View:
Download DOC
Download PDF
Download XLS

 

 

 

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 November 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 x   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
   
Exhibit 99.2 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: November 17, 2020

 

 

 

Exhibit 99.1

 

 

Baidu to Acquire JOYY’s Live Streaming Business in China

 

GUANGZHOU, China, November 16, 2020 — JOYY Inc. (Nasdaq: YY) (“JOYY” or the “Company”), a global video-based social media platform, today announced that the Company entered into definitive agreements with Baidu, Inc. (Nasdaq: BIDU) (“Baidu”). Pursuant to the agreements, Baidu will acquire JOYY’s domestic video-based entertainment live streaming business (“YY Live”), which includes the YY mobile app, YY.com website, and PC YY, among others, for an aggregate purchase price of approximately US$3.6 billion in cash, subject to certain adjustments. The closing of the transaction is subject to certain conditions and is currently expected to occur in the first half of 2021.

 

Mr. David Xueling Li, Chairman and Chief Executive Officer of the Company, commented, “As a pioneer in China’s live streaming industry, JOYY has been deeply engaged in the live streaming business for many years. YY Live is a leading pan-entertainment live streaming platform in China and thus possesses a comprehensive system of operational procedures as well as a full range of domain expertise related to the development of live streaming ecosystems, innovation of live streaming technologies, content operations, monetization features, and systems for host incubation and host development. As the largest integrated information and knowledge-focused internet service provider in China, Baidu has built an extensive mobile internet ecosystem covering one billion monthly active users, including over 200 million daily active mobile users on its Baidu app alone. This transaction will allow YY Live to access Baidu’s massive user traffic, boost its business growth, and enhance its ecosystem’s monetization capabilities to unleash greater value in a larger ecosystem.”

 

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 Bigo, a fast-growing global tech company headquartered in Singapore. Bigo owns several popular video based social platforms including Bigo Live, a leading global live streaming platform outside China; Likee, a leading global short-form video social platform; and video communication service and others. JOYY has created an online community for global video and live streaming users. JOYY Inc. was listed on the NASDAQ in November 2012.

 

Investor Relations Contact

 

JOYY Inc.
Tel: +86 (20) 8212-0000
Email: IR@YY.com

 

 

 

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.

 

 

Exhibit 99.2 

 

JOYY Reports Third Quarter 2020 Unaudited Financial Results

 

Guangzhou, China, November 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 third quarter of 2020.

 

Third Quarter 2020 Financial Highlights1

 

·Net revenues increased by 36.1% to RMB6,286.4 million (US$925.9 million) from RMB4,617.3 million in the corresponding period of 2019.
·Net income from continuing operations attributable to controlling interest of JOYY Inc.2 was RMB2,303.2 million (US$339.2 million), compared to RMB61.8 million in the corresponding period of 2019, primarily due to the impact of gain from partial disposal of investments in Huya.
·Non-GAAP net income from continuing operations attributable to controlling interest and common shareholders of JOYY Inc.3 increased by 64.0% to RMB809.4 million (US$119.2 million) from RMB493.4 million in the corresponding period of 2019, primarily due to the decrease in the operation loss of Bigo Inc (“Bigo”).

 

Third Quarter 2020 Operational Highlights

 

 

1 Starting from the second quarter of 2020, the Company deconsolidated HUYA Inc. (NYSE: HUYA) (“Huya”) and Huya’s historical financial results are and will be reflected in the Company’s consolidated financial statements as discontinued operations accordingly. The financial information and non-GAAP financial information of the Company disclosed in this press release is presented on a continuing operations basis, unless otherwise specifically stated. After the deconsolidation of Huya, the Company accounts for its investment in Huya as an equity method investment and applies the equity method accounting one quarter in arrears. Share of income or loss from the investment in Huya will be included in net income or loss from continuing operations.

 

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

 

3 Non-GAAP net income from continuing operations attributable to controlling interest of JOYY Inc. is a non-GAAP financial measure, which is defined as net income from continuing operations 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 disposal of investments, gain (loss) on fair value change of investments, reconciling items on the share of equity method investments which refer to those similar non-GAAP reconciling items of the Company, fair value change on derivatives, 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 reversal of RMB1,493.8 million (US$220.0 million) and RMB431.7 million in the third quarter of 2020 and 2019, respectively. Please refer to the section titled “Reconciliation of GAAP and Non-GAAP Results” for more details.

 

1

 

 

·Global average mobile MAUs4 decreased by 4.0% to 390.1 million from 406.3 million in the corresponding period of 2019, mainly due to the impact of Indian government’s measures to block certain Chinese-owned apps in its local market, which included Bigo Live, Likee and Hago.
·Average mobile MAUs of Likee increased by 3.8% to 104.0 million from 100.2 million in the corresponding period of 2019.
·Average mobile MAUs of global live streaming services decreased by 2.3% to 92.0 million from 94.1 million in the corresponding period of 2019, among that (i) 41.3 million were from YY, which increased by 3.4% year over year; and (ii) 50.7 million were from outside of China, which decreased by 6.5% year over year, including 28.0 million from Bigo Live, which increased by 27.7% year over year, and 22.7 million from HAGO, which decreased by 29.7% year over year primarily due to the impact of Indian government’s measures to block such app in its local market.
·Total number of paying users5 of YY decreased by 4.7% to 4.1 million from 4.3 million in the corresponding period of 2019, mainly due to COVID-19 impacts.

 

Mr. David Xueling Li, Chairman and Chief Executive Officer of JOYY, commented, “Despite uncertainties from macro perspective, we remained focused on executing our dual-engine growth strategy in the third quarter of 2020. Through a combination of globalized market reach and localized operations management, we continued to achieve solid growth in our financial results. Despite the negative impact from Indian government’s measures to block certain Chinese-owned apps in its local market and other geopolitical risks, our global MAU remained relatively stable, thanks to rapid expansion of our business in other regions. During the quarter, Bigo Live maintained its robust growth trajectory and further diversified its geographic coverage, accomplishing 270% and 231% revenue growth in Europe and East Pacific regions, respectively. Likee continued to gain momentum through a measured approach of balancing its user expansion and user retention, with continuous improvement in user engagement level by introducing multiple functions of its video production tools, dynamic community and thematic functionalities, as reflected by increase in content creator engagement.”

 

Mr. Li continued, “We believe Baidu’s strategic acquisition of YY Live is a true win-win for both parties, as it will accelerate YY Live’s business growth and unlock more value across the domestic entertainment live streaming sector. Going forward, we will continue to expand our live streaming and short-form video content ecosystem in key overseas markets around the world, and explore new business lines, aiming to further enter into the industrial AI internet sector.”

 

 

4 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.

 

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

 

2

 

 

Mr. Bing Jin, Chief Financial Officer of JOYY, further commented, “Despite the impact of geopolitical headwinds, we grew our total revenues by 36.1% year over year to RMB6,286.4 million during the third quarter of 2020 and exceeded the high end of our previous guidance. More specifically, revenues from Bigo grew by 120.8% year over year to RMB3,394.8 million, mostly driven by the uptick in its live streaming revenues. It is also the first quarter for Bigo to achieve a positive non-GAAP operating margin. As we remain in an abundant cash position after recent transaction with Baidu, we will continue to invest in business development efforts to further expand our global market reach, and cultivate new business to enhance our service offerings. We will also actively explore other ways to return value to our shareholders to maximize shareholder value.”

 

Third Quarter 2020 Financial Results

 

NET REVENUES

 

Net revenues increased by 36.1% to RMB6,286.4 million (US$925.9 million) in the third quarter of 2020 from RMB4,617.3 million in the corresponding period of 2019, primarily driven by continued growth in user base and expansion of global footprint in Bigo .

 

Live streaming revenues increased by 40.1% to RMB6,049.1 million (US$890.9 million) in the third quarter of 2020 from RMB4,317.8 million in the corresponding period of 2019, primarily attributable to the continued live streaming revenues growth in Bigo segment.

 

Other revenues decreased by 20.8% to RMB237.3 million (US$34.9 million) in the third quarter of 2020 from RMB299.4 million in the corresponding period of 2019, primarily due to the decrease in other revenues in YY segment.

 

COST OF REVENUES AND GROSS PROFIT

 

Cost of revenues increased by 38.8% to RMB3,961.7 million (US$583.5 million) in the third quarter of 2020 from RMB2,854.5 million in the corresponding period of 2019. Revenue-sharing fees and content costs increased to RMB2,840.3 million (US$418.3 million) in the third quarter of 2020 from RMB1,951.0 million in the corresponding period of 2019 as a result of the increase in live streaming revenues of the Company. Bandwidth costs decreased to RMB236.9 million (US$34.9 million) in the third quarter of 2020 from RMB286.3 million in the corresponding period of 2019, primarily related to the termination of service and access to users in India after its measures to block certain Chinese-owned apps in late June.

 

3

 

 

Gross profit increased by 31.9% to RMB2,324.7 million (US$342.4 million) in the third quarter of 2020 from RMB1,762.7 million in the corresponding period of 2019. Gross margin was 37.0% in the third quarter of 2020, compared to 38.2% in the corresponding period of 2019. The gross margin contraction was primarily caused by the fact that Bigo segment had lower gross margin but contributed significantly greater portions of net revenues in the third quarter of 2020, compared to the corresponding period of 2019.

 

OPERATING INCOME

 

Operating expenses were RMB1,999.9 million (US$294.6 million) in the third quarter of 2020, compared to RMB1,807.9 million in the corresponding period of 2019. Among the operating expenses, sales and marketing expenses increased to RMB1,083.0 million (US$159.5 million) in the third quarter of 2020 from RMB957.3 million in the corresponding period of 2019, primarily due to the Company’s increased efforts in sales and marketing activities in overseas markets. Research and development expenses increased to RMB636.0 million (US$93.7 million) in the third quarter of 2020 from RMB538.1 million in the corresponding period of 2019, mostly due to the increasing headcount and investments in talent recruitment as part of the Company’s efforts to enhance its research and development capabilities. General and administrative expenses were RMB280.8 million (US$41.4 million) in the third quarter of 2020, compared to RMB312.5 million in the corresponding period of 2019. The decrease of general and administrative expenses was mainly attributable to a decrease in provision for loss allowances of receivables.

 

Operating income was RMB466.6 million (US$68.7 million) in the third quarter of 2020, compared to RMB96.4 million in the corresponding period of 2019. Operating margin was 7.4% in the third quarter of 2020, compared to 2.1% in the corresponding period of 2019, primarily due to the decrease in operation loss of Bigo segment.

 

Non-GAAP operating income6 increased by 77.8% to RMB825.8 million (US$121.6 million) in the third quarter of 2020 from RMB464.4 million in the corresponding period of 2019. Non-GAAP operating margin7 was 13.1% in the third quarter of 2020, compared to 10.1% in the corresponding period of 2019.

 

 

 

6 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.

 

7 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.

 

4

 

 

NET INCOME

 

Net income from continuing operations attributable to controlling interest of JOYY Inc. was RMB2,303.2 million (US$339.2 million) in the third quarter of 2020, compared to RMB61.8 million in the corresponding period of 2019. Net margin was 36.6% in the third quarter of 2020, compared to 1.3% in the corresponding period of 2019, mainly due to the gain from partial disposal of investments in Huya.

 

Non-GAAP net income from continuing operations attributable to controlling interest and common shareholders of JOYY Inc. increase by 64.0% to RMB809.4 million (US$119.2 million) in the third quarter of 2020 from RMB493.4 million in the corresponding period of 2019. Non-GAAP net margin8 increased to 12.9% in the third quarter of 2020 from 10.7% in the corresponding period of 2019.

 

NET INCOME PER ADS

 

Diluted net income from continuing operations per ADS9 was RMB25.92 (US$3.82) in the third quarter of 2020, compared to RMB 0.56 in the corresponding period of 2019.

 

Non-GAAP diluted net income from continuing operations per ADS10 increased by 58.8% to RMB8.89 (US$1.31) in the third quarter of 2020 from RMB5.60 in the corresponding period of 2019.

 

BALANCE SHEET AND CASH FLOWS

 

As of September 30, 2020, the Company had cash and cash equivalents, restricted cash and cash equivalents, short-term deposits, restricted short-term deposits and short-term investments of RMB24,469.7 million (US$3,604.0 million). For the third quarter of 2020, net cash from operating activities was RMB1,029.9 million (US$151.7 million).

 

SHARES OUTSTANDING

 

As of September 30, 2020, the Company had a total of 1,619.7 million common shares, or the equivalent of 81.0 million ADSs, outstanding.

 

 

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

 

9 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.

 

10 Non-GAAP diluted net income from continuing operations per ADS is a non-GAAP financial measure, which is defined as non-GAAP net income from continuing operations 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

 

 

Quarterly Dividend

 

On August 11, 2020, the Company's board of directors approved a quarterly dividend policy for the next three years commencing in the third quarter of 2020. Under the policy, quarterly dividends will be set at approximately US$25.0 million in each fiscal quarter. The board of directors has accordingly declared a dividend of US$0.31 per ADS, or US$0.0155 per common share, for the third quarter of 2020, which is expected to be paid on December 23, 2020 to shareholders of record as of the close of business on December 11, 2020. The ex-dividend date will be December 10, 2020. Under the policy, the board of directors of the Company reserves the discretion relating to the determination to make dividend distributions and the amount of such distributions in any particular quarter, depending on the Company’s operations and earnings, cash flow, financial condition and other relevant factors.

 

Recent Developments

 

On November 16, 2020, the Company entered into definitive agreements with Baidu, Inc. (Nasdaq: BIDU) (“Baidu”). Pursuant to the agreements, Baidu will acquire JOYY’s domestic video-based entertainment live streaming business (“YY Live”), which includes YY mobile app, YY.com website and PC YY, among others, for an aggregate purchase price of approximately US$3.6 billion in cash, subject to certain adjustments. The closing of the transaction is subject to certain conditions and is currently expected to occur in the first half of 2021.

 

Conference Call Information

 

The Company will hold a conference call on 9:00 PM U.S. Eastern Time on Monday, November 16, 2020 (10:00 AM Beijing/Hong Kong Time on Tuesday, November 17, 2020). Details for the conference call are as follows:

 

Event Title: JOYY’s Third Quarter 2020 Earnings Conference Call

Conference ID:              #8576720

 

All participants must use the link provided below to complete the online registration process in advance of the conference call. Upon registering, each participant will receive a set of participant dial-in numbers, the Direct Event passcode, and a unique registrant ID by email.

 

PRE-REGISTER LINK: 

http://apac.directeventreg.com/registration/event/8576720

 

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/.

 

6

 

 

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

 

United States: +1-646-254-3697
International: +61-2-8199-0299
Conference ID: #8576720

 

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 RMB6.7896 to US$1.00, the noon buying rate in effect on September 30, 2020 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 Bigo, a fast-growing global tech company headquartered in Singapore. Bigo owns several popular video based social platforms including Bigo Live, a leading global live streaming platform outside China; Likee, a leading global short-form video social platform; and video communication service and others. JOYY has created an online community for global video and live streaming users. JOYY Inc. was listed on the NASDAQ in November 2012.

 

7

 

 

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.

 

8

 

 

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 from continuing operations attributable to controlling interest of JOYY Inc., non-GAAP net margin attributable to controlling interest of JOYY Inc., non-GAAP net income from continuing operations 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 from continuing operations is net income from continuing operations excluding share-based compensation expenses, impairment of goodwill and investments, amortization of intangible assets from business acquisitions, gain on disposal of subsidiaries and business, (loss) gain on disposal and deemed disposal of investments, gain (loss) on fair value change of investments, reconciling items on the share of equity method investments, fair value change on derivatives, 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 from continuing operations attributable to controlling interest of JOYY Inc. is net income from continuing operations attributable to controlling interest of JOYY Inc. excluding share-based compensation expenses, impairment of goodwill and investments, amortization of intangible assets from business acquisitions, (loss) gain on disposal and deemed disposal of subsidiaries and business, gain on disposal of investments, gain (loss) on fair value change of investments, reconciling items on the share of equity method investments, fair value change on derivatives, 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 from continuing operations attributable to non-controlling interest shareholders. Non-GAAP net margin is non-GAAP net income from continuing operations attributable to controlling interest of JOYY Inc. as a percentage of net revenues. Non-GAAP net income from continuing operations attributable to common shareholders of JOYY Inc. is net income from continuing operations attributable to common shareholders of JOYY Inc. excluding share-based compensation expenses, impairment of goodwill and investments, amortization of intangible assets from business acquisitions, (loss) gain on disposal and deemed disposal of subsidiaries and business, gain on disposal of investments, gain (loss) on fair value change of investments, reconciling items on the share of equity method investments, fair value change on derivatives, 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 from continuing operations attributable to non-controlling interest shareholders. After the non-GAAP reconciliation, non-GAAP net income from continuing operations attributable to controlling interests of JOYY Inc. is equal to the non-GAAP net income from continuing operations attributable to common shareholders of JOYY Inc. Basic and diluted non-GAAP net income from continuing operations per ADS is non-GAAP net income from continuing operations 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 derivatives, 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, (loss) gain on disposal and deemed disposal of investments, gain (loss) on fair value change of investments, reconciling items on the share of equity method 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 from continuing operations 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.

 

9

 

 

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.

Jane Xie/Maggie Yan

Tel: +86 (20) 8212-0000

Email: IR@YY.com

 

ICR, Inc.

Jack Wang

Tel: +1 (646) 915-1611

Email: IR@YY.com

 

10

 

 

 

JOYY INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

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

 

   December 31, 2019   September 30, 2020   September 30, 2020 
   RMB   RMB   US$ 
Assets               
Current assets               
Cash and cash equivalents   2,780,345    12,466,359    1,836,096 
Restricted cash and cash equivalents   3,500    3,500    515 
Short-term deposits   10,027,440    8,190,367    1,206,311 
Restricted short-term deposits   653,034    504,312    74,277 
Short-term investments   3,402,658    3,305,128    486,793 
Accounts receivable, net   675,196    1,049,931    154,638 
Amounts due from related parties   1,709    2,279    336 
Financing receivables, net   105,344    1,469    216 
Prepayments and other current assets   569,730    617,810    90,994 
Assets held for sale   10,581,013    -    - 
                
Total current assets   28,799,969    26,141,155    3,850,176 
                
Non-current assets               
Deferred tax assets   81,819    77,429    11,404 
Investments(1)   1,983,483    8,375,126    1,233,523 
Property and equipment, net   2,159,674    2,511,631    369,923 
Land use rights, net   1,736,544    1,700,472    250,452 
Intangible assets, net   3,134,778    2,544,297    374,734 
Right-of-use assets, net   172,783    143,381    21,118 
Goodwill   12,947,192    12,639,182    1,861,550 
Financing receivables, net   129,380    128,627    18,945 
Other non-current assets   289,131    157,274    23,164 
Assets held for sale   774,730    -    - 
                
Total non-current assets   23,409,514    28,277,419    4,164,813 
                
Total assets   52,209,483    54,418,574    8,014,989 
                
Liabilities, mezzanine equity and shareholders’ equity               
Current liabilities               
Accounts payable   120,826    108,245    15,943 
Deferred revenue   548,303    579,704    85,381 
Advances from customers   99,130    69,314    10,209 
Income taxes payable   425,572    452,729    66,680 
Accrued liabilities and other current liabilities   3,150,303    3,610,862    531,821 
Amounts due to related parties   205,921    30,672    4,517 
Lease liabilities due within one year   83,686    94,581    13,930 
Short-term loans   557,203    1,004,125    147,892 
Liabilities held for sale   2,446,677    -    - 
                
Total current liabilities   7,637,621    5,950,232    876,373 
                  
Non-current liabilities               
Convertible bonds   5,008,571    5,197,691    765,537 
Lease liabilities   92,669    53,849    7,931 
Deferred revenue   75,628    68,238    10,050 
Deferred tax liabilities   264,639    302,708    44,584 
Other non-current liabilities   11,495    -    - 
Liabilities held for sale   235,023    -    - 
                
Total non-current liabilities   5,688,025    5,622,486    828,102 
                
Total liabilities   13,325,646    11,572,718    1,704,475 

 

11

 

 

JOYY INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)

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

 

   December 31, 2019   September 30, 2020   September 30, 2020 
   RMB   RMB   US$ 
Mezzanine equity   466,071    484,638    71,379 
                
Shareholders’ equity               
Class A common shares (US$0.00001 par value; 10,000,000,000 and 10,000,000,000 shares authorized, 1,301,845,404 shares issued and 1,293,162,504 shares outstanding as of December 31, 2019; 1,312,572,924 shares issued and 1,293,160,576 shares outstanding as of September 30, 2020, respectively)   80    80    12 
Class B common shares (US$0.00001 par value; 1,000,000,000 and 1,000,000,000 shares authorized, 326,509,555 and 326,509,555 shares issued and outstanding as of December 31, 2019 and September 30, 2020, respectively)   24    24    4 
Treasury Shares (US$0.00001 par value; 8,682,900 and 19,412,348 shares held as of December 31, 2019 and September 30, 2020, respectively)   (168,072)   (320,858)   (47,257)
Additional paid-in capital   21,921,562    22,601,191    3,328,796 
Statutory reserves   149,961    85,282    12,561 
Retained earnings   10,272,122    19,834,864    2,921,360 
Accumulated other comprehensive income   890,209    150,707    22,197 
                
Total JOYY Inc.’s shareholders’ equity   33,065,886    42,351,290    6,237,673 
                
Non-controlling interests   5,351,880    9,928    1,462 
                
Total shareholders’ equity(2)   38,417,766    42,361,218    6,239,135 
                
Total liabilities, mezzanine equity andshareholders’ equity   52,209,483    54,418,574    8,014,989 

 

(1)Increase in the amounts of investments was mainly attributable to the Group's investment in Huya. On April 3rd, 2020, Huya ceased to be a subsidiary of the Company and the Company recognized its investment in Huya as an equity method investment.

 

(2)On January 1, 2020, the Company adopted ASC326, “Financial Instruments-Credit Losses” using modified-retrospective transition approach. Following the adoption of this guidance, a cumulative-effect adjustment to shareholders’ equity, amounting to RMB12.1 million, was recognized as of January 1, 2020.

 

12

 

 

JOYY INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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

 

   Three Months Ended   Nine Months Ended 
  

September

30,

2019

  

June

30,

2020

  

September

30,

2020

  

September

30,

2020

  

September

30,

2019

  

September

30,

2020

  

September

30,

2020

 
   RMB   RMB   RMB   US$   RMB   RMB   US$ 
                             
Net revenues                                   
Live streaming(1)   4,317,840    5,607,748    6,049,090    890,935    11,251,654    16,138,599    2,376,959 
Others   299,425    232,344    237,285    34,948    799,503    725,365    106,835 
                                    
Total net revenues   4,617,265    5,840,092    6,286,375    925,883    12,051,157    16,863,964    2,483,794 
                                    
Cost of revenues(2)   (2,854,546)   (3,769,095)   (3,961,719)   (583,498)   (7,155,814)   (10,739,492)   (1,581,756)
                                    
Gross profit   1,762,719    2,070,997    2,324,656    342,385    4,895,343    6,124,472    902,038 
                                    
Operating expenses(2)                                   
Research and development expenses   (538,089)   (693,458)   (636,015)   (93,675)   (1,402,791)   (1,895,637)   (279,197)
Sales and marketing expenses   (957,261)   (909,825)   (1,083,038)   (159,514)   (2,393,235)   (2,925,127)   (430,825)
General and administrative expenses   (312,516)   (412,714)   (280,831)   (41,362)   (764,774)   (891,681)   (131,330)
                                    
Total operating expenses   (1,807,866)   (2,015,997)   (1,999,884)   (294,551)   (4,560,800)   (5,712,445)   (841,352)
                                    
Other income   141,570    40,243    141,801    20,885    211,469    202,854    29,877 
                                    
Operating income   96,423    95,243    466,573    68,719    546,012    614,881    90,563 
                                    
Interest expenses   (123,456)   (131,656)   (135,193)   (19,912)   (141,943)   (391,364)   (57,642)
Interest income and investment income   116,598    162,519    152,429    22,450    291,900    429,341    63,235 
Foreign currency exchange gains (losses), net   15,748    3,246    (55,002)   (8,101)   30,469    (63,735)   (9,387)
(Loss) gain on disposal and deemed disposal of investments(3)   -    (13,444)   2,040,359    300,512    -    2,135,818    314,572 
(Loss) gain on fair value change of investments   (11,492)   708,633    (39,792)   (5,861)   2,652,642    1,002,635    147,672 
Fair value change on derivatives   (1,753)   2,174    (29,664)   (4,369)   (1,753)   (17,144)   (2,525)
Other non-operating expenses   -    (4,257)   (1,000)   (147)   -    (17,257)   (2,542)
                                    
Income before income tax expenses   92,068    822,458    2,398,710    353,291    3,377,327    3,693,175    543,946 
                                    
Income tax expenses   (58,692)   (187,246)   (127,215)   (18,737)   (285,959)   (458,917)   (67,591)
                                    
Income before share of income in equity method investments, net of income taxes   33,376    635,212    2,271,495    334,554    3,091,368    3,234,258    476,355 
                                    
Share of income (loss) in equity method investments, net of income taxes   21,189    (23,544)   26,550    3,910    35,337    (9,085)   (1,338)
                                    
Net income from continuing operations   54,565    611,668    2,298,045    338,464    3,126,705    3,225,173    475,017 
                                    
Net income from discontinued operations(4)   123,242    6,343,255    -    -    308,503    6,514,481    959,480 
                                    
Net income   177,807    6,954,923    2,298,045    338,464    3,435,208    9,739,654    1,434,497 
                                    
Less: Net income (loss) attributable to the non-controlling interest shareholders and the mezzanine equity classified as non-controlling interest shareholders   67,879    (43,062)   (5,148)   (758)   162,770    51,811    7,631 
                                    
Net income attributable to controlling interest of JOYY Inc.   109,928    6,997,985    2,303,193    339,222    3,272,438    9,687,843    1,426,866 
                                    
Including:                                   
Net income from continuing operations attributable to controlling interest of JOYY Inc.   61,757    619,426    2,303,193    339,222    3,148,022    3,242,757    477,606 
Net income from discontinued operations attributable to controlling interest of JOYY Inc.   48,171    6,378,559    -    -    124,416    6,445,086    949,260 
                                    
Less: Accretion of subsidiaries’ redeemable convertible preferred shares to redemption value   9,715    9,865    9,642    1,420    28,556    29,212    4,302 
Cumulative dividend on subsidiary’s Series A Preferred Shares   6,982    7,090    6,930    1,021    20,523    20,995    3,092 
                                    
Net income attributable to common shareholders of JOYY Inc.   93,231    6,981,030    2,286,621    336,781    3,223,359    9,637,636    1,419,472 
                                    
Including:                                   
Net income from continuing operations attributable to common shareholders of JOYY Inc.   45,060    602,471    2,286,621    336,781    3,098,943    3,192,550    470,212 
Net income from discontinued operations attributable to common shareholders of JOYY Inc.   48,171    6,378,559    -    -    124,416    6,445,086    949,260 

 

13

 

 

JOYY INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)

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

 

   Three Months Ended   Nine Months Ended 
  

September

30,

2019

  

June

30,

2020

  

September

30,

2020

  

September

30,

2020

  

September

30,

2019

  

September

30,

2020

  

September

30,

2020

 
   RMB   RMB   RMB   US$   RMB   RMB   US$ 
                             
Net income per ADS                                   
—Basic   1.16    87.69    28.49    4.20    42.24    120.55    17.76 
Continuing operations   0.56    7.57    28.49    4.20    40.61    39.93    5.88 
Discontinued operations   0.60    80.12    -    -    1.63    80.62    11.88 
—Diluted   1.11    85.68    25.92    3.82    41.20    108.54    15.99 
Continuing operations   0.56    7.39    25.92    3.82    39.79    38.67    5.70 
Discontinued operations   0.55    78.29    -    -    1.41    69.87    10.29 
                                    
Weighted average number of ADS used in calculating net income per ADS                                   
—Basic   80,033,607    79,609,517    80,262,892    80,262,892    76,310,648    79,949,342    79,949,342 
—Diluted   80,973,447    81,477,788    93,076,688    93,076,688    81,040,767    92,186,612    92,186,612 

 

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

 

   Three Months Ended   Nine Months Ended 
  

September

30,

2019

  

June

30,

2020

  

September

30,

2020

  

September

30,

2020

  

September

30,

2019

  

September

30,

2020

  

September

30,

2020

 
   RMB   RMB   RMB   US$   RMB   RMB   US$ 
                             
PRC   3,138,668    2,965,737    3,110,451    458,120    8,886,950    8,895,787    1,310,208 
Non-PRC   1,179,172    2,642,011    2,938,639    432,815    2,364,704    7,242,812    1,066,751 

 

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

 

   Three Months Ended   Nine Months Ended 
  

September

30,

2019

  

June

30,

2020

  

September

30,

2020

  

September

30,

2020

  

September

30

2019

  

September

30,

2020

  

September

30,

2020

 
   RMB   RMB   RMB   US$   RMB   RMB   US$ 
                             
Cost of revenues   12,111    9,637    13,676    2,014    33,734    34,962    5,149 
Research and development expenses   105,002    92,465    86,504    12,741    309,883    266,969    39,320 
Sales and marketing expenses   1,175    2,024    2,744    404    4,792    6,683    984 
General and administrative expenses   46,223    91,019    85,254    12,557    145,718    221,475    32,620 

 

(3)(Loss) gain on disposal and deemed disposal of investments mainly represented the gain from our further disposal of our equity interest in Huya in the third quarter of 2020.

 

(4)Gain from the disposal and deconsolidation amounted to around RMB6.4 billion was reported as part of the net income from discontinued operations in the second quarter of 2020.

 

14

 

 

 

JOYY 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,

2019

  

June

30,

2020

  

September 30,

2020

  

September

30,

2020

  

September

30,

2019

  

September 30,

2020

  

September 30,

2020

 
   RMB   RMB   RMB   US$   RMB   RMB   US$ 
Operating income   96,423    95,243    466,573    68,719    546,012    614,881    90,563 
Share-based compensation expenses   164,511    195,145    188,178    27,716    494,127    530,089    78,073 
Impairment of goodwill and investments   10,000    43,861    -    -    10,000    43,861    6,460 
Amortization of intangible assets from
business acquisitions		   193,487    175,043    171,085    25,198    444,227    532,317    78,402 
                                    
Non-GAAP operating income   464,421    509,292    825,836    121,633    1,494,366    1,721,148    253,498 

Net income from continuing operations   54,565    611,668    2,298,045    338,464    3,126,705    3,225,173    475,017 
Share-based compensation expenses   164,511    195,145    188,178    27,716    494,127    530,089    78,073 
Impairment of goodwill and investments   10,000    43,861    -    -    10,000    43,861    6,460 
Amortization of intangible assets from
business acquisitions		   193,487    175,043    171,085    25,198    444,227    532,317    78,402 
(Loss) gain on disposal and deemed
disposal of investments		   -    13,444    (2,040,359)   (300,512)   -    (2,135,818)   (314,572)
(Loss) gain on fair value change of
investments(1)		   11,492    (708,633)   39,792    5,861    (2,652,642)   (1,002,635)   (147,672)
Reconciling items on the share of equity
method investments(1)		   (9,461)   8,805    25,879    3,812    (13,997)   37,117    5,467 
Fair value change on derivatives   1,753    (2,174)   29,664    4,369    1,753    17,144    2,525 
Interest expenses related to the
convertible bonds’ amortization to
face value		   100,885    106,908    107,728    15,867    105,172    316,878    46,671 
Income tax effects on non-GAAP
adjustments		   (40,166)   42,452    (15,241)   (2,245)   (89,053)   47,766    7,035 
                                    
Non-GAAP net income from continuing
operations		   487,066    486,519    804,771    118,530    1,426,292    1,611,892    237,406

 

 

 

15

 

 

   Three Months Ended   Nine Months Ended 
  

September 30,

2019

  

June

30,

2020

  

September 30,

2020

  

September

30,

2020

  

September

30,

2019

  

September 30,

2020

  

September 30,

2020

 
   RMB   RMB   RMB   US$   RMB   RMB   US$ 
Net income from continuing operations
attributable to common shareholders
of JOYY Inc.		   45,060    602,471    2,286,621    336,781    3,098,943    3,192,550    470,212 
Share-based compensation expenses   164,511    195,145    188,178    27,716    494,127    530,089    78,073 
Impairment of goodwill and investments   10,000    43,861    -    -    10,000    43,861    6,460 
Amortization of intangible assets from
business acquisitions		   193,487    175,043    171,085    25,198    444,227    532,317    78,402 
(Loss) gain on disposal and deemed
disposal of investments		   -    13,444    (2,040,359)   (300,512)   -    (2,135,818)   (314,572)
(Loss) gain on fair value change of
investments		   11,492    (708,633)   39,792    5,861    (2,652,642)   (1,002,635)   (147,672)
Reconciling items on the share of equity
method investments		   (9,461)   8,805    25,879    3,812    (13,997)   37,117    5,467 
Fair value change on derivatives   1,753    (2,174)   29,664    4,369    1,753    17,144    2,525 
Interest expenses related to the
convertible bonds’ amortization to
face value		   100,885    106,908    107,728    15,867    105,172    316,878    46,671 
Accretion, cumulative dividend and
deemed dividend to subsidiaries’
preferred shareholders		   16,697    16,955    16,572    2,441    49,079    50,207    7,394 
Income tax effects on non-GAAP
adjustments		   (40,166)   42,452    (15,241)   (2,245)   (89,053)   47,766    7,035 
Non-GAAP adjustments for net income
(loss) attributable to the non-
controlling interest shareholders		   (847)   (688)   (569)   (84)   (1,666)   19    3 
                                    
Non-GAAP net income from continuing
operations attributable to controlling
interest and common shareholders of JOYY Inc.		   493,411    493,589    809,350    119,204    1,445,943    1,629,495    239,998 

 

Non-GAAP net income from continuing
operations per ADS

                                   
—Basic   6.17    6.20    10.08    1.49    18.95    20.38    3.00 
—Diluted   5.60    5.57    8.89    1.31    18.09    18.28    2.69 
Weighted average number of ADS used in
calculating Non-GAAP  net income
from continuing operations per ADS		                                   
—Basic   80,033,607    79,609,517    80,262,892    80,262,892    76,310,648    79,949,342    79,949,342 
—Diluted   91,400,547    91,904,888    93,076,688    93,076,688    81,040,767    92,186,612    92,186,612 

 

(1)(Loss) gain on fair value change of equity investees’ investments was reclassified to the reconciling items on the equity method investments from gain on fair value change of investments

 

16

 

 

JOYY INC.

UNAUDITED SEGMENT REPORT

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

 

   Three Months Ended 
   September 30, 2020 
   YY   Bigo   Elimination(1)   Total   Total 
   RMB   RMB   RMB   RMB   US$ 
Net revenues                         
Live streaming   2,770,876    3,278,214    -    6,049,090    890,935 
Others   120,661    116,624    -    237,285    34,948 
                          
Total net revenues   2,891,537    3,394,838    -    6,286,375    925,883 
                          
Cost of revenues(2)   (1,624,172)   (2,337,547)   -    (3,961,719)   (583,498)
                          
Gross profit   1,267,365    1,057,291    -    2,324,656    342,385 
Operating expenses(2)                         
Research and development expenses   (303,147)   (332,868)   -    (636,015)   (93,675)
Sales and marketing expenses   (230,230)   (852,808)   -    (1,083,038)   (159,514)
General and administrative expenses   (90,752)   (190,079)   -    (280,831)   (41,362)
                          
Total operating expenses   (624,129)   (1,375,755)   -    (1,999,884)   (294,551)
                          
Other income   135,286    6,515    -    141,801    20,885 
                          
Operating income (loss)   778,522    (311,949)   -    466,573    68,719 
                          
Other non-operating expenses   (1,000)   -    -    (1,000)   (147)
Interest expenses   (127,167)   (12,516)   4,490    (135,193)   (19,912)
Interest income and investment income   156,780    139    (4,490)   152,429    22,450 
Foreign currency exchange gains (loss), net   1,014    (56,016)   -    (55,002)   (8,101)
Fair value change on derivatives   (29,664)   -    -    (29,664)   (4,369)
Gain on disposal and deemed disposal of investments   2,040,359    -    -    2,040,359    300,512 
Loss on fair value change of investments   (39,792)   -    -    (39,792)   (5,861)
                          
Income (loss) before income tax expenses   2,779,052    (380,342)   -    2,398,710    353,291 
                          
Income tax expenses   (124,579)   (2,636)   -    (127,215)   (18,737)
                          
Income (loss) before share of loss in equity
method investments, net of income taxes		   2,654,473    (382,978)   -    2,271,495    334,554 
                          
Share of gain in equity method investments,
net of income taxes		   26,550    -    -    26,550    3,910 
                          
Net income (loss) from continuing operations   2,681,023    (382,978)   -    2,298,045    338,464 

 

17

 

 

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

 

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

 

   Three Months Ended 
   September 30, 2020 
   YY   Bigo   Total   Total 
   RMB   RMB   RMB   US$ 
                     
Cost of revenues   9,738    3,938    13,676    2,014 
Research and development expenses   36,643    49,861    86,504    12,741 
Sales and marketing expenses   1,772    972    2,744    404 
General and administrative expenses   (7,860)   93,114    85,254    12,557 

 

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, 2020 
   YY   Bigo   Total   Total 
   RMB   RMB   RMB   US$ 
                 
Operating income (loss)   778,522    (311,949)   466,573    68,719 
Share-based compensation expenses   40,293    147,885    188,178    27,716 
Amortization of intangible assets from business acquisitions   -    171,085    171,085    25,198 
                     
Non-GAAP operating income   818,815    7,021    825,836    121,633 
                     
Net income (loss) from continuing operations   2,681,023    (382,978)   2,298,045    338,464 
Share-based compensation expenses   40,293    147,885    188,178    27,716 
Amortization of intangible assets from business acquisitions   -    171,085    171,085    25,198 
Gain on disposal and deemed disposal of investments   (2,040,359)   -    (2,040,359)   (300,512)
Loss on fair value change of investments   39,792    -    39,792    5,861 
Reconciling items on the share of equity method investments   25,879    -    25,879    3,812 
Fair value change on derivatives   29,664    -    29,664    4,369 
Interest expenses related to the convertible bonds’ amortization to face value   107,728    -    107,728    15,867 
Income tax effects on non-GAAP adjustments   (7,248)   (7,993)   (15,241)   (2,245)
                     
Non-GAAP net income (loss) from continuing operations   876,772    (72,001)   804,771    118,530 

 

19

 

 

JOYY INC.

UNAUDITED SEGMENT REPORT

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

 

   Three Months Ended 
   June 30, 2020 
   YY   Bigo   Elimination(1)   Total   Total 
   RMB   RMB   RMB   RMB   US$ 
                     
Net revenues                         
Live streaming   2,661,788    2,945,960    -    5,607,748    793,725 
Others   115,618    116,726    -    232,344    32,886 
                          
Total net revenues   2,777,406    3,062,686    -    5,840,092    826,611 
                          
Cost of revenues(2)   (1,583,125)   (2,185,970)   -    (3,769,095)   (533,481)
                          
Gross profit   1,194,281    876,716    -    2,070,997    293,130 
Operating expenses(2)                         
Research and development expenses   (292,459)   (400,999)   -    (693,458)   (98,153)
Sales and marketing expenses   (224,955)   (684,870)   -    (909,825)   (128,777)
General and administrative expenses   (232,427)   (180,287)   -    (412,714)   (58,416)
                          
Total operating expenses   (749,841)   (1,266,156)   -    (2,015,997)   (285,346)
                          
Other income   31,679    8,564    -    40,243    5,696 
                          
Operating income (loss)   476,119    (380,876)   -    95,243    13,480 
                          
Other non-operating expenses   -    (4,257)   -    (4,257)   (603)
Interest expenses   (126,282)   (14,231)   8,857    (131,656)   (18,635)
Interest income and investment income   171,299    77    (8,857)   162,519    23,003 
Foreign currency exchange gains, net   2,839    407    -    3,246    459 
Fair value change on derivatives   2,174    -    -    2,174    308 
Loss on disposal and deemed disposal of investments   (13,444)   -    -    (13,444)   (1,903)
Gain on fair value change of investments   708,633    -    -    708,633    100,300 
                          
Income (loss) before income tax expenses   1,221,338    (398,880)   -    822,458    116,409 
                          
Income tax (expenses) benefits   (203,468)   16,222    -    (187,246)   (26,503)
                          
Income (loss) before share of loss in equity method investments, net of income taxes   1,017,870    (382,658)   -    635,212    89,906 
                          
Share of loss in equity method investments, net of income taxes   (23,544)   -    -    (23,544)   (3,332)
                          
Net income (loss) from continuing operations   994,326    (382,658)   -    611,668    86,574 

 

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

 

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

 

   Three Months Ended 
   June 30, 2020 
   YY   Bigo   Total   Total 
   RMB   RMB   RMB   US$ 
                 
Cost of revenues   1,103    8,534    9,637    1,364 
Research and development expenses   26,528    65,937    92,465    13,088 
Sales and marketing expenses   816    1,208    2,024    286 
General and administrative expenses   53,199    37,820    91,019    12,883 

 

 

20

 

  

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 
   June 30, 2020 
    YY    Bigo    Total    Total 
    RMB    RMB    RMB    US$ 
                     
Operating income (loss)   476,119    (380,876)   95,243    13,480 
Share-based compensation expenses   81,646    113,499    195,145    27,621 
Impairment of goodwill and investments   43,861    -    43,861    6,208 
Amortization of intangible assets from business acquisitions   -    175,043    175,043    24,776 
                     
Non-GAAP operating income (loss)   601,626    (92,334)   509,292    72,085 
                     
Net income (loss) from continuing operations   994,326    (382,658)   611,668    86,574 
Share-based compensation expenses   81,646    113,499    195,145    27,621 
Impairment of goodwill and investments   43,861    -    43,861    6,208 
Amortization of intangible assets from business acquisitions   -    175,043    175,043    24,776 
Loss on disposal and deemed disposal of investments   13,444    -    13,444    1,903 
Gain on fair value change of investments   (708,633)   -    (708,633)   (100,300)
Reconciling items on the share of equity method investments   8,805    -    8,805    1,246 
Fair value change on derivatives   (2,174)   -    (2,174)   (308)
Interest expenses related to the convertible bonds’ amortization to face value   106,908    -    106,908    15,132 
Income tax effects on non-GAAP adjustments   65,180    (22,728)   42,452    6,009 
                     
Non-GAAP net income (loss) from continuing operations   603,363    (116,844)   486,519    68,861 

 

21

 

 

JOYY INC.

UNAUDITED SEGMENT REPORT

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

 

   Three Months Ended 
   September 30, 2019 
   YY   Bigo   Elimination(1)   Total   Total 
   RMB   RMB   RMB   RMB   US$ 
                     
Net revenues                         
Live streaming   2,899,044    1,418,796    -    4,317,840    604,088 
Others   181,006    118,419    -    299,425    41,891 
                          
Total net revenues   3,080,050    1,537,215    -    4,617,265    645,979 
                          
Cost of revenues(2)   (1,729,389)   (1,125,157)   -    (2,854,546)   (399,366)
                          
Gross profit   1,350,661    412,058    -    1,762,719    246,613 
Operating expenses(2)                         
Research and development expenses   (249,620)   (288,469)   -    (538,089)   (75,281)
Sales and marketing expenses   (340,619)   (616,642)   -    (957,261)   (133,926)
General and administrative expenses   (225,281)   (87,235)   -    (312,516)   (43,723)
                          
Total operating expenses   (815,520)   (992,346)   -    (1,807,866)   (252,930)
                          
Other income   136,535    5,035    -    141,570    19,806 
                          
Operating income (loss)   671,676    (575,253)   -    96,423    13,489 
                          
Interest expenses   (123,456)   (11,078)   11,078    (123,456)   (17,272)
Interest income and investment income   127,068    608    (11,078)   116,598    16,313 
Foreign currency exchange (losses) gains, net   2,798    12,950    -    15,748    2,203 
Fair value change on derivatives   (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    (572,773)   -    92,068    12,880 
                          
Income tax (expenses) benefits   (146,835)   88,143    -    (58,692)   (8,211)
                          
Income (loss) before share of income in equity method investments, net of income taxes   518,006    (484,630)   -    33,376    4,669 
                          
Share of income in equity method investments, net of income taxes   21,189    -    -    21,189    2,964 
                          
Net income (loss) from continuing operations   539,195    (484,630)   -    54,565    7,633 

 

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

 

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

 

   Three Months Ended 
   September 30, 2019 
   YY   Bigo   Total   Total 
   RMB   RMB   RMB   US$ 
                 
Cost of revenues   5,043    7,068    12,111    1,694 
Research and development expenses   26,848    78,154    105,002    14,690 
Sales and marketing expenses   419    756    1,175    164 
General and administrative expenses   41,265    4,958    46,223    6,467 

 

22

 

 

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   Bigo   Total   Total 
   RMB   RMB   RMB   US$ 
                 
Operating income (loss)   671,676    (575,253)   96,423    13,489 
Share-based compensation expenses   73,575    90,936    164,511    23,015 
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    (290,830)   464,421    64,973 
                     
Net income (loss) from continuing operations   539,195    (484,630)   54,565    7,633 
Share-based compensation expenses   73,575    90,936    164,511    23,015 
Impairment of goodwill and investments   10,000    -    10,000    1,399 
Amortization of intangible assets from business acquisitions   -    193,487    193,487    27,070 
Gain on fair value change of investments   11,492    -    11,492    1,608 
Reconciling items on the share of equity method investments   (9,461)   -    (9,461)   (1,324)
Fair value change on derivatives   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) from continuing operations   727,251    (240,185)   487,066    68,141 

 

23