JOYY Inc. (NASDAQ:YY) Q4 2022 Earnings Call Transcript

by Lindsey Francy Mar 20, 2023 News
JOYY Inc. (NASDAQ:YY) Q4 2022 Earnings Call Transcript

Insider MonkeyInsider Monkey

The transcript of the earnings call for JOYY Inc.

Ladies and gentlemen, thank you for standing by, and welcome to the fourth quarter and full year earnings call of Joyy Inc. All participants are in a listening mode. There will be a question-and-answer session after management's comments. Jane Xie is the company's Senior Manager of Investor Relations. Jane, please proceed.

Jane Xie would like to thank you. Everyone, hello. There is an earnings conference call for JOYY. Mr. David Xueling Li is the Chairman and CEO of JOYY. Management will give a review of the quarter and then we will have a Q&A session. You can listen to the conference call at There will be a replay on our website in a few hours. We may make forward-looking statements that are inherently subject to risks and uncertainties that may cause actual results to differ from our current expectations.

Refer to our latest annual report on Form 20F for detailed discussions of the risks and uncertainties. All figures mentioned during the conference call are in US dollars. The call will be turned over to our Chairman and CEO. Sir, please go ahead.

Greetings, everyone. Our fourth quarter earnings call will be held later today. I'm going to give you an overview of our fourth quarter and results. We generated $50 million in non- GAAP net profit in the fourth quarter, which included $58.7 million in non- GAAP net profit from Bigo. A million of the group's revenues came from Bigo. We earned a non- GAAP net profit of $199.3 million with a non- GAAP net margin of 8.3%. The Bigo segment had a non- GAAP net profit of $288 million.

The combination of high inflation and the strong US dollar created downward pressure on our users' online payment, despite these short-term challenges. Our efforts yield significant results by focusing on the factors that we could control. We generated $199.3 million in non-GAAP net profit at the group level of 2022.

Thanks to our constant cost maximization efforts. The second consecutive year of positive non-GAAP net profit at a group level is a result of the consolidation of YY Live. Bigo Live's MAU grew by 40.3% in the fourth quarter of the year, up from 11.9% in the previous year. It was notable. During a period of more disciplined marketing spending, this was achieved. Bigo Live highlights improve user acquisition capabilities, which are driven by our constant cultivation of its content offerings and the social experience.

Visibility of the global macro elements is limited and it's possible that there will be another quarter or two. This short-term value won't change the secure trends of using pivoting and increasing among their time and they are spending from offline to online. We are committed to enriching our users lives through our products and services. There is a market with huge growth potential. We need a balance between navigating short-term uncertainties and actively pursuing growth. We will keep our focus on the quality and profitability of our entertainment business in the short term.

We will keep doing better with less. Discipline in our marketing spending will allow us to further refine our operations in order to improve our content and social experience. As we strive to maintain steady high quality growth of both our social in business and its operating cash flow, we will continue to maximize efforts. We will try to revise our resources and investments into high potential businesses that will ship our core capabilities. We are confident that we can keep up with our cash flows. We need to reinforce our financial position and act quickly to size long-term growth opportunities.

Let's look at our products a bit more closely. The bigger line will be the first one. Bigo Live's MAUs increased by 18.3% in the fourth quarter thanks to effective logins and increased user acquisition efficiency. Bigo Live launched one month at stake on to better engage the football players and fans around the globe during the World Cup. Bigo Live's local content is highlighted in the pro forma. A group of local football creators were selected by Bigo Live as World Cup ambassadors to host live commentary

Up to 500 concurrent speakers are encouraged to create and share original content in the chat room. The community experience was posted on Bigo Live. We are dedicated to creating value for our creators and that's why we decided to connect users. The first annual flagship event was held in January at the Capitol Theatre. Over 270 Bigo Live families were honored for their contributions to the community during the event. Bigo Live featured activity performance from top tenants from across the global with approximately 4 million viewers into the watch, further boosting our future exposure on a worldwide stage, we will continue to recognize and contribution of our creators in making our platform what it is today and the Bigo award was just when

Bigo Live introduced a number of new interactive features during the fourth quarter. The user go-live experience was improved by this. The number of live streamers on Bigo Live increased in the first quarter, while the average per live session increased. Bigo Live is being monetized. Micro-chains had a negative impact on monetization during the fourth quarter. User spending was diverted to offline entertainment activities in the Middle East. The number of paid users in Europe and North America have grown for two consecutive quarters.

We want to expand Bigo Live's services in multiple regions around the world, including Europe, America and the Middle East, as well as the Eastern Pacific and Southeast Asia. As we pivot Bigo Live content and user interaction via product innovation and innovative local operations, we want to improve user acquisition efficiency and user engagement. Bigo Live will advance its efforts to boost the paying user and monetization growth by our users playing experience in live streaming The operation loss in 2022 was in line with our expectation and narrowed by 83%.

The breakeven was achieved in the second half of the year. In order to further cultivate its interest based communities, likee has expanded its efforts to collaborate with companies from a variety of industry multiples. One example is the gaming community, which is one of the largest interest groups of Likee, with various popular games like Converse, law and live mobile, giving them a shared space to interact with each other In December of 2022, Likee became an official streaming partner of the TIM Awards. The event was watched by millions of people from all over the world.

We saw an increase in user interaction quality and units on Likee due to the increased content offerings. In the fourth quarter, Likee's average user time spent grew by 70.4% and the 30-day user retention increased by 6.3%. We want to implant Likee's monetization efficiency by diversified monetization models and achieve constant profitability. As they take social interactions among our universe and further refine our local, we will continue to prioritize creator input. As we improve Likee's operating cash flow, organic growth capabilities and user base, we believe we will see a gradual stabilization of Likee's user base in certain regions over time.

On Hago next. Hago's operation loss narrowed considerably during the fourth quarter. Hago has transitioned away from being an interactive platform to focusing on casual games. It is a multi- user social platform where a user can enjoy interacting with other users. The user socializing patterns on Hago became clear after the upgrade. After a few rounds of games, some users may want to join one of Hago's social channels such as video and audio chat rooms and Hago Space where they can interact with each other.

With the level of interaction reaching a certain level, user can join the same group of families, their life mine, friends and --engage, which is other on a more refined basis. Hago has developed a variety of monetization features, including pay to play games, live streaming and virtual items. In the fourth quarter, we improved our recommendation algorithm to help our users. The user retention rate in China increased by 1.5% and the user plan spend increased by 5.3%. There is a new 3D printing screen and areas for beginners to learn.

New user time spend on Hago Space increased by 6.5% and revenues from virtual items increased by 13.4%. We intended to further enhance Hago's monetization efficiency, while maintaining our efforts to achieve consistent profitability at the product level, in order to argue with our strategy of likee. There were some updates on capital return during the fourth quarter.

Over the course of the year, we have paid cash dividends in an aggregate amount of over $150 million and bought back $138 million of shares. We will use the remaining share purchase program to reward our shareholders because we are confident in our long-term affect. Strong execution and effective strategy planning drove our solid performance. We are committed to enriching our user life and facility through our diverse range of innovative products and services. With our resilient business model, strong financial position and sharpened focus on building our core capabilities, we are well positioned to create lasting value for shareholders.


11 Highest Paying Countries for Information Technology Professionals

Antonio Guillem is a stock photographer.

Thank you, David.

David Xueling Li is handing over to AlexLiu.

Alex said yes. Thank you David. Everyone, hello. Let's take a look at the financial results. Unless otherwise stated, the financial information and non- GAAP financial information disclosed in our earnings press release is presented as operations basis. Due to macroeconomic uncertainties and unfavorable exchange rates, our total net revenues were US$604.9 million compared to US$ 663.7 million in the same period of 2020 Enhancement of operating efficiency on multiple product fronts is one of the things we have improved during the quarter. The cost of revenues for the quarter decreased to US$392.6 million.

The gross profit was US$212 million in the quarter, with our gross margin improving to 35.1% from 33.7% in the same period of 2021. Our operating expenses increased from the same period in the previous year. Disciplined spending on user acquisition resulted in a decrease in sales and marketing expenses. Increased R&D personnel-related expenses of eco and consolidation of supply resulted in an increase in R&D expenses. The GAAP operating loss for the quarter was $14.2 million, compared to the operating income of $16.6 million for the year.

Our non-GAAP operating income for the quarter which excludes SBC expenses, impairment of goodwill and investments and gain on disposal of subsidiaries and business, was $48 million in this quarter compared to $83.5 million in the same period of 2021. The operating income margin in the prior year period was 12.6%. GAAP net loss from continuing operations attributable to controlling interest of JOYY in the quarter was $327.5 million compared to net income of $71.2 million in the same period of 2021, primarily due to an impairment loss from an equity investment recorded during the quarter The underlying trends in our operating performance are not reflected in the impairment loss calculation.

Net income from continuing operations attributable to controlling interest of JOYY was over 100 million dollars in the same period of 2021. The Group's non- GAAP net income margin was 8.3% in the quarter of 2022, compared to 14.8% in the year before. We have maintained a strong cash flow thanks to our improved profitability. Net cash inflow from operating activities was $75.6 million. We had a strong cash position of $4.29 billion at the end of the year. The full-year financial highlights are brief. The total net revenues for the year were US dollar, compared to the previous year's.

For the second year in a row, we have been able to sustain our path to sustainable profitability. Net income attributable to controlling interest and company shareholders of JOYY was up 83% from the previous year. Bigo's non-GAAP net income grew to $288 million in 2022, with its non-GAAP net income margin improving to 14.4% from 7.8% in the previous year. We have continued to increase shareholder returns through dividends. Over the course of the full year of 2022, we have paid dividends in an aggregate amount of over $150 million, which equates to 140% of our non- GAAP net income.

We have around US$ 800 million left as of the end of the year. We will balance between keeping enough cash to invest and build our linker late and enhancing return for our shareholders. Net revenues for the first quarter of the year are expected to be between US$ 152 million and US$ 517 million. I'm going to finish with some thoughts. Despite the fact that global macro growth -- revenue growth -- effective access to focus on high-quality growth, we have successfully enhanced our operationalEBITDA resilience of our business We prioritize our investments in building our core capabilities due to the low visibility of the global macro.

We are confident in the long-term potential of our global business and will actively pursue long-term growth opportunities. After our prepared remarks, that's it. We would like to hear from you. Thank you, thanks.

There are also 12 best airport stocks to buy.

Click here if you would like to continue reading.

  • Credit Suisse said it would write down 16 billion Swiss Francs of its Additional Tier 1 debt, angering bondholders. The decision will bolster the bank's capital. The move shows authorities' desire to see private investors help out.

  • The tough times are not over.

  • There is a growing disruptive technology that is being driven by Artificial Intelligence.

  • Government bonds and mortgage-backed securities have lost value as a result of the Fed's rate hikes.

  • A historic, government-brokered deal that contains a raft of financial shock absorbers has emerged as a rare winner in Credit Suisse Group AG's crisis. Credit Suisse said to push back against a $1 billion offer from Switzerland's largest bank.

  • The bank is under a lot of pressure. Since the collapse of Silicon Valley Bank, the San Francisco-based bank has been at the center of the crisis of confidence. First Republic Bank has a portfolio of municipal bonds and presents a similar profile to SVB.

  • Do you think the cost of electric cars is high? This is something to check out.

  • Ammar Al Khudiary, the chairman of Saudi National Bank, was asked if he would increase his stake. He said that the answer is not for many reasons.

  • Credit Suisse's $17 billion of risky bonds are now worthless as a result of the 3.3 billion dollar deal to be bought by Ubs.

  • She is confused. On March 17th, the Ark Invest CEO appeared on Fox Business Channel to give her opinion on the response to the Silicon Valley Bank collapse. It's disturbing to hear people say that it won't be 50 basis points.

  • The cars are almost being given away.

  • Investor's Business Daily

    The Swiss rival will be bought by the German company for over $3 billion. The upcoming Fed meeting is also in the spotlight.

  • When appropriate, recent actions and grades from TheStreet'sQuant Ratings, we zero in on three names. We will not be weighing in with fundamental analysis, but we hope this piece will give investors a good starting point for further research on the names. TheStreet has a C+ rating on Estee Lauder Companies Inc.

  • The Treasury Secretary and the Fed Chair are trying to calm the market.

  • VanEck has fixed income and exchange traded funds.

  • The investors in the firm's riskiest bonds, known as AT1s, are the biggest loser in the sale. Credit Suisse said to push back against a $1 billion offer from Switzerland's largest bank.

  • The Federal Reserve will make a decision on Wednesday. The latest earnings reports are also included.

  • Since the beginning of the year, Warren Buffet's company has bought back more than $18 billion of its own stock. As of March 8, the equivalent of 1,455,698 Class A shares were outstanding, down 4,035 from the year-end and 2,537 from February. Class B shares are usually less expensive than Class A shares.

  • Now is the best time to buy this Premium Smartwatch because it was just named the best Smartwatch of the year.

  • First Republic Bank was cut to junk by S&P Global Inc., a week after the ratings firm slashed the lender to junk.

  • Is it the new gold, or is it something else?

  • The US regulators have entered into an agreement with a subsidiary of New York Community Bancorp to purchase deposits and loans from a failed New York bank. The Federal Deposit Insurance Corporation (FDIC) said the deal would see the subsidiary, Flagstar Bank, assume substantially all of Signature Bank's deposits. The agency said that about $60 billion of the bank's loans and $4 billion of its deposits would remain with it.

  • Do you think you are getting the best deal? Don't buy anything until you try it.

  • Two Swiss rivals get married.

  • According to a study by the Social Science Research Network, 186 American banks are vulnerable to the same failure as Silicon Valley Bank.

  • What you need to know about the turmoil at Switzerland's second- largest bank is here.