JOYY Inc. (JOYY)

How it makes money

JOYY's revenue derives primarily from virtual item sales in live streaming where users purchase digital gifts for performers (with revenue sharing to talent), from performance-based advertising through BIGO Ads platform using proprietary neural network models for user targeting, and from Shopline SaaS subscription fees charged to e-commerce merchants for platform access and features.

Revenue by segment

JOYY possesses some competitive advantages through proprietary AI/ML algorithms for advertising optimization, integrated ecosystem spanning multiple social entertainment properties creating network effects, and established user bases on its platforms. However, the company acknowledges intense competition and that competitors possess greater financial resources and stronger market positions. The moat is narrow and vulnerable to technology commoditization and competitive responses.

JOYY's revenue is driven by discretionary consumer spending on virtual entertainment (gifts in live streaming) and performance marketing budgets (advertising), both highly sensitive to economic cycles. Virtual gifting and merchant spending decline during recessions as consumers prioritize necessities. Advertising may show relative resilience during downturns if performance-based models attract budget-conscious advertisers, but overall demand is cyclical and pro-cyclical with economic growth.

Key risks

• Live Streaming Revenue Decline — Live streaming represents 72% of 2025 revenues but faces potential demand decline due to market saturation and shifting user preferences. Company explicitly discloses this risk, noting that declines in live streaming revenues 'may materially and adversely affect results.'
• Regulatory and Content Moderation — Platforms face app store removals and regulatory scrutiny (Bigo Live was removed from app stores in December 2024 and later reinstated). Increased compliance costs and potential restrictions on platform operations across jurisdictions pose significant operational and financial risks.
• Shopline Operating Losses — Shopline subsidiary incurred 'sizable net operating losses' in 2024-2025 with no clear path to profitability disclosed. Acquired as part of strategic diversification but has become a cash drain, raising questions about M&A execution quality and continuing losses.
• Performer Churn and Talent Retention — Company depends on popular performers for platform engagement and relies on revenue-sharing arrangements for talent retention. Risk that popular performers migrate to competitors or that retention arrangements become unsustainable given competitive pressure on margins.
• PFIC Tax Classification — U.S. investors holding JOYY shares face 'significant adverse tax consequences' due to Passive Foreign Investment Company (PFIC) classification. This tax drag creates valuation headwinds versus domestically-listed competitors.

The 2025 Form 20-F does not disclose specific customer or advertiser concentration percentages. The filing discusses general advertiser and merchant acquisition strategies but omits quantitative concentration metrics (e.g., 'top 5 customers represent X% of revenue').