YY Reports Third Quarter 2016 Unaudited Financial Results

GUANGZHOU, China, Nov. 21, 2016 (GLOBE NEWSWIRE) -- YY Inc. (NASDAQ:YY) ("YY" or the "Company"), a live streaming platform, today announced its unaudited financial results for the third quarter of 2016.

Third Quarter 2016 Highlights 
  • Net revenues increased by 40.3% to RMB2,089.8 million (US$313.4 million) from RMB1,490.0 million in the corresponding period of 2015.
  • Net income attributable to YY increased by 155.8% to RMB400.0 million (US$60.0 million) from RMB156.4 million in the corresponding period of 2015.
  • Non-GAAP net income attributable to YY increased by 83.7% to RMB435.6 million (US$65.3 million) from RMB237.1 million in the corresponding period of 2015.

"We are extremely pleased to have achieved solid results this quarter with both top- and bottom-line growth across the board," said Mr. Zhou Chen, Chief Executive Officer of YY. "This growth was primarily driven by the robust 54.5% year-over-year growth in our live streaming business, which was made possible through the successful execution of our business and content strategy. Importantly, we continued to focus on the development of PUGC (Professionally-curated User Generated Content) and PGC. In the third quarter of 2016, we launched a new relationships program and further developed our sports content. Additionally, Huya broadcasting continues to increase its content offerings for mobile game broadcasting and broaden its popularity. Going forward, we will continue to strengthen our content to meet the ever evolving demands of YY's 98.0 million PC MAU and 53.4 million mobile MAU in the third quarter of 2016. We believe in our ability to build a comprehensive content ecosystem across our two live streaming platforms, YY Live and Huya broadcasting, and are confident that we have the right strategy in place to further fortify our position as China's leading interactive, live streaming platform."

Mr. Eric He, Chief Financial Officer of YY, further commented, "For the third quarter of 2016, we continued to see strong revenue growth as total revenues increased by 40.3% year over year to RMB2,089.8 million, primarily driven by a 63.4% year-over-year growth in the total number of paying users to 4.6 million, as well as a solid live streaming revenues  growth of 54.5% year over year to RMB1,790.4 million. In particular, Huya broadcasting witnessed continued strong growth with a significant 139.0% year-over-year increase in revenues. Meanwhile, in the third quarter of 2016, mobile revenues contributed 52.8% to YY Live revenues, which demonstrated the improvement we have further made in mobilization. With these exciting growth momentum, we are confident in our ability to maintain healthy revenue growth in the coming quarters. Going forward, we will continue to expand our content offerings and remain agile in adopting new and innovative ideas to further differentiate the user experience on our platform from our competitors."

Third Quarter 2016 Financial Results

NET REVENUES 1 Net revenues increased by 40.3% to RMB2,089.8 million (US$313.4 million) in the third quarter of 2016 from RMB1,490.0 million in the corresponding period of 2015, primarily driven by the increase in live streaming revenues. Live streaming revenues, which mainly consisted of revenues from YY Live, online dating, Huya broadcasting, PK Show, ME App, and other live streaming services, increased by 54.5% to RMB1,790.4 million (US$268.5 million) in the third quarter of 2016 from RMB1,159.2 million in the corresponding period of 2015. The increase in live streaming revenues was primarily driven by the growth of online dating revenues and Huya broadcasting revenues.

Revenues from online games were RMB149.5 million (US$22.4 million) in the third quarter of 2016, as compared to RMB168.3 million in the corresponding period of 2015, which primarily reflects the continued softness in China's web game market.

Revenues from membership were RMB68.8 million (US$10.3 million) in the third quarter of 2016, as compared to RMB76.3 million in the corresponding period of 2015.

Other revenues, mainly including revenues from the Company's online education platform and online advertising revenues, were RMB81.1 million (US$12.2 million) in the third quarter of 2016, compared with RMB86.2 million in the corresponding period of 2015.

COST OF REVENUES AND GROSS PROFIT Cost of revenues increased by 40.8% to RMB1,275.0 million (US$191.2 million) in the third quarter of 2016 from RMB905.5 million in the corresponding period of 2015, primarily attributable to an increase in revenue-sharing fees and content costs to RMB967.4 million (US$145.1 million) in the third quarter of 2016 from RMB572.6 million in the corresponding period of 2015. The increase in revenue-sharing fees and content costs paid to performers, channel owners 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, as well as the Company's investments in expanding the amount of new and innovative content it provides to users. In addition, bandwidth costs slightly increased to RMB149.2 million (US$22.4 million) in the third quarter of 2016 from RMB147.2 million in the corresponding period of 2015, primarily reflecting the continued user base expansion and video quality improvements, but partially offset by the Company's improved efficiency and pricing terms.

Gross profit increased by 39.4% to RMB814.8 million (US$122.2 million) in the third quarter of 2016 from RMB584.5 million in the corresponding period of 2015. Gross margin was 39.0% in the third quarter of 2016, as compared to 39.2% in the corresponding period of 2015.

OPERATING INCOME Operating expenses for the third quarter of 2016 decreased by 6.6% to RMB375.0 million (US$56.2 million) from RMB401.3 million in the corresponding period of 2015.

Operating income in the third quarter of 2016 increased by 136.1% to RMB472.9 million (US$70.9 million) from RMB200.3 million in the corresponding period of 2015. Operating margin in the third quarter of 2016 increased to 22.6% from 13.4% in the corresponding period of 2015.

Non-GAAP operating income 2  increased by 80.9% to RMB508.4 million (US$76.2 million) in the third quarter of 2016 from RMB281.0 million in the corresponding period of 2015. Non-GAAP operating margin 3  increased to 24.3% in the third quarter of 2016 from 18.9% in the corresponding period of 2015.

NET INCOME Net income attributable to YY Inc. increased by 155.8% to RMB400.0 million (US$60.0 million) in the third quarter of 2016 from RMB156.4 million in the corresponding period of 2015.  Net margin in the third quarter of 2016 increased to 19.1% from 10.5% in the corresponding period of 2015. Excluding  the government subsidy of RMB18.7 million, net income attributable to YY Inc. was RMB381.3 million (US$57.2 million), representing an increase of 143.8% year over year.

Non-GAAP net income attributable to YY Inc. 4  increased by 83.7% to RMB435.6 million (US$65.3 million) from RMB237.1 million in the corresponding period of 2015. Non-GAAP net margin 5  increased to 20.8% in the third quarter of 2016 from 15.9% in the corresponding period of 2015.

NET INCOME PER ADS Diluted net income per ADS 6  increased by 150.9% to RMB6.90 (US$1.03) in the third quarter of 2016 from RMB2.75 in the corresponding period of 2015.

Non-GAAP diluted net income per ADS 7  increased by 79.4% to RMB7.48 (US$1.12) in the third quarter of 2016 from RMB4.17 in the corresponding period of 2015.

BALANCE SHEET AND CASH FLOWS As of September 30, 2016, the Company had cash and cash equivalents of RMB746.5 million (US$111.9 million) and short-term deposits of RMB3,631.3 million (US$544.5 million). For the third quarter of 2016, net cash from operating activities was RMB652.5 million (US$97.8 million).

SHARES OUTSTANDING As of September 30, 2016, the Company had a total of 1,107.3 million common shares outstanding, or the equivalent of 55.4 million ADSs outstanding.

Business OutlookFor the fourth quarter of 2016, the Company expects its net revenues to be between RMB2.4 billion and RMB2.5 billion, representing a year-over-year growth of approximately 26.3% to 31.6%. These forecasts reflect the Company's current and preliminary view on the market and operational conditions, which are subject to change.

Conference Call InformationThe Company will hold a conference call on November 21, 2016 at 8:00 am Eastern Time or 9:00 pm 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:  # 16894086

The replay will be accessible through November 29, 2016 by dialing the following numbers:
United States Toll Free: +1-855-452-5696
International:  +61-2-9003-4211
Conference ID:  # 16894086

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 RateThis 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 RMB6.6685 to US$1.00, the noon buying rate in effect on September 30, 2016 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 live streaming platform that enables users to interact in live online group activities through voice, text and video. Launched in July 2008, YY Client, the Company's core product, empowers users to create and organize groups of varying sizes to discover and participate in a wide range of activities, including online music and entertainment, online games, online dating, live game broadcasting and education. YY Inc. was listed on NASDAQ in November 2012 and generated revenues of US$910 million in the fiscal year 2015.

Safe Harbor StatementThis 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 registered user accounts, active users, especially paying users; YY's ability to monetize the user base; YY's ability to continue attracting advertisers and offering popular online games; 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 MeasuresThe 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.

1 From the third quarter of 2016, the Company changed revenue segmenting to live streaming, online games, membership and others. The Company believes this new method better captures the way it generates revenues and is more transparent and reliable than breaking down revenues by business lines as previously presented.

2 Non-GAAP operating income is a non-GAAP financial measure, which is defined as operating income excluding share-based compensation expenses. 

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. 

4 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.

5 Non-GAAP net margin is a non-GAAP financial measure, which is defined as non-GAAP net income attributable to YY Inc. as a percentage of net revenues.

6 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.

7 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.
YY INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(All amounts in thousands, except share, ADS and per ADS data)
 
    December 31, 201 5    September 30, 201 6   September 30, 201 6
    RMB   RMB   US$
Assets            
Current assets            
Cash and cash equivalents   928,934   746,454    111,937
Short-term deposits   1,894,946   3,631,269    544,541
Restricted short-term deposits   389,221    -   -
Accounts receivable, net   132,353   145,919    21,882
Inventory   14,385   3,453    518
Amount due from related parties   5,297   35,622    5,342
Prepayments and other current assets   147,823   176,749    26,504
Deferred tax assets   116,921   106,179    15,922
             
Total current assets   3,629,880   4,845,645   726,646
             
Non-current assets            
Deferred tax assets   3,363    5,503    825
Investments   567,557   840,663   126,065
Property and equipment, net   843,449    841,155    126,139
Land use rights, net   -   1,884,371    282,578
Intangible assets, net   146,437   120,822    18,118
Goodwill   151,638   132,311    19,841
Other non-current assets   1,960,430   126,779   19,012
             
Total non-current assets   3,672,874   3,951,604   592,578
             
Total assets   7,302,754   8,797,249   1,319,224
             
Liabilities ,mezzanine equity and shareholders' equity            
Current liabilities            
Convertible bonds**   -   2,661,536   399,121
Accounts payable   129,819    106,025    15,899
Deferred revenue   385,300    395,227    59,268
Advances from customers   55,086    75,355    11,300
Income taxes payable   107,403    108,468    16,266
Accrued liabilities and other current liabilities   681,889    797,931    119,657
Amounts due to related parties   24,917    36,904    5,534
             
Total current liabilities   1,384,414   4,181,446   627,045
             
Non-current liabilities            
Convertible bonds*   2,572,119   -   -
Deferred revenue   20,752   26,162   3,923
Deferred tax liabilities   16,817   14,645   2,196
             
Total non-current liabilities   2,609,688   40,807   6,119
             
Total liabilities   3,994,102   4,222,253   633,164
             

YY INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
(All amounts in thousands, except share, ADS and per ADS data)
 
    December 31, 2015   September 30, 201 6   September 30, 201 6
    RMB   RMB   US$
             
Mezzanine equity     61,833     58,458   8,766
             
Shareholders' equity            
Class A common shares (US$0.00001 par value; 10,000,000,000 and 10,000,000,000 shares authorized, 728,227,848 and  747,719,608 shares issued and outstanding as of December 31, 2015 and September 30, 2016, respectively)       43     43   6
Class B common shares (US$0.00001 par value; 1,000,000,000 and 1,000,000,000 shares authorized, 369,557,976 and 359,557,976 shares issued and outstanding as of December 31, 2015 and September 30, 2016, respectively)       27     27   4
Additional paid-in capital     2,011,799     2,137,287   320,505
Statutory reserves       56,507     56,507   8,474
Retained earnings     1,207,168     2,158,832     323,736
Accumulated other comprehensive (loss) income       (36,385 )   152,450   22,861
Non-controlling interests     7,660     11,392   1,708
             
Total shareholders' equity     3,246,819     4,516,538   677,294
             
Total liabilities, mezzanine equity and shareholders' equity     7,302,754     8,797,249   1,319,224
             
             

*  Effectively January 2016, ASU 2015-3 issued by FASB requires entities to present the issuance costs of bonds in the balance sheet as a direct deduction from the related bonds rather than assets. Accordingly, the Company retrospectively reclassified RMB25.3 million of issuance cost of bonds from other non-current assets into convertible bonds as of December 31, 2015.**  Convertible bonds represent Convertible Senior Notes which may be redeemed within one year.

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
    September30 , 201 5 June 3 0, 201 6 September30 , 201 6 September30 , 201 6   September  30, 2015 September 30, 2016 September 30, 2016
    RMB RMB RMB US$   RMB RMB US$
                   
Net revenues                  
Live streaming     1,159,178      1,661,060     1,790,373      268,482        2,974,629      4,809,037     721,157  
Online Games     168,332      188,261     149,530      22,423        599,484      508,901      76,314  
Membership     76,299     72,070     68,768     10,312       210,482     210,210     31,523  
Others     86,153     59,386     81,134     12,167       212,810     191,752     28,755  
                   
Total net revenue     1,489,962     1,980,777     2,089,805     313,384       3,997,405     5,719,900     857,749  
                   
Cost of revenues (1)     (905,489 )   (1,208,340 )   (1,275,002 )   (191,198 )     (2,411,505 )   (3,543,873 )   (531,435 )
                   
Gross profit     584,473     772,437     814,803     122,186       1,585,900     2,176,027     326,314  
                   
Operating expenses (1)                  
Research and development expenses     (153,008 )   (172,228 )   (163,236 )    (24,479 )     (396,121 )   (515,112 )    (77,246 )
Sales and marketing expenses     (84,074 )   (88,699 )   (109,075 )    (16,357 )     (198,696 )   (275,735 )    (41,349 )
General and administrative expenses     (147,312 )   (90,155 )   (102,683 )    (15,398 )     (270,686 )   (276,245 )    (41,425 )
Goodwill impairment     (199,425 )   -     -     -       (310,124 )   -     -  
Fair value change of contingent consideration     182,476     -     -     -       292,471     -     -  
                   
Total operating expenses     (401,343 )   (351,082 )   (374,994 )   (56,234 )     (883,156 )   (1,067,092 )   (160,020 )
                   
Other income     17,156     22,507     33,065     4,958       49,486     64,477     9,669  
                   
Operating income     200,286     443,862     472,874     70,910       752,230     1,173,412     175,963  
                   
Foreign currency exchange (losses) gains, net     (37,119 )   552     (16 )   (2 )     (38,286 )   773     116  
Interest expense     (24,983 )   (19,576 )   (20,357 )   (3,053 )     (65,109 )   (60,327 )   (9,047 )
Interest income     30,555     9,902     17,162     2,574       111,707     40,713     6,105  
Other non-operating expense     -     (23,474 )   -     -       (2,165 )   (23,474 )   (3,520 )
                   
Income before income tax expenses     168,739     411,266     469,663     70,429       758,377     1,131,097     169,617  
                   
Income tax expenses     (45,862 )   (75,179 )   (69,909 )   (10,483 )     (126,766 )   (194,710 )   (29,198 )
                   
Income before share of income (loss) in equity method investments, net of income taxes     122,877     336,087     399,754     59,946       631,611     936,387     140,419  
                   
Share of income (loss) in equity method investments, net of income taxes     3,567     (28 )   (1,867 )   (280 )     10,887     3,879     582  
                   
Net Income     126,444     336,059     397,887     59,666       642,498     940,266     141,001  
                   
Less: Net loss attributable to the non-controlling interest shareholders and the mezzanine classified non-controlling interest shareholders     (29,930 )   (7,227 )   (2,152 )   (323 )     (31,529 )   (11,398 )   (1,709 )
                   
Net income attributable to YY Inc.     156,374     343,286     400,039     59,989       674,027     951,664     142,710  
                                               

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
    September30 , 201 5 June 3 0 , 201 6 September30 , 201 6 September30 , 201 6   September 30, 2015 September 30, 2016 September 30, 2016
    RMB RMB RMB US$   RMB RMB US$
                   
Net income attributable to YY Inc.   156,374   343,286      400,039     59,989     674,027   951,664     142,710  
                   
Other comprehensive income :                  
Unrealized gain of available-for-sales securities   -   177,152     13,354     2,003     -   190,506     28,568  
Foreign currency translation adjustments, net of nil tax   673   (1,459 )   (562 )   (84 )   4,774   (1,671 )   (251 )
                   
Comprehensive income attributable to YY Inc.   157,047   518,979     412,831     61,908     678,801   1,140,499     171,027  
                   
Net income per ADS                  
—Basic   2.80   6.10      7.07      1.06     11.96    16.91      2.54  
—Diluted   2.75   5.97       6.90      1.03     11.68    16.64      2.50  
Weighted average number of ADS used in calculating net income per ADS                  
—Basic   55,918,954   56,244,094     56,560,174     56,560,174     56,371,472   56,290,231     56,290,231  
—Diluted   56,884,168   60,761,097     60,814,662     60,814,662     57,710,288   60,773,398     60,773,398  
                                       

(1)  Share-based compensation was allocated in cost of revenues and operating expenses as follows:
    Three Months Ended   Nine Months Ended
    September30 , 201 5   June 3 0 , 201 6   September 30 , 201 6   September 30 , 201 6   September 30, 2015   September 30, 2016   September 30, 2016
    RMB   RMB   RMB   US$   RMB   RMB   US$
                             
Cost of revenues   8,723   141    3,701    555   15,092    12,454    1,868
Research and development expenses   27,121   26,473    11,120    1,668   41,711    64,893    9,731
Sales and marketing expenses   1,191   941    612    92   2,194    2,392    359
General and administrative expenses   43,695   13,934    20,086    3,012   65,166    51,199    7,678
                             

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
    September30 , 201 5   June 3 0 , 201 6   September30 , 201 6   September 30 , 201 6   September 30, 2015   September 30, 2016   September 30, 2016
    RMB   RMB   RMB   US$   RMB   RMB   US$
                             
Operating income   200,286   443,862    472,874    70,910   752,230    1,173,412    175,963
Share-based compensation expenses   80,730   41,489    35,519    5,326   124,163    130,938    19,636
                             
Non-GAAP operating income   281,016   485,351   508,393   76,236   876,393   1,304,350   195,599
                             
Net income attributable to YY Inc.   156,374   343,286   400,039   59,989   674,027   951,664   142,710
Share-based compensation expenses   80,730   41,489    35,519    5,326   124,163    130,938    19,636
                             
Non-GAAP net income attributable to YY Inc.   237,104   384,775   435,558   65,315   798,190   1,082,602   162,346
                             
Non-GAAP net income per ADS                            
—Basic   4.24   6.84    7.70    1.15   14.16    19.23    2.88
—Diluted   4.17   6.65   7.48    1.12   13.83    18.79    2.82
Weighted average number of ADS used in calculating Non-GAAP net income per ADS                            
—Basic   55,918,954   56,244,094   56,560,174    56,560,174   56,371,472   56,290,231   56,290,231
—Diluted   56,884,168   60,761,097   60,814,662    60,814,662   57,710,288   60,773,398   60,773,398
                             

YY INC.
UNAUDITED SEGMENT REPORT
(All amounts in thousands, except share, ADS and per ADS data)
 
    Three Months Ended
    September 30 , 201 6 
     
    YY Live   Huya broadcasting   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)     (972,553 )   (269,407 )    (33,042 )    (1,275,002 )    (191,198 )
             
Gross profit (loss)      859,480      (72,529 )    27,852      814,803      122,186  
             
Operating expenses (1)            
Research and development expenses      (125,637 )    (31,409 )    (6,190 )    (163,236 )    (24,479 )
Sales and marketing expenses      (80,373 )    (10,174 )    (18,528 )    (109,075 )    (16,357 )
General and administrative expenses      (70,514 )    (11,557 )   (20,612 )    (102,683 )    (15,398 )
             
Total operating expenses      (276,524 )    (53,140 )    (45,330 )    (374,994 )    (56,234 )
Other income      33,065      -      -      33,065      4,958  
             
Operating income (loss)      616,021      (125,669 )    (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 , 201 6
                     
    YY Live   Huya broadcasting   100 Education   Total   Total
    RMB   RMB     RMB     RMB     US$
                     
Cost of revenues    2,726    934    41    3,701    555
Research and development expenses    7,985    2,357    778    11,120    1,668
Sales and marketing expenses    586    26    -    612    92
General and administrative expenses    4,383    2,229   13,474   20,086   3,012
                     

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 , 201 6
                 
    YY Live   Huya   broadcasting   100 Education   Total   Total
    RMB RMB RMB   RMB   US$
                 
Operating income (loss)    616,021    (125,669 )    (17,478 )    472,874    70,910
Share-based compensation expenses    15,680    5,546     14,293     35,519   5,327
                 
Non-GAAP operating income (loss)    631,701    (120,123 )   (3,185 )   508,393   76,237
                 

YY INC.
UNAUDITED SEGMENT REPORT
(All amounts in thousands, except share, ADS and per ADS data)
 
    Three Months Ended
    June 30 , 201 6
     
    YY Live   Huya broadcasting   100 Education   Total   Total
    RMB RMB RMB RMB US$
             
Net revenues            
Live streaming     1,517,983     143,077     -     1,661,060     249,938  
Online games     188,261     -     -     188,261     28,327  
Membership     72,070     -     -     72,070     10,844  
Others     28,749     -     30,637     59,386     8,935  
             
Total net revenue     1,807,063     143,077     30,637     1,980,777     298,044  
             
Cost of revenues (1)     (965,291 )   (216,606 )   (26,443 )   (1,208,340 )   (181,817 )
             
Gross profit (loss)     841,772     (73,529 )   4,194     772,437     116,227  
             
Operating expenses (1)            
Research and development expenses     (130,170 )   (33,811 )   (8,247 )   (172,228 )   (25,915 )
Sales and marketing expenses     (63,038 )   (12,247 )   (13,414 )   (88,699 )   (13,346 )
General and administrative expenses     (76,169 )   (11,115 )   (2,871 )   (90,155 )   (13,566 )
             
Total operating expenses     (269,377 )   (57,173 )   (24,532 )   (351,082 )   (52,827 )
Other income     22,507     -     -     22,507     3,387  
             
Operating income (loss)     594,902     (130,702 )   (20,338 )   443,862     66,787  
             

(1)  Share-based compensation was allocated in cost of revenues and operating expenses as follows:
    Three Months Ended
    June 30 , 201 6
                   
    YY Live   Huya broadcasting   100 Education   Total   Total
    RMB   RMB  RMB     RMB     US$
                   
Cost of revenues     (1,432 )   1,441   132     141   21
Research and development expenses     17,976     6,501   1,996     26,473   3,983
Sales and marketing expenses     729     212   -     941   142
General and administrative expenses     10,227     3,807   (100 )   13,934   2,097

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 3 0 , 201 6
               
    YY Live   Huya broadcasting   100 Education   Total Total
    RMB RMB RMB   RMB US$
               
Operating income (loss)   594,902   (130,702 )   (20,338 )   443,862    66,787  
Share-based compensation expenses   27,500   11,961     2,028     41,489   6,243  
                   
Non-GAAP operating income (loss)   622,402   (118,741 )   (18,310 )   485,351    73,030  
                   

YY INC.
UNAUDITED SEGMENT REPORT
(All amounts in thousands, except share, ADS and per ADS data)
 
    Three Months Ended
    September 30 , 201 5
     
    YY Live   Huya broadcasting   100 Education   Total   Total
    RMB RMB RMB RMB US$
             
Net revenues            
Live streaming     1,076,801     82,377     -     1,159,178     182,387  
Online games     168,332     -     -     168,332     26,486  
Membership     76,299     -     -     76,299     12,005  
Others     46,489     -     39,664     86,153     13,556  
             
Total net revenue     1,367,921     82,377     39,664     1,489,962     234,434  
             
Cost of revenues (1)     (695,373 )   (171,212 )   (38,904 )   (905,489 )   (142,471 )
             
Gross profit (loss)     672,548     (88,835 )   760     584,473     91,963  
             
Operating expenses (1)            
Research and development expenses     (123,378 )   (18,233 )   (11,397 )   (153,008 )   (24,075 )
Sales and marketing expenses     (62,754 )   (8,788 )   (12,532 )   (84,074 )   (13,228 )
General and administrative expenses     (72,254 )   (6,021 )   (69,037 )   (147,312 )   (23,178 )
Goodwill impairment     (128,034 )   -     (71,391 )   (199,425 )   (31,378 )
Fair value changes of contingent consideration     108,858     -     73,618     182,476     28,711  
             
Total operating expenses     (277,562 )   (33,042 )   (90,739 )   (401,343 )   (63,148 )
Other income     17,156     -     -     17,156     2,699  
             
Operating income (loss)     412,142     (121,877 )   (89,979 )   200,286     31,514  
             

(1)  Share-based compensation was allocated in cost of revenues and operating expenses as follows:
    Three Months Ended
    September 30 , 201 5
                     
    YY Live   Huya broadcasting   100 Education   Total   Total
    RMB   RMB     RMB     RMB     US$
                     
Cost of revenues   8,194   367   162   8,723   1,372
Research and development expenses   23,065   1,559   2,497   27,121   4,267
Sales and marketing expenses   1,189   2   -   1,191   187
General and administrative expenses   15,381   130   28,184   43,695   6,875

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 , 201 5
                 
    YY Live   Huya   broadcasting   100 Education   Total   Total
    RMB RMB RMB   RMB   US$
                 
Operating income (loss)   412,142   (121,877 )   (89,979 )   200,286   31,514
Share-based compensation expenses   47,829   2,058     30,843     80,730   12,701
                 
Non-GAAP operating income (loss)   459,971   (119,819 )   (59,136 )   281,016   44,215

Investor Relations ContactYY Inc.Yuffie FuTel: +86 (20) 8212-0000Email:IR@YY.comICR, Inc.Jessie FanTel: +1 (646) 915-1611Email:IR@YY.com

If you liked this article you might like

YY Should Stand for Yes! Yes!

YY Should Stand for Yes! Yes!

Yesterday's Worries Are Totally Forgotten

Yesterday's Worries Are Totally Forgotten

Gains Elude Market as Momentum Withers

Gains Elude Market as Momentum Withers

More Market Records Amid Relentless Uptrend

More Market Records Amid Relentless Uptrend

Anything Happen While I Was Gone? Not Really

Anything Happen While I Was Gone? Not Really