JOYY - Earnings Call - Q4 2024

Transcript

Operator (participant)

Ladies and gentlemen, thank you for standing by and welcome to JOYY's fourth quarter 2024 earnings call. At this time, all participants are in a listen-only mode. After management's prepared remarks, there will be a question-and-answer session. I would 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 fourth quarter 2024 earnings conference call. Joining us today are Ms. Ting Li, Chairperson and CEO of JOYY, 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 webcast 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'd like to remind you that we may make forward-looking statements, which are inherently subject to risk uncertainties that may cause actual results to differ from our current expectations. For detailed discussions of the risk uncertainties, please refer to our latest annual report on Form 20-F and other documents filed with the SEC. We will also discuss certain non-GAAP financial measures.

They're included as additional clarifying items to aid investors in further understanding the company's performance and the impact that these items and events had on the financial results. The non-GAAP financial measures provided above should not be considered as a substitute for or superior to the measures of financial performance prepared in accordance with GAAP. You may find a reconciliation of differences between GAAP and non-GAAP financial measures in our earnings release. Finally, please note that unless otherwise stated, all figures mentioned during this conference call are in US dollars. 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 fourth quarter 2024 earnings call. As we recently announced on February 25th, 2025, we successfully completed the sale of our live streaming business for Mainland China, WifiLive. I believe the full closing of this transaction marks the beginning of a new chapter for JOYY's corporate development. As a fourth step, we are excited to announce that, effective from March 31st, our Nasdaq ticker symbol will be changed from WIFI to JOYY. This aligns with our strategic vision and our globalization strategy entering into the new era. Over the past few years, JOYY's position as a global technology company has solidified thanks to our global growth strategy. We have focused our resources and attention on markets across the world, with an emphasis on developed countries that demonstrate higher monetization efficiency and ROI. This strategic approach has yielded strong results.

In 2024, our global market revenue, excluding Mainland China, accounted for 89.6% of our total revenue. Notably, developed countries saw a year-over-year revenue increase of 24.6%, boosting their share of the group's revenue to 53.9%. Moving forward, we will continue to depend on our penetration in key markets to build on this success. Improved global infrastructure, a diversified product portfolio, and localized operations will build our brand influence and reinforce our status as a global technology company. As we drive our development, operational efficiency will remain a key focus. We will pursue a balance between growth and efficiency, driving high-quality pipeline growth while maintaining profitability and positive cash flow. AI remains a key component of our strategy. The rapid advancement of AI has brought both transformative changes and new opportunities. With our accumulated proprietary data and in-house algorithm team, we are well positioned to capitalize on this new trend.

AI will empower our business by enhancing product development, optimizing data analysis, and improving our customer service. These advancements will directly improve both our operational efficiency and our users' experience, taking our global operations to new heights. As AI usage rapidly increases, we also recognize that people will seek more emotional interpersonal connections. Providing users with meaningful connections and they can truly value will be essential to long-term success for social media platforms in the AI age. This notion will inform our long-term strategic direction. Empowered by AI, we can build more comprehensive user profiles, which will ultimately improve content recommendation and matching among our users. We will continue to drive product optimization and operational improvement, leveraging AI in combination with the personal touch of talented creators on our platform to provide users with emotionally resonant connections and interactive experiences.

As we begin this important new chapter, we also want to reaffirm that as a leading global technology company, JOYY will hold itself to higher standards of responsibility towards our users and community. As a guardian of a global community of 263.1 million users, we remain committed to strictly adhere to all regulatory requirements, well-integrating social responsibility and sustainability into our global operations. We will continue to update our community guidelines and enhance our technological capabilities to create a safe platform for our users, while actively collaborating with industry partners to promote industry standards that support sustainable, responsible growth. Now, let's review our overall performance for the fourth quarter and the full year. In our fourth quarter, our group revenue reached $549.4 million, achieving a non-GAAP net profit of $96.1 million, up 57.1% quarter over quarter. Our core business segment, BIGO, achieved revenues of $480 million.

Bigo's non-GAAP operating profit reached $81 million, up 11.2% quarter over quarter. For the full year 2024, our group revenue was $2.24 billion. The Bigo segment achieved revenues of $1.99 billion, a year-over-year increase of 3.3%. Thanks to strong operational execution throughout 2024, we made progress across multiple core objectives. We constantly enhanced our localized operations worldwide, delivering steady growth and group profitability. For the full year 2024, the group achieved a non-GAAP operating profit of $136 million, a year-over-year increase of 4.2%, and a non-GAAP net profit of $298.5 million, a year-over-year increase of 2%. The Bigo segment full year operating profit reached $286.3 million, exceeding our previous expectations. Bigo's non-GAAP net profit reached $314.6 million, a year-over-year increase of 4.2%.

This profit growth was achieved despite significant adjustments to our audio live streaming products in non-core markets in 2024, which had a double-digit million negative impact on our bottom line. The upward trend in our operating profit in spite of these adjustments indicates that our core business profitability has improved substantially. Meanwhile, the group's non-live streaming revenue maintained high growth throughout the year. This primarily included BIGO's advertising and all other segments SaaS revenue. For the full year 2024, the group's non-live streaming revenue increased 55.9% year-over-year to $449.8 million, according to 20.1% of total group revenue, an increase of 7.4 percentage points compared to 2023. In 2025, we expect that the group's non-live streaming revenue will maintain double-digit growth, with its proportion of group revenue increasing in 10%. We expect this will provide momentum for the recovery of our revenue growth at the group level.

Meanwhile, we expect the economics of our non-live streaming business to be meaningfully improved given enhanced monetization and disciplined spending in 2025. As we set a stage for ongoing growth, shareholders' returns remain a high priority for management. In 2024, we repurchased 2.21 million ADS for a total of $309.2 million, representing 15.1% of our total outstanding shares as of the end of last year. As of December 31, 2024, our net cash position stood at $3.3 billion. We believe the current market valuation significantly undervalues our company, especially when considering our profitable live streaming business and rapidly growing non-live streaming business. We are happy to announce that our board has approved a quarterly cash dividend program for the following three years. The aggregate amount of the cash dividend is expected to be about $600 million, consisting of about $200 million per year.

Additionally, our board has approved an additional share repurchase program, under which we may repurchase up to $300 million of our shares until December 2027. This program replaces our previous share repurchase program, which would expire in November this year. We remain firmly committed to unlocking shareholder value through our consistent capital return initiative. Next, let me share more specific progress across our product lines. Let's begin with Bigo Live. In line with our goal of providing meaningful personal experiences to our users, we continued to focus on cultivating a safe, high-quality, and diverse content ecosystem on Bigo Live. In the fourth quarter, we updated Bigo Live's community guidelines and comprehensively enhanced its community-safety technological capabilities. We introduced our exclusive multimodal content modulation model, which was fine-tuned with our scenario-specific data, and leveraged third-party large models to further strengthen our content modulation capabilities.

On the product future front, we refined user verification processes and stratified monetization system to direct traffic towards high-quality, verified user content at the same time. We exercised stricter measurement of user-generated content to ensure our users would have safe, high-quality experiences. In addition, we formed partnerships with multiple industry players and worked with relevant authorities to jointly prevent and punish any potential malicious use of the platform. We remain committed to constantly improving our safety feature to ensure a secure experience for our users. On the content front, Bigo Live continued to deliver the level of quality users have come to expect. The annual Bigo Awards Gala was held at Marina Bay Sands in Singapore. Over 1,000 guests from around the world attended in person, and nearly 500,000 viewers tuned in via live stream.

The event honored over 200 outstanding content creators and families for their contributions to Bigo Live's vibrant user community and featured performances from certified global artists across various genres. The Bigo Awards Gala has become a culmination for the platform and has helped countless talented creators expand their influence and reach the global stage. In addition to the main global venue, Bigo Live also held regional galas in Dubai, Thailand, and elsewhere. In 2025, Bigo Live will expand its community initiatives through creator partnerships focused on diversity, philanthropy, education, and more. We remain dedicated to building value for the platform's creator base and helping our global creators grow. During the quarter, we utilized our proprietary AI model to analyze ultra-long user behavior sequences and refined our content recommendations on Bigo Live.

This improvement, together with our continued efforts to expand Bigo Live's high-quality content offering and optimize its live streaming room viewing filters, drove a 2.1% sequential increase in average viewing time per user during the fourth quarter, by strategically directing traffic to mid-tier hosts and optimizing live streaming tools such as beauty and body filters. Bigo Live achieved a 1.2% increase in host next-day retention and a 2.9% increase in average live streaming time per host, both quarter over quarter. Next, let's look at Lucky. Lucky remains focused on two core markets: the Middle East and Europe. In the fourth quarter, Lucky's DAUs in core European countries increased by 4.4% quarter over quarter. Driven by growth in paying users, Lucky's live streaming revenue grew 2.2% sequentially. In 2024, Likee recorded its second consecutive profitable year. We continued to elevate Lucky's content and community engagement in its core markets.

In January, Lucky partnered with a globally popular game, Genshin Impact, to deepen its penetration among Gen Z users. The campaign featured Genshin-themed short video and live streaming content with special prizes and a co-branded offline event in Europe. During the campaign, the initiative generated over 5.7 million viewers, and the offline event attracted 11,000 participants. Even programming several popular creators with millions of followings to join Lucky. Beyond these targeted operational activities, Lucky increased support for quality creators, driving a 13% quarter-over-quarter increase in viewing time spent on short videos. The proportion of content creators as a percentage of daily active users grew steadily compared to the third quarter, indicating healthy levels of engagement. Last quarter, we mentioned that we have redirected some of Lucky's operational resources, including personnel and traffic, to a new product to unlock our monetization potential in Lucky's core market.

We are pleased to report that the new product has launched smoothly and is currently generating small-scale revenue. We look forward to building the scale of this new product over the next few quarters, at which time we will share more updates. Finally, on Huggle, in the fourth quarter, driven by its blockbuster year-end operational event, Huggle's quarterly live streaming revenue achieved quarter-over-quarter growth. In the fourth quarter, Huggle's cash flow remained positive, achieving its goal of positive cash flow for the second consecutive year. Hago's user engagement further improved during the fourth quarter as well. Average time spent in channels increased by 8.6% quarter over quarter to 108.2 minutes. The product's next-day retention rate also continued to improve. In 2024, we made substantial progress in improving operational efficiency and diversifying our revenue stream.

Looking ahead, we remain deeply committed to driving diversified growth across our global operations and solidifying our position as a leading global technology company. Through AI-driven innovation, we are comprehensively enhancing our operational efficiency and cultivating meaningful experiences for our users. We will continue to prioritize platform safety and integrate social responsibility into our global operations. Based on our solid operational execution, we remain confident in driving sustainable growth in our global business and creating long-term value for our shareholders. Thank you. Thank you. Next, we will now turn the call over to Mr. Alex Liu, the Vice President of Finance, to provide our financial updates. Thanks, Ms. Li. Hello everyone. I will now provide a recap of some key financial highlights for the fourth quarter. Our total net revenues were $549.4 million in the fourth quarter, compared with $569.8 million in the same period last year.

Revenues from BIGO segment were $480 million. In particular, group's non-live streaming revenues were $127 million, up by 51.9% year-over-year, primarily due to the increase of BIGO's advertising revenues. Geographically speaking, as we prioritized to allocate our operational resources towards developed countries and the acquisition of premium users with greater monetization potential, our group revenues from developed countries and regions were up by 13.7% year-over-year, while revenues from Middle East sustained a sequential growth of 0.7%. Cost of revenues for the quarter decreased by 6.2% year-over-year to $345.7 million. BIGO's cost of revenues were $304.9 million, which was down by 1.3% year-over-year, driven by a $5.5 million decrease in payment handling costs. Our other cost of revenues were $40.8 million, down by 31.4% year-over-year, consistent with its revenue trend. Gross profit was $203.8 million in the quarter, with a gross margin of 37.1%.

Bigo's gross profit was $175 million, with a gross margin of 36.5%. Bigo's gross margin was lower year-over-year and quarter-over-quarter due to a shift in our revenue mix, which saw an increased contribution from our lower-margin Audience Network advertising revenues. Our group's operating expenses for the quarter were $633.5 million, compared with $199.4 million in the same period of 2023. Among the operating expenses, we recorded non-cash goodwill impairment, charged at $454.9 million. The impairment was primarily attributable to goodwill associated with our prior acquisitions, mainly driven by lower valuation amid current market conditions. Short-term marketing expenses decreased to $67 million from $92.3 million in the same period of 2023, primarily due to our reduced spending on user acquisition through advertising. General and administrative expenses increased to $44 million from $34.6 million in the same period of 2023, primarily due to an increase in expected credit loss of receivables.

Bigo's total operating expenses for the quarter were $105.7 million, decreased from $131.3 million in the same period of 2023, primarily due to a decrease in short-term marketing expenses. Our disciplined execution has driven enhanced operational efficiency at both the group and Bigo segment. Our group's non-cash operating income for the quarter was $46.4 million in this quarter, up by 66.2% from $27.9 million year-over-year. Bigo's non-cash operating income was $81 million, up by 21% from $67 million year-over-year. Non-cash net income attributable to controlling interest of JOYY in the quarter was $96.1 million, up by 49.7% from $64.2 million in the same period of 2023. The group's non-cash net income margin was 17.5% in the quarter, compared to 11.3% in the same period of 2023. Bigo's non-cash net income was $98.4 million, up by 55% from $63.5 million in the same period of 2023.

Bigo's non-GAAP net margin was 20.5% in the quarter, compared with 12.9% in the same period last year. For the fourth quarter of 2024, we booked net cash inflows from operating activities of $110.5 million. Our balance sheet remains healthy with a strong net cash position of $3.3 billion as of December 31 of 2024. Now, I would like to briefly walk through the full-year financial highlights. Our total net revenues for the full year were $2,237.8 million, compared to $2,267.9 million in 2023. Bigo's revenues for the full year were $1,988.3 million, up from $1,924.3 million in 2023. Our non-GAAP net income attributable to controlling interest and common shareholders of JOYY for the full year of 2024 was $298.5 million, up by 2% from $292.5 million in 2023. Non-GAAP net income margin for the full year of 2024 was 13.3%, up from 12.9% in 2023.

Notably, BIGO's non-cash net income expanded to $314.6 million in 2024, up by 4.2% from $302 million in 2023, with its non-cash net income margin slightly improved to 15.8%. Importantly, shareholder return continued to be an important component of our capital allocation strategy. In the full year of 2024, we have returned an aggregate amount of $309.2 million to our shareholders through share buyback, which altogether represents 103.6% of our non-cash net income. We remain confident in our company's long-term growth prospects and believe that our share price has been trading substantially below its intrinsic value. Accordingly, our Board of Directors approved quarterly dividend policy for the next three years, commencing immediately. As such, the total cash dividends amount expected to be paid will be approximately $600 million US dollars, and quarterly dividends will be set at a fixed amount of approximately $50 million.

It's 0.93% for ADS in each fiscal quarter. Additionally, our board has approved an additional share repurchase program, in which we may repurchase up to 300 million of our shares until December 2027. This program replaces our previous share repurchase program, which would expire in November this year. Going forward, we remain firmly committed to unlocking shareholder value through our capital return initiatives. Turning now to our business outlook, at the group level, we expect our net revenues for the first quarter of 2025 to be between $482 million and $490 million. Our guidance accounts for seasonality fluctuations and reflects our preliminary views on the current market, operational conditions, and business adjustment decisions. These are subject to changes. In closing, with the deal behind us, we are ready to turn to a new chapter for JOYY.

Looking forward, we will remain dedicated to our strategic priorities, building our influence as a global technology company, exploring diverse groups, and actively driving operational efficiency at all levels. We are well-positioned to deliver sustainable, profitable growth and create long-term value for our shareholders. That concludes our prepared remarks. Operator, we would now like to open up the call to questions. Thanks.

Operator (participant)

Thank you. 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're on a speakerphone, please pick up the handset to ask your question. 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. Your first question comes from Thomas Chong with Jefferies. Please go ahead.

Thomas Chong (Regional Head of Internet and Media)

好的，谢谢受我的提问。我这边的问题是，管理层能否分享一下2025年的用户以及营收的趋势？ Let me translate myself. My question is about the user and the revenue trend in 2025. Thanks. Okay，那我来回答这个问题。关于第四季度的表现，我还想补充几点。四季度我们可以看到，JOYY集团的非直播的收入同比环比都保持了高速的增长。在这个同时，直播收入的环比有所下滑，主要是有两个原因。第一个原因是，上个季度我们提到的基于合规的需求，我们主动在Q3末对BIGO板块的非核心语音直播产品的玩法做了主动的调整。四季度是玩法调整落地后第一个完整季度。第二点是，12月部分产品Bigo Live有从平台短暂下架，导致了Q4的收入有所波动。但是非常值得一提的是，尽管在遭受短暂下架这个预期外的事件，年终盛典活动的效果在我们看来仍然好于预期，使得我们整体的营收仍然大致在上个季度提供的收入指引预测内。这也体现了我们的核心用户群的粘性和业务的韧性。

Ting Li (Chairperson and CEO)

Thank you for your question. This is Ting Li. I will take your question. First of all, I'd like to add a few more colors regarding our performance in Q4. In Q4, the group's non-live streaming revenues continued to grow substantially, both year-over-year and quarter-over-quarter, while our live streaming revenue experienced a decline. The reason behind the decline was primarily due to two factors. First, we've mentioned this in our last quarter as well, that we made certain adjustments to interactive features of BIGO's non-core audio live streaming product in late Q3 to enhance compliance. Q4 is the first full quarter reflecting those adjustments. Secondly, Bigo Live experienced an unexpected temporary removal from platforms in Q4, and that has caused additional short-term fluctuation in its live streaming revenue.

However, despite the disruption of that temporary event, our annual gala, which we believe has delivered stronger than expected results, and that is why we're still able to deliver revenue within our previously given guidance. I think that it reflects the stickiness of our core paying user group and also the resilience of our global business. 关于2025年，我也想在这里再展望一下。由于2025年的农历新年和斋月都恰巧在Q1出现，所以我们预期在一季度会比往年有更加明显的季节性影响。再加上叠加了Bigo Live产品在1月份才恢复了双平台的上架，所以需要一段时间循序渐进地来恢复正常的投放和运营活动的节奏。这个是一定的滞后影响，但不影响我们业务其实本身的健康度。所以目前我们的Q1收入指引考量中，其实把上述的两个因素都已经加入进去了。回顾2024年，我们推进了对直播业务各区域的内容成本政策、投放政策，还有非核心市场语音直播玩法等一系列的调整，并且在短暂的下架事件的推动下，也让我们将本就在规划内的全球社区安全体系的区域间的拉齐和升级提前一步完成到位。这也是值得可喜的地方。这让我们的业务拥有了一个更加高效和健康的基础。 Looking ahead to the first quarter of 2025, we do expect a stronger than usual negative seasonality impact due to the coinciding Lunar New Year and Ramadan. With Bigo Live fully back on both platforms in January, we also expect Bigo Live to take certain time to resume its normal pace of user acquisition and operational events during the quarter. Therefore, there will be a lagging impact on its monetization, which we do not believe is going to affect the long-term sustainable growth of that product.

Our current revenue guidance has considered the potential impact from the above-mentioned factors. In 2024, we know that we have implemented a number of adjustments to our operations, including our optimization over content cost, optimization of user acquisition strategies, as well as the mentioned adjustment to non-core audio live streaming. The unexpected temporary incident drove us to accelerate the update of our previously planned global community guidelines and safety capabilities, enabling us to align and upgrade our community guideline and safety requirements across different global regions ahead of our schedule. We believe that this altogether has provided our business with a more efficient and healthier foundation to start for the year 2025. 按照我们对于BIGO板块来说，我们会继续把运营的资源集中到发达国家和优质付费用户的获取上。我们期待BIGO的付费用户和UP值都有机会在二季度开始逐步恢复环比增长。对于BIGO的非直播收入，我们预期将持续保持两位数的同比增长，贡献比例将进一步提升。不过，考虑到高基数的影响，我们预期非核心语音产品的调整仍然将给BIGO 2025前三个季度的收入增速带来同比的压力，但这是暂时的。对于OR的板块，我们预期板块的非直播收入仍然将保持两位数的同比增长，全年的板块收入将迎来全面复苏。关于用户规模，我们的全球MAU近几个季度有一些波动，同比主要是因为我们持续在优化产品的投放策略，将投放的预算和运营资源向核心发达国家及优质用户倾斜。环比看来，主要是因为产品短暂下架对投放获客的节奏带来的波动。我们预期随着用户结构的优化逐步到位，BIGO Live MAU将在下半年有机会开始迎来环比的复苏和增长. Looking ahead for the full year of 2025, for B2 segment, we will continue to concentrate our operational resources on developed countries and premium users with greater monetization potential.

We expect the paying users and our pool of Bigo will gradually return to sequential growth in Q2. Additionally, we anticipate that the non-live streaming revenue will continue to maintain its strong growth momentum, likely double-digit year-over-year. However, our adjustment to the non-core audio live streaming product might still exert certain negative impact on Bigo's overall top-line growth, especially when compared with the high bids during the first three quarters of 2024. For all other segments, we expect its non-live streaming revenue to continue to grow and continue to grow by double digits and drive the top-line recovery of the whole segment. Regarding our MAU outlook, we understood that Bigo Live experienced some fluctuation for its MAU over the past several quarters. The year-over-year decline was primarily due to our recurrent strategy of optimizing our advertising spend and operational resources towards developed countries and premium users.

Sequentially speaking, the QOQ decline was primarily due to the short-term disruption of new user acquisition during the temporary suspension period. However, we expect that with the optimization of Bigo Live's user base gradually taking effect, its MAU will likely return to sequential growth in the second half of the year. Next question, please.

Operator (participant)

Thank you. Your next question comes from Yuan Jiang with China Renaissance. Please go ahead.

Yuan Jiang (Principal)

好的，谢谢关于财经的问题。我想问一下咱们对于25年的一个分油，包括利润的掌握是怎么样的？谢谢。 So that's for taking my question. So my question is about our outlook on 2025 experience and our profitability trend. Thank you. 你好，谢谢你的提问。我是 Alex，我来回答一下。四季度我们稳步推进全球的运营的精细化，推动集团和两个业务板块持续的降本增效，收获了比较明显的成效。那么单独看 BIGO 板块的话，四季度的 non-GAAP 的毛利是 36.5%。对比三季度略有下滑，主要是因为四季度广告的旺季，广告平台收入占比是提升的，所以对整体的毛利率有所稀释。BIGO 板块经营利润率提升到了 16.9%，对比上个季度是提升了 2.2 个百分点。non-GAAP 的经营利润额环比是增长了 11.2%。这背后主要是由于产品短暂下架期间，其实广告的投放费用环比是明显下降的，从而带来了销售和 marketing 费用的一个节约。不过值得一提的是，即使不考虑这部分投放费用的节约，BIGO 板块的 non-GAAP 的经营利润额也是微幅好于三季度的，也是好于我们的预期的。那么单独看 OR 的板块的话，non-GAAP 的毛利率环比也是大幅改善，从三季度的 40% 提升到了 41.8%，环比是提升了 1.8 个百分点。这主要惠于变现的环比复苏。non-GAAP 的经营亏损额也是从下降了 8.9% 到 $34.6 million，主要是由于研发费用的绝对金额以及占收入的比例均明显下降。

Thank you for your question. This is Alex. In the fourth quarter, our discipline execution has driven operational efficiency enhancement at both the group and the BIGO segment. Looking specifically at the BIGO segment in Q4, the non-GAAP gross margin was 36.5%, which was down Q on Q due to shifts in our revenue mix, which saw an increased contribution from our lower margin Audience Network advertising revenue. The BIGO's operating margin increased to 16.9%, which is up 2.2 percentage points as compared to the last quarter, and its non-GAAP operating profit amount increased by 11.2% QOQ. The improvement was primarily due to a decrease in our sales and marketing expenses, particularly our user acquisition spending during the temporary suspension period. Excluding that impact, BIGO's non-GAAP OP was still up QOQ, which is better than our original expectation.

Looking at the OR segment, its non-GAAP gross margin also saw a substantial improvement during the quarter, rising from 40% in Q3 to 41.8% in Q4, which is up by 1.8 percentage points, and that was mainly benefiting from a QOQ acceleration in its monetization. The non-GAAP operating loss for the OR segment was narrowed by 8.9% compared to the previous quarter to $34.6 million, and that was mainly due to effective control over our operating expenses and a steady decline in R&D expenses, both in terms of absolute amount and also as a percentage of revenue. 转往25年一季度的话，由于业务进入了明显的淡季，我们预期Bigo的non-GAAP的经营利润额将有所回落，但是OR的板块的non-GAAP的经营亏损额则有望在一季度获得进一步的收窄。那么2025年全年的话，我们还会继续以RY为导向，持续推动Bigo板块各项成本和运营费用的优化。考虑到我们对Bigo板块下面非核心语音直播产品玩法做出的调整，对利润的影响，以及短暂下架期间一次性投放费用的节约导致的2020年利润高基数的影响，我们预期2025年Bigo板块的整体的non-GAAP的经营利润额将保持相对稳定，并有望实现增长。对于OR的板块在变现增长，运营费用获得良好控制，尤其是研发费用占收入的比例稳步下降的前提下，我们预期2025年板块的non-GAAP的经营亏损金额将进一步的收窄。总体来讲，我们认为2025年我们整体non-GAAP的经营利润额会在一个改善的趋势上. Looking ahead to the first quarter of 2025 for Bigo segment, due to the impact of seasonality, we expect a decline in its non-GAAP operating profit when compared to Q4.

For all other segments, we expect its non-GAAP operating loss to further narrow on a sequential basis during the quarter. For the full year of 2025, we'll continue to execute our ROI-oriented strategies, persistently optimizing our cost and operational expenses within the segment. Nonetheless, adjustments made to the non-core audio live streaming product in the segment may still have a negative impact on its profit, and the one-off user acquisition expense savings during the temporary suspension period in Q4 has made Bigo's non-GAAP OP for the full year of 2024 quite a high base. Considering those factors, we expect the overall non-GAAP OP in terms of absolute amount for the Bigo segment to remain roughly stable, with certain potential for growth for the full year of 2025.

In terms of all other segments, we expect with improving monetization and disciplined spending, our R&D expenses as a percentage of revenue will continue to decline, and we foresee a meaningful reduction in its non-GAAP operating loss in 2025 compared to the last year. Overall speaking, at group level, we expect the group's non-GAAP operating profit will continue to show an improving trend in the year 2025. Next question, please.

Operator (participant)

Thank you. Your next question comes from Brian Gong with Citi. Please go ahead.

Brian Gong (Analyst)

谢谢关于曾接受我的提问。这个我看到公司想问一下股东回报的一个情况。我看到公司刚刚宣布了新的股息和回购的计划，能不能请管理层分享一下新的股东回报计划的背后我们的一个想法？谢谢。 I will translate myself. Thanks, Management, for taking my question. A very quick question on shareholder return plan. We just announced the new plan, including dividend and the share repurchase program. Can Management elaborate a little bit more on our rationale behind this new shareholder return plan? Thank you. 好的，谢谢你的问题。我是 Alex，我来回答一下。回顾2024年，我们的股东回馈是非常积极的。2024年全年，我们累计投入的回购金额已经高达了$309 million，一共回购了9.21 million股的ADS，占我们去年年底总股本高达15.1%。那么回看2020年到2024年，累计投入了$1.684 billion用于股东回馈，这是一个非常大的数字，尤其对比我们当前的市值规模来看。展望未来，我们会继续把股东回馈作为战略重点之一。刚刚董事会宣布了新的股东回馈方案，未来三年内新增$600 million分红，$300 million回购，合计$900 million，占我们当前市值大概35%。这是整个行业内非常有竞争力的水平。我们希望通过清晰、持续、量化的股东回馈承诺，来让大家看到我们股东回馈的诚意和公司的信心。当然，公司也会结合业务发展和市场的情况，考虑其他的股东回馈机会。那么长期来看，股东价值的创造是需要双管齐下，既需要公司主营业务现金流的可持续增长，也需要兼顾稳定的股东回馈。我们对长期持续推动公司全球业务营收和经营利润的多元化增长，同时保持可持续、有竞争力的股东回馈是有信心的。谢谢。

Thank you, Brian, for your question. This is Alex.

In the year 2024, we continue to be very active in shareholder return. During the year, we bought back a total number of 9.21 million ADS for a total of $309 million, accounting for an impressive 15.1% of our total shares outstanding as of the end of last year. Between 2020 and 2024, we have in total returned $1.684 billion to our shareholders. This is a very sizable amount, especially when compared to our current market cap. Looking ahead, we will continue to consider shareholder returns as an important component of our capital allocation, and the Board of Directors has just approved an additional $600 million dividend policy and a $300 million buyback program for the following three years, totaling $900 million, and that represents approximately 35% of our current market cap, which we believe represents a relatively competitive level within the industry.

Through our well-communicated, consistent, quantified, and sustainable shareholder commitment, we would like to demonstrate our determination in persistent, sustainable shareholder returns and our confidence in the long-term prospects of the company. On top of that, we also, from time to time, consider other shareholder options subject to ongoing operational updates and also market conditions. In the long term, we need both growth in the company's core business and also just its stable shareholder return in order to create a sustainable value for our shareholders. We remain confident in our ability to continuously drive ongoing diversified growth, especially profit growth in our global operations, while maintaining a competitive and sustainable shareholder return. Thank you. Maybe one last question, please.

Operator (participant)

Thank you. Your next question comes from Rafael Chen with BOCI Research. Please go ahead.

Rafael Chen (Managing Director and Senior Analyst)

早上好，感谢管理层接受我的提问。我想问一下公司关于新业务，尤其是广告业务在未来的策略转换和想法。 I will translate myself. Thank you for taking my question. Could Management elaborate more on the strategic priority and the positioning for new initiatives? For example, our advertising business in the future, please. Okay, 谢谢你的提问，我来回答。在第四季度呢，BIGO的广告收入保持了高速的增长，整体的广告占BIGO板块的收入贡献比例现在已经提高了16.6%。那其中呢，广告平台的收入保持了同比的高速增长，新增的客户主要都来自于欧美发达国家。展望2025年，随着三方合作流量的扩大和新市场新客户的需求和拓展，我们预期广告平台业务还将保持比较强劲的两位数增长，经营利润额和利润率应该都会同比得到改善。同时在这里我也想再次声明一下新业务的资金使用，我们给各业务线的要求都是提高变现效率，同时持续优化成本结构，早日实现正向现金流和盈亏平衡。我们预期BIGO板块的广告平台和OR的板块的SAS业务在2025年的现金流层面都会有明显的改善。

Li Qin (JOYY Inc.)

Thank you. This is Li Qin. In the fourth quarter, BIGO's advertising revenue maintained robust growth, which significantly increased its contribution to the segment total revenue, now reaching 16.6%. Specifically, revenues from our advertising platform, Bigo Audience Network, continue to show a strong momentum, primarily driven by North America and European markets. Looking ahead to 2025, we expect Bigo Audience Network to continue its strong growth momentum, double-digit year over year, driven by a number of factors, including expansion of its network's DAU pool, expansion of advertiser base, and exploring into new verticals. We also expect its operating profit and OP margin trend to improve during the year as compared to 2024.

With regards to our cash usage for our new initiatives, we have said we'd like to clarify that we have set a consistent goal for each business unit, which is to enhance monetization efficiency, continuously optimizing their cost structure, and aiming a positive cash flow and break-even as soon as possible. We expect that both the Bigo Audience Network and our SaaS business under all other segments to show significant improvement in their operating cash flows in 2025. That was the last question, and thank you so much for joining our call. We look forward to speaking with everyone next quarter.

Operator (participant)

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