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YY Reports First Quarter 2019 Unaudited Financial Results

May 28, 2019

GUANGZHOU, China, May 29, 2019 (GLOBE NEWSWIRE) -- YY Inc. (NASDAQ: YY) (“YY” or the “Company”), a global social media platform, today announced its unaudited financial results for the first quarter of 2019. The Company completed the acquisition of Bigo Inc. (“Bigo”) in the first quarter of 2019 and has consolidated Bigo’s financials starting from March 4, 2019.

First Quarter 2019 Financial Highlights

-- Net revenues increased by 47.1% to RMB4,780.6 million (US$705.3 million) from RMB3,248.9 million in the corresponding period of 2018. -- Net income attributable to controlling interest of YY Inc.1 increased by 223.9% to RMB3,120.4 million (US$460.4 million) from RMB963.5 million in the corresponding period of 2018. -- Non-GAAP net income attributable to controlling interest of YY Inc.2 was RMB653.5 million (US$96.4 million), compared to RMB730.0 million in the corresponding period of 2018.

First Quarter 2019 Operational Highlights

-- Global video and live streaming average mobile MAUs3reached over 400 million, among which over 75% were from outside of China. -- Average mobile MAUs of YY (including YY Live and Hago) increased by 65.6% to 59.8 million from 36.1 million in the corresponding period of 2018, primarily driven by the user growth of Hago. -- Total number of paying users4 of YY increased by 17.1% to 4.1 million from 3.5 million in the corresponding period of 2018. -- Average mobile MAUs of Huya increased by 29.8% to 53.9 million from 41.5 million in the corresponding period of 2018. -- Total number of paying users of Huya increased by 57.4% to 5.4 million from 3.4 million in the corresponding period of 2018. -- Average mobile MAUs of Bigo(including its short form video and live streaming services, such as Like and Bigo Live) increased by 160.6% to 78.7 million from 30.2 million in the corresponding period of 2018, primarily driven by the user growth of Like. -- Average mobile MAUs of IMO(under Bigo’s operation) reached 211.8 million. IMO is a global video communication application.

“We are very excited to witness that YY has successfully evolved into a global social media platform with over 400 million in global video and live streaming average mobile MAUs in the first quarter of 2019, after the acquisition of Bigo. We carried our strong growth momentum into 2019 with solid first quarter results, driven by enhanced performances from YY, Huya and Bigo,” stated Mr. David Xueling Li, Chairman and Chief Executive Officer of YY. “Importantly, over 75% of such global video and live streaming MAUs were from outside of China, demonstrating that our global expansion strategy has achieved initial success. Our average mobile MAUs for short form video and live streaming services reached 192.4 million, and total number of paying users for YY, Huya and Bigo continued to grow healthily year over year. This strong growth was a result of our commitment to expanding our global operations, upgrading our content offerings, and improving our AI technological capabilities. During the same quarter, IMO had 211.8 million in average mobile MAUs. By offering frictionless video call and other communication tools, IMO has attracted a highly engaged and video-oriented user base in the Middle East, South Asia and other global regions. As we continue to develop synergies among different business lines going forward, we will leverage these synergies to create high-quality video-based content across our platform and best-in-class user experiences for our global user community.”

Mr. Bing Jin, Chief Financial Officer of YY, further commented, “We delivered another quarter of solid financial results, marked by high growth and strong profitability. Our total net revenues in the first quarter increased by 47.1% year over year to RMB4,780.6 million, exceeding the high end of our previous guidance range. The increase in net revenues was primarily driven by an year-over-year 47.9% increase in live streaming revenues to RMB4,485.0 million, and the contribution from the consolidation of Bigo. Going forward, as we continue to invest in video-based content offerings, global user base expansion and AI technological innovation, we believe that we will further enhance our monetization and yield sustainable growth.”

First Quarter 2019 Financial Results

NET REVENUES Net revenues increased by 47.1% to RMB4,780.6 million (US$705.3 million) in the first quarter of 2019 from RMB3,248.9 million in the corresponding period of 2018, primarily driven by an increase in live streaming revenues, and the contribution from the consolidation of Bigo segment.

Live streaming revenues increased by 47.9% to RMB4,485.0 million (US$661.7 million) in the first quarter of 2019 from RMB3,032.0 million in the corresponding period of 2018, primarily attributable to the continued live streaming revenues growth in YY and Huya segments and, to a lesser extent, the consolidation of the live streaming revenues of Bigo for most of the month of March 2019.

Other revenues increased by 36.3% to RMB295.6 million (US$43.6 million) in the first quarter of 2019 from RMB216.9 million in the corresponding period of 2018, primarily driven by the increase of advertising revenues from Huya and Bigo segments.

COST OF REVENUES AND GROSS PROFIT Cost of revenues increased by 56.8% to RMB3,160.3 million (US$466.3 million) in the first quarter of 2019 from RMB2,015.8 million in the corresponding period of 2018, mainly attributable to an increase in revenue-sharing fees and content costs to RMB2,524.7 million (US$372.5 million) in the first quarter of 2019 from RMB1,621.0 million in the corresponding period of 2018. The increase in revenue-sharing fees and content costs paid to performers, guilds and content providers was in line with the increase in live streaming revenues for both YY and Huya segments, respectively. Bandwidth costs increased to RMB297.4 million (US$43.9 million) in the first quarter of 2019 from RMB225.4 million in the corresponding period of 2018, primarily reflecting continued overseas user base expansion.

Gross profit increased by 31.4% to RMB1,620.3 million (US$239.1 million) in the first quarter of 2019 from RMB1,233.1 million in the corresponding period of 2018. Gross margin was 33.9% in the first quarter of 2019, compared to 38.0% in the corresponding period of 2018, primarily due to the increase in revenue-sharing fees and content costs. The decrease in gross margin was also attributable to the impact caused by the relatively low gross margin of the Huya segment as its contribution to net revenues increased significantly year-over-year.

OPERATING INCOMEOperating expenses were RMB1,215.4 million (US$179.3 million) in the first quarter of 2019, compared to RMB649.1 million in the corresponding period of 2018, primarily due to the Company’s increased efforts in sales and marketing activities in overseas markets, as well as the increase in staff related expenses for AI research and development personnel.

Operating income was RMB473.6 million (US$69.9 million) in the first quarter of 2019, compared to RMB596.4 million in the corresponding period of 2018. Operating margin was 9.9% in the first quarter of 2019, compared to 18.4% in the corresponding period of 2018, primarily due to the decrease in gross margin and the increase in sales and marketing expenses, which is partially related to the consolidation of Bigo.

Non-GAAP operating income5 was RMB717.3 million (US$105.8 million) in the first quarter of 2019, compared to RMB727.3 million in the corresponding period of 2018. Non-GAAP operating margin6 was 15.0% in the first quarter of 2019, compared to 22.4% in the corresponding period of 2018.

NET INCOMENet income attributable to controlling interest of YY Inc. increased by 223.9% to RMB3,120.4 million (US$460.4 million) in the first quarter of 2019 from RMB963.5 million in the corresponding period of 2018, mainly due to the remeasurement gain of YY’s previously held interests in Bigo amounting to RMB2,669.3 million (US$393.8 million), which was included as part of the “gain on fair value change of investments”. Net margin was 65.3% in the first quarter of 2019, compared to 29.7% in the corresponding period of 2018. The effective tax rate in the first quarter of 2019 was significantly impacted by the gain on fair value change of investment in Bigo, as it was non-taxable for income tax purpose.

Non-GAAP net income attributable to controlling interest of YY Inc. was RMB653.5 million (US$96.4 million) in the first quarter of 2019, compared to RMB730.0 million in the corresponding period of 2018. Non-GAAP net margin7 was 13.7% in the first quarter of 2019, compared to 22.5% in the corresponding period of 2018.

NET INCOME PER ADSDiluted net income per ADS8 was RMB44.55 (US$6.57) in the first quarter of 2019, compared to RMB6.86 in the corresponding period of 2018.

Non-GAAP diluted net income per ADS9 was RMB9.32 (US$1.38) in the first quarter of 2019, compared to RMB10.96 in the corresponding period of 2018.

BALANCE SHEET AND CASH FLOWS As of March 31, 2019, the Company had cash and cash equivalents, restricted cash and cash equivalents, restricted short-term deposits and short-term deposits of RMB14,744.4 million (US$2,175.4 million). For the first quarter of 2019, net cash from operating activities was RMB966.1 million (US$142.5 million).

SHARES OUTSTANDING As of March 31, 2019, the Company had a total of 1,613.3 million common shares, or the equivalent of 80.7 million ADSs, outstanding.

Business OutlookFor the second quarter of 2019, the Company expects net revenues to be between RMB6.0 billion and RMB6.2 billion10, representing a year-over-year growth of 59.0% to 64.3%. This forecast reflects the Company’s current and preliminary views on the market and operational conditions, which are subject to change.

Conference Call InformationThe Company will hold a conference call on Tuesday, May 28, 2019, at 9:00 P.M. Eastern Time (or Wednesday, May 29, 2019, at 9:00 A.M. Beijing Time) to discuss the financial results. Participants may access the call by dialing the following numbers:

United States: +1-845-675-0438International: +65-6713-5440China Domestic: 400-120-0654Hong Kong: +852-3018-6776Conference ID: #5556539

The replay will be accessible through June 5, 2019, by dialing the following numbers:

United States: +1-646-254-3697International: +61-2-9003-4211Conference ID: #5556539

A live and archived webcast of the conference call will also be available at the Company’s investor relations website at http://ir.yy.com/.

Exchange RateThis press release contains translations of certain Renminbi amounts into U.S. dollars at specified rates solely for the convenience of readers. Unless otherwise noted, all translations from Renminbi to U.S. dollars, in this press release, were made at a rate of RMB6.7777 to US$1.00, the noon buying rate in effect on March 31, 2019 in the City of New York for cable transfers in Renminbi per U.S. dollar as certified for customs purposes by the Federal Reserve Bank of New York.

About YY Inc.YY Inc. (“YY” or the “Company”) is a global social media platform. The Company’s highly engaged users contribute to a vibrant social community by creating, sharing, and enjoying a vast range of entertainment content and activities. YY enables users to interact with each other in real time through online live media and offers users a uniquely engaging and immersive entertainment experience. YY owns YY Live, a leading live streaming social media platform in China and Huya, a leading game live streaming platform in China. In addition, YY completed the acquisition of Bigo in March 2019. Bigo is a fast-growing global tech company. Headquartered in Singapore, Bigo owns Bigo Live, a leading global live streaming platform outside of China; Like, a leading global short form video social platform; IMO, a global video communication app, and other social applications. YY has created an online community for global video and live streaming users. YY Inc. was listed on the NASDAQ in November 2012.

Safe Harbor StatementThis announcement contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” and similar statements. Among other things, the business outlook and quotations from management in this announcement, as well as YY’s strategic and operational plans, contain forward-looking statements. YY may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (“SEC”), in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to first parties. Statements that are not historical facts, including statements about YY’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: YY’s goals and strategies; YY’s future business development, results of operations and financial condition; the expected growth of the online communication social platform market in China; the expectation regarding the rate at which to gain active users, especially paying users; YY’s ability to monetize the user base; fluctuations in general economic and business conditions in China and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in YY’s filings with the SEC. All information provided in this press release and in the attachments is as of the date of this press release, and YY does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

Use of Non-GAAP Financial MeasuresThe unaudited condensed consolidated financial information is prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). YY uses non-GAAP operating income, non-GAAP operating margin, non-GAAP net income attributable to controlling interest of YY Inc., non-GAAP net margin attributable to controlling interest of YY Inc., non-GAAP net income attributable to common shareholders of YY Inc., and basic and diluted non-GAAP net income per ADS, which are non-GAAP financial measures. Non-GAAP operating income is operating income excluding share-based compensation expenses, impairment of goodwill and investments, amortization of intangible assets from business acquisitions, and gain on deconsolidation and disposal of subsidiary. Non-GAAP operating margin is non-GAAP operating income as a percentage of net revenues. Non-GAAP net income is net income excluding share-based compensation expenses, impairment of goodwill and investments, amortization of intangible assets from business acquisitions, gain on deconsolidation and disposal of subsidiary, gain on deemed disposal and disposal of investments, gain on fair value change of investments and equity investees’ investments, fair value loss on derivative liabilities, and income tax effects of above non-GAAP reconciling items. Non-GAAP net income attributable to controlling interest of YY Inc. is net income attributable to controlling interest of YY Inc. excluding share-based compensation expenses, impairment of goodwill and investments, amortization of intangible assets from business acquisitions, gain on deconsolidation and disposal of subsidiary, gain on deemed disposal and disposal of investments, gain on fair value change of investments and equity investees’ investments, fair value loss on derivative liabilities, income tax effects of above non-GAAP reconciling items and adjustment for non-GAAP reconciling items for the income attributable to non-controlling interests. Non-GAAP net margin is non-GAAP net income attributable to controlling interest of YY Inc. as a percentage of net revenues. Non-GAAP net income attributable to common shareholders of YY Inc. is net income attributable to common shareholders of YY Inc. excluding share-based compensation expenses, impairment of goodwill and investments, amortization of intangible assets from business acquisitions, gain on deconsolidation and disposal of subsidiary, gain on deemed disposal and disposal of investments, gain on fair value change of investments and equity investees’ investments, fair value loss on derivative liabilities, accretion, cumulative dividend and deemed dividend to subsidiaries’ preferred shareholders and income tax effects of above non-GAAP reconciling items and adjustment for non-GAAP reconciling items for the income attributable to non-controlling interests. After the non-GAAP reconciliation, non-GAAP net income attributable to controlling interests of YY Inc. is equal to the non-GAAP net income attributable to common shareholders of YY Inc. Basic and diluted non-GAAP net income per ADS is non-GAAP net income attributable to common shareholders of YY Inc. divided by weighted average number of ADS used in the calculation of basic and diluted net income per ADS. The Company believes that separate analysis and exclusion of the non-cash impact of above reconciling items adds clarity to the constituent parts of its performance. The Company reviews these non-GAAP financial measures together with GAAP financial measures to obtain a better understanding of its operating performance. It uses the non-GAAP financial measure for planning, forecasting and measuring results against the forecast. The Company believes that non-GAAP financial measure is useful supplemental information for investors and analysts to assess its operating performance without the non-cash effect of (i) share-based compensation expenses and amortization of intangible assets from business acquisitions, which have been and will continue to be significant recurring expenses in its business, (ii) impairment of goodwill and investments, gain on deconsolidation and disposal of subsidiary, gain on deemed disposal and disposal of investments, gain on fair value change of investments and equity investees’ investments, fair value loss on derivative liabilities, and accretion, cumulative dividend and deemed dividend to subsidiaries’ preferred shareholders, which may not be recurring in its business, and (iii) income tax expenses and non-GAAP adjustments for net income (loss) attributable to non-controlling interest shareholders, which are affected by above non-GAAP reconciling items. However, the use of non-GAAP financial measures has material limitations as an analytical tool. One of the limitations of using non-GAAP financial measures is that they do not include all items that impact the Company’s net income for the period. In addition, because non-GAAP financial measures are not measured in the same manner by all companies, they may not be comparable to other similar titled measures used by other companies. In light of the foregoing limitations, you should not consider non-GAAP financial measure in isolation from or as an alternative to the financial measure prepared in accordance with U.S. GAAP.

The presentation of these non-GAAP financial measures is not intended to be considered in isolation from, or as a substitute for, the financial information prepared and presented in accordance with U.S. GAAP. For more information on these non-GAAP financial measures, please see the table captioned “YY Inc. Reconciliations of GAAP and Non-GAAP Results” near the end of this release.

Investor Relations ContactYY Inc.Matthew ZhaoTel: +86 (20) 8212-0000Email: IR@YY.com

ICR, Inc. Jack WangTel: +1 (646) 915-1611Email: IR@YY.com

___________________________________1 Net income attributable to controlling interest of YY Inc., is net income less net (loss) income attributable to the non-controlling interest shareholders and the mezzanine equity classified as non-controlling interest shareholder.2 Non-GAAP net income attributable to controlling interest of YY Inc. is a non-GAAP financial measure, which is defined as net income attributable to controlling interest of YY Inc. excluding share-based compensation expenses, impairment of goodwill and investment, amortization of intangible assets from business acquisitions, gain on deconsolidation and disposal of subsidiary, gain on deemed disposal and disposal of investments (deemed disposal refers to dilution of equity interest in equity-method investments), gain on fair value change of investments and equity investees’ investments, fair value loss on derivative liabilities, income tax effects on non-GAAP adjustment and non-GAAP adjustment for net (loss) income attributable to non-controlling interests shareholders. These adjustments amounted to a reversal of net gain of RMB2,466.9 million (US$364.0 million) and RMB233.5 million in the first quarter of 2019 and 2018, respectively. Please refer to the section titled “Reconciliation of GAAP and Non-GAAP Results” for more details.3 Refers to mobile average monthly active users. Average mobile MAU for any period is calculated by dividing (i) the sum of the Company’s mobile active users for each month of such period, by (ii) the number of months in such period.4 Refers to a registered user that has purchased virtual items on YY’s platforms at least once during the period presented.5 Non-GAAP operating income is a non-GAAP financial measure, which is defined as operating income excluding share-based compensation expenses, amortization of intangible assets from business acquisitions, impairment of goodwill and investments and gain on deconsolidation and disposal of a subsidiary. Please refer to the section titled “Reconciliation of GAAP and Non-GAAP Results” for details.6 Non-GAAP operating margin is a non-GAAP financial measure, which is defined as non-GAAP operating income as a percentage of net revenues. Please refer to the section titled “Reconciliation of GAAP and Non-GAAP Results” for details.7 Non-GAAP net margin is non-GAAP net income attributable to controlling interest of YY Inc. as a percentage of net revenues.8 ADS is American Depositary Share. Each ADS represents twenty Class A common shares of the Company. Diluted net income per ADS is net income attributable to common shareholders of YY Inc. divided by weighted average number of diluted ADS.9 Non-GAAP diluted net income per ADS is a non-GAAP financial measure, which is defined as non-GAAP net income attributable to common shareholders of YY Inc. divided by weighted average number of ADS used in the calculation of diluted net income per ADS. Please refer to the section titled “Reconciliation of GAAP and Non-GAAP Results” for details.10 The outlook of net revenues for the second quarter of 2019 includes the impact from Bigo’s consolidation. However, when calculating the year-over-year growth rate, Bigo’s net revenues in the same period of 2018 was not included as the part of denominator.

YY INC. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS(All amounts in thousands, except share, ADS and per ADS data)

December March March 31, 31, 31, 2018 2019 2019 RMB RMB US$ Assets Current assets Cash and cash equivalents 6,004,231 8,936,229 1,318,475 Restricted cash and cash equivalents - 263,132 38,823 Short-term deposits 7,326,996 4,907,121 724,010 Restricted short-term deposits - 637,907 94,119 Short-term investments 979,053 1,402,678 206,955 Accounts receivable, net 198,428 632,357 93,300 Amounts due from related parties 193,559 10,330 1,524 Financing receivables, net 768,343 704,451 103,937 Prepayments and other current assets 1,019,019 639,029 94,286 ---------- ---------- --------- Total current assets 16,489,629 18,133,234 2,675,429 ---------- ---------- --------- Non-current assets Long-term deposits 1,000,000 - - Deferred tax assets 70,834 113,059 16,681 Investments 4,591,524 1,436,281 211,913 Property and equipment, net 1,296,319 1,697,773 250,494 Land use rights, net 1,784,639 1,772,615 261,536 Intangible assets, net 74,685 3,533,432 521,332 Right-of-use assets, net(1) - 266,728 39,354 Goodwill 11,763 12,497,140 1,843,861 Financing receivables, net 224,793 224,609 33,139 Other non-current assets 223,859 246,938 36,434 ---------- ---------- --------- Total non-current assets 9,278,416 21,788,575 3,214,744 ---------- ---------- --------- Total assets 25,768,045 39,921,809 5,890,173 ---------- ---------- --------- Liabilities, mezzanine equity and shareholders’ equity Current liabilities Convertible bonds 6,863 6,734 994 Accounts payable 114,589 235,556 34,755 Deferred revenue 951,616 1,210,396 178,585 Advances from customers 101,690 90,516 13,355 Income taxes payable 235,561 307,124 45,314 Accrued liabilities and other current liabilities 2,414,371 3,324,934 490,570 Amounts due to related parties 28,336 33,745 4,979 Lease liabilities due within one year(1) - 103,350 15,249 Short-term loans - 1,282,516 189,226 ---------- ---------- --------- Total current liabilities 3,853,026 6,594,871 973,027 ---------- ---------- --------- Non-current liabilities Lease liabilities(1) - 172,138 25,398 Deferred revenue 91,710 129,876 19,162 Deferred tax liabilities 27,505 350,981 51,785 ---------- ---------- --------- Total non-current liabilities 119,215 652,995 96,345 ---------- ---------- --------- Total liabilities 3,972,241 7,247,866 1,069,372 ---------- ---------- ---------

YY INC.UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)(All amounts in thousands, except share, ADS and per ADS data)

December March March 31, 31, 31, 2018 2019 2019 RMB RMB US$ Mezzanine equity 418,673 420,525 62,045 Shareholders’ equity Class A common shares (US$0.00001 par value; 10,000,000,000 and 10,000,000,000 shares authorized, 981,740,848 shares issued and outstanding as of 59 80 12 December 31, 2018; 1,297,051,264 shares issued and 1,286,804,655 shares outstanding as of and March 31, 2019, respectively) Class B common shares (US$0.00001 par value; 1,000,000,000 and 1,000,000,000 shares authorized, 21 24 4 288,182,976 and 326,509,555 shares issued and outstanding as of December 31, 2018 and March 31, 2019, respectively) Additional paid-in capital 11,168,866 19,048,058 2,810,401 Statutory reserves 101,725 101,725 15,009 Retained earnings 6,913,469 10,024,537 1,479,047 Accumulated other comprehensive income 336,152 228,389 33,697 ---------- ---------- --------- Total YY Inc.’s shareholders’ equity 18,520,292 29,402,813 4,338,170 ---------- ---------- --------- Non-controlling interests 2,856,839 2,850,605 420,586 ---------- ---------- --------- Total shareholders’ equity 21,377,131 32,253,418 4,758,756 ---------- ---------- --------- Total liabilities, mezzanine equity and shareholders’ equity 25,768,045 39,921,809 5,890,173 ---------- ---------- ---------

(1) The Company has adopted ASC842 “Leases” beginning January 1, 2019 using the optional transition method and prior periods were not restated. The only major impact of the standard is that assets and liabilities amounting to RMB145.2 million and RMB141.2 million, respectively, are recognized beginning January 1, 2019 for leased office space with terms of more than 12 months.

YY INC.UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(All amounts in thousands, except share, ADS and per ADS data)

Three Months Ended ---------------------------------------------------- March December March March 31, 31, 31, 31, 2018 2018 2019 2019 RMB RMB RMB US$ Net revenues Live streaming 3,032,035 4,391,418 4,485,020 661,732 Others 216,896 249,506 295,564 43,608 Total net revenues 3,248,931 4,640,924 4,780,584 705,340 ---------- - ---------- - ---------- - -------- - Cost of revenues(1) (2,015,797 ) (3,013,063 ) (3,160,325 ) (466,283 ) ---------- - ---------- - ---------- - -------- - Gross profit 1,233,134 1,627,861 1,620,259 239,057 ---------- - ---------- - ---------- - -------- - Operating expenses(1) Research and development expenses (249,465 ) (332,513 ) (404,736 ) (59,716 ) Sales and marketing expenses (235,658 ) (323,689 ) (534,236 ) (78,823 ) General and administrative expenses (163,976 ) (274,979 ) (276,424 ) (40,784 ) ---------- - ---------- - ---------- - -------- - Total operating expenses (649,099 ) (931,181 ) (1,215,396 ) (179,323 ) Other income 12,374 21,924 68,688 10,134 ---------- - ---------- - ---------- - -------- - Operating income 596,409 718,604 473,551 69,868 ---------- - ---------- - ---------- - -------- - Interest expense (2,019 ) (139 ) (6,219 ) (918 ) Interest income and investment income 92,191 123,401 148,289 21,879 Foreign currency exchange gain (losses), net 6,719 (1,338 ) 1,333 197 Gain on deemed disposal and disposal of investments - 2,179 - - Gain on fair value change of investments 426,547 26,138 2,649,843 390,965 Fair value loss on derivative liabilities (11,868 ) - - - ---------- - ---------- - ---------- - -------- - Income before income tax expenses 1,107,979 868,845 3,266,797 481,991 ---------- - ---------- - ---------- - -------- - Income tax expenses (148,245 ) (107,114 ) (123,971 ) (18,291 ) ---------- - ---------- - ---------- - -------- - Income before share of income (loss) in 959,734 761,731 3,142,826 463,700 equity method investments, net of income taxes ---------- - ---------- - ---------- - -------- - Share of income (loss) in equity method 9,179 (19,281 ) 7,156 1,056 investments, net of income taxes ---------- - ---------- - ---------- - -------- - Net income 968,913 742,450 3,149,982 464,756 ---------- - ---------- - ---------- - -------- - Less: Net income attributable to the non-controlling interest shareholders and the mezzanine equity 5,384 47,744 29,549 4,360 classified as non-controlling interest shareholders Net income attributable to controlling interest of YY 963,529 694,706 3,120,433 460,396 Inc. ---------- - ---------- - ---------- - -------- - Less: Accretion of subsidiaries’ redeemable convertible 30,107 6,083 9,365 1,382 preferred shares to redemption value Cumulative dividend on subsidiary’s - 4,606 6,730 993 Series A Preferred Shares Deemed dividend to subsidiary’s 489,284 - - - Series A preferred shareholders Net income attributable to common shareholders of YY 444,138 684,017 3,104,338 458,021 Inc. ---------- - ---------- - ---------- - -------- -

YY INC.UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)(All amounts in thousands, except share, ADS and per ADS data)

Three Months Ended March December March March 31, 31, 31, 31, 2018 2018 2019 2019 RMB RMB RMB US$ Net income per ADS —Basic 6.97 10.64 44.93 6.63 —Diluted 6.86 10.54 44.55 6.57 Weighted average number of ADS used in calculating net income per ADS —Basic 63,694,535 64,307,569 69,097,090 69,097,090 —Diluted 64,713,421 64,609,000 69,640,885 69,640,885

1. Share-based compensation was allocated in cost of revenues and operating expenses as follows:

Three Months Ended March December March March 31, 31 31, 31, 2018 2018 2019 2019 RMB RMB RMB US$ Cost of revenues 19,608 14,650 14,309 2,111 Research and development expenses 54,467 50,042 70,607 10,418 Sales and marketing expenses 1,869 1,158 1,976 292 General and administrative expenses 36,563 88,909 94,877 13,998

YY INC.RECONCILIATION OF GAAP AND NON-GAAP RESULTS(All amounts in thousands, except share, ADS and per ADS data)

Three Months Ended March December March March 31, 31, 31, 31, 2018 2018 2019 2019 RMB RMB RMB US$ Operating income 596,409 718,604 473,551 69,868 Share-based compensation expenses 112,507 154,759 181,769 26,819 Impairment of goodwill and investments 18,349 15,099 - - Amortization of intangible assets from - - 62,000 9,148 business acquisitions ------- -------- ------- ------- Non-GAAP operating income 727,265 888,462 717,320 105,835 ------- -------- ------- -------

Net income 968,913 742,450 3,149,982 464,756 Share-based compensation expenses 112,507 154,759 181,769 26,819 Impairment of goodwill and investments 18,349 15,099 - - Amortization of intangible assets - - 62,000 9,148 from business acquisitions Gain on deemed disposal and disposal - (2,179 ) - - of investments Gain on fair value change of investments (426,547 ) (1,089 ) (2,655,338 ) (391,776 ) and equity investees’ investments Fair value loss on derivative liabilities 11,868 - - - Income tax effects on non-GAAP 44,466 21,479 (16,996 ) (2,508 ) adjustments -------- ------- ---------- -------- Non-GAAP net income 729,556 930,519 721,417 106,439 -------- ------- ---------- --------

Net income attributable to common 444,138 684,017 3,104,338 458,021 shareholders of YY Inc. Share-based compensation expenses 112,507 154,759 181,769 26,819 Impairment of goodwill and investments 18,349 15,099 - - Amortization of intangible assets - - 62,000 9,148 from business acquisitions Gain on deemed disposal and - (2,179 ) - - disposal of investments Gain on fair value change of investments (426,547 ) (1,089 ) (2,655,338 ) (391,776 ) and equity investees’ investments Fair value loss on derivative liabilities 11,868 - - - Accretion, cumulative dividend and deemed 519,391 10,689 16,095 2,375 dividend to subsidiaries’ preferred shareholders Income tax effects on non-GAAP adjustments 44,466 21,479 (16,996 ) (2,508 ) Non-GAAP adjustments for net loss (gain) 5,820 (35,843 ) (38,346 ) (5,658 ) attributable to the non-controlling interest shareholders -------- ------- ---------- -------- Non-GAAP net income attributable tocontrolling 729,992 846,932 653,522 96,421 interest and common shareholders of YY Inc. -------- ------- ---------- --------

Non-GAAP net income per ADS —Basic 11.46 13.17 9.46 1.40 —Diluted 10.96 13.02 9.32 1.38 Weighted average number of ADS used in calculating Non-GAAP net income per ADS —Basic 63,694,535 64,307,569 69,097,090 69,097,090 —Diluted 64,713,421 64,609,000 69,640,885 69,640,885

YY INC.UNAUDITED SEGMENT REPORT(All amounts in thousands, except share, ADS and per ADS data)

Three Months Ended ----------------------------------------------------------------------------- March 31, 2019 YY(1) Huya Bigo(2) Elimination(3) Total Total RMB RMB RMB RMB RMB US$ Net revenues Live streaming 2,566,523 1,552,482 366,015 - 4,485,020 661,732 Others 186,733 78,996 29,835 - 295,564 43,608 ---------- ---------- -------- -------------- ---------- -------- Total net revenues 2,753,256 1,631,478 395,850 - 4,780,584 705,340 ---------- ---------- -------- -------------- ---------- -------- Cost of revenues(4) (1,548,046 ) (1,358,105 ) (254,174 ) - (3,160,325 ) (466,283 ) ---------- ---------- -------- -------------- ---------- -------- Gross profit 1,205,210 273,373 141,676 - 1,620,259 239,057 ---------- ---------- -------- ---------- -------- Operating expenses(4) Research and development (235,502 ) (90,044 ) (79,190 ) - (404,736 ) (59,716 ) expenses ---------- ---------- -------- ---------- -------- Sales and marketing expenses (266,317 ) (78,164 ) (189,755 ) - (534,236 ) (78,823 ) ---------- ---------- -------- ---------- -------- General and administrative (163,364 ) (85,811 ) (27,249 ) - (276,424 ) (40,784 ) expenses ---------- ---------- -------- ---------- -------- Total operating expenses (665,183 ) (254,019 ) (296,194 ) - (1,215,396 ) (179,323 ) Other income 58,066 8,864 1,758 - 68,688 10,134 Operating income (loss) 598,093 28,218 (152,760 ) - 473,551 69,868 ---------- ---------- -------- -------------- ---------- -------- Interest expenses (6,219 ) - (1,395 ) 1,395 (6,219 ) (918 ) Interest income and investment 94,745 54,585 354 (1,395 ) 148,289 21,879 income Foreign currency exchange (965 ) (374 ) 2,672 - 1,333 197 (losses) gain, net Gain on fair value change of 2,649,843 - - - 2,649,843 390,965 investments ---------- ---------- -------- -------------- ---------- -------- Income (loss) before income tax 3,335,497 82,429 (151,129 ) - 3,266,797 481,991 expenses ---------- ---------- -------- -------------- ---------- -------- Income tax (expenses) benefits (110,380 ) (18,968 ) 5,377 - (123,971 ) (18,291 ) Income before share of (loss) income in equity 3,225,117 63,461 (145,752 ) - 3,142,826 463,700 method investments, net of income taxes ---------- ---------- -------- -------------- ---------- -------- Share of income (loss) in equity method 7,157 (1 ) - - 7,156 1,056 investments, net of income taxes Net income (loss) 3,232,274 63,460 (145,752 ) - 3,149,982 464,756 ---------- ---------- -------- -------------- ---------- --------

(1) In 2019 the segment of “YY Live” was renamed as “YY”.

(2) On March 4, 2019, YY completed the acquisition of Bigo. Therefore, Bigo’s financial results from March 4, 2019 to March 31, 2019 were included in YY’s consolidated financial statements.

(3) The elimination mainly consists of interest income and interest expenses generated from the loan among YY and Bigo segments.

(4) Share-based compensation was allocated in cost of revenues and operating expenses as follows:

Three Months Ended ---------------------------------- March 31, 2019 YY Huya Bigo Total Total RMB RMB RMB RMB US$ Cost of revenues 7,224 4,020 3,065 14,309 2,111 Research and development expenses 25,992 11,824 32,791 70,607 10,418 Sales and marketing expenses 552 904 520 1,976 292 General and administrative expenses 38,194 51,078 5,605 94,877 13,998

YY INC.RECONCILIATION OF GAAP AND NON-GAAP RESULTS OF UNAUDITED SEGMENT REPORT (All amounts in thousands, except share, ADS and per ADS data)

Three Months Ended ------------------------------------------------------- March 31, 2019 YY Huya Bigo Total Total RMB RMB RMB RMB US$ Operating income (loss) 598,093 28,218 (152,760 ) 473,551 69,868 Share-based compensation expense 71,962 67,826 41,981 181,769 26,819 Amortization of intangible assets - - 62,000 62,000 9,148 from business acquisitions ---------- ------- -------- ---------- -------- Non-GAAP operating income (loss) 670,055 96,044 (48,779 ) 717,320 105,835 ---------- ------- -------- ---------- -------- Net income (loss) 3,232,274 63,460 (145,752 ) 3,149,982 464,756 Share-based compensation expenses 71,962 67,826 41,981 181,769 26,819 Amortization of intangible assets from - - 62,000 62,000 9,148 business acquisitions Gain on fair value change of investments (2,655,338 ) - - (2,655,338 ) (391,776 ) and equity investees’ investments Income tax effects on non-GAAP adjustments (7,479 ) - (9,517 ) (16,996 ) (2,508 ) ---------- ------- -------- ---------- -------- Non-GAAP net income (loss) 641,419 131,286 (51,288 ) 721,417 106,439 ---------- ------- -------- ---------- --------

YY INC.UNAUDITED SEGMENT REPORT(All amounts in thousands, except share, ADS and per ADS data)

Three Months Ended ------------------------------------------------- December 31, 2018 YY Huya Total Total RMB RMB RMB US$ Net revenues Live streaming 2,949,636 1,441,782 4,391,418 638,705 Others 186,359 63,147 249,506 36,289 ---------- ---------- ---------- -------- Total net revenues 3,135,995 1,504,929 4,640,924 674,994 ---------- ---------- ---------- -------- Cost of revenues(1) (1,746,771 ) (1,266,292 ) (3,013,063 ) (438,232 ) ---------- ---------- ---------- -------- Gross profit 1,389,224 238,637 1,627,861 236,762 ---------- ---------- ---------- -------- Operating expenses(1) Research and development expenses (253,408 ) (79,105 ) (332,513 ) (48,362 ) Sales and marketing expenses (263,806 ) (59,883 ) (323,689 ) (47,079 ) General and administrative expenses (182,726 ) (92,253 ) (274,979 ) (39,994 ) ---------- ---------- ---------- -------- Total operating expenses (699,940 ) (231,241 ) (931,181 ) (135,435 ) Other income 10,800 11,124 21,924 3,189 ---------- ---------- ---------- -------- Operating income 700,084 18,520 718,604 104,516 ---------- ---------- ---------- -------- Interest expenses (139 ) - (139 ) (20 ) Interest income and investment income 70,698 52,703 123,401 17,948 Gain on disposal of an equity investment 2,179 - 2,179 317 Foreign currency exchange losses, net (1,291 ) (47 ) (1,338 ) (195 ) Gain on fair value change of investments 26,138 - 26,138 3,802 ---------- ---------- ---------- -------- Income before income tax expenses 797,669 71,176 868,845 126,368 ---------- ---------- ---------- -------- Income tax (expenses) benefits (138,961 ) 31,847 (107,114 ) (15,579 ) Income before share of loss in equity 658,708 103,023 761,731 110,789 method investments, net of income taxes ---------- ---------- ---------- -------- Share of loss in equity method investments, (15,837 ) (3,444 ) (19,281 ) (2,804 ) net of income taxes Net Income 642,871 99,579 742,450 107,985 ---------- ---------- ---------- --------

(1) Share-based compensation was allocated in cost of revenues and operating expenses as follows:

Three Months Ended --------------------------- December 31, 2018 YY Huya Total Total RMB RMB RMB US$ Cost of revenues 10,988 3,662 14,650 2,131 Research and development expenses 38,643 11,399 50,042 7,278 Sales and marketing expenses 551 607 1,158 168 General and administrative expenses 40,582 48,327 88,909 12,931

YY INC.RECONCILIATION OF GAAP AND NON-GAAP RESULTS OF UNAUDITED SEGMENT REPORT (All amounts in thousands, except share, ADS and per ADS data)

Three Months Ended ------------------------------------- December 31, 2018 YY Huya Total Total RMB RMB RMB US$ Operating income 700,084 18,520 718,604 104,516 Share-based compensation expenses 90,764 63,995 154,759 22,508 Impairment of goodwill and investments 15,099 - 15,099 2,196 ------- ------- ------- ------- Non-GAAP operating income 805,947 82,515 888,462 129,220 ------- ------- ------- ------- Net income 642,871 99,579 742,450 107,985 Share-based compensation expenses 90,764 63,995 154,759 22,508 Impairment of goodwill and investments 15,099 - 15,099 2,196 (Gain) loss on fair value change of (4,422 ) 3,333 (1,089 ) (158 ) investments and equity investees’ investments Gain on deemed disposal and disposal of (2,179 ) - (2,179 ) (317 ) investments Income tax effects on non-GAAP adjustments 21,479 - 21,479 3,124 ------- ------- ------- ------- Non-GAAP net income 763,612 166,907 930,519 135,338

YY INC.UNAUDITED SEGMENT REPORT(All amounts in thousands, except share, ADS and per ADS data)

Three Months Ended ------------------------------------------------------------- March 31, 2018 YY Huya Elimination Total Total RMB RMB RMB RMB US$ Net revenues Live streaming 2,239,251 792,784 - 3,032,035 483,378 Others 168,053 50,798 (1,955 ) 216,896 34,578 ---------- -------- ----------- ---------- -------- Total net revenues 2,407,304 843,582 (1,955 ) 3,248,931 517,956 ---------- -------- ----------- ---------- -------- Cost of revenues(1) (1,303,264 ) (712,533 ) - (2,015,797 ) (321,365 ) ---------- -------- ----------- ---------- -------- Gross profit 1,104,040 131,049 (1,955 ) 1,233,134 196,591 ---------- -------- ----------- ---------- -------- Operating expenses(1) Research and development expenses (198,007 ) (51,458 ) - (249,465 ) (39,771 ) Sales and marketing expenses (211,673 ) (25,940 ) 1,955 (235,658 ) (37,569 ) General and administrative expenses (128,193 ) (35,783 ) - (163,976 ) (26,142 ) ---------- -------- ----------- ---------- -------- Total operating expenses (537,873 ) (113,181 ) (649,099 ) (103,482 ) 1,955 Other income 2,091 10,283 - 12,374 1,973 ---------- -------- ----------- ---------- -------- Operating income 568,258 28,151 - 596,409 95,082 ---------- -------- ----------- ---------- -------- Interest expenses (2,019 ) - (2,019 ) (322 ) - Interest income and investment income 81,607 10,584 92,191 14,697 - Foreign currency exchange gain, net 6,719 - - 6,719 1,071 Gain on fair value change of investments 426,547 - - 426,547 68,002 Fair value loss on derivative liabilities - (11,868 ) - (11,868 ) (1,892 ) ---------- -------- ----------- ---------- -------- Income before income tax expenses 1,081,112 26,867 - 1,107,979 176,638 ---------- -------- ----------- ---------- -------- Income tax (expenses) benefits (152,709 ) 4,464 - (148,245 ) (23,634 ) Income before share of income in equity 928,403 31,331 - 959,734 153,004 method investments, net of income taxes ---------- -------- ----------- ---------- -------- Share of income in equity method investments, 9,103 76 - 9,179 1,463 net of income taxes Net income 937,506 31,407 - 968,913 154,467 ---------- -------- ----------- ---------- --------

(1) Share-based compensation was allocated in cost of revenues and operating expenses as follows:

Three Months Ended -------------------------- 31-Mar-18 YY Huya Total Total RMB RMB RMB US$ Cost of revenues 19,353 255 19,608 3,126 Research and development expenses 52,677 1,790 54,467 8,683 Sales and marketing expenses 1,451 418 1,869 298 General and administrative expenses 14,659 21,904 36,563 5,829

YY INC.RECONCILIATION OF GAAP AND NON-GAAP RESULTS OF UNAUDITED SEGMENT REPORT (All amounts in thousands, except share, ADS and per ADS data)

Three Months Ended -------------------------------------- March 31, 2018 YY Huya Total Total RMB RMB RMB US$ Operating income 568,258 28,151 596,409 95,082 Share-based compensation expenses 88,140 24,367 112,507 17,936 Impairment of goodwill and investments 18,349 - 18,349 2,925 -------- ------ -------- ------- Non-GAAP operating income 674,747 52,518 727,265 115,943 -------- ------ -------- ------- Net income 937,506 31,407 968,913 154,467 Share-based compensation expenses 88,140 24,367 112,507 17,936 Impairment of goodwill and investments 18,349 - 18,349 2,925 Gain on fair value change of investments (426,547 ) - (426,547 ) (68,002 ) and equity investees’ investments Fair value loss on derivative liabilities - 11,868 11,868 1,892 Income tax effects on non-GAAP adjustments 44,466 - 44,466 7,089 -------- ------ -------- ------- Non-GAAP net income 661,914 67,642 729,556 116,307 -------- ------ -------- -------

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