JOYY Inc. First Quarter 2026 Earnings Conference Call

Ladies and gentlemen, thank you for standing by and welcome to Joy Inc.'s first quarter 2026 earnings call. At this time, all participants are in listen-only mode. After the management's prepared remarks, there will be a question and answer session. I'd now like to hand the conference over to your host today, Jane Zee, the company's senior manager of Investor Relations. Please go ahead, Jane.

Thank you, Operator. Hello, everyone. Welcome to Joy's first quarter 2026 earnings conference call. Joining us today are Ms. Ting Lee, Chairperson and CEO of JOY, and Mr. Alex Liu, the Vice President of Finance. For today's call, management will first provide a review of the quarter, and then we will conduct a Q&A session. The financial results and webcasts of this conference call are available at IR.JOY.com. A replay of this call will also be available on our website. Before we continue, I would like to remind you that we may make forward-looking statements, including but not limited to the future development of our products and businesses, the expected future financial performance of the company, our shared purchases, and other fortunate future events which are inherently subject to risk uncertainties that may cause actual results to differ from our current expectations. For detailed discussions of the risk uncertainties, please refer to our latest annual report on Form 20F and other documents filed with the SEC. We will also discuss certain non-GAAP financial measures that are included as additional clarifying items to aid investors in further understanding the company's performance and the impact that these items and events had on the financial results. The non-GAAP financial measures provided above should not be considered as a substitute for or superior to the measures of the financial performance prepared in accordance with GAAP. You may find a reconciliation of the differences between GAAP and non-GAAP financial measures in our earnings release. Finally, please note that unless otherwise stated, all figures mentioned during this conference call are in U.S. dollar. And we now turn the call over to our chairperson and CEO, Ms. Ting Lee. Please go ahead.

Hello, everyone. I'm Lee Ting. Thank you for joining us today. I apologize, but I have gotten cold recently, and my voice is quite weak. For efficiency of this meeting, I'm going to have our I.I. Jim read through the prepared remarks for me. I'll be back to take your questions during the Q&A. Thank you for the understanding.

As we enter 2026, our social entertainment business has returned to year-over-year growth, while our second growth curve, AdTag and Smart Commerce, is progressing with strong momentum. Our globally diversified ecosystem is taking shape with social entertainment, advertising, and smart commerce bolstering one another in a self-reinforcing strategic flywheel. This flywheel is propelling joy into its next phase of growth. Let me begin with an overview of our Q1 results. Total revenues reached $556 million, up 12.4% year-over-year, marking our strongest year-over-year growth rate in recent years. Social entertainment revenue was $400 million, up 3.2% year-over-year. Beagle Ads contributed $125 million, up 55.6% year-over-year, among which our third-party Beagle Audience Network delivered 78.8% year-over-year growth. Shopline Revenue reached $31 million, up 16.1% year-over-year. Q1 non-GAAP operating profit and EBITDA reached $38 million and $46 million, up 22.5% and 13.2% year-over-year, respectively. Operating cash flow for the cruiser was $46 million. As of March 31, 2026, we held $3.18 billion in net cash. Our strong cash generation continues to support meaningful shareholder returns. Since the start of 2026, we have accelerated our buyback program. Through May 22, 2026, we have repurchased a cumulative 88 million in shares and paid 69 million in dividends for total return of 157 million to shareholders. In light of our solid operational performance and robust balance sheet, the Board has just approved an updated shareholder return program, totaling $1.5 billion, under which we could repurchase up to $600 million worth of our shares and distribute approximately $900 million in dividends over the next three years. This underscores our strong confidence in the long-term potential of our business and demonstrates our continued commitment to delivering sustainable value to our shareholders and enabling shareholders to benefit from our operational improvements. This quarter marks the first quarter we are reporting results under our new three-segment structure, social entertainment, legal ads, and shopline. I'd like to take this opportunity to reaffirm our long-term strategic vision. We are building a global technology ecosystem driven by AI. This ecosystem is designed to unlock compounding returns from our data assets through the deintegration of social entertainment, programmatic advertising, and omnichannel e-commerce, creating a self-reinforcing growth slide wheel. Social entertainment is our foundational business, providing the user-based data assets for the broader ecosystem, but building a highly engaged global user community we have accumulated a valuable first-party data asset in a scaled global traffic pool, supported by established technology infrastructure and localized operational networks across key markets. Social entertainment underpins our cash flow generation and serves as the long-term anchor of the Google Ads. accelerates our flywheel, strengthening our data and algo advantages. Through advanced predictive models and algo optimization, we convert traffic in the top line is the engine of our one-stop omni-channel e-commerce offering and provides merchants with open customer streamer incentives. We have now fully rolled out our AI smart tool, interaction efficiency. As of April, AI-generated interactive virtual gifts accounted for 34% virtual gift consumption on BeagleLive. Our new product lineup continued to gain traction, with revenue up over 500% year-over-year and 45% QOQ, setting new monthly revenue records. Our current Q2 guidance implies low- to mid-single-digit year-over-year growth for social entertainment revenue. Building on this momentum, we are confident that our social entertainment business revenue grows in the 26th century going forward. Moving to Beagle Ads, in Q1, Beagle Ads generated $125 million in advertising revenue, personal softness of traffic coverage multi vertical advertising maintains strong growth on demand side our strategic presence across multiple verticals including lead generation e-commerce and IAA our advertiser makes an enhanced ecosystem then this multi vertical approach not only accelerate data accumulation and power iteration but also strengthen our traffic bidding capabilities from leech-end and e-commerce advertisers grew 90% year-over-year and mental spend seasonal softness of Q1. IAA spending sustained high-value developed markets. North America remains our largest market for Beagle has, while Western Europe delivered notable momentum. On the algo side, we're integrating data feedback from advertisers across channels and leveraging the dual growth of traffic scale and advertiser density through all data layup. This enables multidimensional precise user profiling and real-time model iteration. Positive feedback across multiple verticals validates the generalization capabilities of our model framework. Our data scale accelerates and the vertical-specific model's material slide wheel will increasingly We reiterate our strategic commitment to reaching $1 billion in legal audience network. Third-party advertising business continues to scale with ability. Moving to ShopLine, this is the first quarter we're reporting ShopLine as a critical mark in terms of its importance. We'll become an increasingly meaningful contributor to our global commerce enters the omni-channel era. Merchants increasingly desire autonomy and full-funnel data ownership. We have built shop lines as AI-native, one-stop, omni-channel e-commerce infrastructure. What we offer merchants is not simply a storefront building tool, retail operating system. Integration with payments, logistics, and marketing modules will empower merchants across every stage of their journey, from store setup and transactions to fulfillment and full lifecycle customer retention. Globally, very few vendors are capable of accelerating the integration of a suite of AI-powered capabilities. The tools will drive shoplines, ongoing evolution from an enablement tool to an AI-driven commerce engine can represent a fundamental shift in how merchants operate. Our traffic allocation and automated decision-making will unlock new growth opportunities and new levels of precision across omnichannel retail. On monetization, beyond high retention subscription fees, we generate revenue through transaction-based financial distinction, fuel shopline's ongoing accelerating performance. Q1 is traditionally a third season for e-commerce, yet shopline delivers solid results. Revenue will remain robust, so our Q2 guidance implies shopline's revenue growth accelerating If you wish to ask a question, please press star 1 on your telephone and wait for your

name to be announced. If you wish to cancel your request, please press star 2. If you're on a speakerphone, please pick up the handset to ask your question. When asking a question, please state your question in Chinese first. Your first question comes from Thomas Chong with Jefferies. Please go ahead.

早上好,谢谢管理层介绍我的提问 我们看到这一次是公司首次按照社交娱乐广告技术还有Softline 这三个业务板块披露我们的业绩 我们看到在社交舆论业务上的直播的收入在QE 也实现了同比的增长 可否在进一步说一下这一个复苏的 是否可以持续 We've seen that this is the first time on social media and social media, and social media, and social media, and social media. We've seen that in social media media and social media, in Q1, we've seen the same growth in Q1. Can you tell us about this is if we can continue? The second one, can you share with us in the past 26 years of the year's earnings and earnings of the year's earnings? Hi, good morning. Thanks management for taking my question. My first question is that this is the first time the company disclosed its performance in three business segments, namely social entertainment, Beagle Ads, and ShopLine. So, for social entertainment, live streaming revenue achieved positive year-on-year growth in Q1. Can management further elaborate whether this is a sustainable recovery? And my second question is about our full year outlook. Can management comments about our 2026 revenue and profit guidance for each business line this year?

I come from TCG with the LSA. Please go ahead. The next question comes from Raphael Chen with the OCI Research. Please go ahead.

Thank you for your question. I will continue to answer the question. So if you can do it, I'm going to go ahead and check that ShopLine made it first. Notating that ShopLine made it first and along this closure, could management elaborate more insights on the latest business? 都深度的集成在了一起,让商家在一个平台上完成同线站、交易、礼约到用户获取。

在全球的范围内,能提供这种担当案的服务商非常高年性订阅费基石,加高爆发增值的差异化商业变线模式。 allows for the revenue to the giveaway and to the lower tier of the currency. This can be called the shop line. We can divide the two parts of the company and the two big part of the company. The supply chain cash flow levels from the past year-reported, and the cost of the revenue and mortgage increases. The price of the price in the stock line is in large numbers. and with the increase of revenue and capitalization, we will all be able to push the shop line.

Thank you, Rafael, for your question. This is a quick question that we are reporting shop line as a similar segment. It's a revenue differentiated monetization framework, anchored by high-seeking value added on new services, a foundational entry point, merchant base, and generating recurring revenue, and on the other hand, driving the continuous growth in real-time, We currently serve home merchants, and revenues from cross-border mutual friends have a primary goal of tax generating operating leverage, and short-line losses are narrowing, meaning maybe one last question.

The next question that comes from is making John with the ICC. Please go ahead.

The company announced the new three-year shareholder return plan. of U.S. dollar 1.5 billion this quarter, including 600 million in share buyback and 900 million in dividends. A commencement share the thinking behind the significant increase in shareholder return.

Thank you, Mr. Chairman. I will answer this one.

This is Alex. I'm very pleased to announce this quarter our new three-year shareholder return plan, totaling 1.5 billion, covering the fiscal year of the year. years, 2026 through 2028, this replaces our previous, representing a roughly 67% expansion in annual dividend for previous two buybacks. The purchase authorization quota would be $200 million and doubling the $100 million under the previous plan. There were several key considerations on the clear growth of the returns. We do believe that the current share price is still materially undervalued and strong conviction in the future of the company. Looking ahead over the next three years, we are firmly committed to executing this plan and enabling our shareholders to benefit from improving operations. That was the last question. Thank you so much for joining us today. We look forward to speaking with everyone next quarter.

Thank you. This conference is now concluded. Thank you for attending today's presentation. You may now disconnect.