JOYY (YY) Q2 earnings beat estimates, revenue falls Y/Y

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JOYY Inc. YY generated second-quarter 2022 non-GAAP earnings of 65 cents per U.S. Depository Share (ADS), which beat Zacks’ consensus estimate of 20 cents and was up significantly from the loss of a cent per share reported a year ago.

Revenue totaled $596.2 million, down 9.9% year-over-year and below Zacks’ consensus estimate of 0.6%. The decline in revenue was due to global macroeconomic uncertainties and the seasonal impact of the Ramadan holiday in the Middle East.

ADR award sponsored by JOYY Inc., consensus and surprise EPS

JOYY Inc. Sponsored Prize ADR-consensus-eps-surprise-chart | ADR quote sponsored by JOYY Inc.

Front line details

Live streaming revenue (95% of total revenue) decreased 10.2% year-over-year to $565.2 million, primarily due to lower paid users and average revenue per paid user of BIGO, while global macroeconomic uncertainties and the appreciation of the US dollar against certain other local currencies negatively affected paid user activities.

In particular, other revenue (5% of total revenue) fell 3.8% to $30.8 million. Global average mobile MAUs decreased 11.2% year-over-year to 273.1 million, primarily due to lower average mobile MAUs from Likee and Hago.

BIGO and All Other contributed 85% and 15%, respectively, to total live streaming revenue in the second quarter. Moreover, the year-on-year growth at YY Live and HUYA Live was 11.5% and 93.7%, respectively.

During the second quarter, Bigo Live’s monthly active users (MAUs) grew 10.6% year-over-year to 32.6 million. Notably, users in Southeast Asia and other emerging markets grew 18.6%, while users in Europe grew 8.7% year-over-year.

Bigo Live’s average mobile MAUs grew 10.6% year-over-year to 32.6 million. Likee’s average mobile MAUs declined 37.5% year-over-year to 57.7 million, primarily due to reduced user acquisition spend through advertising.

During the second quarter, Hago’s live streaming revenue grew 7.1% year-over-year, and its number of paying users increased 12.8% over the same period. Hago’s average mobile MAUs decreased 27.4% year-over-year to 8.5 million.

Revenue cost decreased 17.6% to $377.7 million in the second quarter of 2022. Revenue share and content costs were $247.0 million, compared to $289.1 million in the corresponding period of 2021.

Bandwidth costs decreased to $20.0 million in the second quarter of 2022 from $27.5 million in the corresponding period of 2021, primarily due to improved network efficiency. company’s bandwidth usage, partially offset by increased bandwidth usage due to the continued expansion of Bigo Vivre’s MAUs.

Operation details

Gross profit climbed 7.4% from the year-ago quarter to $218.4 million. Gross margin increased 590 basis points (bps) to 37% in the second quarter, mainly due to revenue share cost optimization and improved bandwidth utilization efficiency .

Operating expenses totaled $185 million, down 41.1% from the prior year quarter. Research and development (R&D), sales and marketing (S&M) and general and administrative (G&A) expenses were down 37.6%, 12.2% and 76.6% year-on-year other, respectively. As a percentage of revenue, R&D contracted 470 basis points while S&M expenses contracted 40 basis points year-over-year. G&A expenses, as a percentage of revenue, contracted significantly to 4% from 15% in the prior year quarter.

The company reported non-GAAP operating profit of $38.7 million compared to an operating loss of $12.9 million a year ago.

The operating profit margin was 6.5% in the second quarter of 2022, in contrast to the operating loss margin of 15.3% in the corresponding period of 2021, mainly due to the fact that BIGO is became profitable from the second quarter of 2021.

Balance sheet and cash flow

As of June 30, 2022, the company had cash and cash equivalents, restricted cash and cash equivalents, short-term deposits, restricted short-term deposits and short-term investments of $4.2 billion. For the second quarter of 2022, net cash provided by operating activities was $61.7 million.

As of June 30, 2022, the company had a total of 1,426.6 million ordinary shares, equivalent to 71.3 million ADSs, outstanding.

Orientation Q3

For the third quarter of 2022, the company expects net revenues to be between $561.5 million and $593.5 million.

Zacks Ranking and Other Stocks to Consider

Currently, YY carries a Zacks rank #1 (Strong Buy).

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Arista Networks ANET currently sports a Zacks rank of 1.

ANET shares have fallen 12.9% year-to-date compared to the 12.7% drop in the industry Zacks Communication – Components.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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