2025-05-27-Jefferies-欢聚集团（JOYY）_多元化收入来源取得成果_10页_275kb

Diversifying Revenue Streams Bearing Fruit - Summary

Core Content

JOYY, a leading live-streaming platform in China, reported its 1Q25 results, showing revenue in-line with expectations and non-GAAP earnings exceeding estimates. The company's midpoint of 2Q25 revenue guidance aligns with market consensus, indicating stability and continued growth in key areas. JOYY is emphasizing its diversified revenue strategy, with significant progress in advertising and other non-live-streaming segments.

Main Points

• Revenue Performance:

  • 1Q25 revenue declined by 12.4% YoY to US$494.4m, slightly above both consensus and estimates.
  • BIGO revenue dropped 10% QoQ and 14.5% YoY to US$432m (vs estimate of US$427m).
  • All Other revenue decreased 10% QoQ but increased 5.3% YoY to US$62.5m (vs estimate of US$60.5m).
  • Non-GAAP net income reached US$61.5m, above both consensus and estimates.

• Operational Adjustments:

  • The company has fully implemented operational adjustments for live-streaming, which is expected to stabilize revenue in 2Q25.
  • All Other segments are projected to reduce losses significantly in 2025.

• User Metrics:

  • Bigo Live MAU declined 22% YoY to 28.9m.
  • Likee MAU dropped 19.5% YoY to 30.2m.
  • Global MAU fell 6% YoY to 260.4m.
  • Total paying users for BIGO decreased 13% to 1.45m, while ARPU for BIGO fell from US$235.4 to US$221.6.

• Growth Strategy:

  • JOYY's diversified growth strategy is yielding results, with non-live-streaming revenue growing 25% YoY to US$123m, now accounting for 25% of total revenue.
  • BIGO Ads experienced strong growth, supported by a large user base and localized operations.

• 2Q25 Revenue Guidance:

  • The midpoint of 2Q25 revenue guidance is US$499m–US$519m, in line with market expectations.
  • BIGO is expected to grow 3% QoQ, while All Other is projected to increase 3% QoQ due to eCommerce contributions.

• Non-GAAP Operating Profit:

  • Group-level non-GAAP operating profit is expected to be US$30m in 2Q25.
  • BIGO is projected to generate US$59m in non-GAAP operating profit, while All Other is expected to incur a US$29m loss.
  • Full-year 2025 non-GAAP op profit is expected to be stable compared to 2024.

• Valuation and Price Target:

  • Buy rating is maintained with a price target of US$57.3, representing a +31% increase from the prior price of US$57.1.
  • SOTP valuation is used as the basis for the price target.

Key Takeaways from Conference Call

• JOYY's diversified revenue streams are showing strong performance.
• BIGO Ads is a key growth driver, benefiting from a large user base and strong localized operations.
• The company is focusing on ROI and acquiring high-quality paying users in core markets.
• Non-core audio live-streaming and negative ROI channels are being phased out to improve profitability.

Investment Thesis

• JOYY is one of the few Chinese Internet companies actively expanding globally, which is expected to support long-term growth.
• Bigo Live remains a major revenue driver, with Likee contributing increasingly to the business.
• The company has 400m global users and has achieved successful monetization in overseas markets.

Risks and Considerations

• Risks:

  • Aggressive overseas marketing spending could impact profitability.
  • Macro headwinds may slow domestic live-streaming revenue growth.
  • Stringent regulations in short-form video and live-streaming could pose challenges.

• Valuation Methodology:

  • Price targets are based on SOTP, DCF, EBITDA, P/E, and EV/EBITDA analyses.
  • The Buy rating is based on the expectation of 15% or more total return over 12 months.

Analyst Certification and Disclosure

• Thomas Chong and Zoey Zong are non-US analysts not registered with FINRA.
• Their recommendations are not subject to FINRA rules.
• The report is intended for general circulation and does not provide individual investment recommendations.
• Investors should consider this report as only one factor in their decision-making.

Company Overview

• Founded in 2005 as an online game portal, JOYY is now a leading live-streaming platform in China with core products including YY Live, BIGO Live, and 100 Education.
• Monetization is primarily through revenue sharing of virtual items sold on the platform.

Valuation and Investment Recommendation

• Buy rating with a price target of US$57.3.
• Investment risks include currency fluctuations, market volatility, and regulatory changes.

Summary of Key Metrics

Catalysts for Growth

• Stronger-than-expected MAU growth.
• Market share gains in live-streaming.
• Rising paying user ratio and ARPU in live-streaming.
• Growth in advertising revenue.
• ECommerce contributions to All Other revenue.
• Stable user base in developed markets.

Sustainability Matters

• Customer Privacy is a key concern, with the need to comply with data regulations.
• Employee Engagement, Diversity & Inclusion are important for long-term value creation.
• Company targets include attracting and retaining a global and diverse workforce and ensuring compliance with privacy laws.

Conclusion

JOYY's diversified strategy is showing positive results, with non-live-streaming revenue growing rapidly and advertising performance improving. Despite challenges in user growth and regulatory risks, the company is expected to improve profitability in 2025, supported by operational adjustments and strategic focus on ROI. The Buy rating and price target of US$57.3 reflect confidence in the company's long-term growth potential and value creation.