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 2014

 


 

Commission File Number: 001-35729

 


 

YY INC.

 

Building 3-08, Yangcheng Creative Industry Zone

No. 309 Huangpu Avenue Middle

Tianhe District

Guangzhou 510655

The People’s Republic of China

(Address of principal executive office)

 

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 x                                              Form 40-F o

 

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): o

 

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): o

 

 

 



 

SIGNATURES

 

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.

 

 

 

YY INC.

 

 

 

 

 

By:

/s/ Eric He

 

Name:

Eric He

 

Title:

Chief Financial Officer

 

 

 

 

Date: March 5, 2014

 

 

2



 

EXHIBIT INDEX

 

Exhibit No.

 

Description

 

 

 

99.1

 

Press Release

 

3


Exhibit 99.1

 

YY Reports Fourth Quarter and Full Year 2013 Unaudited Financial Results

 

4Q13 Net Revenues Up 129.5% YOY to RMB612.3 Million

4Q13 Net Income Up 477.9% YOY to RMB192.0 Million

4Q13 Non-GAAP Net Income Up 268.7% YOY to RMB216.9 Million

 

Guangzhou, China, March 4, 2014 — YY Inc. (NASDAQ: YY) (“YY” or the “Company”), a revolutionary real-time interactive social platform, today announced its unaudited financial results for the fourth quarter and full year ended December 31, 2013.

 

Fourth Quarter 2013 Highlights

 

·                  Net revenues increased by 129.5% to RMB612.3 million (US$101.1 million) from RMB266.8 million in the corresponding period of 2012, primarily driven by a 144.1% increase in revenues from internet value-added services, or IVAS revenues.

·                  Net income attributable to YY Inc. increased by 477.9% to RMB192.0 million (US$31.7 million) from RMB33.2 million in the corresponding period of 2012.

·                  Non-GAAP net income attributable to YY Inc.(1) increased by 268.7% to RMB216.9 million (US$35.8 million) from RMB58.8 million in the corresponding period of 2012.

 

Full Year 2013 Highlights

 

·                  Net revenues increased by 122.4% to RMB1.8 billion (US$301.2 million) in 2013 from RMB820.0 million in 2012, primarily driven by a 136.4% increase in revenues from internet value-added services, or IVAS revenues.

·                  Net income attributable to YY Inc. increased by 435.7% to RMB477.7 million (US$78.9 million) in 2013 from RMB89.2 million in 2012.

·                  Non-GAAP net income attributable to YY Inc. increased by 213.8% to RMB594.8 million (US$98.3 million) in 2013 from RMB189.5 million in 2012.

 

Mr. David Xueling Li, Chief Executive Officer of YY, stated, “We’re very pleased to end our first full fiscal year as a public company with a solid fourth quarter, building upon the strong momentum we saw throughout 2013. Online music and entertainment(2), in particular, again outperformed our expectations, with revenues growing by 217.1% year over year. Resulting from the powerful real-time interactive and social capabilities of our unique platform, we have seen increasingly diversified and interactive online activities among our expanding base of active users, with our average monthly active users reaching 92.3 million in the fourth quarter of 2013. Through a series of engaging and diversified group entertainment events and activities, such as our 2013 Annual Entertainment Awards Ceremony, we were able to not only stimulate user engagement and spending, but also enhance user attachment to our platform. Heading into 2014, we’re excited to build upon the robust foundation we have established and continue to broaden our ability to engage our users and monetize our user traffic by further penetrating into online entertainment, live broadcasting, education and other verticals. We are proud of our evolution into a large, live and sticky online entertainment platform and aim to further enable services which cater to Chinese users’ dynamic and ever-changing demands.”

 

Mr. Eric He, Chief Financial Officer of YY, commented, “In the fourth quarter, not only we were able to exceed our expectations on both the top and bottom line growth, but we also further increased our profitability with non-GAAP net margin expanding to 35.4% from 22.0% a year ago. These results were driven by the greater operating leverage of our platform, which has increasingly been able to attract and engage massive audiences in a cost-effective manner through viral online marketing as well as self-promotions by performers and channel owners within our platform. We believe that YY has significant potential to become an even more powerful, pervasive and profitable platform through the ongoing diversification and expansion of our entertainment and education services.”

 


(1)  Non-GAAP net income attributable to YY Inc. is a non-GAAP financial measure, which is defined as net income attributable to YY Inc. excluding share-based compensation expenses.

(2) The Company renamed the YY Music segment ‘online music and entertainment’ in order to better reflect users’ increasingly diverse online entertainment activities on the Company’s platform.

 

1



 

Fourth Quarter 2013 Financial Results

 

NET REVENUES

 

Net revenues increased by 129.5% to RMB612.3 million (US$101.1 million) in the fourth quarter of 2013 from RMB266.8 million in the corresponding period of 2012, primarily driven by an increase in IVAS revenues and, to a lesser extent, an increase in the Company’s online advertising revenues.

 

IVAS revenues, which consisted of revenues from online music and entertainment, online games, as well as other sources including the Company’s membership program and live game broadcasting, increased by 144.1% to RMB568.9 million (US$94.0 million) in the fourth quarter of 2013 from RMB233.0 million in the corresponding period of 2012. The overall increase primarily reflected an increase in the number of paying users and an increase in average revenue per user (“ARPU”).

 

Revenues from online music and entertainment, increased by 217.1% to RMB336.6 million (US$55.6 million) in the fourth quarter of 2013 from RMB106.1 million in the corresponding period of 2012. This increase primarily reflected a 165.3% increase in the number of paying users to 902,000 with a 19.6% increase in ARPU to RMB373 during the fourth quarter of 2013.

 

Revenues from online games increased by 66.1% to RMB162.8 million (US$26.9 million) in the fourth quarter of 2013 from RMB98.0 million in the corresponding period of 2012. This increase primarily reflected a year-over-year increase in ARPU of 41.4% to RMB376 and a 17.7% increase in the number of paying users to 433,000. The number of online games operated by the Company increased to 126 as of December 31, 2013 from 73 as of December 31, 2012.

 

Revenues from others, which primarily consist of the Company’s membership program and live game broadcasting, increased by 140.9% to RMB69.5 million (US$11.5 million) in the fourth quarter of 2013 from RMB28.8 million in the corresponding period of 2012. Revenues from the membership program increased by 72.4% to RMB44.5 million (US$7.4 million) in the fourth quarter of 2013 from RMB25.8 million in the corresponding period of 2012. This increase primarily reflected a 64.8% increase in the number of members to 837,000 as of December 31, 2013 from 508,000 as of December 31, 2012. Revenues from live game broadcasting increased significantly to RMB20.6 million (US$3.4 million) in the fourth quarter of 2013 from RMB0.7 million in the corresponding period of 2012.

 

Online advertising revenues increased by 28.5% to RMB43.4 million (US$7.2 million) in the fourth quarter of 2013 from RMB33.8 million in the corresponding period of 2012. This increase reflected an increase in the total number of advertisers of 50.8% to 92 with an average revenue per advertiser (“ARPA”) of approximately RMB472,000.

 

COST OF REVENUES AND GROSS PROFIT

 

Cost of revenues increased by 113.6% to RMB296.8 million (US$49.0 million) in the fourth quarter of 2013 from RMB138.9 million in the corresponding period of 2012. This increase was primarily attributable to an increase in revenue-sharing fees and content costs to RMB165.1 million (US$27.3 million) in the fourth quarter of 2013 from RMB47.1 million in the corresponding period of 2012. This increase in revenue-sharing fees and content costs paid to performers, channel owners and content providers was primarily due to higher levels of user engagement and spending. In addition, bandwidth costs increased to RMB59.7 million (US$9.9 million) in the fourth quarter of 2013 from RMB42.4 million in the corresponding period of 2012.

 

Gross profit increased by 146.7% to RMB315.5 million (US$52.1 million) in the fourth quarter of 2013 from RMB127.9 million in the corresponding period of 2012. Gross margin increased to 51.5% in the fourth quarter of 2013 from 47.9% in the corresponding period of 2012. The increase in gross margin was mainly attributable to the improved cost efficiency due to the scale effect of the Company’s growth as well as the Company’s ability to control bandwidth costs.

 

2



 

OPERATING INCOME

 

Operating expenses for the fourth quarter of 2013 increased by 37.0% to RMB128.5 million (US$21.2 million) from RMB93.8 million in the corresponding period of 2012. This increase was primarily attributable to higher research and development expenses and general and administrative expenses which were associated with the general growth of the Company’s overall business.

 

Operating income in the fourth quarter of 2013 increased by 453.4% to RMB194.9 million (US$32.2 million) from RMB35.2 million in the corresponding period of 2012. Operating margin increased to 31.8% in the fourth quarter of 2013 from 13.2% in the corresponding period of 2012. The increase in operating margin was primarily due to increased operating leverage associated with the Company’s expansion.

 

Non-GAAP operating income(3) increased by 261.4% to RMB219.8 million (US$36.3 million) in the fourth quarter of 2013 from RMB60.8 million in the corresponding period of 2012. Non-GAAP operating margin(4) increased to 35.9% in the fourth quarter of 2013 from 22.8% in the corresponding period of 2012.

 

NET INCOME

 

Net income attributable to YY Inc. increased by 477.9% to RMB192.0 million (US$31.7 million) in the fourth quarter of 2013, from RMB33.2 million in the corresponding period of 2012. Net margin in the fourth quarter of 2013 increased to 31.4% from 12.5% in the corresponding period of 2012. Non-GAAP net income attributable to YY Inc.(5) increased by 268.7% to RMB216.9 million (US$35.8 million) from RMB58.8 million in the corresponding period of 2012. Non-GAAP net margin(6) increased to 35.4% in the fourth quarter of 2013 from 22.0% in the corresponding period of 2012.

 

NET INCOME PER ADS

 

Diluted net income per ADS(7) in the fourth quarter of 2013 increased by 409.5% to RMB3.21 (US$0.53), from RMB0.63 in the corresponding period of 2012.

 

Non-GAAP diluted net income per ADS(8) in the fourth quarter of 2013 increased by 224.1% to RMB3.63 (US$0.60), from RMB1.12 in the corresponding period of 2012.

 


(3) Non-GAAP operating income is a non-GAAP financial measure, which is defined as operating income excluding share-based compensation expenses.

(4)  Non-GAAP operating margin is a non-GAAP financial measure, which is defined as non-GAAP operating income as a percentage of net revenues.

(5) Non-GAAP net income attributable to YY Inc. is a non-GAAP financial measure, which is defined as net income attributable to YY Inc. excluding share-based compensation expenses.

(6) Non-GAAP net margin is a non-GAAP financial measure, which is defined as non-GAAP net income attributable to YY Inc. as a percentage of net revenues.

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

(8) Non-GAAP diluted net income (loss) per ADS is a non-GAAP financial measure, which is defined as non-GAAP net income (loss) attributable to common shareholders divided by weighted average number of diluted ADS.

 

3



 

BALANCE SHEET AND CASH FLOWS

 

As of December 31, 2013, the Company had cash and cash equivalents of RMB729.6 million (US$120.5 million) and short-term deposits of RMB1.4 billion (US$236.7 million). For the fourth quarter of 2013, net cash from operating activities was RMB358.4 million (US$59.2 million).

 

SHARES OUTSTANDING

 

As of December 31, 2013, the Company had a total of 1.1 billion common shares outstanding, or the equivalent of 55.4 million ADSs outstanding.

 

Full Year 2013 Financial Results

 

For the full year of 2013, net revenues increased by 122.4% to RMB1.8 billion (US$301.2 million) from RMB820.0 million in 2012, primarily driven by a 136.4% increase in revenues from IVAS revenues.

 

Net income attributable to YY Inc. for the full year of 2013 increased by 435.7% to RMB477.7 million (US$78.9 million) from RMB89.2 million in 2012. Net margin for the full year of 2013 increased to 26.2% from 10.9% in 2012.

 

Non-GAAP net income attributable to YY Inc. for the full year of 2013 increased by 213.8% to RMB594.8 million (US$98.3 million) from RMB189.5 million in 2012. Non-GAAP net margin increased to 32.6% for the full year of 2013 from 23.1% in 2012.

 

Diluted net income per ADS for the full year 2013 increased to RMB8.09 (US$1.34) from RMB1.80 in the prior year. Non-GAAP diluted net income per ADS increased to RMB10.07 (US$1.66) from RMB3.82 in the prior year.

 

For the full year 2013, net cash from operating activities was RMB891.2 million (US$147.2 million).

 

Business Outlook

 

For the first quarter of 2014, the Company expects its net revenues to be between RMB625 million and RMB635 million, representing a year-over-year growth of approximately 98% to 102%. These forecasts reflect the Company’s current and preliminary view on the market and operational conditions, which are subject to change.

 

Conference Call Information

 

The Company will hold a conference call on Wednesday, March 4, 2014 at 8:00 pm Eastern Time or March 5, 2014 at 9:00 am Beijing Time to discuss the financial results. Participants may access the call by dialing the following numbers:

 

United States:

+1-845-675-0438

International Toll Free:

+1-855-500-8701

China Domestic:

400-1200654

Hong Kong:

+852-3051-2745

Conference ID:

#59548573

 

 

The replay will be accessible through March 11, 2014 by dialing the following numbers:

 

 

United States Toll Free:

+1-855-452-5696

International:

+61-2-8199-0299

Conference ID:

#59548573

 

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

 

4



 

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 RMB6.0537 to US$1.00, the noon buying rate in effect on December 31, 2013 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 YY Inc.

 

YY Inc. (“YY” or the “Company”) is a revolutionary real-time interactive social platform that engages users in real-time online group activities through voice, text and video. Launched in July 2008, YY Client, the Company’s core product, empowers users to create and organize groups of varying sizes to discover and participate in a wide range of online activities, including online games, karaoke, music concerts, education, live shows and conference calls.

 

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 YY’s strategic and operational plans, contain forward-looking statements. YY 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 third parties. Statements that are not historical facts, including statements about YYs 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: YYs goals and strategies; YY’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 registered user accounts, active users, especially paying users; YYs ability to monetize the user base; YYs ability to continue attracting advertisers and offering popular online games; fluctuations in general economic and business conditions in China and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in YY’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 YY does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

 

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”), except that the consolidated statement of changes in shareholders’ equity (deficits), consolidated statements of cash flows, and the detailed notes have not been presented. YY uses non-GAAP operating income, non-GAAP operating margin, non-GAAP net income attributable to YY Inc., non-GAAP net margin, non-GAAP net income (loss) attributable to common shareholders, and basic and diluted non-GAAP net income(loss) per ADS, which are non-GAAP financial measures. Non-GAAP operating income is operating income excluding share-based compensation expenses. Non-GAAP operating margin is non-GAAP operating income as a percentage of net revenues. Non-GAAP net income (loss) attributable to YY Inc. is net income (loss) attributable to YY Inc. excluding share-based compensation expenses. Non-GAAP net margin is non-GAAP net income

 

5



 

attributable to YY Inc. as a percentage of net revenues. Non-GAAP net income (loss) attributable to common shareholders is net income (loss) attributable to common shareholders excluding share-based compensation expenses. Basic and diluted non-GAAP net income (loss) per ADS is non-GAAP net income (loss) attributable to common shareholders divided by weighted average number of basic and diluted ADS. The Company believes that separate analysis and exclusion of the non-cash impact of share-based compensation 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 effect of non-cash share-based compensation expenses, which have been and will continue to be significant recurring expenses in its business. 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 (loss) 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 “YY Inc. Reconciliations of GAAP and Non-GAAP Results” at the end of this release.

 

Investor Relations Contact

 

YY Inc.

Anna Yu

Tel: (+86) 2029162000

Email:IR@YY.com

 

ICR, Inc.

Jeremy Peruski

Tel: +1 (646) 915-1611

Email:IR@YY.com

 

6



 

YY INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

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

 

 

 

December 31,
2012

 

December 31,
2013

 

December 31,
2013

 

 

 

RMB

 

RMB

 

US$

 

Assets

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

Cash and cash equivalents

 

504,702

 

729,598

 

120,521

 

Short-term deposits

 

897,698

 

1,432,863

 

236,692

 

Accounts receivable, net

 

117,616

 

100,101

 

16,536

 

Amount due from a related party

 

1,073

 

73

 

12

 

Prepayments and other current assets

 

25,149

 

67,533

 

11,156

 

Deferred tax assets

 

31,549

 

66,921

 

11,055

 

 

 

 

 

 

 

 

 

Total current assets

 

1,577,787

 

2,397,089

 

395,972

 

 

 

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

 

 

Deferred tax assets

 

583

 

625

 

103

 

Investments

 

2,950

 

62,029

 

10,246

 

Property and equipment, net

 

90,299

 

102,636

 

16,954

 

Intangible assets, net

 

19,481

 

29,127

 

4,811

 

Goodwill

 

1,604

 

1,577

 

261

 

Other non-current assets

 

3,485

 

4,864

 

803

 

 

 

 

 

 

 

 

 

Total non-current assets

 

118,402

 

200,858

 

33,178

 

 

 

 

 

 

 

 

 

Total assets

 

1,696,189

 

2,597,947

 

429,150

 

 

 

 

 

 

 

 

 

Liabilities and shareholders’ equity

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

Accounts payable

 

28,149

 

56,391

 

9,315

 

Deferred revenue

 

159,859

 

293,866

 

48,543

 

Advances from customers

 

7,515

 

19,549

 

3,229

 

Income taxes payable

 

48,001

 

78,107

 

12,902

 

Accrued liabilities and other current liabilities

 

120,289

 

250,760

 

41,423

 

Amounts due to related parties

 

2,604

 

2,640

 

436

 

 

 

 

 

 

 

 

 

Total current liabilities

 

366,417

 

701,313

 

115,848

 

 

 

 

 

 

 

 

 

Non-current liabilities

 

 

 

 

 

 

 

Deferred revenue

 

6,487

 

9,425

 

1,557

 

 

 

 

 

 

 

 

 

Total liabilities

 

372,904

 

710,738

 

117,405

 

 

7



 

YY INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)

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

 

 

 

December 31,
2012

 

December 31,
2013

 

December 31,
2013

 

 

 

RMB

 

RMB

 

US$

 

Shareholders’ equity

 

 

 

 

 

 

 

Class A common shares (US$0.00001 par value; 10,000,000,000 shares authorized, 179,400,000 shares issued and outstanding as of December 31, 2012 and 622,658,738 shares issued and outstanding as of December 31, 2013)

 

11

 

38

 

6

 

Class B common shares (US$0.00001 par value; 1,000,000,000shares authorized, 907,833,224 shares issued and outstanding as of December 31, 2012 and 485,831,386 shares issued and outstanding as of December 31, 2013)

 

60

 

34

 

6

 

Additional paid-in capital

 

2,648,404

 

2,765,614

 

456,847

 

Statutory reserves

 

 

40,657

 

6,716

 

Accumulated deficits

 

(1,311,767

)

(874,697

)

(144,490

)

Accumulated other comprehensive losses

 

(13,423

)

(44,437

)

(7,340

)

 

 

 

 

 

 

 

 

Total shareholders’ equity

 

1,323,285

 

1,887,209

 

311,745

 

 

 

 

 

 

 

 

 

Total liabilities and shareholders’ equity

 

1,696,189

 

2,597,947

 

429,150

 

 

8



 

YY INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

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

 

 

 

Three Months Ended

 

Twelve Months Ended

 

 

 

December
31,

2012

 

September
30,
2013

 

December
31,
2013

 

December
31,

2013

 

December
31,
2012

 

December
31,
2013

 

December
31,
2013

 

 

 

RMB

 

RMB

 

RMB

 

US$

 

RMB

 

RMB

 

US$

 

Net revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Internet value-added service

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—Online music and entertainment

 

106,145

 

228,906

 

336,590

 

55,601

 

286,446

 

852,885

 

140,887

 

—Online games

 

98,048

 

154,529

 

162,827

 

26,897

 

332,287

 

602,111

 

99,462

 

—Others

 

28,830

 

58,383

 

69,458

 

11,474

 

83,655

 

205,212

 

33,899

 

Online advertising

 

33,803

 

45,337

 

43,433

 

7,175

 

117,643

 

163,260

 

26,969

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total net revenue

 

266,826

 

487,155

 

612,308

 

101,147

 

820,031

 

1,823,468

 

301,217

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenues(1)

 

(138,939

)

(248,553

)

(296,811

)

(49,030

)

(416,133

)

(881,999

)

(145,696

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

127,887

 

238,602

 

315,497

 

52,117

 

403,898

 

941,469

 

155,521

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development expenses

 

(54,122

)

(67,148

)

(75,139

)

(12,412

)

(176,725

)

(267,005

)

(44,106

)

Sales and marketing expenses

 

(5,961

)

(7,502

)

(4,211

)

(696

)

(16,954

)

(24,955

)

(4,122

)

General and administrative expenses

 

(33,741

)

(46,663

)

(49,197

)

(8,127

)

(109,788

)

(200,554

)

(33,129

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating expenses

 

(93,824

)

(121,313

)

(128,547

)

(21,235

)

(303,467

)

(492,514

)

(81,357

)

Other income

 

1,161

 

16,766

 

7,971

 

1,317

 

2,465

 

27,078

 

4,473

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

35,224

 

134,055

 

194,921

 

32,199

 

102,896

 

476,033

 

78,637

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain on disposal of an equity investment

 

 

 

 

 

651

 

 

 

Gain on disposal of a cost investment

 

2,351

 

 

 

 

2,351

 

 

 

Foreign currency exchange (losses) gains, net

 

(1,164

)

5,500

 

7,806

 

1,289

 

(4,153

)

29,555

 

4,882

 

Interest income

 

5,789

 

16,542

 

19,540

 

3,228

 

16,316

 

60,221

 

9,948

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income tax expenses

 

42,200

 

156,097

 

222,267

 

36,716

 

118,061

 

565,809

 

93,467

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expenses

 

(9,107

)

(27,719

)

(30,830

)

(5,093

)

(29,041

)

(89,951

)

(14,859

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before share of income in equity method investments, net of income taxes

 

33,093

 

128,378

 

191,437

 

31,623

 

89,020

 

475,858

 

78,608

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share of income in equity method investments, net of income taxes

 

134

 

586

 

579

 

96

 

157

 

1,869

 

309

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to YY Inc.

 

33,227

 

128,964

 

192,016

 

31,719

 

89,177

 

477,727

 

78,917

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Decretion to convertible redeemable preferred shares redemption value

 

1,408,888

 

 

 

 

1,293,875

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allocation of net income to participating preferred shareholders

 

(294,984

)

 

 

 

(478,754

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to common shareholders

 

1,147,131

 

128,964

 

192,016

 

31,719

 

904,298

 

477,727

 

78,917

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

33,227

 

128,964

 

192,016

 

31,719

 

89,177

 

477,727

 

78,917

 

 

9



 

 

 

Three Months Ended

 

Twelve Months Ended

 

 

 

December
31,

2012

 

September
30,
2013

 

December
31,
2013

 

December
31,

2013

 

December
31,
2012

 

December
31,
2013

 

December
31,
2013

 

 

 

RMB

 

RMB

 

RMB

 

US$

 

RMB

 

RMB

 

US$

 

Other comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments, net of nil tax

 

(4,374

)

(5,678

)

(8,197

)

(1,354

)

(1,204

)

(31,014

)

(5,123

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive income attributable to YY Inc.

 

28,853

 

123,286

 

183,819

 

30,365

 

87,973

 

446,713

 

73,794

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per ADS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—Basic

 

29.04

 

2.29

 

3.40

 

0.56

 

29.91

 

8.51

 

1.41

 

—Diluted

 

0.63

 

2.17

 

3.21

 

0.53

 

1.80

 

8.09

 

1.34

 

Weighted average number of ADS used in calculating net income per ADS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—Basic

 

39,500,941

 

56,261,659

 

56,449,190

 

56,449,190

 

30,235,191

 

56,123,784

 

56,123,784

 

—Diluted

 

52,473,054

 

59,546,765

 

59,802,052

 

59,802,052

 

49,623,442

 

59,056,065

 

59,056,065

 

 

10



 

YY INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (CONTINUED)

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

 

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

 

 

 

Three Months Ended

 

Twelve Months Ended

 

 

 

December
31,
2012

 

September
30,
2013

 

December
31,
2013

 

December
31,
2013

 

December
 31,
2012

 

December
31,
2013

 

December
31,
2013

 

 

 

RMB

 

RMB

 

RMB

 

US$

 

RMB

 

RMB

 

US$

 

Cost of revenues

 

2,092

 

3,191

 

3,242

 

536

 

8,407

 

9,860

 

1,629

 

Research and development expenses

 

9,129

 

12,357

 

11,873

 

1,961

 

35,441

 

39,587

 

6,539

 

Sales and marketing expenses

 

216

 

432

 

445

 

74

 

884

 

1,318

 

218

 

General and administrative expenses

 

14,165

 

25,859

 

9,335

 

1,542

 

55,619

 

66,331

 

10,957

 

 

11



 

YY INC.

Reconciliations 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,

2012

 

September
30,

2013

 

December
31,
2013

 

December
31,
2013

 

December
31,

2012

 

December
31,
2013

 

December
31,
2013

 

 

 

RMB

 

RMB

 

RMB

 

US$

 

RMB

 

RMB

 

US$

 

Operating income

 

35,224

 

134,055

 

194,921

 

32,199

 

102,896

 

476,033

 

78,637

 

Share-based compensation expenses

 

25,602

 

41,839

 

24,895

 

4,113

 

100,351

 

117,096

 

19,343

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP operating income

 

60,826

 

175,894

 

219,816

 

36,312

 

203,247

 

593,129

 

97,980

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to YY Inc.

 

33,227

 

128,964

 

192,016

 

31,719

 

89,177

 

477,727

 

78,917

 

Share-based compensation expenses

 

25,602

 

41,839

 

24,895

 

4,113

 

100,351

 

117,096

 

19,343

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP net income attributable to YY Inc.

 

58,829

 

170,803

 

216,911

 

35,832

 

189,528

 

594,823

 

98,260

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Decretion to convertible redeemable preferred shares redemption value

 

1,408,888

 

 

 

 

1,293,875

 

 

 

Allocation of Non-GAAP net income to particiating preferred shareholders

 

(300,221

)

 

 

 

(513,492

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP net income attributable to common shareholders

 

1,167,496

 

170,803

 

216,911

 

35,832

 

969,911

 

594,823

 

98,260

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP net income per ADS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—Basic

 

29.56

 

3.04

 

3.84

 

0.63

 

32.08

 

10.60

 

1.75

 

—Diluted

 

1.12

 

2.87

 

3.63

 

0.60

 

3.82

 

10.07

 

1.66

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of ADS used in calculating Non-GAAP net income per ADS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—Basic

 

39,500,941

 

56,261,659

 

56,449,190

 

56,449,190

 

30,235,191

 

56,123,784

 

56,123,784

 

—Diluted

 

52,473,054

 

59,546,765

 

59,802,052

 

59,802,052

 

49,623,442

 

59,056,065

 

59,056,065

 

 

12