Joyy Group: 2020 full-year revenue of 13.2 billion, a year-on-year increase of 112%

On March 26, 2021, the global video social media platform Joyy Group today announced its unaudited financial report for the fourth quarter and full year of 2020. In 2020, Joyy Group's full-year revenue was 13.2 billion, a year-on-year increase of 112%; the fourth quarter revenue was 3.7835 billion, a year-on-year increase of 77.5%. The global mobile monthly active users were 393.7 million, a year-on-year decrease of 7.1%, mainly due to the Indian government's ban on some Chinese applications. (Because Huya and YY Live have been listed as non-continuing operations by the group, the financial data in this report do not include Huya and YY Live)

Fourth Quarter 2020 Financial Highlights

Net income increased 77.5% year-on-year to RMB 3.7835 billion (US$579.9 million), compared with RMB 2.1319 billion in the same period of 2019.

The net loss from continuing operations attributable to Huya Group's controlling interest was RMB 791.9 million (US$121.4 million), compared with RMB 816.6 million in the same period of 2019, mainly due to the narrowing of BIGO's operating losses.

Under non-U.S. generally accepted accounting principles, the net loss from continuing operations attributable to Huya Group's controlling interest decreased by 67.2% year-on-year to RMB 149.4 million (US$22.9 million), mainly due to the narrowing of BIGO's operating losses; it was RMB 455.7 million in the same period of 2019.

2020 Full Year Financial Highlights

Net income increased 112.1% year-on-year to RMB 13.2309 billion (US$2.0277 billion), compared with RMB 6.2393 billion in the same period of 2019.

The net loss from continuing operations attributable to Huya Group's controlling interest was RMB105.1 million (US$16.1 million), compared with RMB516.7 million in the same period of 2019.

Under non-U.S. generally accepted accounting principles, the net loss from continuing operations attributable to Huya Group's controlling interest was RMB 1.1423 billion (US$175.1 million), compared with RMB 1.9632 billion in the same period of 2019.

Fourth Quarter Operational Highlights

The global average number of monthly active mobile users fell 7.1% year-on-year to 393.7 million, mainly due to the Indian government's ban on some Chinese applications (including Bigo Live, Likee, and Hago), which was partially offset by the increase in monthly active users outside India; in the same period of 2019, it was 423.6 million.

Likee’s average mobile monthly active users increased by 4.2% year-on-year to 120.1 million, compared with 115.3 million in the same period of 2019.

Bigo Live’s average mobile monthly active users increased by 24.5% year-on-year to 28.7 million, compared with 23.1 million in the same period of 2019.

Hago's average mobile monthly active users fell 49.9% year-on-year to 16.5 million, from 33 million in the same period of 2019, mainly due to the Indian government's ban on Chinese apps.

Mr. Li Xueling, Chairman and CEO of Huya, said: "In the fourth quarter, we firmly focused on the development strategy of live broadcast + short video as the dual engines, continued to promote global layout, deepened localized operations, steadily improved the scale of overseas business and monetization capabilities, and many products achieved outstanding performance. Among them, Bigo Live's revenue increased by 100.4% year-on-year, Likee's revenue increased by 407.5% year-on-year, and Hago's revenue increased by 69.4% year-on-year; in terms of regional distribution, the performance of developed countries and the Middle East market was also quite impressive. For the whole year, the revenue of BIGO, the overseas business segment, exceeded YY Live for the first time. This is the result of our early exploration of market potential and firm implementation of strategies in the past few years. This quarter, we continued to improve the user's product experience and engagement by iterating the social functions of our products and improving content production tools. In 2021, we will continue to localize and deepen the community operation and content ecology of our products, continuously lower the threshold for content production, increase the enthusiasm and activity of creators, empower creators in all aspects, ensure sufficient supply of high-quality content, and promote the continuous growth of the platform."

Mr. Bing Jin, Chief Financial Officer of Huya, further commented, "In the fourth quarter of 2020, our net revenue increased by 77.5% year-on-year to RMB 3,783.5 million, of which BIGO's operating revenue reached RMB 3,389.8 million, an increase of 87.9% year-on-year, mainly driven by the live broadcast business. Due to the improvement of product monetization capabilities, we achieved non-GAAP operating profit profitability for the BIGO segment for the second consecutive quarter. We will continue to increase our investment in the global market, continue to localize and deepen the community operation and content ecology of our products, and will also actively explore ways to give back to shareholders and create greater value for them."

Fourth Quarter Financial Results

Net income

Net revenue in the fourth quarter of 2020 increased 77.5% year-on-year to RMB 3.7835 billion (US$579.9 million), compared with RMB 2.1319 billion in the same period of 2019. This was mainly due to the increase in BIGO live broadcast revenue.

In the fourth quarter of 2020, live streaming revenue increased by 93.3% year-on-year to RMB 3.5939 billion (US$550.8 million), mainly due to the continued growth of BIGO users and improved monetization capabilities.

Other income decreased 30.5% year-on-year to RMB 189.6 million (US$29.1 million) in the fourth quarter of 2020, compared with RMB 272.8 million in the same period of 2019. This was mainly due to the decline in other income.

Cost of revenue and gross profit

Cost of revenue increased 76.6% year-on-year to RMB 2,674.7 million (US$409.9 million) in the fourth quarter of 2020, compared with RMB 1,514.5 million in the same period of 2019. Revenue sharing expenses and content costs increased from RMB 708.6 million in the same period of 2019 to RMB 1,693.1 million (US$259.5 million) in the fourth quarter of 2020, mainly due to the increase in the company's live broadcast revenue. Bandwidth costs decreased from RMB 221.8 million in the same period of 2019 to RMB 179.5 million (US$27.5 million), mainly due to the improvement in the efficiency of the company's bandwidth utilization. In late June 2020, the Indian government banned some Chinese applications and interrupted the service of Indian users; the growth of users in non-Indian regions (resulting in some increase in bandwidth costs) partially offset this impact.

Gross profit for the fourth quarter of 2020 increased 79.6% year-over-year to RMB1,108.9 million (US$169.9 million), compared with RMB617.4 million in the same period of 2019. Gross profit margin was 29.3%, compared with 29.0% in the same period of 2019.

Operating Profit

Operating expenses for the fourth quarter of 2020 were RMB1,675.2 million (US$256.7 million), compared with RMB1,576.2 million in the same period of 2019. Among them, selling expenses increased from RMB782.0 million in the same period of 2019 to RMB973.8 million (US$149.2 million), mainly due to the company's increased marketing investment in overseas markets. Administrative expenses for the fourth quarter of 2020 were RMB236.3 million (US$36.2 million), compared with RMB319.8 million in the same period of 2019. The decrease in administrative expenses was mainly due to the decrease in the company's provision for bad debts of accounts receivable.

The operating loss in the fourth quarter of 2020 was RMB 557.6 million (US$85.5 million), compared with RMB 863.3 million in the same period of 2019. The operating loss margin was 14.7%, compared with 40.5% in the same period of 2019, mainly due to the narrowing of BIGO's operating losses.

Non-GAAP operating loss decreased 60.7% year-on-year to RMB220.7 million (US$33.8 million) in the fourth quarter of 2020, compared with RMB561.5 million in the same period of 2019. Non-GAAP operating loss margin was 5.8% in the fourth quarter of 2020, compared with 26.3% in the same period of 2019.

Net Profit

The net loss from continuing operations attributable to Huya Group's controlling interest in the fourth quarter of 2020 was RMB 791.9 million (US$121.4 million), compared with RMB 816.6 million in the same period of 2019. The net loss margin was 20.9%, compared with 38.3% in the same period of 2019, mainly due to the narrowing of BIGO's operating losses.

Under non-U.S. GAAP, the net loss from continuing operations attributable to Huya Group's controlling interest and common shareholders in the fourth quarter of 2020 was RMB 149.4 million (US$22.9 million), compared with RMB 455.7 million in the same period of 2019. The net loss margin under non-U.S. GAAP was 3.9%, compared with 21.4% in the same period of 2019.

Net income per American Depositary Share ("ADS")

Net loss from continuing operations per ADS was $10.07 (diluted) ($1.54) for the fourth quarter of 2020, compared to $10.43 for the same period in 2019.

Non-GAAP net loss from continuing operations per ADS was $1.86 (diluted) ($0.29) for the fourth quarter of 2020, compared to $5.70 for the same period in 2019.

Balance Sheet and Cash

As of December 31, 2020, the Company had cash and cash equivalents, restricted cash and cash equivalents, restricted short-term deposits, and short-term deposits and short-term investments of RMB 25.3036 billion (US$3.6021 billion).

Outstanding shares

As of December 31, 2020, the Company had 1,598.9 million common shares outstanding, representing 79.9 million American Depositary Shares (“ADSs”).

2020 Financial Results

Net revenue increased 112.1% year-on-year to RMB 13,230.9 million (US$2,027.7 million) in 2020, compared with RMB 6,239.3 million in the same period of 2019. This was mainly driven by a 135% year-on-year increase in live streaming revenue. Net loss from continuing operations attributable to Huya Group's controlling interest decreased 79.7% year-on-year to RMB 105.1 million (US$16.1 million) in 2020, compared with RMB 516.7 million in the same period of 2019. The net loss margin was 0.8% in 2020, compared with 8.3% in the same period of 2019.

Under non-U.S. generally accepted accounting principles, the net loss attributable to Huya Group's controlling interest in 2020 was RMB 1.1423 billion (US$175.1 million), compared with RMB 1.9632 billion in the same period of 2019. Under non-U.S. generally accepted accounting principles, the net loss margin in 2020 was 8.6%, compared with 31.5% in the same period of 2019.

Net loss from continuing operations per ADS decreased 71.6% year-over-year to $2.14 (diluted) ($0.33) in 2020, compared with $7.54 in 2019. Non-GAAP net loss from continuing operations per ADS was $14.28 (diluted) ($2.19) in 2020, compared with $25.42 in 2019.

The company's future prospects

For the first quarter of 2021, the company expects net revenue to be between $590 million and $605 million, a year-on-year increase of 72.5% to 76.9%. This forecast does not include revenue from Huya and YY Live. This forecast is based on the impact of the COVID-19 outbreak and indirectly reflects the company's initial considerations of the market and operating conditions. Due to the potential impact of the COVID-19 outbreak on the global economy and users' ability to pay, the forecast data may change.

Quarterly Dividends

On August 11, 2020, the Company's Board of Directors approved a quarterly dividend policy for the next three years starting in the third quarter of 2020; together with the quarterly dividend policy approved on November 16, 2020, the Board of Directors resolved that the dividend for the fourth quarter of 2020 is US$0.51 per ADS (US$0.0225 per ordinary share), which is expected to be distributed on April 30, 2021 to shareholders of record as of the close of business on April 19, 2021. The ex-rights and ex-dividend date is April 20, 2021. Under this policy, the Company's Board of Directors has the right to determine the distribution and amount of dividends in any particular quarter based on the Company's operations and profitability, cash flow, financial condition and other relevant factors.

Recent Developments

Due to personal career planning reasons, the Company's Chief Financial Officer, Bing Jin, will leave the position of Chief Financial Officer at the end of April 2021. Bing Jin joined Huya Group as CFO in 2017 and has made significant contributions to the Company's business, finance and corporate governance. The Company thanks Bing Jin for his contributions and wishes him all the best in the future. Bing Jin has agreed to continue to serve as an advisor to the Company to assist in the handover until April 2022. The Company has begun the search for a new successor, and Bing Jin will actively participate in the entire selection process.

Independent review findings

As stated in the company's announcement on February 8, 2021, in response to the short-selling report released on November 18, 2020, the company's audit committee proactively launched an independent investigation into the allegations in the Muddy Waters report. With the assistance of third-party law firms, audits and professional data analysis agencies, the company's audit committee has previously formed an investigation conclusion on the YY Live business. The allegations and conclusions related to the YY Live business in the short-selling report have not been confirmed. The audit committee has now formed an investigation conclusion on other allegations mentioned in the report other than the YY Live business (around the BIGO business), and the allegations and conclusions related to this part in the short-selling report have also not been confirmed. At this point, the independent investigation of the audit committee has been completed without any negative conclusions.

Share Buyback Program

In May 2020, the company announced that its board of directors had authorized an additional 12-month extension of the share repurchase program approved in August 2019. Under the program, the company may repurchase up to $300 million of its shares between August 2019 and August 2021. As of December 31, 2020, the company had repurchased approximately $139.5 million of its shares.

via Financial Network