Q2 2022 JOYY Inc Earnings Call
Good morning, ladies and gentlemen, thank you for standing by and welcome to the Joy Inc's second quarter 2022 earnings call.
At this time all participants are in a listen only mode.
After the managements prepared remarks, there will be a question and answer session.
I would now like to hand, the conference. So what's your host Jamie Yeah. The company's senior manager of Investor Relations. Please go ahead Jim.
Thank you.
Breaker Hello, everyone welcome to join our second quarter 2022 earnings conference call joining.
Joining us today are Mr. David <unk>, Chairman and CEO of Joy.
Ms, Jamie our CLO and Mr. Alex Liu the general manager of Finance.
For today's call management will first provide a review of the culture and then we will conduct a Q&A session.
The financial results and webcast of this conference call are available and I are joined 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 are in U S. Dollar.
I will now turn the call over to our chairman and CEO Mr. David <unk>. Please go ahead Sir.
Yeah.
Thank you.
Hello, everyone and welcome to our second quarter 2022 earnings call.
As far as an overview of our quarterly results.
The global macroeconomic uncertainties and has a seasonality impact also Ramadan holiday in the middle East.
<unk> five.
<unk> hundred <unk>.
$98 1 million in revenues include the <unk>.
500.
Two 6 million of revenue from Beagle approach approaching the higher end of our previous guidance.
We grew our noncash nonprofits to 51 5 million as a group level. Realizing are all non-GAAP net margin of eight 6%.
Notably the <unk> segment expanded.
Its non-GAAP net profit too.
T 6.3 million and the improved its non-GAAP net margin to <unk>.
Kevin T point 17 point to press it.
Our operating cash flow in crew.
To be strong.
Reaching $61.7 million for the quarter.
That's got a fashion also our.
Paul probably the part of our ability.
And this current market condition demand improve.
In pool.
In Peru.
Uh huh.
<unk> of our business.
Yeah.
We are adamant also increased.
<unk> roofing.
The inflation and the increase in the cost to all four leaving containing alluded to negatively impact that.
So I'm we're spending.
The lifting of lockdown and travel restrictions imposed.
During the pandemic contributed to.
Resurgence and travel demand during the summer season.
Further.
<unk> consumers time and spending.
Expanding into offline activities.
The brass, Steve a vacation and all of the U S. Dollar was also a favorable factor as our price rose in local currency terms.
Those various highways habit, and we'll use that as a soldier monetization efficiency.
Oh, why the very itchy all for global companies include the Joy.
Despite these macro economy economy challenges.
And <unk>.
<unk> Chan of global users either steel.
Andre.
For social Entertainment services.
Time increased uncertainties users.
King mall emotional value from their products, such as a sense of belonging.
The meaningful connections with others.
It's why we respond to this.
Well I told Mike I haven't I'm into first and foremost by turning inward.
Hiney continuing to integrate our report us and cultivate our user community well Maxine.
The emotional valuable our services come for one <unk>.
In recent quarters, we launched several major product features updates Inc.
Including Big go lives.
Virtual life and community <unk> loop.
Interest space community feature and.
<unk> three D hognose space those features so too.
Prove the quality and the efficiency of our user is a social experience.
Enabling them to better engage and.
Foster meaningful connections.
Well with those who will have a similar interest together with our drivers and diverse and the.
Inclusive of the community community culture, we believe.
Those are the false will help our products deliver important and unique emotional value to our users.
In addition to Maxine this emotional value we continue to be fully.
Dedicated to creating value for our creators by providing greater friendly video increase in truth and the monetization features and cultivating.
Cultivating a user community that is build on.
Okay.
Equity and connections.
We have a stable base.
Creative Center centric.
Economy ecosystem that are in there.
Table, a larger number of creators to showcase their talents in front of us.
Global audience and at the same time in July from me seeing economy the tennis.
Yes.
Yeah.
Over the past few years, we have invested are actually made.
Accurately T. A cumulative accumulative total of our U S dollar 1 billion increase risk reward.
With the support of.
Our global operations team and the implementation of very key off of activities.
Hillard to local users.
<unk>.
Knees, we empower our creators to gain exposure.
Both locally and internationally and enables them to realize the new levels of personal and professional success going forward we remain.
Community.
Committed to delivering value to our users and Christmas we will continue to cultivate.
Diverse.
Premium content.
We paid innovate to interactive features and the argonaut.
Organisers Taylor, Hey, what are the local activities.
We expect that those faults wheel.
Those efforts will further improve the user experience and.
Ultimately facilitate the growth of our user community and the global business.
To mitigate risks against the current market we are proactive in.
In employment and implemented.
Syria All of America is to further improve our efficiency and enhance the resilience of our business as.
As we continue to execute.
Sustainable growth strategy and I emphasize our paradox organized.
All organic growth.
We will be more adaptive in the execution of our user acquisition strategy.
This means we will dynamically adjust our strategy based on our ROI and closely monitor shifts in marketing.
Yes.
Our products that's on steel last month loss, making such as.
Like he and <unk>, we will focus on the steady improvement.
I respect to monetization capabilities stick to our.
This is blaine the sales and marketing strategy.
And optimize the cost structure in order to steadily narrowed they are respectively.
The operation loss.
We will also continue to enhance for doctors sanity and.
Optimize our business first is to drive further.
Improvement of our operations defense I'd say at the group level.
As we.
Maintain a healthy growth trajectory in our profit and cash flow since the 'twenty 'twenty. One we are in a strong financial position that allows us to have greater flexibility and then continue the investments in call air.
That appeal to our long term cap capabilities.
We expect to emerge.
The average from the above.
Recalibration as a more focused and more productive organization better positioned to capture long term growth opportunities.
Now, let me dive deeper into the progress we've made in each of our product line that is a star Wars Big go lives.
As a result of macroeconomic uncertainties and the.
The seasonality during two <unk>.
<unk>.
Holiday in the Middle East.
V go lives the live streaming revenue and the number of paying users declined during the second quarter.
Yes, Big go lives, so user base and engagement LIBOR continue Canadian Oda to grow thanks to our innovative feature updates and localize the activities.
In breast or in general tradition.
Traditions and.
User needs.
During the second quarter of <unk> increased by 10, 6% year over year too.
32.6, many north play users in southeast Asia, and other emerging markets increased by 18, 6% well user in Europe increased by.
Eight 7% year over year.
To help our users in the middle East and.
Southeast Asia countries celebrating.
Ramadan holiday pay go live launch of a serious offer.
Vince.
Great.
The tailored to local.
Traditions.
These include the cooking Sanchez Queens shows and Sydney.
<unk> and <unk>.
Likely the local celebrate celebrities and influencers to demonstrate the unique cultural tradition of their regions.
Our new community feature which.
Was it onto the last quarter continued to contribute to content diversification and the user engagement and improvements in the bar channel, Brian So average views per user increased by.
41%.
14, 114, 1% and the.
Volume also is video content increased by seven 3% sequentially.
People live also upgraded its a virtual life feature to enable AR.
Tim There live streaming experience for users.
Having both the number of users and.
Cumulative time spend all virtualized session subset.
Substantially over the previous quarter.
Next.
Let's turn to likely during the second quarter for a similar reason too big go lives like fees last streaming revenue and the number of paying user decline.
As I mentioned earlier given the current micro Abdomens ended the fact that the salt video monetization is still at an early stage of development likely continue to size them.
Dennis proteins is sales and marketing strategies.
Further optimize its cost.
Structure and actively explore new opportunities for monetization.
We have made progress in executing those objectives and we successfully narrowed that like is the operating loss to buy it.
5% year over year and during the.
During the first half of 2022.
In mid June .
Likely launched a new feature called the move in Europe , and the U S loop is a.
Community feature that.
Helps the users to with similar interests to connect with each other and we have so far received a positive feedback from our users for example, suddenly after Lu who is along the.
<unk>.
Community's shared more than 6 million episodes of video content and over 50% of the user in the <unk>.
Community falling one another this indicates that loops.
<unk> has contributed to the closer in.
Of a high level of connection.
We also observed.
Steady improvement in user engagement and stickiness, especially in the region, where Luc So was introduced.
The average time spent per user increase sequentially.
Pinpoint 2% globally.
Sure.
'twenty 2022 7% in this region.
During the second quarter. In addition to launching a verity of localized campaigns like the partner with our charity organization in Middle East and South Asia to launch a cross region donation campaign.
Bye.
Logging into like <unk> and <unk>.
Dissipating.
[noise] around Ramadan.
Campaign user practically the energy points everyday reached through the later be converted to a certain donation amounts to be made by like these are all local charity organizations.
More than 200 of thousands of users participated in this campaign.
Demand sitting in that as a user today seek to make a positive impact on the communities, while being entertained and engaged it we will continue to act to the us.
As for other opportunities to further empower our user to make positive.
Difference in their local.
Communities.
Yeah.
Next we can tend to handle during the second quarter horse live streaming revenue increased by seven 1% year over year, and it's number of paying user grow by 12, 8% over the same period.
As we continue to optimize.
<unk> content recommendation.
<unk>.
User engagement improved as I read is that.
By our increase in is the feature channel.
Penetration rates of.
One 8% sequentially.
During the quarter hardware focused operating is newly launched the <unk> space feature.
<unk> introduced a more localized demand.
Our customers and accessories, enabling users to design and that's really our Paris, according to their personal and their culture prefer in states.
Additional interactivity item and a three D. Virtual Sims will also introduce that boasts the OSM, which was well received by <unk> user.
And demonstrated by the increase of cargo space next to their user retention rates spike.
69.
It was a 14.9 sequentially.
He is a coming quarter hog or plan to further update the users Hugo Swiss experience by introducing more <unk> and <unk> then to catch her to local culture and the user needs.
We expect to continuously increase the user penetration rates of our.
Hogwash with feature and further enrich kago users' social experience.
Finally, some updates.
Our capital return.
In the second quarter, we bought back an additional Tao <unk> 1 million of our shares.
We will continue to actively utilize our share repurchase program to enhance the return to shareholders.
To conclude we will always strive to establish the stability and the finding the opportunity Amy uncertainty.
The current macro element does not change our demonstrated a chat career track record.
In capturing some of the largest growth opportunity in all our long term outlook on the industry and we really the current market the Bruins.
<unk>.
Opportunities to deepen our focus and plain for the future.
We remain committed to generating value for our users and the creators while improving efficiency and enhance the resilience.
We continue to invest in building our long term capabilities. We firmly believe is that July was our company will emerge from the current uncertainties either.
Mall whole close to end of product to our organization and be well positioned to capture long term growth opportunities and generate sustainable shareholder value.
This concludes my prepared remarks, I will now turn the call to our general manager all finance actually all for our own financial updates.
Okay.
Thanks, David and Hello, everyone now let me go through the details of our financial results.
Please note that the financial information on a non-GAAP financial information disclosed in our earnings press release.
<unk> paid a continuing operations basis.
Unless otherwise specifically stated.
And the issue of alive.
It was substantially completed our February 2021 with certain customer remained to be completed in the future.
They have shift consolidation.
Of our life business is February 2021.
Our total net revenues for the second quarter was USD.
Fiber.
Oh, Joy and $96 5 million.
Compared to USD 661, 7 million in the same period of 2021.
Primarily due to macroeconomic uncertainties and unfavorable exchange rates, which negatively affects opinion yogurt segment.
Cost of revenues for the second quarter decreased by 17, 6% year over year to USD 377 7 million.
Revenue sharing fees and content costs was USD 247 million in the second quarter compared with USD $289 1 million in the same period of 2021.
Primarily due to.
Optimization of revenue sharing costs.
Bandwidth costs increased to USD 20 million from USD 27 4 million.
That same period of 2021.
Primarily due to the company's improved efficacy and better.
Its usage.
Ethical.
As we continue to execute our sustainable growth strategy.
We're proactively implemented a salary salary costs in my view.
Mothers.
This effectively improved.
This year and a half.
The legs of our business.
<unk> maintained a healthy growth.
Gross and operating profitability.
Gross profit increased to USD 200 in 18 portfolio.
The second quarter.
Our gross margin improved to 36, 6% from 37% in the same period of 2021.
Our operating expenses for the second quarter decreased by 41, 1% to USD 100.
85 million from USD 314 media is the same.
There are plenty plenty right.
Among the operating expenses.
Sales and marketing expenses decreased to USD $98 4 million from USD 100, and top two media.
Due to a pension plan.
Spending on user acquisition.
General and administrative expenses decreased to USD $23 7 million for the second quarter of 2022 from USD $101 1 million. There is a corresponding period of 2021.
General and administrative expenses was higher in the second quarter of 'twenty.
'twenty one.
Due to a one off impairment loss arising from certain equity investments.
Our GAAP operating income for the second quarter was USD <unk>.
$8 7 million compared to operating loss of USD 100 in one part of anemia in the same period of 2021.
Operating income margin for the second quarter was six 5%.
Now to operating loss margin of 15, 3% in the same period of 2021.
Our non-GAAP operating income for the second quarter.
Excludes share based compensation expense amortization of intangible assets from business acquisitions.
S impairment of goodwill and investments okay.
Of subsidiary and business, what's the USD.
59.
Armenia in this quarter.
Total non-GAAP operating loss of USD shutting it in the same period of 2021.
Our non-GAAP operating income margin for the second quarter was 10%.
Compared to non-GAAP operating loss margin of 2%.
<unk> appeared.
GAAP net income from continuing operations attributable to controlling interest of Joy is a second quarter of 2022 was.
$18 7 million compared to net loss of USD 109, clustering media in the same period of 2021.
Okay.
Shreveport like first thing in the second quarter of 2022.
Comparable net loss margin of 16, 5% and the corresponding periods of 2021.
Yeah.
non-GAAP net income from continuing operations attributable to controlling interest of <unk>.
Joy is our second quarter was USD $51 5 million compared to non-GAAP net loss of USD <unk> 5 million in the same period of 2021.
non-GAAP net income margin was eight 6% is the second quarter of 2022.
Compared to non-GAAP net loss margin of zero to 1%.
The same period of 2021.
Notably <unk>.
non-GAAP net income expanded to $86 extreme EMEA is a second quarter res and non-GAAP net income.
True to send him.
2% from three 3% neither prior year periods.
Together with <unk>.
And profitability they haven't maintained a strong operating cash flow as well.
For the second quarter of 2022, they book net cash inflows from operating activities.
P 61 7 million.
We remain a healthy balanced at least a strong cast pretty cent of USD, two 9 billion as of June should hit.
2022.
Importantly, we have continued to enhance returns to shareholders through dividends and share repurchase.
Yeah.
Our previously announced a quarterly dividend applies approve the August and November .
Maybe it'll be distributing a dividend of USD <unk> <unk>.
Yes, it's all in there.
Second quarter of 2022.
To shareholders of record as of the.
Loss of business.
September 22.
Additionally, we have repurchased just a tough part of it.
One of our shares.
Our previously announced share repurchase programs.
As of June 2022, I mean, having total repurchased approximately USD 320 style important many of our share repurchase programs.
Given our current test pricing, we should be able to balance between kicking sufficient cash to invest in building a long term capabilities and.
Tim obviously, you owe to us.
We will continue to actively utilize share repurchase to create value for.
All of our shareholders and current market condition.
Going forward.
Supplements and they remain committed to the Liberty video to our users.
Great.
And really we'll continue to prioritize investment into the calculation of our compound protected interactive features and localized.
Yes.
We will continue to enhance our operational efficiency.
Secondly, execute our long term growth strategies.
Yes.
Our business outlook.
We expect our net revenues for the third quarter.
Two to really.
Turning to USD, $561 5 million and USD 519 sleep.
Median.
When you start considering supply base.
They currently have limited visibility surrounding the macroeconomic uncertainties.
Our business and the <unk>.
Markets in which we 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, we'd now like to open up the call to questions.
<unk>.
Thank you Sir.
Ladies and gentlemen, if you wish to ask a question. Please press star one on your telephone and wait for your name to be announced if you wish to cancel your request. Please press star two.
If you are on speakerphone, please pick up the handset to ask your question.
Ladies and gentlemen, a reminder, when asking a question. Please state your question in Chinese first then immediately repeat your question in English.
We will wait for a moment, while the question queue assembles.
Our first question comes from the line of Alex Poon from Morgan Stanley . Please go ahead.
And Glenn in terms of how close you can get hold of tier one.
So when you see all of them I mean, guys about vehicles that you do that.
Ah Okay, the Chi X.
He tells them what kind of job one here from Indiana.
Doug If you don't do that she said.
The other one to see Oh, yes.
She wants to shop on game a whole she goes up we can time that she said she can't.
Thanks management for taking my question.
My first question is how should we read.
Our third quarter revenue guidance, and how management sees all growth.
Trajectory than in this year's second half and next year and also for the user growth trend in the second half of next year. Thank you very much.
Yeah.
Uh huh.
Excellent here.
We'll talk a single Iot eager to resolve or sometimes homes go nuts, but he doesn't want.
The one thing I need to leave the useful lives of diesel would you say.
Each image your phone, Honduras, Tigard, ballgame, Tweel, Youll General mother, and daughter to book.
Tony you choose to go twill Magellan upon Shaw warm in the missile really talk to them they didn't even.
No there are no bleeding insulin Rogers and that won't change chenzhou loved to go to work now.
The soil and those are the dollar to the.
Hopefully draw, though some way out, but we'd end up at.
At this time going on when you listen to me, so maybe I'm, putting an exact stranger with multiple airports with walnuts, Oh, well may outside Bundy, Shandong, who matched losing their jobs.
And to the.
So you don't see agenda. So it just sounds like those are women and men.
Paul.
Okay.
Okay.
Right.
I will certainly talk about at times macro headwinds that we face.
Revenue class effects, mainly comes from lifting of Lockdown and travel restrictions, we are seeing a resurgence in travel demand during the quarter and Australia, we've seen a lot of our creators and head off to having increased activity and offline.
Traveling as well.
It's going to be enacted.
Secondly, with the rising inflation, we've seen on the cost of living and doing a higher pressure.
In fact, my question appreciation of U S dollar.
Jack I'm afraid.
In accordance with the appreciation and that is going to create.
The negative impact on the revenue front as well.
Yeah.
So it turns on Azure.
The other woman with Shanda.
I'm not sure you will all arrive angel.
<unk> alright.
Uh huh.
Children. So you don't want to.
We more than doubled digital we've got young Dano, Please fetor MRI that Hugo.
Womens whaler I know you guys talked about huge also halted their time to each other in the middle.
How do you call it timing of who she don't listen to Zynga.
Yeah.
Okay.
Yeah.
So all of that.
I guess, that's an environment.
So any change.
Adopt to ROI, driven marketing strategy by resi, it's all of the efficiency over the scale of our business.
Means that we're going to continue to integrate our products and cultivate our services and to rely more on our products and services Jean Ashish.
And in fact to quest.
Yes.
Yeah.
So it's warm alere.
I'll, let John Melo woman to the Trulia, yet told all of you.
Yeah.
Meanwhile, Youre going to was it sounds Jon.
John .
So in general people live in or you call it either need between needle not doing all the time this morning.
Well Ms. Susan on the Champions League.
Unfortunately, the timing can be done when dealing with Luna.
Sudan hold on to the JV could you sort of thing that you werent job.
People like you and Sheila yourself those are the folks I'll tell you who those Suzanne.
But I would just sit there until the I may also went up to the 70 I know well monthly cannot women don't go you'll know, it's usually voucher consol either English comes out.
Yeah.
So for our second question regarding that.
Credit trends.
All four of V. Go lives I think would be eight which upset that it has been continuously expand its outreach.
Rich I further diversifying its contents and innovate our product features.
That's why despite.
Sales and marketing expenses for Eagle life decline Q on Q I think are like steel.
Yeah.
Growing by 10, 6% year over year.
Yeah and it varies.
Effective user acquisition.
Strategy of People's life.
But as for our second year, we believe that Eagle life likely maintain its used airplanes momentum given its effective user acquisition.
Yeah.
Oh great.
Great.
Yeah.
Thank you for the question and we'll now take our next question.
Yeah.
Thank you.
Our next question comes from the line of Thomas Chong from Jefferies. Please go ahead.
So I was just like one each one oh what is human.
They are an issue that was out of that Oh, let's.
Don't see bauxite.
I mean are those all are in both easy that Utah.
Saba.
It's not by name.
While the English.
More money right.
So I'm sure that was a market that need that against what I pay your IOC.
And do you feel are clean.
They either tissue.
Okay woman in front of me.
Being in the market.
Typically it's been something you've talked about but they are talking about expense management or taking my questions. My question is about cost efficiency measures given that we have seen many internet companies.
Implementing the measures on cost control.
Get some kind of local management about.
The trend in operating expenses, such as sales and marketing.
G&A in the second half and how we should think about the margin trend going forward. Thank you.
Okay.
Hi, Tamara Gotcha, and intervention, what equity shop, Oh, Gee for what you said and I'm kind of a woman.
I see how you can shoot up vehicle segment in China.
Things just so cheap.
Non cat that changed somewhat.
What you see showing up I think the father knockouts that you continuously.
You want might change.
You can't cut so she's still thought that you could sort it they swung back Jose you want some cheetah, even shortly that tee ball.
No. It's only like kind of this article FICO segment at the Hall Archie talk.
<unk> you mentioned that you Sundar Sergio actually.
Somebody that Eagle bulk.
Paul <unk>, you, sometimes that youll, while she starts to put on that that you you know.
Of course, it was much too young Kwon.
She said, yes, youll switch it up.
Dmitry. This is so important.
Importantly, she works out well.
Yeah sure. It does show you that yourself pretty shallow out more money.
Thank you.
There are lots of them by function that you guys didn't shop.
I'm a lifetime take on your end market outlook.
Eco the mortgages jumped 19 Chaco.
Holiday shopping, yes or no.
So at some juncture as a woman that's just not going to pay off.
So to sum it up now, but you probably also have some good T cell they tend to shop correlating.
<unk> Yeah do.
Do you want me to pick up my marching in that category.
Our Union industries can shop chain without it yourself to fit opposition.
Thank you Thomas.
Alex I will answer your question.
So and you can see that in the second quarter I think you only sustainable great synergy and continued optimization of costs expenses.
We have managed to enhance operating efficiency and achieved better than expected profitability a bigger segment achieved a non-GAAP net margin of 17, 2%, while the group achieved a non-GAAP net margin.
Eight 6%.
If we take a closer look at FICO segment, our gross margin with employees.
Year over year and Q on Q in the second quarter and that is mainly teaching optimizations.
Content costs increased bandwidth utilization.
And also cost savings and the payment channel expenses.
And for our non-GAAP operating expenses, such as sales and marketing G&A and R&D. We also saw a cost savings happening across these expense items as well.
I would like to mention that the fact that we've been able to increase our efficiency. Despite short term saturation and revenues demonstrate that we have been forward looking in our strategy planning, while minimizing the potential negative impact from fixed costs.
Just for our second half of the year and also for 'twenty. Two we expect he goes back many gross margin to remain stable.
And also given that our localized sales and marketing activity with the more active in the second half of the year.
The amount of sales and marketing expenses should be slightly higher <unk> and astellas.
We expect to continue to achieve certain cost savings across other expense items given increased efficiency.
Still confident to achieve a higher non-GAAP profitability for a legal settlement in the full year 'twenty two.
As compared to a year 21, thank you.
Yeah.
Next question.
Yeah.
Yeah.
Thank you next.
Next question comes from the line of Daniel Chen from Jpmorgan. Please go ahead.
Uh huh.
Oh excuse me I, just want what I want to hear what they want to use.
Why do you think <unk>, Oh, yeah, sure, Matt the client franchise and I've seen it.
I work with us at the time that you guys seem to have good you are.
What a win T. A C said I'm trying to think myself.
Can management, maybe share your view on the live streaming and short video and that she you'd be.
Overseas market each of these secondhand market, what what are the major comeback competitive landscape.
What's the latest change in each of the market. Thank you.
Oh last with I'd have to go into your phone to change all that kind of tenants you Sir.
Brian This is Jim Jones Act or somebody like that shipyard julianna.
Could you kind of go off and do the <unk> in bulk or Google bulk of physical vocaltec, Pope sure they'll pay to come here because I've done it could be interesting when you go sundries interim Julia that you've sushi.
I hope to use these oh, well I don't know.
I don't know what you said.
Yeah.
It was soundly you call you did.
Sure.
So you can kind of physically you can either do it internally.
John .
That wasn't a single gene.
Okay got it alright.
Either you want who exactly what you mean.
Somebody like sometimes you can finish it off.
Yeah, I don't know maybe.
Maybe I know you're going to hear and see.
She's the bunch of Siegelbaum I'm glad that you see no sure sure no naive Philadelphia.
Tricia you talked about some of these countries.
This is juan.
One woman, which I'm not even sure.
That's a rather turbulent seizure yeah, yeah, yeah, yeah, Yeah 2014 until at least.
Bob.
Women with him may or so down to prove it out yourself.
Okay.
And this is David I wanted to ask a question on a weekend Firstly look Hopkins Shaw deal.
We believe that there has been increasing competition in the short video sector given that we have so many new products coming into the stock going crazy and meet larger companies like Google and Facebook. That's my last quick talk.
If we look at my tuning, especially social nights, Jamie we don't believe that the competition landscape has changed that much I would leave that for social live streaming this is a product.
Sector excuse me reliant on the community and a sticky connection among the users. If we look back and we look at YY life, which we used to operate in mainland China, even when the domestic.
The competitive landscape.
Priest, our competition in the PRC market, we see that YY light user scale and also revenue scale remain relatively stable and that is because our food such as social live streaming platforms, usually take that.
Five to 10 years to build up a social connection and community where everyone is actually deeply connected so it's much more sticky and therefore, having a relatively limited impact from additional competition.
The lead that we have a strong barrier in India, our global social live streaming sector.
Uh huh.
Thank you. The next question please.
Thank you.
Our next question comes from the line of Evan Zhang from China Renaissance. Please go ahead.
Thank you so much I'll talk many times.
Depending on a bunch. So can you guys just somebody has got some some quick remarks.
Wondering if you can elaborate a tragic one oh wait you'd always shocked how did it go so we have a buffer.
Since I know you come on so.
I would tell you are telling me he would call unique like a hawk over the banking quite a challenge okay cool update Oh sure.
Yeah. Thanks for taking my question, it's supposed to be calling it that people don't have any prepared remarks can management talk communities poaching.
I put on that how does it have oh Wow, you're talking you're engaged in my time I always want that content ecosystem and then secondarily can you give us an update how can a huckle opinions. Thank you.
Well, what I'd tell you, it's not just the huddle they like it.
No.
G.
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<unk> hundred food with a donkey that's not yet.
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Right.
Thank you for the question, David I want to ask question.
So as I talk about me go likelihood so now I will mention monthly about HOKA and Nike.
Huckabee launch is three D virtual reality, social interaction feature of last quarter and it introduced a variety of virtual three D C and eventual questions during the call significantly improving.
And engagement.
<unk> also completed the setup of the virtual costumes dose.
Yes, so that they can see shop and dress digital advertisers and this should be a meaningful capital.
To further increase huggers monetization efficiency.
And diversifying its revenue stream.
And so like he is still focusing on the conservation hops creators and facilitating the growth of interest based communities. So after the new community function is.
Launch in Europe , and U S. During the quarter, we have observed increased social interactivity on Nike.
We plan to make loop available in more regions and facilitate the growth of each that you poke immunity.
More efficient interest content matching we will also explore new monetization opportunities.
Feature a more community based social Commerce for example.
Okay.
Yeah.
Okay.
We go live with Zynga she needs you more color.
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With the closing of BARDA, neither on the boiler <unk> seven nano <unk>.
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What are you seeing boutique.
Yeah. So this is all those yet.
Okay.
And also some additional updates on our life. We've mentioned that the recent launch of Eagle life virtual lives and community feature has been launched in the previous quarter and we have received positive feedbacks from our users.
This has contributed to increased activity in live streaming sessions and also the content diversity and social activity.
Bar channel.
In the second half of the year, we plan to launch some new features.
To further improve our users' social interaction experience. Thank you.
So on that Steve.
Our call and we look forward to speaking with everyone next quarter.
Thank you that does conclude our conference for today. Thank you for your participation you may now disconnect your lines.
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Good morning, ladies and gentlemen, thank you for standing by and welcome to the Joy, Inc. Second quarter 2022 earnings call.
At this time all participants are in a listen only mode.
After the managements prepared remarks, there will be a question and answer session.
I would now like to hand, the conference over to your host James <unk>, The company's senior manager of Investor Relations. Please go ahead Jan.
Thank you operator.
Hello, everyone welcome to join US second quarter 2022 earnings Conference call.
Joining us today are Mr. David <unk>, Li 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 <unk> 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.
<unk>.
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 are in U S. Dollar.
I will now turn the call over to our chairman and CEO Mr. David <unk>. Please go ahead Sir.
Thank you.
Hello, everyone and welcome to our second quarter 2022 earnings call.
Let me start with an overview of our quarterly results.
Despite the global macroeconomic uncertainties and the seasonality impact of Ramadan holiday in the Middle East.
Achieve the 500.
$98 1 million in revenues include including.
500, and the <unk>.
$2 6 million of revenue from <unk>.
Approaching the higher end of our previous guidance.
We grew our non-GAAP net profit to 51 5 million as a group level. Realizing are all non-GAAP net margin of eight 6%.
Notably the <unk> segment expanded.
Its non-GAAP net profit to <unk>.
T $6 3 million and the improved its non-GAAP net margin to seven T point.
72%.
Our operating cash flow in crew continues to be strong.
Reaching $61 7 million for the quarter.
Sure.
The steady expansion of our cross trial profit profitability.
And if the current market condition, demonstrating either improve or improve the efficiency.
Yes.
The resilience of our business.
We are.
<unk> also increased the macro uncertainty.
Dean.
The inflation and the increase of the cost to all four leaving containing alluded to negatively impact that.
Consumer spending.
The lifting of lockdown and travel restrictions imposed.
During the pandemic contributed to.
Resurgence and travel demand during the summer season.
Further.
<unk> consumers time and.
Spending to offline activities.
The aggressive a predication.
Of the U S. Dollar was also a favorable factor as our price rose in local currency terms.
Those various highways habit and will affect the short term monetization efficiency for a wide verity of global companies include <unk>.
Sure.
Despite these macro economy economy challenges so good evening.
Probably <unk> of our global users this deal.
Sure.
Underserved.
For social Entertainment services.
Time increase the uncertainties users seeking mall emotional value from their products such as a sense of belonging.
And the meaningful connections with others right.
Why will respond to this.
The allied toe micro I haven't I'm into first and foremost by turning inward.
Many continue to integrate our products and cultivate our user community well Maxine.
Emotional valuable our services come for wine.
In recent quarters, we launched several major product features updates.
Including Big go lives.
What's your life and.
Community <unk> loop.
Interest based community feature and.
<unk> three the haggadah space those features so.
Prove the quality and the efficiency of our users and social experience.
Enabling them to better engage and.
Foster meaningful connections.
With those who have a similar interest together with our drivers and diverse and.
Inclusive of the community.
Community culture, we believe.
Those defaults will hamper our products deliver important and unique emotional value to our users.
In addition to Maxine this emotional value we continue to be fully.
Dedicated to creating value for our creators by providing increased per friendly video increase in truth and the monetization features and.
Cultivating user community that is built on.
I agree.
Equity and connections.
We have established a creative center centric.
Economy Yeah.
Core system that are in.
To enable a large number of creators to showcase their talents in front of a.
Global audience and at the.
Speeding time in joining from missing economy the tennis.
Over the past two years, we have invested are acclimated accurately to accumulate a accumulative total of our U S. Dollar 1 billion increase risk reward.
With the support of.
Our global operations team and the.
The implementation of Verity of activities Taylor.
Tailored to local users.
I really.
Knees.
Power, our creators to gain exposure, both locally and internationally and enables them to realize the new levels of personal and professional success going forward we remain.
Community.
Committed to delivering value to our users and creators.
We will continue to cultivate.
Divers.
Premium content.
We paid innovate to interactive features in.
Organiser Taylor tailored to local activities.
We expect that those thoughts.
Those efforts will further improve the user experience and.
Fundamentally facilitate the growth of our user community and the global business.
To mitigate risks against the current market.
Proactive the important employment and implemented.
Syria all of the matters to further improve our efficiency.
The resilience of our business.
As we continue to execute.
Sustainable growth strategy and emphasize our paradox organized.
Organic growth.
We will be more adaptive in the execution of our user acquisition strategy.
This means we will dynamically adjust our strategy based on our ROI and closely monitor shifts in marketing.
This is <unk>.
Oil products.
Steel last month loss, making such as.
Likely in Hangzhou, we will focus on the steady improvement.
I respect to monetization capabilities stick to.
Disciplined sales and marketing strategy.
And optimize the cost structure in order to steadily narrowed they are respectively.
The operation loss.
We will also continue to enhance product synergy.
Optimize our business first is to drive further.
Improvement of our operation expenses.
Group level.
As we are.
Maintained healthy growth trajectory in our profit and cash flow since the 20.
<unk> hundred one.
We're in a strong financial position that allows us to have greater flexibility and continue the investments in call area that would build our long term.
Capabilities.
We expect to emerge.
It's from the above.
Calibration.
More focus and more productive organization better positioned to capture long term growth opportunities.
Now, let me dive deeper into the progress we've made in each of our product line that is a star Wars Big go lives.
As a result of macroeconomic uncertainties and the.
The seasonality during two <unk>.
Yes.
Holiday in the Middle East.
The go lives the live streaming revenue and the number of paying user declined during the second quarter.
Yes single line, so user base and engagement level continue Canadian to grow thanks to our innovative feature of this and localize the activities in breast or in general tradition regions.
Aw traditions and.
User needs.
During the second quarter of <unk>.
Increased by 10, 6% year over year to 32.6, many north play users in southeast Asia.
Other emerging markets increased by 18, 6% well user in Europe increased by.
Eight 7% year over year.
To help our users in the middle East and.
Southeast Asia countries celebrate their.
Ramadan holiday <unk> live launch of a serious offer.
Vince.
The tailored to local.
Traditions.
These include the cooking Sanchez.
This shows and Sydney.
<unk> and <unk>.
In likely the local celebrates celebrities.
The influencers to demonstrate the unique cultural tradition of their regions.
Our new community feature which was launched in the last quarter continued to contribute to content diversification and the user engagement and improvements in the bar channel, Brian So everybody's views per user increased by <unk>.
41%.
14 114, 1%.
Volume also is video content increased by seven 3% sequentially.
<unk> also upgraded its virtual life feature to enable AR.
Tim There live streaming experience for users.
Driving both the number of users.
Cumulative time spin.
<unk> Virtualized session.
Substantially over the previous quarter.
Next.
Let's turn to <unk>.
During the second quarter for a similar reason to be go live like this last streaming revenue and the number of paying user decline.
As I mentioned earlier given the current micro Abdomens ended the fact that the salt video monetization is still at an early stage of development likely continue to upsize it.
Dennis proteins is sales and marketing strategy.
Further optimize its cost.
The structure and actively explore new opportunities for monetization.
We have made progress in executing those objectives and we successfully narrowed that likely is operating loss by <unk>.
85% year over year and during the.
During the first half of 'twenty into 'twenty two.
In mid June .
Likely launched a new feature called the move in Europe , and the U S loop is a.
Community feature that helps.
Perhaps the users too with similar interests connect with each other and we have so far received a positive feedback from our users for example, suddenly after Lu who is along the.
<unk>.
Community shared more than 6 million episodes of video content and over 50% of the user in the <unk>.
Community falling one another this aimed at is that loops.
<unk> has contributed to the clustering.
Of a high level of connection.
We also observed.
The improvement in user engagement and <unk>.
Sticky thing is especially in the region, where Luc so was introduced.
The average time spent per user increase sequentially.
Pinpoint 2% globally.
'twenty 2022 7% in this region.
During the second quarter in addition to launching.
Verity offer localize the campaigns.
<unk> partnered with our charity organization, the Middle East and the South Asia to launch a cross region donation campaign by law.
Logging into light.
Dissipating.
Around Ramadan.
Campaign user practically the energy points everyday leads through the later be converted to a certain.
Amounts to be made by like these are all local Cherokee organizations.
More than 200000 users participated in this campaign.
Okay.
Demand is hitting that as a user today seek to make a positive impact.
Our communities, while being entertained and engaged it we will continue to act to the us.
As for other opportunities to further empower our user to make positive.
Difference in their local.
Communities.
Yeah.
Next we can tend to handle during the second quarter Hognose live streaming revenue increased by seven 1% year over year and is number of paying users grew by 12, 8% over the same period.
We continue to optimize.
<unk> content recommendation.
<unk>.
User engagement improved.
I read is that.
The increase is the feature channel.
Penetration rates of.
One 8% sequentially.
During the quarter hardware focused operating is a newly launched the <unk> <unk> space feature.
Cargo introduced more localized demand.
Our customers and accessories, enabling users to design and that's really our Paris, according to their personal and their culture prefer in the states.
Additional interactivity item and Thats really virtual Sims will also introduce both of which were well received by <unk> user.
And demonstrated by the increase of cargo space next to their user retention rates by.
69.
14.9 sequentially.
Yeah.
In the coming quarter hog or plan to further update the users.
Experience by introducing more <unk> Santos and items, then to cater to local culture and the user needs.
We expect to continuously increase the user penetration rates of our.
Hogwash with feature and further in rates cargo users' social.
Appearance.
Finally, some odd days.
Our capital return.
In the second quarter, we bought back.
No.
<unk> 1 million of our shares.
We will continue to actively utilize our share repurchase program to enhance the return to shareholders.
To conclude we will.
Always strive to establish the stability and the.
Finding the opportunity even though uncertainty.
The current macro elements in that.
Now turn to our demonstrated a chat career track record.
In capturing some of the largest growth opportunity in all our long term outlook on the industry and we really the current market the Bruins food production.
As opportunities to deepen our focus.
The plane for the future.
We remain.
<unk> two <unk>.
Generating value for our users and the freezers, while improving efficiency I mean.
The resilience.
So we continue to invest in building our long term capabilities.
Firmly believes that July was our company will emerge from the current uncertainties.
More focused in our product organization and be well positioned to capture long term growth opportunities and generate sustainable shareholder value.
This concludes my prepared remarks, I will now turn the call to our general manager All finance Asheville for our financial updates.
Okay.
Thanks, David and Hello, everyone now let me go through the details of our financial results.
Please note that the financial information on a non-GAAP financial information disclosed in our earnings press release.
Presented a continuing operations basis.
Unless otherwise specifically stated.
Sure.
Alive.
It was substantially completed our February 2021 with certain customary made to us to be completed in the future.
We have shift consolidation.
But the life business is February 2021.
Our total net revenues for the second quarter was <unk>.
Yeah.
Five.
$596 5 million.
Compared to USD $661 7 million in the same period of 2021 <unk>.
I'm really due to macroeconomic uncertainties and unfavorable exchange rates.
Which negatively affect opinion yogurt segment.
Cost of revenues for the second quarter decreased by 17, 6% year over year to USD 377 7 million.
Revenue sharing fees and content cost was USD 247 million in the second quarter comparatively to USD $289 1 million in the same period of 2021.
Primarily due to optimum.
Okay.
Revenue sharing costs.
Bandwidth cost increased to USD 20 million from USD 27 from the same period of 2021.
Primarily due to the companys improved efficacy and better.
And to use it.
Ethical.
As we continue to execute our sustainable growth strategy.
Proactively implemented a salary a series of cost optimization measures.
This effectively improved.
This year and a half.
The length of our business.
And maintained a healthy growth.
Gross and operating profitability.
Gross profit increased to USD 218 point for me.
The second quarter.
Our gross margin improved to 36, 6% from 37% in the same period of 2021.
Our operating expenses for the second quarter decreased by 41, 1% to USD 100.
85 million from USD 314 media is a same period up until 'twenty one.
The amount of the operating expenses.
Sales and marketing expenses decreased to USD $98 4 million from USD 100, and top two media.
Due to a pension plan.
Spending on user acquisition.
General and administrative expenses decreased to USD $23 7 million for the second quarter of 2022 from USD $101 1 million. There is a corresponding period up until 'twenty one.
Our general and administrative expenses was higher.
Second quarter.
2021, primarily due to a one off impairment loss arising from certain equity investments.
Our GAAP operating income for the second quarter was USD <unk> $38 7 million compared to operating loss of USD 100 in one part of anemia in the same period of 2021.
Operating income margin for the second quarter was six 5% compared to operating loss margin of 15, 3% in the same period of 2021.
Our non-GAAP operating income for the second quarter.
It excludes share based compensation expense amortization of intangible assets from business acquisitions.
S impairment of goodwill and investments and gain on disposal of subsidiary and business, what's the USD.
59 parts of Armenia in this quarter.
Total non-GAAP operating loss of USD shifting media in the same period of 2021.
Our non-GAAP operating income margin for the second quarter was 10%.
Compared to a non-GAAP operating loss margin of 2% in the prior year appeared.
GAAP net income from continuing operations attributable to controlling interest of Joy is a second quarter of 2022 was $18 7 million compared to net loss of USD 109 clustering media.
Same period of 2021.
Net income margin was Shreveport at like for the second quarter of 2022.
Comparable net loss margin of 16, 5% is a corresponding period of 2021.
non-GAAP net income from continuing operations attributable to controlling interest of <unk>.
Joy is a second quarter with USD $51 5 million compared to no GAAP net loss of <unk>.
They're all part of <unk> 5 million in the same period of 2021.
non-GAAP net income margin was eight 6% is a second quarter of 2022.
Compared to non-GAAP net loss margin of zero to 1%.
That same period of 2021.
Notably.
Because non-GAAP net income expanded to $86 extreme EMEA is a second quarter non-GAAP net income margin improved to 17 two.
<unk>, 2% from three 3% in the prior year period.
Together with our improving profitability there.
Haven't maintained a strong operating cash flow bill.
For the second quarter of 2022, they book net cash inflows from operating activities.
P 61 7 million.
We remain a healthy balanced it with a strong cash producing of USD. All pointed two 9 billion as of June should hit.
2022.
Importantly, we have continued.
Returns to shareholders through dividends and share repurchase.
Yes.
Current estimates, our previously announced a quarterly dividend plus approved in August and November punting Pentair.
We will be distributing a dividend of <unk>.
They're all quantified.
For the second quarter of 2022.
To shareholders of record as of the close.
Close of business.
September 22.
Additionally, we have repurchased USD top partner of.
Atmosphere, and our previously announced share repurchase programs.
As of June 32022.
Having total repurchased approximately USD 325 important meeting of average share repurchase programs.
Given our current penetration, we should be able to balance between kicking sufficient cash to invest in building a long term capabilities and.
The only thing obviously of holders.
We will continue to effectively utilize the share repurchase.
Many of our shareholders and current market condition.
Going forward.
David supplements and they remain committed to delivering value to our users and our greenhouse.
And we will continue to prioritize investment into the calculation of our content production interactive features and localized activities.
We will continue to enhance our operational efficiency.
Hercules execute our long term growth strategies.
Our business outlook.
We expect our net revenues for the third quarter.
'twenty two to be between USD, $561 5 million and USD $593 5 million.
Is that considering supply base.
They currently have limited visibility surrounding the macroeconomic uncertainties.
Business.
Markets in which we 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 wed now like to open up the call to questions.
<unk>.
Thank you Sir.
Ladies and gentlemen, if you wish to ask a question. Please press star one on your telephone and wait for your name to be announced if you wish to cancel your request. Please press star two.
If you are on speakerphone, please pick up the handset to ask your question.
Ladies and gentlemen, a reminder, when asking a question. Please state your question in Chinese first then immediately repeat your question in English.
We will wait for a moment, while the question queue assembles.
Our first question comes from the line of Alex Poon from Morgan Stanley . Please go ahead.
Got it that's all it takes hold of tier one.
E on detail on when you see all of them I mean, guys about vehicles.
Da Vinci.
It tells them what kind of job one here Doug.
Doug If you don't do that she said.
The other one T C.
I'm glad you can see what's happened in our whole. She goes I think Alex you said that you can't.
Thanks management for taking my question.
My first question is how should we read.
Our third quarter revenue guidance, and how management sees our growth.
<unk> trajectory.
In this year's second half and next year and also for the user growth trend in the second half of next year. Thank you very much.
Oh, Hi, Susan.
<unk> here.
We'll talk to you.
Finally in the Eagle as a result, sometimes elements.
Well he doesn't want to go.
Neither of them really useful your diesel would you say.
And with Daiichi Geophone, Honduras Tiger Ballgame, Tweel Youll general month in order to book.
Tony you choose to go twill Magellan upon Shaw warm in the initial rule to talk somebody didn't change.
No there are no bleeding instrument and that won't change a lot because the two of them now.
The soil and those are the dollar to the.
So hopefully draw, though some way Ali we burned up the design going on when you listen to me I know soldier.
Well remember what that box with walnuts, Oh, well may also have been D, Sean Daugherty, who matched.
So I don't know until the.
The Mount Isa Shanda. So it just sounds like those are women and men.
Neither cheap.
Okay.
Right.
I will firstly talk about the current macro headwinds that we face.
Revenues class effects.
He comes from lifting of Lockdown and travel restrictions, we are seeing a resurgence in travel demand during the quarter and also we've seen a lot of our creators and head off to having increased activity and offline traveling as well.
That is going to be a negative impact on our event secondly, with rising inflation, we've seen the cost of living and putting a higher pressure.
And thirdly aggressive appreciation of U S. Dollar means that we would meet your check.
In accordance with the appreciation and that is going to create.
The negative impact on our revenue growth as well.
Yeah.
Sure well general.
The other woman which has.
<unk> alright leads to another.
This is on each auto <unk> alright.
<unk>.
Goldman So you don't want more we.
More to the digital we've got young no I don't know please feature on my Alright, Thats Hugo So womens whaler that you don't see any an adult equated to about <unk> <unk>, how do the time dealing with each other.
So how do you call a tiny little cool she don't listen to Zynga.
Okay.
Yeah.
So.
Thanks.
We are going to adopt.
Adopt to ROI, driven marketing strategy by resi, it's all of the efficiency over the scale of our business. It means that we're going to continue to integrate our products and cultivate our services and to rely more on our products and services Jean Ashish.
Ganic unaffected.
Yeah.
So it's warm and alere.
In College Outmetal woman.
It truly is a total of 18 as yet.
This is John John just one minute.
John .
So in general alignment or you call. It is unable to get in there or not doing.
The time this morning.
Well, Ms Suzanne <unk>, Paul Chawla, timely and be done with dealing with Luna.
Sudan hold on to the <unk>. So it doesn't mean that you werent job.
And she's already.
So those are the polka Australia for Susanne.
I may also now.
Thanks, Anthony I know well monthly cannot women undergo youll 90, it's usually about sure the consol either English comes out.
Okay.
So for our second question regarding that use our credit trends.
Paul for Eagle life, I think we'd be eight which upset that it has been continuously expand its product rich I saw there.
As ever to find its contents and innovate our product features.
That's why despite our sales and marketing expenses for Eagle life decline Q on Q, a <unk> deal.
With this I mean, you're growing by 10, 6% year over year.
Yeah, and it plays a D.
Effective user acquisition.
Strategy of People's life.
But as for our second year, we believe that Eagle life likely maintain its use airplanes momentum given its effective user acquisition.
Yeah.
Oh great.
Great.
Yeah.
Thank you for your question and we will now take.
Thank you our next question.
Yeah.
Thank you.
Our next question comes from the line of Thomas Chong from Jefferies. Please go ahead.
So I was just like one is from Jay sole with its human whatever issue quite a bit.
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But what I want to see.
So it all off in both DC that Utah.
Let me Sabo.
It's not by name.
While the English <unk>.
Right.
Uh huh.
Sales and marketing EBIT again.
<unk>.
They either tissue.
Okay.
Okay.
Typically if you thought about but they start with.
Thanks management for taking my questions. My question is about cost efficiency measures.
We have seen many internet companies.
Implementing the measures on cost control just wanted to get some kind of upper management about it.
The trend in operating expenses, such as ourselves and marketing.
G&A in the second half and how we should think about the margin trend going forward. Thank you.
Okay.
Hi, guys.
Gotcha and interventions, while equity Isa Oh.
Thank you for what you said and I'm kind of women 70 30 range.
How he cheetah FICO segment and a sufficient lot five things just the chita are noncash.
non-GAAP that seems to be somewhat Keith what is shown up I think I'll deal with it not get but you continue to need.
You want might change students could so she's don't come that you could sort of come back.
Sure.
Tom.
<unk> that you saw.
And what's wrong that I kind of wish I take or FICO segment at the hall or Quito.
Ctg's total you mentioned.
But she summed up to July .
I was wondering if you could go.
Paul.
So I'm glad that you're is it she starts to put something like that.
For your focus your smartphone.
She said yes.
This is Josh.
So switching to bottleneck works out well I don't know Susannah Street, shortly that T cell the T cell or much of it.
Thank you.
Female by function that you guys didn't shop.
I'm a lifetime.
Margin outlook.
<unk> jumped 19.
Thanks Shankar.
Call It our Shanghai banking importantly, also transactions, one, but that's just not going to pay off.
Total debt.
I'm going to send somebody to tell they tend to shop.
What did you do you want me to speak about our Xinjiang Kathy.
Our union industry can shop came with other geographies, obviously isn't that.
Thank you Thomas.
Alex I will answer your question.
So and you can see that in the second quarter.
Thanks to our sustainable growth strategy and continued optimization of cost expenses.
We have managed to enhance operating efficiency and achieved better than expected profitability.
<unk> segment achieved a non-GAAP net margin of 17, 2%, while the group achieved a non-GAAP net margin.
Eight 6%.
We take a closer look at FICO segment, our gross margin which increased.
Year over year and Q on Q in the second quarter and that is mainly teaching optimizations.
Content costs increased bandwidth utilization.
And also cost savings and the payment channel expenses.
And for our non-GAAP operating expenses, such as sales and marketing G&A.
R&D, we also saw a cost savings happening across these expense items as well.
I would like to mention that the fact that we've been able to increase our efficiency. Despite short term saturation and revenues demonstrate that we have been forward looking and how our strategy planning, while minimizing the potential negative impact from fixed costs.
Just for our second half of the year and also for <unk>.
Q, we expect he goes back many of its gross margin.
It remains stable.
And also given that our localized sales and marketing activity would be more active in the second half of a year.
The amount of sales and marketing expenses should be slightly higher.
Yes.
We expect to continue to achieve certain cost savings across other expense items given interest efficiency.
We're still confident to achieve a higher non-GAAP profitability for the segment in the full year 'twenty two.
As compared to a year 21, thank you.
Yeah.
Yeah.
Next question.
Yeah.
Yeah.
Thank you next.
Our next question comes from the line of Daniel Chen from Jpmorgan. Please go ahead.
Oh are quite high.
Cincinnati is somewhat O N T.
Why do you think <unk> Oh, yeah shouldn't that are quite.
Hi work with us at the time that you guys seem to have good you are.
What a win T. A C here I'm trying to think myself.
Can management, maybe share your view on the live streaming and short video into Chi.
In the overseas market.
Of these secondary market.
The major comeback competitive landscape.
And what's the latest change in each of the market. Thank you.
Oh, well I think I'd have to go into here well tuned to change all that kind of chance you Sir.
Try and <unk> those are the kingdom someday like entrepreneur Julianna.
Could you kind of go off into the <unk> in bulk or Google bulk of physical bulk will take Pope here. Please.
I mean would you look to go down it could be interesting when you go Sunday syndrome, Dr. Julian.
Sure Chi.
I hope to use as well.
Well I don't know.
Well I don't know.
The other issue.
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Yes.
You bet.
But we are doing.
So the people at Sangamo.
So again.
It is Jim.
Yeah.
I know you won't be more hiring somebody with you man or woman something like on a seemingly endless search for.
Commercial vehicle production, yet so I don't know.
D G.
The branch Siegelbaum I'm glad to see Youre sure Manny.
So that's what I meant.
Should you use on a Sunday.
Sunday, it's hard for you to figure out what it is.
One.
Manuel mainland China.
However, when a seizure yeah, yeah, yeah, yeah, yeah yeah.
Lisa.
Rob.
Women with him May or June .
So.
Yeah.
Hi, This is David I want to see your question on a weekend, Firstly look Hopkins Shaw deal.
We believe that there has been increasing competition in the short video sector given that we have so many new products coming in today's session Crazy and make larger companies like Google and Facebook, That's why I'll ask Vic talk.
If we look at live streaming, especially social lines Drew me, we don't believe that the competition landscape has changed that much I would leave that for social live streaming this is a product.
Sector.
Me reliant on the community and a sticky a connection among the users if we look back and we look at YY life, which we used to operate in mainland China.
When the domestic or the.
The competitive landscape are increased.
Competition in the PRC market, we see that YY nice user scale and also revenue scale remain relatively stable and that is because our food such as social live streaming platforms usually takes.
Five to 10 years to build up a social connection and community where everyone is actually deeply connected so it's much more sticky and therefore, having a relatively limited impact from additional competition.
The lead that we have a strong barrier in India, our global social live streaming sector.
Uh huh.
Thank you. The next question please.
Yeah.
Thank you. Our next question comes from the line of year when the <unk> from China Renaissance. Please go ahead.
Hey, good morning, I just wanted to.
So can you guys just somebody has got some some quick remarks.
Wondering if you're going to live with physical and Oh complete you'd always shocked how did it go upward.
No one should turn out so well.
I'll tell you tell him that he would call unique Oh and I can't go Haggadah banking quite a challenge.
Update on its future.
Taking my question, it's supposed to be calling it up because I have no prepared remarks can management talk communities poaching.
Yeah, that's right.
Could you hold on to it.
Sure.
You can go to my time I also want to come to your ecosystem and then secondarily can you give us an update how can a hardcore opinions. Thank you.
Yeah.
Well, what I would tell me it sounds like the huddle, who liked it.
<unk> <unk> Sandler <unk> space Jeremy.
<unk> says it will do so.
Joe who no singular <unk> double for the thank you Tanya.
Got that.
Like when I look at it.
Yeah.
So you.
She doesn't want you won't go to acquire the Keystone synergies.
It sounds good.
Yes, that's not yet when you look at it.
D G sync all the time.
So it became more sugar or do they play out.
No I don't know a long quiet like gentlemen, anytime in Eagle upon that because those are the two the Paypal So I assume you're still looking at about one.
So she doesn't know.
She is on Santa Luca.
That sounds great.
Sure Joe.
Where do you guys have dummies yet.
The <unk> <unk> on a P. P. So that'd be the.
So a few points here.
You don't do a search and those are the Zynga posted times will assume that they are being placed.
Places, where you used to go since you're doing songs related.
Okay.
Thank you for the question David I'll answer your question.
And so as I talk about vehicle likely with me. So now I will ask me about Hagen with Nike.
Hoggard launches three D space virtual reality, social interaction feature of last quarter and it introduced a variety of virtual three D scenes and eventual questions during the call significantly improving.
And engagement.
<unk> also completed the setup of the virtual costumes dose.
So that they can see shop and dress in digital advertising and this should be a meaningful capital work.
To further increase harvest monetization efficiency.
And diversifying its revenue stream.
And so like he is still focusing on the conservation hops creators and facilitating the growth of interest based communities. So after the new community function Luke.
The launch in Europe , and U S. During the quarter, we have observed increased social interactivity and Nike.
One to make loop available in more regions and facilitate the growth of each vertical community through more efficient interest content matching we will also explore new monetization opportunities under to feature a more.
Keep a social commerce for example.
Okay.
See I think the bigger alive with Zynga she needs ruble.
<unk> is a single number.
Yeah, you want me is that.
Frankly, it out to them yet.
Or clothing, apart I mean on the dwell in San Antonio <unk>, seven nano Mojave personalization of ARPA up you lose all of it.
The Mets Shar this is John .
What are you seeing boutique.
Yeah. So this resulted yet.
Okay.
And also some additional updates on the device we've mentioned that the recent launch of Eagle life virtual lives and community feature has been launched in the previous quarter and we have received positive feedback from our users.
But it has contributed to increased activity in live streaming sessions and also other content diversity and social activity.
By channel.
In the second half of the year, we plan to launch some new features.
To further improve our users' social interaction experience. Thank you.
So on that end.
On our call and we look forward to speaking with everyone next quarter.
Thank you that does.
<unk> our conference for today. Thank you for your participation you may now disconnect your lines.