Ladies and gentlemen, thank you for standing by, and welcome to the JOYY Inc.'s First Quarter 2024 Earnings Call. [Operator Instructions] I'd now like to hand the conference over to your host today, Jane Xie, the company's Senior Manager of Investor Relations. Please go ahead, Jane. .

Thank you, operator. Hello, everyone. Welcome to JOYY's First Quarter 2024 Earnings Conference Call. Joining us today are Mr. David Xueling Li, Chairman and CEO of JOYY; Ms. Ting Li, our COO; and Mr. Alex Liu, Vice President of Finance. For today's call, management will first provide a review of the quarter, and then we will conduct a Q&A session. .

The financial results and webcast of this conference call are available at ir.joyy.com. A replay of this call will also be available on our website in a few hours. .

Before we continue, I would like to remind you that we may make forward-looking statements, which are inherently subject to risks and uncertainties that may cause actual results to differ from our current expectations.

For detailed discussions of the risks and uncertainties, please refer to our latest annual report on Form 20-F and other documents filed with the SEC..

Finally, please note that unless otherwise stated, all figures mentioned during this conference call are in U.S. dollars. I will now turn the call over to our Chairman and CEO, Mr. David Xueling Li. Please go ahead, sir. .

Hello, everyone. Welcome to our first quarter 2024 earnings call. To start, let me briefly review our performance in the fourth quarter. We kicked off 2024 with a solid quarter. Group's revenue currently at $565 million with our core business BIGO segment contributing $505 million.

Group's non-GAAP net profit reached $65 million and BIGO's non-GAAP net profit hit $71 million, both surpassing our expectations. BIGO sustained its top line recovery trend for the third consecutive quarter, achieving at 8% year-over-year growth.

Livestreaming revenues from our core global products, which include a big Bigo Live, likee, imo increased by 2.8% year-over-year, driven by a continued expansion of paying users, which was up by 6.9% on an annual basis..

We have prioritized and the channel that our advertising spend and other operational resources toward premium users and developed countries where we observed improved ROI and spending segment. Across all BIGO's markets developed countries continued to outperform with livestreaming revenues, achieving double-digit growth year-over-year. .

Importantly, as we continue to strategically expand and diversify our revenue streams, BIGO's non-live streaming revenues, primarily advertising revenues grew substantially year-over-year. At the same time, we continued to improve our profitability at group level.

Our non-GAAP net profit reached $67 million in the fourth quarter after 34.8% year-over-year..

Non-GAAP net margin increased by 3.4 percentage points to 11.9%. Notably, despite the negative impact of seasonality, the All Other segment is steadily narrowed its non-GAAP operation loss on a sequential basis.

This improvement was driven by further cost optimization and enhance the operational and management efficiency at both the group and product levels..

We sustained our positive operation cash flow in the first quarter, generating a robust $75 million with its foundation of healthy cash flows and our solid financial position. We repurchased an additional of $54.5 million worth of shares during the quarter.

As we have outlined previously, despite the last developments with regard to the sales of YY Live, we remain committed to returning value to our shareholders..

We will continue to actively execute our current share repurchase program and enhance execution consistently. Looking ahead, well, we have seen some green shoots of recovery, global macroeconomic uncertainties persisted. Our livestreaming ARPU was still down slightly year-over-year. And the regional recovery [ change ] diverged and remained uneven.

As such, we will maintain our efficiency-oriented approach to our operational investments. We will continue to focus on ROI and nimbly adjust our strategies to [ fill in ] with prevailing market dynamics. We expect to drive healthy and sustainable growth of our business while maintaining stable profitability and positive cash flow..

Based on our current operational plans, we expect BIGO to resume sequentially growth in the second half of the year and maintain its year-over-year revenue recovery for the full year.

We anticipate that BIGO's revenue mix will become more diversified in 2024 with a further increase in the contribution from non-livestreaming revenue on a year-over-year basis. .

Now let's delve deeper into our regional strategies by optimizing product features, providing diverse premium content and leveraging innovative marketing activities. We continuously enhance our users' content and social experience.

Notably, our global operations teams collaborated with KOLs and the industry partners to execute a range of innovative online and offline marketing activities in the fourth quarter. .

In addition to hosting galas and cultural themed regional activities and resonate deeply with our users. We yet elevated our presence in the offline activities and roadshows. We also hosted [ creator ] parties and family events to further connect with our community.

These initiatives drove deeper engagement with our global communities of users and significantly enhanced both product awareness and our brand awareness..

Furthermore, as a global technology company, we remained steadfast in our commitment to promoting corporate social responsibilities and sustainable development and integrating these principles into the core of our local operations worldwide.

In March, we launched a series of regional events in Middle East and Southeast Asia to celebrate Ramadan fostering a sense of community among users during this festival period.

We also forged partners with several international charitable organizations include the Indonesia Cancer Foundation; Saudi Arabia's Namaa National Association; and Bangladesh's JAAGO Foundations.

We made a number of donations to those international charitable organizations, inspiring hundreds of -- thousands of our users to join our cause and provide assistance to local families' patients and children in need..

We have also actively engaged dialogues with government agencies, industry leaders, entrepreneurs and other stakeholders in our key markets to align our regional operations with the economic and sustainable development global of -- goals of local communities.

For example, in January, we attended the Jordan-Singapore Tech Alliance Forum with BIGO and the Information and Communications Technology Associations of Jordan jointly signed an MoU. This partnership aimed to strengthen bilateral cooperation, promote regional technology called innovation and facilitate economic growth..

In March, BIGO participated in LEAP, the largest technology exhibition in Middle East, where we showcased BIGO's technologies and AI-driven solutions. BIGO's presence underscores our support for the region's sustainable development and our commitment to promoting entrepreneurship, innovation and digital transforming -- transformation. .

Now let's take a closer look at our product, we will start with, Bigo Live. In the first quarter, Bigo Live's revenue continued its year-over-year rebound, especially revenue from developed country grew by 40.8% accompanied by 17.2% increase in pay user in those regions.

During the quarter, we remain focused on Bigo Live user acquisition strategy channeling more resources into developed countries to enhance our monetization efficiency. As a result, Bigo Live's MAU was slightly down year-over-year, setting at 37.1 million. .

However, MAU in developed countries rose by 8.9% on an annual basis. In contract -- in contrast with 4% decline in Southeast Asia and other emerging markets. Moving forward, we will continue to execution our focused user acquisition strategy as we strive to optimize Bigo Live's user mix.

While we anticipate some short-term fluctuations in MAU growth, we are confident that this adjustment will enhance the long-term [ validity ] of Bigo Live..

In the fourth quarter, Bigo Live organized a variety of innovative marketing initiatives in reaching the platform with diverse high-quality content and broadening our reach within the global community. A highlight was our participating in the Sanremo Music Festival, the world-famous Italian song contest and award ceremony held in early February.

As part of organizer, Bigo Live showcased 10 of our most talented streamers in a 2-hour music extravaganza that was streamed worldwide..

In addition, Bigo Live launched an intelligent management system for streamers and agencies which significantly streamlines the contracting and the management process by reducing the average duration from days to mere hours. This efficiency boost led to 4.9% quarter-over-quarter increase in newly contracted streamers.

We anticipate the automation initiatives such as these will further improve our overall operational efficiency in the long run. .

Family-based operational activities also played a key role in this quarter, strengthening social bonds within our user community in a sequential basis. Our approach yielded a 1.1% increase in paying Family user and 1.5% rise in contracted streamers within Families and [ 6.2% ] uptick in daily active user in Family groups. .

We also simplified and upgraded Bigo Live's homepage and rolled out -- refined the AI driving content recommendation algorithm that better catered to our users' preference and their real-time feedback. This resulted in sequentially increase of 1.1% in next-day user retention and 5.4% in average viewer time spent per live session.

Enhancements to livestreaming rooms tools and interactive features contributed to a 5.3% sequential rise in average during per live session. And 4.4% sequential increase in the number of users going live in multi-guest rooms..

Next, let's take a look at Likee. In the first quarter, Likee's revenue continued to recover year-over-year and then it maintained its profitability. Advertising revenue grew by 1.1x on an annual basis and the DAU in the core European market maintained sequential growth.

Likee's recently launch of interactive gaming features has been instrumental in breaking the ice and fostering connections between users, leading to substantial growth in paying users..

During the fourth quarter, Likee launched a series of engaging community events for creators, users and brands.

This includes the global Likee Party and MENA Gala in the Middle East cohosted with Bigo Live as Likee continued to enhance its creator services and expanded its optimization tools and incentives for premium creators, its number of core creators increased by 13.6% quarter-over-quarter. .

Finally, turning to Hago, Hago sustained a positive operation cash flow during the first quarter. Hago's implementation of more gamified interactions and paid features has effectively boosted user engagement and monetization. A standout success was the rollout of the Fly Across the World event spanning Hago's major operation countries.

By participating in the event users could travel virtually to various countries, collect treasures, claim and nurture their travel companion pets and tip virtual gifts tailored to each location's, unique culture and traditions. The event received enthusiastic feedback with nearly 1/3 of Hago's total paid user participating.

User engagement on Hago also increased notably with daily average time spent in social channels, rising by 2.8% to 102 minutes. And the time spent in multi-guest audio livestreaming rooms up by 2.9% from the previous quarter..

To sum up, we are off to a good start in 2022 (sic) [ 2024 ]. Bigo has sustained its year-over-year revenue recovery trajectory while further diversifying its revenue mix. The group has delivered profit growth. Looking ahead, we will continue to furnish our product experience and drive operational innovations.

At the same time, we will further optimize our efficiencies to propel sustainable profitable growth across our global business..

This concludes my prepared remarks. I will now turn the call to our Vice President of Finance, Alex Liu, for our financial updates. .

Thanks, David. Hello, everyone. Before I go into the details, we would like to remind you that despite the latest development in the sale of YY Live. To the date of this press release, they have not obtained control over YY Live, and therefore, have not consolidated the business..

The financial results presented in our press release and this conference call primarily consisted of Bigo and all other segments, excluding YY Live. I will now provide a recap of some key financial highlights for the first quarter..

Overall, we observed improving fundamentals supported by BIGO's continued top line recovery and efficiency improvement at the group level. Our total net revenues were $564.6 million in the first quarter. Revenues from BIGO segment were $505.2 million, up by 8% year-over-year.

In particular, BIGO's non-live streaming revenues were $63 million, which was up substantially year-over-year primarily due to the increase of advertising revenues..

Geographically speaking, as we prioritized to allocate our operational resources towards developed countries. Our revenues from developed countries was up by double digit year-over-year outperforming other regions.

Cost of revenues for the quarter decreased to $369.2 million among which our revenue-sharing fees and content costs increased to $268.4 million. BIGO's cost of revenues was $328.6 million, which was up year-over-year, consistent with a rebound in revenue and elevated creator support during the quarter..

Gross profit was $195.4 million in the quarter with a gross margin of 34.6%. BIGO's gross profit was [ $176.6 ] million with a gross margin of 35%. BIGO's gross margin was lower year-over-year due to change of revenue mix and higher contribution of BIGO Audience Network advertising revenues. .

Our group's operating expenses for the quarter were $195.4 million compared with $205.3 million in the same period of 2023 Among the operating expenses, R&D expenses decreased to $69 million from $75.8 million, primarily due to decreased personnel expenses and share-based compensation expenses. .

Our sales and marketing expenses decreased to $94.6 million from $97.6 million in the same period of 2023. BIGO's total operating expenses for the quarter were $129.5 million. This was slight year-over-year, while its total operating expenses ratio was 25.6% during the quarter, down from 27.6% last year..

Our group's GAAP operating income for the quarter was $3.5 million.

And the group's non-GAAP operating income for the quarter which excludes SBC expenses, amortization of intangible assets from business acquisitions, not on the consolidation and the disposal of subsidiaries as well as impairment of goodwill and investments was $24.8 million in this quarter, with non-GAAP operating income margin of 4.4%.

BIGO's GAAP operating income for the quarter was $50.4 million and BIGO's non-GAAP operating income was $63 million representing a non-GAAP operating income margin of 12.5% (sic) [ 12.9% ]. The GAAP and non-GAAP operating loss for All Other segment during the quarter was further narrowed to $46.8 million and $38.2 million on a sequential basis.

Respectively, despite the negative impact of seasonality. .

group's GAAP net income attributable to controlling interest of JOYY in the quarter was $45.3 million compared to $28 million in the same period of 2023. GAAP net income margin was 8% in the first quarter of 2024 compared to 4.8% in the same period of 2023.

BIGO's GAAP net income in the quarter was $69 million with a GAAP net margin of 12.1%, up from 9.3% in the same period last year..

Non-GAAP net income attributable to controlling interest of JOYY in the quarter was $67.2 million, compared to $49.9 million in the same period of 2023. The group's non-GAAP net income margin was 11.9% in the quarter, compared to 8.5% in the same period of 2023.

BIGO's non-GAAP net income was $71.2 million compared with $66.8 million in the same period of 2023. BIGO's non-GAAP net margin was 14.9% in the quarter, up from 12.1% in the same period last year..

For the first quarter of 2024, we booked net cash inflows from operating activities of $75 million. We made a healthy balance sheet with a strong cash position of $3.6 billion as of March 31, 2024. In the first quarter, we continued to enhance returns to shareholders and repurchased an additional of approximately $54.5 million of our shares.

As of the end of March, we still have around $472 million unutilized quota under our current share repurchase program. We intend to actively utilize our current share repurchase program and proceed with steady execution of additional share buyback in 2024..

Turning now to our business outlook. We anticipate continued top line recovery in the BIGO segment. However, due to the ongoing uncertainty in the global macro landscape, we recognize that the pace of recovery may be uneven across different markets and there may be short-term fluctuations in user paying segment.

At group level, we expect our net revenues for the second quarter of 2024 to be between $538 million and $569 million. This forecast reflects our preliminary views on the market and operational conditions, which are subject to changes. .

Looking forward, we will remain dedicated to our strategic priorities, optimizing product and innovating our business to create value for our users and stakeholders. We continue to execute our ROI-oriented operational strategy to deliver profitable, sustainable growth. .

That concludes our prepared remarks. Operator, we would now like to open up the call to questions. .

[Operator Instructions] Your first question comes from Henry Sun with JPMorgan. .

[Foreign Language] My question is about the revenue in Bigo Live.

Could the management share the revenue outlook for 2024? And what are the expected trend for Bigo Live by region in the second half of this year?.

[Foreign Language].

[Interpreted] This is David. I will take a question. First, let's review the monetization trend for Q1. In the first quarter, BIGO's 3 core products saw positive year-over-year growth in their live streaming revenue, although there was a Q-on-Q decline primarily due to the impact of a low season.

The current revenue recovery is primarily driven by the growth in paying users while our ARPU is still showing a year-over-year decline looking at the trends across different markets..

The revenue in developed countries maintained double-digit growth year-over-year in the first quarter, while other regions such as Middle East and Southeast Asia, have not yet returned to recovery trends..

Taking the ARPU decline and uneven trend across different regions, we believe that uncertainties and risks still persist regarding the global macro environment.

Therefore, we still need to remain focused and targeted, spend our money wisely with our ROI and efficiency as the top priorities, seeking a healthy growth based on stable profitability and healthy cash flow, maintaining a targeted and focused operational strategy actually requires the combined efforts of multiple teams, including our user acquisition, our content operation and our content recommendation algorithm team..

And these actually involves the in-depth analysis of different demographics of users, content and also [ chipping ] behavior and their ROI.

And based on those data, we then flexibly adjust our advertising spend, our content recommendation and our monetization-driven activities accordingly, making sure these adjustments are coordinated and synchronized while -- during that process, we figured that actually our platform's diverse culture provides extra and unique emotional value to users.

And those who value such [ ad spends ] tend to have a higher ARPU than the overall average and exhibit very strong loyalty, therefore, we will continue to uphold our value to cultivate a diverse and inclusive culture. And combined with our targeted operational strategy and amplify our advantages of diverse culture and multi-market operation..

And looking ahead to the revenue trend in the following quarters, first of all, for Q2 because of the influence of Ramadan and the celebration of Eid during which we believe users' offline social activities will increase and also together with some of our optimization of content policies in certain regions, we expect a relatively softer Q2, and that was reflected in our current guidance..

However, our -- given that we expect to have elevated level of operational activities and marketing activities in the second half of the year, we do expect Bigo's revenue growth will be better in the second half of the year. And for the full year of '24, we're still expecting BIGO to maintain revenue recovery trend on a year-over-year basis. .

Your next question comes from Alex Poon with Morgan Stanley. .

[Foreign Language] My question is related to our group margin trend and BIGO margin trend in the rest of the year. .

[Foreign Language].

[Interpreted] Thank you. This is Alex. I will take your question. In the first quarter, the group's non-GAAP net profit achieved a year-over-year increase of 34.8% on first looking at BIGO's segment. BIGO's non-GAAP net profit grew by 25.3% year-over-year. And the amount of non-GAAP operating profit was flattish in line with our expectations..

In Q1, BIGO's non-GAAP gross margin was 35% declining year-over-year, mainly due to the strategic upgrade of BIGO's advertising business and some change in the revenue mix. Excluding that impact, BIGO's Q1 gross margin is consistent with our expectation for a low season..

In terms of operating expenses, thanks to our continued cost optimization and improvement of our operational efficiency, BIGO's operating expenses increased by a slower rate than its revenue growth.

Regarding the all other segments, despite the impact of a low season and also the proactive adjustment of certain noncore audio live streaming business that we did in last year, the segment continued to book reduced losses -- reduced operating losses in Q1 on a sequential basis with its non-GAAP operating losses narrowing by 2.1% Q-o-Q..

So looking ahead to the rest of 2024, we expect to continue to focus on ROI and efficiency. For BIGO segment, we expect Bigo to continue its top line recovery year-over-year and deliver a stable amount of non-GAAP operating losses, while excluding the impact of some adjustments to noncore audio live streaming business..

And for the other segment -- for the all other segment, we expect it to further narrow its non-GAAP operating losses Q-on-Q. .

Your next question comes from Lei Zhang with Bank of America. .

[Foreign Language] I want to follow up on the share repurchase plan [ returned back ] in the following quarter since we have repurchased U.S. dollar about $55 million in the fourth quarter. .

[Foreign Language].

[Interpreted] Thank you, Lei. This is Alex. I will take the question. As we've just mentioned, although that the sale of YY Live is not yet conclusive, we remain committed to returning value to our shareholders. In the first quarter, you can see that we have repurchased an additional $54.5 million worth of our shares.

As of the end of Q1, we still have around $772 million unutilized quota under our current share repurchase program. We intend to continue to execute additional share repurchases and we'll strive to improve our execution consistency in '24. Our last question, please. .

Your last question comes from Yiwen Zhang with China Renaissance. .

[Foreign Language] My question is regarding our non-livestreaming [ revenue ]. Can you discuss the trend there and our future plan. .

[Foreign Language].

[Interpreted] Thank you. This is David. I will answer your question.

Currently, our non-livestreaming revenue primarily includes advertising revenues, which could be further diverted into 2 categories, including advertising revenue generated on our own social platform and advertising revenues generated on BIGO Audience Network where we work with third-party traffic.

Looking back at the year '23, we've made some progress regarding our non-livestreaming business. With BIGO's non-livestreaming revenue increased by 14% year-over-year and Likee's advertising revenue increased by nearly 2.5x year-over-year..

And in Q1, we continue to see significant year-over-year growth in BIGO's non-livestreaming revenues. That was partially driven by the strategic upgrade of our BIGO Audience Network advertising business. Excluding the -- our network advertising revenues, BIGO's non-livestreaming revenue grew by over 50% year-over-year.

Among this Likee's advertising revenue increased by 1.1x in the quarter. However, I would like to acknowledge that our advertising business is still in a relatively early stage. .

We will continue to optimize our products and services focused on growing our core market, DAU, and also our merchant advertiser corporation network. We expect to continue to expand and diversify our revenue streams and drive a long-term sustainable growth with a much diversified engine. So that was the last question.

Thank you so much for joining our call. We look forward to speaking with everyone next quarter. .

That does conclude our conference for today. Thank you for participating. You may now disconnect. .

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.].