JOYY's Q2 2025 Earnings: Navigating Declines and Diversification for Long-Term Growth

JOYY Inc. (NASDAQ: JOYY) has long been a bellwether for the global live-streaming and social media landscape. Its Q2 2025 earnings report, released on August 26, 2025, paints a mixed but telling picture: a 10.1% year-over-year decline in net revenue to $507.8 million, driven by struggles in its core live-streaming segment, yet a 25.6% surge in non-livestreaming revenue to $132.4 million. This duality raises critical questions about the company's long-term sustainability. Can JOYY's pivot to advertising and cost discipline offset the erosion of its traditional revenue streams? Let's dissect the numbers and strategy.

The Decline in Live Streaming: A Structural Headwind

JOYY's live-streaming revenue fell to $375.4 million in Q2 2025, down from $459.7 million in Q2 2024. The culprit? A shrinking base of paying users and a 7.6% drop in average revenue per paying user (ARPPU). Management attributed this to compliance-driven adjustments in non-core audio live-streaming products and macroeconomic pressures. While the segment stabilized sequentially (up 1.1% from Q1 2025), the long-term trend is concerning. Analysts project a 71.5% annual decline in long-term earnings per share, underscoring structural challenges in monetizing live-streaming in an increasingly competitive and regulated market.

The Rise of BIGO Ads: A Strategic Lifeline

JOYY's non-livestreaming revenue, led by BIGO Ads, grew 25.6% year-over-year to $132.4 million. This segment is now a critical pillar of the company's dual-growth engine strategy. BIGO Ads achieved 29.0% year-over-year growth, driven by algorithmic improvements in ad targeting and expanded advertiser demand. The company's focus on AI-driven ad tech—enhancing return-on-investment for advertisers—has created a flywheel effect: better performance attracts more advertisers, which in turn fuels further algorithmic refinement.

This pivot is not without risks. The ad-tech space is crowded, with giants like Meta and Google dominating. However, JOYY's global footprint (262.5 million mobile monthly active users, albeit down 4.7% YoY) and its ecosystem of apps (Bigo Live, Likee, Hago) provide a unique value proposition. The key question is whether JOYY can scale BIGO Ads into a standalone growth engine.

Cost Discipline and Profitability: A Silver Lining

JOYY's operating expenses dropped 9.5% to $179.8 million, driven by a 19.5% cut in sales and marketing costs and a 14.1% reduction in R&D spending. This discipline propelled operating income to $5.8 million, a 155.4% increase YoY. Non-GAAP EBITDA rose 25.7% to $48.2 million, and the company's net cash position stood at $3.3 billion as of June 30, 2025.

These metrics highlight JOYY's ability to navigate headwinds through operational efficiency. However, aggressive cost-cutting could backfire if it stifles innovation or user acquisition. The company must strike a balance between fiscal prudence and reinvestment in high-growth areas like ad tech.

Shareholder Returns and Future Outlook: A Mixed Bag

JOYY distributed $98.5 million in dividends and repurchased $36.5 million in shares during H1 2025. A Q3 dividend of $0.95 per ADS was declared, signaling confidence in its strategy. Yet, with revenue guidance for Q3 2025 at $525–$539 million, the company is projecting only modest growth. The long-term EPS outlook remains bleak, with a projected 76.9% annual decline.

Investment Implications: A Calculated Bet

JOYY's Q2 results reflect a company in transition. While the live-streaming segment faces existential challenges, the rise of BIGO Ads offers a compelling narrative. For investors, the key is to assess whether the ad-tech pivot can offset declining live-streaming revenue.

Buy Case:
- Diversification Success: BIGO Ads' 29.0% YoY growth suggests JOYY can monetize its ecosystem beyond live streaming.
- Strong Balance Sheet: $3.3 billion in net cash provides flexibility for M&A or further share repurchases.
- Shareholder Returns: Dividends and buybacks enhance value in a low-growth environment.

Sell Case:
- Structural Decline: Long-term EPS projections (-76.9% annually) indicate a shrinking core business.
- Competition in Ad Tech: Scaling BIGO Ads against industry giants is a high-stakes gamble.
- User Engagement Risks: Declining MAUs and paying users could erode the foundation of both segments.

Final Verdict: A High-Risk, High-Reward Play

JOYY's Q2 results are a microcosm of its broader challenges and opportunities. The company has made strides in cost control and ad-tech innovation, but its reliance on a struggling live-streaming segment remains a liability. For risk-tolerant investors, JOYY could be a speculative bet on its ability to reinvent itself as an ad-tech player. However, those seeking stability may find the long-term outlook too uncertain.

In the end, JOYY's success will hinge on its ability to execute its dual-growth strategy. If BIGO Ads can become a dominant force in global ad tech, the company may yet defy the odds. But if the live-streaming decline accelerates and ad-tech growth stalls, the stock could face prolonged pressure. Investors must weigh these risks carefully—and act decisively.