Executive Summary / Key Takeaways

• JOYY Inc. is strategically transforming into a global technology company, shifting from its traditional livestreaming reliance to a dual-growth engine model powered by its rapidly expanding AI-driven ad tech platform, BIGO Ads, and a stabilized core livestreaming business.
• The company's non-livestreaming revenue, primarily from BIGO Ads, surged 25.6% year-over-year in Q2 2025, now contributing 26.1% of total revenue, demonstrating its emergence as a significant growth driver.
• AI is a core differentiator, extensively applied across both livestreaming (e.g., real-time translation, AIGC for virtual items) and advertising (e.g., user profiling, targeting, generative ad creation, real-time bidding), enhancing user engagement, monetization, and advertiser ROI.
• JOYY maintains a robust financial position with $3.3 billion in net cash as of June 30, 2025, and a strong commitment to shareholder returns through a $600 million dividend program and a $300 million share repurchase program.
• While the core livestreaming business is stabilizing and expected to return to year-over-year growth in 2026, the long-term investment thesis hinges on the continued scaling and profitability of BIGO Ads in a competitive global ad market.

JOYY's Transformation and Dual Growth Engines

JOYY Inc., founded in 2005, has undergone a significant strategic evolution, culminating in its rebranding from YY Inc. to JOYY Inc. (NASDAQ:JOYY) on March 31, 2025. This change reflects a deliberate pivot towards a global technology company model, moving beyond its historical reliance on livestreaming to embrace a multi-faceted ecosystem. The successful sale of its Mainland China livestreaming business, YY Live, on February 25, 2025, marked a new chapter, allowing JOYY to concentrate resources on international markets and diversified growth engines.

This strategic shift is driven by a commitment to high-quality operations, sustainable growth, AI-driven innovation, and organizational vitality. The company's focus has increasingly gravitated towards developed countries, which contributed 53.9% of the group's revenue in 2024, representing a 24.6% year-over-year increase. This emphasis on higher monetization efficiency and ROI is reshaping JOYY's revenue mix and operational footprint.

Technological Edge: The AI Differentiator

At the heart of JOYY's transformation is its extensive application of artificial intelligence (AI), which serves as a critical technological differentiator across its platforms. In livestreaming, AI enhances user engagement through features like multilingual real-time voice recognition and translation, enabling users from diverse linguistic backgrounds to interact seamlessly. This capability strengthens cross-regional connections and has significantly driven cross-regional tipping, particularly in Europe and the Americas. Furthermore, JOYY leverages large language models with multimodal content understanding to create dynamic topic summaries and interactive comments, deepening the user-streamer connection. AIGC (AI-Generated Content) also plays a role in transforming the production of virtual items and images, allowing for personalized and localized content creation in a shorter timeframe.

For its burgeoning advertising business, BIGO Ads, AI powers the entire value chain. It deeply analyzes and dynamically models user intentions, interests, and behavioral patterns, enabling precise profiling of mid- to long-tail traffic segments. This significantly enhances targeting accuracy, especially in cold-start scenarios. From user profiling and targeting to generative ad creation, real-time bidding, and dynamic budget allocation, AI-driven automated decision-making continuously improves, leading to higher conversion rates, better third-party developer monetization, and the expansion of BIGO Ads across more verticals. JOYY's global network infrastructure and R&D capabilities, originally built for its social entertainment products, provide significant cost advantages for its ad tech platform as it scales. These AI-driven advancements are not merely incremental improvements; they are foundational to JOYY's competitive moat, directly contributing to enhanced monetization, improved advertiser ROI, and a stronger market position.

Competitive Landscape and Market Opportunity

JOYY operates in a dynamic and intensely competitive global social media and ad tech landscape. The ad tech market, estimated to be a "trillion dollar market," is experiencing major shifts, with advertisers increasingly demanding better returns and clearer measurement from their placements. Geopolitical tensions and anti-monopoly measures are also prompting advertisers to seek greater diversification in their placement channels.

JOYY's competitive positioning is underpinned by its unique profile, combining strong localized operations with extensive global reach. The company possesses exclusive access to its approximately 263 million global users, providing a proprietary data asset for user profiling and targeting. This, coupled with its established advertiser outreach and network infrastructure, gives BIGO Ads inherent advantages. While global giants like Meta and Google dominate a significant portion of digital ad spending, JOYY aims to differentiate itself through niche verticals, regional expertise, and its AI-driven personalization, particularly in emerging markets where mobile-first advertising is still nascent. The company's strategic focus on expanding BIGO Ads in North America, Japan, and Europe highlights its ambition to carve out a meaningful presence in these key regions.

Livestreaming: Stabilizing the Core

JOYY's core livestreaming business, encompassing platforms like BIGO LIVE, Likee, and Hago, has demonstrated resilience amidst strategic adjustments and market headwinds. In Q2 2025, livestreaming revenue reached $375 million, showing a 1.1% quarter-over-quarter (QoQ) growth, with BIGO livestreaming revenue stabilizing at $355 million. This marked the first sequential recovery for the segment in several quarters, indicating that proactive measures to optimize content costs and enhance operational efficiency are yielding results.

Operational refinements have been pivotal. The company's ROI-driven user acquisition approach led to a 2.3% QoQ increase in BIGO LIVE's user numbers and a 4.4% sequential improvement in 30-day ROI from new devices. User engagement has also been a focus, with the IM product's monthly active users (MAUs) increasing by 3 million and average daily user time spent rising 12.8% year-over-year. Initiatives like the Streamer Academy, which provides tiered training and enhanced tools, fueled a 1.6% QoQ increase in active streamers on BIGO LIVE. A revamped premium paying user benefit system drove a 13% QoQ increase in premium paying users, contributing to a 3.7% QoQ growth in BIGO's overall livestreaming paying users. Regionally, BIGO LIVE's revenue in Europe rose 6.5% QoQ, marking a significant rebound, and Southeast Asia also saw a 3.9% QoQ increase.

BIGO Ads: The Ascendant Growth Engine

The non-livestreaming segment, primarily driven by BIGO Ads, has emerged as JOYY's second major growth engine, showcasing robust and accelerated expansion. In Q2 2025, non-livestreaming revenue reached $132.4 million, representing a substantial 25.6% year-over-year (YoY) growth and contributing 26.1% to total revenues, up from 18.7% in the prior year period.

BIGO Ads alone generated $87 million in ad revenue, reflecting approximately 29% YoY growth and 9% QoQ growth. Revenues from its ad network recorded mid double-digit YoY growth.

BIGO Ads is rapidly building scale, leveraging JOYY's 263 million users across its social apps and significantly extending its reach by integrating developer traffic across major channels, including CTV. Developer SDK adoption has driven nearly 80% traffic growth for BIGO Ads compared to the second half of 2024. Geographically, BIGO Ads demonstrated strong performance, with North America delivering approximately 24.2% sequential growth in the first half of 2025, and Europe seeing a high single-digit percentage QoQ revenue growth in Q2 2025. The "All Other" segment's non-livestreaming revenues also grew 19% YoY to $45.2 million, with its gross margin substantially up by 9.5 percentage points YoY to 43.5% due to high-margin SaaS revenues. This strong momentum underscores BIGO Ads' strategic importance and its positive contribution to JOYY's bottom line.

Financial Resilience and Shareholder Value

JOYY maintains a strong financial foundation, characterized by robust liquidity and a clear commitment to shareholder returns. As of June 30, 2025, the company held a healthy $3.3 billion in net cash on its balance sheet, a testament to its financial resilience.

Operating cash flow reached $58 million in Q2 2025, providing ample resources for strategic investments and capital allocation.

The company has consistently prioritized returning value to shareholders. From January 1 through June 30, 2025, JOYY distributed $135 million to shareholders through dividends and share buybacks, including repurchasing $36.5 million worth of shares. The board has approved a quarterly cash dividend program for the next three years, totaling approximately $600 million, with an expected annual payout of $200 million. Additionally, an extra share repurchase program of up to $300 million has been approved, extending until December 2027. Management explicitly states that the current market valuation "significantly undervalues our company," reinforcing their commitment to active buybacks.

Outlook and Risks: Charting the Future

JOYY's forward-looking guidance reflects cautious optimism and a clear strategic roadmap. For the third quarter of 2025, the company expects net revenues to be between $525 million and $539 million. This guidance anticipates a continued sequential recovery in the livestreaming business and sustained double-digit year-over-year growth from ad tech, which is entering a peak season. Management is confident that the livestreaming business will regain momentum and return to a "steady year-over-year growth trajectory in 2026." This will be supported by localized campaigns, enhanced content, improved payment experiences, and incremental contributions from new audio products in the Middle East.

For the full year 2025, JOYY expects its consolidated non-GAAP operating profit to show an improving trend. The BIGO segment's non-GAAP operating profit is projected to remain stable with potential for growth, while the "All Other" segment is expected to see a meaningful reduction in non-GAAP operating losses due to improving monetization and disciplined spending. In the short term, JOYY plans to prudently expand headcount and marketing resources for its ad tech business while maintaining healthy profit margins. Mid-to-long term investments are earmarked for infrastructure upgrades, tech development, talent expansion, and marketing efforts, viewed as high-return capital allocation options once non-livestreaming businesses achieve scale.

However, the path forward is not without risks. The company faced temporary app removals and compliance-driven adjustments to non-core audio livestreaming products in late 2024, which caused short-term revenue fluctuations. While these adversities led to strengthened community safety and resilience, the impact of these adjustments on BIGO's overall top-line growth, particularly against a high comparative base from early 2024, remains a factor. The social media and ad tech industries are intensely competitive, with global giants vying for user attention and advertising revenue. JOYY's ability to sustain its ad tech momentum against dominant players like Meta (META) and Google (GOOGL), and to retain its core livestreaming users, will be critical. Furthermore, macroeconomic uncertainties and seasonality, such as the coinciding Lunar New Year and Ramadan, can impact performance.

Conclusion

JOYY Inc. is in the midst of a profound strategic transformation, successfully pivoting towards a dual-growth engine model that balances a stabilizing core livestreaming business with the rapid ascent of its AI-powered ad tech platform, BIGO Ads. The company's disciplined operational execution, particularly its ROI-driven user acquisition and content optimization, has stabilized livestreaming revenues and is setting the stage for renewed growth in 2026. Simultaneously, BIGO Ads is demonstrating impressive growth, leveraging JOYY's extensive user base, proprietary data, and AI-driven targeting capabilities to establish a distinct competitive advantage in the trillion-dollar global ad market.

With a robust net cash position and a strong commitment to shareholder returns, JOYY presents a compelling investment narrative. While competitive pressures and the inherent volatility of the digital advertising landscape pose ongoing challenges, the company's strategic focus on AI-driven innovation, localized operations in high-potential markets, and prudent capital allocation positions it for sustainable, profitable growth. The continued scaling and profitability of BIGO Ads, coupled with the resilience of its core social entertainment platforms, will be key determinants of JOYY's long-term value creation.