Company Presentation. June 2018

Transcription

1 Company Presentation June 2018

2 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 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. Forwardlooking 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

3 Company Overview 2

4 Our vision We aspire to enrich people's lives through our next-generation social media platform focused on live streaming content 3

5 Next-generation social media platform Last Generation Next-Generation Social Interaction Postings and messages! Live Interaction! Gamification! Enriched social activities and user scenarios! Social games! Multi-person live interactive activities Media Content Texts and pictures! Video based! Diversified content categories! Live steaming & short video become mainstream format 4

6 No. 1 live streaming social media platform in China No. 1 MAU 1 No. 1 DAU 1 No. 1 Total Time Spent 1 Large and Rapidly Growing User Base 77.6 mm Average mobile MAU in 1Q2018, +23.9% in 1Q18 vs. 1Q17 ² Note: (⑴) 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 March (⑵) Company data. 5

7 New ways of attracting users Embedded game features to attract younger generation users & improve the engagement Emoji Tetris Host Battalion Happy Go 6

8 Enhanced monetization capabilities Happy Contest: enables hosts to connect with and compete against each other across different showrooms encourage hosts to create a diverse reservoir of interactive content engage users to participate more actively within the hosts competition Accompany Me: on-demand live streaming service long-tail hosts offer customized services to users within live show room singing, dancing, chatting and etc. a live streaming version of taxi-hailing Happy Contest Accompany Me 7

9 Huya: A phenomenal growth story in game live streaming Successful IPO in NYSE in May 2018 (NYSE:HUYA) Rapid Net Revenue Growth 2017 vs % GAME LIVE STREAMING 1Q18 vs. 1Q % VIRTUAL GIFTS NOBLE SUBSCRIPTION ADVERTISEMENT E-Sports Q2017 1Q2018 8

10 Business Highlights 9

11 YY s strengths 1 The no. 1 live streaming social media platform in China 1 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 Note: (⑴) 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 March

12 The No. 1 live streaming social media platform in China Next-generation social media platform focused on live streaming content Note: 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 March

13 Comprehensive, interactive and organic content and activities Wide range of popular contents and activities Follow Discover Share Comment Interactive social features Tipping Dedicate songs 12

14 Vibrant ecosystem of performers, guilds and users Users Quality and interest-based content only a few swipes away Showcase their talent on a platform with minimal entry barrier Promote stardom for performers managed by guilds LIVE Performers Discovering, nurturing and managing talents Guilds 13

15 Proprietary and scalable technology infrastructure Proprietary network, Support communications High volume High quality Concurrent Live & devices and broadcasting software Empower performers Data depository & Precise content curation C ontent screening monitoring and management powered by in-house technology 14

16 Visionary management team with proven track record David Xueling Li Co-founder / Chairman / Acting CEO Rongjie Dong Bing Jin VV Ting Li Jeff Pengjun Lu CEO of Huya CFO COO CTO 15

17 YY s strategies for growth 31 Attract new users through fun and creative activities and content 32 Continue to offer innovative social features 3 Enhance marketing efforts to promote new products and features 34 Strengthen and develop technology capabilities 35 Selectively pursue acquisition/investment opportunities 36 Expand into overseas markets with high growth potential 16

18 Financial Highlights 17

19 Financial highlights Massive and Growing Revenue 1 2 Stable Gross Margin Contribution Operating Leverage & Marketing Initiative 3 4 Proven Profitability & Cash Generation $$ 18

20 Massive and growing revenue RMBmm 40% CAGR Total Net Revenue 43% YoY Growth 5,897 3,249 2, Q2017 1Q

21 Live streaming revenue growth drivers Massive User Base 77.6mm Average Mobile MAU in 1Q mm Live Streaming Paying Users in 1Q2018 $ Fast Growing Huya Business $ $ $ $ Monetization Initiatives 111% YoY Net Revenue Growth (1Q2018 vs. 1Q2017) Noble Subscription Happy Contest Source: Company data disclosed in 1Q2018 earnings release. 20

22 Stable gross margin Revenue Sharing Fees and Content Costs Bandwidth Cost RMBmm RMBmm 52% 54% 54% 50% 53% 10% 8% 696 8% 7% 3, % 2,343 1,035 1, Q2017 1Q Q2017 1Q2018 Revenue Sharing Fees and Content Costs % of Live Streaming Revenue Bandwidth Cost % of Revenue! Mutually beneficial and sustainable revenue sharing structure with content providers! Bandwidth cost as % of revenue declined as a result of our improved efficiency and pricing term 21

23 Operating leverage and marketing initiatives Research and Development Expenses Sales and Marketing Expenses RMBmm 9% 8% 7% 7% 8% RMBmm % % Research and Development 1Q2017 1Q2018 % of Revenue! Improved efficiency leveraging on the expertise of established research and development team General and Administrative Expenses 5% 5% % 236 RMBmm 6% 6% 5% 3% 5% General and Administrative Q2017 1Q2018 % of Revenue! Controlled cost due to improved operational efficiency Q2017 1Q2018 Sales and Marketing % of Revenue! Strategically focus on sales and marketing to promote our new initiatives and further strengthen our brand! Increased sales and marketing efforts and capabilities 22

24 Proven profitability and cash generation Proven Profitability RMBmm 48% CAGR 32% YoY Growth 21% 1,242 1,667 34% 63% 24% 22% Q2017 1Q2018 Non-GAAP Net Income Non-GAAP Net Margin (%) Strong Operating Cash Flow RMBmm 43% CAGR 1,823 2, Note: non-gaap net income refers to 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, gain on fair value change of investments, fair value loss on derivative liabilities, deemed dividend to subsidiary s Series A preferred shareholders and income tax effects on above non-gaap reconciling items and adjustment for non-gaap reconciling items for the income attributable to non-controlling interests. 23

25 Appendix 24

26 Proven track record of growth and monetization Nov 2014 Rebranded Huya... 8,204 Apr 2005 Founded Huaduo Jul 2008 Launched YY Client 128 Sep 2010 Introduced Mobile YY 320 Mar 2011 Commercial Launch of YY Music 820 Nov 2012 Listed in Nasdaq 1,823 Nov 2013 Launched Online Dating 3,678 5,897 64x Revenue Growth YY Inc. Total Net Revenue (RMB mm) Source: Company Form F-1 prospectus and precious Form 20-F public filings. 25

27 Reconciliation of GAAP and Non-GAAP results For the Year Ended Dec 31 For the Three Months Ended December 31 (in RMB mm) Q2017 1Q2018 Operating income 1, , Impairment of goodwill and investments Gain on deconsolidation and disposal of a subsidiary (104.0) (38.0) (38.0) - Fair value change of contingent consideration Share-based compensation expenses Non-GAAP operating income 1, , Net income attributable to YY Inc. 1, , Share-based compensation expenses Impairment of goodwill and investments Gain on deconsolidation and disposal of a subsidiary (104.0) (38.0) (38.0) - Fair value change of contingent consideration Fair value loss on derivative liabilities Gain on deemed disposals/disposals/fair value change of investments (25.1) (45.9) - (426.5) Deemed dividend to subsidiary's Series A Preferred Shareholders Income tax effects on non-gaap adjustments Net income (loss) attributable to the non-controlling interest shareholders - (2.0) (1.0) 5.8 Non-GAAP net income attributable to YY Inc. 1, ,

28 Thanks Investor Relations Contact: IR Team Matthew Zhao, Maggie Yan Tel: +86 (20) ICR, Inc. Jack Wang Tel: (+1)