JOYY Inc.

And the conference over to your host today, Jane Shear, the company's Senior Manager of Investor Relations. Please go ahead, Jane.

Thank you, Operator. Hello, everyone. Welcome to Joy's fourth quarter 2022 earnings conference call. Joining us today are Mr. David Shillingly and CEO of Joy, Ms. Ting Li, 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 in 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. dollar. I will now turn the call over to our Chairman and CEO, Mr. David Schillingly. Please go ahead, sir.

Hello, everyone. Welcome to our first quarter 2022 earnings call. Let me start with an overview of our fourth quarter and results. In the fourth quarter, we recorded $504.9 million in revenues, including $476.5 million of revenue from Beagle, and generated $50 million in non-GAAP net profit include 57.7 million in non-GAAP net profit from Beagle. For the full year of 2022, we achieved 2.4 billion in revenues at the group level, about a billion of which come from Beagle. We further improved our non-GAAP profitability at the group level as we earned a non-GAAP net profit of $199.3 million with a non-GAAP net margin of 8.3%. The Spiegel segment recorded $288 million in non-GAAP net profits with a non-GAAP net margin of 14.4%. 2022 marked a year of uncertainty of multinational companies. As we continue to be impacted by our economy headwinds, the combination of post-COVID normalization, high inflation, and the strong U.S. dollar created a downward pressure on our users' online entertainment spending and top-line growth. Despite these short-term challenges, we've taken actions to focus on the cultivation of our user community, improve content quality, deepen engagement on our various products, and pursue sustainable high-quality growth by centering on the factors that we could control and by our strong execution capabilities, our efforts yield significant results. First, we continued our path to sustainable profitability by generating 199.3 million in non-GAAP net profit at the group level of 2022. Thanks to our continuous cost optimization efforts and improved operational efficiency, this represents 83% year-over-year growth in our non-GAAP net profits and the second consecutive year of positive non-GAAP net profits at the group level since our the consolation of YY Live. Second, we witnessed an accelerating in user growth of BeagleLive, as its MAU grew by 40.3% year-over-year in the first quarter of 2022, up from 11.9% in the same year last year. Such acceleration was noteworthy, as it was achieved against the backdrop of post-COVID normalization and during a period of more disciplined marketing spending. In highlights of bigger lives improved user acquisition capabilities. which are driven by our continuous cultivation of its content offerings and social experience. Heading into 2023, visibility of the global macroelement remains limited, and it's possible that micro-Halloween may linger for another one or two quarters. However, this short-term valid utilities will not reverse the secure trends of using pivoting and increasing amount of their time and their spending from offline to online. As we remain committed to enrich our users' lives and facilitating their online activities through our products and services, We see a market with massive growth potential. As such, we need to strike a strategic balance between navigating short-term micro uncertainties and actively pursuing long-term growth. In the current micro uncertainties, we will remain We will retain our focus on the quality and profitability of our entertainment business in the near term. This means we will continue to do better with less. We will maintain discipline in our marketing spending, further refine our localized operations in order to further improve our content and social experience. and ultimately boost our product's organic growth. Our amazing efforts will continue as we strive to maintain steady, high-quality growth of both our social industry and its operating cash flow. In the meantime, we will continue to prioritize our resources and investments into high potential business that align with our long-term strategies and which will shape our core capabilities. We are confident that we can remain self-sufficient in our cash flows, reinforce our strong financial position, and act swiftly to size long-term growth opportunities as they raise. Now, let's take a closer look at our products. We will start with BeagleLine. In the first quarter, BeagleLine sustained its strong user growth trajectory thanks to effective notions and increased user acquisition efficiency. During the quarter, Bigelow Live's MAU increased by 18.3% year-over-year to 36.8 million. Notably, MAUs in Southeast Asia and other emerging markets increased by 21.6% year-over-year. During the 2022 World Cup, BeagleLives rolled out a one-month match designed to better engage the football players and fans around the globe. The program highlights BeagleLives' diverse localized content and resonates with local communities. In November, Beagle Live invited well-known professional footballers such as England's Kieran Trapper and Northland's Wesley Snager to join its live interviews. A group of local football creators were selected by Beagle Live as World Cup ambassadors to host live community commentary sessions. We also established discussion groups and chat rooms which support up to 500 concurrent speakers who encourage to create and share original content. These efforts successfully hosted an engaging community experience on Beagle Live during the World Cup. In addition to connecting users, we remained fully dedicated to create value for our creators. In January, we hosted our first annual flagship event, the Beagle Awards Gala 2023 at Singapore's historical Capital Theatre. During the event, Big O' Life honored over 270 Big O' Life creators and about 100 Big O' Life families for their contribution to the community in the past year. The gala also featured activity performance from top talents from across the globe. with approximately 4 million viewers into the world. Further boosting our creatures' exposure on a worldwide stage, we will continue to recognize and reward the contribution of our creatures in making our platform what it is today, and the bigger award was just one season of our efforts to incubate talent, building communities, and promote in and in diversity on our platform. In the first quarter, Big Blue Line conducted a comprehensive upgrade of its live streaming tools and room. and introduced a number of new interactive features. This improved the effectiveness of live session recommendation and the user go-live experience. On a sequential basis, the number of live streamers on WeGoLive increased by 3.3%, and the average during per live session increased by 4.5% in the first quarter. Turning to BeagleLive's monetization, during the first quarter, monetization continued to be negatively impacted by microhigh winds. In the Middle East, we were also negatively impacted as user spending was diverted to offline entertainment activities during the World Cup. Nervously, the number of global paying users was stabilized, and the number of paying users in Europe and North America have assumed sequential growth for two consecutive quarters. Looking aside, 2023, we aim to further improve BeagleLive's penetration rate and expand its services in multiple regions around the world, including Europe, America, and the Middle East, the Eastern Pacific, and Southeast Asia. Improvement in user acquisition efficiency and user engagement will remain our priority as we continue to innovate BeagleLive's content and user interaction via product innovation and innovative local operations. Furthermore, BeagleLive will advance its efforts to boost paying users and monetization growth by optimizing users' paying experience in live streaming sessions and broadcasts. Next, let's turn to Leike. Following a year of proactive optimization, Leike's operation loss in 2022 was in line with our expectation, narrowing by 83% year-over-year. More importantly, Leike hit another milestone by achieving brief even in the second half of 2022. Following the initial launch of its Loop feature, Likey has expanded its efforts to collaborate with companies from a variety of industry verticals. In order to further cultivate its interest-based communities, take the gaming community as an example, which is one of the largest interest groups on Likey. with various popular games include Compass, Loz Mobile, and PUBG Mobile to offer gamers, game lovers a shared space to interact with each other. In December 2022, Nike become a official streaming partners of the Game Awards 2022, an annual awards ceremony honoring achievements in the video game industry. Millions of viewers from all over the world watched the event live and interacted with each other on Lackey's platform. Boosted by Loop and the Likert's refined content offerings, we saw an increase in user interaction quality and units on Likert. In the fourth quarter, Likert's average user time spent rose by 70.4% and 30-day user retention improved by 6.3% over the previous quarter. Looking ahead, as we enter into 2023, we intend to further enhance lightest monetization efficiency by diversified monetization models and achieve constant profitability. We will continue to prioritize creator support. facilitate social interactions among our users and further refine our local centered on interest-based communities. As we gradually improve Likert's operation cash flow, organic growth capabilities, and user signals, we believe Likert's user base will gradually stabilized and user growth will resume in certain regions over time. Next, on Hargo. During the first quarter, Hargo's operation loss narrowed substantially over the previous quarter. In product status, we mentioned in Hargo's positioning upgrade about a year ago, substantially Hago has transitioned away from being an interactive platform primarily focused on casual games. Now, it is a multi-user social platform where users can enjoy engaging interactions with a much more diverse range of groups. Following the upgrade, our user socializing patterns on HaGo become clear. First, users feel apprehensive by participating in multiplayer casual games. Then, after a few rounds of games, some users may choose to engage further by joining one of HaGo's social channels. such as video and audio multiplayer chat rooms, and a hub of space where they can interact with each other using customized 3D avatars. When the level of interaction reaches a certain level, users may choose to join the same group of families as their like-minded friends. engage with each other on a much more frequent basis. Toggle has enhanced its monetization efficiency throughout the process by developing a variety of monetization features, such as pay-to-play games, advertisements, live streaming, and virtual items. During the fourth quarter, we optimized our recommendation algorithm to help our users locate social rooms. This initiative drove sequential increase in the social channels next day user retention rate by 1.5% and user time spent by 5.3%. We also We also introduced a new 3D time screen and launched a series of optimizations in a beginner's guide to hardware space. As a result, new user time spent on hardware space improved by 6.5%, and revenues from virtual items increased by 13.4%. over the previous quarter. In 2023, in alignment with our strategy of LIFE, we intend to further enhance HAGO's monetization efficiency. While maintaining our efforts to achieve consistent profitability at the product level, HAGO will optimize its filters throughout its users' socializing patterns and better facilitate user interactions. Such as, we expect to further improve HAGO's user retention and organic growth capabilities, which are crucial to gradual stabilization and eventual recovery of user growth over time. Finally, some updates on capital returns. During the fourth quarter, we bounced back an additional 31 points of our shares. In the full year of 2022, we have repurchased a total of 138.1 million of shares and paid cash dividends in an aggregate amount of $145.9 million. We are confident in our long-term prospects and will continue to actively utilize the remaining share purchase program to reward the long-term support of our shareholders. To conclude, effective strategy planning and strong execution goals are our solid performance in 2020 despite certain micro-events. Looking ahead, we remain committed to enrich our users' lives and facilities and improving their online activities through our diverse range of innovative products and services. With our resilient business model, strong financial position, and sharpened focus on building our core capabilities, we are well positioned to weather short-term macro headwinds while raising long-term growth opportunities and creating lasting value for shareholders?