JOYY's Strategic Shift to High-Growth Non-Livestreaming and Shareholder Returns: A Blueprint for Long-Term Value Creation
48min readIn a world where traditional revenue streams face headwinds, JOYY Inc. (NASDAQ: JOYY) is proving that structural transformation and disciplined capital allocation can create lasting value. Despite near-term challenges in user growth, the company's pivot to high-margin non-livestreaming businesses, powered by AI-driven advertising, and its aggressive shareholder returns program position it as a compelling investment for the next decade. Let's dissect why now is the time to act.
The Non-Livestreaming Revolution: 25.3% YoY Growth and the Rise of AI-Powered Ecosystems
JOYY's first-quarter 2025 results underscore a tectonic shift in its revenue model. Non-livestreaming revenue surged to $123.0 million, a 25.3% year-over-year increase, now accounting for 24.9% of total revenue. This milestone is driven by the BIGO Ads platform, which leverages AI innovations in user insights, creative development, and targeting to boost ad performance. By integrating premium publisher traffic with first-party data and global infrastructure, BIGO Ads has become a profit machine—its revenue grew 27% YoY, outpacing core livestreaming declines.
This is no fleeting trend. The platform's advanced algorithms and partnerships with global advertisers ensure scalability. Meanwhile, JOYY's broader ecosystem—spanning social networking, gaming, and messaging—continues to diversify its offerings, reducing reliance on any single revenue stream. The shift to non-livestreaming isn't just about growth; it's about margin expansion. Non-GAAP operating income rose 24.9% YoY to $31.0 million, with margins improving to 6.3%, reflecting operational discipline.
Disciplined Cost Management: Turning Efficiency into Profitability
While livestreaming revenue dipped 16.1% YoY to $371.3 million, JOYY's focus on cost optimization has delivered outsized rewards. Sales and marketing expenses plummeted 23.7% YoY to $72.1 million, as the company prioritized ROI over user acquisition. This pivot hasn't hurt profitability: GAAP operating income jumped 244.5% YoY to $12.2 million, and net cash swelled to $3.386 billion—a fortress balance sheet that fuels its shareholder returns.
The company's operational rigor extends to product innovation. Bigo Live's recommendation system upgrades boosted average viewing time by 4% QoQ, while Likee's content diversity improvements increased paying user ratios by 3% QoQ. These metrics prove that even as MAUs decline, engagement and monetization are strengthening.
Shareholder Returns: $71.6M YTD and a $600M Three-Year Commitment
JOYY isn't just building a better business—it's returning capital aggressively. Year-to-date, shareholders have received $49.1 million in dividends and $22.5 million in buybacks, totaling $71.6 million. The board's Q2 dividend of $0.94 per ADS (payable July 3) marks another step in its $600 million three-year dividend program, while the $300 million buyback authorization (valid until 2027) ensures sustained capital returns.
Despite these returns, JOYY's stock trades at a discount to its peers. With a P/E ratio of 12.5 (well below the sector average of 20), the market isn't pricing in the full potential of its transformation.
Navigating MAU Headwinds: A Strategic Trade-Off for Long-Term Health
Critics will point to the 9.8% decline in global MAUs to 260.4 million from Q1 2024. But this is a calculated trade-off. JOYY has deliberately scaled back wasteful marketing spend to focus on high-ROI users. For example:
- Bigo Live's North American MAUs grew 7% YoY, a strategic geographic win.
- Likee's video consumption time rose 10% QoQ, proving deeper engagement among its core audience.
Even Hago, despite a MAU drop to 3.3 million, has stabilized its paying user base through content upgrades. Management's Q2 revenue guidance of $499–$519 million reflects cautious optimism amid macroeconomic uncertainty—a conservative stance that could be beaten as non-livestreaming momentum accelerates.
Why Now is the Time to Invest
The pieces are aligning for JOYY's long-term success:
1. Structural Growth: Non-livestreaming's 25%+ growth rate and high margins signal a durable second engine of growth.
2. Balance Sheet Strength: $3.386 billion in net cash provides a cushion for innovation and returns.
3. Shareholder Discipline: The dividend-buyback combo ensures value flows to investors even as the company invests in AI and ad tech.
4. Undervalued Stock: At current prices, the market is ignoring the compounding power of its ecosystem and the secular shift toward ad-driven social platforms.
Historical performance reinforces this undervaluation thesis. A strategy of buying JOYY on positive quarterly earnings announcements and holding for 20 trading days since 2020 delivered an average return of 7.69%, with a maximum drawdown of -11.02% and a Sharpe ratio of 0.63. This demonstrates that the stock has historically rewarded investors who capitalized on earnings-driven catalysts, balancing risk and reward effectively.
Conclusion: A Rare Opportunity in a Crowded Market
JOYY isn't just surviving—it's redefining its future. By transitioning to high-margin, AI-powered advertising and prioritizing profitable user engagement over vanity metrics, it's setting itself up for decades of growth. The $71.6M in returns YTD and its fortress balance sheet make it a rare stock: one that rewards shareholders today while building tomorrow's value.
The near-term MAU headwinds are a speed bump on a highway to transformation. For investors seeking a blend of growth and income in a volatile market, JOYY offers a compelling entry point. Act now—this structural shift won't stay overlooked for long.
Investor Takeaway:
- Buy JOYY for exposure to AI-driven ad growth and shareholder-friendly capital allocation.
- Hold for the long term as non-livestreaming scales and the company's ecosystem matures.
- Watch for Q2 results, where non-livestreaming's performance and MAU stabilization could drive a re-rating.
The future is ad-powered—and JOYY is leading the charge.
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