JOYY Inc.

Ladies and gentlemen, thank you for standing by and welcome to Joy Inks' first quarter 2022 earnings call. At this time, all participants are in a listen-only mode. After the management's prepared remarks, there'll be a question and answer session. I'd now like to hand the conference over to your host today, Jane Cheer, the company's Senior Manager of Investor Relations. Please go ahead, Jane.

Thank you, Operator. Hello, everyone. Welcome to Joy's first quarter 2022 earnings conference call. Joining us today are Mr. David Shelling Lee, Chairman and CEO of Joy, Ms. Ting Lee, our COO, and Mr. Alex Liu, the General Manager 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 webcasts of this conference call are available at ir.joy.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 20F, and other documents filed with the FCC. 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 Schilling. Please go ahead, sir.

Hello, everyone. Welcome to our first quarter 2022 earnings call. Let me start the call with an overview of our first quarter results. In line with our previous expectations as various parts of the world started to emerge from pandemic restrictions, a combination of faults, including macroeconomic weakness, seasonality, and unfavorable foreign exchange impact contributed to a drag on our top line growth during the first quarter. For the first quarter of 2022, our group's total revenue were 623.8 million, decreasing by 3% year over year, among which among which Beagle's revenue was $534.6 million, decreasing by 8% year over year. However, our global business has demonstrated resilience despite the challenging market environment and weak seasonality. Such resilience is mainly attributable to our sustainable growth model and further improvement to our operating efficiency. When compared to prior year period, we achieved steady improvement in profitability during the first quarter of 2022, excluding YY Live we recorded a non-GAAP net profit of 20.9 million and expanded our non-GAAP net margin to 3.3%, compared to a non-GAAP net loss margin of 3.7 in the prior year period. Because non-GAAP net profit grew to 59.9 million, where its non-GAAP net margin improved to 11.2%. In addition, our operation cash flow remained healthy and reached a positive 59.2 million in the first quarter. I talked last quarter about some of the increasing macro complexities facing our business. As a global company with worldwide operations, we are not immune to international microeconomic volatilities. During the initial outbreak of COVID-19 from early 2020 to mid-2021, we experienced an acceleration in business growth as the online social entertainment industry in general enjoyed a greater user engagement and activities amidst prevalent lockdowns. However, as the world implied into the post-pandemic era, The long-term effect of COVID lingered, and the global economy suffered from dynamic growth recovery and significant inflationary pressures. These adverse microchips damped global consumers' confidence. reduce their spending power and pose challenges for our business growth in the short run. However, from a medium and long-term perspective, global users' diversified individual demand of social entertainment remains high, and the long-term trend of transitioning social entertainment activities from offline to online is still irreversible. As we look further into our key operational regions include North America, Europe, Pacific East, the Middle East, and South Asia, our product penetration rates is still relatively low, which creates substantial headroom for us for further penetrate the market. On top of that, I want to share some thoughts on our operating philosophy. First, we remain committed to our globalization through localization strategy, which has been vital to the rapid growth in our global business over the past few years. Globalization and diversification help us minimize our single region exposure, cushioning the blow from cyclical fluctuations in certain regions. We will further localize our operation team by recruiting professionals with international backgrounds to drive our content localization, innovation, and integration. Second, we will grow our user community by offering diverse social entertainment services with rich local and premium content offerings. At the same time, by continuously upgrading our product and the user interface and experience innovation, we seek to further optimize the immersive in-space, the social networking experience of our users. With our reach and the direct content, efficiency content recommendation engine and product that better neutral users' social networking needs, we should be able to further expand our product reach and ultimately fuel our monetization growth. So, we will continue to execute our sustainable ROI-driven growth strategy. and a balance between growth and profitability in 2022. We believe that under the current market environment, maintaining a strong operating cash flow is crucial to safeguard our need for long-term growth. As a company established in 2005 and with 10 years of listing history, we have been constantly adapting to evolving marketing conditions and have achieved significant breakthroughs. We believe that with our established operation capacity, continuous iteration on our user centric products, persistence, execution on a sustainable growth model, and striving to maintain robust cash flows. We are in a stronger position to navigate the current microeconomic challenges and size emerging growth opportunities along the way. Now, let me dive deeper into the progress we made in each of our product lines. Let's start with BeagleLive. In the first quarter, BeagleLive's MAU grew by 8.8% year-over-year to 31.7 million. As I have just mentioned, impacted by global economic uncertainty, unsustainable seasonal weakness and multiple local currencies depreciating against the U.S. dollar. BeagleLive's live streaming revenue and paying users in the first quarter decreased by 9.6% and 1.5%. year over year respectively. Geographically speaking, our operation in Europe was less effective when compared with prior year periods. During the quarter, both our revenue and the number of paid users from Europe sustained their growth momentum and increased by 10.4% and 3.1% year over year respectively. During the first quarter, we continued to diversify our localized premier content offerings on BeagleLive, driving improvement in its user engagement. For example, we hosted the European Talent Camping League, inviting streamers from various countries to produce local themed interactive content for European users. In Malaysia, we partnered with WeTV to offer our users exclusive access to streaming television dramas and reality shows on WeTV Live. Thanks to our diversified premier content, our user engagement improved and As evidenced by the 9.9% and the 2.1% sequentially increase in the average duration of live streaming sessions and the average viewer time spent, respectively. BeagleLive has always been dedicated to fostering engaging and in Class C community, and it has been an important venue for global users to connect with others with similar backgrounds or interests. In March, we launched a community feature, which is a space enabling users, especially New Year users, establish and join different interest groups and quickly connect with like-minded people. Within each community, users can interact with friends' video posts and join their live sessions, thereby significantly improving the efficiency of social interaction. Since this feature launched, various interest-based communities have flourished with themes such as fitness, pop-downs, dining, and others that enhance the diversification of our user content production as well as promoting the consolidation of our real-time and non-real-time content polls. Next, let's turn to Leakey. Following our proactive adjustment of Leakey's marketing strategy, Leakey's MAU fluctuation continued in the first quarter and its MAU reached 61.8 million in the first quarter. Due to the proactive adjustment, coupled with vehicle uncertainty and seasonal fluctuations, like its live streaming revenue declined by 11.9% year-over-year. However, its live streaming revenue in the Middle East region turned out slightly better than that in other markets, recording a year-over-year increase by 29.4%. LIKEY continued to cultivate a diversified and vibrant content community by nurturing talented creators through our comprehensive support program. In the first quarter, LIKEY focused on equipping creators with additional interactive tools and localize the operational services. Following the introduction of Super Like and Super Follow features, we launched a personal voice chat feature in certain regions on Likey, encouraging additional real-time and direct interactions between creators and their fans group in southern Asia during the local wedding season. Like his local operations team launched a number of wedding related challenges to encouraging creators to showcase traditional wedding culture feature, local wedding dresses, makeups, and ceremonies. attracting millions of page views. Thanks to our comprehensive Creators Support Program, the number of likey certified creators increased by 8.4% sequentially in the first quarter. To meet users' diversified social interactions need, we also launched a trend feature to allow users to create their own private community groups and exclusively share their personal content with designated groups, enabling individualized social experience on Likey. We believe that the friend feature will help merge Likey users' offline and online social networks and reduce their psychological barriers to produce and share their own content online. During the first quarter, as Leakey continued the optimization of its short videos and live streaming features and enhanced integration between the two, user engagement with Leakey live streaming improved with average viewer time spent on live streaming growing by 45.6% and like his live streaming DAU penetration rate increasing by 10.9% sequentially. Next, on Hargo. During the first quarter, Hargo maintained its monetization growth trajectory as its live streaming revenue increased by 24.2%. Number of paying users grew by 40.5% year-over-year. Based on our product team's deep user insight, HAGO upgraded several product features to explore new innovations in multiplayer social interaction and further enhance user social experience. This quarter, Hargo launched a new feature called Hargo Space, allowing users to create their own 3D digital avatars and interact with virtual 3D screens. Users can engage in a variety of activities in their 3D avatar, including voice chat, casual gaming, and gifting. Shortly after the new feature was launched, we observed positive impact on users' social activities and features channel penetration. In the following quarter, HAGO plans to further enrich users' HAGOspace experience by introducing more 3D virtual screens, virtual items, and casual games. Finally, some updates on capital return. In the first quarter, we continue to enhance return to shareholders and protect their interest through sharing repurchase program. In the first quarter, we bought back accumulated 80.2 million of our shares. As of March 31st, we have repurchased in total 350.8 million of our shares out of the previous announced repurchase program of US dollar 1.2 billion. Taken together by capitalizing our diversified global product metrics and continuous operating efficiency improvements, our global business demonstrated resilience amidst the challenging external environment during the first quarter. We remain confident in the middle to long-term growth prospects of the global social entertainment market. We will continue to prioritize the cultivation of our content and social ecosystems and seek to maintain a strong cash flow while saving emerging business opportunities along the way. We remain committed to delivering long-term value to our shareholders. This concludes my presentation. prepared remarks, I will now turn the call to our General Manager of Finance, Alex Liu, for our financial updates.