Ladies and gentlemen, thank you for standing by, and welcome to the JOYY Inc.'s Fourth Quarter and Full Year 2021 Earnings Call. At this time, all participants are in a listen-only mode. After the management’s prepared remarks, there will be a question-and-answer session. I'd now like to hand the conference over to your host today, Jane Xie, the company's Senior Manager of Investor Relations. Please go ahead, Jane.

Thank you, operator. Hello, everyone. Welcome to JOYY's fourth quarter and full year 2021 earnings conference call. Joining us today are Mr. David Xueling Li, Chairman and CEO of JOYY; Ms. Ting Li, our COO; and Mr. [Alex Leo], the General Manager of Finance. For today's call, management will first provide a review of the quarter and then we will conduct a Q&A session. The financial results and webcast of this conference call are available at ir.joy.com. A replay of this call will also be available on our website in a few hours. Before we continue, I'll refer you to our safe harbor statement in our earnings press release, which apply to this call as well as we will make forward-looking statements. Finally, please note that unless otherwise stated, all figures mentioned during this conference call are in U.S. dollars. I will now turn the call over to our Chairman and CEO, Mr. David Xueling Li. Please go ahead, sir.

Hello, everyone. Welcome to our fourth quarter 2021 earnings call. Let me start the call with an overview of our fourth quarter results. We grew our total revenues by 16.8% year-over-year to $663.7 million. Specifically, BIGO's revenue increased by 30.2% year-over-year to $576.1 million. Meanwhile, we further improved our non-GAAP profitability at the group level when exclude YY Live as we earned a non-GAAP net profit for $98.3 million and improved our non-GAAP net margin to 40.8%. BIGO's non-GAAP net profit expand to $103.5 million, while its non-GAAP net margin improved to 18% from 8.7% in the previous quarter. As a result, for the full year of 2021, we generated $2.62 billion in total revenue, an increase of 36.5% from 2020. Notably, we grew BIGO's full year 2021 revenues by 34.1% to $2.32 billion at the group level. Our global business reached another major milestone as we attended full year non-GAAP profitability for the first time when exclude YY Live having booked $108.9 million in non-GAAP net profit with a 4.2% non-GAAP net margin. This was mainly attributed to BIGO's strong financial performance as it turned profitable for the full year for the first time by generating $182 million in non-GAAP net profit with a corresponding non-GAAP net margin of 7.8%. Looking back, 2021 as a year marked by growth, strategic adaptation and breakthroughs. On the growth front, in 2021, we continued to expand our revenue driven by our enhanced monetization capabilities across multiple social entertainment products. Consequently, for the full year of 2021, BIGO LIVE's revenue grew by 31.3%, Likee's revenue grew by 97.8% and HAGO's revenue grew by 54.6%, all contributing to the 36.5% top line growth at the group level. On the strategic adaptation front, we proactively implemented some strategic elements in early 2021 because we value…

Thanks, David. Hello, everyone. As JOYY's Finance General Manager, I will talk about the financial results. Since a majority of our revenues and expenses are now denominated in USD starting from January 1, 2021, we have changed our reporting currency from renminbi to U.S. dollar to better illustrate our operational results. Please note that the financial information and non-GAAP financial information disclosed in our earnings press release is presented on a continuing operations basis, unless otherwise specifically stated. As the [sale] of YY LIVE was substantially completed on February 8, 2021, with certain customer matters to be completed in the near future, the historical financial results of YY LIVE are reflected in the company's consolidated financial statements as discontinued operations, accordingly, starting from the fourth quarter of 2020. During the fourth quarter of 2021, despite the recent volatility in the macro environment and increased uncertainty due to COVID-19 and some depreciation of certain currencies against the U.S. dollar that partially offset our growth momentum, our business growth remains resilient. Our total revenues for the fourth quarter increased by 16.8% year-over-year to USD 663.7 million, from USD 568.2 million in the same period of 2020, primarily attributable to the enhanced monetization capabilities across multiple products, including BIGO LIVE, Likee and HAGO. In particular, our live streaming revenues for the fourth quarter increased by 15% year-over-year to USD 620.9 million, and other revenues in the fourth quarter increased by 50.3% to USD 42.8 million. Cost of revenues for the fourth quarter increased by 9.6% year-over-year to USD 440.2 million. Revenue sharing fees and content costs increased to USD 297.3 million in the fourth quarter from USD 254.2 million in the same period of 2020, which was in line, based the increase in live streaming revenues. Bandwidth costs decreased to USD 20.6 million…

[Operator Instructions]. Our first question comes from Alex Poon at Morgan Stanley.

Thanks management for taking my question. My first question is related to our revenue growth outlook in 2022, which of how are the major countries' performance doing and what's the outlook for 2022? And my second question is regarding our margins. Margin in the last few quarters have been on an uptrend. And from here onwards, any cost savings we can continue to do? And for the YY core segment, when can we see a break-even point? Thank you very much.

Thank you, Alex, for the question. As the world enters the post-pandemic area, the macroenvironment that we encounter has become of increased uncertainty and volatility. On the one hand, you see that with multiple countries gradually lifting lockdown bans, there has been negative impact on users' online social entertainment activity. And on the other hand, the resurgence of COVID-19 in certain areas both increased uncertainty on the potential economic growth, and together with the ongoing high inflation pressure across multiple regions, we do see weakened consumer confidence and capacity, which have negative impact on users' paying behavior. Despite the above complex macroenvironment, we have achieved a 36.5% revenue growth for the year 2021, which indicates that our diversified globalization strategy, which focused on various numbers of different regions across the world; and our diversified growth engines, empowered by multiple social entertainment products, are effective, enabling our global businesses to have greater resilience. So, looking forward to '22, we will continue to execute the above-mentioned strategy. We expect to have a resilient and steady top-line growth, driven by multiple key regions, including Europe, North America, Middle East, East Pacific, and Southeast Asia; and also by monetization growth across multiple products, including Bigo Live, Likee, Hago, and other products. But we like to remind you that the current outlook for our first quarter 2022 do reflect some fluctuation related to seasonality of our business. So, we expect our business growth to accelerate gradually in the second half of '22. So, in terms of the latest growth trends for the key regions, we do see promising trends in Europe, East Pacific, including countries like Japan, South Korea, Australia, New Zealand, and also the Southeast Asia region, to be good in Q4. And in 2022, we expect our business to continue to be diversified among the above-mentioned regions. Thank you.

Thank you. And this is [Alex Leo]. I will take your second question. As David just mentioned, we proved the profitability of our global business by achieving a 7.8% non-GAAP net profit margin for BIGO segment for the full year for the -- and also a 4.2% non-GAAP net profit margin for the whole group in 2021. So, this means that we have officially entered into a sustainable growth stage. In 2022, we want to balance growth and profit. And this means that on the one hand, we will seize the opportunity, continue to invest and explore the global markets, and continue to increase the influence and market share of our products. And on the other hand, we expect to remain profitable and steadily improve the profitability level of our business. So, specifically for BIGO segment, on top of the non-GAAP net margin that we achieved in the year of '21, we expect to continue to steadily improve BIGO's non-GAAP profitability for the full year in the year '22. And this is based on the assumption that Bigo Live continues to maintain a relatively stable level of operating profitability, while the losses of other product lines such as Likee are continuing to narrow. In terms of the cost and expense margins, with the increased monetization across multiple products, and the improvement of enhanced operational efficiencies, we believe that cost savings could happen across various expense items. And for the other segment, we have successfully narrowed its full year non-GAAP loss by 35% in the year '21. In '22, as the monetization of Hago and also other products continue to pick up, we expect that the non-GAAP net losses of this segment to be further narrowed in the year of '22. Thank you. Next question.

Our next question comes from Thomas Chong at Jefferies. Please go ahead.

Thanks management for taking my questions. My first question is about the competitive landscape in overseas market. How should we envision the changes in this year and how should we think about the seasonality? And my second question is about the YY Live transaction. Can management share about the progress, as well as any contingency plan or any strategies that can be shared? Thank you.

Thank you, Thomas. Regarding your first question on the competitive landscape, I've shared my views multiple times in our previous earnings calls as well. So, I've just mentioned that our global business turned profitable in the year '21, and we have officially entered into a sustainable growth stage. So, this means that under the current complex -- increasingly complex macroenvironment, this makes our business more resilient and allow us to gain additional competitive advantages on top of our already existing extensive global business presence and also our proven global and localized operational capacity. So, turning losses into profits means that we have more space and time to think and plan our business from a longer-term development perspective. As we have said before, there is still a lot of potential for the global social entertainment market. We believe that with the support of our abundant cash flow and also with our healthy growth model, we will be better positioned to seize market opportunity and further increase the market share and influence of our multiple products. And regarding our business seasonality, we have to admit that the outbreak and resurgence of the pandemic has actually disrupted the normal pattern from time to time. And according to our limited observation of our business trends in the past, the first half of the year is usually a lower season, and business growth usually accelerate in the second half of the year. The current outlook for our first quarter 2022 reflects such seasonality fluctuation, and we expect our business growth to accelarate gradually in the second half of '22. And regarding your second question about the sale of YY Live, the deal is still ongoing, and if there's any update, further information will be disclosed when as required by applicable law. Thank you. Next question.

Our next question comes from Yiwen Zhang at China Renaissance. Please go ahead.

Thanks management for taking my question. So I have a couple of questions. Firstly, regarding Likee. So what's our plan for marketing acceleration pace this year? And additionally, what's our expectation for the Likee monetization loss controlling and also user trend? Secondly, what is your mobile live streaming monetization target for this year? Thank you.

Regarding your first question about Likee, as I just mentioned in the prepared remarks, in the year '21, we took some proactive changes to Likee's -- to adjust Likee's marketing strategy and focus on the identification and cultivation of content creators. As a result, although Likee's MAU did suffer some fluctuation, after several quarters of executing the marketing adjustments, Likee has also achieved several key results. In the past year, we see that Likee's livestreaming revenue has increased by nearly 100%, and its operating loss for the full year was significantly narrowed by 67% compared to the year of 2020, meaning that the product's overall growth model has become much more healthier. So, for 2022, we believe that Likee will continue to invest more resources into identifying and nurturing the content creators. We believe that a vibrant content community and the lively interaction between the creators and the fans are fundamental to sustaining Likee's monetization growth and also reversing Likee's user downward trend in the future. And in terms of monetization, Likee will continue to increase the penetration rate of livestreaming and improve its monetization efficiency in the year '22, so expect Likee to maintain steady monetization growth in the year '22. In terms of its marketing strategy, we'll continue to observe the performance of Likee in multiple core markets, including the Middle East and Southeast Asia, and its user engagement level retention, and also content progress in these markets. At the right time, we might consider increasing investment on its user acquisition, but we do expect Likee's operating loss for the full year to be further narrowed and will have the opportunity to be one step closer toward self-sustainability. And regarding your second question about our non-livestreaming revenue, our non-livestreaming revenue in year '21 increased by 39% throughout the year, accounting for 5.4% of our total revenue, mainly from our advertising and also membership subscription revenues. So, monetization contribution from the recently launched features such as Likee's SuperLike and SuperFollow are still very, very small, as their primary focus at this stage is still to provide additional support to our KOL pool. So, as mentioned before, in the previous quarters, the growth of our advertising revenue is closely related to our content pool and also the scale of our user base. So, at this stage, we will prioritize the cultivation of our content pool and our product experience, and also steadily advancing our diversified monetization plan. I believe that the newly introduced -- the latest product features have demonstrated our efforts toward this direction. Thank you.

And that's the end of our Q&A.

Thank you, management. I'll hand it back to you for closing comments.

So, thank you for joining our call. We look forward to speaking with everyone next quarter. Thanks.