On November 27th, Joyful Group (NASDAQ: YY) released its Q3 2024 financial report. In the third quarter, Joyful Group achieved revenue of 559 million US dollars, of which the core business BIGO segment (including Bigo Live, Likee, and imo) generated revenue of 496 million US dollars. Under non GAAP accounting standards, operating profit was $34.9 million, a month on month increase of 16.4%; The net profit was 61.2 million US dollars, with a net profit margin of 10.9%.
Against the backdrop of the Indian government's ban on some Chinese applications, applications under the Joyful Group have not been spared in the Indian market. Since then, Joyful Group has consciously shifted its business to developed countries and regions. The reporter from China Business News noticed that in the third quarter of this year, the revenue of Joyful Group from developed countries and regions accounted for 54.9% of the total revenue.
Li Ting, Chairman and CEO of Joyful Group, revealed during the financial conference call that developed countries continue to be the company's main source of growth, and in the third quarter, the year-on-year revenue growth rate in developed countries reached 21.6%, leading other regions.
Live streaming adjustments are nearing completion
In the third quarter, Joyful Group achieved a revenue of 559 million US dollars, a decrease of 1.48% compared to the same period in 2023. Among them, the BIGO segment, the core business of Joyful Group, generated a revenue of 496 million US dollars, accounting for approximately 88.7% of the total revenue; Other income was $63.03 million, accounting for approximately 11.3% of the total revenue.
In terms of business type, the live streaming revenue of Joyful Group in the third quarter was $439 million, slightly lower than the previous quarter, accounting for approximately 78.5% of the total revenue; Non live streaming revenue was $119 million, a month on month increase of 13.1%, and the proportion of total revenue increased to 21.3%.
Li Ting admitted during the financial report conference that in the third quarter, BIGO's live streaming revenue faced some short-term fluctuations, but BIGO's non live streaming revenue still maintained high-speed growth year-on-year. Among them, the advertising revenue of its own traffic platform Likee increased by 33.4% year-on-year and 8.9% month on month. Part of the reason is that Joyful continues to promote refined global operations and optimize the content costs of some regions of its products. Another part of the reason is based on long-term development needs, and some adjustments were made to the non core product gameplay of BIGO sector in the third quarter
It is worth noting that the management of Joyful Group stated that the company has made proactive adjustments from the perspective of refining a healthier profit model for its products and building a sustainable business ecosystem. These adjustments have already seen some positive effects in the gross profit, ROI, and operating profit trends of the BIGO sector in the third quarter.
The Non GAAP gross profit margin of Joyful Group in the third quarter was 37.3%, an increase of two percentage points compared to the second quarter, and the Non GAAP net profit increased by 16.4% month on month. Among them, in the third quarter, the gross profit of BIGO's Non GAAP segment was $183 million, with a gross profit margin of 36.9%. The gross profit margin of the previous quarter was 35.3%, with a month on month increase of 1.6%; The operating profit of BIGO's Non GAAP segment was $62.74 million, with an operating profit margin of 12.6%. The operating profit margin for the previous quarter was 11.4%, an increase of 1.2 percentage points compared to the previous quarter. Other business sectors benefited from the month on month recovery in monetization, and the Non GAAP gross profit margin also saw a significant improvement, rising from 34.5% in the second quarter to 40%, an increase of 5.5 percentage points month on month.
China International Capital Corporation analyst Zhang Xueqing believes that the impact of the adjustment of the live streaming business of Joyful Group may be nearing its end. It is expected that the live streaming revenue of BIGO sector will continue to grow, while the non live streaming revenue will maintain high-speed growth. The revenue of other sectors is also expected to continue to grow driven by non live streaming business.
The market is tilting towards developed countries
Since selling its shares in Huya and selling YY Live to Baidu, Joyful Group has focused on operating in overseas markets. However, in 2020, the Indian government banned some Chinese applications, which also affected Joyful Group's Bigo Live, Likee, and Hago (an aggregated social platform) applications in India. At that time, Hago's average monthly active users on mobile devices decreased by 49.9% year-on-year, which in turn affected related business revenue.
Afterwards, Joyful Group intends to gradually shift the focus of its overseas markets from South Asia and Southeast Asia to developed countries and the Middle East.
Xia Lu, a senior lawyer at Kenting Law Firm, told reporters: "Compared to markets in developing countries and regions, developed country markets, although fiercely competitive, have relatively stable and transparent legal frameworks and policy environments. Despite strict requirements, they provide a clear compliance path, allowing companies to better predict risks and develop long-term strategies. However, from another perspective, although developed country markets are highly attractive, they also pose new challenges for Chinese companies. For example, the EU GDPR (General Data Protection Regulation) The data protection laws represented by require enterprises to have higher privacy protection and data compliance capabilities. They require enterprises to meet high standards in data privacy protection and compliance capabilities, far exceeding the requirements of many developing markets. These requirements not only involve technological adaptation, but also mean that enterprises need to make comprehensive adjustments in internal processes and operational models
By region, in the third quarter, the revenue of Joyful Group in developed countries was 306 million US dollars, an increase of 21.4% from 252 million US dollars in the same period last year, accounting for 54.8% of the total revenue, and for the first time accounting for more than half of the total revenue; The revenue in the Middle East region was 75.53 million US dollars, a decrease of 30.0% from the same period last year's 108 million US dollars, but an increase of 2.1% compared to the second quarter's 87.45 million US dollars, indicating a rebound; The revenue in Chinese Mainland was US $62.6 million, down 16.0% from US $74.53 million in the same period last year; The revenue from Southeast Asia and other regions was $121 million, a decrease of 8.3% from the same period last year's $132 million.
Li Ting said, "In the long run, Joyful Group will continue to promote the improvement of global operational refinement and focus on ROI, prioritizing the concentration of operational resources in regions with high monetization potential. It is expected that developed countries and the Middle East will continue to be the focus of the group's attention
The MAU (average monthly active users) of Bigo Live in the third quarter was 36.5 million, compared to 40.3 million in the same period of 2023, and 37.7 million in the second quarter of this year. Likee's MAU is 33.9 million, compared to 50 million in the same period of 2023 and 35.6 million in the second quarter of this year. Hago's MAU is 4.3 million, compared to 5 million in the same period of 2023 and 4.4 million in the second quarter of this year. The global average monthly active mobile users is 272 million, compared to 277 million in the same period of 2023 and 275 million in the second quarter of this year.
Zhao Li, an analyst at Bank of Communications International, pointed out that since the first quarter of this year, Bigo Live's MAU has gradually stopped declining compared to the previous quarter, but Likee and Hago's MAU still show a downward trend.
Joyful Group stated in its financial report that the MAU of Likee and Hago decreased in the quarter, mainly due to the company controlling expenses in acquiring users through advertising.
From the perspective of paying users, in the third quarter, BIGO (including Bigo Live, Likee, and imo) had 1.62 million paying users, compared to 1.61 million in the same period of 2023. The average paid user revenue (ARPPU) of BIGO (including Bigo Live, Likee, and imo) is $231.4, compared to $253.4 in the same period of 2023 and $233.5 in the second quarter of this year. It can be seen that both year-on-year and month on month have decreased.
According to the Joyful Group, in terms of regions, in the third quarter, Bigo Live's MAU in core developed countries increased by 3.4% year-on-year and 3.7% month on month, while the number of paying users increased by 9.1% year-on-year. Revenue in the Middle East region rebounded, with a month on month growth of 5.6%. Likee will continue to focus on its core markets in the Middle East and Europe, with a dual monetization model of live streaming and advertising advancing simultaneously, further improving product monetization efficiency. In the third quarter, Likee's advertising revenue increased by 33.4% year-on-year, and the product line remained profitable. Hago, on the other hand, achieved a month on month recovery for paying users and ARPPU through incentive operations targeting paying users at all levels, with revenue increasing by 6.1% and operating cash flow remaining positive.
It is expected that BIGO and the entire group will usher in a brand new beginning in 2025. The BIGO sector will continue to focus its operational resources on acquiring developed countries and high-quality paying users. It is expected that paying users will have the opportunity to gradually recover month on month and year-on-year growth next year, and ARPPU will also have the opportunity to stabilize, thereby driving BIGO's core overseas product live streaming revenue to return to year-on-year growth Li Ting said.
Xia Lu pointed out to reporters that companies that have done well in going global first attach great importance to legal compliance work before entering the target market, and form a professional international legal compliance team in advance; Secondly, maintaining active communication with regulatory agencies in overseas target markets is a major highlight of successful enterprises; Finally, the strategic layout of data localization is one of the important advantages of these enterprises.