Huanju Times announced its second quarter earnings report: net profit increased by 18.1% year-on-year

In the early morning of August 18, Huanju Times today released its financial results for the second quarter and full year of fiscal year 2016 ending June 30. The report shows that Huanju Times's net revenue in the second quarter was RMB 1.9808 billion (approximately US$298.0 million), an increase of 45.9% from RMB 1.3572 billion in the same period last year; net profit was RMB 343.3 million, an increase of 18.1% from RMB 290.7 million in the same period last year.

In the early morning of August 18, Beijing time, Huanju Times today released its second quarter and full-year financial results for the fiscal year 2016 ending June 30. The report shows that Huanju Times's net revenue in the second quarter was RMB 1.9808 billion (approximately US$298.0 million), an increase of 45.9% from RMB 1.3572 billion in the same period last year; net profit was RMB 343.3 million (approximately US$51.7 million), an increase of 18.1% from RMB 290.7 million in the same period last year.

According to data provided by the financial website MarketWatch, one Wall Street analyst expects that, excluding U.S. General Accounting Standards (GAAP) calculations, Huanju Times's earnings per share in the second quarter of fiscal 2016 will reach US$0.80. The financial report showed that Huanju Times's earnings per share for fiscal year 2016 were US$1.00, exceeding analysts 'expectations.

Main results for the second quarter:

Huanju Times's net revenue in the second quarter was RMB 1.9808 billion (approximately US$298.0 million), an increase of 45.9% from RMB 1.3572 billion in the same period last year;

Huanju Times's net profit in the second quarter was RMB 343.3 million (approximately US$51.7 million), an increase of 18.1% from RMB 290.7 million in the same period last year;

Not in accordance with U.S. General Accounting Standards (excluding equity incentive expenses), Huanju Times's net profit in the second quarter was RMB 384.8 million (approximately US$57.9 million), an increase of 27.3% from RMB 302.3 million in the same period last year.

Li Xueling, chairman of Huanju Times, said: "We are pleased to announce that the company's revenue and net profit both achieved strong growth during this quarter. The driving force for this growth was mainly due to the solid growth of 54.5% year-on-year in the number of paying users to 4.2 million people, as well as a strong year-on-year growth of 48.7%. More importantly, the number of monthly active users on the YY platform also continued to grow steadily, with a year-on-year increase of 16% to 141.9 million users. In addition, in June 2016, we renamed our online music and entertainment brand to YY Live as part of the company's strategy to leverage core live streaming technology to provide extensive support for the growing popularity of Mobile Live Video Broadcasting services on online music and entertainment platforms. By launching this new brand, our goal is to further leverage the YY brand that has established itself and build a deeper content ecosystem that includes the development of PUGC (professionally produced user-generated content). At the same time, we are very excited to announce the promotion of Chen Zhou as the new CEO and Dong Rongjie as CEO of Huya Live Broadcast Department. We firmly believe that their profound work experience, creative talents and sound leadership capabilities will help lead the era of joy and joy through the next stage of development. Overall, we still believe that we have the ability to maintain our lead over our competitors and further consolidate Huanju Times's position as the leading interactive live broadcast platform in the China market."

He Zhenyu, CFO of Huanju Times, said: "In the second quarter of fiscal year 2016, our revenue momentum continued, with total revenue increasing by 45.9% year-on-year to RMB 1.98 billion. The growth in both revenue and net profit reflects the power of our increasingly larger and more diverse Internet value-added services revenue stream. Our online game live broadcast business Huya continued to achieve strong growth, with revenue increasing by 67.7% year-on-year and the number of paying users also increasing by 111.6% year-on-year to 1.1 million. Our online music and entertainment business has recently been upgraded to YY Live, with revenue increasing by 50.3% year-on-year and paying users increasing by 51.4% year-on-year. At the same time, our leading online music and entertainment business for mobile devices continued to grow strongly, with revenue growing 96.7% year-on-year and paying users growing 88.3% year-on-year to 1.8 million. Looking forward, under the leadership of the new management team, we will continue to expand innovative content and services to meet the evolving needs of a large user community, driving revenue and net profit growth."

Financial Analysis:

Net Revenue:

Huanju Times's net revenue in the second quarter was RMB 1.9808 billion (approximately US$298.0 million), an increase of 45.9% from RMB 1.3572 billion in the same period last year. The increase in Huanju Times's net revenue in the second quarter was mainly due to the increase in revenue from Internet value-added services.

Juju Times's revenue from Internet value-added services in the second quarter (including revenue from online music and entertainment, online games, online dating, Huya Live Broadcast and Juju Times membership projects) was RMB 1.9330 billion (approximately US$290.9 million), an increase of 48.7% from RMB 1.300 billion in the same period last year. The growth in Internet value-added services revenue in Huanju Times in the second quarter mainly reflected the increase in the number of paying users. The number of paying users in Huanju Times increased by 54.5% year-on-year to 4.2 million in the second quarter.

Huanju Times's revenue from online music and entertainment business in the second quarter was RMB 1.0983 billion (approximately US$165.3 million), an increase of 50.3% from RMB 730.7 million in the same period last year. Huanju Times's growth in online music and entertainment business revenue in the second quarter mainly reflected the increase in the number of paying users. The number of paying users in Huanju Times's online music and entertainment business in the second quarter increased by 51.4% from the same period last year to 2.8 million. In addition, the number of mobile users in Huanju Times increased by 88.3% to 1.8 million in the second quarter from the same period last year.

Juju Times 'revenue from online dating business in the second quarter was RMB 271.1 million (approximately US$40.8 million), an increase of 72.3% from RMB 157.3 million in the same period last year. The growth in revenue from the online dating business in Huanju Times mainly reflects the increase in the number of paying users and the increase in average revenue per user. The number of paying users of Huanju Times's online dating business in the second quarter increased by 35.6% compared with the same period last year to 316,000; the average revenue per user increased by 27.1% compared with the same period last year to RMB 858.

Huanju Times's revenue from online games in the second quarter was 188.3 million yuan (approximately US$28.3 million), compared with 199.4 million yuan in the same period last year. The decline in online game revenue in Huanju Times in the second quarter was mainly due to a 29.2% year-on-year decrease in the number of paying users to 303,000, which reflected the continued weak performance of China's web game market, but was partially offset by a year-on-year increase in average online game revenue per user of 33.3%.

Juju Times 'revenue from other Internet value-added services in the second quarter (mainly including Tiger Tooth Live Broadcast, PK Show, membership program subscription fees and ME App) was RMB 375.3 million (approximately US$56.5 million), compared with RMB 212.6 million in the same period last year. An increase of 76.6%. Juju Times 'revenue from Huya Live Broadcast in the second quarter was RMB 143.1 million (approximately US$21.5 million), an increase of 67.7% from RMB 85.3 million in the same period last year. This increase was mainly due to the increase in the number of paying users compared with the same period last year. 111.6% to 1.1 million people.

Huanju Times's revenue from other businesses in the second quarter included revenue from online education platforms Global Vocational Education Online and online advertising on Duowan.com. Huanju Times's revenue from other businesses in the second quarter was 47.8 million yuan (approximately US$7.2 million), compared with 57.2 million yuan in the same period last year.

Cost of revenue and gross profit:

The cost of revenue in Huanju Times in the second quarter was RMB 1.2083 billion (approximately US$181.8 million), an increase of 45.0% from RMB 833.3 million in the same period last year. The increase in revenue costs in Huanju Times in the second quarter was mainly due to the increase in revenue sharing expenses and content costs. YY's revenue sharing expenses and content costs were RMB 893.3 million (approximately US$134.4 million) in the second quarter, compared with RMB 551.5 million in the same period last year. The increase in revenue sharing fees and content costs paid by YY to performers, channel owners, and content providers is mainly related to the increase in user engagement and spending levels, driven by promotional activities; and due to investment in the amount of innovative content provided to users in the Jubilee era. Broadband costs in Huanju Times in the second quarter were RMB 150.7 million (approximately US$22.7 million), up from RMB 132.2 million in the same period last year, mainly reflecting the continued expansion of the user base and improvement in video quality, but were partially offset by the company's improvements in efficiency and price terms.

Huanju Times's gross profit for the second quarter was RMB 772.4 million (approximately US$116.2 million), an increase of 47.4% from RMB 523.9 million in the same period last year. The gross profit margin of Huanju Times in the second quarter was 39.0%, up from 38.6% in the same period last year.

Operating profit:

Huanju Times's operating expenses in the second quarter were RMB 351.1 million (approximately US$52.8 million), an increase of 41.7% from RMB 247.8 million in the same period last year. The increase in operating expenses in Huanju Times in the second quarter was mainly due to the company's overall business expansion and the company's investment in providing users with richer and more diverse content.

Huanju Times's operating profit for the second quarter was RMB 443.9 million (approximately US$66.8 million), an increase of 44.2% from RMB 307.7 million in the same period last year. Huanju Times's operating profit margin in the second quarter was 22.4%, down from 22.7% in the same period last year.

Excluding U.S. General Accounting Standards (excluding equity award expenses), Huanju Times's operating profit for the second quarter was RMB 485.4 million (approximately US$73 million), an increase of 52.0% from RMB 319.3 million in the same period last year. Excluding U.S. GAAP (excluding equity award expenses), Huanju Times's operating profit margin in the second quarter was 24.5%, up from 23.5% in the same period last year.

Net profit:

Huanju Times's net profit for the second quarter was RMB 343.3 million (approximately US$51.7 million), an increase of 18.1% from RMB 290.7 million in the same period last year. Huanju Times's net profit margin in the second quarter was 17.3%, down from 21.4% in the same period last year. Excluding a one-time non-operating expense of RMB 23.5 million, Huanju Times's net profit for the second quarter was RMB 366.8 million (approximately US$55.2 million), an increase of 26.2% over the same period last year.

Excluding U.S. General Accounting Standards (excluding equity award expenses), Huanju Times's net profit for the second quarter was RMB 384.8 million (approximately US$57.9 million), an increase of 27.3% from RMB 302.3 million in the same period last year. Excluding U.S. GAAP (excluding equity award expenses), Huanju Times's net profit margin in the second quarter was 19.4%, down from 22.3% in the same period last year.

Earnings per share:

Diluted earnings per American depositary receipt in the second quarter of Huanju Times were RMB 5.97 (approximately US$0.90), an increase of 17.1% from the diluted earnings per American depositary receipt of RMB 5.10 in the same period last year.

Not in accordance with U.S. GAAP (not included in equity award expenses), Huanju Times 'diluted earnings per American Depositary Receipt in the second quarter were RMB 6.65 (approximately US$1.00), which was compared with the diluted earnings per American Depositary Receipt for the same period last year. RMB 5.29 increased by 25.7%.

Balance sheet and cash flow:

As of June 30, 2016, the total cash and cash equivalents held by Huanju Times was RMB 679.1 million (approximately US$102.2 million), and the total amount of short-term deposits and restricted short-term deposits was RMB 3.1347 billion (approximately US$471.7 million). Huanju Times's net cash from business operating activities in the second quarter was RMB 573.8 million (approximately US$86.3 million).

Total shares outstanding:

As of June 30, 2016, the total number of common shares outstanding at Huanju Times was 1.1019 billion shares, equivalent to the total number of American Depositary Receipts outstanding at 55.1 million shares.

Note: The exchange rate conversion ratio in this financial report is US$1 = RMB 6.6459.

Performance outlook:

Huanju Times expects net revenue for the third quarter of fiscal year 2016 to be RMB 2.00 billion to RMB 2.10 billion, a year-on-year increase of approximately 34% to 41%. This expectation reflects the company's current and preliminary views based on market and operating conditions, and may change in the future.

Recent development:

On June 22, 2016, Huanju Times announced that the company had upgraded its online music and entertainment brand to YY Live. Under this new brand, Huanju Times will expand its business into the pan-entertainment market and further focus on the increasingly popular live broadcast business. In terms of content, Happy Gathering Times will focus on the PUGC model because it is expected to become one of the company's most important content creation models. In addition, Huanju Times will also strengthen its own PUGC content by cooperating with entertainment industry partners. In addition, Juju Times also announced the release of "YY Live Broadcasting Box", a full-HD encoded live broadcast device.

Stock price changes:

On the same day, Huanju Times's share price rose US$0.50 in regular Nasdaq trading to close at US$49.08, an increase of 1.03%. In subsequent after-hours trading as of 16:39 EST (4:39 Beijing time on the 18th), Huanju Times's share price rose again by US$1.82 to US$50.90, an increase of 3.71%. In the past 52 weeks, the highest price in Happy Gathering Times was $65.53 and the lowest price was $31.07.

Editor: yvette