JOYY(YY) - 2023 Q4 - Annual Report

Third Quarter 2023 Highlights JOYY achieved solid performance in Q3 2023 with a slight year-over-year decrease in total revenue but a year-over-year increase in Non-GAAP net income, driven by strong user growth in Bigo Live Q3 2023 Key Financial Metrics | Metric | Q3 2023 (Million USD) | Q3 2022 (Million USD) | Year-over-Year Change | | :--- | :--- | :--- | :--- | | Net Revenues | 567.1 | 586.7 | -3.3% | | Net Income Attributable to JOYY Inc. Shareholders (GAAP) | 72.9 | 515.3 | -85.8% | | Net Income Attributable to JOYY Inc. Shareholders (Non-GAAP) | 81.2 | 76.9 | +5.6% | Q3 2023 Key Operating Metrics | Metric | Q3 2023 | Q3 2022 | Year-over-Year Change | | :--- | :--- | :--- | :--- | | Global Average Mobile MAU | 276.8 million | 269.8 million | +2.6% | | Bigo Live Average Mobile MAU | 40.3 million | 35.4 million | +14.0% | | Likee Average Mobile MAU | 41.0 million | 50.6 million | -19.0% | | BIGO Paying Users | 1.61 million | 1.51 million | +6.6% | | BIGO Average Revenue Per Paying User (USD) | 253.4 | 259.8 | -2.5% | - The significant year-over-year decrease in GAAP net income was primarily due to a one-time gain from the revaluation of equity investments recorded in the prior year period[8] Management Commentary Chairman and CEO Mr. David Xueling Li highlighted the solid third-quarter results, with continued recovery in BIGO segment revenue, profit, and user engagement - BIGO segment revenue increased by 2.2% year-over-year and 4.9% quarter-over-quarter in the third quarter, indicating a sustained recovery trend[3] - Core product Bigo Live's MAU grew 14.0% year-over-year to 40.3 million, with healthy growth in paying users and improved average revenue per paying user quarter-over-quarter[3] - The company is committed to shareholder returns, having cumulatively returned $355.4 million to shareholders through dividends and share repurchases in the first three quarters of 2023, including $43.5 million in share repurchases during the third quarter[3] Third Quarter 2023 Detailed Financial Results In Q3 2023, the company's net revenues were $567.1 million, a 3.3% year-over-year decrease, with a decline in live streaming revenues partially offset by strong 62.1% growth in other revenues Net Revenues Third-quarter net revenues were $567.1 million, a 3.3% year-over-year decrease, primarily due to a decline in live streaming revenues partially offset by strong growth in other revenues Q3 2023 Revenue Composition | Revenue Category | Q3 2023 (Million USD) | Q3 2022 (Million USD) | Year-over-Year Change | | :--- | :--- | :--- | :--- | | Live Streaming Revenues | 495.8 | 542.8 | -8.7% | | Other Revenues | 71.3 | 44.0 | +62.1% | | Total Net Revenues | 567.1 | 586.7 | -3.3% | Cost of Revenues and Gross Profit Third-quarter cost of revenues decreased by 2.3% year-over-year to $357.9 million, resulting in a gross profit of $209.2 million and a slight decrease in gross margin to 36.9% Q3 2023 Gross Profit Analysis | Metric | Q3 2023 (Million USD) | Q3 2022 (Million USD) | | :--- | :--- | :--- | | Cost of Revenues | 357.9 | 366.5 | | Gross Profit | 209.2 | 220.2 | | Gross Margin | 36.9% | 37.5% | Operating Expenses and Income Total operating expenses decreased year-over-year to $191.3 million in the third quarter, with reduced sales and marketing expenses offset by increased research and development expenses Q3 2023 Operating Expenses Breakdown | Expense Category | Q3 2023 (Million USD) | Q3 2022 (Million USD) | | :--- | :--- | :--- | | Research and Development Expenses | 71.6 | 61.2 | | Sales and Marketing Expenses | 92.5 | 96.8 | | Total Operating Expenses | 191.3 | 202.2 | Q3 2023 Operating Income | Metric | Q3 2023 (Million USD) | Q3 2022 (Million USD) | | :--- | :--- | :--- | | Operating Income (GAAP) | 12.0 | 19.8 | | Operating Margin (GAAP) | 2.1% | 3.4% | | Operating Income (Non-GAAP) | 40.4 | 43.1 | | Operating Margin (Non-GAAP) | 7.1% | 7.4% | Net Income and EPS Third-quarter GAAP net income significantly decreased year-over-year due to a one-time investment gain in the prior year, while Non-GAAP net income increased by 5.6% to $81.2 million Q3 2023 Net Income and Earnings Per ADS | Metric | Q3 2023 (Million USD) | Q3 2022 (Million USD) | | :--- | :--- | :--- | | Net Income (GAAP) | 72.9 | 515.3 | | Net Margin (GAAP) | 12.9% | 87.8% | | Net Income (Non-GAAP) | 81.2 | 76.9 | | Net Margin (Non-GAAP) | 14.3% | 13.1% | | Diluted Earnings Per ADS (GAAP) | 1.86 | 6.28 | | Diluted Earnings Per ADS (Non-GAAP) | 1.22 | 0.96 | Balance Sheet and Cash Flows As of September 30, 2023, the company maintained a strong financial position with $3.8228 billion in cash, cash equivalents, and short-term investments, generating $72.9 million in net cash from operating activities during the third quarter - As of September 30, 2023, the company's total cash, cash equivalents, restricted cash, short-term deposits, and short-term investments amounted to $3.8228 billion[10] - In the third quarter of 2023, the company generated $72.9 million in net cash from operating activities[10][11] Business Outlook and Recent Developments The company anticipates Q4 2023 net revenues to be between $551 million and $579 million, and its board has extended the existing share repurchase program by 12 months - The company expects its net revenues for the fourth quarter of 2023 to be between $551 million and $579 million[12] - The board of directors approved extending the validity of the remaining $530 million under the existing share repurchase program for an additional 12 months[13] - The company appointed Ms. Ting Li, its Chief Operating Officer, as a director of the company, effective November 30, 2023[14] Appendix: Financial Statements This section provides the company's unaudited consolidated balance sheets, statements of operations, GAAP to Non-GAAP reconciliation, and segment report, highlighting BIGO as the primary revenue and profit driver Unaudited Condensed Consolidated Balance Sheets As of September 30, 2023, the company's total assets were $8.449 billion, a decrease from $9.072 billion at the end of 2022, with total liabilities decreasing to $3.141 billion and total shareholders' equity at $5.286 billion Balance Sheet Key Items (As of September 30, 2023) | Item | September 30, 2023 (Billion USD) | December 31, 2022 (Billion USD) | | :--- | :--- | :--- | | Cash and Cash Equivalents | 1.240 | 1.214 | | Total Current Assets | 4.172 | 4.645 | | Total Assets | 8.449 | 9.072 | | Total Liabilities | 3.141 | 3.569 | | Total Shareholders' Equity | 5.286 | 5.411 | Unaudited Condensed Consolidated Statements of Operations The financial statements detail the company's revenues, costs, expenses, and profits for Q3 2023 compared to the prior year, showing a decrease in total net revenues and operating income Q3 2023 Statements of Operations Overview | Item | Q3 2023 (Million USD) | Q3 2022 (Million USD) | | :--- | :--- | :--- | | Total Net Revenues | 567.1 | 586.7 | | Gross Profit | 209.2 | 220.2 | | Operating Income | 12.0 | 19.8 | | Net Income | 65.1 | 509.5 | | Net Income Attributable to Controlling Interests | 72.9 | 515.3 | Unaudited Reconciliation of GAAP and Non-GAAP Results This section provides a detailed reconciliation from GAAP to Non-GAAP metrics, with key adjustments including share-based compensation expenses, amortization of intangible assets, and loss from disposal of a subsidiary Q3 2023 GAAP to Non-GAAP Operating Income Reconciliation | Item | Amount (Thousand USD) | | :--- | :--- | | Operating Income (GAAP) | 12,049 | | Add: Share-based Compensation Expenses | 6,297 | | Add: Amortization of Intangible Assets | 15,890 | | Add: Loss from Disposal of a Subsidiary | 6,177 | | Operating Income (Non-GAAP) | 40,413 | Unaudited Segment Report The company's business is divided into BIGO and All Other segments, with BIGO contributing the vast majority of revenue and all operating profit in Q3 2023, underscoring its role as the core earnings engine Q3 2023 Segment Performance | Item | BIGO (Million USD) | All Other (Million USD) | Total (Million USD) | | :--- | :--- | :--- | :--- | | Total Net Revenues | 494.1 | 73.5 | 567.1 | | Operating Profit (Loss) | 68.51 | (56.46) | 12.05 | | Net Profit (Loss) | 70.24 | (5.16) | 65.08 |