Episode Details

JOYY Inc. (JOYY) Q2 2026 — Q2 2026 (three months ended June 30, 2026): net revenues $590.8m vs $507.8m; operating income $13.8m vs $5.8m; non-GAAP operating income $49.1m vs $38.3m; non-GAAP net income $63.5m vs $77.0m; non-GAAP diluted EPS $1.24 per ADS vs $1.44. Released after the Tuesday Aug 25 US close, with the call at 9:00 PM ET Tuesday - 9:00 AM Wednesday in Singapore - so Wednesday Aug 26 was the reaction session. It gapped +1.59%, printed $80.90 (+7.87%) inside six minutes, traded down to $72.99 and closed $74.81, -0.25%. JOYY's Q2 2026 revenue rose 16.3% to $590.8m, the fastest growth in five quarters and a genuine inflection after revenue FELL 5.1% across the whole of 2025. Both lines beat and the full-year profit guide was raised. But the segment doing the accelerating earned nothing on it. BIGO Ads revenue rose 53.1% to $133.7m - $46.4m of new revenue - and its gross profit went from $27.420m to $27.400m. Down $20,000. A 100.0% flow-through to third-party traffic cost, with segment gross margin falling 31.4% to 20.5%. THE CALL: HOLD (3/5, A REAL REVENUE INFLECTION, A GROWTH ENGINE THAT EARNED NOTHING) — base-case value ~$73.90 vs ~$74.81 today. KEY METRICS: - THE SPINE: BIGO Ads revenue rose 53.1% to $133.7m - $46.4m of new revenue - and segment GROSS PROFIT went $27.420m to $27.400m. Down $20,000. A 100.0% flow-through to cost. Segment gross margin 31.4% to 20.5%; group gross margin 36.5% to 34.1% on mix alone. - THE CROSSOVER: non-GAAP operating income of $49.1m beat interest and investment income of $39.5m by $9.6m - the FIRST time on file. Q1 2026 was $1.8m behind, Q4 2025 was $30,000 behind, FY2025 $11.8m behind and FY2024 $39.5m behind. - AND IT IS PARTLY SUBTRACTION: net cash fell $3,258.0m to $3,059.3m over the half while $358.8m went to shareholders. Interest income was $162.6m in 2025 and is annualising $158.5m now. Part of the crossover is the business rising, part is the bank falling. - ON A REPORTED BASIS NOTHING CROSSED: GAAP operating income was $13.8m on $590.8m of revenue and 277.1m monthly users - a 2.3% margin - while the deposits earned $39.5m, or 2.9x the entire operating business. - THE PROFIT FALL IS NOT OPERATIONAL: non-GAAP EPS fell 13.9% to $1.24 per ADS, but currency swung $14.7m against the company ($0.29 per ADS) and the tax rate went 9.3% to 24.2%. On last year's currency line it would have been $1.53, ABOVE last year's $1.44. - THE BALANCE SHEET, COUNTED PROPERLY: cash and cash equivalents is only $337.0m. Net cash on the company's own seven-line definition is $3,059.3m, rebuilt from the filed balance sheet to within $15,000. That is $62.47 per ADS, 83% of the price. - THE STREET: only TWO targets could be sourced AND dated - J.P. Morgan Overweight $98 (Aug 12, an upgrade from Neutral) and Citi Buy $78 (Jan 13, reaffirmed Jul 22) - averaging $88.00. We value JOYY at $73.90 against $74.81: HOLD, 3/5. What to watch: UP: adjusted operating income rose 28.2% and beat interest income for the FIRST time ever, by $9.6m; the full-year guide was RAISED to about 20% growth; net cash is $62.47 per ADS against a $74.81 close; and $358.8m was returned in under eight months. DOWN: the growth engine runs at 20.5% gross margin, group gross margin fell 240bp, stock compensation went $4.0m to $16.6m, and interest income is annualising 2.5% below 2025 as the pile is paid out. Also on YouTube: @ChargedAlpha DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.