JOYY - Q2 2024

Transcript

Operator (participant)

Ladies and gentlemen, thank you for standing by, and welcome to the JOYY Inc.'s second quarter 2024 earnings call. At this time, all participants are in a listen-only mode. After the management 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.

Jane Xie (Senior Manager of Investor Relations)

Thank you, operator. Hello, everyone. Welcome to JOYY's second quarter 2024 earnings conference call. Joining us today are Ms. Ting Li, Chairperson and CEO of JOYY, Mr. David Xueling Li, Co-founder and Director, and Mr. Alex Liu, the Vice President 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 webcasts of this conference call are available at ir.joyy.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 US dollar. I will now turn the call over to our Chairperson and CEO, Ms. Ting Li. Please go ahead, Ms. Li.

Ting Li (Chairperson and CEO)

Hello, everyone. I'm Ting Li. Welcome to our second quarter 2024 earnings call. This is my first time addressing you as JOYY's Chairperson and CEO. I'm truly excited to connect here and share ideas with you all. Today, we are pleased to be joined by our founder, David, who I would like to invite to say a few words to kick off our call. David, over to you.

David Xueling Li (Co-founder and Director)

Oh, thank you, Ting Li. Welcome, everyone. As we announced earlier this month, with the board's approval, I have officially resigned from my role as Chairman of the board and CEO as of August the third, passing the baton to Ting Li to oversee the company's daily management and operations. This carefully planned leadership transition marks an important milestone to JOY's development. It underscores our commitment to enhance our corporate governance and strengthen our organizational capabilities to foster sustainable long-term growth. Ting Li has been an integral part of our leadership team as the COO since 2016, and has played an instrumental role in driving our strategic transformations and navigating key growth phases. Her operational experience makes her the ideal person to lead YY into its next chapter.

I have complete confidence in Ting Li and our current management team, and I'm pleased to entrust the company's leadership to her capable hands. To ensure continuity and maintain our business momentum, I will remain actively involved as a member of our board. In this capacity, I look forward to offering strategic guidance and supporting JOYY as we prudently explore long-term opportunities. With that, I'd like to hand the call back to Ting Li.

Ting Li (Chairperson and CEO)

Okay. Thanks, David. I'm grateful for your support and your trust. I look forward to building on the strong foundations you have laid. Under David's leadership, we've established our global vision strategy, and our business has achieved remarkable growth on the worldwide scale. According to Data.ai, our flagship products are ranked among the top social apps by consumer spend globally, and importantly, our business continues to generate robust cash flow. Together, this lay a strong foundation for our future, which empowers us to strike a balance between on focusing on our core strategy. In the near term, we are exploring long-term growth prospects. We uphold our corporate mission of enriching life through technology. Moving forward, our strategic focus remains clear and consistent. First, we remain committed to executing on our global strategy.

We will advance continuous product innovation with a focus on optimizing user social interactions and content experience to enhance user satisfaction. We see significant growth potential in our global business, and we will leverage our strong product capabilities and user-centric approach to drive healthy expansion of our global user community. From day one, we have been dedicated to building an inclusive, diverse global community. Our platform transcends geographical boundaries, allowing users from different cultures to connect, interact, and form meaningful relationships. Today, what sets us apart is the truly global nature of our user community and the widespread cross-regional social connections across our platform. To fully leverage our platform's unique value, we are sharpening our ability to match our diverse global users with their preferred content and connections. Our engineering team constantly fine-tunes our recommendation algorithm to better understand our users and the content they engage with.

Our goal is to create more precise and effective connections between people and the content they love. While enhancing our recommendation algorithm is crucial, it's just one part of our approach. We are also focused on innovative features that directly impact how users interact on our platform and enhance their experience. Take Bigo Live's Real Match feature, for example. Launched last year, it creates a space for users to meet new people. After several rounds of optimization, Real Match DAU penetration rate has nearly doubled in the past six months, now exceeding 20%. This success has had a ripple effect, boosting Bigo Live user registration, payment conversion, and overall ROI. Enhancements such as Real Match strengthen our competitive edge, and optimizing our user experience will remain a core goal moving forward. Second, we are laser-focused on balancing growth with operational efficiency to drive steady expansion in product and group profitability.

Our global operations are complex ecosystem, encompassing user acquisition, bandwidth and payment infrastructure, KOL management, and monetization, and marketing initiatives. In the long term, we aim to optimize every link in this chain to comprehensively strengthen efficiencies and the capabilities of our global operations. Third, we will keep cultivating long-term initiatives that will further diversify our revenue and create sustainable growth. Our year of effort of advertising are bearing fruit, with advertising playing an increasingly meaningful role in driving the Bigo segment revenue recovery in 2024. However, we must acknowledge that the scale of our new monetization streams is currently still relatively small. We are taking a long-term view, and we will continue to nurture and develop them and maximize their potential. Finally, we will continue to advance shareholder returns. In the second quarter, we repurchased an additional $71.4 million worth of our shares.

We will continue to actively utilize share repurchase to reward our shareholders for their long-term support. Now, let's review our overall performance during the second quarter. In the second quarter, our group revenue was $565.1 million, a year-over-year increase of 3.3%. Group non-GAAP net profit came in at $74 million, up 10.2% quarter-over-quarter. We also continued to record positive operating cash flow at the group level, generating a healthy $71.1 million. Our core business segment, BIGO, recorded revenues of $507.2 million, a year-over-year increase of 7.7% sustaining a top-line recovery trend for the fourth consecutive quarter. Notably, BIGO's advertising revenue increased substantially year-over-year. BIGO's non-GAAP operating profit reached $69.4 million, up 10.1% sequentially.

Next, let's take a closer look at our products, starting with Bigo Live. In the second quarter, Bigo Live MAUs recovered by 1.6% quarter-over-quarter to 37.7 million. Our targeted strategy of relocating advertising budgets and operational resources to regions with high monetization potential paid off, particularly in developed countries. In these countries, Bigo Live saw year-over-year growth of 9.4% in MAUs, 20.3% in paying users, and 11% in revenue. While global macro uncertainties persist, we will prioritize high-quality paying user growth and ROI to propel Bigo Live's top-line recovery. In the second quarter, we launched a series of innovative marketing initiatives tailored to local customs and user preferences, which brought fresh, diverse content to the platform and injected new energy into our user community. A standout example was Bigo Live's partnership with EWC.

From June to July, Bigo Live broadcast all Free Fire, MLBB, and PUBG Mobile events, offering users an immersive gaming experience and unique opportunities to interact directly with professional eSport players. In June, Bigo Live also participated in the 13th VidCon, held in the United States. This event allowed us to showcase Bigo Live's vibrant creator ecosystem and cutting-edge live streaming features to top American content creators, laying the groundwork for Bigo Live to expand its reach and boost its performance in key markets. We further elevated Bigo Live's live streaming experience with a suite of upgrades, including more dynamic emoji integrations and seamless cross-room engagement features. This enhancement drove sequential increases of 4.2% in the number of streams and 6.5% in numbers of users going live. Finally, let's look at our other products.

As we previously discussed, our other products currently contribute modestly to revenue and profit. Our main objective for this product is to enhance monetization efficiency, maintain strict cost discipline, and achieve profitability at product level. Meanwhile, our operational strategy remains focused on the core market to these products as we develop their fundamental features and their unique value propositions. In the second quarter, Likee remained profitable. Sequential DAU growth in Europe and advertising inventory optimization contributed to a 34.7% year-over-year increase in Likee's advertising revenue. This quarter, we introduced significant upgrades to Likee's video toolkit by adding advanced AI-powered filters and effects. These enhancements have enabled the creation of higher quality videos, leading to more diverse content and driving a 1.3% sequential increase in average DAU time spent.

Likee launched a series of creator-centric events and interactive features, helping content creators deepen their connections with their core fan base. This strategic approach is yielding positive results with strengthened community ties and enhanced user retention. In June, Likee hosted its first fantasy music festival, Likee Fantasy Fest, where outstanding regional creators took the stage and interacted with fans. Held in Europe, the event provided local users with live experience centered around their love of animation, film, music, and gaming. This initiative underscores our commitment to involving Likee into a deeply engaging platform. Finally, let's look at Hago. In the second quarter, Hago sustained its positive operating cash flow. We continued to enhance Hago with new features, including live bullet screen, interactive games in voice rooms, and tools to quick summon family members into live sessions.

These upgrades delivered a positive impact on user engagement during this second quarter. Average time spent per user in Hago social channels increased sequentially to 103 minutes, accompanied by steady improvement in the product's next day retention rate. Hago also innovated on the monetization front, launching activities that feature customized virtual gifts, along with collection and ranking features. The campaign was a major hit, engaging more than 60% of total paying users. Looking ahead, we will adhere to our globalization strategy as we innovate and enrich our products, enhance user experience, and strengthen our unique value proposition. Operational excellence will remain at the core of our approach as we deliver sustainable growth and create long-term value for our global community and our shareholders.

Jane Xie (Senior Manager of Investor Relations)

Now, let's welcome the VP of Finance, Mr. Alex Liu, to provide a financial update.

Alex Liu (VP of Finance)

Thanks, Ms. Xie. Hello, everyone. Before I go into the details, we would like to remind you that despite the latest development in the sale of YY Live, to the date of this press release, we have not obtained control over YY Live, and therefore, have not consolidated the business. The financial results presented in our press release and this conference call primarily consisted of Bigo and all other segments, excluding YY Live. I will now provide a recap of some key financial highlights for the second quarter. Our total net revenues were $565.1 million in the second quarter, up by 3.3% year-over-year. Revenues from Bigo segment were $507.2 million, up by 7.7% year-over-year.

In particular, Bigo's non-live streaming revenues were $67.8 million, which was up substantially year-over-year, primarily due to their increase of advertising revenues. Geographically speaking, as we prioritized to allocate our operational resources towards developed countries, our revenues from developed countries was up by double digits year-over-year, outperforming all other regions. Cost of revenues for the quarter increased to $366.2 million, among which our revenue sharing fees and content costs increased to $263.9 million. Bigo's cost of revenues was $327.7 million, which was up year-over-year, mainly driven by increased traffic acquisition costs paid to third-party partners in relation to our advertising business. Gross profit was $198.9 million in the quarter, with a gross margin of 35.2%.

Bigo's gross profit was $179.4 million, with a gross margin of 35.4%. Bigo's gross margin was lower year-over-year due to change of revenue mix, with higher contribution of Bigo Audience Network advertising revenue. Our group's operating expenses for the quarter were $198.7 million, compared with $191.7 million in the same period of 2023. Among the operating expenses, R&D expenses decreased to $69.9 million from $75.5 million, primarily due to decreased salary and welfare and share-based compensation expenses. General and administrative expenses increased to $40.7 million from $29 million in the same period of 2023, primarily due to impairment losses of equity investments.

Bigo's total operating expenses for the quarter were $121.6 million, decreased from $125 million in the same period of 2023, primarily due to decreased issuance and marketing expenses. Our group's GAAP operating income for the quarter was $2.3 million. Our group's non-GAAP operating income for the quarter, which excludes SBC expenses, amortization of intangible assets from business acquisitions, gain on the consolidation and the disposal of subsidiaries, as well as impairment of goodwill and investments, was $13 million in this quarter, with a non-GAAP operating income margin of 5.3%. Bigo's GAAP operating income for the quarter was $58 million, and Bigo's non-GAAP operating income was $69.4 million, representing a non-GAAP operating income margin of 13.7%.

Our group's GAAP net income attributable to controlling interest of JOYY in the quarter was $52.1 million, compared to $155.1 million in the same period of 2023. GAAP net income margin was 9.2% in the second quarter of 2024, compared to 28.3% in the same period of 2023. Our GAAP net margin was higher last year due to realized gains from the disposal of certain equity investments of $77.7 million, and foreign currency exchange gains of $20.3 million. Bigo's GAAP net income in the quarter was $64.6 million, with a GAAP net margin of 12.7%. Non-GAAP net income attributable to controlling interest of JOYY in the quarter was $34 million, compared to $97.3 million in the same period of 2023.

The group's non-GAAP net income margin was 13.1% in the quarter, compared to 17.8% in the same period of 2023. Bigo's non-GAAP net income was $77.8 million, compared with $99.7 million in the same period of 2023. Bigo's non-GAAP net margin was 15.3% in the quarter, compared with 21.2% in the same period last year. Bigo's non-GAAP net margin was higher last year due to foreign currency exchange gains of $22 million. For the second quarter of 2024, we booked net cash inflows from operating activities of $71.1 million. We remain healthy benefiting with a strong cash position of $3.3 billion as of June 30th of 2024.

In the second quarter, we continued to enhance returns to shareholders, and we repurchased an additional approximately $71.4 million worth of our shares. Our board has also authorized to extend our existing share repurchase program for another 12-month period upon its original expiry date, and which we may repurchase up to 400 million of our shares till the end of November 2025. Turning now to our business outlook. As we are fully dedicated to strengthening the efficiency and sustainability of our global operations, we have taken some proactive actions to optimize our content costs, and we are gradually introducing some adjustments to Bigo's audio live streaming product to enhance risk control. We anticipate such adjustments might cause near-term fluctuation of Bigo's top line.

At group level, we expect our net revenues for the third quarter of 2024 to be between $555 million and $569 million. This forecast reflects our preliminary views on the market and operational conditions, which are subject to changes. Looking forward, we will remain dedicated to our strategic priorities, adhering to our globalization strategy, optimizing products, and innovating our operations to create value for our users and shareholders. We will continue to execute our ROI-oriented operational strategy in order to deliver a profitable, sustainable growth. That concludes our prepared remarks. Operator, we'd like to open up the call to questions.

Operator (participant)

Thank you. 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 a speakerphone, please pick up the handset to ask your question. Ladies and gentlemen, when asking a question, please state your question in Chinese first, then repeat your question in English for the convenience of everyone on the call. One moment, please, while we poll for questions. Your first question is from the line of Thomas Chong with Jefferies. Please go ahead.

Thomas Chong (Managing Director)

[Foreign language] Thanks, management, for taking my question. My first question is about the company strategy in the future. Should we expect there will be any changes after the recent management change? And my second question is about the BIGO outlook. Can management share about the revenue trend in the second half as well as the trend across the different geographies? Thank you.

Ting Li (Chairperson and CEO)

Uh, okay. [Foreign language]

Jane Xie (Senior Manager of Investor Relations)

Thank you, Thomas. This is Ting Li. I will answer your first question, and then Alex can answer your second question. For the first question, I think we go through this in the prepared remarks that our strategic priorities will remain quite consistent, and I will elaborate in my following part.

Ting Li (Chairperson and CEO)

[Foreign language]

Jane Xie (Senior Manager of Investor Relations)

First, we will remain committed to our globalization strategy.

Ting Li (Chairperson and CEO)

[Foreign language]

Jane Xie (Senior Manager of Investor Relations)

And second, specifically regarding to our product operations, we will continue to strengthen our unique value proposition as a truly global social platform. To take an example, Bigo Live is in itself a highly globalized product, and our users can actually watch contents in over 30 languages. Our users have actually demonstrated a content consumption platform where they enjoy cross-regional social interactions. For example, if you look at our users from U.S., U.K., or other developed countries, actually around 35%-50% of their virtual gifts go to creators from other regions. So going forward, the next phase of our operational optimization will be basing on our users' cross-regional social activities and their patterns to ensure an effective content cultivation and also a matching of their social network.

Ting Li (Chairperson and CEO)

[Foreign language]

Jane Xie (Senior Manager of Investor Relations)

And thirdly, given the current macro environment, we will continue to have higher demand over the sophistication of our localized operations, and we will demand a further improvement of our operating efficiency. Our goal is to achieve a steady profitability growth of our core businesses.

Ting Li (Chairperson and CEO)

[Foreign language]

[Foreign language] 这里需要秉承的是长期主义的信念来培育。但是与此同时，我们都会要求新业务逐年都在盈利模型上能够取得更多的一些改进，最终来实现集团可持续且多元化增长的目标。

Jane Xie (Senior Manager of Investor Relations)

And, and lastly, we will continue to explore new revenue streams and profit streams. Currently, we do have some development in our new businesses, but they are still relatively young and early, in an early stage of development. We will take a long-term view and continue to nurture them, while we will continuously push for improvements in their economics, and financial health every year. Our goal is to develop a sustainable and multi-tier growth engine for the group's sustainable long-term growth. Thank you. And Alex will answer the second question.

Alex Liu (VP of Finance)

Hi, Thomas.

[Foreign language] 谢谢你的第二个问题，我来回答一下。从我们二季度的表现来看，BIGO三款核心产品的直播收入其实都是同比保持了一个正增长。那么从驱动因素来看，主要还是以付费用户的增长为主，付费用户同比保持了高个位数的一个增长。那么分区域来看，发达国家大区不管是同比还是环比的增速，连续多个季度是优于其他大区的表现的。展望下半年的话，随着我们进入到运营活动的旺季，区域主播和用户的活跃度会有所提升，部分区域的直播变现有机会恢复环比的增长。比如目前在中东，我们已经看到了一些回暖的迹象。但与此同时，为了提升效率，构建可持续的业务生态，我们对BIGO Live部分区域的内容成本，还在持续进行优化，并在三季度开始对BIGO板块的非核心语音直播产品的玩法做了进一步的调整。那么我们预期这些调整可能会对短期的直播营收带来负面的影响。我们现在给到市场的Q3的guidance已经综合考虑了上述因素的一个影响。需要强调的是，当下我们所做的调整都是为了打磨产品更健康的盈利模型，构建可持续增长的业务生态。那么这些短期的扰动不会影响我们长期推动全球业务规模和盈利持续增长的信心。展望2024年全年的话，由于广告业务持续保持强劲的增长，我们预期BIGO板块全年仍然将实现个位数的营收的增长。谢谢。

Jane Xie (Senior Manager of Investor Relations)

This is Alex. I will take the second question. Based on our performance in the second quarter, the live streaming revenue from BIGO's three core global products has actually maintained a positive growth. And if we look behind the main driver, it's still the growth of paying users that is driving our revenue recovery, which has maintained a high single digit growth year-over-year, while our live streaming ARPU has continued to fluctuate. Looking at the performances among different regions, developed countries have consistently outperformed other regions, both in terms of sequential and year-over-year growth rates, in the past quarters.

While looking ahead to the second quarter, to the second half of the year, while we enter into a period of elevated operating activities, we expect the streamers and users to be more active, and their activities likely to increase. Therefore, some regions might be likely to return to positive revenue growth sequentially, and that's what we're seeing, already seeing in the Middle East. However, to improve efficiency and enhance the sustainability of our global business, we have taken some proactive actions to optimize Bigo Live's content cost, and also, we're gradually making some additional adjustments onto BIGO's non-core audio live streaming products, starting in Q3. We expect these adjustments mainly to short-term fluctuation of BIGO's live streaming revenue, which we have already taken those into account when we deliver the current revenue guidance for Q3.

But we'd like to emphasize that the adjustments that we are making today are aiming at refining a healthier profit model and building our sustainable business ecosystem. These short-term fluctuations will not affect our long-term commitment to continuously drive for a long-term growth of our revenue and profit of our global business. Lastly, for the full year of the year 2024, given that our advertising business has maintained such a strong growth momentum, we still expect the BIGO segment to achieve single digit revenue growth for the full year. Next question, please.

Operator (participant)

Thank you. Your next question comes from the line of Lei Zhang with Bank of America. Please go ahead.

Lei Zhang (Head of Product)

[Foreign language] 哦，Hi，管理层早上好，谢谢接受我的提问。我的问题主要是关于利润率的，然后可以请管理层能不能帮我们展望一下下半年，Bigo还有整个group的一个利润的趋势。谢谢。 Thanks, management, for taking my question. Just want to get more color on the margin trend for Bigo and the group in second half. Thank you.

Alex Liu (VP of Finance)

[Foreign language] 谢谢张磊。您的提问我来回答一下。首先回顾二季度，集团non-GAAP的净利润环比实现了10.2%的增长，其中Bigo板块的non-GAAP的经营利润率是环比增长了10.1%，主要是由于Bigo Live直播内容成本的优化，推动了Bigo板块的毛利环比进行了改善。那么运营费用方面呢，市场销售成本环比节约也是比较明显的，主要因为我们进一步强化了对ROI的一个要求，投放费用环比有所节约。那么展望下半年的话，是由于持续推动内容成本和投放策略的优化，我们预期海外产品Bigo Live的利润率将稳中有一定的上涨。但是与此同时呢，考虑到我们迄今为止对Bigo板块下非核心语音直播产品的玩法会进一步做出调整，对利润带来的负面影响，那么我们预期全年Bigo板块整体的non-GAAP的经营利润的绝对金额啊，对比去年可能会有一幅的下降。那么对于All others板块，全年预期non-GAAP的经营亏损的金额相比去年会有进一步的收窄。谢谢。

Jane Xie (Senior Manager of Investor Relations)

Thank you, Lei Zhang. This is Alex. I will answer your question. First, let's look at our profit details in the second quarter. The group's non-GAAP net profit achieved a 10.2% QoQ growth, and within that, BIGO segment non-GAAP operating profit was up by 10.1%, sequentially, mainly due to the optimization of Bigo Live content costs, which drove an improvement in Bigo's gross margin. On the operating expense side, BIGO's sales and marketing expenses were also down meaningfully QoQ, primarily due to our reduced spending on user acquisition due to our higher requirement on ROI.

Looking ahead to the second half of the year, as we continue to optimize our content cost and our user acquisition strategy, we expect Bigo Live's profit margins to remain stable or even deliver a slight increase. However, considering the accumulated negative impact of the adjustments that we made to BIGO's non-core audio live streaming product, we expect on our profits, we expect the absolute amount of BIGO's segment non-GAAP operating profit to modestly decline compared to last year. And for all other segments, we're expecting the amount of its total non-GAAP operating loss for the full year to also narrow slightly compared to last year. Next question, please.

Operator (participant)

Thank you. Your next question comes from the line of Derek Fei with Morgan Stanley. Please go ahead.

Derek Fei (Equity Research Associate)

[Foreign language] 谢谢管理层，我想问一下公司目前，股份回购的进度，然后以及未来对这个股东回报的展望。Thank you, management. My question would be, could you share with us the latest progress of your share repurchase program and your outlook for the capital return in the future? Thanks.

Ting Li (Chairperson and CEO)

[Foreign language] Thank you for your question. The company will continue to actively promote shareholder returns. In the second quarter, we have cumulatively invested $71.4 million, repurchased 2.3 million ADS shares. This accounts for approximately 3.9% of our Q1 total share capital. The board of directors has also just approved the remaining $400 million repurchase authorization, which will continue to be extended. So we will continue to actively advance the repurchase to reward the support of all shareholders.

Jane Xie (Senior Manager of Investor Relations)

Thank you. This is Ting Li. I will answer your question. Regarding our capital return, we remain committed to return value to our shareholders. In the second quarter, we have altogether repurchased an additional of 2.3 million of our ADS for a total consideration of $71.4 million, which represents 3.9% of our outstanding ADS as of the end of Q1. And the board has just authorized an extension of our unutilized share repurchase program, under which we may repurchase up to 400 million of our shares. We will remain active, executing our share repurchase program and continue to reward the long-standing support of our shareholders. Last question, please.

Operator (participant)

Thank you. Your last question is from the line of Brian Gong with Citi. Please go ahead.

Brian Gong (Internet and Media Research)

[Foreign language] 谢谢管理层接受我的提问。我有一个很快的问题，关于广告这边，刚才管理层提到，这个预计我们2024年广告业务持续快速增长，就是能否具体谈一下这个广告业务，二季度的一个具体的进展，以及我们该，怎么看接下来的一个趋势？谢谢。我很快自己翻译一下。Thanks management for taking my question, have a quick question on ads business. Could management comment on the latest trend and your source on outlook for our ads business? Thank you.

Ting Li (Chairperson and CEO)

[Foreign language] OK，谢谢你的问题，我是Ting Li，我来回答一下。第二个季度，整个Bigo的广告收入还是保持了高速的增长的。这里面Likee的广告收入同比增速达到了34.7%，广告联盟的收入环比增速也达到了12.8%。那么整个广告占Bigo板块的收入贡献的比例，目前已经提高到13.4%。

Jane Xie (Senior Manager of Investor Relations)

This is Ting Li, I will take your question. Looking at our advertising business performance in the second quarter, you can see that BIGO's advertising revenue has maintained a strong growth momentum. Specifically, Likee's advertising revenue increased by 34.7%, year-over-year, and BIGO's Audience Network revenue increased by 12.8% quarter-over-quarter.The contribution of our non-live streaming revenue, primarily advertising revenue, has now contributed to 13.4% to BIGO segment total revenue.

Ting Li (Chairperson and CEO)

[Foreign language] 那整个下半年呢，其实是传统的广告旺季，我们会预期整个的广告收入还会继续保持环比增长的这个趋势。那这里面其实比较值得分享的是，我们的广告业务其实是在广告联盟业务，其实是在我们内部整个流量的这个体系下培育出来，打造好了这个产品。那目前呢，其实还是处于一个打市场的阶段。虽然当前的毛利和经营利润率其实都是正的，但是还需要一些时间去积累这个规模，包括对我们挖掘的一些差异化的优势品类去进行这个突破。那整个公司还是会秉承长期主义精神，继续去打磨好产品，稳步推动我们的核心市场占有率的提升。

Jane Xie (Senior Manager of Investor Relations)

Looking ahead to this second half of the year, which is traditionally a peak season for advertising, we're expecting our advertising revenue to continue to grow on a sequential basis. However, it's worth noting that Bigo Audience Network, it's a new venture under development of our advertising business. It has grown quite substantially in the past few years, but still, it's in an early stage of development. And although it has already managed to achieve a positive gross margin and operating margin, it still takes time for us to accumulate scale to drive further profit growth.

We aim to continue to find our differentiated value proposition and continue to take a long-term view to explore and refine our operations and products, and steadily drive a further improvement of our market share over time. OK, so that was the last question, and thank you for joining our call. We look forward to speaking with everyone next quarter. Thank you!

Operator (participant)

Thank you. This conference is now concluded. Thank you for attending today's presentation. You may now disconnect your line.