JOYY Inc. American Depositary Shares 2026 Q2 Earnings Call

Hello, everyone. Welcome to JOYY's second quarter 2026 earnings conference call. Joining us today are Ms. Ting Li, Chairperson and CEO of JOYY, and Mr. Alex Liu, Vice President of Finance. For today's call, management will provide a review of this quarter, followed by a Q&A session. The financial results and webcast of this conference call are available on our website, ir.joyy.com. Please note that today's call contains forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations. For detailed discussions of these risks and uncertainties, please refer to our latest annual report on Form 20-F, and other documents filed with the SEC.

Please also note that JOYY's earnings press release and this conference call include disclosures of GAAP and non-GAAP financial measures. A reconciliation of these non-GAAP measures to GAAP measures is included in today's earnings press release. All figures referenced on today's call are in USD, unless otherwise noted. I will now turn the call over to our Chairperson and CEO, Ms. Ting Li.

Please go ahead. Hello, everyone.

I'm Li Ting. Thank you for joining us. Building on a strong first quarter, we delivered another solid result in Q2, recording accelerated revenue growth and a notable improvement in operating profit. Our social entertainment, Bigo Live, and the Shopline business all advanced in tandem. While our globally diversified ecosystem continued to unlock growth momentum, propelling our long-term value to its next level. In the second quarter, we generated total revenue of $591 million, up 16.3% year-over-year, and 6.3% Q/Q. Social entertainment revenue was $423 million, up 7.4% year-over-year, and 5.6% Q/Q. Bigo Live, including both first-party and third-party businesses, generated $134 million in revenue, up 53.1% year-over-year, with our third party, BIGO Audience Network, sustaining strong growth of 74.1% year-over-year. Shopline revenue reached $34 million, with year-over-year growth further accelerating to 28.6%.

Non-live streaming revenue surpassed 31.8% of total revenue for the quarter. Non-GAAP operating profit reached $49 million, up 28.2% year-over-year, and non-GAAP EBITDA reached $57 million, up 18.1% year-over-year. Operating cash flow for the quarter was $65 million. As of March 30, 2026, we held $3.06 billion in net cash. Since the start of this year, we have accelerated our capital returns year-to-date. Through August 21, 2026, we have repurchased a cumulative $216 million in shares and paid $142 million in dividends, for a total return of $359 million in shareholders. Meaningful shareholders' returns remain a key part of our strategy as we continue to execute on the $1.5 billion shareholders' return program running through the end of 2028, which our board authorized this May. At this mid-year mark, I would like to take a few minutes to share our perspective on our overall strategy.

Today, JOYY is steadily evolving into a multi-engine global technology company. In the first half of this year, the core social entertainment business maintained a steady recovery, with all flagship products returning to solid growth and profitability continuing to improve. This further validates the effectiveness of the judgments we have made to our content ecosystem, user experience, and localized operations over the past several quarters. At the same time, our second growth curve, comprising Ad Tech and smart commerce sustained a strong performance, making increasingly greater contributions to the group. Looking ahead, we remain committed to building a global technology ecosystem driven by AI. By leveraging the synergies of social entertainment, programmatics, advertising, and omnichannel e-commerce, we are fueling our growth fly view, and building the core competitiveness that will define our future. First, social entertainment remains an important strategic cornerstone for the group.

We will continue to strengthen the growth momentum and profitability of our core products, while accelerating the build-out of our social product portfolio. These initiatives are expected to further reinforce the recovery trend and growth resilience of our core business, providing a stable foundation for profitability cash flow generation. At the same time, we are cultivating our ad tech and smart commerce businesses to boost overall revenue expansion. We will prioritize enhancing the standalone competitiveness of each business, expanding our customer base and business footprint, and further deepening our data, technology, and product capabilities. Looking ahead to 2028, as this business continues to scale, we currently expect non-live streaming segments to contribute close to half of the group's total revenue and operating profit. We see this as a testament to the strength of our monkey engine growth strategy and the validation of our long-term strategic approach.

AI is a critical foundational technology supporting our long-term strategy across all of our businesses. We continue to leverage AI to drive measurable product enhancements and efficiency gains across a range of scenarios, including our streamer ecosystem, content distribution, payment experience, advertising vertical models, and Shopline merchant operations. We are also applying AI to enhance our team's data analysis, decision making, and execution capabilities. By turning proven experience and workflow into replicable AI capabilities, we can accelerate knowledge sharing and scale best practices, further improving overall operating efficiency. In addition to our long-term business development, shareholder returns remain a persistent strategic priority. Our strong cash position and robust operating cash flow provide a solid foundation for ongoing business investment and shareholder returns. We expect to continue actively advancing our share repurchase and dividend programs as the company grows over the long term.

We remain committed to validating the strategic path through solid operating results, driving great market recognition of our long-term value. Next, I will walk through our Q2 results and share our outlook for the future. In Q2, social entertainment revenue grew 7.4% year-over-year and 5.6% Q/Q. Within this segment, live streaming revenue grew 7.3% year-over-year and 5.9% Q/Q. Core live streaming paying users grew 3.9% year-over-year and 1.7% Q/Q. On the traffic side, our global average mobile MAUs reached 277 million, up 5.5% year-over-year, supported by strong user engagement and organic growth. Our instant messaging product increased its contribution towards total MAUs to 82%. Bigo Live, our flagship product, recorded stronger sequential growth in Q2.

This momentum was driven by ongoing enhancements to our streamer incentive and growth mechanism, a richer content ecosystem, and AI-powered improvements to content distribution and payment experiences, alongside localized operating campaigns. Together, these efforts effectively drove user engagement and greater willingness to pay. In Q2, Bigo Live's average daily active streamers increased 4.4% Q2, while newly signed streamer joining Live increased 5.4% Q2. As we further enhance our streamer recruitment, incubation, and development mechanism, the supply of high-quality content on our platform should continue to expand. In content distribution, we continue to develop and refine our AI-driven content understanding capabilities. In particular, our focus is on improving onboarding content for new users and depending users consumption. By more efficiently identifying and distributing high-quality content across regions, we can better match content with users' interests and improve their consumption experiences.

To improve payment experience, we have been expanding our AI-generated content and interactive virtual gifts. In May, these gifts accounted for 34.3% of total virtual gift consumption, further validating the value of AI in reaching our content supply and enhancing users' interactive experience. At the same time, our new VOICe product portfolio continued to drive solid growth. In Q2, revenue from this new product increased more than 400% year-over-year, and 39% Q/Q, gradually becoming a meaningful complement to our social entertainment growth. Our current Q3 guidance projects moderate single-digit year-over-year growth for social entertainment revenue. In the second half, we will continue to strengthen localized operations, enrich content supply, and further optimize user and payment experiences. As core live streaming paying users expand steadily and our new VOICe product portfolio contribute to further incremental growth, we expect stronger momentum for our social entertainment business.

Based on current trends, we are confident that our social entertainment business will achieve full-year revenue growth in 2026, and sustain a steady growth trajectory beyond. In Q2, BIGO Ads generated $134 million in revenue, up 53.1% year-over-year, and 7.1% QOQ. Notably, our third-party business, the BIGO Audience Network, continued its strong momentum, delivering 74.1% year-over-year growth and 9.3% QOQ growth. Accelerating traffic expansion, a more diversified advertiser mix, omni-channel positioning, and significant algorithm efficiency gains are all strengthening the flywheel effect. On the supply side, BIGO Ads' developer ecosystem and global traffic coverage continued to expand. Our SDK traffic maintained a steady increase of 37.7% year-over-year in Q2. On the demand side, our strategy presence across multiple verticals, combined with AI-driven algorithm interventions, growing traffic scale, and regional market expansion drove strong advertiser demand.

As a result, performance advertising demand across multiple channels, including web and IAA, delivered stand out result. Web-based demand, primarily from lead generation and e-commerce, grew 91.7% year-over-year and 14.4% QOQ. in Q2, we continued to expand our advertiser base in several verticals, such as base space to e-commerce, further enriching our advertiser mix. As we approach the peak seasons in the second half, we are making early preparations in Q3 and remain optimistic about the growth prospects of web-based demand. Meanwhile, IAA spending recorded 17.3% year-over-year growth. On the algorithm side, continued investments in algorithm and engineering infrastructure, like for algorithm capability and cost efficiency and converting into positive circle that will drive the next stage of Bigo Live's development. As we accumulate our customer feedback data and refine our multi-channel attribution capabilities, our user profiling and targeting capabilities are improving.