YY Inc
Mar 21, 2016

YY Reports Fourth Quarter and Full Year 2015 Unaudited Financial Results

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

Fourth Quarter 2015 Highlights

Full Year 2015 Highlights

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

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

Fourth Quarter 2015 Financial Results

NET REVENUES 

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

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

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

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

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

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

COST OF REVENUES AND GROSS PROFIT 

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

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

OPERATING INCOME

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

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

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

NET INCOME

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

NET INCOME PER ADS

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

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

BALANCE SHEET AND CASH FLOWS 

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

SHARES OUTSTANDING 

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

FULL YEAR 2015 FINANCIAL RESULTS

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

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

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

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

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

Recent Development

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

Conference Call Information

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

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

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

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

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

Exchange Rate

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

About YY Inc.

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

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Among other things, the business outlook and quotations from management in this announcement, as well as YY's strategic and operational plans, contain forward-looking statements. YY may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission ("SEC"), in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about YY's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: YY's goals and strategies; YY's future business development, results of operations and financial condition; the expected growth of the online communication social platform market in China; the expectation regarding the rate at which to gain registered user accounts, active users, especially paying users; YY's ability to monetize the user base; YY's ability to continue attracting advertisers and offering popular online games; fluctuations in general economic and business conditions in China and assumptions underlying or related to any of the foregoing, as well as uncertainties relating to the proposed "going-private" transaction. Further information regarding these and other risks is included in YY's filings with the SEC. All information provided in this press release and in the attachments is as of the date of this press release, and YY does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

Use of Non-GAAP Financial Measures

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

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

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

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

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

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

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

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


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


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


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


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


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

 

Investor Relations Contact

YY Inc.
Yuffie Fu
Tel: +86 (20) 2916-2000
Email:IR@YY.com

ICR, Inc. 
Charles Eveslage
Tel: +1 (646) 915-1611
Email:IR@YY.com