Company Presentation March 2019 - Investor Relations | YY Inc.
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Company Presentation March 2019
Disclaimer
This presentation 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,” “expect,” “anticipate,” “future,” “intend,” “plan,” “believe,”
“estimate” and similar statements. Among other things, the business outlook and quotations from management
in this presentation, 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 presentation is as of the date of this presentation, and YY does not undertake any obligation to
update any forward-looking statement, except as required under applicable law.
1
Company Overview
2
Our vision
We aspire to enrich people's lives through our next-generation
video-based social media platform focused on live streaming content globally
Short-form video
3
Next-generation global video-based social media platform
Social Interaction
Live Interaction
Gamification
Enriched social activities and
user scenarios
Social games
Multi-person live
Entertainment interactive activities
Live Streaming
Media Content
Casual games Game Video based
Social Network
broadcasting Diversified content
categories
Live steaming & short
video become
Short-form Overseas Live mainstream format
video Streaming
4
Leading live streaming social media platform worldwide
No. 1 Live Streaming Rapid Overseas Expansion
Social Media Platform
in China
No. 1 MAU1 No. 1 DAU1 No. 1 Total Time Spent1
MAU: 69.0mm in 4Q18
Large and Rapidly Growing User Base
MAU :20.9mm in 4Q18
90.4 mm
Average mobile MAU in 4Q18, +18.1% in 4Q18 vs. 4Q17²
…
Note:
(1) YY is the no. 1 live streaming social media platform in China as ranked by QuestMobile based on monthly and daily active user, as well as total time spent data of
users that directly accessed the platforms of the relevant industry players, in December 2018.
(2) Company data. 5
Bigo: The forefront of global expansion
Leadership in key SEA & Middle East Markets
YY recently completed the acquisition of Bigo in March 2019
Total MAU 1 reached 69.3mm in Q418,compared to 40.0mm in 1H18
Impressive growth in 2018 with a clear path of profitability
Leading global live streaming platform Short form video social platform
excluding China worldwide
Note: (1) &(2) Company data
6
Significant Synergies between YY and Bigo
To Better Leverage Global Opportunities through Full Integration
With rich industry-leading experience in live streaming, YY
could leverage its accumulated knowhow to help with Bigo’s
user acquisition and monetization
Bigo’s established global footprint with strong presence in
2 emerging markets could help accelerate the Group’s global
expansion
3 Bigo + YY’s AI algorithm and machine learning capabilities
to boost the Group’s AI efficiency
4 YY Group will be positioned as the leading live streaming and
short-video platform globally
47
HAGO: Initial global expansion has generated
encouraging results in 2018
A Casual-Game-Oriented Social Networking Platform
Focused on Southeast Asia market currently
MAU1 has reached 20.9mm with average daily time spent2 more than 60 mins in 4Q18
Consistently topped the charts as the most popular application on both App Store and Google
Play in its primary markets, namely Indonesia and Vietnam in 4Q18
Chance to
socialize
Engaging
gameplay
Notes:
(1) &(2) in Q418 8
Huya: A phenomenal growth story in game live streaming
Rapid Net Revenue Growth
Successful IPO in NYSE in May 2018 (NYSE:HUYA) and Stable Margin Expansion
4Q18 vs. 4Q17 4Q18 vs. 4Q17 non-gaap
revenue growth net income attribute to
+ 103% Huya growth
VIRTUAL GIFTS +487%
1800.00
1,669
1600.00 1,505
NOBLE SUBSCRIPTION
1400.00
1200.00
ADVERTISEMENT 1000.00
800.00 741
600.00
E-Sports
400.00 284
200.00
0.00
4Q2017 4Q2018 4Q2017 4Q2018
Source: Company data disclosed in 4Q18 earnings release. 9Business Highlights
10YY’s strengths
1 Leading video-based social media platform worldwide
2 Comprehensive, interactive and organic content and activities
3 Vibrant ecosystem of performers, guilds and users
4 Proprietary and scalable technology infrastructure
5 Visionary management team with proven track record
11Leading video based social media platform worldwide
12Comprehensive, interactive and organic content and
activities
Wide range of popular contents
and activities
Follow Discover Share Comment Tipping Dedicate songs
Interactive social features
13New ways of attracting users
Promoting hosts and acquiring Additional growth via
3
1 2
external traffic from short-form strategic partnerships
video platform to YY Live
…
Short-form video platform Modern Brother’ showroom Xiaomi Broadcasting
on YY Live
14Vibrant ecosystem of performers, guilds and users
Users
Quality and interest-based content
only a few swipes away
Showcase their talent Promote stardom for
on a platform with performers managed
minimal entry barrier by guilds
LIVE Discovering, nurturing
and managing talents
Performers Guilds
15Proprietary and advanced technological capabilities
LIVE
Advance our video technological Application
AI-based applications
capabilities of A.I. &
Machine
Learning
big data analytics
Personalized recommendation &
data acquisition
content screening monitoring
data processing
and management
data analysis
Support high quality video live streaming related audio & video
communications technology improvement
16Enhancing AI capabilities on all fronts
Content Creation Content
3 3 Recommendation
& Understanding
Applying AI related computer Strengthening machine
vision and voice technologies learning and algorithm
to enhance the content capabilities in managing and
creation and understanding distributing personalized
content
Automated AI-driven Tech
3 3
Product Testing Team Management
Establishing a AI driven process Adopting a tech-centric approach
to review hundreds of different where the tech team determines
versions of APPs and through AI the workflow of each business
based A/B testing to achieve unit and the labor force
the optimization of distribution allocation
17Visionary management team with proven track record
David
Xueling Li Bing Jin VV Ting Li Jeff Pengjun Lu
Co-founder / CFO COO CTO
Chairman / Acting
CEO
18YY’s strategies for growth
3
1 Continue to focus on global expansion
3
2 Strengthen and develop AI capabilities
3 Attract new users through new product development and strategic
partnerships
3
4 Continue to explore short-form video opportunity globally
3
5 Enhance marketing efforts to promote new products globally
3
6 Pursue acquisition/investment opportunities
19Financial Highlights
20Financial highlights
Massive
1 and
Growing
2 Healthy
Gross Margin
Contribution
Revenue
$$
$
Investment Proven
3 R&D and S&M
Initiatives to
4 Profitability
& Cash
Support Growth Generation
21Massive and growing revenue
Total Net Revenue
RMBmm
15,764
39%
2016-18 CAGR
11,595 28%
YoY Growth
8,204
4,641
3,627
2016 2017 2018 4Q2017 4Q2018
excluding Bigo business unit
22Live streaming revenue growth drivers
Massive User Base
YY Live + Huya
90.4mm
Average Mobile MAU1
in 4Q18
8.9mm
Live Streaming Paying
Users1 in 4Q18
$
$
$
Fast Growing $ $
Monetization Initiatives
Bigo and Huya Business
Noble Subscription Happy Contest
103%
Robust YoY YoY Net Revenue
revenue growth Growth (4Q18 vs.
in 2018 4Q17)
Note:1.Source from Company data disclosed in 4Q18 earnings release(excluding Bigo business unit).
23Healthy gross margin
Revenue Sharing Fees and Content Costs Bandwidth Cost
RMBmm 58% RMBmm
56% 54%
54%
8,273
967
54%
8%
696
5,727 5% 5%
6%
652 6%
696
3,791
2,557
246
1,828
181
2016 2017 2018 4Q2017 4Q2018 2016 2017 2018 4Q2017 4Q2018
Revenue Sharing Fees and Bandwidth Cost % of Revenue
% of Live Streaming Revenue
Content Costs
Mutually beneficial and sustainable revenue sharing Bandwidth cost as % of revenue increased as a result of
structure with content providers, with additional increased user base on both YY and Huya’s platform
content production cost to promote hosts and live streaming quality improvements
excluding Bigo business unit 24Investment R&D and S&M Initiatives to Support Growth
Research and Development Expenses Sales and Marketing Expenses
RMBmm RMBmm
7% 6% 6% 6%
5%
7%
967
596 660 7%
1,144
282 6%
176
5%
2016 2017 2018 4Q2017 4Q2018
Research and Development % of Revenue 4%
687
Increased R&D related to A.I. technical team expansion
384
General and Administrative Expenses 323
RMBmm
145
4% 4% 3% 4% 4%
540
413 2016 2017 2018 4Q2017 4Q2018
343
Sales and Marketing % of Revenue
155 171
Strategically focus on sales and marketing to
promote our new initiatives and further strengthen
2016 2017 2018 4Q2017 4Q2018
General and Administrative % of Revenue
our brand globally
Controlled cost due to improved operational Increased S&M efforts and capabilities in user
efficiency acquisition
Note: Research and Development Expenses、Sales and Marketing Expenses and General and Administrative Expense refer to Operating expenses excluding share-based 25
compensation expenses, impairment of goodwill and investments and gain on deconsolidation and disposal of a subsidiary.(excluding Bigo business unit)Proven profitability and cash generation
Proven Profitability
RMBmm 38%
2016-18 CAGR
3,196
2,699
1,667
26%
20% 18%
23%
20% 932
836
2016 2017 2018 4Q2017 4Q2018
Net income attributable to YY Inc. Non-GAAP Net Margin (%)
Strong Operating Cash Flow
RMBmm 36%
2016-18 CAGR
4,465
3,718
2,421
2016 2017 2018
Note: Non-GAAP net income attributable to YY Inc. excluding share-based compensation expenses, impairment of goodwill and investment, gain on deconsolidation and
disposal of subsidiary, gain on deemed disposal and disposal of investments (deemed disposal refers to dilution of equity int erest in equity-method investments), gain on fair
value change of investments and equity investees’ investments, fair value loss on derivative liabilities, deemed dividend to subsidiary’s Series A preferred shareholders,
income tax effects on non-GAAP adjustment and non-GAAP adjustment for net (loss) income attributable to non-controlling interests shareholders. (excluding Bigo business
unit) 26Reconciliation of GAAP and Non-GAAP results
For the Year Ended For the Three Months Ended
Dec 31 Dec 31
(in RMB mm) 2017 2018 4Q2017 4Q2018
Operating income 2,699.2 2639.7 821.5 718.6
Impairment of goodwill and investments 45.7 35.3 4.1 15.1
Gain on deconsolidation and disposal of a subsidiary (38.0) - - -
Share-based compensation expenses 257.7 648.0 208.5 154.8
Non-GAAP operating income 2,964.6 3,323.1 1,034.1 888.5
Net income attributable to YY Inc. 2,493.2 1,642.0 740.4 684.0
Share-based compensation expenses 257.7 648.0 208.5 154.8
Impairment of goodwill and investments 45.7 35.3 4.1 15.1
Gain on deconsolidation and disposal of a subsidiary (38.0) - - -
Gain on fair value change of investments and equity investee's
(20.6) (1,711.5) (20.6) (1.1)
investments
Gain on deemed disposal and disposal of investments (45.9) (16.2) - (2.2)
Fair value loss on derivative liabilities - 2,285.2 - -
Deemed dividend to subsidiary's Series A Preferred Shareholders - 489.3 - -
Income tax effects on non-GAAP adjustments 9.3 97.6 - 21.5
Non-GAAP adjustments for net income (loss) attributable to the non-
(2.0) (273.4) (0.4) - (35.8)
controlling interest shareholders
Non-GAAP net income attributable to YY Inc. 2,699.4 3,196.4 932.1 836.2
27Thanks
Investor Relations Contact:
IR Team
Matthew Zhao, Maggie Yan
Tel: +86 (20) 8212-0000
Email: IR@YY.com
ICR, Inc.
Jack Wang
Tel: (+1) 646 915-1611
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