GUANGZHOU, China, Nov. 21, 2016 (GLOBE NEWSWIRE) -- YY Inc. (NASDAQ:YY) ("YY" or the "Company"), a live streaming platform, today announced its unaudited financial results for the third quarter of 2016.

Third Quarter 2016 Highlights 

• Net revenues increased by 40.3% to RMB2,089.8 million (US$313.4 million) from RMB1,490.0 million in the corresponding period of 2015.
• Net income attributable to YY increased by 155.8% to RMB400.0 million (US$60.0 million) from RMB156.4 million in the corresponding period of 2015.
• Non-GAAP net income attributable to YY increased by 83.7% to RMB435.6 million (US$65.3 million) from RMB237.1 million in the corresponding period of 2015.

"We are extremely pleased to have achieved solid results this quarter with both top- and bottom-line growth across the board," said Mr. Zhou Chen, Chief Executive Officer of YY. "This growth was primarily driven by the robust 54.5% year-over-year growth in our live streaming business, which was made possible through the successful execution of our business and content strategy. Importantly, we continued to focus on the development of PUGC (Professionally-curated User Generated Content) and PGC. In the third quarter of 2016, we launched a new relationships program and further developed our sports content. Additionally, Huya broadcasting continues to increase its content offerings for mobile game broadcasting and broaden its popularity. Going forward, we will continue to strengthen our content to meet the ever evolving demands of YY's 98.0 million PC MAU and 53.4 million mobile MAU in the third quarter of 2016. We believe in our ability to build a comprehensive content ecosystem across our two live streaming platforms, YY Live and Huya broadcasting, and are confident that we have the right strategy in place to further fortify our position as China's leading interactive, live streaming platform."

Mr. Eric He, Chief Financial Officer of YY, further commented, "For the third quarter of 2016, we continued to see strong revenue growth as total revenues increased by 40.3% year over year to RMB2,089.8 million, primarily driven by a 63.4% year-over-year growth in the total number of paying users to 4.6 million, as well as a solid live streaming revenues  growth of 54.5% year over year to RMB1,790.4 million. In particular, Huya broadcasting witnessed continued strong growth with a significant 139.0% year-over-year increase in revenues. Meanwhile, in the third quarter of 2016, mobile revenues contributed 52.8% to YY Live revenues, which demonstrated the improvement we have further made in mobilization. With these exciting growth momentum, we are confident in our ability to maintain healthy revenue growth in the coming quarters. Going forward, we will continue to expand our content offerings and remain agile in adopting new and innovative ideas to further differentiate the user experience on our platform from our competitors."

Third Quarter 2016 Financial Results

NET REVENUES¹
Net revenues increased by 40.3% to RMB2,089.8 million (US$313.4 million) in the third quarter of 2016 from RMB1,490.0 million in the corresponding period of 2015, primarily driven by the increase in live streaming revenues. Live streaming revenues, which mainly consisted of revenues from YY Live, online dating, Huya broadcasting, PK Show, ME App, and other live streaming services, increased by 54.5% to RMB1,790.4 million (US$268.5 million) in the third quarter of 2016 from RMB1,159.2 million in the corresponding period of 2015. The increase in live streaming revenues was primarily driven by the growth of online dating revenues and Huya broadcasting revenues.

Revenues from online games were RMB149.5 million (US$22.4 million) in the third quarter of 2016, as compared to RMB168.3 million in the corresponding period of 2015, which primarily reflects the continued softness in China's web game market.

Revenues from membership were RMB68.8 million (US$10.3 million) in the third quarter of 2016, as compared to RMB76.3 million in the corresponding period of 2015.

Other revenues, mainly including revenues from the Company's online education platform and online advertising revenues, were RMB81.1 million (US$12.2 million) in the third quarter of 2016, compared with RMB86.2 million in the corresponding period of 2015.

COST OF REVENUES AND GROSS PROFIT
Cost of revenues increased by 40.8% to RMB1,275.0 million (US$191.2 million) in the third quarter of 2016 from RMB905.5 million in the corresponding period of 2015, primarily attributable to an increase in revenue-sharing fees and content costs to RMB967.4 million (US$145.1 million) in the third quarter of 2016 from RMB572.6 million in the corresponding period of 2015. The increase in revenue-sharing fees and content costs paid to performers, channel owners and content providers was in line with the increase in revenues and was primarily due to the higher level of user engagement and spending driven by promotional activities, as well as the Company's investments in expanding the amount of new and innovative content it provides to users. In addition, bandwidth costs slightly increased to RMB149.2 million (US$22.4 million) in the third quarter of 2016 from RMB147.2 million in the corresponding period of 2015, primarily reflecting the continued user base expansion and video quality improvements, but partially offset by the Company's improved efficiency and pricing terms.

Gross profit increased by 39.4% to RMB814.8 million (US$122.2 million) in the third quarter of 2016 from RMB584.5 million in the corresponding period of 2015. Gross margin was 39.0% in the third quarter of 2016, as compared to 39.2% in the corresponding period of 2015.

OPERATING INCOME
Operating expenses for the third quarter of 2016 decreased by 6.6% to RMB375.0 million (US$56.2 million) from RMB401.3 million in the corresponding period of 2015.

Operating income in the third quarter of 2016 increased by 136.1% to RMB472.9 million (US$70.9 million) from RMB200.3 million in the corresponding period of 2015. Operating margin in the third quarter of 2016 increased to 22.6% from 13.4% in the corresponding period of 2015.

Non-GAAP operating income² increased by 80.9% to RMB508.4 million (US$76.2 million) in the third quarter of 2016 from RMB281.0 million in the corresponding period of 2015. Non-GAAP operating margin³ increased to 24.3% in the third quarter of 2016 from 18.9% in the corresponding period of 2015.

NET INCOME
Net income attributable to YY Inc. increased by 155.8% to RMB400.0 million (US$60.0 million) in the third quarter of 2016 from RMB156.4 million in the corresponding period of 2015.  Net margin in the third quarter of 2016 increased to 19.1% from 10.5% in the corresponding period of 2015. Excluding  the government subsidy of RMB18.7 million, net income attributable to YY Inc. was RMB381.3 million (US$57.2 million), representing an increase of 143.8% year over year.

Non-GAAP net income attributable to YY Inc.⁴ increased by 83.7% to RMB435.6 million (US$65.3 million) from RMB237.1 million in the corresponding period of 2015. Non-GAAP net margin⁵ increased to 20.8% in the third quarter of 2016 from 15.9% in the corresponding period of 2015.

NET INCOME PER ADS
Diluted net income per ADS⁶ increased by 150.9% to RMB6.90 (US$1.03) in the third quarter of 2016 from RMB2.75 in the corresponding period of 2015.

Non-GAAP diluted net income per ADS⁷ increased by 79.4% to RMB7.48 (US$1.12) in the third quarter of 2016 from RMB4.17 in the corresponding period of 2015.

BALANCE SHEET AND CASH FLOWS
As of September 30, 2016, the Company had cash and cash equivalents of RMB746.5 million (US$111.9 million) and short-term deposits of RMB3,631.3 million (US$544.5 million). For the third quarter of 2016, net cash from operating activities was RMB652.5 million (US$97.8 million).

SHARES OUTSTANDING
As of September 30, 2016, the Company had a total of 1,107.3 million common shares outstanding, or the equivalent of 55.4 million ADSs outstanding.

Business Outlook
For the fourth quarter of 2016, the Company expects its net revenues to be between RMB2.4 billion and RMB2.5 billion, representing a year-over-year growth of approximately 26.3% to 31.6%. 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 November 21, 2016 at 8:00 am Eastern Time or 9:00 pm 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:	400-1200-654
Hong Kong:	+852-3018-6776
Conference ID:	# 16894086

The replay will be accessible through November 29, 2016 by dialing the following numbers:

United States Toll Free:	+1-855-452-5696
International:	+61-2-9003-4211
Conference ID:	# 16894086

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/.

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 RMB6.6685 to US$1.00, the noon buying rate in effect on September 30, 2016 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 live streaming platform that enables users to interact in live 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 activities, including online music and entertainment, online games, online dating, live game broadcasting and education. YY Inc. was listed on NASDAQ in November 2012 and generated revenues of US$910 million in the fiscal year 2015.

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 YY'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: YY's 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; YY's ability to monetize the user base; YY's 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, 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 attributable to common shareholders, 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. Non-GAAP operating margin is non-GAAP operating income as a percentage of net revenues. Non-GAAP net income attributable to YY Inc. is net income attributable to YY Inc. excluding share-based compensation expenses. Non-GAAP net margin is non-GAAP net income attributable to YY Inc. as a percentage of net revenues. Non-GAAP net income attributable to common shareholders is net income attributable to common shareholders excluding share-based compensation expenses. Basic and diluted non-GAAP net income per ADS is non-GAAP net income attributable to common shareholders 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 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 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" near the end of this release.

¹From the third quarter of 2016, the Company changed revenue segmenting to live streaming, online games, membership and others. The Company believes this new method better captures the way it generates revenues and is more transparent and reliable than breaking down revenues by business lines as previously presented.

²Non-GAAP operating income is a non-GAAP financial measure, which is defined as operating income excluding share-based compensation expenses. 

³Non-GAAP operating margin is a non-GAAP financial measure, which is defined as non-GAAP operating income as a percentage of net revenues. 

⁴Non-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.

⁵Non-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.

⁶ADS 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 divided by weighted average number of diluted ADS.

⁷Non-GAAP diluted net income per ADS is a non-GAAP financial measure, which is defined as non-GAAP net income attributable to common shareholders divided by weighted average number of ADS used in the calculation of diluted net income per ADS.

YY INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(All amounts in thousands, except share, ADS and per ADS data)
		December 31, 2015		September 30, 2016		September 30, 2016
		RMB		RMB		US$
Assets
Current assets
Cash and cash equivalents		928,934		746,454		111,937
Short-term deposits		1,894,946		3,631,269		544,541
Restricted short-term deposits		389,221		-		-
Accounts receivable, net		132,353		145,919		21,882
Inventory		14,385		3,453		518
Amount due from related parties		5,297		35,622		5,342
Prepayments and other current assets		147,823		176,749		26,504
Deferred tax assets		116,921		106,179		15,922
Total current assets		3,629,880		4,845,645		726,646
Non-current assets
Deferred tax assets		3,363		5,503		825
Investments		567,557		840,663		126,065
Property and equipment, net		843,449		841,155		126,139
Land use rights, net		-		1,884,371		282,578
Intangible assets, net		146,437		120,822		18,118
Goodwill		151,638		132,311		19,841
Other non-current assets		1,960,430		126,779		19,012
Total non-current assets		3,672,874		3,951,604		592,578
Total assets		7,302,754		8,797,249		1,319,224
Liabilities ,mezzanine equity and shareholders' equity
Current liabilities
Convertible bonds**		-		2,661,536		399,121
Accounts payable		129,819		106,025		15,899
Deferred revenue		385,300		395,227		59,268
Advances from customers		55,086		75,355		11,300
Income taxes payable		107,403		108,468		16,266
Accrued liabilities and other current liabilities		681,889		797,931		119,657
Amounts due to related parties		24,917		36,904		5,534
Total current liabilities		1,384,414		4,181,446		627,045
Non-current liabilities
Convertible bonds*		2,572,119		-		-
Deferred revenue		20,752		26,162		3,923
Deferred tax liabilities		16,817		14,645		2,196
Total non-current liabilities		2,609,688		40,807		6,119
Total liabilities		3,994,102		4,222,253		633,164

YY INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
(All amounts in thousands, except share, ADS and per ADS data)
		December 31, 2015				September 30, 2016		September 30, 2016
		RMB				RMB		US$
Mezzanine equity			61,833			58,458		8,766
Shareholders' equity
Class A common shares (US$0.00001 par value; 10,000,000,000 and 10,000,000,000 shares authorized, 728,227,848 and  747,719,608 shares issued and outstanding as of December 31, 2015 and September 30, 2016, respectively)			43			43		6
Class B common shares (US$0.00001 par value; 1,000,000,000 and 1,000,000,000 shares authorized, 369,557,976 and 359,557,976 shares issued and outstanding as of December 31, 2015 and September 30, 2016, respectively)			27			27		4
Additional paid-in capital			2,011,799			2,137,287		320,505
Statutory reserves			56,507			56,507		8,474
Retained earnings			1,207,168			2,158,832		323,736
Accumulated other comprehensive (loss) income			(36,385	)		152,450		22,861
Non-controlling interests			7,660			11,392		1,708
Total shareholders' equity			3,246,819			4,516,538		677,294
Total liabilities, mezzanine equity and shareholders' equity			7,302,754			8,797,249		1,319,224

*  Effectively January 2016, ASU 2015-3 issued by FASB requires entities to present the issuance costs of bonds in the balance sheet as a direct deduction from the related bonds rather than assets. Accordingly, the Company retrospectively reclassified RMB25.3 million of issuance cost of bonds from other non-current assets into convertible bonds as of December 31, 2015.
**  Convertible bonds represent Convertible Senior Notes which may be redeemed within one year.

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													Nine Months Ended
		September 30, 2015			June 30, 2016			September 30, 2016			September 30, 2016				September  30, 2015			September 30, 2016			September 30, 2016
		RMB			RMB			RMB			US$				RMB			RMB			US$
Net revenues
Live streaming			1,159,178			1,661,060			1,790,373			268,482				2,974,629			4,809,037			721,157
Online Games			168,332			188,261			149,530			22,423				599,484			508,901			76,314
Membership			76,299			72,070			68,768			10,312				210,482			210,210			31,523
Others			86,153			59,386			81,134			12,167				212,810			191,752			28,755
Total net revenue			1,489,962			1,980,777			2,089,805			313,384				3,997,405			5,719,900			857,749
Cost of revenues(1)			(905,489	)		(1,208,340	)		(1,275,002	)		(191,198	)			(2,411,505	)		(3,543,873	)		(531,435	)
Gross profit			584,473			772,437			814,803			122,186				1,585,900			2,176,027			326,314
Operating expenses(1)
Research and development expenses			(153,008	)		(172,228	)		(163,236	)		(24,479	)			(396,121	)		(515,112	)		(77,246	)
Sales and marketing expenses			(84,074	)		(88,699	)		(109,075	)		(16,357	)			(198,696	)		(275,735	)		(41,349	)
General and administrative expenses			(147,312	)		(90,155	)		(102,683	)		(15,398	)			(270,686	)		(276,245	)		(41,425	)
Goodwill impairment			(199,425	)		-			-			-				(310,124	)		-			-
Fair value change of contingent consideration			182,476			-			-			-				292,471			-			-
Total operating expenses			(401,343	)		(351,082	)		(374,994	)		(56,234	)			(883,156	)		(1,067,092	)		(160,020	)
Other income			17,156			22,507			33,065			4,958				49,486			64,477			9,669
Operating income			200,286			443,862			472,874			70,910				752,230			1,173,412			175,963
Foreign currency exchange (losses) gains, net			(37,119	)		552			(16	)		(2	)			(38,286	)		773			116
Interest expense			(24,983	)		(19,576	)		(20,357	)		(3,053	)			(65,109	)		(60,327	)		(9,047	)
Interest income			30,555			9,902			17,162			2,574				111,707			40,713			6,105
Other non-operating expense			-			(23,474	)		-			-				(2,165	)		(23,474	)		(3,520	)
Income before income tax expenses			168,739			411,266			469,663			70,429				758,377			1,131,097			169,617
Income tax expenses			(45,862	)		(75,179	)		(69,909	)		(10,483	)			(126,766	)		(194,710	)		(29,198	)
Income before share of income (loss) in equity method investments, net of income taxes			122,877			336,087			399,754			59,946				631,611			936,387			140,419
Share of income (loss) in equity method investments, net of income taxes			3,567			(28	)		(1,867	)		(280	)			10,887			3,879			582
Net Income			126,444			336,059			397,887			59,666				642,498			940,266			141,001
Less: Net loss attributable to the non-controlling interest shareholders and the mezzanine classified non-controlling interest shareholders			(29,930	)		(7,227	)		(2,152	)		(323	)			(31,529	)		(11,398	)		(1,709	)
Net income attributable to YY Inc.			156,374			343,286			400,039			59,989				674,027			951,664			142,710

YY INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (CONTINUED)
(All amounts in thousands, except share, ADS and per ADS data)
		Three Months Ended											Nine Months Ended
		September 30, 2015	June 30, 2016			September 30, 2016			September 30, 2016				September 30, 2015	September 30, 2016			September 30, 2016
		RMB	RMB			RMB			US$				RMB	RMB			US$
Net income attributable to YY Inc.		156,374		343,286			400,039			59,989			674,027		951,664			142,710
Other comprehensive income :
Unrealized gain of available-for-sales securities		-		177,152			13,354			2,003			-		190,506			28,568
Foreign currency translation adjustments, net of nil tax		673		(1,459	)		(562	)		(84	)		4,774		(1,671	)		(251	)
Comprehensive income attributable to YY Inc.		157,047		518,979			412,831			61,908			678,801		1,140,499			171,027
Net income per ADS
—Basic		2.80		6.10			7.07			1.06			11.96		16.91			2.54
—Diluted		2.75		5.97			6.90			1.03			11.68		16.64			2.50
Weighted average number of ADS used in calculating net income per ADS
—Basic		55,918,954		56,244,094			56,560,174			56,560,174			56,371,472		56,290,231			56,290,231
—Diluted		56,884,168		60,761,097			60,814,662			60,814,662			57,710,288		60,773,398			60,773,398

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

		Three Months Ended								Nine Months Ended
		September 30, 2015		June 30, 2016		September 30, 2016		September 30, 2016		September 30, 2015		September 30, 2016		September 30, 2016
		RMB		RMB		RMB		US$		RMB		RMB		US$
Cost of revenues		8,723		141		3,701		555		15,092		12,454		1,868
Research and development expenses		27,121		26,473		11,120		1,668		41,711		64,893		9,731
Sales and marketing expenses		1,191		941		612		92		2,194		2,392		359
General and administrative expenses		43,695		13,934		20,086		3,012		65,166		51,199		7,678

YY INC.
RECONCILIATION OF GAAP AND NON-GAAP RESULTS
(All amounts in thousands, except share, ADS and per ADS data)
		Three Months Ended								Nine Months Ended
		September 30, 2015		June 30, 2016		September 30, 2016		September 30, 2016		September 30, 2015		September 30, 2016		September 30, 2016
		RMB		RMB		RMB		US$		RMB		RMB		US$
Operating income		200,286		443,862		472,874		70,910		752,230		1,173,412		175,963
Share-based compensation expenses		80,730		41,489		35,519		5,326		124,163		130,938		19,636
Non-GAAP operating income		281,016		485,351		508,393		76,236		876,393		1,304,350		195,599
Net income attributable to YY Inc.		156,374		343,286		400,039		59,989		674,027		951,664		142,710
Share-based compensation expenses		80,730		41,489		35,519		5,326		124,163		130,938		19,636
Non-GAAP net income attributable to YY Inc.		237,104		384,775		435,558		65,315		798,190		1,082,602		162,346
Non-GAAP net income per ADS
—Basic		4.24		6.84		7.70		1.15		14.16		19.23		2.88
—Diluted		4.17		6.65		7.48		1.12		13.83		18.79		2.82
Weighted average number of ADS used in calculating Non-GAAP net income per ADS
—Basic		55,918,954		56,244,094		56,560,174		56,560,174		56,371,472		56,290,231		56,290,231
—Diluted		56,884,168		60,761,097		60,814,662		60,814,662		57,710,288		60,773,398		60,773,398

YY INC.
UNAUDITED SEGMENT REPORT
(All amounts in thousands, except share, ADS and per ADS data)
		Three Months Ended
		September 30, 2016
		YY Live				Huya broadcasting			100 Education			Total			Total
		RMB			RMB			RMB			RMB			US$
Net revenues
Live streaming			1,593,495			196,878			-			1,790,373			268,482
Online games			149,530			-			-			149,530			22,423
Membership			68,768			-			-			68,768			10,312
Others			20,240			-			60,894			81,134			12,167
Total net revenue			1,832,033			196,878			60,894			2,089,805			313,384
Cost of revenues(1)			(972,553	)		(269,407	)		(33,042	)		(1,275,002	)		(191,198		)
Gross profit (loss)			859,480			(72,529	)		27,852			814,803			122,186
Operating expenses(1)
Research and development expenses			(125,637	)		(31,409	)		(6,190	)		(163,236	)		(24,479		)
Sales and marketing expenses			(80,373	)		(10,174	)		(18,528	)		(109,075	)		(16,357		)
General and administrative expenses			(70,514	)		(11,557	)		(20,612	)		(102,683	)		(15,398		)
Total operating expenses			(276,524	)		(53,140	)		(45,330	)		(374,994	)		(56,234		)
Other income			33,065			-			-			33,065			4,958
Operating income (loss)			616,021			(125,669	)		(17,478	)		472,874			70,910

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

		Three Months Ended
		September 30, 2016
		YY Live		Huya broadcasting		100 Education		Total		Total
		RMB		RMB		RMB		RMB		US$
Cost of revenues		2,726		934		41		3,701		555
Research and development expenses		7,985		2,357		778		11,120		1,668
Sales and marketing expenses		586		26		-		612		92
General and administrative expenses		4,383		2,229		13,474		20,086		3,012

YY 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, 2016
			YY Live		Huya  broadcasting			100 Education			Total		Total
			RMB	RMB			RMB				RMB		US$
Operating income (loss)			616,021		(125,669	)		(17,478	)		472,874		70,910
Share-based compensation expenses			15,680		5,546			14,293			35,519		5,327
Non-GAAP operating income (loss)			631,701		(120,123	)		(3,185	)		508,393		76,237

YY INC.
UNAUDITED SEGMENT REPORT
(All amounts in thousands, except share, ADS and per ADS data)
		Three Months Ended
		June 30, 2016
		YY Live				Huya broadcasting			100 Education			Total			Total
		RMB			RMB			RMB			RMB			US$
Net revenues
Live streaming			1,517,983			143,077			-			1,661,060			249,938
Online games			188,261			-			-			188,261			28,327
Membership			72,070			-			-			72,070			10,844
Others			28,749			-			30,637			59,386			8,935
Total net revenue			1,807,063			143,077			30,637			1,980,777			298,044
Cost of revenues(1)			(965,291	)		(216,606	)		(26,443	)		(1,208,340	)		(181,817	)
Gross profit (loss)			841,772			(73,529	)		4,194			772,437			116,227
Operating expenses(1)
Research and development expenses			(130,170	)		(33,811	)		(8,247	)		(172,228	)		(25,915	)
Sales and marketing expenses			(63,038	)		(12,247	)		(13,414	)		(88,699	)		(13,346	)
General and administrative expenses			(76,169	)		(11,115	)		(2,871	)		(90,155	)		(13,566	)
Total operating expenses			(269,377	)		(57,173	)		(24,532	)		(351,082	)		(52,827	)
Other income			22,507			-			-			22,507			3,387
Operating income (loss)			594,902			(130,702	)		(20,338	)		443,862			66,787

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

		Three Months Ended
		June 30, 2016
		YY Live				Huya broadcasting		100 Education			Total		Total
		RMB				RMB	RMB				RMB		US$
Cost of revenues			(1,432	)		1,441		132			141		21
Research and development expenses			17,976			6,501		1,996			26,473		3,983
Sales and marketing expenses			729			212		-			941		142
General and administrative expenses			10,227			3,807		(100	)		13,934		2,097

YY 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
		June 30, 2016
		YY Live		Huya broadcasting			100 Education			Total	Total
		RMB	RMB			RMB				RMB	US$
Operating income (loss)		594,902		(130,702	)		(20,338	)		443,862		66,787
Share-based compensation expenses		27,500		11,961			2,028			41,489		6,243
Non-GAAP operating income (loss)		622,402		(118,741	)		(18,310	)		485,351		73,030

YY INC.
UNAUDITED SEGMENT REPORT
(All amounts in thousands, except share, ADS and per ADS data)
		Three Months Ended
		September 30, 2015
		YY Live				Huya broadcasting			100 Education			Total			Total
		RMB			RMB			RMB			RMB			US$
Net revenues
Live streaming			1,076,801			82,377			-			1,159,178			182,387
Online games			168,332			-			-			168,332			26,486
Membership			76,299			-			-			76,299			12,005
Others			46,489			-			39,664			86,153			13,556
Total net revenue			1,367,921			82,377			39,664			1,489,962			234,434
Cost of revenues(1)			(695,373	)		(171,212	)		(38,904	)		(905,489	)		(142,471	)
Gross profit (loss)			672,548			(88,835	)		760			584,473			91,963
Operating expenses(1)
Research and development expenses			(123,378	)		(18,233	)		(11,397	)		(153,008	)		(24,075	)
Sales and marketing expenses			(62,754	)		(8,788	)		(12,532	)		(84,074	)		(13,228	)
General and administrative expenses			(72,254	)		(6,021	)		(69,037	)		(147,312	)		(23,178	)
Goodwill impairment			(128,034	)		-			(71,391	)		(199,425	)		(31,378	)
Fair value changes of contingent consideration			108,858			-			73,618			182,476			28,711
Total operating expenses			(277,562	)		(33,042	)		(90,739	)		(401,343	)		(63,148	)
Other income			17,156			-			-			17,156			2,699
Operating income (loss)			412,142			(121,877	)		(89,979	)		200,286			31,514

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

		Three Months Ended
		September 30, 2015
		YY Live		Huya broadcasting		100 Education		Total		Total
		RMB		RMB		RMB		RMB		US$
Cost of revenues		8,194		367		162		8,723		1,372
Research and development expenses		23,065		1,559		2,497		27,121		4,267
Sales and marketing expenses		1,189		2		-		1,191		187
General and administrative expenses		15,381		130		28,184		43,695		6,875

YY 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, 2015
		YY Live		Huya  broadcasting			100 Education			Total		Total
		RMB	RMB			RMB				RMB		US$
Operating income (loss)		412,142		(121,877	)		(89,979	)		200,286		31,514
Share-based compensation expenses		47,829		2,058			30,843			80,730		12,701
Non-GAAP operating income (loss)		459,971		(119,819	)		(59,136	)		281,016		44,215

Investor Relations Contact
YY Inc.
Yuffie Fu
Tel: +86 (20) 8212-0000
Email:IR@YY.com

ICR, Inc.
Jessie Fan
Tel: +1 (646) 915-1611
Email:IR@YY.com