YY Reports Fourth Quarter and Full Year 2015 Unaudited Financial Results

GUANGZHOU, China, March 21, 2016 (GLOBE NEWSWIRE) -- YY Inc. (NASDAQ:YY) ("YY" or the "Company"), a revolutionary real-time interactive social platform, today announced its unaudited financial results for the fourth quarter and full year 2015.

Fourth Quarter 2015 Highlights

  • Net revenues increased by 62.3% to RMB1,899.8 million (US$293.3 million) from RMB1,170.6 million in the corresponding period of 2014.

Full Year 2015 Highlights

  • Net revenues increased by 60.3% to RMB5,897.2 million (US$910.4 million) from RMB3,678.4 million in 2014.

Mr. David Xueling Li, Chief Executive Officer of YY, stated, “We are pleased to report another strong quarter as we saw continued top-line growth momentum across our core business segments, namely online music and entertainment, online dating, and Huya broadcasting. Furthermore, in our online music and entertainment business, revenues from mobile grew at an impressive rate of 452% year over year and accounted for 45% of total revenues in the fourth quarter of 2015. Going forward, we will continue to build up our mobile offering and introduce other innovative services as we strive to meet the evolving demands of users in the dynamic mobile internet market. As we continue to augment and adapt the services across our healthy ecosystem, we are confident in our ability to strengthen our position as the leading real-time internet platform in China.”

Mr. Eric He, Chief Financial Officer of YY, commented, “In the fourth quarter of 2015, we continued to see strong top-line growth with our net revenues increasing by 62.3% year over year, primarily reflecting our core business growth, but partially offset by the expected ongoing softness of the online game business. In addition, we further increased our paying users by 29.9% year over year to 3.2 million as of December 31, 2015. The mobile-end was a strong driver of our overall growth in the fourth quarter. Particularly in our core online music and entertainment business, mobile ARPU increased by 139% year over year to RMB388, and mobile paying users increased by 131% year over year to 1.4 million. As we move forward, we remain confident in our ability to roll out new, innovative services to our massive community of users and strengthen our ecosystem.”

Fourth Quarter 2015 Financial Results

NET REVENUES

Net revenues increased by 62.3% to RMB1,899.8 million (US$293.3 million) in the fourth quarter of 2015 from RMB1,170.6 million in the corresponding period of 2014, primarily driven by the increase in IVAS revenues. IVAS revenues, which mainly consisted of revenues from online music and entertainment, online games, online dating, Huya broadcasting and YY's membership program, increased by 60.7% to RMB1,832.0 million (US$282.8 million) in the fourth quarter of 2015 from RMB1,140.2 million in the corresponding period of 2014. The increase in IVAS revenues was primarily driven by a 29.9% year-over-year increase in the number of paying users and a 24.3% year-over-year increase in average revenue per user (“ARPU”).

Revenues from online music and entertainment increased by 69.3% to RMB1,145.0 million (US$176.8 million) in the fourth quarter of 2015 from RMB676.2 million in the corresponding period of 2014. This increase was driven by a year-over-year increase of 44.5% in the number of paying users to 2,157,000, and a year-over-year increase of 17.2% in ARPU to RMB531. Moreover, mobile ARPU continues to experience solid acceleration, having grown 139% to RMB388 in the fourth quarter of 2015 from RMB162 in the corresponding period of 2014. In addition, the Company held its 2015 YY Entertainment Annual Event Competition in December 2015, which, as in prior years, proved to be a successful iconic event in the industry and boosted the Company’s online music and entertainment revenues.

Revenues from online games were RMB172.4 million (US$26.6 million) in the fourth quarter of 2015, as compared to RMB229.4 million in the corresponding period of 2014. This decline was primarily caused by a 32.5% year-over-year decrease in paying users to 340,000, which reflects the continued softness in China’s web game market, but was partially offset by an 11.4% year-over-year increase in ARPU of online games.

Revenues from online dating increased by 102.4% to RMB189.2 million (US$29.2 million) in the fourth quarter of 2015 from RMB93.5 million in the corresponding period of 2014. This increase primarily resulted from a 109.3% year-over-year increase in ARPU to RMB837 in the fourth quarter of 2015, partially driven by the contribution from the 2015 YY Online Dating Annual Event Competition, which was held for the first time in December 2015.

Other IVAS revenues, mainly including Huya broadcasting and membership subscription fees, increased by 130.6% to RMB325.4 million (US$50.2 million) in the fourth quarter of 2015 from RMB141.1 million in the corresponding period of 2014. Revenues from Huya broadcasting increased by 152.2% to RMB133.6 million (US$20.6 million) in the fourth quarter of 2015 from RMB53.0 million in the corresponding period of 2014. Revenues from membership subscription fees increased by 36.4% to RMB80.8 million (US$12.5 million) in the fourth quarter of 2015 from RMB59.3 million in the corresponding period of 2014, which reflected a 3.3% increase in the number of members to 1,086,000 as of December 31, 2015 from 1,051,000 as of December 31, 2014.

Other revenues, mainly including revenues from the Company's online education platform, 100 Education, online advertising revenues from Duowan.com, and e-commerce, increased by 123.1% to RMB67.8 million (US$10.5 million) in the fourth quarter of 2015 from RMB30.4 million in the corresponding period of 2014.

COST OF REVENUES AND GROSS PROFIT

Cost of revenues increased by 87.1% to RMB1,168.2 million (US$180.3 million) in the fourth quarter of 2015 from RMB624.5 million in the corresponding period of 2014, primarily attributable to an increase in revenue-sharing fees and content costs to RMB807.3 million (US$124.6 million) in the fourth quarter of 2015 from RMB397.8 million in the corresponding period of 2014. The increase in revenue-sharing fees and content costs paid to performers, channel owners and content providers was in line with the increase in revenues and was primarily due to the higher level of user engagement and spending driven by promotional activities, as well as the Company’s investments in expanding the amount of new and innovative content it provides to users. In addition, bandwidth costs increased to RMB161.1 million (US$24.9 million) in the fourth quarter of 2015 from RMB117.8 million in the corresponding period of 2014, primarily reflecting the continued user base expansion and the video quality improvements.

Gross profit increased by 34.0% to RMB731.6 million (US$112.9 million) in the fourth quarter of 2015 from RMB546.1 million in the corresponding period of 2014. Gross margin was 38.5% in the fourth quarter of 2015 compared with 46.7% in the corresponding period of 2014. The year-over-year decrease in gross margin was primarily attributable to the change in the Company's business mix to include new business lines involving user-generated content, and higher revenue-sharing fees and content costs.

OPERATING INCOME

Operating expenses for the fourth quarter of 2015 increased by 59.6% to RMB354.6 million (US$54.7 million) from RMB222.2 million in the corresponding period of 2014. This increase was primarily attributable to an increase in sales and marketing expenses, particularly those associated with mobile product promotion, as well as general and administrative expenses, driven by the Company’s overall business expansion.

Operating income in the fourth quarter of 2015 increased by 25.6% to RMB409.8 million (US$63.3 million), as compared to RMB326.3 million in the corresponding period of 2014. Operating margin in the fourth quarter of 2015 was 21.6%, as compared to 27.9% in the corresponding period of 2014.

Non-GAAP operating income1 increased by 29.3% to RMB471.0 million (US$72.7 million) in the fourth quarter of 2015 from RMB364.3 million in the corresponding period of 2014. Non-GAAP operating margin2 decreased to 24.8% in the fourth quarter of 2015 from 31.1% in the corresponding period of 2014.

NET INCOME

Net income attributable to YY Inc. was RMB359.2 million (US$55.5 million) in the fourth quarter of 2015, as compared to RMB372.8 million in the corresponding period of 2014. Net margin in the fourth quarter of 2015 was 18.9%, as compared to 31.8% in the corresponding period of 2014. Non-GAAP net income attributable to YY Inc.3 increased by 2.3% to RMB420.4 million (US$64.9 million), as compared to RMB410.8 million in the corresponding period of 2014. Non-GAAP net margin4 was 22.1% in the fourth quarter of 2015, as compared to 35.1% in the corresponding period of 2014.

NET INCOME PER ADS

Diluted net income per ADS5 increased by 1.5% to RMB6.24 (US$0.96) in the fourth quarter of 2015 from RMB6.15 in the corresponding period of 2014.

Non-GAAP diluted net income per ADS6 increased by 7.6% to RMB7.25 (US$1.12) in the fourth quarter of 2015 from RMB6.74 in the corresponding period of 2014.

BALANCE SHEET AND CASH FLOWS

As of December 31, 2015, the Company had cash and cash equivalents of RMB928.9 million (US$143.4 million) and short-term deposits and restricted short-term deposits of RMB2,284.2 million (US$352.6 million). For the fourth quarter of 2015, net cash from operating activities was RMB707.6 million (US$109.2 million).

SHARES OUTSTANDING

As of December 31, 2015, the Company had a total of 1,097.8 million common shares outstanding, or the equivalent of 54.9 million ADSs outstanding.

FULL YEAR 2015 FINANCIAL RESULTS

For the full year of 2015, net revenues increased by 60.3% to RMB5,897.2 million (US$910.4 million) from RMB3,678.4 million in 2014, primarily driven by a 60.3% increase in IVAS revenues.

Net income attributable to YY Inc. for the full year of 2015 was RMB1,033.2 million (US$159.5 million), compared with RMB1,064.5 million in 2014. Net margin for the full year of 2015 was 17.5%, compared with 28.9% in 2014.

Non-GAAP net income attributable to YY Inc. for the full year of 2015 increased by 1.6% to RMB1,218.6 million (US$188.1 million) from RMB1,199.1 million in 2014. Non-GAAP net margin was 20.7% for the full year of 2015, compared to 32.6% for the full year of 2014.

Diluted net income per ADS for the full year of 2015 increased to RMB17.96 (US$2.77) from RMB17.76 in the prior year. Non-GAAP diluted net income per ADS for the full year of 2015 increased to RMB21.18 (US$3.27) from RMB20.01 in the prior year.

For the full year of 2015, net cash from operating activities was RMB1,780.2 million (US$274.8 million).

Recent Development

In the fourth quarter of 2015, the Company invested RMB1,860.5 million (US$287.2 million) in purchasing land for future office space in the Pazhou Internet Innovation Zone in order to accommodate future work force expansion and reduce long-term operating costs.

Conference Call Information

The Company will hold a conference call on Monday, March 21, 2016 at 8:00 pm Eastern Daylight Time or Tuesday, March 22, 2016 at 8:00 am Beijing Time to discuss the financial results. Participants may access the call by dialing the following numbers:

United States:+1-845-675-0438
International Toll Free: +1-855-500-8701
China Domestic:400-1200654
Hong Kong: +852-3018-6776
Conference ID: #68691605

The replay will be accessible through March 29, 2016 by dialing the following numbers:

United States Toll Free:+1-855-452-5696
International: +61-2-9003-4211
Conference ID: #68691605

A live and archived webcast of the conference call will also be available at the Company's investor relations website at http://investors.yy.com/.

Exchange Rate

This press release contains translations of certain Renminbi amounts into U.S. dollars at specified rates solely for the convenience of readers. Unless otherwise noted, all translations from Renminbi to U.S. dollars, in this press release, were made at a rate of RMB6.4778 to US$1.00, the noon buying rate in effect on December 31, 2015 in the City of New York for cable transfers in Renminbi per U.S. dollar as certified for customs purposes by the Federal Reserve Bank of New York.

About YY Inc.

YY Inc. (“YY” or the “Company”) is a revolutionary real-time interactive social platform that engages users in real-time online group activities through voice, text and video. Launched in July 2008, YY Client, the Company’s core product, empowers users to create and organize groups of varying sizes to discover and participate in a wide range of online activities, including online music and entertainment, online games, online dating, live game broadcasting and education. YY Inc. was listed on NASDAQ in November 2012 and generated revenues of US$910 million in the fiscal year 2015.

Safe Harbor Statement

This announcement 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,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” and similar statements. Among other things, the business outlook and quotations from management in this announcement, 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, as well as uncertainties relating to the proposed “going-private” transaction. Further information regarding these and other risks is included in YY’s filings with the SEC. All information provided in this press release and in the attachments is as of the date of this press release, and YY does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

Use of Non-GAAP Financial Measures

The unaudited condensed consolidated financial information is prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”), except that the consolidated statement of changes in shareholders’ equity, consolidated statements of cash flows, and the detailed notes have not been presented. YY uses non-GAAP operating income, non-GAAP operating margin, non-GAAP net income attributable to YY Inc., non-GAAP net margin, non-GAAP net income attributable to common shareholders, and basic and diluted non-GAAP net income per ADS, which are non-GAAP financial measures. Non-GAAP operating income is operating income excluding share-based compensation expenses. Non-GAAP operating margin is non-GAAP operating income as a percentage of net revenues. Non-GAAP net income attributable to YY Inc. is net income attributable to YY Inc. excluding share-based compensation expenses. Non-GAAP net margin is non-GAAP net income attributable to YY Inc. as a percentage of net revenues. Non-GAAP net income attributable to common shareholders is net income attributable to common shareholders excluding share-based compensation expenses. Basic and diluted non-GAAP net income per ADS is non-GAAP net income attributable to common shareholders divided by weighted average number of ADS used in the calculation of basic and diluted net income per ADS. The Company believes that separate analysis and exclusion of the non-cash impact of share-based compensation adds clarity to the constituent parts of its performance. The Company reviews these non-GAAP financial measures together with GAAP financial measures to obtain a better understanding of its operating performance. It uses the non-GAAP financial measure for planning, forecasting and measuring results against the forecast. The Company believes that non-GAAP financial measure is useful supplemental information for investors and analysts to assess its operating performance without the effect of non-cash share-based compensation expenses, which have been and will continue to be significant recurring expenses in its business. However, the use of non-GAAP financial measures has material limitations as an analytical tool. One of the limitations of using non-GAAP financial measures is that they do not include all items that impact the Company’s net income for the period. In addition, because non-GAAP financial measures are not measured in the same manner by all companies, they may not be comparable to other similar titled measures used by other companies. In light of the foregoing limitations, you should not consider non-GAAP financial measure in isolation from or as an alternative to the financial measure prepared in accordance with U.S. GAAP.

The presentation of these non-GAAP financial measures is not intended to be considered in isolation from, or as a substitute for, the financial information prepared and presented in accordance with U.S. GAAP. For more information on these non-GAAP financial measures, please see the table captioned “YY Inc. Reconciliations of GAAP and Non-GAAP Results” at the end of this release.

__________________
1 Non-GAAP operating income is a non-GAAP financial measure, which is defined as operating income excluding share-based compensation expenses.

2 Non-GAAP operating margin is a non-GAAP financial measure, which is defined as non-GAAP operating income as a percentage of net revenues.

3 Non-GAAP net income attributable to YY Inc. is a non-GAAP financial measure, which is defined as net income attributable to YY Inc. excluding share-based compensation expenses.

4 Non-GAAP net margin is a non-GAAP financial measure, which is defined as non-GAAP net income attributable to YY Inc. as a percentage of net revenues.

5 ADS is American Depositary Share. Each ADS represents twenty Class A common shares of the Company. Diluted net income per ADS is net income attributable to common shareholders divided by weighted average number of diluted ADS.

6 Non-GAAP diluted net income per ADS is a non-GAAP financial measure, which is defined as non-GAAP net income attributable to common shareholders divided by weighted average number of ADS used in the calculation of diluted net income per ADS.


YY INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(All amounts in thousands, except share, ADS and per ADS data)
December 31, December 31, December 31,
2014 2015 2015
RMB RMB US$
Assets
Current assets
Cash and cash equivalents 475,028 928,934 143,403
Short-term deposits 4,214,576 1,894,946 292,529
Restricted short-term deposits 100,000 389,221 60,085
Accounts receivable, net 257,436 132,353 20,432
Inventory 1,445 14,385 2,221
Amount due from related parties 61,073 5,297 818
Prepayments and other current assets 204,139 147,823 22,822
Deferred tax assets 111,436 116,921 18,049
Total current assets 5,425,133 3,629,880 560,359
Non-current assets
Deferred tax assets 1,392 3,363 519
Investments 186,654 567,557 87,616
Property and equipment, net 234,228 843,449 130,206
Intangible assets, net 154,034 146,437 22,606
Goodwill 300,382 151,638 23,409
Other non-current assets 560,971 1,985,714 306,541
Total non-current assets 1,437,661 3,698,158 570,897
Total assets 6,862,794 7,328,038 1,131,256
Liabilities and shareholders’ equity
Current liabilities
Accounts payable 101,525 129,819 20,041
Deferred revenue 356,150 385,300 59,480
Advances from customers 34,127 55,086 8,504
Income taxes payable 89,161 107,403 16,580
Accrued liabilities and other current liabilities 478,703 681,889 105,266
Amounts due to related parties 30,892 24,917 3,847
Total current liabilities 1,090,558 1,384,414 213,718
Non-current liabilities
Convertible debt 2,447,980 2,597,403 400,970
Long-term payable 183,000 - -
Deferred revenue 24,383 20,752 3,204
Deferred tax liabilities 26,709 16,817 2,596
Total non-current liabilities 2,682,072 2,634,972 406,770
Total liabilities 3,772,630 4,019,386 620,488


YY INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
(All amounts in thousands, except share, ADS and per ADS data)
December 31, December 31, December 31,
2014 2014 2015
RMB RMB US$
Mezzanine equity - 61,833 9,545
Shareholders’ equity
Class A common shares (US$0.00001 par value; 10,000,000,000 shares authorized, 706,173,568 shares issued and outstanding as of December 31, 2014 and 728,227,848 shares issued and outstanding as of December 31, 2015, respectively) 43 43 7
Class B common shares (US$0.00001 par value; 1,000,000,000 shares authorized, 427,352,696 shares issued and outstanding as of December 31, 2014 and 369,557,976 shares issued and outstanding as of December 31, 2015, respectively) 30 27 4
Additional paid-in capital 2,900,458 2,011,799 310,568
Statutory reserves 56,469 56,507 8,723
Retained earnings 173,963 1,207,168 186,355
Accumulated other comprehensive losses (40,799) (36,385) (5,617)
Noncontrolling interests - 7,660 1,183
Total shareholders’ equity 3,090,164 3,246,819 501,223
Total liabilities, mezzanine equity and shareholders’ equity 6,862,794 7,328,038 1,131,256


YY INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(All amounts in thousands, except share, ADS and per ADS data)
Three Months Ended Twelve Months Ended
December September December December December December December
31, 30, 31, 31, 31, 31, 31,
2014 2015 2015 2015 2014 2015 2015
RMB RMB RMB US$ RMB RMB US$
Net revenues
Internet value-added service
—Online music and entertainment 676,192 854,306 1,144,998 176,757 2,109,503 3,320,052 512,528
—Online games 229,398 168,332 172,398 26,614 811,699 771,882 119,158
—Online dating 93,497 172,641 189,194 29,207 194,134 651,019 100,500
—Other IVAS 141,146 222,797 325,427 50,237 415,689 918,006 141,716
Other revenues 30,405 71,886 67,827 10,471 147,343 236,290 36,477
Total net revenue 1,170,638 1,489,962 1,899,844 293,286 3,678,368 5,897,249 910,379
Cost of revenues(1) (624,494) (905,489) (1,168,239) (180,345) (1,849,149) (3,579,744) (552,617)
Gross profit 546,144 584,473 731,605 112,941 1,829,219 2,317,505 357,762
Operating expenses(1)
Research and development expenses (115,425) (153,008) (152,678) (23,569) (431,188) (548,799) (84,720)
Sales and marketing expenses (49,021) (84,074) (114,174) (17,625) (102,527) (312,870) (48,299)
General and administrative expenses (57,762) (147,312) (87,788) (13,552) (223,019) (358,474) (55,339)
Goodwill impairment - (199,425) - - - (310,124) (47,875)
Fair value change of contingent consideration - 182,476 - - - 292,471 45,150
Total operating expenses (222,208) (401,343) (354,640) (54,746) (756,734) (1,237,796) (191,083)
Other income 2,355 17,156 32,814 5,066 6,319 82,300 12,705
Operating income 326,291 200,286 409,779 63,261 1,078,804 1,162,009 179,384
Other non-operating income/(expenses) 36,714 - - - 36,714 (2,165) (334)
Gain on disposal of an equity investment - - - - 999 - -
Foreign currency exchange gains (losses), net 4,096 (37,119) 187 29 (10,399) (38,099) (5,881)
Interest expense (18,610) (24,983) (32,016) (4,942) (56,607) (97,125) (14,994)
Interest income 48,595 30,555 26,185 4,042 164,969 137,892 21,287
Income before income tax expenses 397,086 168,739 404,135 62,390 1,214,480 1,162,512 179,462
Income tax expenses (29,079) (45,862) (51,561) (7,960) (154,283) (178,327) (27,529)
Income before share of income in equity method investments, net of income taxes 368,007 122,877 352,574 54,430 1,060,197 984,185 151,933
Share of income in equity method investments, net of income taxes 4,790 3,567 3,233 499 4,275 14,120 2,180
Net income 372,797 126,444 355,807 54,929 1,064,472 998,305 154,113
Less: Net loss attributable to non-controlling interest - (29,930) (3,409) (526) - (34,938) (5,393)
Net income attributable to YY Inc. 372,797 156,374 359,216 55,455 1,064,472 1,033,243 159,506
Other comprehensive (loss) income :
Foreign currency translation adjustments, net of nil tax (5,799) 673 (360) (56) 3,638 4,414 681
Comprehensive income attributable to YY Inc. 366,998 157,047 358,856 55,399 1,068,110 1,037,657 160,187
Net income per ADS
—basic 6.42 2.80 6.42 0.99 18.46 18.37 2.84
—diluted 6.15 2.75 6.24 0.96 17.76 17.96 2.77
Weighted average number of ADS used in calculating net income per ADS
—basic 58,081,100 55,918,954 55,976,338 55,976,338 57,657,035 56,259,499 56,259,499
—diluted 63,684,904 56,884,168 60,655,008 60,655,008 59,927,174 57,541,558 57,541,558
(1) Share-based compensation was allocated in cost of revenues and operating expenses as follows:
Three Months Ended Twelve Months Ended
December September December December December December December
31, 30, 31, 31, 31, 31, 31,
2014 2015 2015 2015 2014 2015 2015
RMB RMB RMB US$ RMB RMB US$
Cost of revenues 5,658 8,723 8,871 1,369 18,037 23,963 3,699
Research and development expenses 14,492 27,121 29,240 4,514 54,141 70,951 10,953
Sales and marketing expenses 1,070 1,191 1,089 168 2,807 3,283 507
General and administrative expenses 16,802 43,695 22,009 3,398 59,647 87,175 13,458


YY INC.
Reconciliations of GAAP and Non-GAAP Results
(All amounts in thousands, except share, ADS and per ADS data)
Three Months Ended Twelve Months Ended
December September December December December December December
31, 30, 31, 31, 31, 31, 31,
2014 2015 2015 2015 2014 2015 2015
RMB RMB RMB US$ RMB RMB US$
Operating income326,291 200,286 409,779 63,261 1,078,804 1,162,009 179,384
Share-based compensation expenses38,022 80,730 61,209 9,449 134,632 185,372 28,617
Non-GAAP operating income364,313 281,016 470,988 72,710 1,213,436 1,347,381 208,001
Net income attributable to YY Inc.372,797 156,374 359,216 55,455 1,064,472 1,033,243 159,506
Share-based compensation expenses38,022 80,730 61,209 9,449 134,632 185,372 28,617
Non-GAAP net income attributable to YY Inc.410,819 237,104 420,425 64,904 1,199,104 1,218,615 188,123
Non-GAAP net income per ADS
—Basic 7.07 4.24 7.51 1.16 20.80 21.66 3.34
—Diluted 6.74 4.17 7.25 1.12 20.01 21.18 3.27
Weighted average numbers of ADS used in calculating Non-GAAP net income per ADS:
—Basic58,081,100 55,918,954 55,976,338 55,976,338 57,657,035 56,259,499 56,259,499
—Diluted63,684,904 56,884,168 60,655,008 60,655,008 59,927,174 57,541,558 57,541,558


YY INC.
UNAUDITED SEGMENT REPORT
(All amounts in thousands, except share, ADS and per ADS data)
Three Months Ended
December 31, 2015
YY IVAS Huya 100
YY IVAS Others and others broadcasting Education Total Total
RMB RMB RMB RMB RMB RMB US$
Net revenues
Internet value-added service
—Online music and entertainment1,144,998 - 1,144,998 - - 1,144,998 176,757
—Online games172,398 - 172,398 - - 172,398 26,614
—Online dating189,194 - 189,194 - - 189,194 29,207
—Other IVAS191,781 - 191,781 133,646 - 325,427 50,237
Other revenues- 31,473 31,473 - 36,354 67,827 10,471
Total net revenue1,698,371 31,473 1,729,844 133,646 36,354 1,899,844 293,286
Cost of revenues(1) (930,954) (203,297) (33,988) (1,168,239) (180,345)
Gross profit (loss) 798,890 (69,651) 2,366 731,605 112,941
Operating expenses(1)
Research and development expenses (124,330) (20,131) (8,217) (152,678) (23,569)
Sales and marketing expenses (94,192) (11,215) (8,767) (114,174) (17,625)
General and administrative expenses (71,847) (6,926) (9,015) (87,788) (13,552)
Total operating expenses (290,369) (38,272) (25,999) (354,640) (54,746)
Other income 32,814 - - 32,814 5,066
Operating income (loss) 541,335 (107,923) (23,633) 409,779 63,261
(1) Share-based compensation was allocated in cost of revenues and operating expenses as follows:
Three Months Ended
December 31, 2015
YY IVAS Huya 100
and others broadcasting Education Total Total
RMB RMB RMB RMB US$
Cost of revenues 8,104 639 128 8,871 1,369
Research and development expenses 24,373 2,246 2,621 29,240 4,514
Sales and marketing expenses 938 151 - 1,089 168
General and administrative expenses 17,430 146 4,433 22,009 3,398
YY INC.
RECONCILIATION OF GAAP AND NON-GAAP RESULTS OF UNAUDITED SEGMENT REPORT
(All amounts in thousands, except share, ADS and per ADS data)
Three Months Ended
December 31, 2015
YY IVAS Huya 100
and others broadcasting Education Total Total
RMB RMB RMB RMB US$
Operating income (loss) 541,335 (107,923) (23,633) 409,779 63,261
Share-based compensation expenses 50,845 3,182 7,182 61,209 9,449
Non-GAAP operating income (loss) 592,180 (104,741) (16,451) 470,988 72,710
YY INC.
UNAUDITED SEGMENT REPORT
(All amounts in thousands, except share, ADS and per ADS data)
Three Months Ended
September 30, 2015
YY IVAS Huya 100
YY IVAS Others and others broadcasting Education Total Total
RMB RMB RMB RMB RMB RMB US$
Net revenues
Internet value-added service
—Online music and entertainment 854,306 - 854,306 - - 854,306 134,418
—Online games 168,332 - 168,332 - - 168,332 26,486
—Online dating 172,641 - 172,641 - - 172,641 27,164
—Other IVAS 140,420 - 140,420 82,377 - 222,797 35,055
Other revenues - 32,222 32,222 - 39,664 71,886 11,311
Total net revenue 1,335,699 32,222 1,367,921 82,377 39,664 1,489,962 234,434
Cost of revenues(1) (695,373) (171,212) (38,904) (905,489) (142,471)
Gross profit (loss) 672,548 (88,835) 760 584,473 91,963
Operating expenses(1)
Research and development expenses (123,378) (18,233) (11,397) (153,008) (24,075)
Sales and marketing expenses (62,754) (8,788) (12,532) (84,074) (13,228)
General and administrative expenses (72,254) (6,021) (69,037) (147,312) (23,178)
Goodwill impairment (128,034) - (71,391) (199,425) (31,378)
Fair value change of contingent consideration 108,858 - 73,618 182,476 28,711
Total operating expenses (277,562) (33,042) (90,739) (401,343) (63,148)
Other income 17,156 - - 17,156 2,699
Operating income (loss) 412,142 (121,877) (89,979) 200,286 31,514
(1) Share-based compensation was allocated in cost of revenues and operating expenses as follows:
Three Months Ended
September 30, 2015
YY IVAS Huya 100
and others broadcasting Education Total Total
RMB RMB RMB RMB US$
Cost of revenues 8,194 367 162 8,723 1,372
Research and development expenses 23,065 1,559 2,497 27,121 4,267
Sales and marketing expenses 1,189 2 - 1,191 187
General and administrative expenses 15,381 130 28,184 43,695 6,875
YY INC.
RECONCILIATION OF GAAP AND NON-GAAP RESULTS OF UNAUDITED SEGMENT REPORT
(All amounts in thousands, except share, ADS and per ADS data)
Three Months Ended
September 30, 2015
YY IVAS Huya 100
and others broadcasting Education Total Total
RMB RMB RMB RMB US$
Operating income (loss) 412,142 (121,877) (89,979) 200,286 31,514
Share-based compensation expenses 47,829 2,058 30,843 80,730 12,701
Non-GAAP operating income (loss) 459,971 (119,819) (59,136) 281,016 44,215


Investor Relations Contact YY Inc. Yuffie Fu Tel: +86 (20) 2916-2000 Email:IR@YY.com ICR, Inc. Charles Eveslage Tel: +1 (646) 915-1611 Email:IR@YY.com

Source:YY Inc.