JOYY's Non-Livestreaming Surge: A Turnaround Play With Dividend Power

JOYY Inc. (NASDAQ: YY) stands at a pivotal crossroads: its core livestreaming business faces headwinds, yet its pivot to non-livestreaming revenue—bolstered by AI-driven advertising and razor-sharp cost discipline—is rewriting its growth narrative. For investors, the question is clear: Can this transition sustain profitability, stabilize cash flows, and justify a long position in a volatile market? The data suggests a resounding yes.

The Diversification Payoff: Non-Livestreaming Revenue Surges 25.3% YoY

JOYY's Q1 2025 results underscore a seismic shift in its revenue mix. Non-livestreaming revenue leapt to $123.0 million, now accounting for 24.9% of total revenue—up from just 18% a year ago. This segment's growth, driven by BIGO Ads—its AI-powered programmatic advertising platform—is nothing short of transformative. By leveraging first-party data and machine learning for targeting, BIGO Ads grew 27% YoY, attracting both global advertisers and publishers.

This diversification isn't just about revenue—it's about margins. Non-GAAP operating income surged 24.9% YoY to $31.0 million, with margins expanding to 6.3%. For context, this represents a 244.5% jump in GAAP operating profit to $12.2 million—a stark reversal from prior struggles. The key driver? Cost optimization.

Cost Cuts That Pack a Punch

JOYY's ruthless efficiency is the unsung hero of its turnaround. Sales and marketing expenses plummeted 23.8% YoY to $72.1 million, as the company prioritized ROI over vanity metrics like MAU growth. Meanwhile, R&D costs fell 9.6%, and revenue-sharing fees dropped 15.1% in the BIGO segment—a sign of renegotiated partnerships or smarter content strategies.

The result? Operating cash flow hit $58 million, and net cash swelled to $3.38 billion—a war chest to fund dividends, buybacks, and innovation.

Navigating User Metrics: A Trade of Quantity for Quality

Critics will point to the 9.8% YoY drop in global MAUs to 260.4 million as a red flag. But this decline reflects a deliberate pivot: JOYY is shedding low-ROI users to focus on high-value cohorts. For instance:
- Bigo Live's North American MAUs rose 7% YoY, a strategic win in a high-margin region.
- Average viewing time per user jumped 4% QoQ, thanks to AI-driven content recommendations.
- ARPPU (Average Revenue Per Paying User) rose 3% QoQ in key segments, signaling deeper engagement with premium features.

This isn't about growth for growth's sake—it's about monetizing smarter, not bigger.

Dividends and Buybacks: Cash to Shareholders, Not Just the Balance Sheet

JOYY's shareholder returns are a beacon of stability. In Q1, it distributed $49.1 million in dividends and repurchased $22.5 million in shares, with a $300 million buyback program still in play. The company also authorized a three-year $600 million dividend program, yielding 8.5% annually.

Q2 2025: A Crucial Test of Stabilization

The company's Q2 guidance of $499–519 million in revenue sets a modest bar above Q1's $494 million. Success here would validate the stabilization thesis. While macroeconomic risks linger, the 25.3% non-livestreaming growth tailwind and $3.3 billion cash buffer provide a safety net.

Why This Justifies a Long Position Now

1. Margin Expansion is Sustainable: Cost cuts are structural, not one-off. With non-livestreaming margins likely higher than traditional livestreaming, profitability should trend upward.
2. Dividend Resilience: An 8.5% yield in a low-interest world is a rare attractor. The buyback program further boosts shareholder value.
3. AI-Driven Growth: BIGO Ads' 27% YoY expansion mirrors the global shift to programmatic ads, a $100 billion+ market by 2027.
4. Undervalued Multiple: Trading at a P/E of 12.5 vs. sector averages of 20, the stock offers upside as growth stabilizes.

Risks to Consider

• Macroeconomic Volatility: Ad spending could falter in a recession.
• User Declines: If MAUs drop further without offsetting engagement gains, monetization could stall.
• Regulatory Hurdles: Compliance costs in global markets remain a wildcard.

Final Verdict: A High-Reward, Strategically Positioned Play

JOYY's pivot to non-livestreaming isn't just a stopgap—it's a full-fledged reinvention. With margins expanding, dividends intact, and a fortress balance sheet, the stock offers a compelling mix of income and growth. While risks exist, the data suggests this is a buy at current levels, particularly for investors willing to ride the AI advertising wave and capitalize on a potential re-rating.

Action Item: Allocate to JOYY for its dividend power and secular growth in digital advertising, with a 12–18 month horizon to capture stabilization and margin upside.