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YY Reports Third Quarter 2017 Unaudited Financial Results
[November 14, 2017]

YY Reports Third Quarter 2017 Unaudited Financial Results


GUANGZHOU, China, Nov. 14, 2017 (GLOBE NEWSWIRE) -- YY Inc. (NASDAQ:YY) ("YY" or the "Company"), a leading live streaming social media platform in China, today announced its unaudited financial results for the third quarter of 2017.

Third Quarter 2017 Highlights

  • Net revenues increased by 48.0% to RMB3,092.3 million (US$464.8 million) from RMB2,089.8 million in the corresponding period of 2016.
  • Net income attributable to YY increased by 59.0% to RMB636.0 million (US$95.6 million) from RMB400.0 million in the corresponding period of 2016.
  • Non-GAAP net income attributable to YY1 increased by 46.7% to RMB639.1 million (US$96.1 million) from RMB435.6 million in the corresponding period of 2016.

“We continued to deliver robust financial and operating results in the third quarter of 2017,” stated Mr. David Xueling Li, Chairman and acting Chief Executive Officer of YY. “Our mobile live streaming monthly active users (MAU) increased by 36.6% year over year to 73.0 million, and our total live streaming paying users increased by 46.5% year over year to over 6.3 million. Our solid performance is a testament to our highly effective strategies in introducing more initiatives to attract younger generation users and to enhance existing user’s engagement and consumption on our live streaming social media platform.  In the past quarter, we rolled out a series of innovative social functionalities and features in the latest version of YY Live 7.0, including Accompany Me, Happy Basketball, and Clip Doll Online. In addition, we launched several new short-form video products to tap into more segmented video verticals and fulfill the diversified demands of users across China. On the Huya side, we are pleased to see that it continued its trajectory of user growth and revenue generation in the third quarter. Looking ahead, by leveraging our dual growth engines, YY Live and Huya, we will continue to invent new ways to attract users and stimulate user engagement, further build our content ecosystem, and explore more monetization opportunities. We believe that we have the right strategy in place to stay ahead of the competition in China’s live streaming social media industry.”

Mr. Bing Jin, Chief Financial Officer of YY, further commented, “This was another quarter with solid financial growth for YY. In the third quarter, our total net revenues increased by 48.0% year over year to RMB3,092.3 million, exceeding the high end of our previous guidance range. The growth was primarily attributable to the significant increase of our live streaming revenues, which grew by 60.4% year over year to RMB2,871.6 million. Both YY Live and Huya broadcasting contributed to such rapid revenue growth. Our non-GAAP net income attributable to YY increased by 46.7% to RMB639.1 million in the quarter, of which Huya’s Non-GAAP operating loss further shrank year over year from RMB159.3 million to RMB10.1 million. In addition, during the quarter, we completed a secondary offering and received approximately USD442.2 million in net proceeds, thus further demonstrating investors’ confidence in YY and laying a solid capital foundation for YY’s future development.”

Third Quarter 2017 Financial Results

NET REVENUES
Net revenues increased by 48.0% to RMB3,092.3 million (US$464.8 million) in the third quarter of 2017 from RMB2,089.8 million in the corresponding period of 2016, primarily driven by the increase in live streaming revenues. Live streaming revenues increased by 60.4% to RMB2,871.6 million (US$431.6 million) in the third quarter of 2017 from RMB1,790.4 million in the corresponding period of 2016. Live streaming revenues from the YY Live segment were RMB2,319.2 million (US$348.6 million) and from the Huya segment were RMB552.4 million (US$83.0 million) in the third quarter of 2017. 

Revenues from online games were RMB122.0 million (US$18.3 million) in the third quarter of 2017 as compared to RMB149.5 million in the corresponding period of 2016.

Revenues from membership were RMB49.5 million (US$7.4 million) in the third quarter of 2017 as compared to RMB68.8 million in the corresponding period of 2016.

Other revenues, mainly representing revenues from the Company's online advertising revenues, were RMB49.2 million (US$7.4 million) in the third quarter of 2017, compared with RMB81.1 million in the corresponding period of 2016. The declines in online gaming, membership, and other revenues mainly reflected the Company’s continued strategic shift towards its live streaming business.

COST OF REVENUES AND GROSS PROFIT
Cost of revenues increased by 48.2% to RMB1,889.3 million (US$284.0 million) in the third quarter of 2017 from RMB1,275.0 million in the corresponding period of 2016, primarily attributable to an increase in revenue-sharing fees and content costs to RMB1,604.9 million (US$241.2 million) in the third quarter of 2017 from RMB967.4 million in the corresponding period of 2016. The increase in revenue-sharing fees and content costs paid to performers, guilds and content providers was in line with the increase in revenues and was primarily due to the higher level of user engagement and spending driven by promotional activities. In addition, bandwidth costs increased to RMB160.5 million (US$24.1 million) in the third quarter of 2017 from RMB149.2 million in the corresponding period of 2016, primarily reflecting continued user base expansion and video quality improvements, but largely offset by the Company’s improved efficiency and pricing terms.

Gross profit increased by 47.6% to RMB1,203.0 million (US$180.8 million) in the third quarter of 2017 from RMB814.8 million in the corresponding period of 2016. Gross margin was 38.9% in the third quarter of 2017 as compared to 39.0% in the corresponding period of 2016 and 40.1% in the second quarter of 2017. The sequential decline of gross margin was mainly attributable to the increased revenue sharing with entry-level hosts on the Company’s platform to develop a more healthy and balanced ecosystem.

OPERATING INCOME
Operating expenses in the third quarter of 2017 increased by 49.4% to RMB560.3 million (US$84.2 million) from RMB375.0 million in the corresponding period of 2016.

Operating income in the third quarter of 2017 increased by 39.9% to RMB661.4 million (US$99.4 million) from RMB472.9 million in the corresponding period of 2016. Operating margin in the third quarter of 2017 was 21.4% as compared to 22.6% in the corresponding period of 2016.

Non-GAAP operating income2 increased by 30.7% to RMB664.5 million (US$99.9 million) in the third quarter of 2017 from RMB508.4 million in the corresponding period of 2016. Non-GAAP operating margin3 was 21.5% in the third quarter of 2017 as compared to 24.3% in the corresponding period of 2016.

NET INCOME
Net income attributable to YY Inc. increased by 59.0% to RMB636.0 million (US$95.6 million) in the third quarter of 2017 from RMB400.0 million in the corresponding period of 2016. Net margin in the third quarter of 2017 increased to 20.6% from 19.1% in the corresponding period of 2016.

Non-GAAP net income attributable to YY Inc. increased by 46.7% to RMB639.1 million (US$96.1 million) from RMB435.6 million in the corresponding period of 2016. Non-GAAP net margin in the third quarter of 2017 was 20.7% as compared to 20.8% in the corresponding period of 2016.

NET INCOME PER ADS
Diluted net income per ADS4 increased by 52.3% to RMB10.51 (US$1.58) in the third quarter of 2017 from RMB6.90 in the corresponding period of 2016.

Non-GAAP diluted net income per ADS5 increased by 41.2% to RMB10.56 (US$1.59) in the third quarter of 2017 from RMB7.48 in the corresponding period of 2016.

BALANCE SHEET AND CASH FLOWS
As of September 30, 2017, the Company had cash and cash equivalents of RMB1,129.0 million (US$169.7 million), short-term deposits of RMB6,474.2 million (US$973.1 million) and restricted short-term deposits of RMB1,000.0 million (US$150.3 million). For the third quarter of 2017, net cash from operating activities was RMB1,045.0 million (US$157.1 million).

SHARES OUTSTANDING
As of September 30, 2017, the Company had a total of 1,260.8 million common shares, or the equivalent of 63.0 million ADSs outstanding.

Business Outlook
For the fourth quarter of 2017, the Company expects net revenues to be between RMB3.4 billion and RMB3.5 billion, representing a year-over-year growth of 36.5% to 40.6%. This forecast reflects the Company's current and preliminary view on the market and operational conditions, which are subject to change.

Conference Call Information
The Company will hold a conference call on Tuesday, November 14, 2017 at 8:00 pm Eastern Time, or Wednesday, November 15, 2017 at 9:00 am Beijing Time to discuss the financial results. Participants may access the call by dialing the following numbers:

   
United States:  +1-845-675-0438
International Toll Free: +1-855-500-8701
China Domestic: 400-1200-654
Hong Kong:  +852-3018-6776
Conference ID: # 4599539
   

The replay will be accessible through November 22, 2017 by dialing the following numbers:

   
United States Toll Free: +1-855-452-5696
International: +61-2-9003-4211
Conference ID:  # 4599539
   

A live and archived webcast of the conference call will also be available at the Company's investor relations website at http://investors.yy.com/

Exchange Rate
This press release contains translations of certain Renminbi amounts into U.S. dollars at specified rates solely for the convenience of readers. Unless otherwise noted, all translations from Renminbi to U.S. dollars, in this press release, were made at a rate of RMB6.6533 to US$1.00, the noon buying rate in effect on September 30, 2017 in the City of New York for cable transfers in Renminbi per U.S. dollar as certified for customs purposes by the Federal Reserve Bank of New York.

About YY Inc.
YY Inc. (“YY” or the “Company”) is a leading live streaming social media platform in China. The Company’s highly engaged users contribute to a vibrant social community by creating, sharing and enjoying a vast range of entertainment content and activities. YY enables users to interact with each other in real-time through online live media and offers users a uniquely engaging and immersive entertainment experience. YY Inc. was listed on the NASDAQ in November 2012.

Safe Harbor Statement
This announcement contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” and similar statements. Among other things, the business outlook and quotations from management in this announcement, as well as YY's strategic and operational plans, contain forward-looking statements. YY may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (“SEC”), in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about YY’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: YY’s goals and strategies; YY's future business development, results of operations and financial condition; the expected growth of the online communication social platform market in China; the expectation regarding the rate at which to gain  active users, especially paying users; YY’s ability to monetize the user base; fluctuations in general economic and business conditions in China and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in YY’s filings with the SEC. All information provided in this press release and in the attachments is as of the date of this press release, and YY does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

Use of Non-GAAP Financial Measures
The unaudited condensed consolidated financial information is prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”), except that the consolidated statement of changes in shareholders’ equity, consolidated statements of cash flows, and the detailed notes have not been presented. YY uses non-GAAP operating income, non-GAAP operating margin, non-GAAP net income attributable to YY Inc., non-GAAP net margin, non-GAAP net income attributable to common shareholders, and basic and diluted non-GAAP net income per ADS, which are non-GAAP financial measures. Non-GAAP operating income is operating income excluding share-based compensation expenses. Non-GAAP operating margin is non-GAAP operating income as a percentage of net revenues. Non-GAAP net income attributable to YY Inc. is net income attributable to YY Inc. excluding share-based compensation expenses. Non-GAAP net margin is non-GAAP net income attributable to YY Inc. as a percentage of net revenues. Non-GAAP net income attributable to common shareholders is net income attributable to common shareholders excluding share-based compensation expenses. Basic and diluted non-GAAP net income per ADS is non-GAAP net income attributable to common shareholders divided by weighted average number of ADS used in the calculation of basic and diluted net income per ADS. The Company believes that separate analysis and exclusion of the non-cash impact of share-based compensation adds clarity to the constituent parts of its performance. The Company reviews these non-GAAP financial measures together with GAAP financial measures to obtain a better understanding of its operating performance. It uses the non-GAAP financial measure for planning, forecasting and measuring results against the forecast. The Company believes that non-GAAP financial measure is useful supplemental information for investors and analysts to assess its operating performance without the effect of non-cash share-based compensation expenses, which have been and will continue to be significant recurring expenses in its business. However, the use of non-GAAP financial measures has material limitations as an analytical tool. One of the limitations of using non-GAAP financial measures is that they do not include all items that impact the Company’s net income for the period. In addition, because non-GAAP financial measures are not measured in the same manner by all companies, they may not be comparable to other similar titled measures used by other companies. In light of the foregoing limitations, you should not consider non-GAAP financial measure in isolation from or as an alternative to the financial measure prepared in accordance with U.S. GAAP.

The presentation of these non-GAAP financial measures is not intended to be considered in isolation from, or as a substitute for, the financial information prepared and presented in accordance with U.S. GAAP. For more information on these non-GAAP financial measures, please see the table captioned “YY Inc. Reconciliations of GAAP and Non-GAAP Results” near the end of this release.

Investor Relations Contact
YY Inc.
Matthew Zhao
Tel: +86 (20) 8212-0000
Email: [email protected] 

ICR, Inc.
Xueli Song
Tel: +1 (646) 915-1611
Email: [email protected]

__________________________________

1 Non-GAAP net income attributable to YY Inc. is a non-GAAP financial measure, which is defined as net income attributable to YY Inc. excluding share-based compensation expenses. Please refer to the section titled "Reconciliation of GAAP and Non-GAAP Results" for details.

2 Non-GAAP operating income is a non-GAAP financial measure, which is defined as operating income excluding share-based compensation expenses. Please refer to the section titled "Reconciliation of GAAP and Non-GAAP Results" for details.  

3 Non-GAAP operating margin is a non-GAAP financial measure, which is defined as non-GAAP operating income as a percentage of net revenues. Please refer to the section titled "Reconciliation of GAAP and Non-GAAP Results" for details.

4 ADS is American Depositary Share. Each ADS represents twenty Class A common shares of the Company. Diluted net income per ADS is net income attributable to common shareholders divided by weighted average number of diluted ADS.

5 Non-GAAP diluted net income per ADS is a non-GAAP financial measure, which is defined as non-GAAP net income attributable to common shareholders divided by weighted average number of ADS used in the calculation of diluted net income per ADS. Please refer to the section titled "Reconciliation of GAAP and Non-GAAP Results" for details).

 
YY INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(All amounts in thousands, except share, ADS and per ADS data)
       
  December
 31,
2016
 September
30,
2017
 September
30,
2017
  RMB RMB US$
Assets      
Current assets      
Cash and cash equivalents 1,579,743  1,129,024  169,694
Short-term deposits 3,751,519  6,474,206  973,082
Restricted short-term deposits -  1,000,000  150,301
Short-term investment -  89,070  13,387
Accounts receivable, net 169,571  167,551  25,183
Inventory 2,266  332  50
Amount due from related parties 135,245  52,876  7,947
Prepayments and other current assets 224,732  180,422  27,118
       
Total current assets 5,863,076 9,093,481 1,366,762
       
Non-current assets      
Deferred tax assets(1) 117,811  121,637  18,282
Investments 918,602  1,076,111  161,741
Property and equipment, net 838,750  925,233  139,064
Land use rights, net 1,872,394  1,836,493  276,027
Intangible assets, net 58,926  37,488  5,634
Goodwill 14,300  14,257  2,143
Amount due from related parties -  20,000  3,006
Other non-current assets 101,933  71,334  10,722
       
Total non-current assets 3,922,716 4,102,553 616,619
       
Total assets 9,785,792 13,196,034 1,983,381
       
Liabilities, mezzanine equity and shareholders’ equity      
Current liabilities      
Convertible bonds 2,768,469 - -
Accounts payable 137,107 102,242  15,367
Deferred revenue 430,683 630,911 94,827
Advances from customers 56,152 66,743  10,032
Income taxes payable 140,754 90,389 13,586
Accrued liabilities and other current liabilities 1,066,038 1,275,704  191,740
Amounts due to related parties 91,245 29,456  4,427
Short-term loan - 597,213  89,762
       
Total current liabilities 4,690,448 2,792,658 419,741
       
Non-current liabilities      
Convertible bonds - 6,636 997
Deferred revenue 25,459 49,222 7,398
Deferred tax liabilities 8,058 17,282 2,598
       
Total non-current liabilities 33,517 73,140 10,993
       
Total liabilities 4,723,965 2,865,798 430,734
       


YY INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
(All amounts in thousands, except share, ADS and per ADS data)
       
  December
31,
2016
 September
 30,
2017
 September
 30,
2017
  RMB RMB US$
       
Mezzanine equity 9,272 522,426 78,521
       
Shareholders’ equity      
Class A common shares (US$0.00001 par value; 10,000,000,000 and 10,000,000,000 shares authorized, 750,115,028 and  922,793,788 shares issued and outstanding as of December 31, 2016 and September 30, 2017, respectively) 44  56  8
Class B common shares (US$0.00001 par value; 1,000,000,000 and 1,000,000,000 shares authorized, 359,557,976 and 337,982,976 shares issued and outstanding as of December 31, 2016 and September 30, 2017, respectively) 26  24  4
Additional paid-in capital 2,165,766  5,161,606 775,796
Statutory reserves 58,857  58,857  8,846
Retained earnings 2,728,736  4,471,612 672,089
Accumulated other comprehensive income 93,066  60,671  9,119
       
Total YY Inc.’s shareholders’ equity 5,046,495 9,752,826 1,465,862
       
Non-controlling interests 6,060 54,984 8,264
       
Total shareholders’ equity 5,052,555 9,807,810 1,474,126
       
Total liabilities, mezzanine equity and shareholders’ equity 9,785,792 13,196,034 1,983,381
       
_________________________________________________________       
(1) Effectively January 2017, ASU 2015-17 issued by FASB requires entities to reclassify deferred tax assets and liabilities as non-current in the balance sheet. Accordingly, the Company retrospectively reclassified RMB107.3 million of deferred tax assets from current assets into non-current assets as of December 31, 2016.


 
YY INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(All amounts in thousands, except share, ADS and per ADS data)
     
  Three Months Ended Nine Months Ended
  September
 30,
2016
 June
30,
2017
 September
 30,
2017
 September
30,
2017
  September
30,
2016
 September
30,
2017
 September
30,
2017
 
  RMB RMB RMB US$  RMB RMB US$ 
          
Net revenues         
Live streaming 1,790,373 2,373,397  2,871,610  431,607   4,809,037  7,302,434  1,097,566 
Online games 149,530 153,959  122,035  18,342   508,901  415,742  62,487 
Membership 68,768 52,204  49,486  7,438  210,210  147,111  22,111 
Others 81,134 29,431  49,174  7,391  191,752  102,967  15,476 
          
Total net revenue 2,089,805 2,608,991 3,092,305 464,778  5,719,900 7,968,254 1,197,640 
                 
Cost of revenues(1) (1,275,002)(1,563,445)(1,889,313)(283,966) (3,543,873)(4,829,753)(725,918)
                 
Gross profit 814,803 1,045,546 1,202,992 180,812  2,176,027 3,138,501 471,722 
                 
Operating expenses(1)         
Research and development expenses (163,236)(167,359)(166,139) (24,971) (515,112)(499,059) (75,009)
Sales and marketing expenses (109,075)(204,434)(249,480) (37,497) (275,735)(542,516) (81,541)
General and administrative expenses (102,683)(104,545)(144,678) (21,745) (276,245)(325,875) (48,979)
                 
Total operating expenses (374,994)(476,338)(560,297)(84,213) (1,067,092)(1,367,450)(205,529)
          
Gain on deconsolidation and disposal of subsidiaries - - - -  - 37,989 5,710 
Other income 33,065 30,166 18,667 2,806  64,477 68,653 10,319 
                 
Operating income 472,874 599,374 661,362 99,405  1,173,412 1,877,693 282,222 
                 
Gain on partial disposal of investments - 45,861 - -  - 45,861 6,893 
Interest expense (20,357)(3,459)(3,651)(549) (60,327)(28,378)(4,265)
Interest income 17,162 27,317 47,505 7,140  40,713 105,853 15,910 
Foreign currency exchange gains (losses), net (16)(281)(251)(38) 773 (1,825)(274)
Other non-operating expense - - - -  (23,474)- - 
                 
Income before income tax expenses
 469,663 668,812 704,965 105,958  1,131,097 1,999,204 300,486 
                 
Income tax expenses (69,909)(100,531)(74,684)(11,225) (194,710)(264,288)(39,723)
                 
Income before share of (loss) income in equity method investments, net of income taxes 399,754 568,281 630,281 94,733  936,387 1,734,916 260,763 
                 
Share of (loss) income in equity method investments, net of income taxes (1,867)4,726 6,806 1,023  3,879 15,467 2,325 
                 
Net Income 397,887 573,007 637,087 95,756  940,266 1,750,383 263,088 
                 
Less: Net loss attributable to the non-controlling interest shareholders and the mezzanine classified non-controlling interest shareholders (2,152)(701)1,120 168  (11,398)(2,446)(368)
                 
Net income attributable to YY Inc. 400,039 573,708 635,967 95,588  951,664 1,752,829 263,456 
                         


YY INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (CONTINUED)
(All amounts in thousands, except share, ADS and per ADS data)
 
  Three Months Ended Nine Months Ended
  September 30,
2016
 June 30,
2017
 September 30,
2017
 September 30,
2017
  September 30,
2016
 September 30,
2017
 September 30,
2017
 
  RMB RMB RMB US$  RMB RMB US$ 
          
Net income attributable to YY Inc. 400,039 573,708 635,967 95,588  951,664 1,752,829 263,456 
          
Other comprehensive income:         
Unrealized gain (loss) of available-for-sales securities, net of nil tax 13,354 (39,818)(22,128)(3,326) 190,506 (19,710)(2,962)
Foreign currency translation adjustments, net of nil tax (562)(712)(12,592)(1,893) (1,671)(12,685)(1,907)
                 
Comprehensive income attributable to YY Inc. 412,831 533,178 601,247 90,369  1,140,499 1,720,434 258,587 
                 
          
Net income per ADS         
—Basic 7.07 10.09 10.60 1.59   16.91 30.30 4.55 
—Diluted  6.90 9.98 10.51 1.58   16.64 29.72 4.47 
Weighted average number of ADS used in calculating net income per ADS         
—Basic 56,560,174 56,832,278 60,008,235 60,008,235  56,290,231  57,857,025 57,857,025 
—Diluted 60,814,662 57,488,989 60,503,529 60,503,529  60,773,398 59,681,394 59,681,394 
                 

(1)     Share-based compensation was allocated in cost of revenues and operating expenses as follows:

     
  Three Months Ended Nine Months Ended
  September 30,
2016
June 30,
2017
September 30,
2017
 September 30,
2017
  September 30,
2016
September 30,
2017
September 30,
2017
  RMBRMBRMB US$  RMBRMBUS$
          
Cost of revenues  3,7013,021(434)(65) 12,4546,210 933
Research and development expenses  11,12010,492(6,049)(909) 64,893 15,847 2,382
Sales and marketing expenses  612303(74)(11) 2,392738111
General and administrative expenses  20,0869,649 9,700  1,458  51,199 26,406 3,969


 
YY INC.
RECONCILIATION OF GAAP AND NON-GAAP RESULTS
(All amounts in thousands, except share, ADS and per ADS data)
 
  Three Months Ended Nine Months Ended
  September 30,
2016
 June 30,
2017
 September 30,
2017
 September 30,
2017
  September 30,
2016
 September 30,
2017
 September 30,
2017
  RMB RMB RMB US$  RMB RMB US$
                
Operating income 472,874 599,374 661,362 99,405   1,173,412  1,877,693  282,222
Share-based compensation expenses 35,519 23,465  3,143 473   130,938 49,201 7,395
                
Non-GAAP operating income 508,393 622,839 664,505 99,878  1,304,350 1,926,894 289,617
                
Net income attributable to YY Inc. 400,039 573,708  635,967 95,588  951,664   1,752,829  263,456
Share-based compensation expenses 35,519 23,465  3,143  473   130,938  49,201  7,395
                
Non-GAAP net income attributable to YY Inc. 435,558 597,173 639,110 96,061  1,082,602 1,802,030 270,851
                
                
Non-GAAP net income per ADS               
—Basic  7.70 10.51  10.65  1.60   19.23  31.15  4.68
—Diluted 7.48 10.39  10.56  1.59   18.79  30.54  4.59
Weighted average number of ADS used in calculating Non-GAAP net income per ADS               
—Basic 56,560,174 56,832,278 60,008,235  60,008,235  56,290,231  57,857,025  57,857,025
—Diluted 60,814,662 57,488,989 60,503,529  60,503,529  60,773,398  59,681,394  59,681,394


 
YY INC.
UNAUDITED SEGMENT REPORT
(All amounts in thousands, except share, ADS and per ADS data)
 
  Three Months Ended
  September 30, 2017
      
  YY Live(2) Huya(2) Total Total 
  RMB RMB RMB US$ 
          
Net revenues         
Live streaming 2,319,251  552,359  2,871,610  431,607 
Online games 113,188  8,847  122,035  18,342 
Membership 46,139  3,347  49,486  7,438 
Others 30,193  18,981  49,174  7,391 
          
Total net revenue 2,508,771 583,534 3,092,305 464,778 
          
Cost of revenues(1) (1,379,016)(510,297)(1,889,313)(283,966)
          
Gross profit  1,129,755 73,237 1,202,992 180,812 
          
Operating expenses(1)         
Research and development expenses (117,231) (48,908) (166,139) (24,971)
Sales and marketing expenses (228,318) (21,162) (249,480) (37,497)
General and administrative expenses (127,342) (17,336) (144,678) (21,745)
          
Total operating expenses (472,891)(87,406)(560,297)(84,213)
Other income 18,569 98 18,667 2,806 
          
Operating income (loss) 675,433 (14,071)661,362 99,405 
          
  1. Share-based compensation was allocated in cost of revenues and operating expenses as follows:
   
  Three Months Ended
  September 30, 2017
      
  YY Live HuyaTotal Total 
  RMB RMB  RMB   US$ 
         
Cost of revenues (1,190)756(434)(65)
Research and development expenses (7,973)1,924(6,049)(909)
Sales and marketing expenses (106)32(74)(11)
General and administrative expenses 8,473 1,2279,700 1,458 
         
  1. The Company revamped its internal organization and one sub-business stream previously presented and reviewed under YY Live was changed to be presented and reviewed under Huya from the first quarter of 2017. Segment information for the 3 months ended 30 September 2016 has been restated accordingly.
  2. As the Company has disposed of a great majority of its online education business before the end of 2016 and disposed of the remaining portion of its online education business in the beginning of 2017, 100 Education ceased to be an operating segment starting from the first quarter of 2017.
 
YY INC.
RECONCILIATION OF GAAP AND NON-GAAP RESULTS OF UNAUDITED SEGMENT REPORT
(All amounts in thousands, except share, ADS and per ADS data)
 
   Three Months Ended
   September 30, 2017
       
   YY Live Huya TotalTotal
   RMB RMB RMBUS$
        
Operating income (loss) 675,433 (14,071)661,36299,405
Share-based compensation expenses (796)3,939 3,143473
        
Non-GAAP operating income (loss) 674,637 (10,132)664,50599,878
        


YY INC.
UNAUDITED SEGMENT REPORT
(All amounts in thousands, except share, ADS and per ADS data)
 
  Three Months Ended
  June 30, 2017
      
  YY Live Huya Total Total 
  RMB RMB RMB US$ 
          
Net revenues         
Live streaming 1,931,569 441,828 2,373,397 350,095 
Online games 147,010 6,949 153,959 22,710 
Membership 50,014 2,190 52,204 7,701 
Others 19,034 10,397 29,431 4,341 
          
Total net revenue 2,147,627 461,364 2,608,991 384,847 
          
Cost of revenues(1) (1,159,554)(403,891)(1,563,445)(230,620)
          
Gross profit  988,073 57,473 1,045,546 154,227 
          
Operating expenses(1)         
Research and development expenses (132,223)(35,136)(167,359)(24,687)
Sales and marketing expenses (183,119)(21,315)(204,434)(30,156)
General and administrative expenses (86,678)(17,867)(104,545)(15,421)
          
Total operating expenses (402,020)(74,318)(476,338)(70,264)
Gain on deconsolidation and disposal of subsidiaries - - - - 
Other income 30,156 10 30,166 4,450 
          
Operating income (loss) 616,209 (16,835)599,374 88,413 
          
  1. Share-based compensation was allocated in cost of revenues and operating expenses as follows:
   
  Three Months Ended
  June 30, 2017
      
  YY LiveHuyaTotalTotal
  RMBRMB  RMB  US$
      
Cost of revenues 2,3726493,021446
Research and development expenses 8,2292,26310,4921,548
Sales and marketing expenses 2822130345
General and administrative expenses 6,8722,7779,6491,423
      


YY INC.
RECONCILIATION OF GAAP AND NON-GAAP RESULTS OF UNAUDITED SEGMENT REPORT
(All amounts in thousands, except share, ADS and per ADS data)
 
   Three Months Ended
   June 30, 2017
         
   YY Live Huya Total Total
   RMB RMB RMB US$
         
Operating income (loss) 616,209 (16,835)599,374 88,413
Share-based compensation expenses 17,755 5,710 23,465 3,462
         
Non-GAAP operating income (loss) 633,964 (11,125)622,839 91,875
         


YY INC.
UNAUDITED SEGMENT REPORT
(All amounts in thousands, except share, ADS and per ADS data)
 
  Three Months Ended
  September 30, 2016
   
  YY Live Huya 100 Education Total Total 
  RMB RMB RMB RMB US$ 
            
Net revenues           
Live streaming 1,593,495 196,878 - 1,790,373 268,482 
Online games 149,530 - - 149,530 22,423 
Membership 68,768 - - 68,768 10,312 
Others 20,240 - 60,894 81,134 12,167 
            
Total net revenue 1,832,033 196,878 60,894 2,089,805 313,384 
            
Cost of revenues(1) (962,250)(279,710)(33,042)(1,275,002)(191,198)
            
Gross profit (loss) 869,783 (82,832)27,852 814,803 122,186 
            
Operating expenses(1)           
Research and development expenses (109,495)(47,551)(6,190)(163,236)(24,479)
Sales and marketing expenses (68,794)(21,753)(18,528)(109,075)(16,357)
General and administrative expenses (63,984)(18,087)(20,612)(102,683)(15,398)
            
Total operating expenses (242,273)(87,391)(45,330)(374,994)(56,234)
Gain on deconsolidation and disposal of subsidiaries - - - - - 
Other income 33,065 - - 33,065 4,958 
            
Operating income (loss) 660,575 (170,223)(17,478)472,874 70,910 
            
  1. Share-based compensation was allocated in cost of revenues and operating expenses as follows:
 
  Three Months Ended
  September 30, 2016
       
  YY LiveHuya100 EducationTotalTotal
  RMBRMB  RMB  RMB  US$
       
Cost of revenues 2,2311,429 41 3,701 555
Research and development expenses 6,108 4,234 778 11,120 1,668
Sales and marketing expenses 575 37 -  612 92
General and administrative expenses 1,435 5,17713,47420,0863,012
       




YY INC.
RECONCILIATION OF GAAP AND NON-GAAP RESULTS OF UNAUDITED SEGMENT REPORT
(All amounts in thousands, except share, ADS and per ADS data)
 
   Three Months Ended
   September 30, 2016
          
   YY Live Huya 100 Education Total Total
   RMB RMB RMB RMB US$
           
Operating income (loss)  660,575  (170,223) (17,478) 472,874  70,910
Share-based compensation expenses  10,349 10,877 14,293 35,519  5,327 
           
Non-GAAP operating income (loss) 670,924 (159,346)(3,185)508,393  76,237 
           

 


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