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What happened
Actions of JOYE (NASDAQ: YY) were down today after the Chinese social media company reported its fourth quarter results last night.
As of 2:44 p.m. EDT, the stock was down 11.3%.
Image source: Getty Images.
So what
On the surface, it was a solid quarter for JOYY, who changed their name from YY in December. The company said its revenue jumped 77.5% to $ 579.9 million as it expanded its international presence and stepped up its monetization efforts. This includes strong growth from Bigo, the video streaming service it acquired in 2019, as Bigo Live’s revenue grew by 100%. In addition, Likee’s revenue jumped 407% and Hago’s 69%.
Despite strong revenue growth, average mobile monthly active users (MAUs) fell 7.1% to 393.7 million, due to the Indian government’s decision to block Chinese-owned apps, although JOYY has saw an increase in MAUs outside of India.
In the end, JOYY reported another big loss as the company continues to spend aggressively in areas such as sales and marketing. It also reported an operating loss of $ 85.5 million, or a margin of 14.7%, which was an improvement over an operating loss margin of 40.5% in the quarter of l last year because she was reducing her loss of Bigo. Per share, the company reported an adjusted loss per share of $ 0.29.
Commenting on Bigo’s growth outside of China, CEO David Xueling Li said, “Such progress illustrates not only our ability to capture the potential of the overseas market, but also our strong execution of growth strategies over the past few years. . “
Now what
For the current quarter, management expects revenue growth of 72.5% to 76.9% to $ 590 million to $ 605 million, although these revenues exclude Huya and YY Live, these companies having been sold to Tencent and Baidu, respectively.
The fourth quarter shows that JOYY continues to generate strong revenue growth and reduce its operating loss. However, Chinese stocks have come under close scrutiny on regulatory matters, and JOYY itself was accused of being a fraud in November by short seller Muddy Waters. After a brief decline, JOYY stock continued to rise, indicating overall confidence in the company.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.
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