B	78.11	6.26%	―	7.71%	―
DSP	65 Neutral	$790.22M	419.60	4.15%	―	30.64%	―
Sector *	62 Neutral	$11.80B	10.10	-7.47%	2.99%	7.37%	-8.16%
BLND	57 Neutral	$824.69M	―	-93.00%	―	-0.40%	63.36%
BMBL	56 Neutral	$511.29M	―	-46.57%	―	-2.39%	-2961.26%

* Technology Sector Average

Performance Comparison

YALA

Yalla Group

6.47

1.98

44.10%

OPFI

OppFi

12.30

8.84

255.49%

DSP

Viant Technology

13.03

3.61

38.32%

BMBL

Bumble

5.24

-5.38

-50.66%

BLND

Blend Labs

3.19

0.82

34.60%

VTEX

6.64

-0.10

-1.48%

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.