Business context and reporting period
JOYY Inc. filed this Form 20-F for the fiscal year ended December 31, 2023. This is an annual report, not a standalone fourth-quarter filing. Unless noted otherwise, financial results are for continuing operations and exclude YY Live, whose results were discontinued after February 8, 2021. JOYY operates global social entertainment platforms including Bigo Live, Likee and imo, alongside Hago and the Shopline smart commerce platform.
Global monthly active users on JOYY’s social platforms averaged 274.9 million in Q4 2023, up 2.6% year over year. This measure counts accounts, not necessarily unique people.
Key financial metrics
Amounts are in U.S. dollars; annual comparisons are 2023 versus 2022.
| Metric | 2023 | 2022 |
|---|---|---|
| Net revenue | $2.268 billion | $2.412 billion |
| Gross profit; gross margin | $813.0 million; 35.8% | $852.1 million; 35.3% |
| Operating income; operating margin | $28.8 million; 1.3% | $50.7 million; 2.1% |
| Net income from continuing operations | $272.4 million | $101.6 million |
| Net income from continuing operations attributable to common shareholders | $347.4 million | $119.5 million |
| Cash from continuing operating activities | $295.6 million | $316.5 million |
| Cash from/(used in) continuing investing activities | $420.4 million | $(510.3) million |
| Cash used in continuing financing activities | $(841.7) million | $(321.9) million |
The difference between consolidated continuing-operations net income and income attributable to common shareholders reflects, among other items, a $52.6 million gain on repurchase of a subsidiary’s redeemable preferred shares. Other significant 2023 non-operating items included $74.9 million in gains on disposal and deemed disposal of investments and $185.2 million in interest and investment income.
Live streaming generated $1.979 billion, or 87.3% of revenue, down from $2.226 billion and 92.3% in 2022. Other revenue rose 55.1% to $288.5 million, principally from Shopline and advertising. Live-streaming paying users on Bigo Live, Likee and imo increased to 3.9 million from 3.6 million, while reported ARPU declined to $403 from $452.
BIGO generated $1.924 billion in revenue and $230.1 million in operating income. All other generated $344.9 million in revenue and a $201.3 million operating loss.
Liquidity, debt and capital allocation
At year-end, cash and cash equivalents were $1.064 billion; restricted cash was $319.3 million; short-term deposits were $1.970 billion; restricted short-term deposits were $57.2 million; and short-term investments were $274.8 million. Together, these categories totaled approximately $3.685 billion, although some funds were restricted or pledged. Cash, cash equivalents and restricted cash reported for continuing operations totaled $1.440 billion, down from $1.566 billion a year earlier.
Current liabilities included $405.6 million of convertible bonds and $52.1 million of short-term loans. The remaining $406.0 million principal of the 1.375% convertible notes due 2026 was subject to a holder put on June 15, 2024; management expected substantially all holders to exercise the put, implying a potential cash payment of up to $406.0 million. Short-term deposits of $57.2 million were pledged as loan collateral. The filing also reports $34.6 million of operating lease commitments and $244.9 million of capital commitments at year-end.
Financing cash outflows in 2023 included $432.2 million to extinguish convertible bonds, $273.9 million for share repurchases, $84.2 million in dividends and $82.5 million in bank-loan repayments, partly offset by $95.2 million of new bank borrowings. The company reported no current dividend policy after its prior three-year quarterly policies expired.
Material changes versus the prior year
- Revenue fell 6.0%, mainly because live-streaming revenue declined; the share of revenue from non-live-streaming sources increased.
- Gross margin improved by about 0.5 percentage point, but operating income and operating margin declined. Lower marketing and general and administrative expenses partly offset higher research and development spending.
- Common-shareholder income increased, supported by improved equity-method investment results, higher interest income and investment income, and the preferred-share repurchase gain. The 2022 comparison included a $417.2 million impairment loss on an equity-method investment.
- Operating cash flow decreased modestly. Investing cash flow turned positive largely because of maturities of short-term deposits and investments; financing outflows increased substantially.
- Likee and Hago reported lower Q4 monthly active users year over year, while Bigo Live and imo reported growth.
Outlook, risks and unusual items
- YY Live/Baidu dispute: On January 1, 2024, a Baidu affiliate purported to terminate the YY Live share purchase agreement. JOYY had not regained control or reconsolidated YY Live as of the report date. Baidu had paid approximately $1.9 billion to JOYY’s designated accounts and deposited $1.6 billion in Baidu escrow accounts; the filing says their possession status was unchanged. The parties were discussing next steps, and the outcome regarding YY Live and the consideration remained uncertain.
- Liquidity outlook: Management said existing cash and expected operating cash flow should cover anticipated working capital and capital expenditure needs for the next 12 months. This assessment should be considered alongside the expected 2024 note put, capital commitments and restrictions on moving funds from mainland China.
- Business risks: Revenue remains highly dependent on live streaming and virtual-item purchases. The filing also highlights competition, user and creator retention, content moderation, privacy and cybersecurity compliance, foreign-exchange exposure, and changing regulation across its markets.
- China structure and regulation: Some mainland China operations rely on contractual VIE arrangements rather than direct ownership. Their enforceability and regulatory treatment are uncertain; mainland China contributed 15.3% of 2023 revenue. The company reported that material operating licenses were in place and that it had not been subject to a cybersecurity review as of the report date.
- Accounting judgments: Goodwill was $2.649 billion. At year-end, estimated fair-value headroom was about 3% for the BIGO reporting unit and 1% for Shopline; the audit identified goodwill impairment assessments and live-streaming revenue recognition as critical audit matters. No goodwill impairment was recorded in 2023.
- Other disclosures: JOYY believed it was a passive foreign investment company for U.S. tax purposes in 2023. Management and the auditor concluded internal control over financial reporting was effective as of December 31, 2023. No specific 2024 revenue or earnings guidance is provided in the supplied filing text.
Important facts for investors to verify
- Developments in the Baidu termination dispute, including legal remedies, control of YY Live, and the ultimate treatment or return of the $1.9 billion paid and $1.6 billion escrowed.
- Whether holders exercised the June 2024 put on the 2026 notes, the cash paid, and the resulting liquidity and debt position.
- Cash accessibility by legal entity and jurisdiction, including restricted and pledged balances and limits on transfers from mainland China.
- Whether Shopline and the All other segment can reduce their operating losses, and whether live-streaming ARPU and revenue stabilize.
- Goodwill valuation assumptions and headroom for BIGO and Shopline, given the narrow disclosed valuation margins.
- The comparability and interpretation of user and paying-user metrics, which are account-based and may include multiple accounts per individual.