JOYY Inc. — FY2021 Form 20-F Summary
Reporting period: Fiscal year ended December 31, 2021. Although the request specifies 2021 Q4, this filing is an annual report; it does not provide a clear standalone Q4 income statement or cash-flow summary. Financial figures below are for the full year unless otherwise noted. Amounts are in U.S. dollars.
Business context and reporting period
JOYY operates global online social entertainment platforms, including Bigo Live, Likee, Hago and imo, offering live streaming, short-form video, social networking and communication services. Its platforms were available in more than 150 countries, with 280 million average mobile monthly active users in Q4 2021. From 2021, JOYY reports in U.S. dollars and presents historical results retrospectively in that currency.
Continuing operations primarily comprise BIGO; Huya and YY Live are presented as discontinued operations. The Baidu sale of YY Live was substantially completed in February 2021, and JOYY ceased consolidating it from February 8, 2021. Regulatory approvals remained outstanding at the filing date.
Key financial metrics
| Metric | FY2021 | FY2020 |
|---|---|---|
| Net revenue | $2.619 billion | $1.918 billion |
| Live-streaming revenue | $2.477 billion; 94.6% of revenue | $1.816 billion; 94.7% |
| Gross profit / margin | $837.9 million / 32.0% | $540.0 million / 28.2% |
| Operating loss | $106.7 million | $406.8 million |
| Net loss from continuing operations | $129.6 million | $21.8 million |
| Net income from discontinued operations | $35.6 million | $1.402 billion |
| Net loss attributable to JOYY common shareholders | $89.5 million | Net income of $1.363 billion |
| Continuing operating cash flow | $146.1 million | -$2.7 million |
| Continuing investing cash flow | -$846.9 million | $690.2 million |
| Continuing financing cash flow | -$723.5 million | -$136.7 million |
Liquidity and debt: At year-end, cash and cash equivalents, restricted cash, short-term deposits, restricted short-term deposits and short-term investments totaled $4.685 billion. Cash, cash equivalents and restricted cash from continuing operations were $2.134 billion. Current assets were $5.070 billion and current liabilities were $2.512 billion. Convertible bonds totaled $924.1 million; the company also drew $7.4 million under a long-term construction loan facility. FY2021 financing outflows included $398.6 million of share repurchases and $160.1 million of dividends.
Other metrics: BIGO live-streaming paying users rose to 3.8 million from 3.4 million; reported ARPU increased to $509 from $416. Q4 average mobile monthly active users were 32.2 million for Bigo Live, 67.0 million for Likee, 9.5 million for Hago and 171.3 million for imo. These platform figures should not be added as unique users.
Material changes versus the prior comparable period
- Revenue increased 36.5%, driven primarily by 36.4% growth in live-streaming revenue and higher BIGO paying users and ARPU.
- Gross margin improved to 32.0% from 28.2%, as revenue growth outpaced cost-of-revenue growth.
- Operating loss narrowed substantially, to $106.7 million from $406.8 million. Operating expenses edged up to $969.9 million: lower R&D and sales and marketing spending partly offset higher general and administrative expenses.
- JOYY recorded a $129.6 million continuing-operations net loss, versus $21.8 million in 2020. The prior year’s overall profit included substantial discontinued-operations income, including a gain on the Huya disposal; FY2021 discontinued-operations income was only $35.6 million.
- Investing cash flow turned negative, primarily reflecting placements in short-term deposits and investments. Financing cash outflow increased, mainly due to repurchases, dividends and bank-loan repayments.
Outlook, commentary, risks and unusual items
- Outlook: The filing gives no specific revenue, earnings or cash-flow guidance. Management said available liquidity and anticipated operating cash flow were expected to meet working-capital and capital-expenditure needs for the next 12 months. It cautioned that COVID-19’s effects remained uncertain.
- YY Live transaction: Baidu agreed to pay approximately $3.6 billion, subject to adjustments; $1.9 billion had been received by year-end, including amounts held in escrow and recorded as advance payments. JOYY recognized no disposal gain in 2021 pending regulatory approvals. The parties extended the transaction long-stop date, and the filing describes repayment of the advance as a possible outcome if the deal is terminated.
- Unusual items: JOYY recorded $93.6 million of investment impairment charges in 2021, a $23.8 million loss on disposal and deemed disposal of investments, and a $15.4 million loss on fair-value changes of investments. It also early-adopted convertible-debt accounting guidance, resulting in an $86.7 million transition adjustment credited to retained earnings.
- Regulatory and structural risks: Part of the China business uses variable-interest-entity contractual arrangements rather than direct ownership. The filing highlights uncertainty around their enforceability, evolving PRC data and cybersecurity rules, and possible CSRC filing or cybersecurity-review requirements for overseas listings.
- Listing and audit risks: The filing states the PCAOB could not inspect JOYY’s auditor in China and warns of potential U.S. trading restrictions under the HFCAA. It also says JOYY believed it was a PFIC for U.S. tax purposes in 2021.
- Operating and legal risks: Live streaming represented 94.6% of revenue, creating concentration in a monetization model dependent on virtual-item spending. The filing cites content moderation, privacy, competition, currency, COVID-19 and user acquisition risks. A securities class action was dismissed with prejudice in March 2022, but plaintiffs appealed in April 2022. A separate NetEase copyright matter resulted in a RMB20 million payment in 2020.
- Controls: Management and the auditor concluded internal control over financial reporting was effective as of December 31, 2021; the auditor issued an unqualified opinion on the financial statements and controls.
Important facts for investors to verify
- Whether the Baidu YY Live sale received required regulatory approvals, closed, and resulted in final proceeds or any repayment obligation.
- How much of reported liquidity is unrestricted, readily deployable by the holding company, and held in PRC entities subject to transfer restrictions.
- Whether BIGO’s paying-user, ARPU and revenue growth can be sustained as live streaming remains the dominant revenue source.
- The drivers and potential recurrence of the $93.6 million investment impairment and the negative continuing-operations earnings.
- Developments in PRC overseas-listing and cybersecurity rules, VIE enforceability, and PCAOB inspection access and HFCAA delisting exposure.
- The status and financial exposure, if any, from the securities-litigation appeal and other material legal or regulatory proceedings.
- Whether dividend and repurchase plans remain affordable alongside capital commitments, debt service and investment needs.