Third Quarter 2023 Financial Highlights1
Third Quarter 2023 Operational Highlights
Mr. David Xueling Li, Chairman and Chief Executive Officer of JOYY, commented, “We delivered a robust performance during the third quarter, highlighted by the ongoing recovery of BIGO’s revenue, profit, and user activity. As we continued to flexibly adapt to market dynamics and leveraged our local operational advantages, BIGO’s revenue for the third quarter grew by 2.2% year over year and by 4.9% compared to the previous quarter. Meanwhile, our dedicated operational strategies to optimize users’ content and social experiences drove BIGO’s enhanced user engagement and monetization. During the quarter, our global average mobile MAUs grew by 2.6% year over year and reached 276.8 million. Notably, Bigo Live sustained its strong growth trajectory in MAUs, increasing by 14.0% year over year to 40.3 million, while maintaining healthy growth in paying users and sequential improvement in average revenue per paying user.”
Third Quarter 2023 Financial Results
NET INCOME
Net income was $567. 1 million in the third quarter of 2023, to $586. 7 million in the same period of 2022.
Live streaming revenues were US$495.8 million in the third quarter of 2023, compared to US$542.8 million in the corresponding period of 2022, primarily due to our proactive adjustments to certain non-core products and the decrease in the average revenue per paying user of BIGO, partially offset by the increase in the number of paying users of BIGO.
COST OF REVENUE AND GROSS PROFIT
Cost of earnings decreased 2. 3% to $357. 9 million in the third quarter of 2023 from $366. 5 million in the corresponding 2022 era. Revenue sharing fees and content charge amounted to $232. 3 million in the third quarter of 2023, versus the U. S. $245. 8 million. million the corresponding era of 2022.
Gross profit was $209. 2 million in Q3 2023, compared to $220. 2 million in the same era in 2022. Gross margin 36. 9% in Q3 2023, compared to 37. 5% in the same era in 2022.
OPERATING INCOME AND EXPENSES
Operating income was US$12.0 million in the third quarter of 2023, compared to operating income of US$19.8 million in the corresponding period of 2022. Operating income margin was 2.1% in the third quarter of 2023, compared to operating income margin of 3.4% in the corresponding period of 2022.
Non-GAAP operating income7 was US$40.4 million in the third quarter of 2023, compared to US$43.1 million in the corresponding period of 2022. Non-GAAP operating income margin8 was 7.1% in the third quarter of 2023, compared to 7.4% in the corresponding period of 2022.
NET INCOME
Net income attributable to controlling interest of JOYY was US$72.9 million in the third quarter of 2023, compared to net income of US$515.3 million in the corresponding period of 2022. Our net income was higher in the third quarter of 2022 primarily due to a one-off remeasurement gain of an equity investment recorded upon the consolidation of the investee as previously announced on August 22, 2022, as part of the “gain on fair value change of investments.” Net income margin was 12.9% in the third quarter of 2023, compared to net income margin of 87.8% in the corresponding period of 2022.
NET INCOME PER ADS
Diluted net income per ADS10 was US$1.86 in the third quarter of 2023, compared to diluted net income per ADS of US$6.28 in the corresponding period of 2022.
Non-GAAP diluted net revenue source consistent with ADS11 $1. 22 in the third quarter of 2023, compared to $0. 96 in the same consistent period of 2022.
BALANCE SHEET & CASH FLOW
SHARES OUTSTANDING
As of September 30, 2023, the Company had a total of 1,215. 9 million non-unusual shares outstanding, representing 60. 8 million ADSs assuming the conversion of all non-unusual shares into ADSs.
Business Outlook
Recent Developments
Share buyback program
During the third quarter of 2023, the Company repurchased US$43. 5 million of its interests under the pre-existing US$800 million percentage repurchase program. In November 2023, the Company’s Board of Directors legalized the renewal and continued use of unused quota under the pre-existing program. existing US$530 million percentage buyback program, which would initially expire at the end of November 2023, for an additional period of 12 months from the date hereof.
Director Appointment
Conference Call Information
The Company will hold a conference call at 9:00 PM U.S. Eastern Time on Wednesday, November 29, 2023 (10:00 AM Singapore/Hong Kong Time on Thursday, November 30, 2023). Details for the conference call are as follows:
Event Title: JOYY Inc. Third Quarter 2023 Earnings Conference CallConference ID: #10035209
PRE-ENROLMENT LINK: https://s1. c-conf. com/diamondpass/10035209-d2mxkh. html
A live archived webcast of the convention will also be available on the Company’s online investor relations page in https://ir. joyy. com. The replay will be available until December 7, 2023, by dialing the following numbers:
About JOYY Inc.
JOYY is a global leading generation company with a project to enrich ads across generation. Lately, JOYY operates several social products, adding Bigo Live for streaming, Likee for short videos, Hago for multiplayer social networking, an instant messaging product, and more. The company has created a very attractive and colorful user network for users around the world. JOYY ADSs have been indexed on the NASDAQ since November 2012.
This press release contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” and similar statements. Among other things, the business outlook and quotations from management in this press release, as well as JOYY’s strategic and operational plans, contain forward-looking statements. JOYY may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (“SEC”), in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about JOYY’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: JOYY’s goals and strategies; JOYY’s future business development, results of operations and financial condition; the expected growth of the global online communication social platform market; the expectation regarding the rate at which to gain active users, especially paying users; JOYY’s ability to monetize the user base; fluctuations in global economic and business conditions; the impact of the COVID-19 to JOYY’s business operations and the global economy; and assumptions underlying or related to any of the foregoing. A more detailed and full discussion of those risks and other potential risks is included in JOYY’s filings with the SEC. All information provided in this press release and in the attachments is as of the date of this press release, and JOYY does not undertake any obligation to update any forward- looking statement, except as required under applicable law.
Use of Non-GAAP Financial Measures
The unaudited condensed consolidated financial information is prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). JOYY uses non-GAAP operating income, non-GAAP operating (loss) margin, non-GAAP net income (loss) attributable to controlling interest of JOYY, non-GAAP net income (loss) margin attributable to controlling interest of JOYY, non-GAAP net income (loss) attributable to common shareholders of JOYY, and basic and diluted non-GAAP net income (loss) per ADS, all of which are non-GAAP financial measures adjusted from the most comparable U.S. GAAP results. Non-GAAP operating income (loss) is operating income (loss) excluding share-based compensation expenses, impairment of goodwill and investments, amortization of intangible assets from business acquisitions, and gain (loss) on disposal of subsidiaries and business. Non-GAAP operating (loss) margin is non-GAAP operating income as a percentage of net revenues. Non-GAAP net income (loss) is net income (loss) excluding share-based compensation expenses, impairment of goodwill and investments, amortization of intangible assets from business acquisitions, gain (loss) on disposal of subsidiaries and business, gain (loss) on disposal and deemed disposal of investments, gain (loss) on fair value change of investments, reconciling items on the share of equity method investments (referring to share of income (loss) from equity method investments resulting from non-recurring or non-cash items of the equity method investments), gain (loss) on extinguishment of debt and derivative, interest expenses related to the convertible bonds’ amortization to face value, and income tax effects of the above non-GAAP reconciling items. Non-GAAP net income (loss) attributable to controlling interest of JOYY is net income (loss) attributable to controlling interest of JOYY excluding share-based compensation expenses, impairment of goodwill and investments, amortization of intangible assets from business acquisitions, gain (loss) on disposal of subsidiaries and business, gain (loss) on disposal and deemed disposal of investments, gain (loss) on fair value change of investments, reconciling items on the share of equity method investments, gain (loss) on extinguishment of debt and derivative, interest expenses related to the convertible bonds’ amortization to face value, income tax effects of the above non-GAAP reconciling items and adjustments for non-GAAP reconciling items for the net (loss) income attributable to non-controlling interest shareholders. Non-GAAP net income (loss) margin is non-GAAP net income (loss) attributable to controlling interest of JOYY as a percentage of net revenues. Non-GAAP net income (loss) attributable to common shareholders of JOYY is net income (loss) attributable to common shareholders of JOYY excluding share-based compensation expenses, impairment of goodwill and investments, amortization of intangible assets from business acquisitions, gain (loss) on disposal of subsidiaries and business, gain (loss) on disposal and deemed disposal of investments, gain (loss) on fair value change of investments, reconciling items on the share of equity method investments, gain (loss) on extinguishment of debt and derivative, interest expenses related to the convertible bonds’ amortization to face value, accretion, cumulative dividend and deemed dividend to subsidiaries’ preferred shareholders, gain on repurchase of redeemable convertible preferred shares of a subsidiary and income tax effects of above non-GAAP reconciling items and adjustments for non-GAAP reconciling items for the net income (loss) attributable to non-controlling interest shareholders. After the non-GAAP adjustment, non-GAAP net income (loss) attributable to controlling interests of JOYY is equal to the non-GAAP net income (loss) attributable to common shareholders of JOYY. Basic and diluted non-GAAP net income (loss) per ADS is non-GAAP net income (loss) attributable to common shareholders of JOYY divided by weighted average number of ADS used in the calculation of basic and diluted net income per ADS. The Company believes that separate analysis and exclusion of the non-cash impact of above reconciling items adds clarity to the constituent parts of its performance. The Company reviews these non-GAAP financial measures together with GAAP financial measures to obtain a better understanding of its operating performance. It uses the non-GAAP financial measure for planning, forecasting and measuring results against the forecast. The Company believes that non-GAAP financial measure is useful supplemental information for investors and analysts to assess its operating performance without the non-cash effect of (i) share-based compensation expenses and amortization of intangible assets from business acquisitions, gain (loss) on extinguishment of debt and derivative, interest expenses related to the convertible bonds’ amortization to face value, which have been and will continue to be significant recurring expenses in its business, (ii) impairment of goodwill and investments, gain (loss) on disposal of subsidiaries and business, gain (loss) on disposal and deemed disposal of investments, gain (loss) on fair value change of investments, reconciling items on the share of equity method investments, accretion, cumulative dividend and deemed dividend to subsidiaries’ preferred shareholders and gain on repurchase of redeemable convertible preferred shares of a subsidiary which may not be recurring in its business, and (iii) income tax expenses and non-GAAP adjustments for net income (loss) attributable to non-controlling interest shareholders, which are affected by the above non-GAAP reconciling items. However, the use of non-GAAP financial measures has material limitations as an analytical tool. One of the limitations of using non-GAAP financial measures is that they do not include all items that impact the Company’s net income (loss) for the period. In addition, because non-GAAP financial measures are not measured in the same manner by all companies, they may not be comparable to other similar titled measures used by other companies. In light of the foregoing limitations, you should not consider non-GAAP financial measure in isolation from or as an alternative to the financial measure prepared in accordance with U.S. GAAP.
The presentation of these non-GAAP financial measures is not intended to be considered in isolation from, or as a substitute for, the financial information prepared and presented in accordance with U.S. GAAP. For more information on these non-GAAP financial measures, please see the table captioned “JOYY Inc. Unaudited Reconciliation of GAAP and Non-GAAP Results” near the end of this press release.
Investor Relations Contact
JOYY Inc. Jane Xie/Maggie YanEmail: joyy-ir@joyy. com
ICR, Inc. Robin Yang Email: joyy@icrinc. com
1 On November 16, 2020, the Company entered into definitive agreements with Baidu, Inc. (“Baidu”). Pursuant to the agreements, Baidu would obtain JOYY’s domestic video entertainment live streaming business (“YY Live”), including YY mobile app, YY. com online site and YY PC, among others, for a total acquisition value of approximately 3. 6 US dollars. billion in cash, subject to certain adjustments. Subsequently, the sale was substantially completed on February 8, 2021, with certain matters remaining to be finalized in the future, in addition to mandatory regulatory approvals from government authorities. Accordingly, the former monetary effects of YY Live are reflected in the Company’s consolidated monetary statements as discontinued operations and the Company ceased consolidation of YY Live operations effective February 8, 2021. On August 22, 2022 , the Company announced that it had entered into a percentage subscription agreement with Shopline Corporation Limited (“Shopline”). Following the transaction, Shopline’s monetary effects were fully consolidated across the Company as of September 6, 2022. The monetary data and non-GAAP monetary data disclosed in this press release are presented on a consolidated basis. of continued activities. basis, unless expressly indicated otherwise.
2 Net income (loss) attributable to controlling interest of JOYY is net income (loss) less net (loss) income attributable to the non-controlling interest shareholders and the mezzanine equity classified as non-controlling interest shareholders.
3 Net source of non-GAAP income (loss) attributable to controlling interest of JOYY is a non-GAAP monetary measure, which is explained as a net source of income (loss) attributable to controlling interest of JOYY, the reimbursement expense based in percentages, depreciation. of capital gains and investments. General amortization of intangible assets arising from business acquisitions, gain (loss) on movement of subsidiaries and activities, gain (loss) on movement and estimated movement of investments, gain (loss) on replacement in the fair price of investments, percentage of equity reconciliation of focus pieces investments that reference the Company’s similar non-GAAP reconciliation pieces, gain (loss) on extinguishment of debt and derivatives, interest expense similar to the amortization of convertible bonds at nominal price, effects tax provisions of the previous non-GAAP reconciliation pieces and replacements of non-GAAP reconciliation pieces for the net source of income (losses) attributable to minority shareholders. These replacements amounted to US$8. 3 million and US$438. 3 million in the 3rd quarter of 2023 and 2022, respectively. Please see the segment titled “Use of Non-GAAP Financial Measures” and the table titled “Unaudited Reconciliation of GAAP and Non-GAAP Results of JOYY Inc” near the end of this press release for more details.
4 Refers to mobile average monthly active users of the social entertainment platforms operated by the Company, including Bigo Live, Likee, imo and Hago. Average mobile MAU for any period is calculated by dividing (i) the sum of the Company’s mobile active users for each month of such period, by (ii) the number of months in such period.
5 The number of paying users during a given period is calculated as the cumulative number of registered user accounts that have purchased virtual items or other products and services on platforms including Bigo Live, Likee and imo at least once during the relevant period.
7 Non-GAAP operating source of income (loss) is a non-GAAP monetary measure, which is explained as operating source of income (loss), stock-based redemption expense, amortization of intangible assets from business acquisitions, impairment of goodwill and investments, and gains on disposal of subsidiaries and activities. Please refer to the segment titled “Use of Non-GAAP Financial Measures” and the table titled “Unaudited Reconciliation of GAAP and Non-GAAP Results of JOYY Inc” near the end of this press release for more details.
8 Non-GAAP operating revenue margin (loss) is a non-GAAP monetary measure, which is explained as a non-GAAP operating source of income (loss) expressed as a percentage of net sales. Please refer to the segment entitled “Use of Non-GAAP Financial Measures” and the table titled “JOYY Inc. Unaudited Reconciliation of GAAP and Non-GAAP Results” near the end of this press release for further details.
9 Non-GAAP net income (loss) margin is non-GAAP net income (loss) attributable to controlling interest of JOYY as a percentage of net revenues.
10 ADS is American Depositary Share. Each ADS represents twenty Class A common shares of the Company. Diluted net income (loss) per ADS is net income (loss) attributable to common shareholders of JOYY divided by weighted average number of diluted ADS.