JOYY Inc.

Ladies and gentlemen, thank you for standing by and welcome to the Joys, Inc.' 's second quarter 2023 earnings call. At this time, all participants are in a listen-only mode. After management's prepared remarks, there will be a question and answer session. I'd now like to hand 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 second quarter 2023 earnings conference call. Joining us today are Mr. David Sherling Lee, Chairman and CEO of Joy, Ms. Ting Lee, our COO, and Mr. Alex Liu, the 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 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'd 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. dollar. I will now turn the call over to our Chairman and CEO, Mr. David Sherling Lee. Please go ahead, sir.

Hello, everyone. Welcome to our second quarter 2023 earnings call. Let's begin by reviewing our overall performance for the second quarter. During the second quarter, we delivered a strong performance that was in line with our expectations. Our group revenue coming above the high end of our guidance at $547.3 million. We hit a non-gap net profit of 97.3 million and 89.1% year-over-year increase, with a non-GAAP net margin of 17.8%. Importantly, we maintained a positive operating cash flow of 61.8 million, which boosted our already solid financial position. The FIGO segment recorded a revenue of $471.1 million, a slight quarter-over-quarter increase, demonstrating further signs of stabilization. Its non-gap outreach profit reached 75.1 million, and its future expanded its non-GAFA operation profit margin to 16%. In the second quarter, our global MAUs grew to 275.6 million, a positive increase of 1% and a slight annual increase showing continued recovery and our effective product strategy, even as we are headed to our disciplined marketing spending. In particular, PicoLive's MAU sustained its strong growth momentum, increasing by 18% year-over-year 38.5 million. This was the fifth computing quarter in which SQLite recorded a double digital year-over-year and AU growth. Our performance in the second quarter was largely driven by our effective product strategy as we continue to enhance our users' content and social experience through cultivation of diverse premium content, productive feature innovations, and localized operations. On the product form, we constantly evaluate and strengthen our platform's content and the social interaction features. For instance, we have harnessed AI to refine our understanding of user profiles on Vigo Live. This helps us optimize our recommendation algorithm and deliver personal content that better suits users' individual interests. At the same time, we can use active tools and social scenarios to enhance interaction between users. As we enable user interaction in a range of virtual environments such as living streaming sessions, interface-based communications, and suite to match channels where users meet and chat with new people. We cater to broader and much more diverse set of social needs. We also actively developing and testing some new AIGC related features to facility content creation and streamer communication. Hiding into the second half of 2023, we will explore new ways to future improve users' content and social experience through product upgrades. We believe continuous efforts to improve product experience and facilitate engaging social interactions are fundamental elements for sustainable user growth and paying user conversion. On the operational activities front, We partner with diverse spectrum of KOLs and institutions during the quarter. This has increased our diverse, high-quality, localized content and successfully enhanced our brand's influence within local communities. Meanwhile, as a global tech company, Dedicated to enriching life and delivering value to our users and the local communities, we are actively and progressively embedding social responsibilities into our day-to-day operations. During the remainder, we launched a wide range of online campaigns across the Middle East, Southeast Asia, and other regions, encouraging users to participate and share their acts of kindness to embrace the festival spirit. We raise funds through multiple online campaigns on our platforms and extend our support to various programs programs under several international charities, such as the Indonesia Cancer Foundation, the Child Cancer Center of Lebanon, and Jordan's TUV. Being a community-wide platform, giving back to society a crucial part of our values. such as we remain committed to operational innovation with an emphasis on creating positive social impact. Looking ahead to the second half of 2023, while there have been some continuing signs of recovery, we remain consciously optimistic regarding industry outlook, feeling that ongoing macroeconomic uncertainties may still pressure consumer spending. We will continue to drive effective, high-quality growth through ongoing product and operational innovations. Moreover, as communicated in the previous quarter, Globalization remains a key drive of our business growth and our top priority. We intend to further concentrate our resources on building our core strengths and global business that align with our long-term strategies and actively pressure growth opportunities. Pursue growth opportunities. Before we move on to the detailed product updates, I would like to provide an update on capital return. We significantly stepped up our share buyback during the second quarter and about an additional 14.3 million of our shares. Since 2020, we have distributed around US dollar 1.32 billion of capital to our shareholders through those share buybacks and dividends. This represents 5.4 times of our total non-GAAP net profits excluding continued operation over that period, a substantial amount especially when compared to our market cap. This demonstrates our ongoing dedication to reward our shareholders' long-term support. committed to create and return value to our shareholders. And we will continue to actively utilize our share buyback program going forward. Now, let's take a closer look at our product. We will start with BeagleLine. In the second quarter, BeagleLine Remaining is double digital user growth momentum for the fifth consecutive quarter, with MAUs increasing by 80% year-over-year to 38.5 million. We observed growth across several key regions, with year-over-year growth rates of 10.3% in Europe, 16.9% in the Middle East, and 20.8% in South Asia and other emerging markets. Legalized revenue continued to stabilize during the quarter, and we saw recovery from developed regions, especially Europe. Japan, and Korea. BeagleLive launched a series of standard activities across various regions in the second quarter, delivering a continuous stream of diverse local and premium content to users. In April, BeagleLive partnered with social media influencers Kuai and launched a reality-based show in North America. This innovative content provided extremely popular, going over 2.3 million viewership. This was the second original BeagleLive reality show following the successful launch of its previous series. in charter back in February. The production process for both shows included script cleaning, artist management, filming production, and the marketing we carried out by Big O Live's local team. The success of these series showcased our ongoing dedication to cultivate diverse, high-quality content to our local user communities. Similarly, in June, BeagleLive partnered with the Revolution Music Festival in Vietnam to provide users with an eight-hour live broadcasting of events. This gave users the ultimate music festival experience and attracted hundreds of thousands of viewers worldwide. We actively encourage the user engagement on bigger lives, social communities through a number of online events. Our family feature launched in 2019 brings together streamer fans and other unity by similar interests to uphold the honor of their respective families. It has become a vital funding element of our user community. In May, we introduced the family mosque to further strengthen these funds. During this event, Figo Live had an held a number of activities and contests with family ranks and awards based on participation and interaction levels. In the Middle East, Big Alive had an offline meetup for the top local families, which created a unique opportunity for family members to build offline connections. Family months generated significant user interest and attention and fostered rapid growth in family sizes. The number of contacted streamers who are members of a family grew by 5.1% from the first quarter, and the daily paying user with family membership rose 3.8%. On the content development front, Bigline retained its focus on incentivizing the creation of video content in the bar channel. Our introduction of newly refined video creation tools and implemented presentation of reward system to encourage creation, consumption, and sharing on bar. Those at 26.5% sequential increase in the amount of bar video content produced in the second quarter, with the total number of video shares and downloads doubling over the same period. During the quarter, we also upgraded our user interface and optimized our content recommendation algorithm. These initiatives further improved users' overall viewing experience in VAR, and average impressions per user increased by 5.7% sequentially in the second quarter. At the same time, we enhanced the social interactions by introducing the ability to send mass images and play games within live sessions on BeagleLine. This fulfilled a 1% sequential increase in the number of users going live in multi-gap rooms, along with a 15.1% sequential increase in the number of users actively engaging per live session. Next, let's move on to Leaky. Leaky's focus remains set on improving product monetization efficiency, and organic user acquisition capabilities. During the second quarter, Nike increased its revenue by 11.2% sequentially, and it continued to deliver profitability at the product level. This marks its second consecutive half year of achieving break-even. After initially doing so in the second half of last year, despite a sequential decline in this quarter, saw a slight increase quarter over quarter. and CEOs even grow by several digits in some core regions. In the second quarter, Nike further developed its creator services and improved user content and social experience. To increase creators' efficiency, Nike rolled out a video collection feature to streamline the video production process. They can also furnish the creatures with data and analytic tools to help them find their contents and better align it with the interests of their audience. has also supported its content creators by connecting them with e-commerce platforms and brand machines to generate additional monetization channels. In June, BlackBerry Host is its first ever summer party. The event aims to acknowledge outstanding creators from the past year and boost their visibility on the platform. It brought together hundreds of top talent and brand representatives, encouraging in-person interactions and networking. As a result, the number of official creatures likely increased by 4% sequentially in the second quarter. It also further enhanced user interactions within its community. In the second quarter, IAM penetration rates continued to grow, increased by 6.8% sequentially. Overall, user engagement, as measured by the ratio of DAU to MAU, grew by 4.2% sequentially. while average user time spending increased by 15.8%. Finally, let's turn to Hargo. In the second quarter, Hargo's revenue increased by 6.4% sequentially, and it further narrowed its operating loss through the continued cost optimization. Importantly, Hanco's operation cash flow turned positive during the quarter, reaching another milestone on the road towards self-sufficiency. During the quarter, Hanco upgraded a number of features for further enhanced internetization efficiency and improved user social engagement. To improve through users playing segments and enhanced monetization. Hangou launched a celebration room, a new kind of multi-gap room for specific occasions, such as the birthday parties. It also introduced a voting feature multi-gap rooms and enable additional decoration and communication privileges to HAPO couples. HAPO also optimized the distribution of multi-gap real-time interactive rooms across different regions and effectively upgrade the user's interactive social experience through the specific application of tracking up 3D . These products' development results resulted in a 1.2% increase in the penetration rate of hard-boiled social channels. Average user time spent on Hustle today rose as well, growing by 5.2 percent from the first quarter. To summarize, despite ongoing macroeconomic uncertainties, our strong execution enabled us to deliver a solid financial performance in the second quarter. Through continuous product improvements and operational enhancements, Beagle successfully navigated the higher winds and improved its operation margin. With Beagle Live, sustained its strong user growth momentum. We also significantly sped up our share repurchase during the quarter. our confidence in our future growth prospects and our commitment to reward the long-term support of our shareholders. Looking ahead to the second half of 2023, we will continue to thrive. effective high-quality growth through ongoing products and operational innovations. We will further concentrate our resources on building our core strengths and global business with our long-term strategies and actively pursue growth opportunities. With our proven execution capabilities, and robust financial position, we are well positioned to size growth opportunities and generate value for our shareholders. This concludes my previous remarks. I will now turn the call to our Vice President of Finance, Leo for our financial updates.