JOYY Inc.

Ladies and gentlemen, thank you for standing by, and welcome to the Joy, Inc.' 's second quarter 2025 earnings call. At this time, all participants are in a listen-only mode. After the management's prepared remarks, there will be a question and answer session. I would now like to turn a conference call over to your host for today, Ms. Jane Sieh, the company's senior manager of investor relations. Please go ahead, Jane.

Thank you, operator. Hello, everyone. Welcome to Joy's second quarter 2025 earnings conference call. Joining us today are Ms. Ting Lee, chairperson and CEO of Joy, 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 would like to remind you that we may make forward-looking statements, which are inherently subject to risk uncertainties that may cause actual results to differ from our current expectations. For detailed discussions of the risk uncertainties, please refer to our latest annual report on Form 20F and other documents filed with the SEC. We will also discuss certain non-GAF financial measures. They are included as additional clarifying items to aid investors in further understanding the company's performance and the impact that these items and events had on the financial results. The non-GAAP financial measures provided above should not be considered as a substitute for or superior to the measures of financial performance preferred in accordance with GAAP. You may find a reconciliation of the differences between GAAP and non-GAAP financial measures in our earnings release. Finally, please note that unless otherwise stated, All figures measured during this conference call are in U.S. dollar. I will now turn the call over to our chairperson and CEO, Ms. Ting Li. Please go ahead, Ms. Li.

Hello, everyone. I'm Li Ting. Thank you for joining us today. This call marks my first anniversary as CEO, and I'm excited to share some of our latest progress with you. We deeply liked our live streaming business while driving robust growth in our non-live streaming businesses, particularly our ad tech business. We continue our transformation into a global tech company powered by multiple growth entries. Today, I will first briefly summarize our Q2 results, followed by a review our progress over the past year to highlight the key pillars that will guide our growth. Finally, I will share detailed updates on each of our business units. Starting with our Q2 results, we delivered a solid performance as our live streaming business reached a stable footing. while our advertising business achieved robust and accelerated growth. We recorded total revenue of $508 million, representing 2.7% QQ growth. Our non-GAAP operating profit reached $38 million, with year-to-year growth of 27.9%. Non-GAF EBITDA reached 48 million, growing 25.7% year-to-year. To break this down, live streaming revenue grew 1.1% QQ, while non-live streaming revenue achieved 25.6% year-to-year growth. contributing 26.1% of total revenues. Meanwhile, our operating cash flow reached $58 million. As of June 30, we mentioned $3.3 billion in net cash on our balance sheet, a sign of our strong financial resilience. Next, I want to highlight the four key words that have driven our progress in the past year and will continue to guide our growth. High-quality operations, sustainable growth, AI-driven innovation, and organizational vitality. First, high-quality operations. APP removals in late 2024 prompted us to take decisive actions to further enhance our community safety infrastructure and proactively strengthen our business ecosystem. By turning AdWords City into a community opportunity, we have emerged more and better positioned for the future. We are committed to continuous improvement as a cornerstone of our competitive advantage, building a robust business that delivers long-term value while pursuing our vision of creating a great enterprise. Next, sustainable growth Our strong operational foundation has allowed us to cultivate our huge growth engine and achieve sustainable growth. Building on a diverse product portfolio, localized operations, and enhanced global market penetration, our live streaming operations continue to generate reliable profits and cash flows. Leveraging our operational strength and technology expertise accumulated in the 2C sector, we accelerated our expansion into the 2B sector, and we have seen huge progress in our ad tech business in the past year. Thirdly, AI-driven innovation. We believe that AI holds transmoders potential to empower our business. Today, we are applying AI extensively in our recommendation systems and advertising algorithms. In live streaming, our AI usage is all about boosting user engagement. Early this year, for instance, we launched multi-lingual real-time voice recognition and translation function for our products. This enables users across languages to interact in real-time, strengthening relationships between people from vastly different backgrounds and driving monetization. We have merged large language models with multi-modal content understanding to create dynamic topics summarized and interactive comments that depend the user-streamer connection. Our use of AIGC has transformed how we produce virtual items and images. We are able to create personalized, localized items in a much shorter time span. In advertising, we leverage AI to deeply analyze and dynamically model user intentions, interests, and behavioral patterns. This allows us to precisely profile mid- to long-tail traffic segments, greatly enhancing targeting accuracy, especially in cold start scenarios AI powers our entire advertising value chain, from user profiling and targeting to generative ad creation, real-time building, and dynamic budget allocation. Our automated data-driven decision-making is continuously improving. Driving higher conversion rates, better third-party developer monetization, and fueling Big O 8's expansion across more verticals. Lastly, organizational vitality. After 20 years of building milestone successes, we are turning our entrepreneurial drive into enhancing organizational execution and efficiency. by modularizing our foundational R&D and operational processes. We are building agile, scalable capabilities and empower us to replicate past wins across emerging products and businesses. We are also prioritizing the creation of an empowering workplace for our global talents. Above all, Our people are the cornerstone of our ability to achieve our strategic ambitions. Next, let me share with you the latest update for the respective businesses. In the second quarter, our group's live streaming revenue reached $375 million. with bigger live streaming revenue at $355 million, both stabilizing QoQ. During the quarter, our global average mobile MLs grew sequentially to $263 million. We continued to refine our user acquisition with an ROI-driven approach. As a result, BeagleLive's user numbers grew 2.3.22, while 30 days ROI from new devices improved 4.4% sequentially. Our organic user growth was also strong, driven by improving user experience. Today, majority of our total global MAUs are from our IAM product. High-frequency usage and strong user-sickness fueled by enhanced features such as HD audio-video calling and rich media messaging have been pivotal to IAM's organic expansion. In the second quarter, the annual use of our IAM increased by 3 million. with the average daily user time spent up 12.8% year-over-year. We are building our long-term strategy on the foundation of high-quality global traffic that drives sustained monetization across live streaming, advertising, and potentially others. As we prioritize quality, over volume, we will continue to closely monitor the effectiveness of our user acquisition through ROI and our long-term user thickness. We enhanced content quality and refined the paying user experience during the second quarter, which drove higher user engagement and conversion efficiency. Specifically, we optimized BeagleLive's cross-regional content distribution algorithm and real-time AI translation. These changes significantly drove continued growth in cross-regional taping, particularly in Europe and the Americas. We launched the Streamer Academy, which provide tiered training, enhanced live streaming tours, and operational support to help streamers improve quality and reach. This fueled a 1.6% QQ increase in active streamers on BeagleLive. We also revamped BeagleLive Premier Paying User Benefits system during the quarter. Introducing refined tiered incentive and exclusive privileges, this drove a 13% KOQ increase in premium paying users. As a result, Beagle's overall live streaming paying users grew 3.7% KOQ. Looking at our performance, In the second quarter, our live streaming revenue in development countries returned to positive QoQ growth. In particular, BeagleLive's revenue in Europe rose 6.5% QoQ, marking the fourth significant rebound in the regime since we implemented a series of content strategy optimizations in the second half of last year. Our live streaming revenue in Southeast Asia was also up QQ, with bigger live revenue in this market rising 3.9%. We anticipate continued growth in paying users in the second half from hedging localized campaigns. enhanced content and payment experiences, and the incremental contribution from our new audio product Li-Amp in the Middle East. We are confident that our live streaming business will regain momentum and continue to deliver sustainable cash flow. In the second quarter, BigOA achieved in ad revenue, representing approximately 29% year-to-year growth and 9% QQ growth. In particular, revenues from our ad network recorded mid-double-digit year-to-year growth. Last quarter, I outlined our strategic for entering into the ag tech business and how we can utilize our inherent advantages to build a sustainable competitive edge. Today, I want to focus on where we stand in this trillion dollar market and the bigger edge strategic positioning for long-term growth. We are building significant scale on the traffic side. Our reach spans roughly 263 million users through our own social apps. And we extend this reach substantially by seamlessly integrating developer traffic across major channels. Our first-party traffic monetization remains stable, we believe steady first-party AIDs revenue with strong profitability, and we expect to maintain growth through improved user engagement and ad series. In the meantime, we have significantly scaled our third-party network traffic through successful integrations with uploading Macs and Unity-level play mediation platforms. Growing developer SDK adoption has driven nearly 80% traffic growth versus the second half of 2024, where new integrations with multi-channel platforms further expanded our traffic reach, including CTV. Meanwhile, we saw robot growth across IAP, IAA, and web-based channels. With daily transactions, volumes reaching recorded levels. With based lead generation, continued to post double-digit gains. Powered by pixel features, optimization enriched customer data, feedback, and improved building strategies. In IAA, we expanded partnerships with top gaming campaigns, with firms including TripleDot, PeoplePhone, and Fugle, expanding their campaigns on bigger apps, which contributed to faster sequential growth. Graphically speaking, we are seeing strong performance in multiple regions. In the fourth half of 2025, North America delivered approximately 24.2% sequential growth. In Europe, where we kicked off our expansion during the second quarter, revenue grew by a high single-digit percentage QoQ. Finally, our proprietary user data asset enhanced by customer feedback and multi-channel attribution continuously improves our profiling and targeting precision. Deep signatures across our business segments including accumulated vertical insights, data assets, established algorithm capabilities, and relevant experiences in cold start scenarios have given us a head start in developing specialized models tailored to each vertical. Additional, our global networks, infrastructure, and tech capabilities originally built for our live streaming businesses offer significant cost advantages. In summary, our advertising business has delivered consistent sequential growth and profitability for multiple consecutive quarters. This success stems from the number of key strengths including expansion of our traffic, rising advertiser, demand across channels and verticals, and quickly involving algorithms supported by our global tech and network infrastructure fostering a self-reforcing strategic flywheel. BigOA has emerged as our second major growth engine. Representing a strategic long-term priority for the group, we are pursuing expansion in North America, Japan, and Europe, unlocking substantial new opportunities, leveraging joint ecosystem and deep insight into e-commerce and social media verticals we are accelerating the training and optimization of AI-driven models to establish a distinct competitive advantage. On our product front, we are enriching our ad formats, strengthening integration with attribution platforms, enhancing advertisers' data feedback and advancing algorithms to maximize targeting, precision, and drive long-term ROI. Big OAs' structural advantages, combined with our proven execution capabilities and the vast market opportunities ahead, reinforce our commitment to building a meaningful and lasting presence in the EdTech industry. We are determined to execute on our strategic plan and retain full confidence in our team and ability to drive long-term success. Finally, let's turn to capital allocation. As discussed previously, we are actively exploring new growth engines and have already seen promising initial results. In the short term, we expect to prudently expand headquarters and marketing resources to support our ad tech business while maintaining healthy profit margins. In the mid-year to long term, Once our non-live streaming businesses reach a certain scale, investments, infrastructure upgrades, tech development, talent expansion, and marketing efforts are all potentially high return capital allocation options. From January 1 through June 30, we have distributed $135 million to our shareholders through dividends and share buybacks. We view our shares as substantially undervalued and remain committed to actively utilize buybacks under the previous approached program. Looking forward, with our live streaming business, stabilizing and the rising revenue and profit from advertising and other emerging businesses. We expect the company's consolidated operating profit to continue to improve and our shareholders to benefit from long-term profitable growth. In closing, our call live streaming business has stabilized in Q2. Positioning us for sustained growth, our ag-tech platform is rapidly scaling as our second growth engine. And we are building our long-term capabilities, particularly in our data and algorithms, and establishing our differential competitive advantages across market and the verticals. We look forward to sharing ongoing positive developments in the coming quarter. I will now turn the call over to Mr. Axel Liu, the Vice President of Finance, to provide our financial updates.

Thanks, Miechi. Hello, everyone. I will now dive deeper into our financial performance for the second quarter. In the second quarter of 2025, we recorded total net revenues of $507.8 million, securing a quarter-over-quarter growth of 2.7%. This was achieved as our live streaming reached a stable footing and delivered our first sequential recovery in the past several quarters. Our non-live streaming business, particularly advertising business, sustained strong growth momentum in the past consecutive quarters. We expect our live streaming business to gradually regain momentum and our non-live streaming revenues to continue to deliver impressive growth in the following quarters. Our non-GAAP-obligated income was 38.3 million, up by 27.9% year-over-year, beating market expectations. Non-GAAP EBITDA for the quarter was 48.2 million, up by 25.7% year-over-year. We are disclosing our non-GAAP EBITDA metric since this quarter, as we believe it's a standard measure of original performance. REITs stretch out non-aggregating sectors like interest, tax, and non-cash expenses. REITs could help our shareholders better assess the performance of our core business. Our total live streaming revenues were $375.4 million for the second quarter, $355.3 million of which was from Beagle segment. Both are quarter-over-quarter. Our ROI-driven user acquisition and continued optimization of our content quality and patient user experience have contributed to improved patient conversation. With Beagle's total patient users increasing by 3.7% quarter-over-quarter, By region, total live streaming revenue from developed countries increased by 3.4 percent quarter-over-quarter, while live streaming revenues from Southeast Asia increased by 2.1 percent quarter-over-quarter. Our non-live streaming revenues were 132.4 million during the second quarter, up by 25.6 year-over-year. Non-live streaming now contributes 26.1% of our total group revenues, up from only 18.7% contribution in the same period last year. In particular, Beagle's non-live streaming revenues, primarily advertising revenues, increased by 29% year-over-year and 8.9% quarter-over-quarter. to 87.4 million. As Misty just shared, Google Ads has emerged as our second major growth engine with exceptional momentum. We are making substantial progress on all fronts, including expansion of our traffic and rising advertiser demand across different channels and verticals. As we accumulate each skill, we are accelerating the training and optimization of our algorithm to further improve our campaign performance and ROI, which we believe in turn will drive accelerating growth in advertisers' demand and publisher traffic. Fostering a self-reinforcing strategic level, at present, Big ads has made a positive contribution to our bottom line. We expect it to be increasingly meaningful over time. All other segments now live streaming revenues was 45.2 million, increasing by 19% year over year. Gross gross profit was 185.2 million in the quarter. with a gross margin of 36.5% up from 35.2% last year, while Beagle's gross margin was relatively stable. All other segments' gross margin was substantially up by 9.5% year-over-year to 43.5% due to growth in high margin sales revenues. Our group's operating expenses for the quarter were $179.8 million, compared with $198.7 million in the same period of 2024. Our GMA expenses was higher during the quarter due to a non-operational impairment of 30 equity investments, while we saw decline in other operating expenses. The decline in our other operating expenses was in line with our current operating strategy across both live streaming and non-live streaming business. For our live streaming business, we are consistently optimizing our user acquisition expenses to enhance ROI. For our non-live streaming business, while it has seen robust revenue growth, We maintained prudent and disciplined in spending, with our operating expenses rising at a slower rate than revenue. Our gross non-GAAP operating income for the quarter was $38.3 million in this quarter, up by 27.9% from $30 million year-over-year. Non-GAAP net income Attribute of controlling interest of joint in the quarter was 77 million, up by 3.9% year-over-year. The gross non-GAAP net income margin was 15.2% in the quarter. For the second quarter of 2025, we booked net cash inflows from operating activities of 57.6 million. Our balance sheet remains healthy with a strong net cash producing of 3.3 billion as of June 30, 2025. Now, moving to capital allocation. Shareholder return continued to be an important component of our capital allocation strategy. We have returned 49.4 million to our shareholders through dividends during the second quarter. and repurchased 36.5 million worth of our shares during the year as of June 30, 2025. We remain firmly committed to actively utilize our outstanding share repurchase program. Turning now to our business outlook. At the group level, we expect our net revenues for the third quarter of 2025 to be between $525 million and $539 million. Our guidance accounts for certain seasonality fluctuations and reflects our preliminary views on the current market, operational conditions, and business adjustment decisions, which are subject to changes. Our efforts to cultivate new growth engines continue to bear fruit, as evidenced by the impressive revenue growth of Beagle Edge and our live streaming business reaching a stable footing and continue to contribute strong operating profits. With our global operational capabilities, tech infrastructure, and vibrant ecosystem, We are present to establish a distinct competitive edge and build meaningful and lasting presence in the tech industry while delivering sustainable, profitable growth and long-term value for our shareholders. That concludes our prepared remarks. Operator, we would now like to open up the call to questions.

Thank you, sir. If you wish to ask a question, please press the star key on your telephone and wait for a name to be announced. Star then one to ask a question. If you wish to cancel your request, please press star then two. If you are on a speakerphone, please pick up your handset to ask your question. Again, add a star then one to ask a question. Additionally, when asking a question, please state your question in Chinese first then repeat your question in English for the convenience of everyone on the call. At this time, we will just pause momentarily to assemble our roster. The first question we have will come from Thomas Chong of Jefferies. Please go ahead.

Good morning. Thank you for accepting my question. I have two questions. The first one is about... Now we see that Q2's live broadcast revenue is relatively stable. How should we look at the long-term development trend of live broadcasts? My other question is about our half-year exhibition. How should we look at the half-year trend of group revenue? Thanks, management, for taking my question. My first question is about the live streaming business. As we are seeing the Q2 live streaming revenue is already stabilizing on a sequential basis in Q2. How should we think about the long-term development trend for the live streaming business? And my second question is about the second half outlook. Can management comment about the group-level revenue in the second half? Thank you.

Okay, thank you, Thomas. I'm Li Ting. I'll answer both of these questions. First of all, let's answer the first question. First of all, Q1 is the bottom line that we have identified. It is mainly affected by seasonal factors and the double impact of the price drop at the time. In Q2, we achieved a steady recovery of the balance. The live income of the three core products of Beagle has actually achieved a steady growth. From the specific driving factors, it is mainly based on the steady growth of paid users. So in some areas, the overall performance of the developed country market will be more competitive, especially after the European region's content cost strategy is optimized, the income will return to normal growth. Southeast Asia and other regions are also in the same difficult situation. Thank you, Thomas. This is Leiting.

I will take your two questions. We see Q1 as a clear bottom while Beagle's live streaming revenue was negatively impacted due to seasonality factors and also the temporary app removal in the first quarter. In Q2, we've seen sequential recovery with revenue from Beagle's core global product, all three global products, delivering sequential growth in their live streaming revenue. The key driver for the recovery was mainly driven by growth in paid users, Geographically speaking, we've seen stronger resilience from developed countries, especially in Europe, where our live streaming revenues rebound after our earlier content cost optimization in the previous quarters. Southeast Asia and other regions are also showing signs of recovery. All in all, I would like to say the sequential recovery in Q2 is built on solid improvements that we've made in the past few quarters, both including content optimization, the optimization of the content offering system, and also the enhancement of operating efficiency. We believe that these efforts will continue to drive growth of our live streaming revenue in the upcoming quarters.

Let's move on to the next half of the year. We expect the recovery trend to be continued. On the one hand, the heavy-duty operations such as annual holidays will help to improve the activity of local broadcasters and users, leading to the growth of local live broadcasts. From the latest data of BeagleLive, the activities such as annual holidays in July have effectively led to a slow growth in revenue. At the same time, we will continue to promote detailed content operation, especially the encouragement of back-end anchors, focusing on high-quality customers and product experience optimization. We expect that our paid users will continue to grow. We believe that with the formation of a better, more diverse content ecosystem, and the gradual contribution of new Chinese and English products to the Middle East, we are confident that in 2026, we will bring the live broadcast industry back to the track of growth.

While looking ahead to our live streaming performance in the second half of the year, we expect the sequential recovery trend to continue. Our highlighted operational activities, such as our galas, are expected to enhance streamer and user engagement in the second half of the year, driving regional monetization to pick up. Some preliminary data from BeagleLive shows that our July gala has driven a MOM revenue increase in live streaming. We will continue optimizing our content operations, focusing on refined content management and enhancing our incentives for mid-tier streamers. Together with our ROI-driven user acquisition, which focuses on higher quality users and also overall product experience optimization, We expect sustained growth in Beagle's paying users in the second half with a much more diversified content ecosystem and better quality. We expect also incremental contributions from our new audio social products in the MENA region. Based on those factors, we are confident that our live streaming revenue will return to a steady year-over-year growth trajectory in 2026.

The second question is about the income trend in the second half of the year. I will answer this question. First, let's review the performance of Q2. In the second quarter, the company's income was $5.078 billion, which increased by 2.7%. This is mainly due to the steady growth of live income. The non-live income continued to maintain a strong growth trend, which increased by 25.6%, and the total income ratio reached 26.1%. So looking at Q3, we expect that the live broadcast income will continue to recover. In terms of the live broadcast section, advertising business enters the traditional wave. It is expected to continue to maintain the same growth of two numbers, promoting the overall income of the group to continue to recover. So from the second quarter, the group's overall step into a steady recovery channel, accompanied by the stability of the live broadcast business, the rapid growth of the live broadcast business is gradually becoming an important engine for the growth of the group's income. And I will now move on to your second question.

In the second quarter, you can see that our total revenue was up 2.7% to $507.8 million, up QOQ, and this growth was driven by stabilizing and recovery in our live-streaming revenue, while our non-live-streaming revenue sustaining a strong momentum, growing by 25.6% year-over-year and now contributing 26.1% to the group's total revenue. Looking ahead to Q3, we expect our live-streaming revenue to continue its sequential recovery. And on the non-live-streaming revenue side, as our advertising entered into a peak season, We anticipate continued double-digit year-over-year growth from ad tech, supporting a further QOQ revenue growth at the group level. You can see that since Q2, our top line, our group's top line has entered into a phase of sequential recovery with live streaming stabilizing and back to growth and also non-live streaming accelerating growth and becoming a new growth engine. We expect both year-over-year and QOQ growth into full. Thank you. Next question, please.

The next question will come from of CICC.

I have two questions on your financials. First, you have added the disclosure of non-GAAP EBITDA in this quarter. What's your consideration behind this decision? My second question is about the trend in OPEX and the profit outlook for the second half of this year.

Thank you. Thank you for your question. I'm Alex. I'll answer it. For the first question, about EBITDA, EBITDA is a core indicator of the company's internal management. First of all, from the point of view of business capability, EBITDA eliminates interest, debt, corruption, and tax. These are factors that are less related to the core business of the company. It can more accurately show the ability of the company to generate cash flow through its main business. In addition, from the point of view of industry comparison, considering the capital structure of different companies, tax policy, and capital debt policy, there is a difference. Then EBITDA can reduce the interference of these external factors. Thank you, Xueqing, for the question.

This is Alex. First of all, we believe that EBITDA is a core operating metric that we've always closely monitored internally. As EBITDA excludes interest, depreciation, amortization, and taxes, which are all non-operational factors, we believe that it is a proxy of our capability to generate cash flow through our core operations. It's also a better metric for peers' comparison as well, given the differences that lie in the capital structure, the differences in our applicable tax rates, and also depreciation policies, et cetera. We believe that EBITDA eliminates all of these external factors and enable us to better compare our operating efficiency with our peers. In brief, we believe that the trend of our EBITDA can better reflect the improvement of our, or the trend of our operating efficiency under the current dual growth engine strategy, and it will help us better evaluate our capital allocation in a more prudent and comprehensive manner in the future.

Okay, Xueqian, for your second question, the next year's group expenses and profits, before answering this question, let's first review the performance of the second quarter. The profit of the second quarter group is as expected, including the case of interest, net profit, and net profit. The net profit of Nungap increased by 23.6%, reaching $38.3 million. The net profit of EBITDA increased by 19.3%, reaching $48.2 million. In terms of the version, the non-GAAP profit margin of the Beagle version is 35.6%, and the net profit margin is 14%. Yes, the ratio has been improved. This is mainly due to our continuous efforts in sustainable operation and content ecological optimization and operation efficiency improvement, promoting the net profit margin and net profit margin of Beagle live broadcast business. As for the RR version, the interest rate of the second quarter non-GAAP ratio is also significantly improved, from 42.1% in Q1 of 2025 to 13.8%. This is mainly due to the increase in the ratio of our previous business. At the same time, the financial loss from 26,520,000 dollars in Q1 to 23,666,000 dollars in Q1 is reduced by 10.8%.

Moving to your next question about expenses and margins for the second half of the year, let's first quickly review our second quarter performance. In Q2, we definitely delivered better than expected profitability, both in terms of our gross margin, OP margin, and NAP margin. Our non-GAAP operating profit was up by 23.6% on QOQ to 38.3 million, and our non-GAAP EBITDA rose by 19.3% to 48.2 million. And to look at it by segment, for the vehicle segment, Our non-dap gross margin was 35.6%, and our operating margin was 14% in Q2. Both are improving QOQ, and these gains were driven by our continued efforts in refined operations, our content ecosystem, and also enhanced operational efficiency, which better improved the gross and operating margins in our live streaming business. For the all other segments, the Q2 non-GAAP gross margin was up significantly from the previous quarter, rising from 42.1% in Q2 to 43.8% in Q2, primarily driven by increased contribution from our higher margin non-live streaming revenue. Meanwhile, non-GAAP operating loss was narrowed to 23.6%. million from 26.5 million in Q1, a 10.8% QOQ decrease mainly due to our discipline spending and a lower margin ratio of our operating expenses.

Looking ahead to Q3,

with our revenue growth in the Beagle segment, and we expect Beagle's non-GAAP operating profits to continue a steady improvement. For the all other segments, due to the seasonal fluctuations in certain expenses, we expect its non-GAAP operating losses might slightly widen compared to Q2, but we'll still show significant year-over-year improvements compared to the 24th. For the full year of 25, we're expecting our overall non-GAAP operating profit amount and non-GAAP EBITDA to show an improving trend. Thank you. Next question, please.

The next question will come from C.C. Chen of COFA.

感谢管理层接受我的提问。 我是想请教一下,就是因为其实在 Our advertising business has consistently maintained the robust growth rate in this year, which is higher than industry average. Could you please share the main driver and the unique advantage behind the growth of our advertising revenue, and how do we view the potential for synergy between different business segments? Thank you.

Thank you for your question. I will answer the two questions about advertising business. The growth of the third-party advertising business, its key driving force can be seen from the two angles of technology and the market. In terms of technology, the key driving force is the improvement of the investment effect of the optimization of the algorithm and the expansion of the new category of hammer model training. First of all, our model is still in a very early stage, and it is based on self-learning and continuous self-training and improvement. At the same time, our team is focusing on the full chain of advertising, such as estimated price, dynamic budget allocation, etc., and continues to look for practical and feasible ways to improve the efficiency and effectiveness of the algorithm. When these models show some innovations and breakthroughs, the business will grow more and more.

For the growth driver of our ad tech business, we can look at it from both the technical and also a market opportunity perspective. From the tech side, as we continue to optimize our algorithm, we are delivering better campaign performance for our advertisers, and this has driven further advertiser demand. And secondly, we are making progress in vertical models and we believe that this has opened up new opportunities across verticals as well. At this moment, our advertising algorithm is still in its early stage of development and it's continuously refining and optimizing based on self-learning while our team continues to look for practical ways to improve our algorithm efficiency and effectiveness in full-stack services of advertising, such as estimated bidding, dynamic budget allocation. We believe that when there are certain innovations or breakthroughs in these models, our ad-pack business will continue to grow by a major amount.

Second, our model is not only limited to web and IAEA game advertising. We will continue to train and carry out social entertainment, e-commerce, and other IAP-type investment models. In terms of the market, the key driving force is the expansion of the region. In addition to the continued development in North America and Japan, we have also accelerated the layout in areas such as Europe. As for the unique advantage, I think it can be概括一下就是一方的流量和生态协同。 We have 2.63 billion users and the most suitable investment scenarios. At Epoch Group, advertising technology business has advanced technology, data, and advertising team resources. We have established a good foundation for business expansion and established a unique advantage. For example, our e-commerce business and BeagleAids have obvious collaboration with advertising team resources and business scenarios. At the same time, the high growth of advertising technology business will also promote the accumulation of users and technology, and the continuous enhancement of the flying wheel effect of live broadcasting and other businesses. In short, the advertising technology platform business is our strategic focus. We also hope that we will gradually establish competitive advantages in the long-term development of this 10,000 billion-scale track.

Secondly, we are not restricted to web advertising and IAA game advertising. We are also training and optimizing our IAP advertising models in verticals such as social entertainment and e-commerce. Geographically speaking, we are continuing to penetrate North America and Japan and also actively exploring new markets such as Europe. And I want to summarize our competitive edge with a proprietary data asset due to our first party traffic and also ecosystem synergies. We have exclusive access to Joy's 263 million users and additionally leveraging on our group's diverse ecosystem, BeagleAds has enjoyed inherent advantages over technology, data and also advertiser outreach and that is laying a very solid foundation for its business expansion and establishing unique advantages and certain verticals. For example, our e-commerce SaaS business has clear synergies with Beagle Ads in terms of advertiser resources and also business scenarios. While we continue to accelerate the growth of our advertising business, We will also be building up our user insights and efficient targeting technology, and that is likely going to empower our live streaming and other businesses as well and continue to strengthen the flywheel effect. Overall, legal ads has emerged as one of our strategic focus. We remain confident in our growth prospects. and also our ability to build our differentiated competitive edge in this trillion-dollar market over time.

接下来回答第二个问题,就是如何思考业务之间的协同性,还有是否存在经营杠杆。 那我想先给一个结论,就是我们的各业务之间不仅有强协同性, and will continue to grow with the growth of business scale and the accumulation of technical experience. First of all, advertising and business expansion is based on the external exploration done by internal resources. In the past, we have reached global traffic through social entertainment and other businesses. As we develop, we find that the efficiency of traffic transmission in different areas is relatively large, and the efficiency of advertising transmission in some areas is higher than that of live broadcast. As a result, we developed Vigo 8, Secondly, as mentioned earlier, the competitive advantage of advertising is based on the data and advertising resources of a large number of users, as well as IT infrastructure. Advertising technology and other businesses have resources and technical advantages, and continue to counteract live broadcast businesses, promoting the enhancement of ecological cohesion and improving the efficiency of supply and demand. So we believe that with the high growth of advertising and other businesses, the company will enter the next stage of rapid growth and become a multi-dimensional high-growth technology company.

And now moving on to your next question on our synergy, I'd like to first come to the conclusion and highlight that there are obviously very strong synergies among our businesses. And I believe that the benefits of our synergies and operating leverage will increase with the growth of scale and the improvement of our tech capability. First of all, our current progress in our ad tech business is built on top of our established operational capabilities in live streaming. in the past, we have accumulated a massive user base through our social entertainment products. And along the way, we figured that traffic and monetization efficiency is very different among different regions. In certain regions, advertising turned out to be a better monetization tool than live streaming. And it's based on this observation that we launched Vigo Ads. And secondly, as I mentioned earlier, referring to our competitive edge in ad tech, our ad tech business has inherent resources and tech capabilities leveraging on the group's massive user data, established advertiser outreach, as well as our network and tech infrastructure. And therefore, Beagle Ads has got the right ingredients to sustain growth. And as we grow our ad tech business, we expect our achievements in ad tech will also, in the end, empower our live streaming business as well, further enhancing our synergy benefits and also our operating leverage. We remain confident that as we continue to grow our ad tech business, we will evolve beyond our current stage and transition into a diversified, high-growth tech company. So that's the end. That was the last question. Thank you so much for joining this call. We look forward to speaking with everyone next quarter. Thank you.

Thank you also, ma'am, for your time and to the rest of the management team. The conference call has now concluded. Again, we thank you all for attending today's presentation. At this time you may disconnect. Thank you.