UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934

 

For the month of March 2020

 

 

 

 

Commission File Number: 001-35729 

 

 

 

JOYY Inc.

 

Building B-1 North Block of Wanda Plaza

No. 79 Wanbo Er Road, Nancun Town

Panyu District, Guangzhou 511442

People’s Republic of China
(Address of principal executive offices)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

 

Form 20-F þ Form 40-F ¨

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ¨

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ¨

 

 

  

 

 

EXHIBIT INDEX

 

Exhibit No.   Description
Exhibit 99.1   Press Release

 

 

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

       
  JOYY INC.  
   
  By:   /s/ Bing Jin
    Name:  Bing Jin
    Title: Chief Financial Officer

 

Date: March 17, 2020

  

 

Exhibit 99.1

 

JOYY Reports Fourth Quarter and Full Year 2019 Unaudited Financial Results

 

Guangzhou, China, March 16, 2020 - JOYY Inc. (NASDAQ: YY) (“JOYY” or the “Company”, formerly known as YY Inc.), a global video-based social media platform, today announced its unaudited financial results for the fourth quarter and full year of 2019.

 

Fourth Quarter 2019 Financial Highlights

 

·Net revenues increased by 64.2% to RMB7,618.2 million (US$1,094.3 million) from RMB4,640.9 million in the corresponding period of 2018.
·Net income attributable to controlling interest of JOYY Inc.1 was RMB172.8 million (US$24.8 million), compared to RMB694.7 million in the corresponding period of 2018.
·Non-GAAP net income attributable to controlling interest of JOYY Inc.2 was RMB600.8 million (US$86.3 million), compared to RMB846.9 million in the corresponding period of 2018, primarily due to the impact of the consolidation of Bigo Inc (“Bigo”).

 

Full Year 2019 Highlights

 

·Net revenues increased by 62.2% to RMB25,576.2 million (US$3,673.8 million) from RMB15,763.6 million in 2018.
·Net income attributable to controlling interest of JOYY Inc. was RMB3,445.2 million (US$494.9 million), compared to RMB2,209.0 million in 2018.
·Non-GAAP net income attributable to controlling interest of JOYY Inc. was RMB2,252.6 million (US$323.6 million), compared to RMB3,274.1 million in 2018.

 

Fourth Quarter 2019 Operational Highlights

 

·Global average mobile MAUs3 reached 485.2 million, among that 78.8% were from markets outside of China.

 

 

 

1 Net income attributable to controlling interest of JOYY Inc., is net income less net (loss) income attributable to the non-controlling interest shareholders and the mezzanine equity classified as non-controlling interest shareholder.

 

2 Non-GAAP net income attributable to controlling interest of JOYY Inc. is a non-GAAP financial measure, which is defined as net income attributable to controlling interest of JOYY Inc. excluding share-based compensation expenses, impairment of goodwill and investment, amortization of intangible assets from business acquisitions, gain on disposal of subsidiaries and business, gain on deemed disposal and disposal of investments (deemed disposal refers to dilution of equity interest in equity-method investments), gain (loss) on fair value change of investments and equity investees’ investments, fair value change on derivative, interest expenses related to the convertible bonds amortization to face value, income tax effects on non-GAAP adjustments and non-GAAP adjustments for net (loss) income attributable to non-controlling interest shareholders. These adjustments amounted to RMB428.0 million (US$61.5 million) and RMB152.2 million in the fourth quarters of 2019 and 2018, respectively. Please refer to the section titled “Reconciliation of GAAP and Non-GAAP Results” for more details.

 

3 Refers to mobile average monthly active users. Average mobile MAU for any period is calculated by dividing (i) the sum of the Company’s mobile active users for each month of such period, by (ii) the number of months in such period.

 

1

 

 

·Average mobile MAUs of Likee (formerly known as Like) increased by 208.3% to 115.3 million from 37.4 million in the corresponding period of 2018.
·Average mobile MAUs of global live streaming services increased by 21.5% to 158.9 million from 130.8 million in the corresponding period of 2018, among that (i) 102.8 million were from China, including 41.2 million from YY, which increased by 3.8% year over year, and 61.6 million from Huya, which increased by 21.5% year over year; and (ii) 56.1 million were from outside of China, including 23.1 million from BIGO LIVE, which increased by 18.6% year over year, and 33.0 million from HAGO, which increased by 57.9% year over year.
·Average mobile MAUs of imo was 211.0 million.
·Total number of paying users4 of YY increased by 9.8% to 4.5 million from 4.1 million in the corresponding period of 2018.
·Total number of paying users of Huya increased by 5.9% to 5.1 million from 4.8 million in the corresponding period of 2018.

 

“We concluded 2019 with robust operating and financial performances in the fourth quarter, further demonstrating the success of our domestic and international businesses,” commented Mr. David Xueling Li, Chairman and Chief Executive Officer of JOYY. “During the quarter, we maintained our focus on the growth of our short-form video and live streaming products to fuel our dual growth engines. For Likee, our global short-form video platform, we continued to expand its geographic coverage, refine its content offerings, and augment its monetization capabilities. As a result, Likee’s total MAUs swelled to 115.3 million in the quarter, representing an increase of 208.3% on a yearly basis and 15.1% on a sequential basis. We also continued to expand our global live streaming ecosystem through BIGO Live, our flagship live streaming platform for international markets. Our persistence in cultivating BIGO Live’s operational efficiency, localization capabilities, and cultural sensitivity enabled the platform to achieve record growth in developed markets around the world in the quarter. Furthermore, HAGO, our casual-game-oriented social media platform, also maintained its healthy growth trajectory, as we continued to expand its game portfolio and innovate its social features to explore additional monetization opportunities.

 

In addition to our rapid expansion overseas, we also maintained our focus on serving YY Live’s community of loyal users to cement our leadership in China’s entertainment live streaming industry. The success of our 2019 YY Annual Awards once again demonstrated the strength and scale of our live streaming social media ecosystem in China. Moreover, as we continue to cultivate synergies across business segments, implement cutting-edge technology into our products, and cultivate our localization capabilities, we are also compounding the network effects of our product matrix and enhancing our ability to achieve sustainable growth.”

 

Mr. Bing Jin, Chief Financial Officer of JOYY, further commented, “During the fourth quarter of 2019, we generated a year-over-year net revenues growth rate of 64.2%, exceeding the high end of our previous guidance range. In terms of our global strategy, we are committed to continuous investment in user base expansion, content enrichment and technology innovation, while keeping rapid monetization progress in both live streaming and short-form video services. In response to the recent COVID-19 outbreak, we immediately leveraged our capabilities to contribute to our society’s efforts of rallying charitable support and uplifting people’s spirit. While we assess and monitor the financial impact of the outbreak in 2020, we are confident that our global footprint, diversified products matrix, and abundant cash reserve have positioned us to meet the challenges and seize the opportunities ahead.”

 

 

 

4 Refers to a registered user that has purchased virtual items on YY’s platforms at least once during the period presented.

 

2

 

 

Fourth Quarter 2019 Financial Results

 

NET REVENUES

Net revenues increased by 64.2% to RMB7,618.2 million (US$1,094.3 million) in the fourth quarter of 2019 from RMB4,640.9 million in the corresponding period of 2018, primarily driven by an increase in live streaming revenues and the contribution from Bigo’s consolidation.

 

Live streaming revenues increased by 62.7% to RMB7,146.6 million (US$1,026.5 million) in the fourth quarter of 2019 from RMB4,391.4 million in the corresponding period of 2018, primarily attributable to (i) the continued live streaming revenues growth in YY and Huya segments, amounting to RMB5,507.8 million (US$791.1 million); and (ii) the contribution from the consolidation of Bigo segment, amounting to RMB1,638.7 million (US$235.4 million).

 

Other revenues increased by 89.0% to RMB471.6 million (US$67.7 million) in the fourth quarter of 2019 from RMB249.5 million in the corresponding period of 2018, primarily driven by the increase in advertising revenues from Huya and Bigo.

 

COST OF REVENUES AND GROSS PROFIT

Cost of revenues increased by 69.3% to RMB5,101.0 million (US$732.7 million) in the fourth quarter of 2019 from RMB3,013.1 million in the corresponding period of 2018. Revenue-sharing fees and content costs increased to RMB3,727.4 million (US$535.4 million) in the fourth quarter of 2019 from RMB2,556.5 million in the corresponding period of 2018 as a result of the increase in live streaming revenues of the Company. Bandwidth costs increased to RMB505.0 million (US$72.5 million) in the fourth quarter of 2019 from RMB246.5 million in the corresponding period of 2018, as the overseas user base and time spent continued to expand following the Bigo consolidation.

 

Gross profit increased by 54.6% to RMB2,517.2 million (US$361.6 million) in the fourth quarter of 2019 from RMB1,627.9 million in the corresponding period of 2018. Gross margin was 33.0% in the fourth quarter of 2019, compared to 35.1% in the corresponding period of 2018. The gross margin contraction was primarily caused by the fact that Huya and Bigo segments had lower gross margins but contributed significantly greater portions of net revenues in the fourth quarter of 2019, compared to the corresponding period of 2018.

 

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OPERATING INCOME

Operating expenses were RMB2,296.9 million (US$329.9 million) in the fourth quarter of 2019, compared to RMB931.2 million in the corresponding period of 2018. Among the operating expenses, sales and marketing expenses increased to RMB1,026.4 million (US$147.4 million) in the fourth quarter of 2019, primarily due to the Company’s increased efforts in sales and marketing activities in overseas markets and the impact of depreciation and amortization related to the Bigo consolidation. Research and development expenses increased to RMB802.3 million (US$115.2 million) in the fourth quarter of 2019, mostly due to the increase in salaries caused primarily by the consolidation of Bigo.

 

Operating income was RMB362.2 million (US$52.0 million) in the fourth quarter of 2019, compared to RMB718.6 million in the corresponding period of 2018. Operating margin was 4.8% in the fourth quarter of 2019, compared to 15.5% in the corresponding period of 2018, primarily due to the decrease in gross margin, the impact of depreciation and amortization related to the Bigo consolidation and other overseas expansion initiatives.

 

Non-GAAP operating income5 was RMB781.3 million (US$112.2 million) in the fourth quarter of 2019, compared to RMB888.5 million in the corresponding period of 2018. Non-GAAP operating margin6 was 10.3% in the fourth quarter of 2019, compared to 19.1% in the corresponding period of 2018.

 

NET INCOME

Net income attributable to controlling interest of JOYY Inc. was RMB172.8 million (US$24.8 million) in the fourth quarter of 2019, compared to RMB694.7 million in the corresponding period of 2018. Net margin was 2.3% in the fourth quarter of 2019, compared to 15.0% in the corresponding period of 2018. The high effective tax rate in the fourth quarter of 2019 was primarily due to the profit (loss) structure and the different effective tax rates of YY, Huya and Bigo segments. Particularly, the Company was not receiving as much benefit from losses incurred by Bigo as a majority of Bigo’s business was subject to a low applicable tax rate in its jurisdiction.

 

Non-GAAP net income attributable to controlling interest of JOYY Inc. was RMB600.8 million (US$86.3 million) in the fourth quarter of 2019, compared to RMB846.9 million in the corresponding period of 2018. Non-GAAP net margin7 was 7.9% in the fourth quarter of 2019, compared to 18.2% in the corresponding period of 2018.

 

 

 

5 Non-GAAP operating income is a non-GAAP financial measure, which is defined as operating income excluding share-based compensation expenses, amortization of intangible assets from business acquisitions, impairment of goodwill and investments and gain on disposal of subsidiaries and business. Please refer to the section titled “Reconciliation of GAAP and Non-GAAP Results” for details.

 

6 Non-GAAP operating margin is a non-GAAP financial measure, which is defined as non-GAAP operating income as a percentage of net revenues. Please refer to the section titled “Reconciliation of GAAP and Non-GAAP Results” for details.

 

7 Non-GAAP net margin is non-GAAP net income attributable to controlling interest of JOYY Inc. as a percentage of net revenues.

 

4

 

 

NET INCOME PER ADS

Diluted net income per ADS8 was RMB1.87 (US$0.27) in the fourth quarter of 2019, compared to RMB10.54 in the corresponding period of 2018.

 

Non-GAAP diluted net income per ADS9 was RMB6.70 (US$0.96) in the fourth quarter of 2019, compared to RMB13.03 in the corresponding period of 2018.

 

BALANCE SHEET AND CASH FLOWS

As of December 31, 2019, the Company had cash and cash equivalents, restricted cash and cash equivalents, short-term deposits, restricted short-term deposits and short-term investments of RMB26,944.5 million (US$3,870.3 million). For the fourth quarter of 2019, net cash from operating activities was RMB1,788.1 million (US$256.8 million).

 

SHARES OUTSTANDING

As of December 31, 2019, the Company had a total of 1,619.7 million common shares, or the equivalent of 81.0 million ADSs, outstanding.

 

Full Year 2019 Financial Results

 

Net revenues for the full year of 2019 increased by 62.2% to RMB25,576.2 million (US$3,673.8 million) from RMB15,763.6 million in 2018, primarily driven by a 61.5% year-over-year increase in live streaming revenues.

 

Net income attributable to controlling interest of JOYY Inc. for the full year of 2019 increased by 56.0% to RMB3,445.2 million (US$494.9 million) from RMB2,209.0 million in 2018. Net margin for the full year of 2019 was 13.5%, compared to 14.0% in 2018.

 

 

 

8 ADS is American Depositary Share. Each ADS represents twenty Class A common shares of the Company. Diluted net income per ADS is net income attributable to common shareholders of JOYY Inc. divided by weighted average number of diluted ADS.

 

9 Non-GAAP diluted net income per ADS is a non-GAAP financial measure, which is defined as non-GAAP net income attributable to common shareholders of JOYY Inc. divided by weighted average number of ADS used in the calculation of diluted net income per ADS. Please refer to the section titled “Reconciliation of GAAP and Non-GAAP Results” for details.

 

5

 

 

Non-GAAP net income attributable to controlling interest of JOYY Inc. for the full year of 2019 was RMB2,252.6 (US$323.6 million), compared to RMB3,274.1 million in 2018. Non-GAAP net margin for the full year of 2019 was 8.8%, compared to 20.8% in 2018.

 

Diluted net income per ADS for the full year of 2019 increased by 69.5% to RMB43.01 (US$6.18) from RMB25.38 in 2018. Non-GAAP diluted net income per ADS was RMB27.11 (US$3.89) in 2019, compared to RMB50.07 in the corresponding period of 2018.

 

For the full year of 2019, net cash from operating activities was RMB4,581.7 million (US$658.1 million).

 

Business Outlook

For the first quarter of 2020, the Company expects net revenues to be between RMB6.75 billion and RMB6.85 billion10, representing a year-over-year growth of 41.2% to 43.3%. This forecast considers the potential impact of the COVID-19 outbreak and reflects the Company’s current and preliminary views on the market and operational conditions, which are subject to change, particularly as to the potential impact of the COVID-19 on the economy in China and elsewhere.

 

Social Responsibility Initiatives

In late January of 2020, the Company announced a donation of RMB22 million to help contain the spread of the COVID-19 outbreak. The donation was used for the procurement of medical supplies and equipment via domestic and international channels. These items included facemasks, medical safety glasses, hazmat suits, and medical sanitizers. After receiving the medical supplies and equipment, the Company coordinated directly with hospitals both in Hubei and Guangdong provinces that were involved in the treatment of COVID-19 patients to ensure the efficient delivery of the medical supplies and equipment.

 

Conference Call Information

The Company will hold a conference call on Monday, March 16, 2020, at 9:00 P.M. Eastern Time (or Tuesday, March 17, 2020, at 9:00 A.M. Beijing Time) to discuss the financial results. Participants may access the call by dialing the following numbers:

 

United States:+1-845-675-0437
International:+65-6713-5090
Mainland China:400-620-8038
Hong Kong, China:+852-3018-6771
Conference ID:#8385384

 

 

 

10 The outlook of net revenues for the first quarter of 2020 includes the impact from Bigo’s consolidation. However, when calculating the year-over-year growth rate, Bigo’s net revenues in January and February of 2019 was not included as the part of denominator.

 

6

 

 

The replay will be accessible through March 24, 2020, by dialing the following numbers:

 

United States: +1-646-254-3697
International: +61-2-8199-0299
Conference ID: #8385384

 

A live and archived webcast of the conference call will also be available at the Company's investor relations website at http://ir.yy.com/.

 

Exchange Rate

This press release contains translations of certain Renminbi amounts into U.S. dollars at specified rates solely for the convenience of readers. Unless otherwise noted, all translations from Renminbi to U.S. dollars, in this press release, were made at a rate of RMB6.9618 to US$1.00, the noon buying rate in effect on December 31, 2019 in the City of New York for cable transfers in Renminbi per U.S. dollar as certified for customs purposes by the Federal Reserve Bank of New York.

 

About JOYY Inc.

JOYY Inc. is a global social media platform. The Company’s highly engaged users contribute to a vibrant social community by creating, sharing, and enjoying a vast range of entertainment content and activities. JOYY enables users to interact with each other in real time through online live media and offers users a uniquely engaging and immersive entertainment experience. JOYY owns YY Live, a leading live streaming social media platform in China and Huya, a leading game live streaming platform in China. In addition, JOYY completed the acquisition of Bigo in March 2019. Bigo is a fast-growing global tech company. Headquartered in Singapore, Bigo owns Bigo Live, a leading global live streaming platform outside China; Likee, a leading global short-form video social platform; imo, a global video communication app and other social applications. YY has created an online community for global video and live streaming users. JOYY Inc. was listed on the NASDAQ in November 2012.

 

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” and similar statements. Among other things, the business outlook and quotations from management in this announcement, as well as JOYY’s strategic and operational plans, contain forward-looking statements. JOYY may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (“SEC”), in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to fourth parties. Statements that are not historical facts, including statements about JOYY’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: JOYY’s goals and strategies; JOYY’s future business development, results of operations and financial condition; the expected growth of the online communication social platform market in China; the expectation regarding the rate at which to gain active users, especially paying users; JOYY’s ability to monetize the user base; fluctuations in general economic and business conditions in China; the impact of the COVID-19 to JOYY’s business operations and the economy in China and elsewhere generally; and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in JOYY’s filings with the SEC. All information provided in this press release and in the attachments is as of the date of this press release, and JOYY does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

 

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Use of Non-GAAP Financial Measures

The unaudited condensed consolidated financial information is prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). JOYY uses non-GAAP operating income, non-GAAP operating margin, non-GAAP net income attributable to controlling interest of JOYY Inc., non-GAAP net margin attributable to controlling interest of JOYY Inc., non-GAAP net income attributable to common shareholders of JOYY Inc., and basic and diluted non-GAAP net income per ADS, which are non-GAAP financial measures. Non-GAAP operating income is operating income excluding share-based compensation expenses, impairment of goodwill and investments, amortization of intangible assets from business acquisitions, and gain on disposal of subsidiaries and business. Non-GAAP operating margin is non-GAAP operating income as a percentage of net revenues. Non-GAAP net income is net income excluding share-based compensation expenses, impairment of goodwill and investments, amortization of intangible assets from business acquisitions, gain on disposal of subsidiaries and business, gain on deemed disposal and disposal of investments, gain (loss) on fair value change of investments and equity investees’ investments, fair value change on derivative, interest expenses related to the convertible bonds’ amortization to face value, and income tax effects of above non-GAAP reconciling items. Non-GAAP net income attributable to controlling interest of JOYY Inc. is net income attributable to controlling interest of JOYY Inc. excluding share-based compensation expenses, impairment of goodwill and investments, amortization of intangible assets from business acquisitions, gain on disposal of subsidiaries and business, gain on deemed disposal and disposal of investments, gain (loss) on fair value change of investments and equity investees’ investments, fair value change on derivative, interest expenses related to the convertible bonds’ amortization to face value, income tax effects of above non-GAAP reconciling items and adjustments for non-GAAP reconciling items for the net (loss) income attributable to non-controlling interest shareholders. Non-GAAP net margin is non-GAAP net income attributable to controlling interest of JOYY Inc. as a percentage of net revenues. Non-GAAP net income attributable to common shareholders of JOYY Inc. is net income attributable to common shareholders of JOYY Inc. excluding share-based compensation expenses, impairment of goodwill and investments, amortization of intangible assets from business acquisitions, gain on disposal of subsidiaries and business, gain on deemed disposal and disposal of investments, gain (loss) on fair value change of investments and equity investees’ investments, fair value change on derivative, interest expenses related to the convertible bonds’ amortization to face value, accretion, cumulative dividend and deemed dividend to subsidiaries’ preferred shareholders and income tax effects of above non-GAAP reconciling items and adjustments for non-GAAP reconciling items for the net (loss) income attributable to non-controlling interest shareholders. After the non-GAAP reconciliation, non-GAAP net income attributable to controlling interests of JOYY Inc. is equal to the non-GAAP net income attributable to common shareholders of JOYY Inc. Basic and diluted non-GAAP net income per ADS is non-GAAP net income attributable to common shareholders of JOYY Inc. divided by weighted average number of ADS used in the calculation of basic and diluted net income per ADS. The Company believes that separate analysis and exclusion of the non-cash impact of above reconciling items adds clarity to the constituent parts of its performance. The Company reviews these non-GAAP financial measures together with GAAP financial measures to obtain a better understanding of its operating performance. It uses the non-GAAP financial measure for planning, forecasting and measuring results against the forecast. The Company believes that non-GAAP financial measure is useful supplemental information for investors and analysts to assess its operating performance without the non-cash effect of (i) share-based compensation expenses and amortization of intangible assets from business acquisitions, fair value change on derivative, interest expenses related to the convertible bonds’ amortization to face value, which have been and will continue to be significant recurring expenses in its business, (ii) impairment of goodwill and investments, gain on disposal of subsidiaries and business, gain on deemed disposal and disposal of investments, gain (loss) on fair value change of investments and equity investees’ investments, and accretion, cumulative dividend and deemed dividend to subsidiaries’ preferred shareholders, which may not be recurring in its business, and (iii) income tax expenses and non-GAAP adjustments for net (loss) income attributable to non-controlling interest shareholders, which are affected by above non-GAAP reconciling items. However, the use of non-GAAP financial measures has material limitations as an analytical tool. One of the limitations of using non-GAAP financial measures is that they do not include all items that impact the Company’s net income for the period. In addition, because non-GAAP financial measures are not measured in the same manner by all companies, they may not be comparable to other similar titled measures used by other companies. In light of the foregoing limitations, you should not consider non-GAAP financial measure in isolation from or as an alternative to the financial measure prepared in accordance with U.S. GAAP.

 

The presentation of these non-GAAP financial measures is not intended to be considered in isolation from, or as a substitute for, the financial information prepared and presented in accordance with U.S. GAAP. For more information on these non-GAAP financial measures, please see the table captioned “JOYY Inc. Reconciliation of GAAP and Non-GAAP Results” near the end of this release.

 

Investor Relations Contact

JOYY Inc.

Matthew Zhao

Maggie Yan

Tel: +86 (20) 8212-0000 

Email: IR@YY.com

 

ICR, Inc.

Jack Wang

Tel: +1 (646) 915-1611

Email: IR@YY.com

 

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JOYY INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(All amounts in thousands, except share, ADS and per ADS data)

 

   December 31,
2018
   December 31,
2019
   December 31,
2019
 
   RMB   RMB   US$ 
Assets            
Current assets               
Cash and cash equivalents   6,004,231    3,893,538    559,272 
Restricted cash and cash equivalents   -    4,892    703 
Short-term deposits   7,326,996    16,770,885    2,408,987 
Restricted short-term deposits   -    653,034    93,802 
Short-term investments   979,053    5,622,189    807,577 
Accounts receivable, net   198,428    762,018    109,457 
Amounts due from related parties   193,559    17,262    2,480 
Financing receivables, net   768,343    105,344    15,132 
Prepayments and other current assets   1,019,019    970,807    139,447 
                
Total current assets   16,489,629    28,799,969    4,136,857 
                
Non-current assets               
Long-term deposits   1,000,000    -    - 
Deferred tax assets   70,834    127,635    18,334 
Investments   4,591,524    2,362,907    339,410 
Property and equipment, net   1,296,319    2,256,360    324,106 
Land use rights, net   1,784,639    1,736,544    249,439 
Intangible assets, net   74,685    3,179,863    456,759 
Right-of-use assets, net(1)   -    275,607    39,588 
Goodwill   11,763    12,947,192    1,859,748 
Financing receivables, net   224,793    129,380    18,584 
Other non-current assets   223,859    394,026    56,598 
                
Total non-current assets   9,278,416    23,409,514    3,362,566 
                
Total assets   25,768,045    52,209,483    7,499,423 
                
Liabilities, mezzanine equity and shareholders’ equity               
                
Current liabilities               
Convertible bonds   6,863    -    - 
Accounts payable   114,589    124,551    17,891 
Deferred revenue   951,616    1,343,308    192,954 
Advances from customers   101,690    150,091    21,559 
Income taxes payable   235,561    451,623    64,872 
Accrued liabilities and other current liabilities   2,414,371    4,673,000    671,234 
Amounts due to related parties   28,336    222,281    31,929 
Lease liabilities due within one year(1)   -    115,564    16,600 
Short-term loans   -    557,203    80,037 
                
Total current liabilities   3,853,026    7,637,621    1,097,076 
                
Non-current liabilities               
Convertible bonds   -    5,008,571    719,436 
Lease liabilities(1)   -    162,779    23,382 
Deferred revenue   91,710    240,541    34,552 
Deferred tax liabilities   27,505    264,639    38,013 
Other non-current liabilities   -    11,495    1,651 
                
Total non-current liabilities   119,215    5,688,025    817,034 
                
Total liabilities   3,972,241    13,325,646    1,914,110 

 

9

 

 

JOYY INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)

(All amounts in thousands, except share, ADS and per ADS data)

 

    December 31,
2018
    December 31,
2019
    December 31,
2019
 
    RMB     RMB     US$  
Mezzanine equity     418,673       466,071       66,947  
                         
Shareholders’ equity                        
Class A common shares (US$0.00001 par value; 10,000,000,000 and 10,000,000,000 shares authorized, 981,740,848 shares issued and outstanding as of December 31, 2018; 1,301,845,404 shares issued and 1,293,162,504 shares outstanding as of and December 31, 2019, respectively)     59       80       11  
Class B common shares (US$0.00001 par value; 1,000,000,000 and 1,000,000,000 shares authorized, 288,182,976 and  326,509,555 shares issued and outstanding as of December 31, 2018 and December 31, 2019, respectively)     21       24       3  
Treasury Shares (US$0.00001 par value; nil and 8,682,900 shares held as of December 31, 2018 and December 31, 2019, respectively)     -       (168,072 )     (24,142 )
Additional paid-in capital     11,168,866       21,921,562       3,148,835  
Statutory reserves     101,725       149,961       21,541  
Retained earnings     6,913,469       10,272,122       1,475,498  
Accumulated other comprehensive income     336,152       890,209       127,871  
                         
Total JOYY Inc.’s shareholders’ equity     18,520,292       33,065,886       4,749,617  
                         
Non-controlling interests     2,856,839       5,351,880       768,749  
                         
Total shareholders’ equity     21,377,131       38,417,766       5,518,366  
                         
Total liabilities, mezzanine equity and shareholders' equity     25,768,045       52,209,483       7,499,423  

 

(1)The Company has adopted ASC842 ”Leases” beginning January 1, 2019 using the optional transition method. The only major impact of the standard is that assets and liabilities amounting to RMB145.2 million and RMB141.2 million, respectively, are recognized beginning January 1, 2019 for leased office space with terms of more than 12 months.

 

10

 

 

JOYY INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(All amounts in thousands, except share, ADS and per ADS data)

 

   Three Months Ended   Twelve Months Ended 
   December 31,
2018
   September 30,
2019
   December 31,
2019
   December 31,
2019
   December 31,
2018
   December 31,
2019
   December 31,
2019
 
   RMB   RMB   RMB   US$   RMB   RMB   US$ 
Net revenues                                   
Live streaming(1)   4,391,418    6,473,946    7,146,572    1,026,541    14,877,667    24,028,299    3,451,449 
Others   249,506    408,268    471,587    67,739    885,890    1,547,905    222,343 
                                    
Total net revenues   4,640,924    6,882,214    7,618,159    1,094,280    15,763,557    25,576,204    3,673,792 
                                    
Cost of revenues(2)   (3,013,063)   (4,713,175)   (5,101,009)   (732,714)   (10,017,134)   (17,148,350)   (2,463,206)
                                    
Gross profit   1,627,861    2,169,039    2,517,150    361,566    5,746,423    8,427,854    1,210,586 
                                    
Operating expenses(2)                                   
Research and development expenses   (332,513)   (673,058)   (802,267)   (115,238)   (1,192,052)   (2,535,482)   (364,199)
Sales and marketing expenses   (323,689)   (1,079,577)   (1,026,417)   (147,436)   (1,149,316)   (3,739,724)   (537,178)
General and administrative expenses   (274,979)   (408,834)   (468,264)   (67,262)   (883,225)   (1,489,495)   (213,953)
                                    
Total operating expenses   (931,181)   (2,161,469)   (2,296,948)   (329,936)   (3,224,593)   (7,764,701)   (1,115,330)
                                    
Gain on disposal of subsidiaries and business   -    -    82,699    11,879    -    82,699    11,879 
Other income   21,924    152,718    59,290    8,516    117,860    322,103    46,267 
                                    
Operating income   718,604    160,288    362,191    52,025    2,639,690    1,067,955    153,402 
                                    
Interest expenses   (139)   (123,456)   (124,574)   (17,894)   (8,616)   (266,517)   (38,283)
Interest income and investment income   123,401    203,137    225,531    32,396    485,552    733,576    105,372 
Foreign currency exchange (losses) gains, net   (1,338)   16,393    (21,731)   (3,121)   (514)   9,796    1,407 
Gain on deemed disposal and disposal of investments   2,179    -    -    -    16,178    -    - 
Gain (loss) on fair value change of investments   26,138    (11,492)   26,670    3,831    1,689,404    2,679,312    384,859 
Fair value change on derivative   -    (1,753)   (14,258)   (2,048)   (2,285,223)   (16,011)   (2,300)
Other non-operating expenses   -    -    -    -    (2,000)   -    - 
                                    
Income before income tax expenses   868,845    243,117    453,829    65,189    2,534,471    4,208,111    604,457 
                                    
Income tax expenses   (107,114)   (86,571)   (192,184)   (27,606)   (477,707)   (546,622)   (78,517)
                                    
Income before share of  income  in equity method investments, net of income taxes   761,731    156,546    261,645    37,583    2,056,764    3,661,489    525,940 
                                    
Share of (loss) income in equity method investments, net of income taxes   (19,281)   21,261    3,176    456    58,933    38,540    5,536 
                                    
Net income   742,450    177,807    264,821    38,039    2,115,697    3,700,029    531,476 
                                    
Less: Net income (loss) attributable to the non-controlling interest shareholders and the mezzanine equity classified as non-controlling interest shareholders   47,744    67,879    92,024    13,218    (93,310)   254,794    36,599 
                                    
Net income attributable to controlling interest of JOYY Inc.   694,706    109,928    172,797    24,821    2,209,007    3,445,235    494,877 
                                    
Less: Accretion of subsidiaries’ redeemable convertible preferred shares to redemption value   6,083    9,715    9,790    1,406    73,159    38,346    5,508 
Cumulative dividend on subsidiary’s Series A Preferred Shares   4,606    6,982    7,036    1,011    4,606    27,559    3,959 
Deemed dividend to subsidiary’s Series A preferred shareholders   -    -    -    -    489,284    -    - 
                                    
Net income attributable to common shareholders of JOYY Inc.   684,017    93,231    155,971    22,404    1,641,958    3,379,330    485,410 

 

11

 

 

JOYY INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)

(All amounts in thousands, except share, ADS and per ADS data)

 

   Three Months Ended   Twelve Months Ended 
   December 31,
2018
   September 30,
2019
   December 31,
2019
   December 31,
2019
   December 31,
2018
   December 31,
2019
   December 31,
2019
 
   RMB   RMB   RMB   US$   RMB   RMB   US$ 
 Net income per ADS                                   
—Basic   10.64    1.16    1.95    0.28    25.64    43.76    6.29 
—Diluted   10.54    1.11    1.87    0.27    25.38    43.01    6.18 
Weighted average number of ADS used in calculating net income per ADS                                   
—Basic   64,307,569    80,033,607    79,917,791    79,917,791    64,042,390    77,219,846    77,219,846 
—Diluted   64,609,000    80,973,447    81,102,544    81,102,544    64,704,470    78,254,045    78,254,045 

  

(1)Live streaming revenues by geographical areas were as follows:

 

   Three Months Ended   Twelve Months Ended 
   December 31,
2018
   September 30,
2019
   December 31,
2019
   December 31,
2019
   December 31,
2018
   December 31,
2019
   December 31,
2019
 
   RMB   RMB   RMB   US$   RMB   RMB   US$ 
PRC   4,389,839    5,266,815    5,701,605    818,984    14,875,780    20,174,417    2,897,873 
Non-PRC   1,579    1,207,131    1,444,967    207,557    1,887    3,853,882    553,576 

 

(2)Share-based compensation was allocated in cost of revenues and operating expenses as follows:

 

   Three Months Ended   Twelve Months Ended 
   December 31,
2018
   September 30,
2019
   December 31,
2019
   December 31,
2019
   December 31,
2018
   December 31,
2019
   December 31,
2019
 
   RMB   RMB   RMB   US$   RMB   RMB   US$ 
Cost of revenues   14,650    20,608    30,733    4,415    74,339    81,254    11,671 
Research and development expenses   50,042    129,174    145,887    20,955    225,173    505,697    72,639 
Sales and marketing expenses   1,158    2,643    4,647    667    5,723    12,718    1,827 
General and administrative expenses   88,909    95,210    73,195    10,514    342,790    348,479    50,056 

 

12

 

  

 

JOYY INC.

RECONCILIATION OF GAAP AND NON-GAAP RESULTS

(All amounts in thousands, except share, ADS and per ADS data)

 

    Three Months Ended     Twelve Months Ended  
    December 31,
2018
    September 30,
2019
    December 31,
2019
    December 31,
2019
    December 31,
2018
    December 31,
2019
    December 31,
2019
 
    RMB     RMB     RMB     US$     RMB     RMB     US$  
Operating income     718,604       160,288       362,191       52,025       2,639,690       1,067,955       153,402  
Share-based compensation expenses     154,759       247,635       254,462       36,551       648,025       948,148       136,193  
Impairment of goodwill and investments     15,099       10,000       52,334       7,517       35,348       62,334       8,954  
Gain on disposal of subsidiaries and business     -       -       (82,699 )     (11,879 )     -       (82,699 )     (11,879 )
Amortization of intangible assets from business acquisitions     -       193,487       194,982       28,007       -       639,209       91,817  
                                                         
Non-GAAP operating income     888,462       611,410       781,270       112,221       3,323,063       2,634,947       378,487  
                                                         
Net income     742,450       177,807       264,821       38,039       2,115,697       3,700,029       531,476  
Share-based compensation expenses     154,759       247,635       254,462       36,551       648,025       948,148       136,193  
Impairment of goodwill and investments     15,099       10,000       52,334       7,517       35,348       62,334       8,954  
Gain on disposal of subsidiaries and business     -       -       (82,699 )     (11,879 )     -       (82,699 )     (11,879 )
Amortization of intangible assets from business acquisitions     -       193,487       194,982       28,007       -       639,209       91,817  
Gain on deemed disposal and disposal of investments     (2,179 )     -       -       -       (16,178 )     -       -  
Gain (loss) on fair value change of investments and equity investees’ investments     (1,089 )     2,031       (24,610 )     (3,535 )     (1,711,509 )     (2,691,249 )     (386,574 )
Fair value change on derivative     -       1,753       14,258       2,048       2,285,223       16,011       2,300  
Interest expenses related to the convertible bonds’ amortization to face value     -       100,885       102,510       14,725       -       207,682       29,832  
Income tax effects on non-GAAP adjustments     21,479       (40,166 )     (30,889 )     (4,437 )     97,560       (119,942 )     (17,229 )
                                                         
Non-GAAP net income     930,519       693,432       745,169       107,036       3,454,166       2,679,523       384,890  
                                                         
Net income attributable to common shareholders of JOYY Inc.     684,017       93,231       155,971       22,404       1,641,958       3,379,330       485,410  
Share-based compensation expenses     154,759       247,635       254,462       36,551       648,025       948,148       136,193  
Impairment of goodwill and investments     15,099       10,000       52,334       7,517       35,348       62,334       8,954  
Gain on disposal of subsidiaries and business     -       -       (82,699 )     (11,879 )     -       (82,699 )     (11,879 )
Amortization of intangible assets from business acquisitions     -       193,487       194,982       28,007       -       639,209       91,817  
Gain on deemed disposal and disposal of investments     (2,179 )     -       -       -       (16,178 )     -       -  
Gain (loss) on fair value change of investments and equity investees’ investments     (1,089 )     2,031       (24,610 )     (3,535 )     (1,711,509 )     (2,691,249 )     (386,574 )
Fair value change on derivative     -       1,753       14,258       2,048       2,285,223       16,011       2,300  
Interest expenses related to the convertible bonds’ amortization to face value     -       100,885       102,510       14,725       -       207,682       29,832  
Accretion, cumulative dividend and deemed dividend to subsidiaries’ preferred shareholders     10,689       16,697       16,826       2,417       567,049       65,905       9,467  
Income tax effects on non-GAAP adjustments     21,479       (40,166 )     (30,889 )     (4,437 )     97,560       (119,942 )     (17,229 )
Non-GAAP adjustments for net loss attributable to the non-controlling interest shareholders     (35,843 )     (51,481 )     (52,381 )     (7,524 )     (273,356 )     (172,149 )     (24,728 )
                                                         
Non-GAAP net income attributable to controlling interest and common shareholders of JOYY Inc.     846,932       574,072       600,764       86,294       3,274,120       2,252,580       323,563  
                                                         
Non-GAAP net income per ADS                                                        
—Basic     13.17       7.17       7.52       1.08       51.12       29.17       4.19  
—Diluted     13.03       6.42       6.70       0.96       50.07       27.11       3.89  
Weighted average number of ADS used in calculating Non-GAAP  net income per ADS                                                        
—Basic     64,307,569       80,033,607       79,917,791       79,917,791       64,042,390       77,219,846       77,219,846  
—Diluted     64,609,000       91,400,547       91,529,644       91,529,644       64,704,470       83,684,078       83,684,078  

 

13

 

 

JOYY INC.

UNAUDITED SEGMENT REPORT

(All amounts in thousands, except share, ADS and per ADS data)

 

   Three Months Ended 
   December 31, 2019 
   YY(1)   Huya   Bigo   Elimination(2)   Total   Total 
   RMB   RMB   RMB   RMB   RMB   US$ 
Net revenues                              
Live streaming   3,161,700    2,346,141    1,638,731    -    7,146,572    1,026,541 
Others   184,708    121,329    165,550    -    471,587    67,739 
                               
Total net revenues   3,346,408    2,467,470    1,804,281    -    7,618,159    1,094,280 
                               
Cost of revenues(3)   (1,842,255)   (2,000,909)   (1,257,845)   -    (5,101,009)   (732,714)
                               
Gross profit   1,504,153    466,561    546,436    -    2,517,150    361,566 
Operating expenses(3)                              
Research and development expenses   (321,240)   (178,290)   (302,737)   -    (802,267)   (115,238)
Sales and marketing expenses   (299,985)   (118,324)   (608,108)   -    (1,026,417)   (147,436)
General and administrative expenses   (245,533)   (96,367)   (126,364)   -    (468,264)   (67,262)
                               
Total operating expenses   (866,758)   (392,981)   (1,037,209)   -    (2,296,948)   (329,936)
                               
Gain on disposal of subsidiaries and business   82,699    -    -    -    82,699    11,879 
Other income   29,929    28,046    1,315    -    59,290    8,516 
                               
Operating income (loss)   750,023    101,626    (489,458)   -    362,191    52,025 
                               
Interest expenses   (123,570)   -    (15,282)   14,278    (124,574)   (17,894)
Interest income and investment income   150,749    88,346    714    (14,278)   225,531    32,396 
Foreign currency exchange (losses) gains, net   (2,221)   99    (19,609)   -    (21,731)   (3,121)
Fair value change on derivative   (14,258)   -    -    -    (14,258)   (2,048)
Gain on fair value change of investments   26,670    -    -    -    26,670    3,831 
                               
Income (loss) before income tax expenses   787,393    190,071    (523,635)   -    453,829    65,189 
                               
Income tax (expenses) benefits   (170,114)   (27,599)   5,529    -    (192,184)   (27,606)
                               
Income (loss) before share of income in equity method investments, net of income taxes   617,279    162,472    (518,106)   -    261,645    37,583 
                               
Share of income (loss) in equity method investments, net of income taxes   5,978    (2,802)   -    -    3,176    456 
                               
Net income (loss)   623,257    159,670    (518,106)   -    264,821    38,039 

 

(1)In 2019 the segment of “YY Live” was renamed as “YY”.

 

(2)The elimination mainly consists of interest income and interest expenses generated from the loan between YY and Bigo segments.

 

(3)Share-based compensation was allocated in cost of revenues and operating expenses as follows:

 

14

 

 

   Three Months Ended 
   December 31, 2019 
   YY   Huya   Bigo   Total   Total 
   RMB   RMB   RMB   RMB   US$ 
Cost of revenues   7,189    14,806    8,738    30,733    4,415 
Research and development expenses   38,211    36,369    71,307    145,887    20,955 
Sales and marketing expenses   917    2,640    1,090    4,647    667 
General and administrative expenses   35,433             28,370     9,392    73,195    10,514 

 

15

 

 

 

JOYY INC.

RECONCILIATION OF GAAP AND NON-GAAP RESULTS OF UNAUDITED SEGMENT REPORT

(All amounts in thousands, except share, ADS and per ADS data)

 

   Three Months Ended 
   December 31, 2019 
   YY   Huya   Bigo   Total   Total 
   RMB   RMB   RMB   RMB   US$ 
Operating income (loss)   750,023    101,626    (489,458)   362,191    52,025 
Share-based compensation expenses   81,750    82,185    90,527    254,462    36,551 
Impairment of goodwill and investments   52,334    -    -    52,334    7,517 
Gain on disposal of subsidiaries and business   (82,699)   -    -    (82,699)   (11,879)
Amortization of intangible assets from business acquisitions   -    -    194,982    194,982    28,007 
                          
Non-GAAP operating income (loss)   801,408    183,811    (203,949)   781,270    112,221 
Net income (loss)   623,257    159,670    (518,106)   264,821    38,039 
Share-based compensation expenses   81,750    82,185    90,527    254,462    36,551 
Impairment of goodwill and investments   52,334    -    -    52,334    7,517 
Gain on disposal of subsidiaries and business   (82,699)   -    -    (82,699)   (11,879)
Amortization of intangible assets from business acquisitions   -    -    194,982    194,982    28,007 
Gain on fair value change of investments and equity investees’ investments   (24,610)   -    -    (24,610)   (3,535)
Fair value change on derivative   14,258    -    -    14,258    2,048 
Interest expenses related to the convertible bonds’ amortization to face value   102,510    -    -    102,510    14,725 
Income tax effects on non-GAAP adjustments   9,235    -    (40,124)   (30,889)   (4,437)
                          
Non-GAAP net income (loss)   776,035    241,855    (272,721)   745,169    107,036 

 

16

 

 

JOYY INC.

UNAUDITED SEGMENT REPORT

(All amounts in thousands, except share, ADS and per ADS data)

 

   Three Months Ended 
   September 30, 2019 
   YY   Huya   Bigo(1)   Elimination(2)   Total   Total 
   RMB   RMB   RMB   RMB   RMB   US$ 
Net revenues                              
Live streaming   2,899,044    2,156,106    1,418,796    -    6,473,946    905,738 
Others   181,006    108,986    118,419    (143)   408,268    57,119 
                               
Total net revenues   3,080,050    2,265,092    1,537,215    (143)   6,882,214    962,857 
                               
Cost of revenues(3)   (1,729,389)   (1,858,772)   (1,125,157)   143    (4,713,175)   (659,397)
                               
Gross profit   1,350,661    406,320    412,058    -    2,169,039    303,460 
Operating expenses(3)                              
Research and development expenses   (249,620)   (134,969)   (288,469)   -    (673,058)   (94,164)
Sales and marketing expenses   (340,619)   (122,316)   (616,642)   -    (1,079,577)   (151,038)
General and administrative expenses   (225,281)   (96,318)   (87,235)   -    (408,834)   (57,198)
                               
Total operating expenses   (815,520)   (353,603)   (992,346)   -    (2,161,469)   (302,400)
                               
Other income   136,535    11,148    5,035    -    152,718    21,366 
                               
Operating income (loss)   671,676    63,865    (575,253)   -    160,288    22,426 
                               
Interest expenses   (123,456)   -    (11,078)   11,078    (123,456)   (17,272)
Interest income and investment income   127,068    86,539    608    (11,078)   203,137    28,420 
Foreign currency exchange gains, net   2,798    645    12,950    -    16,393    2,293 
Fair value change on derivative   (1,753)   -    -    -    (1,753)   (245)
Loss on fair value change of investments   (11,492)   -    -    -    (11,492)   (1,608)
                               
Income (loss) before income tax expenses   664,841    151,049    (572,773)   -    243,117    34,014 
                               
Income tax (expenses) benefits   (146,835)   (27,879)   88,143    -    (86,571)   (12,112)
                               
Income (loss) before share of income (loss) in equity method investments, net of income taxes   518,006    123,170    (484,630)   -    156,546    21,902 
                               
Share of income in equity method investments, net of income taxes   21,189    72    -    -    21,261    2,975 
                               
Net income (loss)   539,195    123,242    (484,630)   -    177,807    24,877 

 

17

 

 

(1)On March 4, 2019, YY completed the acquisition of Bigo. Therefore, Bigo’s financial results from March 4, 2019 to March 31, 2019 were included in YY’s consolidated financial statements.

 

(2)The elimination mainly consists of revenues and expenses generated from services among YY and Huya segments, and interest income and interest expenses generated from the loan between YY and Bigo segments.

 

(3)Share-based compensation was allocated in cost of revenues and operating expenses as follows:

 

   Three Months Ended 
   September 30, 2019 
   YY   Huya   Bigo   Total   Total 
   RMB   RMB   RMB   RMB   US$ 
Cost of revenues   5,043    8,497    7,068    20,608    2,883 
Research and development expenses   26,848    24,172    78,154    129,174    18,072 
Sales and marketing expenses   419    1,468    756    2,643    370 
General and administrative expenses   41,265    48,987    4,958    95,210    13,320 

 

18

 

 

  

JOYY INC.

RECONCILIATION OF GAAP AND NON-GAAP RESULTS OF UNAUDITED SEGMENT REPORT

(All amounts in thousands, except share, ADS and per ADS data)

 

   Three Months Ended 
   September 30, 2019 
   YY   Huya   Bigo   Total   Total 
   RMB   RMB   RMB   RMB   US$ 
Operating income (loss)   671,676    63,865    (575,253)   160,288    22,426 
Share-based compensation expenses   73,575    83,124    90,936    247,635    34,645 
Impairment of goodwill and investments   10,000    -    -    10,000    1,399 
Amortization of intangible assets from business acquisitions  -   -   193,487   193,487   27,070 
                          
Non-GAAP operating income (loss)   755,251    146,989    (290,830)   611,410    85,540 
                          
Net income (loss)   539,195    123,242    (484,630)   177,807    24,877 
Share-based compensation expenses   73,575    83,124    90,936    247,635    34,645 
Impairment of goodwill and investments   10,000    -    -    10,000    1,399 
Amortization of intangible assets from business acquisitions   -    -    193,487    193,487    27,070 
Loss on fair value change of investments and equity investees’ investments   2,031    -    -    2,031    284 
Fair value change on derivative   1,753    -    -    1,753    245 
Interest expenses related to the convertible bonds’ amortization to face value   100,885    -    -    100,885    14,114 
Income tax effects on non-GAAP adjustments   (188)   -    (39,978)   (40,166)   (5,619)
                          
Non-GAAP net income (loss)   727,251    206,366    (240,185)   693,432    97,015 

  

19

 

 

JOYY INC.

UNAUDITED SEGMENT REPORT

(All amounts in thousands, except share, ADS and per ADS data)

 

   Three Months Ended 
   December 31, 2018 
   YY   Huya   Total   Total 
   RMB   RMB   RMB   US$ 
Net revenues                    
Live streaming   2,949,636    1,441,782    4,391,418    638,705 
Others   186,359    63,147    249,506    36,289 
                     
Total net revenues   3,135,995    1,504,929    4,640,924    674,994 
                     
Cost of revenues(1)   (1,746,771)   (1,266,292)   (3,013,063)   (438,232)
                     
Gross profit   1,389,224    238,637    1,627,861    236,762 
                     
Operating expenses(1)                    
Research and development expenses   (253,408)   (79,105)   (332,513)   (48,362)
Sales and marketing expenses   (263,806)   (59,883)   (323,689)   (47,079)
General and administrative expenses   (182,726)   (92,253)   (274,979)   (39,994)
                     
Total operating expenses   (699,940)   (231,241)   (931,181)   (135,435)
                     
Other income   10,800    11,124    21,924    3,189 
                     
Operating income   700,084    18,520    718,604    104,516 
                     
Interest expenses   (139)   -    (139)   (20)
Interest income and investment income   70,698    52,703    123,401    17,948 
Gain on deemed disposal and disposal of investments   2,179    -    2,179    317 
Foreign currency exchange losses, net   (1,291)   (47)   (1,338)   (195)
Gain on fair value change of investments   26,138    -    26,138    3,802 
                     
Income before income tax expenses   797,669    71,176    868,845    126,368 
                     
Income tax (expenses) benefits   (138,961)   31,847    (107,114)   (15,579)
                     
Income before share of loss in equity method investments, net of income taxes   658,708    103,023    761,731    110,789 
                     
Share of loss in equity method investments, net of income taxes   (15,837)   (3,444)   (19,281)   (2,804)
                     
Net income   642,871    99,579    742,450    107,985 

 

20

 

 

(1)Share-based compensation was allocated in cost of revenues and operating expenses as follows:

 

   Three Months Ended 
   December 31, 2018 
   YY   Huya   Total   Total 
   RMB   RMB   RMB   US$ 
Cost of revenues   10,988    3,662    14,650    2,131 
Research and development expenses   38,643    11,399    50,042    7,278 
Sales and marketing expenses   551    607    1,158    168 
General and administrative expenses   40,582    48,327    88,909    12,931 

  

21

 

 

JOYY INC.

RECONCILIATION OF GAAP AND NON-GAAP RESULTS OF UNAUDITED SEGMENT REPORT

(All amounts in thousands, except share, ADS and per ADS data)

 

   Three Months Ended 
   December 31, 2018 
   YY   Huya   Total   Total 
   RMB   RMB   RMB   US$ 
Operating income   700,084    18,520    718,604    104,516 
Share-based compensation expenses   90,764    63,995    154,759    22,508 
Impairment of goodwill and investments   15,099    -    15,099    2,196 
                     
Non-GAAP operating income   805,947    82,515    888,462    129,220 
                     
Net income   642,871    99,579    742,450    107,985 
Share-based compensation expenses   90,764    63,995    154,759    22,508 
Impairment of goodwill and investments   15,099    -    15,099    2,196 
Gain (loss) on fair value change of investments and equity investees' investments   (4,422)   3,333    (1,089)   (158)
Gain on deemed disposal and disposal of investments   (2,179)   -    (2,179)   (317)
Income tax effects on non-GAAP adjustments   21,479    -    21,479    3,124 
                     
Non-GAAP net income   763,612    166,907    930,519    135,338 
                     
                     

  

22