You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our consolidated financial statements and the related notes included elsewhere in this annual report. This discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Item 3. Key Information—D. Risk Factors” or in other parts of this annual report. A.Operating Results Overview We are a social networking and gaming platform in MENA. We have built a large and vibrant Yalla community. In the fourth quarter of 2025, approximately 44.8 million users visited our platform on average each month, and the number of paying users on our platform reached 10.4 million during the same period. We have experienced continued revenue growth in recent years. We primarily generate our revenue by providing group chatting and games services. Individual users consume virtual currencies to purchase virtual items and upgrade services or play games on our platform. Virtual items primarily consist of various virtual gifts and privileges in chat rooms or games. Upgrade services primarily consist of VIP rights or premium membership on our platform. Our revenues increased by 6.5% from US$318.9 million in 2023 to US$339.7 million in 2024 and further increased by 0.7% to US$341.9 million in 2025. Our innovative business model focuses on users’ interactions and social networking experience on our platform. Therefore, we do not incur significant content acquisition cost, such as incentive fees to key users or costs for acquiring media content. Our user acquisition channels have been cost-effective. As a result, we are able to achieve high profitability. General Factors Affecting Our Results of Operations Our business and operating results are affected by general factors affecting the social networking and gaming industry in our target markets, particularly MENA. Such general factors include: •overall political, economic and social environment in MENA; •growth of mobile Internet usage and penetration rate in MENA; •changes in user preferences and mobile-based consumption, as well as our ability to adapt to such changes; •social networking and gaming habits and trends in MENA, including competition among different forms of entertainment; and •growth and competitive landscape of the social networking and gaming industry in MENA. Changes in any of these general industry conditions could affect demand for our services, as well as our results of operations. Specific Factors Affecting Our Results of Operations While our business is influenced by general factors affecting the social networking and gaming industry in our target markets, particularly MENA, we believe our results of operations are more directly affected by company specific factors, including the following major factors: Our ability to expand user base We primarily generate our revenue by providing group chatting and games services. Our ability to expand our user base will affect the growth of our business and revenues going forward. Our average MAUs increased by 14.4% from 36.2 million in the three months ended December 31, 2023 to 41.4 million in the three months ended December 31, 2024, and further increased by 8.2% to 44.8 million in the three months ended December 31, 2025. We seek to further expand our user base by penetrating our existing markets and expanding into other underserved markets. Our ability to expand user base depends on our abilities to, among other things, deliver superior user experience, raise brand recognition, utilize cost-effective user acquisition channels and increase attractiveness and breadth of content offerings. 75 Our ability to offer superior user experience to enhance user engagement User experience on our platform is critical to our ability to enhance user engagement. We have devoted to increasing users’ enjoyment of our platform, making Yalla a substantial part of their social life. We actively manage our platform to make the Yalla community more vibrant and interactive. For example, we organize online events on Yalla based on the holidays of the relevant cultures, and we organize tournaments on Yalla Ludo. We believe such online events enable us to foster a sense of community and enhance user engagement, which in turn drives users’ willingness to spend on our platform. Our ability to monetize Our results of operations mainly depend on our ability to monetize our user base by converting non-paying users into paying users and keeping them active. Our revenues are primarily affected by the number of paying users and ARPPU. We experienced growth in the number of paying users from 11.9 million in the three months ended December 31, 2023 to 12.3 million in the three months ended December 31, 2024, primarily driven by our continuous efforts to enhance user experience and increase engagement through content tailored to local cultural preferences. Our ARPPU also increased from US$6.6 in the three months ended December 31, 2023 to US$7.2 in the same period in 2024. Despite a decline in the number of paying users from 12.3 million in the three months ended December 31, 2024 to 10.4 million in the three months ended December 31, 2025, primarily due to fewer promotional events offered by third‑party payment platforms, our ARPPU continued to rise, increasing from US$7.2 in the three months ended December 31, 2024 to US$7.9 in the same period of 2025. We incentivize user spending by recognizing their generosity in the Yalla community. We have created rankings to honor users who have sent the most gifts. We will also continue to introduce new virtual items and upgrade services on our platform. We believe our massive and highly engaged user base and our leading position in the social networking and gaming industry in MENA will allow us to continue to strengthen our monetization capabilities. Our ability to manage our costs and expenses Due to our innovative business model, we have enjoyed strong unit economics and return for our shareholders. As our platform promotes users’ interactions, we do not incur significant content acquisition cost, such as incentive fees to key users or costs for acquiring media content. Our profitability will depend on our ability to continually improve cost efficiency. Selling and marketing expenses represent a significant component of our costs and expenses. We benefit from organic user acquisition through word-of-mouth referrals, and we will also continue to focus on cost-effective user acquisition channels to manage selling and marketing expenses. Key Operating Metrics We regularly review a number of operating metrics, including the following key operating metrics, to evaluate our business, measure our performance, identify trends, formulate financial projections and make strategic decisions. We believe that these key operating metrics are useful to investors because they are frequently used by analysts, investors and other interested parties to evaluate companies in our industry. The following table sets forth our average MAUs, paying users and ARPPU: Three Months Ended March 31, 2024 June 30, 2024 September 30, 2024 December 31, 2024 March 31, 2025 June 30, 2025 September 30, 2025 December 31, 2025 Average MAUs (in thousands) 37,791 38,999 40,176 41,445 44,555 42,421 43,420 44,848 Paying users (in thousands) 12,806 12,023 12,582 12,309 11,787 11,186 11,366 10,444 ARPPU(1) (US$) 6.0 6.6 6.9 7.2 6.9 7.4 7.7 7.9 (1)When calculating the ARPPU, we include revenues generated from our main mobile applications in a given period. 76 Average MAUs Average MAUs allows us to evaluate the size of user base and the level of user engagement on our platform. We calculate average MAUs in a given period by dividing (i) the sum of active users for each month of such period, by (ii) the number of months in such period. We define active users as registered users who accessed any of our main mobile applications at least once during a given period. Average MAUs have grown rapidly, primarily due to continued efforts in user acquisition to penetrate the market. Paying Users Paying users allow us to evaluate the monetization capabilities of our platform. We define paying users as registered users who played a game or purchased our virtual items or upgrade services using virtual currencies on our main mobile applications at least once in a given period, except for users who receive all of their virtual currencies directly or indirectly from us for free. The number of paying users decreased from 12.3 million for the fourth quarter of 2024 to 10.4 million for the fourth quarter of 2025, primarily due to fewer promotion events held by third-party payment platforms in the same period. ARPPU ARPPU is a measure we adopted to better understand user behaviors and evaluate our monetization strategies. We calculate ARPPU in a given period by dividing (i) revenues generated from our main mobile applications in a given period, by (ii) the number of paying users for such period. Our ARPPU increased from US$7.2 in the fourth quarter of 2024 to US$7.9 in the same period of 2025 mainly because our enhanced social and gamification features derive users to spend more on our platform. Key Components of Our Results of Operations Revenues We primarily generate our revenues by providing group chatting and games services. We operate a social networking and gaming platform using a revenue model whereby users can get free access to the basic functions on the platform for our group chatting service but have the options to purchase virtual currencies. Individual users consume virtual currencies to purchase virtual items and upgrade services or play games on our platform. Virtual items primarily consist of various virtual gifts and privileges in chat rooms or games. Upgrade services primarily consist of VIP rights or premium membership on our platform. Costs and Expenses Cost of revenues. Our cost of revenues consists primarily of (i) commission fees paid to third party payment platforms and (ii) staff cost and expenses related to the operations of our mobile platform. Selling and Marketing. Our selling and marketing expenses consist primarily of (i) advertising costs and market promotion expenses and (ii) staff cost, rental and depreciation related to selling and marketing functions. General and Administrative. Our general and administrative expenses consist primarily of (i) staff cost, rental and depreciation related to general and administrative personnel, (ii) professional service fees and (iii) other corporate expenses. Technology and Product Development. Our technology and product development expenses consist primarily of (i) staff cost and (ii) related expenses for the employees involved in designing and developing new features for our mobile platform and self-developed mobile games. 77 Taxation Cayman Islands We are an exempted company incorporated in the Cayman Islands. Under the current laws of the Cayman Islands, we are not subject to tax on income or capital gain. Additionally, the Cayman Islands does not impose a withholding tax on payments of dividends to shareholders. British Virgin Islands Under the current laws of the British Virgin Islands, our subsidiaries incorporated in the BVI are not subject to tax on income or capital gains. In addition, upon payments of dividends by the subsidiaries to their shareholders, no BVI withholding tax will be imposed. UAE For the year ended December 31, 2023, our subsidiaries incorporated in the UAE were not subject to tax on income or capital gain. The UAE has introduced Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses (the “CT Law”), which applies to financial years beginning on or after June 1, 2023. Under the CT Law, corporate tax is applicable to (amongst others) legal persons in the UAE at the rate of 9% on taxable income above AED375,000. However, entities incorporated or registered in free zones that are considered qualifying free zone persons (“QFZP”) are subject to 0% tax on their qualifying income. Certain of our UAE subsidiaries apply 0% tax rate on their qualifying income, as QFZP for the years ended December 31, 2024 and 2025, while other UAE subsidiaries are subject to the corporate tax at a rate of 9%. We believe that the subsidiaries are more likely than not that satisfying all the conditions for QFZP prescribed in the CT Law. If a free zone person does not meet all the conditions, it will be subject to a rate of 9% on its taxable income. For fiscal years beginning on or after January 1, 2025, a top-up-tax has been implemented for certain entities that are part of large multinational enterprises, such that the effective tax rate applicable to them becomes 15%. The top-up-tax generally applies to constituent entities that are members of a multinational enterprise group that has annual global consolidated revenues of 750 million Euros or more in at least two out of the four fiscal years immediately preceding the tested fiscal year. Additionally, although a withholding tax framework has been introduced in the UAE, the applicable rate is currently set at 0% and although this is subject to change, the UAE does not currently impose a withholding tax on payments of dividends to shareholders. Position under Federal Corporate Tax Regime As mentioned in “Item 4. Information on the Company—B. Business Overview—Regulation—United Arab Emirates—Regulations Relating to Tax—Corporate income tax” above, the UAE has issued the CT Law, pursuant to which, federal corporate tax applies to financial periods starting on or after June 1, 2023. Although natural persons that conduct a business in the UAE are subject to corporate tax, personal investment income, as defined in the UAE tax legislation, derived by individuals is not taxable. Therefore, individuals purchasing shares for their personal accounts (and without possessing or requiring a license to do so) should not be taxable on dividends or capital gains accrued from the shares. In the context of corporate/juridical person shareholders that are subject to UAE corporate tax, dividends and profit distributions earned from (i.e., issued by or in respect of) entities resident in the UAE are automatically exempt income for corporate tax purposes. For completeness, profit distributions/dividends generated from (i.e., issued by or in respect of) foreign non-UAE resident entities may be subject to a participation exemption, depending on the satisfaction of strict conditions. Capital gains generated from the disposal of ownership interests held in UAE-resident or foreign non-UAE resident entities may be subject to a participation exemption, depending on the satisfaction of strict conditions. The participation exemption conditions include but are not limited to, minimum ownership interest thresholds and minimum holding periods (or intended minimum holding periods), among other stringent conditions. 78 Hong Kong Under the current Hong Kong Inland Revenue Ordinance, our subsidiaries incorporated in Hong Kong are subject to Hong Kong profits tax at the rate of 16.5% on their taxable income generated from the operations in Hong Kong. Payments of dividends by the Hong Kong subsidiaries to us are not subject to withholding tax in Hong Kong. A two-tiered profits tax rates regime was introduced in 2018 where the first HK$2 million of assessable profits earned by a company will be taxed at half of the current tax rate (8.25%), whilst the remaining profits will continue to be taxed at 16.5%. There is an anti-fragmentation measure where each group will have to nominate only one company in the group to benefit from the progressive rates. Mainland China Our PRC subsidiaries are subject to the PRC Enterprise Income Tax Law (“EIT Law”) and are taxed at the statutory income tax rate of 25%, except for one entity that is entitled to preferential tax treatment. One of our PRC subsidiaries became qualified as an “Advanced Technology Service Enterprise” in 2025 and is entitled to a preferential income tax rate of 15% for the year ended December 31, 2025. Under the EIT Law and its implementation rules, an enterprise established outside mainland China with a “de facto management body” within mainland China is considered a PRC resident enterprise for Chinese enterprise income tax purposes. A PRC resident enterprise is generally subject to certain Chinese tax reporting obligations and a uniform 25% enterprise income tax rate on its global income. The implementation rules to the EIT Law provide that non-resident legal entities are considered PRC residents if substantial and overall management and control over the production and business operations, personnel, accounting, properties, etc., occurs within the mainland China. Our company is a company incorporated outside the mainland China and is not an offshore entity controlled by mainland China enterprises. As a holding company, its key assets are its ownership interests of its subsidiaries, and its key assets and operation are located outside the mainland China. We do not believe that it is more likely than not that our company and our subsidiaries registered outside the mainland China should be treated as residents for EIT Law purposes. If the PRC tax authorities subsequently determine that our company and our subsidiaries registered outside the mainland China are deemed resident enterprises, our company and our subsidiaries registered outside the mainland China will be subject to the PRC income tax at a rate of 25%. As of December 31, 2024, we had not received any inquiry or notice from the tax authorities of mainland China in respect of the tax resident status of its offshore entities. Singapore The subsidiary incorporated in Singapore is subject to the Singapore Corporate Tax rate of 17%. 79 Results of Operations for Continuing Operations The following table sets forth a summary of our consolidated results of operations for the periods presented, both in absolute amount and as a percentage of our total revenues. This information should be read together with our consolidated financial statements and related notes included elsewhere in this annual report. The operating results in any period are not necessarily indicative of the results that may be expected for any future period. For the Year Ended December 31, 2023 2024 2025 US$ % US$ % US$ % (in thousands, except for percentages) Revenues 318,878 100.0 339,676 100.0 341,938 100.0 Costs and expenses Cost of revenues (114,527 ) (36.0 ) (120,471 ) (35.6 ) (111,926 ) (32.8 ) Selling and marketing expenses (45,383 ) (14.2 ) (31,348 ) (9.2 ) (34,550 ) (10.1 ) General and administrative expenses (36,808 ) (11.5 ) (37,424 ) (11.0 ) (38,975 ) (11.4 ) Technology and product development expenses (25,805 ) (8.1 ) (29,031 ) (8.5 ) (34,270 ) (10.0 ) Total costs and expenses (222,523 ) (69.8 ) (218,274 ) (64.3 ) (219,721 ) (64.3 ) Operating income 96,355 30.2 121,402 35.7 122,217 35.7 Interest income 19,833 6.2 28,674 8.4 25,662 7.5 Government grants 337 0.1 800 0.2 931 0.3 Investment income (loss) 1,728 0.6 (2,806 ) (0.7 ) 3,310 1.0 Impairment loss of investments (2,509 ) (0.8 ) — — — — Income before income taxes 115,744 36.3 148,070 43.6 152,120 44.5 Income tax expense (2,686 ) (0.8 ) (13,919 ) (4.1 ) (3,980 ) (1.2 ) Net income 113,058 35.5 134,151 39.5 148,140 43.3 Comparison of Year Ended December 31, 2025 and Year Ended December 31, 2024 Revenues. Our total revenues increased by 0.7% from US$339.7 million in 2024 to US$341.9 million in 2025, which was primarily driven by the broadening of user base and enhanced user monetization. Costs and expenses. Our total costs and expenses increased by 0.7% from US$218.3 million in 2024 to US$219.7 million in 2025. •Cost of revenues. Our cost of revenues decreased by 7.1% from US$120.5 million in 2024 to US$111.9 million in 2025, mainly due to lower commission fees paid to third-party payment platforms by US$4.9 million from 2024 to 2025 as a result of diversified payment channels. Cost of revenues as a percentage of our total revenues decreased from 35.5% in 2024 to 32.7% in 2025. •Selling and marketing expenses. Our selling and marketing expenses increased by 10.2% from US$31.3 million in 2024 to US$34.6 million in 2025, mainly due to an increase in advertising and market promotion expenses by US$7.3 million from 2024 to 2025 attributable to our continued user acquisition efforts and expanding product portfolio, and partially offset by a decrease of US$2.9 million in salaries and benefits for our selling and marketing staff. Selling and marketing expenses as a percentage of our total revenues increased from 9.2% in 2024 to 10.1% in 2025. •General and administrative expenses. Our general and administrative expenses increased by 4.1% from US$37.4 million in 2024 to US$39.0 million in 2025. The increase was mainly due to an increase in foreign exchange loss of US$2.1 million from 2024 to 2025. General and administrative expenses as a percentage of our total revenues increased from 11.0% in 2024 to 11.4% in 2025. •Technology and product development expenses. Our technology and product development expenses increased by 18.0% from US$29.0 million in 2024 to US$34.3 million in 2025, mainly due to an increase in salaries and benefits for our technology and product development staff by US$5.4 million from 2024 to 2025, driven by an increase in the headcount of our technology and product development staff to support the development of new businesses and expansion of our product portfolio. Technology and product development expenses as a percentage of our total revenues increased from 8.5% in 2024 to 10.0% in 2025. 80 Interest income. Our interest income decreased from US$28.7 million in 2024 to US$25.7 million in 2025, primarily due to the decreased position of term deposits. Government grants. Our government grants amounted to US$0.9 million in 2025, compared with US$0.8 million in 2024. Investment income (loss). Our investment income was US$3.3 million in 2025, compared to an investment loss of US$2.8 million in 2024, primarily due to changes in the fair value of wealth management products. Income tax expense. Our income tax expense decreased from US$13.9 million in 2024 to US$4.0 million in 2025, primarily due to a decrease in UAE corporate tax. Net income. As a result of the foregoing, our net income increased by 10.4% from US$134.2 million in 2024 to US$148.1 million in 2025. Comparison of Year Ended December 31, 2024 and Year Ended December 31, 2023 Revenues. Our total revenues increased by 6.5% from US$318.9 million in 2023 to US$339.7 million in 2024, which was primarily driven by our broadening user base and enhanced monetization capability. Costs and expenses. Our total costs and expenses decreased by 1.9% from US$222.5 million in 2023 to US$218.3 million in 2024. •Cost of revenues. Our cost of revenues increased by 5.2% from US$114.5 million in 2023 to US$120.5 million in 2024, mainly due to an increase in commission fees paid to third-party payment platforms by US$7.5 million from 2023 to 2024 as a result of increasing revenues generated. Cost of revenues as a percentage of our total revenues decreased from 35.9% in 2023 to 35.5% in 2024. •Selling and marketing expenses. Our selling and marketing expenses decreased by 30.9% from US$45.4 million in 2023 to US$31.3 million in 2024, mainly due to a decrease in advertising and market promotion expenses by US$10.6 million from 2023 to 2024 driven by a more disciplined advertising and promotion approach. As a result, selling and marketing expenses as a percentage of our total revenues decreased from 14.2% in 2023 to 9.2% in 2024. •General and administrative expenses. Our general and administrative expenses increased by 1.7% from US$36.8 million in 2023 to US$37.4 million in 2024. The increase was mainly due to an increase in salaries and other benefits for our general and administrative staff by US$7.1 million from 2023 to 2024, partially offset by (i) a decrease in share-based compensation expenses by US$4.5 million from 2023 to 2024, and (ii) a decrease in foreign exchange loss of US$1.2 million from 2023 to 2024. General and administrative expenses as a percentage of our total revenues decreased from 11.5% in 2023 to 11.0% in 2024. •Technology and product development expenses. Our technology and product development expenses increased by 12.5% from US$25.8 million in 2023 to US$29.0 million in 2024, mainly due to an increase in salaries and benefits for our technology and product development staff by US$3.7 million from 2023 to 2024, driven by an increase in the headcount of our technology and product development staff to support the development of new businesses and expansion of our product portfolio. Technology and product development expenses as a percentage of our total revenues slightly increased from 8.1% in 2023 to 8.5% in 2024. Interest income. Our interest income increased significantly from US$19.8 million in 2023 to US$28.7 million in 2024, primarily due to the increased position of cash and cash equivalents and increased investments in wealth management products. Government grants. Our government grants slightly increased from US$0.3 million in 2023 to US$0.8 million in 2024. Investment income (loss). Our investment loss was US$2.8 million in 2024, compared to an investment income of US$1.7 million in 2023, primarily due to changes in fair value of certain debt securities recognized in 2024. Impairment loss of investments. Our impairment loss of long-term investments was nil in 2024, compared to US$2.5 million in 2023. The decrease was due to the loss of investment in an equity investee recognized in 2023. 81 Income tax expense. Our income tax expense increased from US$2.7 million in 2023 to US$13.9 million in 2024, primarily due to the introduction and implementation of the UAE Corporate Tax Law, which is effective for the financial years starting on or after June 1, 2023. Net income. As a result of the foregoing, our net income increased by 18.7% from US$113.1 million in 2023 to US$134.2 million in 2024. Non-GAAP Measures To supplement the financial measures prepared in accordance with generally accepted accounting principles in the United States, or GAAP, this annual report presents non-GAAP financial measures, namely non-GAAP operating income and non-GAAP net income, as supplemental measures to review and assess our operating performance. The presentation of the non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. We define non-GAAP operating income as operating income excluding share-based compensation. We define non-GAAP net income as net income excluding share-based compensation. By excluding the impact of share-based compensation expenses, which are non-cash charges, we believe that the non-GAAP financial measures help identify underlying trends in our business and enhance the overall understanding of our past performance and future prospects. Investors can better understand our operating and financial performance, compare business trends among different reporting periods on a consistent basis and assess our core operating results, as they exclude share-based compensation expenses, which are not expected to result in cash payments. We also believe that the non-GAAP financial measures allow for greater visibility with respect to key metrics used by our management in financial and operational decision-making. The non-GAAP financial measure is not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. The non-GAAP financial measure has limitations as analytical tools. One of the key limitations of using the non-GAAP financial measures is that they do not reflect all items of income and expense that affect our operations. Share-based compensation has been and may continue to be incurred in our business and is not reflected in the presentation of non-GAAP financial measures. Furthermore, the non-GAAP financial measures may differ from the non-GAAP information used by other companies, including peer companies, and therefore their comparability may be limited. We compensate for these limitations by providing the relevant disclosure of our non-GAAP financial measures in the reconciliations to the nearest U.S. GAAP performance measures, all of which should be considered when evaluating our performance. We encourage investors and others to review our financial information in its entirety and not rely on a single financial measure. The following table reconciles our non-GAAP operating income in the years presented to operating income: For the Year Ended December 31, 2023 2024 2025 (US$ in thousands) Operating income 96,354 121,401 122,217 Add: share-based compensation expenses 17,930 14,692 10,317 Non-GAAP operating income 114,284 136,093 132,534 The following table reconciles our non-GAAP net income in the years presented to net income: For the Year Ended December 31, 2023 2024 2025 (US$ in thousands) Net income 113,058 134,151 148,140 Add: share-based compensation expenses, net of tax effect of nil* 17,930 14,692 10,317 Non-GAAP net income 130,988 148,843 158,457 * Share-based compensation expenses were recorded at our Company (incorporated in the Cayman Islands), and our subsidiaries incorporated in PRC and UAE. Share-based compensation expenses were non-deductible expenses in the PRC and UAE and the statutory tax rate of Cayman Islands is nil. Therefore, there is no tax impact for share-based compensation expenses adjustment for our company’s non-GAAP financial measures. 82 B.Liquidity and Capital Resources Our primary sources of liquidity have been issuance of equity securities and cash provided by operating activities, which have historically been sufficient to meet our working capital and capital expenditure requirements. In 2023, 2024 and 2025, net cash provided by operating activities was US$139.3 million, US$172.8 million and US$137.5 million, respectively. As of December 31, 2025, we had cash and cash equivalents and restricted cash of US$528.6 million, as compared to cash and cash equivalents and restricted cash of US$490.4 million as of December 31, 2024. We believe that our existing cash and cash equivalents and restricted cash and anticipated cash flows from operating activities will be sufficient to meet our anticipated working capital requirements and capital expenditures in the ordinary course of business for the next 12 months. We may, however, need additional cash resources in the future if we experience changes in business condition or other developments, or if we find and wish to pursue opportunities for investments, acquisitions, capital expenditures or similar actions. If we determine that our cash requirements exceed the amount of cash and cash equivalents we have on hand at the time, we may seek to issue equity or debt securities or obtain credit facilities. The issuance and sale of additional equity would result in further dilution to our shareholders. The incurrence of indebtedness would result in increased fixed obligations and could result in operating covenants that would restrict our operations. We cannot assure you that financing will be available in amounts or on terms acceptable to us, if at all. The following table sets forth a summary of our cash flows for the periods indicated: For the Year Ended December 31, 2023 2024 2025 (US$ in thousands) Net cash provided by operating activities 139,320 172,817 137,537 Net cash (used in) provided by investing activities (226,125 ) 18,579 (45,081 ) Net cash used in financing activities (7,554 ) (12,823 ) (55,464 ) Effect of foreign currency exchange rate changes on cash and cash equivalents and restricted cash (591 ) (524 ) 1,250 Net (decrease) increase in cash and cash equivalents and restricted cash (94,950 ) 178,049 38,242 Cash and cash equivalents and restricted cash at the beginning of the year 407,257 312,307 490,356 Cash and cash equivalents and restricted cash at the end of the year 312,307 490,356 528,598 Operating Activities Net cash provided by operating activities was US$137.5 million in 2025, primarily due to net income of US$148.1 million, adjusted for the effects of changes in working capital and other activities. Reconciliation of net income to net cash provided by operating activities primarily consisted of the non-cash share-based compensation expenses of US$10.3 million. Changes in working capital primarily consisted of a decrease in income taxes payable of US$7.8 million due to a decrease in UAE corporate tax payable, and an increase in prepayments and other current assets of US$6.5 million due to an increase in receivables from third-party payment platforms. Net cash provided by operating activities was US$172.8 million in 2024, primarily due to net income of US$134.2 million, adjusted for the effects of changes in working capital and other activities. Reconciliation of net income to net cash provided by operating activities primarily consisted of the non-cash share-based compensation expenses of US$14.7 million. Changes in working capital primarily consisted of an increase in deferred revenue of US$11.5 million due to the growth of our business, and an increase in income taxes payable of US$8.2 million due to the introduction and implementation of the UAE Corporate Tax Law. Net cash provided by operating activities was US$139.3 million in 2023, primarily due to net income of US$113.1 million, adjusted for the effects of changes in working capital and other activities. Reconciliation of net income to net cash provided by operating activities primarily consisted of the non-cash share-based compensation expenses of US$17.9 million. Changes in working capital primarily consisted of an increase in deferred revenue of US$10.6 million due to the growth of our business, which were partially offset by an increase in prepayments and other current assets of US$6.3 million due to an increase in receivables from third-party payment platforms. 83 Investing Activities Net cash used in investing activities was US$45.1 million in 2025, which was primarily attributable to (i) purchase of short-term investments of US$277.7 million, and (ii) purchase of term deposits of US$197.8 million, partially offset by (i) proceeds from maturity of short-term investments of US$238.4 million, and (ii) proceeds from maturity of term deposits of US$208.0 million. Net cash provided by investing activities was US$18.6 million in 2024, which was primarily attributable to proceeds from maturity of term deposits of US$304.2 million, partially offset by (i) purchase of term deposits of US$181.9 million, and (ii) payments of long-term investments of US$93.5 million. Net cash used in investing activities was US$226.1 million in 2023, which was primarily attributable to (i) purchases of term deposits of US$292.0 million, (ii) purchases of short-term investments of US$100.6 million, and (iii) payments of long-term investments of US$50.1 million, which was partially offset by (i) proceeds from maturity of short-term investments of US$117.7 million and (ii) proceeds from maturity of term deposits of US$100.5 million. Financing Activities Net cash used in financing activities was US$55.5 million in 2025, which was primarily attributable to repurchase of ordinary shares of US$56.6 million, partially offset by proceeds from exercise of share options of US$1.1 million. Net cash used in financing activities was US$12.8 million in 2024, which was primarily attributable to repurchase of ordinary shares of US$13.9 million, partially offset by proceeds from exercise of share options of US$1.1 million. Net cash used in financing activities was US$7.6 million in 2023, which was primarily attributable to repurchase of ordinary shares of US$8.5 million, which was partially offset by proceeds from exercise of share options of US$0.9 million. Capital Expenditures We made capital expenditures of US$1.6 million, US$0.8 million and US$2.3 million in 2023, 2024 and 2025, respectively. Our capital expenditures were mainly used for purchases and prepayments of property and equipment and purchases of intangible asset. We will continue to make capital expenditures to meet the expected growth of our business. Holding Company Structure Yalla Group Limited is a holding company with no material operations of its own. We conduct our operations primarily through our subsidiaries in the UAE and China, and all of users’ payments for virtual currencies are mainly collected by our subsidiaries in the UAE. As a result, Yalla Group Limited’s ability to pay dividends depends upon dividends paid by our UAE subsidiaries. As a matter of the laws regulating the subsidiaries in the UAE, the subsidiaries can pay dividends only to the extent they have profits available for the purpose after deducting the statutory reserve required by the local laws. A company’s profits available for distribution are its accumulated, realized profits, so far as not previously utilized by distribution or capitalization, less its accumulated, realized losses, so far as not previously written off in a reduction or reorganization of capital duly made. Recent Accounting Pronouncements Please see Note 2 to our consolidated financial statements included elsewhere in this annual report. C.Research and Development, Patents and Licenses, Etc. We have focused on and will continue to invest in our technology system, which supports all key aspects of our platform and is designed to optimize for scalability and flexibility. Our technology and product development expenses were US$25.8 million, US$29.0 million and US$34.3 million in 2023, 2024 and 2025, respectively. 84 D.Trend Information Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for the year ended December 31, 2025 that are reasonably likely to have a material effect on our total net revenues, income, profitability, liquidity or capital reserves, or that caused the disclosed financial information to be not necessarily indicative of future operating results or financial conditions. E.Critical Accounting Estimates Our management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires our management to make judgments and estimates that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported revenue generated, and expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these judgments and estimates under different assumptions or conditions and any such differences may be material. For the year ended December 31, 2025, we had not identified critical accounting estimates that involve a significant level of estimation uncertainty and would have a material impact on our results.