GUANGZHOU, China, May 10, 2017 (GLOBE NEWSWIRE) -- YY Inc. (NASDAQ:YY) ("YY" or the "Company"), a live streaming platform, today announced its unaudited financial results for the first quarter of 2017.

First Quarter 2017 Highlights
  • Net revenues increased by 37.4% to RMB2,267.0 million (US$329.3 million) from RMB1,649.3 million in the corresponding period of 2016.
  • Net income attributable to YY increased by 160.7% to RMB543.2 million (US$78.9 million) from RMB208.3 million in the corresponding period of 2016.
  • Non-GAAP net income attributable to YY 1 increased by 115.7% to RMB565.7 million (US$82.2 million) from RMB262.3 million in the corresponding period of 2016.

"We are very pleased to have delivered another quarter of strong top- and bottom-line results in the first quarter of 2017," said Mr. Zhou Chen, Chief Executive Officer of YY. "Our live streaming revenues continued to witness significant growth, increasing by 51.5% year over year to RMB2.06 billion. These robust results were driven by the successful execution of our content strategy and demonstrate the strength of both YY Live and Huya broadcasting. Importantly, our mobile live streaming MAUs increased by 11.8% quarter over quarter, reaching 62.6 million in the first quarter of 2017, and our total number of live streaming paying users increased by 66% year over year to 5.88 million. Looking ahead, we will continue to focus on expanding the product and content offerings across our platforms and enhancing our content ecosystem. As the leading live streaming platform in China, we are confident that we have what it takes to further expand our market share in this growing industry and create additional value for all our stakeholders."

Mr. Eric He, Chief Financial Officer of YY, further commented, "We continued to witness sustainable revenue growth in the first quarter of 2017, with total net revenues increasing by 37.4% year over year to RMB2.27 billion, driven by the robust growth in our live streaming revenues. Importantly, we continued to successfully expand our profit margins and our Non-GAAP operating margins 2 exceeded 28% in the first quarter of 2017. In addition, our Non-GAAP net income attributable to YY increased by 115.7% year over year to RMB565.7 million, of which Huya segment's loss shrunk tremendously year over year from RMB140.5 million to RMB35.2 million. Our solid financial and operational results continue to prove that we can maintain our growth momentum and achieve long-term profitability despite the competitiveness in the live streaming industry."

First Quarter 2017 Financial Results

NET REVENUES Net revenues increased by 37.4% to RMB2,267.0 million (US$329.3 million) in the first quarter of 2017 from RMB1,649.3 million in the corresponding period of 2016, primarily driven by the increase in live streaming revenues. Live streaming revenues increased by 51.5% to RMB2,057.4 million (US$298.9 million) in the first quarter of 2017 from RMB1,357.6 million in the corresponding period of 2016. Live streaming revenues from the YY Live segment in the first quarter of 2017 was RMB1,674.8 million (US$243.3 million) and live streaming revenues from the Huya segment in the first quarter of 2017 was RMB382.6 million (US$55.6 million). 

Revenues from online games were RMB139.7 million (US$20.3 million) in the first quarter of 2017, as compared to RMB171.1 million in the corresponding period of 2016, which primarily reflected the continued softness in China's web game market.

Revenues from membership were RMB45.4 million (US$6.6 million) in the first quarter of 2017, as compared to RMB69.4 million in the corresponding period of 2016.

Other revenues, mainly representing revenues from the Company's online advertising revenues, were RMB24.4 million (US$3.5 million) in the first quarter of 2017, compared with RMB51.2 million in the corresponding period of 2016.

COST OF REVENUES AND GROSS PROFIT Cost of revenues increased by 29.8% to RMB1,377.0 million (US$200.1 million) in the first quarter of 2017 from RMB1,060.5 million in the corresponding period of 2016, primarily attributable to an increase in revenue-sharing fees and content costs to RMB1,035.3 million (US$150.4 million) in the first quarter of 2017 from RMB707.7 million in the corresponding period of 2016. 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. In addition, bandwidth costs slightly increased to RMB188.9 million (US$27.4 million) in the first quarter of 2017 from RMB182.9 million in the corresponding period of 2016, primarily reflecting the continued user base expansion and video quality improvements, but largely offset by the Company's improved efficiency and pricing terms.

Gross profit increased by 51.2% to RMB890.0 million (US$129.3 million) in the first quarter of 2017 from RMB588.8 million in the corresponding period of 2016. Gross margin was 39.3% in the first quarter of 2017, as compared to 35.7% in the corresponding period of 2016.

OPERATING INCOME Operating expenses for the first quarter of 2017 were RMB330.8 million (US$48.1 million), as compared to RMB341.0 million in the corresponding period of 2016.

Operating income in the first quarter of 2017 increased by 140.4% to RMB617.0 million (US$89.6 million) from RMB256.7 million in the corresponding period of 2016. Operating margin in the first quarter of 2017 was 27.2%, as compare to 15.6% in the corresponding period of 2016.

Non-GAAP operating income 3  increased by 105.9% to RMB639.6 million (US$92.9 million) in the first quarter of 2017 from RMB310.6 million in the corresponding period of 2016. Non-GAAP operating margin was 28.2% in the first quarter of 2017, as compared to 18.8% in the corresponding period of 2016.

NET INCOME Net income attributable to YY Inc. increased by 160.7% to RMB543.2 million (US$78.9 million) in the first quarter of 2017 from RMB208.3 million in the corresponding period of 2016. Net margin in the first quarter of 2017 increased to 24.0% from 12.6% in the corresponding period of 2016.

Non-GAAP net income attributable to YY Inc. increased by 115.7% to RMB565.7 million (US$82.2 million) from RMB262.3 million in the corresponding period of 2016. Non-GAAP net margin 4  in the first quarter of 2017 increased to 25.0% from 15.9% in the corresponding period of 2016.

NET INCOME PER ADS Diluted net income per ADS 5  increased by 153.4% to RMB9.25 (US$1.34) in the first quarter of 2017 from RMB3.65 in the corresponding period of 2016.

Non-GAAP diluted net income per ADS 6  increased by 109.6% to RMB9.62 (US$1.40) in the first quarter of 2017 from RMB4.59 in the corresponding period of 2016.

BALANCE SHEET AND CASH FLOWS As of March 31, 2017, the Company had cash and cash equivalents of RMB2,043.2 million (US$296.8 million), short-term deposits of RMB1,200.1 million (US$174.4 million), restricted short-term deposits of RMB1,000 million (US$145.3 million), and short-term investments of RMB14.1 million (US$2.0 million). For the first quarter of 2017, net cash from operating activities was RMB395.9 million (US$57.5 million).

SHARES OUTSTANDING As of March 31, 2017, the Company had a total of 1,113.1 million common shares outstanding, or the equivalent of 55.7 million ADSs outstanding.

Recent Developments Ms. Jenny Hong Wei Lee has tendered her resignation as a director of the Company and as a member of the compensation committee of the board of directors of the Company, effective on June 30, 2017.

Business OutlookFor the second quarter of 2017, the Company expects its net revenues to be between RMB2.45 billion and RMB2.55 billion, representing a year-over-year growth of approximately 23.7% to 28.7%. 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 May 10, 2017 at 8:00 am Eastern Time or 8:00 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: # 13374196

The replay will be accessible through May 18, 2017 by dialing the following numbers:
United States Toll Free: +1-855-452-5696
International: +61-2-9003-4211
Conference ID: # 13374196

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 RMB6.8832 to US$1.00, the noon buying rate in effect on March 31, 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 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 and live game broadcasting. YY Inc. was listed on NASDAQ in November 2012 and generated revenues of US$1,182 million in the fiscal year 2016.

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; 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 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.

2 Non-GAAP operating margin is a non-GAAP financial measure, which is defined as non-GAAP operating income as a percentage of net revenues.

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

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.

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.

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 3 1 , 201 6   March 3 1 , 201 7   March 3 1 , 201 7
    RMB   RMB   US$
Assets            
Current assets            
Cash and cash equivalents   1,579,743   2,043,177   296,835
Short-term deposits   3,751,519   1,200,137   174,357
Restricted short-term deposits   -   1,000,000   145,281
Short-term investment   -   14,070   2,044
Accounts receivable, net   169,571   170,542   24,777
Inventory   2,266   1,254   182
Amount due from related parties   135,245   63,355   9,204
Prepayments and other current assets   224,732   2,001,896   290,841
             
Total current assets   5,863,076   6,494,431   943,521
             
Non-current assets            
Deferred tax assets (1)   117,811   112,818   16,390
Investments   918,602   1,176,409   170,910
Property and equipment, net   838,750   805,500   117,024
Land use rights, net   1,872,394   1,860,417   270,284
Intangible assets, net   58,926   46,476   6,752
Goodwill   14,300   14,295   2,077
Other non-current assets   101,933   216,064   31,390
             
Total non-current assets   3,922,716   4,231,979   614,827
             
Total assets   9,785,792   10,726,410   1,558,348
             
Liabilities ,mezzanine equity and shareholders' equity            
Current liabilities            
Convertible bonds (2)   2,768,469   2,753,630   400,051
Accounts payable   137,107   102,116   14,836
Deferred revenue   430,683   422,635   61,401
Advances from customers   56,152   58,347   8,477
Income taxes payable   140,754   187,630   27,259
Accrued liabilities and other current liabilities   1,066,038   797,841   115,912
Amounts due to related parties   91,245   41,705   6,058
Short-term loan   -   621,118   90,237
             
Total current liabilities   4,690,448   4,985,022   724,231
             
Non-current liabilities            
Convertible bonds (2)   -   6,894   1,002
Deferred revenue   25,459   28,252   4,104
Deferred tax liabilities   8,058   7,839   1,139
             
Total non-current liabilities   33,517   42,985   6,245
             
Total liabilities   4,723,965   5,028,007   730,476
             

YY INC. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)(All amounts in thousands, except share, ADS and per ADS data)
             
    December 3 1 , 201 6   March 3 1 , 201 7   March 3 1 , 201 7
    RMB   RMB   US$
             
Mezzanine equity   9,272   11,179   1,624
             
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  765,096,228 shares issued and outstanding as of December 31, 2016 and March  31, 2017, respectively)   44   45   7
Class B common shares (US$0.00001 par value; 1,000,000,000 and 1,000,000,000 shares authorized, 359,557,976 and 347,982,976 shares issued and outstanding as of December 31, 2016 and March  31, 2017, respectively)   26   25   4
Additional paid-in capital   2,165,766   2,188,364   317,928
Statutory reserves   58,857   58,857   8,551
Retained earnings   2,728,736   3,271,890   475,344
Accumulated other comprehensive income   93,066   135,921   19,747
             
Total YY Inc.'s shareholders' equity   5,046,495   5,655,102   821,581
             
Non-controlling interests   6,060   32,122   4,667
             
Total shareholders' equity   5,052,555   5,687,224   826,248
             
Total liabilities, mezzanine equity and            
shareholders' equity   9,785,792   10,726,410   1,558,348

____________________________

(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. (2)  The Company's Convertible Senior Notes (aggregate principal amount US$400,000,000) due 2019 was redeemable at the holders' option on April 1, 2017. US$399 million aggregate principal amount (equivalent to RMB2,753.6 million) of the Convertible Senior notes were confirmed to be redeemed on April 1, 2017 and US$1 million aggregate principal amount (equivalent to RMB6.9 million) of the Convertible Senior Notes remains outstanding after the redemption and is reclassified as non-current liabilities .

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
    March 31 , 201 6     December 31 , 201 6     March 31 , 201 7     March 31 , 201 7  
    RMB     RMB     RMB     US$  
           
Net revenues          
Live streaming   1,357,604     2,218,190     2,057,427     298,906  
Online games   171,110     125,424     139,748     20,303  
Membership   69,372     74,650     45,421     6,599  
Others   51,232     65,886     24,362     3,539  
           
Total net revenue   1,649,318     2,484,150     2,266,958     329,347  
           
Cost of revenues (1)   (1,060,531 )   (1,559,557 )   (1,376,995 )   (200,052 )
           
Gross profit   588,787     924,593     889,963     129,295  
           
Operating expenses (1)          
Research and development expenses   (179,648 )   (160,118 )   (165,561 )   (24,053 )
Sales and marketing expenses   (77,961 )   (111,533 )   (88,602 )   (12,872 )
General and administrative expenses   (83,407 )   (206,192 )   (76,652 )   (11,136 )
Goodwill impairment   -     (17,665 )   -     -  
           
Total operating expenses   (341,016 )   (495,508 )   (330,815 )   (48,061 )
           
Gain on deconsolidation and disposal of  subsidiaries   -     127,434     37,989     5,519  
Other income   8,905     65,027     19,820     2,879  
           
Operating income   256,676     621,546     616,957     89,632  
           
Gain on partial disposal of associates   -     25,061     -     -  
Interest expense   (20,394 )   (20,758 )   (21,268 )   (3,090 )
Interest income   13,649     26,480     31,031     4,508  
Foreign currency exchange gains (losses), net   237     385     (1,293 )   (188 )
           
Income before income tax expenses   250,168     652,714     625,427     90,862  
           
Income tax expenses   (49,622 )   (85,804 )   (89,073 )   (12,941 )
           
Income before share of income in equity method investments, net of income taxes   200,546     566,910     536,354     77,921  
           
Share of  income in equity method investments, net of income taxes   5,774     4,400     3,935     572  
           
Net Income   206,320     571,310     540,289     78,493  
           
Less: Net loss attributable to the non-controlling interest shareholders and  the mezzanine classified non-controlling interest shareholders   (2,019 )   (944 )   (2,865 )   (416 )
           
Net income attributable to YY Inc.   208,339     572,254     543,154     78,909  

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
    March 31 , 201 6   December31 , 201 6     March 31 , 201 7   March 31 , 201 7
    RMB   RMB     RMB   US$
               
Net income attributable to YY Inc.   208,339   572,254     543,154   78,909
               
Other comprehensive income :              
Unrealized (loss) gain of available-for-sales securities, net of nil tax   -   (55,738 )   42,236   6,136
Foreign currency translation adjustments, net of nil tax   350   (3,646 )   619   90
               
Comprehensive income attributable to YY Inc.   208,689   512,870     586,009   85,135
               
Net income per ADS              
—Basic   3.72   10.11     9.58   1.39
—Diluted   3.65   9.74     9.25   1.34
Weighted average number of ADS used in calculating net income per ADS              
—Basic   56,063,449   56,613,257     56,675,919   56,675,919
—Diluted   57,137,915   60,914,063     60,975,038   60,975,038

(1)     Share-based compensation was allocated in cost of revenues and operating expenses as follows:
    Three Months Ended
    March 31 , 201 6   December31 , 201 6   March 31 , 201 7   March 31 , 201 7
    RMB   RMB   RMB   US$
                 
Cost of revenues   8,612   3,440   3,623   526
Research and development expenses   27,300   13,923   11,404   1,657
Sales and marketing expenses   839   715   509   74
General and administrative expenses   17,179   8,270   7,057   1,025

YY INC. RECONCILIATION OF GAAP AND NON-GAAP RESULTS(All amounts in thousands, except share, ADS and per ADS data)
     
    Three Months Ended
    March 31 , 201 6   December31 , 201 6   March 31 , 201 7   March 31 , 201 7
    RMB   RMB   RMB   US$
                 
Operating income   256,676   621,546   616,957   89,632
Share-based compensation expenses   53,930   26,348   22,593   3,282
                 
Non-GAAP operating income   310,606   647,894   639,550   92,914
                 
Net income attributable to YY Inc.   208,339   572,254   543,154   78,909
Share-based compensation expenses   53,930   26,348   22,593   3,282
                 
Non-GAAP net income attributable to YY Inc.   262,269   598,602   565,747   82,191
                 
  Non-GAAP net income per ADS                
—Basic   4.68   10.57   9.98   1.45
—Diluted   4.59   10.17   9.62   1.40
Weighted average number of ADS used in calculating Non-GAAP  net income per ADS                
—Basic   56,063,449   56,613,257   56,675,919   56,675,919
—Diluted   57,137,915   60,914,063   60,975,038   60,975,038

YY INC. UNAUDITED SEGMENT REPORT(All amounts in thousands, except share, ADS and per ADS data)
     
    Three Months Ended
    March 31 , 201 7
           
    YY Live (2)     Huya (2)     Total     Total  
    RMB     RMB     RMB     US$  
           
Net revenues          
Live streaming   1,674,786     382,641     2,057,427     298,906  
Online games   133,731     6,017     139,748     20,303  
Membership   43,776     1,645     45,421     6,599  
Others   15,766     8,596     24,362     3,539  
           
Total net revenue   1,868,059     398,899     2,266,958     329,347  
           
Cost of revenues (1)   (994,233 )   (382,762 )   (1,376,995 )   (200,052 )
           
Gross profit   873,826     16,137     889,963     129,295  
           
Operating expenses (1)          
Research and development expenses   (123,169 )   (42,392 )   (165,561 )   (24,053 )
Sales and marketing expenses   (73,371 )   (15,231 )   (88,602 )   (12,872 )
General and administrative expenses   (66,462 )   (10,190 )   (76,652 )   (11,136 )
           
Total operating expenses   (263,002 )   (67,813 )   (330,815 )   (48,061 )
Gain on deconsolidation  and disposal of  subsidiaries   37,989     -     37,989     5,519  
Other income   10,299     9,521     19,820     2,879  
           
Operating income (loss)   659,112     (42,155 )   616,957     89,632  
           

(1) Share-based compensation was allocated in cost of revenues and operating expenses as follows:
    Three Months Ended
    March 31 , 201 7
                 
    YY Live   Huya   Total   Total
    RMB   RMB   RMB   US$
                 
Cost of revenues   2,380   1,243   3,623   526
Research and development expenses   8,349   3,055   11,404   1,657
Sales and marketing expenses   305   204   509   74
General and administrative expenses   4,568   2,489   7,057   1,025

(2) Considering that the online education business is becoming insignificant to the Company, the Company decided  that the financial performance of 100 Education no longer be presented for CODM's review separately in the Company's internal reporting from the first quarter of 2017. As a result, 100 Education ceased to be a separate operating segment starting from the first quarter of 2017. In addition, 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 of comparative periods has been restated accordingly.
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
      March 31 , 201 7
                 
      YY Live Huya   Total   Total
      RMB RMB   RMB   US$
               
Operating income (loss)   659,112   (42,155 )   616,957   89,632
Share-based compensation expenses   15,602   6,991     22,593   3,282
               
Non-GAAP operating income (loss)   674,714   (35,164 )   639,550   92,914
               

YY INC. UNAUDITED SEGMENT REPORT(All amounts in thousands, except share, ADS and per ADS data)
 
    Three Months Ended
    December 31 , 201 6
     
    YY Live     Huya     100 Education     Total   Total  
    RMB     RMB     RMB     RMB   US$  
             
Net revenues            
Live streaming   1,883,841     334,349     -     2,218,190   319,486  
Online games   125,424     -     -     125,424   18,065  
Membership   74,650     -     -     74,650   10,752  
Others   12,952     4,926     48,008     65,886   9,490  
             
Total net revenue   2,096,867     339,275     48,008     2,484,150   357,793  
             
Cost of revenues (1)   (1,147,010 )   (387,252 )   (25,295 )   (1,559,557 ) (224,623 )
             
Gross profit (loss)   949,857     (47,977 )   22,713     924,593   133,170  
             
Operating expenses (1)            
Research and development expenses   (102,992 )   (53,082 )   (4,044 )   (160,118 ) (23,062 )
Sales and marketing expenses   (79,594 )   (19,014 )   (12,925 )   (111,533 ) (16,064 )
General and administrative expenses   (179,867 )   (18,070 )   (8,255 )   (206,192 ) (29,698 )
Goodwill impairment   (3,861 )   -     (13,804 )   (17,665 ) (2,544 )
             
Total operating expenses   (366,314 )   (90,166 )   (39,028 )   (495,508 ) (71,368 )
Gain on deconsolidation  and disposal of  subsidiaries   127,434     -     -     127,434   18,354  
Other income   65,027     -     -     65,027   9,366  
             
Operating income (loss)   776,004     (138,143 )   (16,315 )   621,546   89,522  
             

(1) Share-based compensation was allocated in cost of revenues and operating expenses as follows:
    Three Months Ended
    December 31 , 201 6
                     
    YY Live   Huya   100 Education   Total   Total
    RMB   RMB   RMB   RMB   US$
                     
Cost of revenues   1,977   1,399   64   3,440   495
Research and development expenses   9,385   3,535   1,003   13,923   2,005
Sales and marketing expenses   699   16   -   715   103
General and administrative expenses   2,671   5,591   8   8,270   1,191

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
      December 31 , 201 6
                   
      YY Live   Huya     100 Education     Total   Total
      RMB   RMB     RMB     RMB   US$
                 
Operating income (loss)   776,004   (138,143 )   (16,315 )   621,546   89,522
Share-based compensation expenses   14,732   10,541     1,075     26,348   3,794
                 
Non-GAAP operating income (loss)   790,736   (127,602 )   (15,240 )   647,894   93,316
                 

YY INC. UNAUDITED SEGMENT REPORT(All amounts in thousands, except share, ADS and per ADS data)
 
    Three Months Ended
    March 31 , 201 6
     
    YY Live     Huya     100 Education     Total     Total  
    RMB     RMB     RMB     RMB     US$  
             
Net revenues            
Live streaming   1,239,930     117,674     -     1,357,604     210,546  
Online games   171,110     -     -     171,110     26,537  
Membership   69,372     -     -     69,372     10,759  
Others   30,044     -     21,188     51,232     7,945  
             
Total net revenue   1,510,456     117,674     21,188     1,649,318     255,787  
             
Cost of revenues (1)   (835,899 )   (201,440 )   (23,192 )   (1,060,531 )   (164,474 )
             
Gross profit (loss)   674,557     (83,766 )   (2,004 )   588,787     91,313  
             
Operating expenses (1)            
Research and development expenses   (129,429 )   (38,179 )   (12,040 )   (179,648 )   (27,861 )
Sales and marketing expenses   (50,283 )   (13,063 )   (14,615 )   (77,961 )   (12,091 )
General and administrative expenses   (62,264 )   (17,727 )   (3,416 )   (83,407 )   (12,935 )
             
Total operating expenses   (241,976 )   (68,969 )   (30,071 )   (341,016 )   (52,887 )
Other income   8,905     -     -     8,905     1,381  
             
Operating income (loss)   441,486     (152,735 )   (32,075 )   256,676     39,807  
             

(1) Share-based compensation was allocated in cost of revenues and operating expenses as follows:
    Three Months Ended
    March 31 , 201 6
                     
    YY Live   Huya   100 Education   Total   Total
    RMB   RMB   RMB   RMB   US$
                     
Cost of revenues   7,679   846   87   8,612   1,336
Research and development expenses   21,682   3,202   2,416   27,300   4,234
Sales and marketing expenses   793   46   -   839   130
General and administrative expenses   9,032   8,140   7   17,179   2,664

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
    March 31 , 201 6
                 
    YY Live   Huya     100 Education     Total   Total
    RMB   RMB     RMB     RMB   US$
                 
Operating income (loss)   441,486   (152,735 )   (32,075 )   256,676   39,807
Share-based compensation expenses   39,186   12,234     2,510     53,930   8,364
                 
Non-GAAP operating income (loss)   480,672   (140,501 )   (29,565 )   310,606   48,171

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