JOYY Inc (YY) Q2 2024 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call highlights a stable financial performance with year-over-year revenue growth and a strong cash position. The continuation of the share repurchase program further supports positive sentiment. While there are concerns about regulatory risks and competitive pressures, management's optimistic guidance and stable margins offset these. The Q&A section suggests confidence in revenue growth and margin stability. Given the company's market cap, the positive factors are likely to result in a modest stock price increase over the next two weeks.
Key Financial Performance
Group Revenue $565.1 million, a year-over-year increase of 3.3%.
BIGO Revenue $507.2 million, a year-over-year increase of 7.7%.
BIGO Non-live Streaming Revenue $67.8 million, up substantially year-over-year, primarily due to the increase of advertising revenues.
Cost of Revenues $366.2 million, increased year-over-year, mainly driven by increased traffic acquisition costs.
Gross Profit $198.9 million, with a gross margin of 35.2%.
BIGO Gross Profit $179.4 million, with a gross margin of 35.4%, lower year-over-year due to change of revenue mix.
Operating Expenses $198.7 million, compared to $191.7 million in the same period of 2023.
R&D Expenses $69.9 million, decreased from $75.5 million, primarily due to decreased salary and welfare.
GAAP Operating Income $2.3 million.
Non-GAAP Operating Income $30 million, with a non-GAAP operating income margin of 5.3%.
GAAP Net Income $52.1 million, compared to $155.1 million in the same period of 2023, lower due to realized gains from equity investments last year.
GAAP Net Margin 9.2%, compared to 28.3% in the same period of 2023.
Non-GAAP Net Income $74 million, compared to $97.3 million in the same period of 2023.
Non-GAAP Net Margin 13.1%, compared to 17.8% in the same period of 2023.
Cash Flow from Operating Activities $71.1 million.
Cash Position $3.3 billion as of June 30, 2024.
Share Repurchase $71.4 million worth of shares repurchased in the second quarter.
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Operating Highlights
Bigo Live's Real Match feature: Launched last year, it creates a space for users to meet new people. After several rounds of optimization, Real Match's DAU penetration rate has nearly doubled in the past 6 months, now exceeding 20%.
Likee's video toolkit upgrades: Introduced significant upgrades to Likee's video toolkit by adding advanced AI-powered filters and effects, leading to a 1.3% sequential increase in average DAU time spent.
Hago's new features: Enhanced Hago with new features, including live bullet screen interactive games in voice rooms, which positively impacted user engagement.
Bigo Live's MAUs: In the second quarter, Bigo Live's MAUs recovered by 1.6% quarter-over-quarter to 37.7 million, with significant growth in developed countries.
Advertising revenue growth: BIGO's advertising revenues increased substantially year-over-year, contributing to the segment's revenue recovery.
Operational efficiencies: Focused on balancing growth with operational efficiency to drive steady expansion in product and group profitability.
Cost management: Operating expenses decreased in R&D, while general and administrative expenses increased due to impairment losses.
Leadership transition: Xueling Li officially resigned as Chairman and CEO, passing leadership to Li Ting, who aims to enhance corporate governance and long-term growth.
Globalization strategy: The company remains committed to executing its global strategy and optimizing user experience to enhance user satisfaction.
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Risk or Challenges
Leadership Transition Risk: The recent leadership transition from David Xueling Li to Li Ting as CEO may pose risks related to continuity and execution of the company's strategic vision.
Regulatory Risks: The company has not consolidated the business of YY Live due to lack of control, which may lead to regulatory scrutiny and impact financial reporting.
Competitive Pressures: The company faces significant competition in the global market, particularly in the social media and live streaming sectors, which could affect user acquisition and retention.
Economic Factors: Global macro uncertainties persist, which may impact user growth and monetization strategies, particularly in developed countries.
Operational Efficiency Risks: The company is focused on balancing growth with operational efficiency, but any missteps in optimizing user acquisition and monetization could hinder profitability.
Advertising Revenue Dependence: While advertising revenues are increasing, the scale of new monetization streams remains relatively small, posing a risk to long-term revenue diversification.
Cost Management Challenges: Increased costs related to revenue-sharing fees and content costs may pressure margins, especially with rising traffic acquisition costs.
Market Fluctuation Risks: Adjustments to BIGO's audio live streaming product may cause near-term fluctuations in revenue, indicating potential volatility in financial performance.
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Guidance & Outlook
Leadership Transition: The transition of leadership from David Xueling Li to Li Ting as Chairperson and CEO is aimed at enhancing corporate governance and fostering sustainable, long-term growth.
Global Strategy: JOYY remains committed to executing its globalization strategy, focusing on continuous product innovation and optimizing user interactions to enhance satisfaction.
User Engagement: The company is enhancing recommendation algorithms and innovative features to improve user experience and engagement, exemplified by the success of Bigo Live's Real Match feature.
Revenue Diversification: JOYY is cultivating long-run initiatives to diversify revenue streams, with advertising playing a significant role in the recovery of the BIGO segment.
Shareholder Returns: In Q2, JOYY repurchased $71.4 million worth of shares and plans to continue share repurchase to reward shareholders.
Q3 2024 Revenue Guidance: JOYY expects net revenues for Q3 2024 to be between $555 million and $569 million, reflecting preliminary views on market and operational conditions.
Operational Adjustments: Proactive actions are being taken to optimize content costs and adjust BIGO's audio live streaming product, which may cause near-term fluctuations in revenue.
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Shareholder Return Plan
Share Repurchase: In the second quarter, JOYY repurchased an additional $71.4 million worth of its shares. The Board has authorized the extension of the existing share repurchase program for another 12-month period, allowing for the repurchase of up to $400 million of shares until the end of November 2025.
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Key Q&A
Q:Should we expect there will be any changes after the recent management change?
A:Our strategic priorities will remain quite consistent. We will remain committed to our globalization strategy and strengthen our unique value proposition as a truly global social platform.
Q:Can management share about the revenue trend in the second half as well as the trend across the different geographies?
A:The live streaming revenue from BIGO's core products has maintained positive growth, driven by the growth of paying users. Developed countries have outperformed other regions, and we expect some regions to return to positive revenue growth sequentially.
Q:Just want to get more color on the margin trend for BIGO and the group in second half?
A:We expect Bigo Live's profit margin to remain stable or slightly increase, but the absolute amount of BIGO's non-GAAP operating profit may modestly decline compared to last year.
Q:Could you share with us the latest progress of your share repurchase program and your outlook for the capital return in the future?
A:In the second quarter, we repurchased 2.3 million ADS for $71.4 million. The Board has authorized an extension of our share repurchase program for up to $400 million.
Q:Could management comment on the business trend and your thoughts on outlook for our ad business?
A:BIGO's advertising revenue has maintained strong growth, with Likee's advertising revenue increasing by 34.7% year-over-year. We expect advertising revenue to continue to grow in the second half.
Q:Review of Unclear Management Responses
A:Management did not provide specific details on the expected changes in strategy after the management change, nor did they clarify the exact impact of adjustments on BIGO's non-core audio live streaming products.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Audience Network
BIGO Audience
BIGO streaming
DAU
Group income
Match
Ms Ting
Ting CEO
Today
action content
adjustment BIGO
advertising BIGO
advertising momentum
advertising revenue
approach
content creator
currency exchange
edge
efficiency sustainability
exchange gain
feature content
fluctuation BIGO
future
globalization product
goal
level core
month
platform
return
role
scale
stage development
sustainability action
term view
user content
value proposition
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The earnings call presents a mixed outlook. Financial performance shows a slight decline in revenues, but improvements in non-GAAP operating income and share repurchases are positive. The Q&A highlights growth in non-live streaming and advertising revenues, yet concerns remain about declining live streaming revenue and unclear guidance on capital returns. Despite a strong cash position, the market may react cautiously due to regulatory issues and cost challenges. The company's market cap suggests a moderate reaction, leading to a neutral prediction for stock movement.
JOYY Inc (YY) Q2 2024 Earnings Call Transcript
Positive8-28
The earnings call highlights a stable financial performance with year-over-year revenue growth and a strong cash position. The continuation of the share repurchase program further supports positive sentiment. While there are concerns about regulatory risks and competitive pressures, management's optimistic guidance and stable margins offset these. The Q&A section suggests confidence in revenue growth and margin stability. Given the company's market cap, the positive factors are likely to result in a modest stock price increase over the next two weeks.
YY Report
Frequently Asked Questions
Where does this earnings call transcript come from?
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They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
