EX-99.1 2 v453627_ex99-1.htm EXHIBIT 99.1

Exhibit 99.1

 

 

YY Reports Third Quarter 2016 Unaudited Financial Results

 

Guangzhou, China, November 21, 2016 – 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 REVENUES1

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.

 

 

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.

 

 

 

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 income2 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 margin3 increased to 24.3% in the third quarter of 2016 from 18.9% in the corresponding period of 2015.

 

 

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.

 

 

 

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 margin5 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 ADS6 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 ADS7 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 Outlook

For 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 Information

The 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

 

 

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.

 

 

 

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 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 RMB6.6685 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 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 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 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.

Yuffie Fu

Tel: +86 (20) 8212-0000

Email:IR@YY.com

 

ICR, Inc.

Jessie Fan

Tel: +1 (646) 915-1611

Email:IR@YY.com

 

 

 

 

YY INC.

UNAUDITED CONDENSEDCONSOLIDATED BALANCE SHEETS

(All amounts in thousands, except share, ADS and per ADS data)

 

  

December 31,

2015 

  

September 30,

2016

  

September 30,

2016

 
   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,

2016

  

September 30,

2016

 
   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 
  

September 30,

2015

  

June

30,

2016

  

September
30,

2016

  

September
30,

2016

  

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 
  

September 30,

2015

  

June
30,

2016

  

September
30,

2016

  

September 30,

2016

  

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 
  

September 30,

2015

  

June
30,

2016

  

September
30,

2016

  

September
30,

2016

  

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 
  

September

30,

2015

  

June
30,

2016

  

September 30,

2016

  

September
30,

2016

  

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, 2016 
     
   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, 2016 
                     
   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, 2016 
                     
   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, 2016 
     
   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, 2016 
                     
   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 30, 2016 
                     
   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, 2015 
     
   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, 2015 
                     
   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, 2015 
                     
   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