JOYY · JOYY, Inc. Sponsored ADR Class A

JOYY Inc. reported a strong first quarter for 2026, with total net revenues of US$555.7 million, a 12.4% increase year-over-year, marking the company's strongest growth rate in recent years. The results reflect a strategic inflection point as the core Social Entertainment business returned to year-over-year growth, with live streaming revenues increasing 2.4% to US$380.3 million. This recovery was driven by expanded content categories, enhanced localized operations, and AI-powered tools that improved user engagement and monetization. The number of core live streaming paying users rose 5.9% year-over-year to 1.54 million, while ARPPU reached US$214.1.

The company's diversification strategy is gaining traction, with non-live streaming revenues reaching US$175.4 million, up 42.6% year-over-year and representing 31.6% of total net revenues. BIGO Ads, the AI-powered programmatic advertising platform, saw revenues surge 55.6% to US$124.8 million, driven by expansion of the BIGO Audience Network (up 78.8% year-over-year) and improved algorithm performance. Shopline, the smart commerce platform, generated US$30.5 million in revenue, up 16.1% year-over-year, with gross margin improving to 51.5%.

Despite the top-line growth, operating income declined to US$6.8 million from US$12.2 million in the prior year, impacted by higher operating expenses, particularly a US$14.6 million increase in general and administrative expenses driven by share-based compensation. Gross margin contracted to 34.1% from 36.1% a year ago, reflecting the faster growth of lower-margin BIGO Ads revenue. However, non-GAAP EBITDA improved to US$45.7 million from US$40.4 million, and net income from continuing operations attributable to controlling interest rose to US$50.7 million from US$45.4 million.

Management highlighted the new three-segment reporting structure (Social Entertainment, BIGO Ads, Shopline) and expressed confidence in the company's strategic flywheel, where AI serves as the backbone across all segments. The board authorized a significant capital return program, including up to US$600 million in share repurchases and approximately US$900 million in dividends over the next three years, underscoring confidence in the business's long-term potential. For the second quarter of 2026, the company expects net revenues between US$562 million and US$581 million.