Core Points - The event is the opening of the "Integrity and Prosperity Promotion Month" and the 9th Jiujiang Qingdao Beer Festival, which attracted thousands of citizens and tourists, filling the night with music and excitement [1][8] - The festival features various activities including live performances, food stalls, and interactive games, contributing to a vibrant atmosphere [3][7] Event Highlights - The festival commenced with a large crowd at the entrance, showcasing a diverse audience including families and tourists [3] - A significant performance included a dance titled "Phoenix Singing at Dawn," followed by popular songs that engaged the audience [3] - The "King of Beer" competition was a highlight, with participants competing for the title and prizes, generating excitement among attendees [5] Economic Impact - The beer festival is seen as a catalyst for Jiujiang's night economy, with extended public transport hours and increased business for local shops and parking facilities [8] - Local vendors reported a surge in sales, with one vendor selling nearly 2,000 skewers of grilled meat in one evening, indicating a strong consumer spending trend [7][8] - The festival is expected to continue attracting visitors and enhancing the city's nightlife, with various themed nights planned throughout its duration [8]

Group 1 - The 2025 Xingan League Nadam Fair opened in Ulanmaodu Sumu, Horqin Right Front Banner, Xingan League, Inner Mongolia [1] - The event featured speed horse racing competitions on August 8 [1]

Core Insights - JOYY Inc. reported Q1 2025 revenue of $494.4 million, with non-live revenue reaching $123 million, a year-over-year increase of 25.3% [2] - The company's GAAP and non-GAAP operating profits for Q1 were $12.2 million and $31 million, reflecting year-over-year growth of 244.5% and 24.9% respectively [2] - JOYY's cash flow from operations for the quarter was $58 million, and the company returned $49.1 million to shareholders through dividends and stock buybacks [2] Group 1: Live Streaming Business - JOYY's live streaming revenue for Q1 was $371.3 million, with BIGO Live contributing $351.6 million [3] - The monthly active users in North America for BIGO Live grew over 7% year-over-year, while the number of paying users increased approximately 4% quarter-over-quarter [3] - The company is deploying a diverse product matrix in verticals such as live streaming, short videos, and instant messaging to build a globally influential user community [3] Group 2: Non-Live Revenue Growth - Non-live revenue accounted for 24.9% of total revenue in Q1, marking its first significant contribution as a second growth curve for the company [4] - BIGO Ads experienced a year-over-year growth of approximately 27%, driven by localized operations, proprietary traffic resources, and advanced algorithm models [4] - The gross margin and operating margin for BIGO improved significantly, with non-live revenue growth driving overall business gross margin up to 42.1% [4] Group 3: Future Outlook - The company anticipates a recovery in BIGO's revenue in Q2, with expectations for non-GAAP operating profit to stabilize and potentially grow throughout the year [4] - JOYY's diverse product matrix covers over 260 million users globally, enhancing its appeal to advertisers and integrating cutting-edge generative AI technology into its advertising business [4]

Group 1 - The event highlighted the characteristics of young entrepreneurs, emphasizing their ability to innovate and adapt in a digital and globalized environment [1] - Young entrepreneurs expressed a strong sense of patriotism and a commitment to contribute to national development, inspired by historical values [1][2] - The New Shanghai Business Association aims to gather young entrepreneurs to drive the transformation of China's private economy from manufacturing to creation, focusing on quality over speed [2][3] Group 2 - Young entrepreneurs are seen as a core force in driving social progress and industrial transformation, with a call for them to take on responsibilities in their respective fields [2] - The importance of collaboration between young and experienced entrepreneurs was emphasized to navigate the challenges of technological change and industry transformation [3] - The Shanghai Securities Journal aims to support the New Shanghai Business Association and its young entrepreneurs by leveraging its resources and platforms for broader development opportunities [3]

Company Strategy - The company plans to fully upgrade its children's meals by 2025 and introduce two new family-focused experiential products: parent-child cooking classes and baby birthday parties [1] - The company's latest strategic positioning is "family gathering restaurant" as stated by the chairman in the New Year's message [1] Operational Performance - In 2024, the company served over 200 million family customers and sold 40 million professional children's meals [1]

Summary of JOI Inc's First Quarter 2024 Earnings Call Company Overview - The call is regarding JOI Inc's first quarter 2024 earnings [1] Key Points - The conference is hosted by Jane Zee, the Senior Manager of Investor Relations [1] - Participants are in listen-only mode during the initial remarks, followed by a question and answer session [1] Additional Important Content - No specific financial data or performance metrics were provided in the excerpt [1]

PART I [ITEM 3. KEY INFORMATION](index=6&type=section&id=ITEM%203.%20KEY%20INFORMATION) This section details JOYY Inc.'s corporate structure, regulatory environment, and key risks, including its VIE arrangements, required Chinese approvals, cash flows, and comprehensive risk factors [Holding Company Structure and VIE Arrangements](index=6&type=section&id=Our%20Holding%20Company%20Structure%20and%20Contractual%20Arrangements%20with%20the%20Variable%20Interest%20Entities) JOYY Inc., a Cayman Islands holding company, operates in mainland China through VIEs controlled by contractual arrangements, a structure with inherent enforceability risks VIE Revenue Contribution | Fiscal Year | Revenue Contribution from VIEs | | :--- | :--- | | 2021 | 17.1% | | 2022 | 19.8% | | 2023 | 13.3% | - The company relies on contractual arrangements (e.g., voting rights proxy, exclusive service agreements) to control its VIEs in mainland China, as direct ownership is restricted in the internet and telecommunications sectors[24](index=24&type=chunk)[25](index=25&type=chunk) - There are substantial uncertainties regarding the interpretation and application of Chinese laws concerning VIE structures. If the government finds the structure non-compliant, the company could face severe penalties, including being forced to relinquish its interests in its China operations[26](index=26&type=chunk) [Required Permissions and Approvals in Mainland China](index=7&type=section&id=Permissions%20and%20Approvals%20Required%20from%20the%20Authorities%20of%20Mainland%20China%20for%20Our%20Operations) The company's mainland China operations are subject to complex and evolving regulations, including new CSRC and CAC rules, which may require future approvals and pose compliance risks - The company's subsidiaries and VIEs in mainland China have obtained material licenses required for current operations, including the Internet Culture Operation License and ICP License[29](index=29&type=chunk) - New regulations, such as the CSRC's Overseas Listing Trial Measures (effective March 2023) and the CAC's Measures for Cybersecurity Review, may require the company to complete filing procedures or obtain approvals for future offerings and data processing activities, creating regulatory uncertainty[29](index=29&type=chunk)[30](index=30&type=chunk) - As of the report date, the company has not been subject to any cybersecurity review by the CAC but acknowledges that failure to comply with future requirements could lead to significant penalties, including fines, license revocation, or business suspension[31](index=31&type=chunk)[33](index=33&type=chunk) [Cash and Asset Flows](index=9&type=section&id=Cash%20and%20Asset%20Flows%20through%20Our%20Organization) JOYY Inc. relies on cash flows from subsidiaries and VIEs, which are subject to mainland China's transfer restrictions, including statutory reserves and withholding taxes, with the holding company funding its own dividends via financing activities Inter-company Cash Flows (US$ in millions) | Flow Type | 2021 | 2022 | 2023 | | :--- | :--- | :--- | :--- | | Capital contributions to PRC subsidiaries | 7.8 | 8.7 | 20.0 | | VIE payments to subsidiaries (technical/software fees) | 114.6 | 109.7 | 86.1 | | Subsidiary payments to VIEs (revenues) | 129.4 | 9.7 | 14.5 | - Subsidiaries in mainland China must set aside at least **10% of after-tax profits** for a statutory reserve fund until it reaches **50% of registered capital**. As of December 31, 2023, these reserves amounted to **US$37.7 million** and are not distributable as cash dividends[42](index=42&type=chunk) - For the years 2021-2023, no subsidiaries paid dividends to the holding company, JOYY Inc. The holding company's cash dividends to its shareholders were funded through its own financing activities[40](index=40&type=chunk)[43](index=43&type=chunk) [Financial Information Related to VIEs](index=11&type=section&id=Financial%20Information%20Related%20to%20the%20Variable%20Interest%20Entities) This section provides detailed condensed consolidating financial schedules for JOYY Inc., its equity subsidiaries, the primary beneficiaries of the VIEs, and the VIEs themselves, including statements of operations, balance sheets, and cash flows for 2021-2023 VIEs and Subsidiaries - Selected Financial Data (FY 2023, US$ in thousands) | Metric | Amount | | :--- | :--- | | **Total Revenue** | 355,685 | | **Net Income from Continuing Operations** | 22,968 | | **Total Assets (as of Dec 31, 2023)** | 2,411,553 | | **Total Liabilities (as of Dec 31, 2023)** | 507,179 | VIEs and Subsidiaries - Selected Cash Flow Data (FY 2023, US$ in thousands) | Flow Type | Amount | | :--- | :--- | | **Net Cash from Continuing Operating Activities** | 27,077 | | **Net Cash used in Continuing Investing Activities** | (211,471) | | **Net Cash used in Continuing Financing Activities** | (2,314) | [Risk Factors](index=18&type=section&id=D.%20Risk%20Factors) This section outlines significant risks to JOYY's ADSs, categorized into business, jurisdictional, corporate structure, and ADS-specific factors, including the terminated YY Live sale, live streaming revenue reliance, global regulatory complexities, VIE structure risks, and ADS price volatility - **Business Risks:** The company faces substantial uncertainty regarding the terminated sale of its YY Live business to Baidu, including whether the business will be returned and the status of the purchase price. A majority of revenue (**87.3% in 2023**) comes from live streaming, making the company vulnerable to declines in this segment[71](index=71&type=chunk)[75](index=75&type=chunk)[79](index=79&type=chunk) - **Jurisdictional Risks:** Operating globally exposes the company to complex and evolving laws regarding cybersecurity, data privacy (e.g., GDPR, China's PIPL), and content regulation. Failure to comply could result in significant penalties. The company also faces risks from geopolitical tensions and potential government actions, such as the blocking of its apps in India in 2020[99](index=99&type=chunk)[96](index=96&type=chunk)[183](index=183&type=chunk) - **Corporate Structure Risks:** The VIE structure used for China operations is subject to interpretation by PRC authorities. If deemed non-compliant, the company could face severe penalties, including being forced to relinquish its interests in these operations. The contractual arrangements may not be as effective as direct ownership[230](index=230&type=chunk)[237](index=237&type=chunk) - **ADS Risks:** The company believes it was a Passive Foreign Investment Company (PFIC) for U.S. tax purposes in 2023, which could have adverse tax consequences for U.S. holders. The dual-class share structure gives co-founder David Xueling Li significant voting control (**83.0% as of March 31, 2024**), limiting the influence of other shareholders[262](index=262&type=chunk)[265](index=265&type=chunk) [ITEM 4. INFORMATION ON THE COMPANY](index=70&type=section&id=ITEM%204.%20INFORMATION%20ON%20THE%20COMPANY) This section provides a comprehensive overview of JOYY Inc.'s history, business strategy, products, and regulatory landscape, emphasizing its global expansion, AI investment, and complex multi-jurisdictional compliance requirements [History and Development of the Company](index=70&type=section&id=A.%20History%20and%20Development%20of%20the%20Company) JOYY Inc., founded in 2005, has evolved into a global technology company through acquisitions like BIGO and Shopline, facing significant uncertainty regarding the terminated sale of its YY Live business to Baidu - The company expanded its global operations by acquiring BIGO in March 2019 and consolidating the smart commerce platform Shopline in September 2022[298](index=298&type=chunk)[303](index=303&type=chunk) - On January 1, 2024, Baidu issued a notice to terminate the share purchase agreement for the YY Live business. The company is currently in discussions with Baidu and seeking legal advice, with the final outcome, including the status of the **US$3.6 billion** purchase price, remaining uncertain[302](index=302&type=chunk)[74](index=74&type=chunk) [Business Overview](index=71&type=section&id=B.%20Business%20Overview) JOYY is a global social entertainment and smart commerce company, leveraging AI and a "globalization through localization" strategy, with monetization primarily from live streaming virtual item sales and growing contributions from advertising and e-commerce Key Financial Metrics (US$ in billions) | Year | Total Revenue | Net Income/(Loss) from Continuing Operations | | :--- | :--- | :--- | | 2021 | 2.6 | (0.125) | | 2022 | 2.4 | 0.120 | | 2023 | 2.3 | 0.347 | - The company's global monthly active users on its social platforms reached **274.9 million** in Q4 2023, a **2.6% year-over-year increase**[307](index=307&type=chunk) - The core business strategy is "globalization through localization," supported by over **30 regional offices** and a focus on tailoring products and content to local cultures[315](index=315&type=chunk) - Artificial intelligence (AI) is integrated into all critical aspects of the business, including content recommendation, user engagement features, content moderation, and operational decision-making[316](index=316&type=chunk) [Organizational Structure](index=111&type=section&id=C.%20Organizational%20Structure) This section illustrates JOYY Inc.'s corporate structure, showing the Cayman Islands holding company, key global subsidiaries like Bigo Technology, and mainland China VIEs controlled via contractual arrangements - The corporate structure is headed by JOYY Inc., a Cayman Islands holding company[555](index=555&type=chunk) - Key operating subsidiaries for the global business include Bigo Technology Pte. Ltd[299](index=299&type=chunk)[555](index=555&type=chunk) - Operations in mainland China are conducted through Variable Interest Entities (VIEs) like Guangzhou Huaduo and Guangzhou BaiGuoYuan, which are controlled via contractual arrangements rather than direct equity ownership[299](index=299&type=chunk)[555](index=555&type=chunk) [Property, Plant, and Equipment](index=112&type=section&id=D.%20Property%2C%20Equipment%20and%20Land%20Use%20Right) JOYY Inc.'s corporate headquarters is in Singapore, with leased global office space and owned land use rights and buildings in mainland China, including a major completed project in Guangzhou and ongoing construction commitments - The company's corporate headquarters is located in Singapore, and it leases **48,708 square meters** of office space globally[556](index=556&type=chunk) - A significant property in Pazhou, Guangzhou, with approximately **142,000 square meters** of floor area, was completed in 2023[558](index=558&type=chunk) - As of December 31, 2023, the company had capital commitments of **US$170.5 million** related to building construction, primarily for a project in Foshan scheduled for completion in 2026[558](index=558&type=chunk) [ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS](index=112&type=section&id=ITEM%205.%20OPERATING%20AND%20FINANCIAL%20REVIEW%20AND%20PROSPECTS) This section analyzes JOYY's financial condition and results for 2021-2023, highlighting a revenue decrease offset by significant net income growth due to non-recurring impairment and improved margins, with liquidity supported by operations and financing activities [Operating Results](index=112&type=section&id=A.%20Operating%20Results) In 2023, JOYY's net revenues decreased to **US$2.3 billion** due to lower live streaming revenue, but net income from continuing operations significantly increased to **US$347.4 million**, primarily due to the non-recurrence of a 2022 impairment loss Consolidated Results of Operations (US$ in millions) | Metric | 2021 | 2022 | 2023 | | :--- | :--- | :--- | :--- | | **Total Net Revenues** | 2,619.1 | 2,411.5 | 2,267.9 | | *Live Streaming* | 2,476.8 | 2,225.5 | 1,979.4 | | *Others* | 142.3 | 186.0 | 288.5 | | **Gross Profit** | 837.9 | 852.1 | 813.0 | | **Operating (Loss) Income** | (106.7) | 50.7 | 28.8 | | **Net (Loss) Income from Continuing Operations** | (129.6) | 101.6 | 272.4 | - The decrease in 2023 live streaming revenue was primarily due to proactive adjustments to non-core audio products and a decrease in ARPU from **US$452 in 2022** to **US$403 in 2023**, caused by macroeconomic uncertainties[605](index=605&type=chunk) - The significant increase in net income from continuing operations in 2023 was largely due to the non-recurrence of a **US$417.2 million** impairment loss from an equity method investment that was recognized in 2022[612](index=612&type=chunk)[613](index=613&type=chunk) [Liquidity and Capital Resources](index=123&type=section&id=B.%20Liquidity%20and%20Capital%20Resources) The company's liquidity is supported by cash from operations and financing, with **US$1.44 billion** in cash as of December 31, 2023, but faces material cash requirements from convertible notes and capital commitments, including a **US$406.0 million** repurchase option in June 2024 Summary of Cash Flows (US$ in millions) | Cash Flow Activity | 2021 | 2022 | 2023 | | :--- | :--- | :--- | :--- | | **Net Cash from Continuing Operations** | 146.1 | 316.5 | 295.6 | | **Net Cash (used in)/from Continuing Investing** | (846.9) | (510.3) | 420.4 | | **Net Cash used in Continuing Financing** | (723.5) | (321.9) | (841.7) | - As of December 31, 2023, the company had **US$1.44 billion** in cash, cash equivalents, and restricted deposits[648](index=648&type=chunk) - Major cash outflows in 2023 included **US$432.2 million** for extinguishment of convertible bonds and **US$273.9 million** for share repurchases[661](index=661&type=chunk) - The company faces a significant potential cash requirement in June 2024, as holders of the **US$406.0 million** outstanding 2026 Notes have the right to require the company to repurchase them[668](index=668&type=chunk) [Critical Accounting Estimates](index=127&type=section&id=E.%20Critical%20Accounting%20Estimates) This section details critical accounting estimates, including complex revenue recognition for live streaming and annual goodwill impairment tests for BIGO and Shopline, where fair values exceeded carrying values by small margins, indicating sensitivity to assumptions - Revenue recognition for live streaming requires significant judgment in identifying distinct performance obligations within contracts (e.g., noble member programs) and allocating the transaction price based on estimated standalone selling prices[683](index=683&type=chunk) - Goodwill impairment assessment is a critical estimate. The fair value of the BIGO reporting unit, determined by a discounted cash flow model, exceeded its carrying value by approximately **3%** as of December 31, 2023[999](index=999&type=chunk)[696](index=696&type=chunk) - The fair value of the Shopline reporting unit, determined by a market approach, exceeded its carrying value by approximately **1%** as of December 31, 2023, highlighting the sensitivity of the goodwill balance to market conditions and performance[696](index=696&type=chunk)[1003](index=1003&type=chunk) [ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES](index=130&type=section&id=ITEM%206.%20DIRECTORS%2C%20SENIOR%20MANAGEMENT%20AND%20EMPLOYEES) This section covers the company's leadership, compensation, board structure, and employee base, noting the dual-class share structure giving co-founder David Xueling Li significant voting control and the employee distribution by function - As of March 31, 2024, co-founder, Chairman, and CEO David Xueling Li, along with his affiliates, controlled **83.0%** of the company's total voting power due to the dual-class share structure[749](index=749&type=chunk)[265](index=265&type=chunk) Employee Breakdown by Function (as of Dec 31, 2023) | Function | Number of Employees | Percentage | | :--- | :--- | :--- | | Customer services and operations | 2,623 | 42% | | Research and development | 2,565 | 41% | | General and administration | 594 | 9% | | Sales and marketing | 510 | 8% | | **Total** | **6,292** | **100%** | - For the fiscal year 2023, the aggregate cash compensation (salaries and bonuses) paid to directors and executive officers was **US$2.3 million**[707](index=707&type=chunk) - As of March 31, 2024, there were **8,574,220 options**, **5,968,858 restricted shares**, and **43,061,343 restricted share units** outstanding under the company's share incentive plans[711](index=711&type=chunk) [ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS](index=139&type=section&id=ITEM%207.%20MAJOR%20SHAREHOLDERS%20AND%20RELATED%20PARTY%20TRANSACTIONS) This section details the company's major shareholders and the contractual arrangements forming its Variable Interest Entity (VIE) structure for mainland China operations, designed to provide effective control and economic benefits despite foreign ownership restrictions - The company conducts its restricted business in mainland China through a VIE structure, relying on a series of contractual arrangements to control entities like Guangzhou BaiGuoYuan and Guangzhou Ruicheng[754](index=754&type=chunk) - Key contractual agreements that enable control over the VIEs include: Exclusive Service Agreements, Voting Rights Proxy Agreements, Exclusive Option Agreements, and Equity Interest Pledge Agreements[758](index=758&type=chunk)[763](index=763&type=chunk) - The VIE structure is designed to ensure stability and governance, with VIEs typically held by limited partnerships whose partners are selected individuals from the company's management team[755](index=755&type=chunk) [ITEM 8. FINANCIAL INFORMATION](index=143&type=section&id=ITEM%208.%20FINANCIAL%20INFORMATION) This section covers legal proceedings, noting the resolution of a securities class action lawsuit, and the company's expired dividend policies, with future dividends at board discretion and subject to mainland China cash transfer restrictions - A securities class action lawsuit filed against the company in November 2020 was dismissed with prejudice, and the dismissal was affirmed on appeal in May 2023, resolving the matter[777](index=777&type=chunk) - The company had two three-year quarterly dividend policies, which have both expired. A total of **US$454.8 million** was paid to shareholders under these policies. Future dividend distributions are not guaranteed and are at the discretion of the board[779](index=779&type=chunk) [ITEM 9. THE OFFER AND LISTING](index=144&type=section&id=ITEM%209.%20THE%20OFFER%20AND%20LISTING) This section details the listing of JOYY Inc.'s American Depositary Shares (ADSs) on the Nasdaq Global Select Market under the ticker symbol "YY", with each ADS representing twenty Class A common shares - JOYY Inc.'s American Depositary Shares (ADSs) are listed on the Nasdaq Global Select Market under the ticker symbol "YY"[785](index=785&type=chunk) - Each ADS represents **twenty Class A common shares**[785](index=785&type=chunk) [ITEM 10. ADDITIONAL INFORMATION](index=144&type=section&id=ITEM%2010.%20ADDITIONAL%20INFORMATION) This section provides detailed information on the company's corporate governance, including its dual-class share structure and Cayman Islands corporate law differences, and its tax status, notably its belief of being a Passive Foreign Investment Company (PFIC) for 2023 - The company has a dual-class share structure where Class A common shares have **one vote per share** and Class B common shares have **ten votes per share**. Class B shares are convertible to Class A, but not vice-versa[800](index=800&type=chunk)[804](index=804&type=chunk) - The company believes it was a Passive Foreign Investment Company (PFIC) for U.S. federal income tax purposes for the taxable year ended December 31, 2023, which could subject U.S. holders of its ADSs or shares to significant adverse tax consequences[262](index=262&type=chunk)[905](index=905&type=chunk) - Dividends from the company's PRC subsidiaries to offshore entities are subject to a **10% withholding tax**, which may be reduced by tax treaties[922](index=922&type=chunk) [ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=165&type=section&id=ITEM%2011.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) This section details the company's exposure to market risks, primarily foreign exchange risk from non-USD revenues/expenses and interest rate risk on cash holdings, where a 1% rate decrease would reduce net interest income by **US$27.7 million** - The company is exposed to foreign exchange risk as some revenues and expenses are in currencies other than the U.S. dollar. A **10% depreciation of the RMB** against the USD would result in a **US$54.2 million** decrease in the value of its RMB-denominated cash and investments as of December 31, 2023[931](index=931&type=chunk)[932](index=932&type=chunk) - The company is exposed to interest rate risk on its interest-earning cash and deposits. A hypothetical **1% decrease in interest rates** would have resulted in a **US$27.7 million** decrease in total net interest income based on its holdings as of December 31, 2023[933](index=933&type=chunk) [ITEM 15. CONTROLS AND PROCEDURES](index=168&type=section&id=ITEM%2015.%20CONTROLS%20AND%20PROCEDURES) This section confirms the effectiveness of the company's disclosure controls and internal control over financial reporting as of December 31, 2023, as evaluated by management and attested by PricewaterhouseCoopers LLP - Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2023[946](index=946&type=chunk) - Based on the COSO framework, management concluded that the company's internal control over financial reporting was effective as of December 31, 2023. This assessment was audited and confirmed by PricewaterhouseCoopers LLP[948](index=948&type=chunk)[949](index=949&type=chunk) [ITEM 16. Other Information](index=169&type=section&id=ITEM%2016.%20Other%20Information) This section covers governance and compliance, including the audit committee financial expert, code of ethics, principal accountant fees, ongoing share repurchase program, foreign private issuer exemptions, and cybersecurity risk management strategy Principal Accountant Fees (US$ in thousands) | Year | Audit Fees | | :--- | :--- | | 2022 | 4,053 | | 2023 | 3,108 | - The company's share repurchase program was renewed in November 2023, authorizing the continued use of the unutilized quota of approximately **US$530 million** for another 12-month period. In 2023, the company repurchased **9,128,846 ADSs** for a total of **US$273.5 million**[957](index=957&type=chunk)[960](index=960&type=chunk)[1296](index=1296&type=chunk) - The company utilizes exemptions available to foreign private issuers, following home country governance practices regarding board and committee independence instead of certain Nasdaq requirements[963](index=963&type=chunk) - The company has a cybersecurity risk management framework where the board of directors provides oversight, and key officers, including the CEO and a dedicated cybersecurity officer, are responsible for managing threats and reporting to the board[971](index=971&type=chunk)[972](index=972&type=chunk) PART III [ITEM 18. FINANCIAL STATEMENTS](index=172&type=section&id=ITEM%2018.%20FINANCIAL%20STATEMENTS) This section contains JOYY Inc.'s audited consolidated financial statements for 2021-2023, prepared under U.S. GAAP, including reports from independent auditors and detailed financial statements with accompanying notes [ITEM 19. EXHIBITS](index=172&type=section&id=ITEM%2019.%20EXHIBITS) This section lists all exhibits filed with the annual report, including corporate documents, securities descriptions, share incentive plans, material contracts like VIE agreements, and various certifications and consents

Regulatory and Legal Risks - Fluctuations in foreign currency exchange rates may adversely affect operational and financial results, potentially leading to higher expenses and lower revenues [185]. - The company operates in multiple markets, exposing it to geopolitical tensions that may result in sanctions, bans, or disruptions affecting business operations [187]. - India has banned hundreds of mobile apps, including the company's services, due to national security concerns, impacting user base retention [187]. - The company may require approval from the CSRC for offerings and financing activities outside mainland China, with uncertainties regarding the duration and outcome of such approvals [189]. - New regulations from the CSRC regarding overseas listings may impose filing requirements that could affect the company's future offerings [192]. - The 2021 Negative List for foreign investment may impose additional requirements on the company, potentially affecting its operations in mainland China [193]. - The company is uncertain about its classification as a Singapore tax resident, which could impact its tax obligations and dividend distributions [198]. - Uncertainties in the interpretation and enforcement of laws in mainland China could limit legal protections available to the company [199]. - The legal system in mainland China may involve significant discretion in interpreting laws, making it difficult to evaluate legal outcomes [200]. - The mainland China's government extensively regulates the internet industry, creating significant uncertainty regarding foreign investments and operations [201]. - The evolving regulatory environment may lead to new laws requiring additional licenses for operations in mainland China, which could result in penalties if not complied with [204]. - The complexity of regulations may disrupt business operations if variable interest entities breach contractual arrangements [201]. - The interpretation of existing laws creates uncertainties regarding the legality of foreign investments in internet businesses in mainland China [204]. - The Foreign Investment Security Review Measures require approval for investments in key areas that result in acquiring actual control of assets [220]. - Compliance with SAFE regulations is critical for the ability to conduct foreign exchange activities and remittance of dividends from subsidiaries in mainland China [228]. - The company faces significant legal and regulatory risks, including potential penalties and operational shutdowns if its business structure is deemed non-compliant with mainland China's laws [237]. - The contractual arrangements with variable interest entities may not provide the same level of control as direct ownership, leading to potential operational disruptions [244]. - The equity interest pledge agreements with variable interest entities' shareholders may face enforcement limitations under mainland China's laws [247]. - The company has substantial uncertainties regarding the interpretation and application of current and future laws in mainland China, which could impact its business operations [241]. - If the variable interest entities face bankruptcy or liquidation, the company may lose access to essential assets, adversely affecting its operations [246]. - The company relies on the performance of variable interest entities and their shareholders under contractual arrangements, which may not be effectively enforceable [244]. - Potential conflicts of interest may arise between the shareholders of variable interest entities and the company, impacting business interests [245]. - The inability to provide data or personal information to foreign entities without governmental approval may hinder regulatory compliance and operational transparency [240]. Taxation and Financial Implications - Under the PRC Enterprise Income Tax Law, companies may be classified as PRC "resident enterprises," subjecting them to a 25% enterprise income tax on worldwide income [205]. - Certain subsidiaries in mainland China, such as Guangzhou Huanju Shidai, qualify as High and New Technology Enterprises (HNTEs) and enjoy a reduced tax rate of 15% for 2020, 2021, and 2022 [216]. - If any subsidiaries fail to maintain their HNTE qualification, their enterprise income tax rate may increase to the standard rate of 25%, adversely affecting financial results [217]. - The PRC tax authorities may impose additional tax obligations on share transfers involving non-resident investors, potentially increasing costs [212]. - The statutory enterprise income tax rate in mainland China is 25%, but certain subsidiaries may benefit from reduced rates due to specific qualifications [216]. - Current regulations permit subsidiaries in mainland China to pay dividends only from accumulated after-tax profits, subject to statutory conditions [232]. - The withholding tax rate of 10% applies to dividends payable by companies in mainland China to non-mainland-China-resident enterprises [233]. - The company may be subject to adverse tax consequences due to its corporate structure and contractual arrangements with variable interest entities, potentially impacting consolidated net income [248]. Operational Challenges - The company is vulnerable to fluctuations in the number of registered or active users, which can significantly impact net revenues and earnings [263]. - The company may experience adverse effects on its business operations if it fails to maintain necessary licenses or approvals, leading to potential fines and operational restrictions [250]. - The company faces risks related to geopolitical events, natural disasters, and health epidemics, which could disrupt operations and adversely affect financial results [257]. - The company is adjusting its platforms in mainland China to comply with regulations regarding virtual currency, which may lead to penalties if not adequately addressed [255]. - The company may face penalties for non-compliance by third-party partners, which could disrupt operations and affect user growth [259]. - Future acquisitions in mainland China may be adversely affected by security reviews if the business is deemed to raise national security concerns [220]. - Regulations may delay or limit the ability to effectively use proceeds from public offerings, impacting capital contributions and profit distributions [221]. Shareholder and Corporate Governance Issues - As of March 31, 2023, Mr. David Xueling Li and his affiliates held 79.4% of the total voting power, significantly influencing corporate decisions and limiting other shareholders' ability to affect change [272]. - The company was classified as a Passive Foreign Investment Company (PFIC) for the taxable year ended December 31, 2022, which may lead to adverse U.S. income tax consequences for U.S. holders of its ADSs [267]. - The dual-class share structure may discourage potential change of control transactions that could benefit Class A shareholders [271]. - Mr. Jun Lei, a major shareholder, holds 8.9% of outstanding shares and has delegated voting rights to Mr. Li, potentially leading to conflicts of interest in future business decisions [275]. - The company's articles of association contain anti-takeover provisions that could limit shareholders' opportunities to sell shares at a premium [286]. - The company is incorporated under Cayman Islands law, which may limit shareholders' rights compared to U.S. companies [289]. - Shareholders of the company have no general rights under Cayman Islands law to inspect corporate records, making it difficult to obtain necessary information [291]. - The company is a foreign private issuer and is exempt from certain U.S. securities regulations, resulting in less extensive and timely disclosures [297]. - The company has relied on exemptions allowing non-independent directors to serve on key committees, potentially reducing shareholder protections [298]. - The company may face difficulties in enforcing judgments obtained against it in the U.S. due to its Cayman Islands incorporation [293]. - Holders of ADSs have limited voting rights and must provide instructions to the depositary to vote on their behalf [299]. - The depositary may give a discretionary proxy to vote Class A common shares if ADS holders do not vote, potentially limiting shareholder influence [300]. - Cash dividends or distributions on common shares may not be available to ADS holders if deemed illegal or impractical by the depositary [301]. - The depositary may close its books at any time, affecting the transferability of ADSs [302]. Market and Financial Performance - The trading prices of the company's ADSs ranged from US$21.38 to US$55.14 in 2022, indicating significant volatility [262]. - The trading price of the company's ADSs has been negatively impacted by adverse publicity and allegations regarding user metrics and revenue authenticity, leading to significant fluctuations [276]. - The company has incurred substantial costs related to legal and professional services due to ongoing investigations and allegations, which may continue to divert management's attention from daily operations [277]. - The company may be subject to further investigations and due diligence in response to allegations made in the Short Report, which could lead to additional legal expenses [266]. - If securities analysts downgrade the company's ADSs or cease coverage, it could result in a decline in market price and trading volume [282]. - The company has conducted independent reviews of allegations made against it, concluding that the claims were unsubstantiated, yet it remains vulnerable to market instability due to such allegations [281]. - The company completed the offering of US$500 million in convertible senior notes due 2025 and US$500 million due 2026, which may discourage third-party acquisitions [283]. - The company's ability to raise capital through equity offerings may be impaired by the perception of substantial sales of its ADSs [285].

[PART I](index=5&type=section&id=PART%20I) [Key Information](index=6&type=section&id=ITEM%203.%20KEY%20INFORMATION) This section details JOYY Inc.'s corporate structure, VIE reliance, associated risks, and condensed financial data for its China operations - JOYY Inc. is a Cayman Islands holding company that conducts its PRC operations through Variable Interest Entities (VIEs) due to foreign investment restrictions. The revenue contribution from these VIEs has been decreasing, accounting for **31.4%**, **20.7%**, and **17.1%** of total revenues in 2019, 2020, and 2021, respectively[31](index=31&type=chunk) - The company faces significant risks from PRC regulations, including potential requirements for CSRC or CAC approval for offshore offerings and cybersecurity reviews, which could materially impact operations and stock value[34](index=34&type=chunk)[37](index=37&type=chunk)[38](index=38&type=chunk) - Due to the Holding Foreign Companies Accountable Act (HFCAA), JOYY's ADSs could be prohibited from trading in the U.S. starting in **2024** if the PCAOB remains unable to inspect its China-based auditor. This risk could be accelerated to **2023** if proposed legislative changes are enacted[40](index=40&type=chunk)[207](index=207&type=chunk) Condensed Financials for Variable Interest Entities (VIEs) - 2021 | Financial Item | Amount (US$ in thousands) | | :--- | :--- | | **Operations** | | | Total Revenue | 557,089 | | Operating Loss | (139,014) | | Net Loss | (122,292) | | **Financial Position (as of Dec 31, 2021)** | | | Total Assets | 2,260,828 | | Total Liabilities | 327,656 | | **Cash Flows** | | | Net Cash from Operating Activities | 259,520 | | Net Cash from Investing Activities | (49,441) | | Net Cash from Financing Activities | (91,820) | [Risk Factors](index=20&type=section&id=D.%20Risk%20Factors) This section outlines JOYY Inc.'s principal risks across business, jurisdictional, corporate structure, and ADS-related categories - The company generates a substantial majority of its revenue (**94.6%** in 2021) from live streaming services, making its financial performance highly dependent on the continued popularity and monetization of this model[87](index=87&type=chunk)[93](index=93&type=chunk) - The company is subject to complex and evolving international laws regarding cybersecurity and data privacy, such as the EU's GDPR and California's CCPA, which could increase compliance costs and potential liabilities[101](index=101&type=chunk)[111](index=111&type=chunk)[113](index=113&type=chunk) - The PCAOB's inability to inspect the company's China-based auditor could lead to the delisting of its ADSs from U.S. exchanges as early as **2024** under the HFCAA, potentially sooner if legislative changes are enacted[206](index=206&type=chunk)[207](index=207&type=chunk)[209](index=209&type=chunk) - The company believes it was a Passive Foreign Investment Company (PFIC) for U.S. federal income tax purposes for the **2021** taxable year, which could result in adverse tax consequences for U.S. holders of its ADSs or shares[306](index=306&type=chunk)[307](index=307&type=chunk) - The company's dual-class share structure gives co-founder, chairman, and CEO Mr. David Xueling Li and his affiliates **78.5%** of the total voting power as of March 31, 2022, allowing substantial influence over corporate matters[278](index=278&type=chunk)[309](index=309&type=chunk)[310](index=310&type=chunk) [Information on the Company](index=72&type=section&id=ITEM%204.%20INFORMATION%20ON%20THE%20COMPANY) This section provides an overview of JOYY Inc.'s history, global social media operations, platform details, and intellectual property portfolio - JOYY has transformed into a global social media company, primarily through the acquisition of Bigo in March 2019 and the divestiture of its PRC-based YY Live business, which was substantially completed in February 2021[337](index=337&type=chunk)[343](index=343&type=chunk)[347](index=347&type=chunk) - The company's global mobile monthly active users (MAUs) reached **280 million** in Q4 2021, diversified across its main platforms[352](index=352&type=chunk) Platform Mobile MAUs (Q4 2021) | Platform | Mobile MAUs (millions) | | :--- | :--- | | Bigo Live | 32.2 | | Likee | 67.0 | | Hago | 9.5 | | imo | 171.3 | - Artificial intelligence (AI) is a core technology, used for personalized content recommendation, visual/voice recognition, and enhancing operational efficiency[356](index=356&type=chunk)[382](index=382&type=chunk) - As of December 31, 2021, the company held a significant intellectual property portfolio, including **935** domain names, **796** software copyrights, **988** patents, and **2,015** trademarks, with thousands more applications pending[397](index=397&type=chunk) [Unresolved Staff Comments](index=108&type=section&id=ITEM%204A.%20UNRESOLVED%20STAFF%20COMMENTS) The company reports no unresolved staff comments from the SEC - There are no unresolved staff comments[550](index=550&type=chunk) [Operating and Financial Review and Prospects](index=108&type=section&id=ITEM%205.%20OPERATING%20AND%20FINANCIAL%20REVIEW%20AND%20PROSPECTS) This section provides management's discussion and analysis of JOYY's financial condition and results, highlighting revenue growth, net loss, and key operational drivers - The company's financial reporting has been significantly impacted by the deconsolidation of Huya (since Q2 2020) and the classification of YY Live as a discontinued operation (since Feb 2021), shifting the focus to the BIGO segment[555](index=555&type=chunk)[556](index=556&type=chunk)[597](index=597&type=chunk) - Starting January 1, 2021, the company changed its reporting currency from Renminbi to U.S. dollars to better reflect its global operations, with historical results restated accordingly[558](index=558&type=chunk) Consolidated Results of Operations (Continuing Operations) | Metric (US$ in millions) | 2019 | 2020 | 2021 | | :--- | :--- | :--- | :--- | | **Total Net Revenues** | 900.7 | 1,918.1 | 2,619.1 | | *Live Streaming* | 769.1 | 1,815.8 | 2,476.8 | | *Others* | 131.6 | 102.3 | 142.3 | | **Gross Profit** | 243.8 | 540.0 | 837.9 | | **Operating Loss** | (515.4) | (406.8) | (106.7) | | **Net Loss from Continuing Operations** | (68.7) | (21.8) | (129.6) | - The **36.4%** increase in live streaming revenue in 2021 was driven by growth in the BIGO segment, where the number of paying users increased to **3.8 million** and ARPU rose to **$509**[601](index=601&type=chunk) - Sales and marketing expenses decreased in 2021 primarily due to reduced user acquisition spending for Likee and Hago[605](index=605&type=chunk) [Directors, Senior Management and Employees](index=132&type=section&id=ITEM%206.%20DIRECTORS,%20SENIOR%20MANAGEMENT%20AND%20EMPLOYEES) This section details JOYY's leadership, compensation, board practices, share incentive plans, and employee breakdown by function - For the fiscal year 2021, the aggregate cash compensation paid to directors and executive officers was **US$1.7 million**[753](index=753&type=chunk) - As of March 31, 2022, there were **9,414,400** options, **16,154,922** restricted shares, and **44,755,859** restricted share units outstanding under the company's various share incentive plans[758](index=758&type=chunk) Employee Breakdown by Function (as of Dec 31, 2021) | Function | Number of Employees | Percentage | | :--- | :--- | :--- | | Customer services and operations | 4,016 | 54% | | Research and development | 2,660 | 36% | | Sales and marketing | 294 | 4% | | General and administration | 479 | 6% | | **Total** | **7,449** | **100%** | - The board has four committees: Audit, Compensation, Corporate Governance & Nominating, and Investment. The company relies on foreign private issuer exemptions for certain independence requirements on its compensation and nominating committees[788](index=788&type=chunk)[790](index=790&type=chunk)[792](index=792&type=chunk) [Major Shareholders and Related Party Transactions](index=144&type=section&id=ITEM%207.%20MAJOR%20SHAREHOLDERS%20AND%20RELATED%20PARTY%20TRANSACTIONS) This section details JOYY's ownership structure, related party transactions, and the contractual arrangements underpinning its VIE structure in China Beneficial Ownership (as of March 31, 2022) | Shareholder | Total Common Shares Beneficially Owned | Total Voting Power % | | :--- | :--- | :--- | | David Xueling Li | 364,273,346 | 78.5% | | All directors and executive officers as a group | 387,144,011 | 78.9% | | Top Brand Holdings Limited (Mr. Jun Lei) | 122,741,483 | — (Voting rights delegated to Mr. Li) | | T. ROWE PRICE ASSOCIATES, INC. | 107,383,120 | 2.5% | - The company utilizes a complex Variable Interest Entity (VIE) structure for its PRC operations to comply with foreign ownership restrictions. This structure is maintained through a series of contractual arrangements, including exclusive service, equity pledge, and proxy agreements[813](index=813&type=chunk)[819](index=819&type=chunk) - The company has enhanced its VIE structure by having VIE equity held by PRC limited liability companies, which are in turn owned by PRC limited partnerships, to reduce key-man risk and improve stability[813](index=813&type=chunk)[815](index=815&type=chunk) - Significant related party transactions in 2021 included receiving **US$3.3 million** in bandwidth services from Guangzhou Sunhongs, an investee of major shareholder Mr. Jun Lei[882](index=882&type=chunk) [Financial Information](index=155&type=section&id=ITEM%208.%20FINANCIAL%20INFORMATION) This section covers JOYY's legal proceedings, including a securities class action lawsuit, and its established quarterly dividend policy - The company is defending a putative securities class action lawsuit filed in November 2020. Although the case was dismissed in March 2022, the plaintiffs filed a notice of appeal in April 2022[890](index=890&type=chunk)[305](index=305&type=chunk) - The company has a quarterly dividend policy established in 2020 for a three-year period, with a total expected payout of approximately **US$300 million**, supplemented by an additional policy for another **US$200 million** over three years[892](index=892&type=chunk) - As of March 31, 2022, the company has paid an aggregate of **US$160.1 million** in dividends under its current policies[892](index=892&type=chunk) [The Offer and Listing](index=157&type=section&id=ITEM%209.%20THE%20OFFER%20AND%20LISTING) This section details the trading of JOYY's American Depositary Shares (ADSs) on the Nasdaq Global Select Market - The company's ADSs are listed on the Nasdaq Global Select Market under the symbol "**YY**"[898](index=898&type=chunk) - Each ADS represents **twenty** Class A common shares[898](index=898&type=chunk) [Additional Information](index=157&type=section&id=ITEM%2010.%20ADDITIONAL%20INFORMATION) This section details JOYY's corporate governance, dual-class share structure, anti-takeover provisions, and key tax considerations for investors - The company has a dual-class share structure. Class A common shares have one vote per share, while Class B common shares have ten votes per share. Class B shares are convertible into Class A shares on a one-for-one basis, but not vice-versa[905](index=905&type=chunk)[914](index=914&type=chunk)[918](index=918&type=chunk) - The company's articles of association include anti-takeover provisions, such as the board's authority to issue preferred shares without shareholder approval, which could discourage a change in control[317](index=317&type=chunk)[968](index=968&type=chunk) - For U.S. federal income tax purposes, the company believes it was a Passive Foreign Investment Company (PFIC) for the taxable year ended December 31, 2021, which could have significant adverse tax consequences for U.S. holders[1015](index=1015&type=chunk)[1025](index=1025&type=chunk) - The company's articles designate the United States District Court for the Southern District of New York as the exclusive U.S. forum for resolving complaints related to federal securities laws, which could limit shareholders' ability to choose a judicial forum[319](index=319&type=chunk)[954](index=954&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=176&type=section&id=ITEM%2011.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) This section details JOYY's exposure to market risks, primarily foreign exchange and interest rate fluctuations, with sensitivity analyses - The company is exposed to foreign exchange risk as some revenues and expenses are in currencies other than its U.S. dollar reporting currency, notably the Renminbi[1040](index=1040&type=chunk) - A **10%** depreciation of the RMB against the USD would result in a decrease of **US$54.3 million** in cash and cash equivalents and **US$34.0 million** in short-term deposits, based on December 31, 2021 balances[1042](index=1042&type=chunk) - The company is exposed to interest rate risk on its interest-earning deposits. A hypothetical **1%** decrease in interest rates would have reduced interest income by **US$17.5 million** for the year ended December 31, 2021[1043](index=1043&type=chunk) [Description of Securities Other Than Equity Securities](index=177&type=section&id=ITEM%2012.%20DESCRIPTION%20OF%20SECURITIES%20OTHER%20THAN%20EQUITY%20SECU RITIES) This section outlines the fees and charges applicable to holders of JOYY's American Depositary Shares (ADSs) ADS Holder Service Fees | Service | Fee | | :--- | :--- | | Issuance of ADSs | Up to US$5.00 per 100 ADSs | | Cancellation of ADSs | Up to US$5.00 per 100 ADSs | | Cash dividend distribution | Up to US$5.00 per 100 ADSs | | Distribution of other securities/rights | Up to US$5.00 per 100 ADSs | - In addition to service fees, ADS holders are responsible for charges such as taxes, registration fees, and foreign currency conversion expenses[1047](index=1047&type=chunk) - The depositary, Citibank N.A., may reimburse JOYY for certain expenses related to the ADS program[1050](index=1050&type=chunk) [PART II](index=179&type=section&id=PART%20II) [Controls and Procedures](index=180&type=section&id=ITEM%2015.%20CONTROLS%20AND%20PROCEDURES) This section confirms the effectiveness of JOYY's disclosure controls and internal control over financial reporting as of December 31, 2021 - Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2021[1055](index=1055&type=chunk) - Based on the COSO framework, management concluded that the company's internal control over financial reporting was effective as of December 31, 2021[1057](index=1057&type=chunk) - The independent registered public accounting firm, PricewaterhouseCoopers Zhong Tian LLP, audited and confirmed the effectiveness of the company's internal control over financial reporting as of December 31, 2021[1058](index=1058&type=chunk) [Principal Accountant Fees and Services](index=181&type=section&id=ITEM%2016C.%20PRINCIPAL%20ACCOUNTANT%20FEES%20AND%20SERVICES) This section discloses fees paid to the principal independent auditor and the audit committee's pre-approval policy Accountant Fees (US$ in thousands) | Fee Type | 2020 | 2021 | | :--- | :--- | :--- | | Audit fees | 2,505 | 2,772 | | Tax fees | 187 | — | | Others | 8 | — | - The audit committee's policy is to pre-approve all audit and non-audit services provided by the independent auditor[1065](index=1065&type=chunk) [Purchases of Equity Securities by the Issuer and Affiliated Purchasers](index=181&type=section&id=ITEM%2016E.%20PURCHASES%20OF%20EQUITY%20SECURITIES%20BY%20THE%20ISSUER%20AND%20AFFILIATED%20PURCHASERS) This section details JOYY's share repurchase activities, including new plans approved in 2021 and total ADSs repurchased - In 2021, the company's board approved two new share repurchase plans: one for up to **US$200 million** in September and another for up to **US$1 billion** in November[1068](index=1068&type=chunk)[1071](index=1071&type=chunk) 2021 Share Repurchases | Period | Total ADSs Purchased | Average Price Paid Per ADS (US$) | | :--- | :--- | :--- | | January 2021 | 170,183 | 79.26 | | March 2021 | 458,507 | 95.60 | | April 2021 | 1,009,579 | 99.05 | | September 2021 | 328,075 | 50.96 | | October 2021 | 185,268 | 50.99 | | November 2021 | 782,605 | 49.72 | | December 2021 | 3,581,271 | 47.63 | | **Total** | **6,515,488** | **60.32** | [Corporate Governance](index=182&type=section&id=ITEM%2016G.%20CORPORATE%20GOVERNANCE) This section explains JOYY's corporate governance practices as a foreign private issuer, relying on home country exemptions - As a foreign private issuer, the company follows certain Cayman Islands corporate governance practices, which differ from Nasdaq requirements[1075](index=1075&type=chunk) - The company relies on exemptions for director independence on its compensation and corporate governance & nominating committees[1076](index=1076&type=chunk) - The company does not require shareholder approval for establishing or amending equity compensation plans, following home country practice[1077](index=1077&type=chunk) [PART III](index=183&type=section&id=PART%20III) [Financial Statements](index=183&type=section&id=ITEM%2018.%20FINANCIAL%20STATEMENTS) This section presents JOYY's audited consolidated financial statements, auditor's opinion, and critical audit matters for 2019-2021 - The independent auditor issued an unqualified opinion on the consolidated financial statements and the effectiveness of internal control over financial reporting as of December 31, 2021[1108](index=1108&type=chunk)[1109](index=1109&type=chunk) - A critical audit matter was the goodwill impairment assessment for the Bigo reporting unit, which had a goodwill balance of **US$1,854 million**. The fair value of the unit was determined to exceed its carrying value by approximately **10%** as of December 31, 2021[1118](index=1118&type=chunk)[1400](index=1400&type=chunk) - Another critical audit matter was revenue recognition for live streaming, specifically the significant management judgment required to identify distinct performance obligations in complex contracts and estimate their standalone selling prices for transaction price allocation[1122](index=1122&type=chunk)[1123](index=1123&type=chunk) - The company adopted a change in accounting for convertible bonds in 2021, which simplified the accounting by no longer separating embedded conversion features from the host contract[1110](index=1110&type=chunk)[1219](index=1219&type=chunk) [Exhibits](index=184&type=section&id=ITEM%2019.%20EXHIBITS) This section lists all exhibits filed with the annual report, including corporate documents, incentive plans, and VIE agreements - The exhibits include the Third Amended and Restated Memorandum and Articles of Association[1085](index=1085&type=chunk) - Filed exhibits detail the company's share incentive plans, including the Amended and Restated 2011 Share Incentive Plan and the 2019 Share Incentive Awards Arrangement[1085](index=1085&type=chunk)[1096](index=1096&type=chunk) - A comprehensive set of contractual agreements governing the company's relationship with its Variable Interest Entities (VIEs) are included as exhibits[1085](index=1085&type=chunk)[1086](index=1086&type=chunk)[1087](index=1087&type=chunk)

Part I [Key Information](index=5&type=section&id=ITEM%203.%20KEY%20INFORMATION) This section outlines primary investment risks for JOYY Inc., covering business, operational, corporate structure, and ADS-related factors, including the YY Live sale and potential delisting [Risk Factors](index=5&type=section&id=D.%20Risk%20Factors) The company faces significant risks from its new business model, managing growth, the YY Live sale, COVID-19 impacts, and intense competition - The company faces risks from the sale of its YY Live business to Baidu, including potential negative impacts on operations, user relationships, and future growth in China due to non-compete agreements[39](index=39&type=chunk)[42](index=42&type=chunk) - The COVID-19 pandemic had mixed effects, increasing mobile MAUs in H1 2020 but causing decreases in H2 2020 due to app blocks in India, also negatively impacting paying users on the discontinued YY Live platform[68](index=68&type=chunk)[69](index=69&type=chunk)[72](index=72&type=chunk) - The company's ADSs may be delisted from U.S. exchanges under the Holding Foreign Companies Accountable Act (HFCA Act) if the PCAOB is unable to inspect its China-based auditor for three consecutive years[204](index=204&type=chunk)[205](index=205&type=chunk) - The company relies on a Variable Interest Entity (VIE) structure to operate in China due to foreign ownership restrictions, which carries risks as it depends on contractual arrangements rather than direct ownership and could be challenged by PRC authorities[224](index=224&type=chunk)[225](index=225&type=chunk)[230](index=230&type=chunk) - The company believes it was a Passive Foreign Investment Company (PFIC) for the 2020 tax year, which could result in adverse U.S. federal income tax consequences for U.S. holders of its ADSs or shares[269](index=269&type=chunk)[270](index=270&type=chunk) [Information on the Company](index=62&type=section&id=ITEM%204.%20INFORMATION%20ON%20THE%20COMPANY) This section details the company's history, business operations, organizational structure, and properties, including key acquisitions, divestitures, and global platform focus [History and Development of the Company](index=62&type=section&id=A.%20History%20and%20Development%20of%20the%20Company) JOYY Inc., founded in 2005, has undergone significant strategic shifts including its 2012 IPO, the 2019 Bigo acquisition, Huya deconsolidation, and the 2020 sale of YY Live to Baidu - In March 2019, the company completed the acquisition of the remaining **68.3% equity interest in Bigo**, making Bigo a wholly-owned subsidiary[312](index=312&type=chunk) - In April and August 2020, the company transferred a significant portion of its Huya shares to Tencent, resulting in Tencent becoming the controlling shareholder and the deconsolidation of Huya from JOYY's financial statements[319](index=319&type=chunk)[497](index=497&type=chunk) - On November 16, 2020, the company entered into a definitive agreement to sell its PRC video-based entertainment live streaming business (YY Live) to Baidu for approximately **US$3.6 billion in cash**, with the sale substantially completed by February 2021[320](index=320&type=chunk)[498](index=498&type=chunk) [Business Overview](index=66&type=section&id=B.%20Business%20Overview) JOYY operates a global portfolio of video and audio-based social media platforms, leveraging AI technology and facing intense competition and complex regulatory environments - The company operates several global social media platforms, including Bigo Live, Likee, imo, and Hago, focusing on live streaming, short-form video, and social gaming[323](index=323&type=chunk)[324](index=324&type=chunk) Key Platform MAUs (Q4 2020) | Platform | Mobile MAUs (Q4 2020) | | :--- | :--- | | Bigo Live | 28.7 million | | Likee | 120.1 million | | Hago | 16.5 million | | imo | 186.3 million | | YY Live (Discontinued) | 42.0 million | - Artificial intelligence (AI) is central to the business, used for content recommendation, visual recognition, and optimizing user experience[327](index=327&type=chunk)[353](index=353&type=chunk) - The company faces significant competition from global platforms like TikTok and regional players like Twitch, especially after divesting its primary China-based business, YY Live[351](index=351&type=chunk) - Operations are subject to extensive regulations across multiple jurisdictions, including the GDPR in Europe, the CCPA in California, and various PRC laws governing internet content, data privacy, and foreign investment[369](index=369&type=chunk)[471](index=471&type=chunk)[473](index=473&type=chunk) [Organizational Structure](index=92&type=section&id=C.%20Organizational%20Structure) The company utilizes a complex organizational structure with direct subsidiaries and Variable Interest Entities (VIEs) to comply with PRC regulations and manage global operations - The company uses a VIE structure to conduct operations in the PRC, with entities like Guangzhou Huaduo and Guangzhou BaiGuoYuan being controlled through contractual arrangements[483](index=483&type=chunk)[491](index=491&type=chunk) - The acquisition of Bigo was completed in March 2019, making it a wholly-owned subsidiary and a key part of the company's global operations[491](index=491&type=chunk) - The sale of the YY Live business to Baidu, which was substantially completed, represents a major change in the organizational structure, shifting the company's focus to its global assets[491](index=491&type=chunk) [Property, Equipment and Land Use Right](index=93&type=section&id=D.%20Property,%20Equipment%20and%20Land%20Use%20Right) JOYY's corporate headquarters are in Singapore, with significant office space and properties in China and other global locations, and server infrastructure hosted at third-party data centers - The company's corporate headquarters is in Singapore, comprising **1,310 square meters**[486](index=486&type=chunk) - The PRC subsidiaries have a headquarters in Guangzhou (**37,548 sq. meters**) and a building in Zhuhai (**27,206 sq. meters**)[488](index=488&type=chunk) - Subsidiary Bigo leases an aggregate of **58,395 square meters** of office space globally, with **33,827 square meters** located in Guangzhou[487](index=487&type=chunk) [Operating and Financial Review and Prospects](index=94&type=section&id=ITEM%205.%20OPERATING%20AND%20FINANCIAL%20REVIEW%20AND%20PROSPECTS) This section analyzes the company's financial performance, highlighting significant revenue growth from Bigo, a net loss from continuing operations, and substantial net income from discontinued operations [Operating Results](index=94&type=section&id=A.%20Operating%20Results) In 2020, net revenues increased significantly due to Bigo's growth, but continuing operations posted an operating loss, while discontinued operations generated substantial net income from asset disposals Consolidated Results of Operations (Continuing Operations) | For the Year Ended December 31, | 2019 (RMB thousands) | 2020 (RMB thousands) | 2020 (US$ thousands) | | :--- | :--- | :--- | :--- | | **Total net revenues** | 6,239,309 | 13,230,945 | 2,027,731 | | *Live streaming* | 5,330,790 | 12,524,825 | 1,919,513 | | *Others* | 908,519 | 706,120 | 108,218 | | **Gross profit** | 1,686,651 | 3,721,356 | 570,323 | | **Operating loss** | (3,557,955) | (2,820,687) | (432,289) | | **Net loss from continuing operations** | (543,478) | (126,378) | (19,367) | | **Net income from discontinued operations** | 4,243,507 | 9,849,538 | 1,509,507 | - Net revenues increased by **112.1%** in 2020, driven by a **135.0%** increase in live streaming revenues, primarily from the consolidation and growth of the Bigo segment[624](index=624&type=chunk)[626](index=626&type=chunk) - Cost of revenues increased by **108.9%** in 2020, mainly due to a **164.4%** rise in revenue sharing fees and content costs, in line with the growth of Bigo's live streaming business[628](index=628&type=chunk) - The company adopted new accounting standards for revenue recognition (ASC 606) and credit losses (ASU 2016-13), with the latter resulting in a cumulative-effect adjustment to shareholders' equity of **RMB 12.1 million**[535](index=535&type=chunk)[567](index=567&type=chunk) [Liquidity and Capital Resources](index=117&type=section&id=B.%20Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity, primarily from operations and financing activities, holding **RMB 11.67 billion** in cash and equivalents as of December 31, 2020 Cash and Liquidity Position (Continuing Operations) | As of December 31, | 2019 (RMB thousands) | 2020 (RMB thousands) | 2020 (US$ thousands) | | :--- | :--- | :--- | :--- | | Cash, cash equivalents, restricted cash, and restricted short-term deposits | 3,367,157 | 11,666,329 | 1,787,942 | - Net cash used in continuing operating activities was **RMB 18.8 million (US$2.9 million)** in 2020, a significant improvement from a use of **RMB 1.23 billion** in 2019[689](index=689&type=chunk)[691](index=691&type=chunk) - Net cash provided by continuing investing activities was **RMB 4.77 billion (US$731.2 million)** in 2020, mainly from maturities of short-term investments and proceeds from the disposal of investments[696](index=696&type=chunk)[697](index=697&type=chunk) - Capital expenditures were **RMB 1.06 billion (US$162.0 million)** in 2020, primarily for purchasing office space, computers, and servers[703](index=703&type=chunk) [Contractual Obligations](index=121&type=section&id=F.%20Tabular%20Disclosure%20of%20Contractual%20Obligations) As of December 31, 2020, the company had significant contractual obligations including operating lease commitments, capital commitments, short-term loans, and convertible senior notes Contractual Obligations as of December 31, 2020 | Obligation | Total | Less than 1 year | 1-2 years | 3-5 years | More than 5 years | | :--- | :--- | :--- | :--- | :--- | :--- | | Operating lease commitments (RMB thousands) | 177,383 | 111,639 | 50,686 | 15,058 | — | | Capital commitment (RMB thousands) | 932,898 | 643,945 | 103,015 | 185,938 | — | | Short-term loans (RMB thousands) | 738,808 | 738,808 | — | — | — | | Convertible senior notes (US$ thousands) | 1,054,688 | 10,625 | 10,625 | 530,000 | 503,438 | [Directors, Senior Management and Employees](index=122&type=section&id=ITEM%206.%20DIRECTORS,%20SENIOR%20MANAGEMENT%20AND%20EMPLOYEES) This section details the company's leadership, compensation, board structure, employee base, and share ownership, highlighting the dual-class share structure and concentrated voting power [Directors and Senior Management](index=122&type=section&id=A.%20Directors%20and%20Senior%20Management) The company is led by co-founder, Chairman, and CEO David Xueling Li, with a board comprising five directors, including three independent members - David Xueling Li is the co-founder, Chairman of the Board, and Chief Executive Officer[715](index=715&type=chunk) - The board includes four independent directors: Qin Liu, Peter Andrew Schloss, Richard Weidong Ji, and David Tang[716](index=716&type=chunk)[717](index=717&type=chunk)[719](index=719&type=chunk)[720](index=720&type=chunk) [Compensation of Directors and Executive Officers](index=123&type=section&id=B.%20Compensation%20of%20Directors%20and%20Executive%20Officers) For fiscal year 2020, aggregate cash compensation for directors and executive officers was **RMB 15.5 million**, supplemented by three share incentive plans with significant outstanding awards - Aggregate cash compensation for directors and executive officers in FY2020 was **RMB 15.5 million (US$2.4 million)**[723](index=723&type=chunk) - The company has three share incentive plans: the 2009 Scheme (expired), the 2011 Plan, and the 2019 Arrangement (for Bigo employees)[727](index=727&type=chunk) - As of March 31, 2021, outstanding awards included options for **9.7 million shares**, **24.7 million restricted shares**, and **74.2 million restricted share units**[728](index=728&type=chunk) [Board Practices](index=128&type=section&id=C.%20Board%20Practices) The board of directors, consisting of five members, operates through four committees, with directors serving without fixed terms under Cayman Islands law - The board has four committees: Audit, Compensation, Corporate Governance & Nominating, and Investment[758](index=758&type=chunk) - The Audit Committee consists of three independent directors: Peter Andrew Schloss (Chairman), David Tang, and Richard Weidong Ji[759](index=759&type=chunk) - Directors are not subject to a term of office and serve until removed by a special resolution of shareholders[764](index=764&type=chunk) [Employees](index=130&type=section&id=D.%20Employees) As of December 31, 2020, JOYY had **7,931 employees**, primarily in customer services/operations and research and development, a decrease from 2019 due to the Huya deconsolidation Employees by Function as of Dec 31, 2020 | Function | Number of Employees | Percentage | | :--- | :--- | :--- | | Customer services and operations | 3,657 | 46% | | Research and development | 3,451 | 44% | | Sales and marketing | 329 | 4% | | General and administration | 494 | 6% | | **Total** | **7,931** | **100%** | [Share Ownership](index=130&type=section&id=E.%20Share%20Ownership) The company's dual-class share structure grants Chairman and CEO David Xueling Li **76.0%** of the total voting power, giving him substantial influence over corporate matters - As of March 31, 2021, Chairman and CEO David Xueling Li beneficially owned shares representing **76.0%** of the total voting power[774](index=774&type=chunk)[231](index=231&type=chunk) - The company has a dual-class share structure: Class A shares have one vote per share, while Class B shares have ten votes per share and are convertible to Class A shares[778](index=778&type=chunk)[273](index=273&type=chunk) - Principal shareholder Jun Lei (via Top Brand Holdings Limited) has delegated the voting rights of his **122.7 million Class B shares** to David Xueling Li[776](index=776&type=chunk) [Major Shareholders and Related Party Transactions](index=132&type=section&id=ITEM%207.%20MAJOR%20SHAREHOLDERS%20AND%20RELATED%20PARTY%20TRANSACTIONS) This section details the company's major shareholders and extensive related party transactions, emphasizing the enhancement of its Variable Interest Entity (VIE) structure for stability and control [Related Party Transactions](index=133&type=section&id=B.%20Related%20Party%20Transactions) The company's China operations rely on complex contractual arrangements with VIEs, which are being enhanced for stability, alongside significant transactions with related parties for services - The company is enhancing its VIE structure to reduce key-man risk and improve stability by having VIEs held by PRC limited liability companies, which are in turn owned by partnerships of management individuals[780](index=780&type=chunk)[781](index=781&type=chunk)[782](index=782&type=chunk) - A series of contractual arrangements (Exclusive Business Cooperation, Exclusive Option, Equity Pledge, and Powers of Attorney) are in place to provide JOYY with effective control over its VIEs and to transfer economic benefits[787](index=787&type=chunk)[789](index=789&type=chunk)[791](index=791&type=chunk)[793](index=793&type=chunk)[794](index=794&type=chunk) - In 2020, the company received service fees of **RMB 222.2 million** from Guangzhou Huaduo and **RMB 784.5 million** from Guangzhou BaiGuoYuan under these arrangements[795](index=795&type=chunk)[812](index=812&type=chunk) - The company purchased bandwidth services from Guangzhou Sunhongs and Kingsoft Cloud, both related to major shareholder Jun Lei, for **RMB 98.4 million** and **RMB 14.7 million**, respectively, in 2020[830](index=830&type=chunk)[832](index=832&type=chunk) [Financial Information](index=142&type=section&id=ITEM%208.%20FINANCIAL%20INFORMATION) This section covers consolidated financial statements, ongoing legal proceedings, and the company's dividend policy, including potential restrictions on dividend payments from PRC subsidiaries - The company is defending a putative securities class action lawsuit filed in November 2020, alleging material misrepresentations regarding revenue and the Bigo acquisition, with potential loss not yet estimable[839](index=839&type=chunk) - The board approved quarterly dividend policies in August and November 2020 for the next three years, with total expected payouts of approximately **US$500 million**, and **US$67 million** had been paid as of March 31, 2021[841](index=841&type=chunk) - Dividends from PRC subsidiaries are subject to PRC regulations and withholding taxes, which may restrict the ability to pay dividends to ADS holders[842](index=842&type=chunk) [Additional Information](index=144&type=section&id=ITEM%2010.%20ADDITIONAL%20INFORMATION) This section details the company's corporate governance under Cayman Islands law, its dual-class share structure, material contracts, exchange controls, and significant U.S. and PRC tax implications, including its PFIC status [Memorandum and Articles of Association](index=144&type=section&id=B.%20Memorandum%20and%20Articles%20of%20Association) JOYY Inc., a Cayman Islands exempted company, operates with a dual-class share structure and anti-takeover provisions, with Cayman Islands law offering fewer shareholder rights compared to U.S. law - The company's common stock is divided into Class A (one vote per share) and Class B (ten votes per share)[853](index=853&type=chunk)[862](index=862&type=chunk) - Class B shares automatically convert to Class A shares upon transfer to a non-affiliate, and the entire class converts if the founding group's ownership of Class B shares falls below **5%**[866](index=866&type=chunk) - The articles contain anti-takeover provisions, allowing the board to issue preferred shares without shareholder approval, which could delay or prevent a change in control[276](index=276&type=chunk)[917](index=917&type=chunk) - Cayman Islands law provides fewer shareholder rights compared to U.S. law, particularly regarding inspection of corporate records and initiating derivative lawsuits[277](index=277&type=chunk)[903](index=903&type=chunk)[911](index=911&type=chunk) [Taxation](index=156&type=section&id=E.%20Taxation) This subsection details tax considerations across key jurisdictions, including Cayman Islands tax exemption, PRC enterprise income tax and withholding tax, and the company's Passive Foreign Investment Company (PFIC) status for U.S. tax purposes - The company is a Cayman Islands entity and is not subject to profits, income, or capital gains tax there[939](index=939&type=chunk) - PRC subsidiaries are subject to a **25% EIT**, with some qualifying for preferential rates, and dividends paid from PRC subsidiaries to the offshore holding company are subject to a **10% withholding tax**[941](index=941&type=chunk) - The company believes it was a Passive Foreign Investment Company (PFIC) for the U.S. federal income tax purposes for the taxable year ended December 31, 2020[949](index=949&type=chunk) - If classified as a PFIC, U.S. holders face special, often punitive, tax rules on 'excess distributions' and gains from selling ADSs/shares; a mark-to-market election may be available for ADSs, but a QEF election is not[957](index=957&type=chunk)[960](index=960&type=chunk)[962](index=962&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=161&type=section&id=ITEM%2011.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company is exposed to market risks, primarily foreign exchange risk (USD vs. RMB) and interest rate risk on cash holdings, with sensitivity analyses provided for both - The company's primary market risks are foreign exchange risk (especially USD vs. RMB) and interest rate risk on its cash holdings[970](index=970&type=chunk)[975](index=975&type=chunk) - As of Dec 31, 2020, the company held significant U.S. dollar-denominated assets; a hypothetical **10% depreciation** of the USD against the RMB would result in a decrease of **RMB 1.34 billion** in the value of its cash, deposits, and short-term investments[973](index=973&type=chunk) - A hypothetical **one percentage point decrease** in interest rates would have reduced the company's interest income by **US$19.4 million** for the year ended December 31, 2020[975](index=975&type=chunk) [Description of Securities Other Than Equity Securities](index=162&type=section&id=ITEM%2012.%20DESCRIPTION%20OF%20SECURITIES%20OTHER%20THAN%20EQUITY%20SECURITIES) This section details the fees and charges applicable to holders of the company's American Depositary Shares (ADSs), including service fees charged by the depositary bank and reimbursements to the company ADS Holder Service Fees | Service | Fee | | :--- | :--- | | Issuance of ADSs | Up to US$5.00 per 100 ADSs | | Cancellation of ADSs | Up to US$5.00 per 100 ADSs | | Cash distribution | Up to US$5.00 per 100 ADSs | | Stock distribution | Up to US$5.00 per 100 ADSs | | Other securities distribution | Up to US$5.00 per 100 ADSs | | ADS Services (annual fee) | Up to US$5.00 per 100 ADSs | - For the year ended December 31, 2020, the depositary, Citibank, N.A., reimbursed the company **US$0.07 million** for expenses related to the ADS program[983](index=983&type=chunk) Part II [Controls and Procedures](index=164&type=section&id=ITEM%2015.%20CONTROLS%20AND%20PROCEDURES) This section confirms the effectiveness of the company's disclosure controls and internal control over financial reporting as of December 31, 2020, as concluded by management and attested by the independent auditor - Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2020[988](index=988&type=chunk) - Based on the COSO 2013 framework, management concluded that the company's internal control over financial reporting was effective as of December 31, 2020[990](index=990&type=chunk) - The independent auditor, PricewaterhouseCoopers Zhong Tian LLP, audited and confirmed the effectiveness of the company's internal control over financial reporting as of December 31, 2020[991](index=991&type=chunk) [Purchases of Equity Securities by the Issuer and Affiliated Purchasers](index=165&type=section&id=ITEM%2016.E.%20PURCHASES%20OF%20EQUITY%20SECURITIES%20BY%20THE%20ISSUER%20AND%20AFFILIATED%20PURCHASERS) This section details the company's share repurchase activities under its **US$300 million** plan, with approximately **2.1 million ADSs** repurchased as of December 31, 2020 2020 Share Repurchases | Period | Total ADSs Purchased | Average Price Paid Per ADS (US$) | | :--- | :--- | :--- | | March 2020 | 499,165 | 43.44 | | November 2020 | 56,218 | 84.67 | | December 2020 | 1,102,908 | 81.03 | - As of December 31, 2020, the company had repurchased a total of **2,092,436 ADSs** under its **US$300 million** plan, with approximately **US$160.5 million** remaining authorized for repurchase[1003](index=1003&type=chunk)[1004](index=1004&type=chunk) [Corporate Governance](index=166&type=section&id=ITEM%2016.G.%20CORPORATE%20GOVERNANCE) As a foreign private issuer, JOYY utilizes exemptions from certain Nasdaq listing rules, particularly regarding compensation committee independence and shareholder approval for equity issuances - The company, as a foreign private issuer, follows certain Cayman Islands governance practices, exempting it from some Nasdaq rules[1006](index=1006&type=chunk) - An exemption is used for the compensation committee, which is chaired by non-independent director David Xueling Li[1007](index=1007&type=chunk) - The company relies on an exemption from requiring shareholder approval for certain equity issuances, including for its 2019 Share Incentive Awards Arrangement[1008](index=1008&type=chunk) Part III [Financial Statements](index=166&type=section&id=ITEM%2018.%20FINANCIAL%20STATEMENTS) This section presents JOYY Inc.'s complete audited consolidated financial statements for 2018-2020, prepared under U.S. GAAP, with the auditor highlighting goodwill impairment and revenue recognition as critical audit matters [Report of Independent Registered Public Accounting Firm](index=178&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) PricewaterhouseCoopers Zhong Tian LLP issued an unqualified opinion on JOYY Inc.'s financial statements and internal controls, identifying goodwill impairment and revenue recognition as critical audit matters - The auditor, PricewaterhouseCoopers Zhong Tian LLP, issued an unqualified opinion on the financial statements and the effectiveness of internal controls over financial reporting[1034](index=1034&type=chunk) - A critical audit matter was the goodwill impairment assessment for the Bigo reporting unit, which had a goodwill balance of **RMB 12.1 billion**, requiring significant management judgment regarding cash flow projections, growth rates, and discount rates[1042](index=1042&type=chunk)[1043](index=1043&type=chunk) - Another critical audit matter was revenue recognition for live streaming, specifically the judgment involved in identifying distinct performance obligations in complex contracts and estimating their standalone selling prices[1046](index=1046&type=chunk)[1047](index=1047&type=chunk) [Consolidated Financial Statements](index=181&type=section&id=Consolidated%20Financial%20Statements) The consolidated financial statements show total assets of **RMB 52.8 billion** as of December 31, 2020, a net loss from continuing operations of **RMB 126.4 million**, but an overall net income of **RMB 9.7 billion** driven by discontinued operations Consolidated Balance Sheet Highlights (As of Dec 31, 2020) | Item | Amount (RMB thousands) | | :--- | :--- | | **Total Assets** | **52,818,794** | | Cash and cash equivalents | 11,371,264 | | Goodwill | 12,215,156 | | **Total Liabilities** | **11,623,668** | | Convertible bonds | 5,084,362 | | **Total Shareholders' Equity** | **40,721,310** | Consolidated Income Statement Highlights (Year Ended Dec 31, 2020) | Item | Amount (RMB thousands) | | :--- | :--- | | Total net revenues | 13,230,945 | | Gross profit | 3,721,356 | | Operating loss | (2,820,687) | | Net loss from continuing operations | (126,378) | | Net income from discontinued operations | 9,849,538 | | **Net income** | **9,723,160** | - The acquisition of Bigo in March 2019 added **RMB 12.4 billion** to goodwill[1275](index=1275&type=chunk)[1316](index=1316&type=chunk) - The disposal of Huya in 2020 resulted in a gain of **RMB 6.4 billion**, which is included in income from discontinued operations[1245](index=1245&type=chunk)