YY Inc (ADR) (NASDAQ: YY) stock fell 9.7% (as of 1:31 PM GMT-4; Source: Google finance) even though the company in the first quarter of FY 18 has reported the revenue of $518 million, beating analyst estimates for $487.8 million and up 43% in local currency. It has reported adjusted earnings of $1.72 per share, beating Wall Street’s view of $1.52. Overall, in the first quarter of 2018, the company’s non-GAAP net income attributable to YY grew by 31.1% to RMB699.9 million (US$111.6 million) from RMB533.9 million in the corresponding period of 2017. As of March 31, 2018, YY had cash and cash equivalents of RMB4,086.5 million (US$651.5 million) and short-term deposits of RMB8,748.9 million (US$1,394.8 million). For the first quarter of 2018, net cash from operating activities was RMB780.3 million (US$124.4 million).
YY has invested US$ 272 million in a series D funding round of preferred shares in Singapore-based Bigo Inc, which runs a social video streaming app. In addition to becoming Bigo’s largest shareholder after the round, this massive investment also gives YY the right to purchase additional Bigo shares a year after closing date at the then fair market price to exceed 50.1% of voting power, giving YY a firmer grip on Bigo. The company has last completed a closed-door Series C funding led by Ping An Overseas Holdings last March, ending with a valuation of US$400 million.
Meanwhile, YY is also facing stiff competition. Just within a year later in Southeast Asia alone, a new startup incubated at Singapore’s Mediapreneur incubator, BeLive has already risen to the challenge and have raised $1.5 million in a seed funding round. While it offers a live streaming platform like Bigo, it seeks to create a more secure and decent platform suitable for the talented online community. The startup too claimed to have found a new source of revenue through sponsorship. Bigo, which is a part of YY Inc’s international expansion plans, will also face stiffer competition with the likes of Twitter’s Periscope and the other social media platforms in the West. The company has also recently announced at the SINO AI Forum held in Singapore it’s opened a R&D center in Singapore and is hiring a 100-strong AI scientists. YY had set up Bigo in S’pore in 2016 and it turned a profit since October 2017, raking in $300m in 2017.
For the second quarter of 2018, YY expects net revenues to be between RMB3.6 billion and RMB3.7 billion, representing a year-over-year growth of 38.0% to 41.8%