Q1 2022 JOYY Inc Earnings Call
Ladies and gentlemen, thank you for standing by and welcome to join <unk> first quarter 2022 earnings call.
At this time all participants are in a listen only mode.
After the management's prepared remarks, there'll be a question and answer session.
I'd now like to hand, the conference over to your host today Jade Cheng the company's senior manager of Investor Relations. Please go ahead Jean.
Thank you operator.
Hello, everyone welcome to join US first quarter 2022 earnings conference call.
Joining us today are Mr. David <unk>, Chairman and CEO of Joy, Ms Ting, Li our CLO and Mr. Alex Liu the general manager 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 webcast of this conference call are available at IR adopt joy Dot com.
A replay of this call will also be available on our website in a few hours.
Before we continue I would like to remind you that we may make forward looking statements, which are inherently subject to risks and uncertainties that may cause actual results to differ from our current expectations.
For detailed discussions of the risks and uncertainties. Please refer to our latest annual report on form 20-F, and other documents filed with the SEC.
Finally, please note that unless otherwise stated all figures mentioned during this conference call on U S dollar.
I will now turn the call over to our chairman and CEO , Mr. David shedding.
Please go ahead Sir.
Oh, Hello, everyone welcome to our first quarter 2022 earnings call. Let me start the call with an overview of our fourth quarter results.
In line with our previous expectations.
Various parts of the word started to emerge from pandemic restrictions.
Combination, all who calls including macroeconomic weakness.
LNG and unfavorable foreign exchange impact to contribute to that to drag along our topline grows during the first quarter.
For the fourth quarter of.
2022 our group's total revenue.
$623 8 million.
Decreasing by 3% year over year Molly.
So mortgage vehicles revenue was.
<unk>.
$134 6 million decreasing by 8% year over year.
Our global business.
Demonstrating the resilience despite the challenging market.
Ameren and weak seasonality.
Resilience is mainly attributable to our sustainable growth model.
Further improvement.
Our operating efficiency.
When compared to prior year period.
Achieved with a steady improvement in profitability during the first quarter of <unk>.
<unk>.
<unk>.
Turning it on Youtube.
Excluding YY live we recorded a non-GAAP net profit of <unk> 9 million.
We expanded our non-GAAP net margin to three 3%.
Compared to a non-GAAP net loss merging.
$3 5 million in the prior year period.
<unk> non-GAAP net profit grew to 59 9 million well its non-GAAP net margin improved to 11, 2%.
<unk>.
Our operation cash flow remains healthy and reach the positive.
$559 2 million in the first quarter.
I talked the last quarter about some of the increasing medical complexities. So please be in our business.
As a global company and we as the worldwide operations, we are now to Neil to international.
<unk> economic.
Volatilities during the initial outbreak of COVID-19 from early 2022 need attorneys on the one we experienced acceleration in business grows as the online social in the NIM in the industry in general.
In July the greater user engagement and activities.
<unk> two <unk>.
Prevail Cleveland.
Lockdowns.
Sure.
Or are they tied into the post pandemic era, the long term effect of Covid lingered and as the global economy suffered from.
Non meek growth recovery in <unk>.
<unk> case and the rate pressures.
The.
Oliver.
<unk>.
Then the global consumers confidence.
Views there.
And so then the empower and post to the challenges for our business grows in the chalk wrong.
However from.
Medium and the long term perspective.
Global users direct supply the individual demand all the social entertainment remains high and there is a long term.
Also transition.
Transitioning social entertainment activities.
From offline to online is the Seville.
Irrevocable.
As we look further into our key operational operational regions, including North America, Europe , the middle East and South Asia, our product penetration rates, we used to deal with <unk>.
<unk> low which creates an substitutional.
Pattern room for us further penetrate the market.
On top of that wants a chef.
Thoughts our operating philosophy.
We remain committed to our globalization zero localization strategy.
Rich has been vital.
To the rapid growth in our global business over the past few years globalization and diversification helped us minimize our single region exposure.
Cushioning the blow from cycle.
The technical.
Fluctuations in.
Certain regions, we will further localize our operations team by recruiting professionals.
National backgrounds to drive our content localization.
Innovation and.
Integration.
Second we will grow our user community by offering.
<unk>.
Social entertainment services with reach local and the premium content offerings.
At the same time that continuously.
Greeting, our product and the user interface and the Eagles current innovation.
We seek to further optimize this.
Immersive.
Chase space, the social networking experience of our users.
With our reach.
DIY.
Direct the right content efficiency content recommendation engine and product that's beds or new term users' social networking needs.
Should it be able to further expand our product reach and.
Also Italy, fueled our monetization and growth.
We will continue to execute our sustainable.
Driving growth strategy and the balance between growth and profitability.
<unk> turned it on Youtube.
We believe that under the current market environment, maintaining a strong.
Operating cash flow is crucial to safeguard our medium to long term growth.
As a company established in Tucson, and applied and with 10 years of listing history, we haven't been constantly adapting to evolving marketing team conditions and have achieved the second wave is sin breakthroughs.
We believe that with our established the operation capacity continuous.
Iteration, our user centric products.
Persistence execution.
Sustainable growth more growth model and striving to maintain robust cash flows.
We are.
Stronger position to navigate the current macro.
<unk>, calling the MC tenanted and sizing emerging growth opportunities along the way.
No aligned me drive D.
Let me dive deeper into the progress we've made in each of our product lines.
Style is the big alive in.
In the first quarter people lives I may you grew by eight 8% year over year to <unk>.
So tier $1.7 million.
As I have adjust the mentioned impacted by global economy in the us.
<unk> Tvs.
Seasonal weakness and multiple local.
Currencies.
Yes.
<unk> has the <unk> against the US dollar legal lives live streaming revenue and the paying user in the post the quarter decreased by nine 6% and one 5% year over year over year, respectively.
<unk> perfectly speaking our operations in Europe was less impacted when compared with prior year periods during the quarter, both our revenue and the number of paid users from Europe sustained their growth momentum and the increase the buy.
10, 4%.
Three 1% year over year, respectively.
During the first quarter, we continue to diversify our local live premium content offerings.
Eagle life.
Driving improvement.
User engagement for example, we hosted the euro the talented campaign legal.
In my team streamers from various countries to produce the local sand Inc.
<unk> content.
European Euro Yogurts.
In Bolivia, we partner, who is the lead TV to offer our users.
<unk> access to streaming.
Two stream television from Thomas Thomas.
The reality shows they go live.
Two our diversified our premium content our user engagement in crude.
As evidenced by the nine 9% and the two 1% sequentially increase but in the Android duration also live streaming sessions and androgen unrelated to Levered time spin respectively.
<unk> has always been dedicated to.
Clustering.
Engaging in the.
Classy.
Community and it has been important.
Venue for global users to connect with others with similar backgrounds all interest.
In March we launched a community feature rich is space, enabling users, especially new euro users to establish the joint deeper the interest groups.
Quickly conagra with like minded people within each community community user.
Interact with the brand.
Radio post.
<unk> joins our live sessions.
Thereby significantly improving the.
The efficiency of our social interaction.
Since this feature launch various interest space community have.
Flourish flourish.
With <unk>.
Such as the season is pumped down story in there.
The Providence binary tiny and the others. Thus he has the diversification of our user content production as well as promoting the.
Consolidation of our real time on the non real time content polls.
Next last tend to like it.
Following our proactive adjustments of <unk> marketing strategy <unk> fluctuation.
Continued in the first quarter.
And they will reach the.
One 8 million in the first quarter.
Due to the.
Pearl Act two adjustment cobbled always make whole suddenly and Susan.
Fluctuations lacking is the live streaming revenue declined by 11, 9% year over year. However.
It's the live streaming revenue in <unk>.
It's the region 10 slides.
Slightly bad news on.
In other markets recording year over year increase the buy.
Tons Eni, 0.4%.
Likely continue the two policy rate diversified.
Leverage content community by nurturing new training talented creator through our.
Comprehensive support program.
In the fourth quarter likely focus.
Equipping creators with additional interact with tools and the localized.
Localize the operational services.
Following the insurer.
Introduction also Super light and the Super Bowl features we launched the Pleasant voice chat feature.
And in region, all Nike encouraging additional real time, and the derived interactions between <unk> and the <unk> group.
South Asia during the.
Local wedding season like local operations team launched a number of widely related to the challenges to encouraging creators to showcase traditional lagging culture feature.
Local wedding dresses may comps.
And the ceremonies, attracting millions of page views.
Our company, hence the increase versus the path program the number of lives.
Certify that reserve increased by eight points.
4% sequentially in the first quarter.
To me that users diversified social interactions need we also launched the trend feature to allow user to create their own private the community groups and.
<unk> is closely related to share their personal content is designed that.
Desalinated.
Groups.
Enabling individual lives the social experience unlikely.
We believe that the trend the feature will help merchant likely users offline to online social networks and reduce the psychology coal barriers to produce and share their own content on.
During the fourth quarter as we continue to optimize these optimization also is the <unk>.
Live streaming features and the Hess integration between the two user engagement with the Nike live streaming improve I'm ready to reword time spend all last roomy grow growing by.
45, 6% and the like is live streaming penetration rates increase increasing by 10, 9% sequentially.
Next our huddle during the first quarter hardware maintained its monetization growth trajectory as is the live streaming revenue increased by.
24, 2%.
Number of paying users grew by.
45% year over year.
Based on our product teams deep user insight.
<unk>, obviously this ever product features to explore new unit.
Innovations in multi player social interaction and further enhance user social experience. This.
This quarter, our hardware launch the FILO feature called the <unk> space.
Allowing user to create their own <unk> digital.
Yes.
Interact with another.
In virtual <unk> screens.
User kind of engaged in a very key off activities in this realty.
Including voice chat Calendaring gaming and <unk>.
Suddenly after the new feature was launched.
The positive impact on users social activities and the features channel penetration in the falling quarter hardware paints to further enrich users huddle space experience by introducing mall <unk> virtual screens.
Virtual items and the casual games.
Finally, some of this on capital return in the first quarter, we continue to enhance returns for shareholders and protected inches surreal sharing repurchase program.
In the first quarter.
Bounce back.
It may lead to a <unk> 2 million of our shares.
Also in March.
Certainly one so the one we have repurchased in total.
358.
Many of our shares.
Of the.
Previous announced the repurchase program off of U S dollar.
One 2 billion.
Taken together by capitalizing our diversified global product metrics and continuous operational efficiency improvements our global business demonstrated.
<unk>.
Amy.
Challenging external environment during the first quarter.
We remain confident in the.
Middle to long term growth prospects of the global Social Entertainment markets, We will continue to prioritize the color Carl.
Cultivation of our content.
Social ecosystems and seek to maintain a strong cast roll wells seething emerging business opportunities along the way.
We remain committed committed too.
Delivering long term value to our shareholders shareholders.
This concludes my.
Prepared remarks, I will now turn the call to our general manager All finance, Alex Neil for our financial updates.
Thanks, David Hello, everybody.
It goes through the details of Bob.
Nice results.
Please note the financial information and non-GAAP financial information disclosed.
The earnings press release.
Present continue.
Continue please.
Mrs.
Unless otherwise.
They take.
Okay.
<unk> was substantially completed in February .
2021 with certain customer and made her to be completed in the future.
They have stayed the course.
Solid leasing.
Thanks in February .
One.
During the first quarter of 2022.
Chris macroeconomic uncertainties.
And the depreciation of certain currencies against U S dollar.
Our total net revenues for the first quarter.
Towards USD 620 Street.
Immediate from USD 643.1 media investing period of 2021.
This particular offering.
Live streaming revenues followed their first quarter.
$591 million.
And other revenues in the first quarter increased by 16, 3% to 30.
Three 7 million.
Cost of revenues for the first.
Courtyard.
By four 6% year over year.
$422 6 million.
Revenue sharing fees and costs.
And cost what's USD 279, 9 million in their first quarter compared administered USD 202 meeting in the space.
PARAGARD up 2021.
But the base cost decrease to yesterday.
Okay.
Media from 29 five needed in the same period of 2020.
Why.
Primarily due to the company's improved.
And benefits.
Partially offset by greater bandwidth usage.
A result of continued user base expansion.
Good luck.
Gross profit.
Great.
201 to meet it.
Quarter.
Our gross margin improved to 32, 2% from 31, 1%.
In the same period of 2021.
We continue to enhance operating leverage.
Our propane marketing stress tek.
If I say, it's all of the first quarter, our fifth grade.
21% to 206 million from USD timeshare affecting night.
In the same period of time.
Thank you bye.
The amount of the operating expenses.
And market expenses decreased to just one.
And full portfolio.
From USD bond mature and $37 4 million due to disciplined shields kind of market funding of certain products.
Including Lockheed and Hugo.
As a result, we continue to achieve us.
GAAP and non-GAAP profitability.
Both vehicles segment.
Entire group.
Our GAAP operating income for the first quarter.
$6 3 million.
Compared to operating loss.
The 73 million in the same period of 2021.
Operating income margin.
All of the first quarter of 1%.
Compared to operating loss margin of the lab.
Perfect.
Period of 'twenty.
Why.
Our non-GAAP operating income for the first quarter.
Excludes share based compensation expenses.
Amortization of intangible assets from business ecosystem.
Yes.
Impairment of goodwill and investments and a gain on disposal of subsidiaries and business.
Yes.
So if history bloodstream.
Quarter.
Compared to non-GAAP operating loss of USD 20, nonpartisan immediate in the same period of 2021.
Our non-GAAP operating income margin for the first quarter was five 3% compared with non-GAAP operating loss margin of four 6%.
Prior year period.
GAAP net loss from continuing operations.
First of all to controlling shares joy in the first quarter of 2022.
The $27 5 million compared to a net loss of USD.
<unk> is the same period of 2021.
Net loss margin.
4% in the first quarter of 2022 compared to a net loss margin.
Sure thing, Paul just 6% in the corresponding period of 2021.
non-GAAP net income from continuing.
Attributable to controlling interest of joy in the first quarter.
29 million.
non-GAAP net loss adjusted plentiful pointed by media.
Same period of 2021.
non-GAAP net income margin was three 3% in the first quarter of 'twenty two.
Compared to non-GAAP net loss margin.
<unk> <unk> seven per cent.
Thank you.
Why.
Notably because non-GAAP net income expanded.
59, 9 million in the first quarter.
non-GAAP net income margin improved to 11, 2% from one 6%.
Period.
Together.
<unk> profitability, we haven't maintained a strong.
Capital S Bill.
All of the first quarter of 2022.
Therefore, net cash inflows from operating activities of USD 59 2 million.
Importantly, we have continued to your highest return to shareholders through dividends and share repurchase.
Our current estimate.
<unk> previously announced quarterly dividend plan approved in August and November 2020.
Vivian.
At this time.
<unk> of USD <unk> <unk>.
Ponte pipeline.
For the first quarter of 'twenty two.
Yes.
To be paid on July six.
Two to shareholders of record at the close.
Yes.
On July 23 22.
Additionally, in September and November 'twenty one.
Our board of directors have also realized additional share repurchase Clive.
<unk>.
Maybe repurchase up to USD, one 2 billion of its share in total.
In the first quarter the company had repurchased an additional USD 2 million.
Sure.
These programs.
As of March 31st 2022.
The company had a total repurchased approximately USD 315 project 2 million of its shares.
Under this program.
These efforts demonstrate our confidence in the Companys long term growth and profitability prospect.
We will continue to actively utilize share repurchase to create value for our shareholders and the current market.
Yes.
Going forward.
That is just the basic while price already.
Already tied to investment into their calculation of our content and social ecosystems.
Maybe we'll continue to execute our.
Sustainable.
Joe I think gross stress tek.
We plan to continue to enhance our operating leverage.
Free cash flow.
Other product on the <unk>.
To maintain our strong operating cash flow.
Okay.
Felipe.
Provide us with greater financial flexibility to invest in our business and the fundamental capability.
Our business outlook, we have anticipated some negative impact our user online social entertainment activities.
From the gradual lift pandemic related a lot off in certain countries.
Macro economic environment.
Activity and exchange rates.
Flat okay.
So continue to post uncertainties.
Global business.
Rick.
Net revenues for the second quarter of 2022 to be between USD 579 million and USD $600 million.
We currently have limited visibility.
The macroeconomic environment, COVID-19 epidemic long term impact.
Geopolitical uncertainties our.
Business and to the markets.
They operate.
Therefore.
This forecast only reflects our current and preliminary views on the market and operational conditions.
These are subject to change.
That concludes our prepared remarks operator.
I would now like to open up the call to questions back.
Thanks.
Thank you.
We'll now begin the question and answer session.
You'd like to ask a question. Please press star one on your telephone and wait for your name to be announced when asking a question. Please state. Your question in Chinese first then immediately repeat your question in English. Thank you.
Our first question will come from Alex Poon Morgan Stanley . Please go ahead.
Hey, Josh I'll, just take one <unk> to Q1.
<unk>.
I think like <unk> seen same guide within China, Taiwan.
Moon shot by the end of <unk>.
So Louise.
Dennis Shaffer.
<unk> achieved will make somewhat hopefully case kind of youre quite in a quite.
Full year youll be get it done.
Like on gum, Glen if I can get $2 Sanjay <unk> DAU enrollment again, we always see a couch.
And when you sell a woman, so Macau, Shanghai, and so with that John Ccs Tiago and see what's out there.
Thank you Scott.
When we kind of picked up 15 years.
<unk> Challenge study in U S.
Conversely, you had few Haas IGN.
And Youll see the year, we'll see.
So it sounds like when you sell a woman.
You can see most of you found me on what we know someone phenotype.
My first question is related to the post Covid normalization.
Causing our revenue weakness in the first half.
So can management share with us.
Where do you expect revenue growth to return to positive year over year growth.
And just now management also mentioned about the weaker macro environment impact on our business and how should we look at the full year of 2022 revenue growth. My second question is related to.
Picked up recently has started.
Subscription business like Twitch, and also plan to start casual game business in Vietnam.
Can management share with us on new monetization strategy do we have any new plans. Thank you.
Hi, Susan.
Yeah.
As a result, <unk> southern Union.
During the changeover.
We would keep an undue kangaroo.
No no no.
Sure Thomas.
And also again in China.
Our new.
Each new timeline.
<unk> Army and adhere to the <unk>.
Denise <unk> who's on.
Each unit seizure chenzhou, those hi, Sheila it's really didn't need a zoom call hydro cleansed, we'll be doing so.
So you're gonna Chenzhou Wenzhou, Virginia.
Which of these you.
Ali.
The diesel completely the CJR.
Moving to meet those aren't familiar.
Tangshan <unk> trigger Gilman.
Uh huh.
I don't know what you don't do that.
Could you should see a woman CLO to change also this year $2 million.
Thanks to the tundra.
There are no such other division along yes, your balance sheet you're targeting.
R&D.
Okay.
There is not a good umbrella.
I don't know what linear power to hit those numbers.
<unk> no changes from a kind of dual <unk>.
Sure.
So <unk> made.
More tuned on all of these are union orange leukemia, and these will be more.
Excuse me I don't think it'll change are you able to meet your.
<unk>, an email to <unk>.
<unk> what are the one we shouldn't assume that other children the whole power if you will.
With that.
The new England, because orange.
So the hydrogel Tien <unk> Liza Unity will look when would you need to see Megumi us to assume we'll know soon.
Hi, Steve.
<unk>.
<unk>.
Gentoo cartridge evening program very soon.
I've read some of the roads in Australia.
Conceivably yes.
Sure.
Thank you Alex.
Your first question.
Jeff mentioned.
Second half of last year.
Global uses.
Offline travel there has been.
<unk>.
Negative impact on users online and social activities.
Yes.
I've noticed that the long term effects on the global economy actually argue continuing in 'twenty, two and especially in multiple regions.
Yes.
Financial stimulus plan.
During the pandemic as well as easing.
Easing monetary policy as these policies being gradually moves we've.
We see.
Kris uncertainty of the global economic growth.
So the raising inflation affected consumer.
Assumption confidence and also they obtain capability.
<unk>.
Macro trends definitely uncertainties and challenges.
For our business.
Yes.
And these challenges are not actually applying to all of the companies worldwide operation.
But we also want to point out is that opportunity.
Ciena team.
Come with challenges.
As you can see in the past two years between 2020 one.
We successfully navigated.
Multiple uncertainties.
During the pandemic and capture.
Okay.
Through the ear market.
Operations, our business has reached meaningful scale, we grow our revenues from $900 million 19.
$2 6 billion.
'twenty, one and we have achieved non-GAAP profitability.
<unk> 2001, and also we have managed to maintain a relatively healthy operating cash flow.
<unk> experience.
A solid foundation.
To navigate the current challenges.
<unk>.
The macro environment and how big is that as Steve said.
The growth opportunity.
So for our 22 outlook.
<unk> remains the same.
Alan.
Revenue and profit.
Given the rising uncertainty.
So environment.
We'll continue to act prudently and closely track market dynamics as we progress.
We will continue to execute our sustainable.
<unk> oriented growth strategy and <unk>.
To maintain the resilience of our global.
<unk>.
Hi, Glenn.
<unk>.
<unk> seen theres been Jim Washerwoman needs for sure would either Changsha potential now.
China will need do to look at the Guam golf will clear.
I'm, assuming that you do not like it sounds.
Super followed.
Excuse me the issue Congress drove our view so the plans for the new engine.
So would you do with it.
Now how can we assume that things are done.
Sandy cargo space through the warmer.
Did you see him once youre in there because of currency.
So just wanted you to talk.
<unk> can.
<unk> orders since wound Kiesle, Huntington <unk> and <unk>.
<unk> yeah.
E <unk> to a woman those fleets.
Sanchez on but she doesn't want me.
Turning to the <unk> so the two the <unk> Lugo, Utah.
So we know we're moving teeth, you Glenn how your liquidity position.
Most of the quick.
Yes.
With good momentum.
<unk> to the womb, so the two of them.
Yeah.
And on your second question about new monetization.
If you'll notice that we have previously already try and deploy.
Advertisement and also membership and B has been introduced in the previous years and recently, we also have been actively exploring additional monetization tools for example, Nike.
We launched followed feature last quarter and this allowance created two population exclusive content and charge.
Monthly subscription fee to Dev bandwidth.
On the new <unk> Haga space feature recently introduced by Hugo would also have some innovation and monetization.
However, I would like to admit that at the current stage. These features are still in the early stage development.
And then more targeted.
Improved product.
So their contribution to revenue in the short term would be relatively small.
Tier one you can see that our non live streaming revenue. It's about 33 7 million accounting for slightly over 5% of our group's revenue.
And we will continue to do that.
Feedback on these new features.
And we'll continue to explore opportunities to drive further diversification of our revenue stream.
Our next question will come from Thomas Chung at Jefferies. Please go ahead.
That was helpful.
Let me say, it's all of it.
Yes.
Album.
This is Tom.
But you've got to.
You were saying that some of the backlog.
Oh.
Well when you've got the Mackay moment that yes.
What do you have to when you said one woman begging game.
<unk> IL, one in Panama E mail, saying that they will all come.
Yet the margin.
Thanks, Mike Amendment, particularly my question. My first question is about the competitive landscape.
Across our different regions.
And how should we think about the second half.
This trend.
And my second question is about the operating expenses side.
How should we think about.
I would look at the margin in kind of tended to you. Thank you.
Susan Lynch here.
<unk> could you look at one of the.
Johnson as well.
No go ahead John .
Sure.
We see numerous syndrome, accordingly, adjourn to the Ohio.
We need them in time.
Yes.
<unk> two leads with J&J pudong.
Are you able to concurrently.
So moving onto those flu shots.
All the time here.
The TM.
Google.
Sharron Johnson <unk> Johnson.
Within zone.
Yes sure.
I need to know what your little Michelle we push in terms of the tubing leak.
During the quarter.
Moving now arguably TCT Jonathan.
<unk> done some of that.
We don't usually include us adult yes.
The Chinese mainland.
You too.
Tani on kind of the change.
This is a higher commission.
Do you see the time that she had a challenging year.
Yes.
In the joint marketing solution to large currency because you can finance you can Glenn.
Look Congress with Paul Butcher, the Chile will mention Joe how are you doing.
<unk>, two big change or to us at home, but do you want to eat meat.
We view <unk>.
Women's embarking.
<unk> the <unk> 92.
We will let you know.
Was there anything Toby listen in logo with dealers.
Most of the Georgia will move.
But you.
<unk>.
So in Germany.
Sequentially revenue in the year, which is sooner.
You do not encourage users to the to the <unk>.
Will you do the two loans.
When does.
<unk>.
Judy.
You could even mentally you on the GMO evansdale jumping in to the year with Danone excuses overhaul you saw ammonia.
Thank you and I'll do the.
So he does it.
Sure.
The change order.
Yes.
Each of the warehouses.
Tom.
Okay.
Thank you comment your question.
Regarding your question on <unk>.
Competitive landscape I think that the main pressure comes from the macro environment.
<unk> mentioned that would be a short term fluctuation of users online.
<unk> time spent and thickness and at the same time, they're paying capacity as well. So this means that.
All industry players we need to.
Gain user engagement and monetization opportunity.
Providing that.
With better service and compete with a wider range of competitive both online and offline.
That's why I believe that we should revisit.
Our intention.
So what drives tend to use these products and focus on the fundamentals.
And we are planning our product strategy.
We will continue to focus on the fundamentals of our products cultivate.
Our content and social ecosystem and continuously innovate our products to improve users' social experience.
I still believe that from a long term perspective to global social entertainment market has huge potential and competition will always be there.
It will be a long term marathon as compared to a short term game.
And in such time.
Increasing macro uncertainty risk control and ensuring long term sustainable growth.
The critical than ever.
Thanks, Jeff mention still use them.
Operation our business has already reached.
A meaningful scale.
We have established worldwide operational capacity.
We achieved non-GAAP profitability.
And our cash flow remains should be relatively healthy as well.
And I believe that we have already gained additional competitive advantage by being proactive and forward looking in terms of risk control and ensuring our sustainable growth model.
He believes that with the support of our strong cash flow and also our proven growth model, we will be able to better.
The growth opportunity.
Further increased our market share.
Hi, Nick.
Garik eventually you will know quite how you shop.
Dara you want potentially put tissue.
<unk> shown that.
Tulsa now put on T cells.
Can you kind of to what Michel or how you monetize it sure.
Sure.
Eco segment, especially I think just see are non.
non-GAAP R&D.
So we cannot fund our non cap.
Thank you.
Chad can sheet is adult woman amount it somewhat.
non-GAAP alcohol, so Josh also.
Yes, youll try to yet.
Gotcha.
But that should change the quotes issued.
So as you showed it especially if you don't go from dish TV some of the same part number.
Sure.
Im sure Molly Ultra Tim you might not be your favorite types I wanted to show that champion shop that came with <unk>.
non-GAAP the industry or <unk>.
<unk> reported that you saw.
Now would you think should occur.
Yes.
Border sort of accretion each equivalent which arent yet.
Chambers.
Dr. Richard Quanta Chegg now kept the market quite soon but.
Scott.
As Scott mentioned, just now thanks to our sustainable growth strategy.
On operational efficiency.
We have achieved steady improvement in both.
GAAP and non-GAAP profitability in the first quarter Eagle.
Segment achieved non-GAAP net margin of 11, 2% and the group achieved a non-GAAP net margin of three 3%.
If you look at.
Parents and between Q1 and the same thing with Nokia.
Gross margin was improved and we saw cost saving.
<unk> across multiple non-GAAP operating expense items.
So given the current macroeconomic uncertainty will continue.
Sustainable RLI driven growth strategy.
And further enhance the overall operational efficiency.
Drive further improvement.
Each of our product lines.
And so for <unk> segment, we expect.
Margin will remain stable in the year 'twenty two.
And cost savings would be achieved on various items.
To further do to further improve operating efficiency.
Efficiency, and we expect Eagle segment non-GAAP profitability for the full year will be further improved based on the full year level in the year 'twenty one.
For the other segment.
With few steadily proceeding narrowing losses.
This product line.
And also improved operating efficiency, we also expecting all the segments will continue to now.
Late in the year 2002, thank you.
Yeah.
Our next question will come from <unk> Zhang of China Renaissance. Please go ahead.
Hey, it's a follow up.
Yes, I don't want to Cuba, what's available when Youre just thinking so.
Gentlemen, cutoff telephone excuse me because I'll tell you.
Turning to fall <unk> somebody all Cold Lake City facility because it was your question on <unk>, what they were telling me a total written all hydro toolkit.
Or how should we couldnt hear you fruitful.
Thanks for taking my question. So I have question regarding cash usage with no dose about our cash.
What should how should we think about the usage of priority, namely hotel way patents pending investments overseas share repurchase or even dividend payout. Thank you.
Susan.
Oh sure.
The English soon.
How are you.
And that's kind of cool key uses of <unk>.
The future will give you.
Somebody like you know you're going to see repeat.
She's onboard through to the business and even though these are two day.
Those earnings will be the gene Hall.
The total due to the lead.
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On sugar.
Cool.
I agree with you we tend to use all right.
Wages.
That's clear.
The only thing I would wonder the Permian or do we look at the closing.
There's tons of and I'm sure She's a woman.
As you know.
Our linear will mention bulla.
Yes.
Thanks Danielle.
<unk> me Julian <unk>, Louisiana.
R&D you are union designs, even on EMEA can you tell US are you may not believe or do you want.
Easy to mono Linda <unk>.
Guy do you want to chime in.
Most people who come.
Women do though.
There you go.
We believe that we will now turn to.
<unk>.
Boomslang for clean on that.
Sounds intonation that your total <unk>, so long answer to it.
Quickly the tweet.
Thank you for your question in terms of cash usage, we will continue to be prudent and planned based on the long term business development needs.
Read that based on our accounting.
Cash position, we should be able to balance between keeping a sufficient cash flows are Ngos and also enhancing returns for our shareholders.
So in terms of our business.
We will continue to invest in our global business.
Organic growth and also execute continue to execute.
Our line oriented growth strategy to create more value and in the meantime to reward our investors for their longtime support we have been actively enhancing shareholder returns via dividends and share buybacks in the year 2020, we have.
Ill give it implants.
With a total size of 500 million to.
<unk> quarterly distributions.
In the following three years and.
The end of the first quarter, we have already declared.
Proximately 250 million.
Of cash dividends under such dividend plan.
And in the third quarter.
The year 2021, we have expanded our share repurchase program by $1 2 billion and by the end of the first quarter, we have purchased approximately three.
$320 million under the plan.
Look at our overall capital return to shareholders as the percentage of our current market cap.
Very sizeable amount we.
We believe that our investors can see our sincerity from our actions as well.
And that's the end of our call. Thank you for joining and we look forward to speaking with everyone next quarter. Thank you.
Thank you very much. This does conclude the call today. Thank you all for joining you may now disconnect.
[music].
[music].
[music].
Ladies and gentlemen, thank you for standing by and welcome to enjoy anxious first quarter 'twenty to 'twenty two earnings call.
At this time all participants are in a listen only mode.
After the management's prepared remarks, there'll be a question and answer session.
I'd now like to hand, the conference over to your host today Jade Cheng the company's senior manager of Investor Relations. Please go ahead James.
Thank you operator.
Hello, everyone welcome to join US first quarter 2022 earnings conference call.
Joining us today are Mr. David Shelly, Chairman and CEO of Joy, Ms Jami, our CLO and Mr. Alex Liu the general manager of Finance.
For today's call management will first provide a review of the quota and then we will conduct a Q&A session.
The financial results and webcast of this conference call are available at IR dumped Joy Dot com.
A replay of this call will also be available on our website in a few hours.
Before we continue I'd like to remind you that we may make forward looking statements, which are inherently subject to risks and uncertainties that may cause actual results to differ from our current expectations.
For detailed discussions of the risks and uncertainties. Please refer to our latest annual report on form 20-F, and other documents filed with the FCC.
Finally, please note that unless otherwise stated all figures mentioned during this conference call on U S dollar.
I will now turn the call over to our chairman and CEO , Mr. David shedding.
Please go ahead Sir.
Oh, Hello, everyone welcome to our first quarter 2022 earnings call. Let me start I recall, we Oh are we all of our first quarter results.
In line with our Premier expectations.
As part of the word started to emerge from pandemic restrictions.
Combination of false, including meaningful economic weakness seasonality and.
Unfavorable foreign exchange impact that contribute to that to drag along our topline grows during the first quarter.
For the fourth quarter all of them.
On page 22, our group's total revenue.
$623 8 million.
Decreasing by 3% year over year I'm always.
So I'm all age vehicles driving the old world.
<unk>.
134.6, many decreasing by 8% year over year.
However, our global business.
Hey, Mark Tracey the resilience despite the challenging market.
Omron amines and.
<unk> seasonality.
<unk> resilience is mainly attributable to our sustainable growth model.
Further improvement too.
Our operating efficiency.
When compared to prior year period.
Achieve it is that the improvement in profitability during the first quarter of <unk>.
Offload.
It is an issue.
Excluding YY live we recorded a non-GAAP net profit of 21 9 million.
We expanded our non-GAAP net margin to three 3% compared to a non-GAAP net loss emerging.
$3 five in the prior year period.
<unk> non-GAAP net profit grew to 59 9 million well its non-GAAP net margin improved to 11, 2%.
<unk>, our operation cash flow remains healthy and reach the positive.
$559 2 million in the first quarter.
I talked the last quarter about some of the increasing macro complex API. So please be in our business.
As a global company and we as the worldwide operations, we are now to Neil to international.
<unk> economic.
Volatilities during the initial outbreak of COVID-19 from early 2022 need attorneys on the one we experienced acceleration in business grows as the online social in the NIM in the industry in general.
Enjoy the greater user engagement and activities.
<unk> is the premier.
We prevail freelance.
Lockdowns however, as a word you tied into the post pandemic era, the long term effect of Covid lingered and as the global economy suffered from.
Our NAMIC rose recovery and <unk>.
<unk> and our rate crashes.
The.
Our diverse.
<unk>.
And the global consumers confidence reduced there.
So then the empower and post the challenges for our business grows in the charter wrong.
However from.
Medium and the long term risk back to.
Global users direct supply the individual demand all for social entertainment remains high and in the long term.
For.
Transitioning social.
Entertainment activities from offline to online is the Seville.
Irrevocable.
As we look further into our key operational operational regions, including North America Europe persists.
The middle East and South Asia, our product penetration rates.
<unk> relatively low which creates substantial.
Headroom for us further penetrate the market.
On top of that I want to share some thoughts on our operating philosophy first we remain committed to our globalization zero localization strategy.
Rich has been litle.
To the rapid growth in our global business over the past few years globalization and diversification helped us minimize our single region exposure.
Cushioning the blow from cycle.
The cyclical.
Fluctuations in.
Certain regions, we will further localize our operations team by recruiting professionals.
National backgrounds to drive our content localization.
Yeah.
Innovation and integration.
We will grow our user community by offering.
<unk>.
Social entertainment services waves reach local and the premium content offerings.
At the same time that continuously.
Grading our product and the user interface and you can see currency innovation.
We seek to further optimize this.
Immersive.
Chase space, the social networking experience of our users.
With our reach.
<unk> direct.
Alright, alright content efficiency content recommendation engine and product that's beds or new term users' social networking needs, we shouldn't be able to further expand our product reach and.
Also Italy fuel, our monetization and growth.
We will continue to be skewed our sustainable trend.
<unk> growth strategy and the balance between growth and profitability in <unk>.
We believe is that under the current market <unk>, maintaining a strong operating cash flow is crucial to safeguard our medium to long term growth.
As a company established in Tucson, and applied and with 10 years of listing history, we haven't been constantly adapting to evolving market conditions and have achieved a significant breakthrough.
Rules, we believe is that with our established the operation capacity continuous.
Iteration on our user centric products.
Persistence execution.
Sustainable growth more growth model and striving to maintain robust cash flows.
We are in a stronger position to navigate the current.
<unk> <unk> common make challenges and side emerging growth opportunities along the way.
Now allow me drive.
Let me dive deeper into the progress we've made in each of our product lines that style is the big alive in.
In the first quarter people lives I may you grew by eight 8% year over year to <unk>.
So tier $1.7 million.
As I have adjust dimension impacted by global economy concepts in the office.
<unk> Tvs.
Seasonal weakness and multiple local.
Currencies.
Yes.
Do you guys see page 18 against the U S. Dollar people lives live streaming revenue and the paying user in the first quarter decreased by nine 6% and one 5% year over year over year, respectively.
<unk> perfectly speaking our operations in Europe was less impacted when compared with prior year periods during the quarter, both our revenue and the number of paid users from Europe sustain their growth momentum and the increased by.
10, 4%.
Three 1% year over year, respectively.
During the course of the quarter, we continue to diversify our localized the premier content offerings.
Eagle life.
Driving improvement.
User engagement for example, with half two to the euro the talented campaign legal.
In my team streamers from various countries to produce locally within the <unk>.
<unk> content.
European Euro users.
In Malaysia, we partner, who is the lead TV to offer our users.
Exclusive access to streaming.
Two stream TV drama Tomas.
Reality is shows big alive.
Two our diversified our premium content, our user engagement improved in.
As evidenced by the nine 9% and the two 1% sequentially increased the in the Android the duration of where live streaming sessions and Theres. The androgen Andres you Levered time spin respectively.
<unk> has always been dedicated to.
Clustering.
Engaging in the.
Classy.
Community and it has been important.
Venue for global users to connect with others with similar backgrounds all interest.
In March we launched a community feature rich is space, enabling users, especially new users to establish the joined different interest groups.
Quickly conagra with like minded people within each community community user.
Interact with Ren <unk>.
Radio post.
Joining their lives sanctions.
Thereby significantly improving.
Efficiency all for social interaction.
Since this feature launch various interest space community have.
Flourish collateral issue.
With <unk> such as the season is pumped down story in there.
Pavan Steiner any tiny and the others, thus enhance the diversification of our user.
Content production as well as promoting the.
Consolidation of our real time on the non real time content polls.
Next last tend to like it.
Following our proactive and adjustments of <unk> marketing strategy likely semiannual fluctuation.
Continued in the first quarter.
And they all reached.
One 8 million in the first quarter.
Due to the.
Pearl Act two adjustment cardholder ways.
They call on uncertainty and Susan.
Fluctuations likely has to live streaming revenue declined by 11, 9% year over year. However.
It's the live streaming revenue in the Middle East the region turned out.
Slightly bad news that.
That in other markets recording year over year increase the buy.
29.4%.
Likely continue to cultivate diversified.
Leverage content community by nurturing new training talented creator through our.
Comprehend steel support program.
In the fourth quarter likely focus.
<unk> <unk> Suisse.
<unk> interactive tools and the local lives.
Localize the operational services.
Following the insurer do.
The introduction and also Super light and the Super Bowl features we launched the Pleasant voice chat feature.
Southern region, all Ikea encouraging additional real time in the derived interactions between <unk> and the <unk> group in South in Asia during the.
Local wedding season like local operations team launched a number of widely related to the challenges to encouraging creators to showcase traditional landing culture feature.
Local wedding dresses may comps and ceremonies.
<unk> million page views.
Our comprehensive increased <unk> support program the number of lives.
Certify the creators increased by eight points.
4% sequentially in the first quarter.
To me that users diversified social interactions need we also launched the <unk>.
Trends feature to allow user to create their own private the community groups and <unk>.
Exclusively share their personal content is designed that.
Desalinated.
Growth.
Enabling individual lives the social experience on likely.
We believe that the trend the feature will help merchant like users offline to online social networks and reduce.
Psychology coal barriers to produce and share their own content on.
During the fourth quarter as well as we continue to optimize these obviously utilization also is the short videos and live streaming features and the enhanced integration between the two user engagement with the Nike live streaming improve with average a reward time spend.
Lastly growth growing by <unk>.
45, 6% and <unk>.
<unk> is live streaming penetration rates increase increasing by 10, 9% sequentially.
Next our huddle during the first quarter <unk> maintained its monetization growth trajectory as is the live streaming revenue increased by.
$24 two per share.
Number of paying user grew by.
45% year over year.
Based on our current our team's deep user insight.
<unk>, obviously, the cyber product features to explore.
Innovations in multi player social interaction and further enhance user social experience this quarter hardware launch the FILO feature called the <unk> space.
User to create their own <unk> digital.
Us and.
Interact with another.
La <unk> screens.
Users engaged.
<unk> also activity in this region.
Including <unk> trial colouring gaming and <unk>.
Suddenly after the new feature was launched we are reserved at positive impact on users social activities and the feature channel penetration in the falling quarter Hot rolled tenants to further enrich users huddle space experience by introducing more three D virtual.
Screens.
Virtual items and the casual games.
Finally, some of it is on capital return in the first quarter, we continue to enhance returns for shareholders and protected.
<unk> sirona sharing repurchase program.
In the first quarter.
<unk> back.
<unk>.
<unk> 2 million of our shares as also in March.
Certainly one so the one we have repurchased in total.
358.
Many of our shares.
Of the.
Previous announced the repurchase program also U S dollar.
$1 2 billion.
Taken together by capitalizing our diversified global product metrics and continuous operational efficiency improvements our global business demonstrated.
<unk>.
Amy.
Challenging external environment during the first quarter.
We remain confident in the.
Medium to long term growth.
Prospects all to the global Social Entertainment markets, we will continue to prioritize the.
Cultivation of our content.
Social ecosystems.
Seek to maintain a strong cast roll well saving emerging business opportunities along the way.
We remain committed committed too.
Delivering long term value to our shareholders shareholders.
This concludes my.
Prepared remarks, I will now turn the call to our general manager of Finance Alex of Aneel for our financial updates.
Thanks, David Hello, everyone.
It goes through the details of Bob and.
Nice results.
Please note the financial information and non-GAAP financial information disclosed.
The earnings press release presentation I'll continue.
Continuing operations basis.
Unless otherwise specifically stated.
Okay.
Evolve a lot.
Thankfully completed on February eight.
2021.
Certain customary metric to be completed in the future.
They have system consolidation.
This business thanks to February 'twenty one.
During the first quarter, our ability to do.
Due to increased macroeconomic uncertainties.
Okay.
And some depreciation of certain currencies against U S dollar.
Our total net revenues for the first quarter decreased to USD 623 pumps.
From USD 643 1 million.
That same period of 2021.
In particular our loss.
Live streaming revenues followed their first quarter was USD 500, art and not paid $1 million.
Other revenues in the first quarter increased by <unk>.
<unk> posted 3%.
$33 7 million.
Cost of revenues for the first quarter decreased by four 6% year over year.
Sure and $22 6 million.
Revenue sharing fees and content costs, what's USD 279, 9 million in their first quarter comparative basis.
200, <unk> two meeting.
PARAGARD up 2021.
Bandwidth cost decreased to just pontificate.
<unk> 9 million from 29 five meters in the same period of 2021.
Primarily due to the company's improved.
And bandwidth usage.
Partially offset by Chris to find ways to use it.
A result of continued user base expansion of E coli.
Gross profit.
To USD 201, 2 million in their first quarter.
Gross margin improved to 32, 2% from 31, 1% in the same period of 2021.
And we continue to enhance our operating leverage.
Our propane marketing stress tek.
<unk> expenses for the first quarter decreased by 21% to adjusted to 106 million from USD <unk> 39.
That same period of 2021.
Among the operating expenses.
Sales and marketing expenses decreased to just the one time charge for portable meaning.
From USB.
And $37 4 million due to the supply and the shifts in the market funding or certain products.
Including Lockheed and huddle.
As a result, we continued to achieve us.
Our GAAP and non-GAAP profitability.
Vehicles segment and the entire group.
Our GAAP operating income for the first quarter was USD, six plus $3 million compared compared to operating loss.
<unk> 3 million in the same period of 2021.
Operating income margin.
For the first quarter of 1%.
Compared to operating loss margin of 11, 4% in the same period of 2021.
Our non-GAAP operating income for the first quarter.
Excludes share based compensation expenses.
Our model of Intel.
Assets from business ecosystems.
Yes.
Impairment of goodwill and investments and again Paul.
Subsidiaries and business.
USD $33 3 million in this quarter.
Compared to non-GAAP operating loss of USD 20, nonpartisan immediate is the same.
The period of 2021.
Our non-GAAP operating income margin for the first quarter was five 3% compared with non-GAAP operating loss margin of four 6% in the prior year period.
GAAP net loss from continuing operations attributable to controlling interest.
In the first quarter of 2022.
The $27 5 million compared to a net loss of USD.
Seven <unk> in the same period of 2021.
Net loss margin.
4% in the first quarter of 2022 compared to a net loss margin.
Second part, 6% in the corresponding period of 2021.
non-GAAP net income from continuing operations.
Attributable to controlling interest of joy in the first quarter.
$29 million.
non-GAAP net loss adjusted plentiful, but in.
The same period of 2021.
The group non-GAAP net income margin was three 3% in the first quarter of 2022.
Compared to non-GAAP net loss margin of three 7% in the same.
Period.
Hi.
Notably <unk>.
non-GAAP net income expanded.
$59 nine.
<unk> 9 million in the first quarter.
non-GAAP net income margin improved.
11, 2% from one 6%.
The prior year period.
Together.
Improved profitability, we have maintained a strong operating cash flow as bill for the first quarter of 2022.
Net cash inflows from operating activities of <unk>.
The 59 2 million.
Importantly, we have continued to enhance returns to shareholders through dividends and share repurchase.
Our current estimate of our prepared it previously announced quarterly dividend plan.
Proved in August and November 2020.
We will be distributing it.
<unk> of USD zero point pipeline.
For the first quarter of 2022.
We.
Expected to be paid on July six.
22 to shareholders of record as of the.
Loss of business onshore in 'twenty, three 2022.
Additionally, in September and November 2021.
Our board of directors have also realized additional share repurchase plan.
Under which the company may repurchase up to USD, one 2 billion of its share in total.
In the first quarter the company has repurchased an additional USD 82 million of its shares under this program.
As of March 31, 2022.
The company had a total repurchased approximately USD 315 2 million of its shares.
Under this program.
These efforts demonstrate our confidence in the Companys long term growth.
Profitability prospects.
We will continue to actively utilized share repurchase to create value.
Our shareholders and the current market condition.
Going forward.
That is just amazing.
We prioritize the investment into the calculation of our content and social ecosystems.
We will continue to execute our sustainable.
Gross stretched it.
We plan to continue to enhance our operating leverage.
Improved returns for each of our product and seek to maintain a strong operating cash flow.
Vic.
Felipe.
Provide us with greater financial flexibility to invest in our business and our fundamental capabilities.
For our business outlook, we have anticipated some negative impact our user online social and Tim and activities.
From the gradual lift up and then make real estate a lot off in certain countries.
Macro economic environment.
Activity and exchange rates flat.
<unk>.
<unk> also continued to post uncertainties.
Our global business.
We expect our net revenues for the second quarter of 2022 to be between USD 579 million and USD $600 million.
We currently have limited visibility surrounding the macroeconomic environment COVID-19 epidemic long term impact.
Geopolitical uncertainties.
And as a market.
They operate.
Therefore.
This forecast only reflects our current and preliminary views on the market and operational conditions.
Which are subject to change.
That concludes our prepared remarks operator.
I'd now like to open up the call to questions back.
Thank you we will now begin the question and answer session if you'd like to ask a question. Please press star one on your telephone.
Wait for your name to be announced when asking a question. Please state. Your question in Chinese first then immediately repeat your question in English. Thank you.
Our first question will come from Alex Poon Morgan Stanley . Please go ahead.
Hey, Josh I'll call it <unk> <unk> to Q1.
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Dennis Shaffer.
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Conversely at <unk> Suisse, and Youll see the year well.
Selwyn.
Sean can you guys talk when you sign a woman.
The good Sam.
Most of you found me enrollment dosing with <unk> associates.
My first question is related to the post Covid normalization.
Causing our revenue weakness in the first half.
So can management share with us.
When do you expect revenue growth to return to positive year over year growth.
And just now management also mentioned about the weaker macro environment impact on our business and how should we look at the full year of 2022 revenue growth.
Second question is related to.
Picked up recently has started.
Subscription business like Twitch, and also plan to start casual game business in Vietnam.
Can management share with us on new monetization.
Do we have any new plans. Thank you.
Hi, Susan Lynch here.
Dean is there as well as wound chignon Southern Union.
So you're going to do.
The change order.
We'll keep an eye on Luke Hydro please look at the Shanghai.
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Sure.
Thank you Alex.
Your first question.
As Jeff mentioned.
Second half of last year.
Global uses.
Offline travel there Hudson.
Ben.
Negative impact on users online and social activities.
Yes.
I've noticed that the long term effects and then Mike on the global economy actually asked you continuing in 'twenty, two and especially at multiple regions.
Yes.
Financial stimulus plan.
During the pandemic as well as easing.
Easing monetary policy as these policies being gradually moves we see it.
Increased uncertainty of the global economic growth and also the raising inflation affecting consumers.
Consumption confidence and also they obtain capability.
That's a macro.
Macro trends definitely Paris, uncertainties and challenges.
Our business growth.
And these challenges are not for us alone actually apply to all of the companies worldwide operation.
We also want to point out is that opportunity.
Come with challenging so.
As you can see in the past two years between 2020 one.
We successfully navigated.
Multiple uncertainties.
During the pandemic and capture.
Gross up the Q&A.
Through the years of market operation our business has reached meaningful scale, we grow our revenues from $900 million 19.
$2 6 billion.
'twenty, one and we have achieved non-GAAP profitability.
21, and also we have managed to maintain a relatively healthy operating cash flow.
Yes.
Well all lay a solid foundation.
To navigate the current challenges.
Luckily.
Macro environment and how big that is.
Is a growth opportunity.
So for our 22 outlook our team remains the same.
Gross profit and given the rising uncertainties.
The macro environment.
Continue to act prudently and closely track market dynamics as we progress.
We will continue to execute our sustainable ally oriented.
Energy and Victor maintained.
The name of a global market.
Thank you.
Hi.
Thank you Dr <unk>.
The seamless and Jim Washerwoman easier sure would either Changsha Shlomo.
E channel when we do talk to the Guangdong will clear.
<unk> sound like it sounds super.
Super Colo.
So really the issue Congress.
So the trends for the needle.
So we'll make sure to DSA.
Now how can we assume that over.
Sandy cargo space due to the warmer.
In our ECP and Jim what's your currency.
So just want to talk <unk>.
When do orders since wound Kiesle, Huntington <unk> and <unk>.
<unk> sure.
<unk> Libre two Orlando fleets.
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She doesn't want me.
<unk> so the to the <unk> call you back.
<unk>.
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<unk>.
Tim most of the quick equally yes.
Three times with pneumonia in the V go to it to the womb so the two of them.
And on your second question about new monetization.
Actually if you'll notice that we have previously already try exploit.
Advertisement and also membership Andy has been introduced in the previous year.
Finally, we also have been actively exploring additional monetization tools for example, Nike launched Super follow feature last quarter and this allowance created two population exclusive content and charge a monthly subscription fee.
Yes.
And the new <unk> Haga space feature recently introduced by Hugo will also have some innovation and monetization.
However, I would like to admit that at the current stage. These features are still in the early stage.
So and then more targeted.
<unk> products.
The contribution to revenue in the short term would be relatively small sampling tier one you can see that our non live streaming revenue. It's about 33 7 million accounting for slightly over 5% of our group's revenue.
And we will continue to observe user feedback on these new features.
And we'll continue to explore opportunities to drive further diversification of our revenue stream.
Our next question will come from Thomas Chung at Jefferies. Please go ahead.
I think if I.
Tom I wanted you and what the equipment.
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Based on this trend and my second question is about the operating expenses side.
How should we think about.
Outlook, that's about right.
The margin in kind of tentative. Thank you.
Susan Lynch here.
Could you look to the Michelle Johnson.
Johnson as well.
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Jenny.
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Tom.
Right.
Thank you Thomas for your question.
Regarding your question on the competitive landscape I think that the main pressure comes from the macro environment.
<unk> mentioned that would be a short term fluctuation of users online.
<unk> time spent and stickiness and at the same time on their paint capacity as well. So this means that.
All industry players we need to.
Gain user engagement and monetization opportunity.
Providing better products with better service and compete with a wider range of competitive both online and offline so that.
That's why I believe that we should revisit.
Our intention.
What do I extend to use these products and focus on the fundamentals.
We are planning our product strategy.
We will continue to focus on the fundamentals of our products cultivate.
Our content and social ecosystem.
And continuously innovate our products to improve users' social experience.
I still believe that from a long term perspective to global social entertainment market has huge potential and competition will always be there.
It will be a long term marathon as compared to a short term game.
And in such time.
Increasing macro uncertainty risk control.
Fueling long term sustainable growth.
More critical than ever.
As I just mentioned.
Yes.
In relation to our business have already reached meaningful scale and we have established worldwide operational capacity.
<unk> achieved non-GAAP profitability.
And our cash flow remained to be relatively healthy as well.
And I believe that we have already gained additional competitive advantage by being proactive and forward looking in terms of risk control and ensuring our sustainable growth model.
I believe that with the support of our strong cash flow and also our proven growth model, we will be able to better grasp growth opportunities.
Further increase our market share.
How much.
Garik <unk> quite high eshop.
You won't potentially cut tissue.
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Close enough, but in Tucson in shortly.
Well Michel or how you monetize it.
Sure.
<unk> segment, especially I think just see.
non-GAAP R&D.
So Shannon our pipeline to fund our.
non-GAAP.
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So Josh also.
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Should that occur.
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Which arent yet.
But with that tougher so tax rates, which are non.
<unk> question for you.
Pat.
Okay.
Mention just now thanks to our sustainable growth strategy and continue is in.
Operational efficiency.
We have achieved steady improvement in both.
GAAP and non-GAAP profitability in the first quarter.
<unk> segment achieved non-GAAP net margin of 11, 2% and the group achieved a non-GAAP net margin of six 3%.
So if you look at a comparison between Q1 and the same thing with Nokia.
Gross margin was improved and we saw cost saving.
Happening across multiple non-GAAP operating expense items.
So given the current macroeconomic uncertainty we will continue our sustainable <unk> driven growth strategy.
And further enhance the overall operational efficiency.
And drive further improvement.
Each of our product lines.
And so for Veeco segments, we expect.
Gross margin will remain stable in the year 2002, and cost savings will be achieved on various items.
To further do to further improve operating.
And we expect Eagle segment non-GAAP profitability for the full year to be.
Further improved based on the full year level in the year 'twenty one.
The other segment.
With with few steadily proceeding narrowing losses.
There is product line.
And also improved its operating efficiency. We're also expecting all the segments will continues and that will happen.
In the year 2002, thank you.
Our next question will come from <unk> Zhang of China Renaissance. Please go ahead.
Hey, it's a follow up question.
What's available when you said you are suing them and charge on that kind of goes to the telephone shifts here because I will tell you.
Joe Hogan tuning in Oklahoma, you got somebody else colored unique since it because youll see a switch so quick.
The total retail now hydro toolkit, so to what you would have critical how should we couldnt hear you.
Thanks for taking my question. So I have question regarding cash usage with known about our cash.
What should how should we think about the usage of <unk> memory, Homeaway pendants beneath the investments share.
Share repurchases or even dividend payout. Thank you.
Susan.
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Guys do you want to chime in.
And those people who count.
Women do though.
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We believe that we will now turn to.
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And Tony you towards <unk> harm and we will also.
Understood.
Quickly the tweet.
Thank you for your question in terms of cash usage, we will continue to be prudent and planning based on a long term business development needs.
Leave that based on our accounting.
Cash position, we should be able to balance between keeping a sufficient cash flows and growth and also enhancing returns for our shareholders.
So in terms of our business.
We will continue to invest in our global business.
Organic growth and also execute continue to execute.
Roy oriented growth strategy to create more value.
The main time to reward our investors for their long term support we have been actively enhancing shareholder returns via dividends and share buybacks.
In the year 2020, we have announced dividend plans with a total size of 500 million to.
<unk> quarterly distributions in the following three years and as of the end of the first quarter, we have already declared.
Ultimately 250 million.
Millions of cash dividends under such dividend plan and.
And in the third quarter and in the.
Year 2021, we have expanded our share repurchase program by $1 2 billion and by the end of the first quarter, we had purchased approximately.
$320 million under these plans.
Look at our overall capital return to shareholders.
Percentage of our current market cap, that's just a very sizeable amount.
Aleve that our investors can see our sincerity from our actions as well.
And Thats the end of our call. Thank you for joining and we look forward to speaking with everyone next quarter. Thank you.
Thank you very much. This does conclude the call today. Thank you all for joining you may now disconnect.