Ladies and gentlemen, thank you for standing by and welcome to the JOYY Inc. third quarter 2021 earnings call. At this time, all participants are in a listen-only mode. After the management's prepared remarks, there will be a question-and-answer session. I'd now like to hand the conference over to your host today, Jane Xie, the company's Senior Manager of Investor Relations. Please go ahead, Jane.
Thank you, operator. Hello, everyone. Welcome to JOYY's Q3 2021 earnings conference call. Joining us today are Mr. David Xueling Li, Chairman and CEO of JOYY, Mr. Ting Li, our COO, and Mr. Alex Liu, the General Manager of Finance. For today's call, management will first provide a review of the quarter, and then we will conduct a Q&A session. The Q3 2021 financial results and webcasts of this conference call are available at ir.joyy.com. A replay of this call will also be available on our website in a few hours. Before we continue, I refer you to our safe harbor statement in our earnings press release, which apply to this call as well as we will make forward-looking statements. Finally, please note that unless otherwise stated, all figures mentioned during this conference call are in U.S. dollar.
I will now turn the call over to our Chairman and CEO, Mr. David Xueling Li. Please go ahead, sir.
Hello, everyone. Welcome to our third quarter 2021 earnings call. Despite the increasing uncertainty due to COVID-19, we had another solid quarter as we grew our total quarterly revenues by 21.7% year-over-year to $651 million, while BIGO's revenue increased by 60.1% year-over-year to $569 million. Notably, we attained a non-GAAP profitability at the group level for the first time since we deconsolidated YY Live and booked $35.1 million in non-GAAP net profit. This was mainly attributed to BIGO's margin expansion and improved operating leverage at the group level. During the quarter, BIGO's non-GAAP net profit expanded to $49.6 million, while its non-GAAP net margin improved from 3.3% to 8.7% in the previous quarter.
The persistent execution of our globalization strategy has enabled us to deliver steady progress across multiple aspects, including one, the continued expansion of our global business. Two, diversify content offering on various products that nurture interest-based interactive social connections. Three, better synergy among multiple products that drive steady improvements in profitability at the group level. Next, let me share richer detail on some quarterly updates for each of our core product line. Let's start with Bigo Live. Despite global economic uncertainties and other challenges posed by the resurgence of COVID-19, our business demonstrated resilience as we entered the post-pandemic era. Bigo Live's live streaming revenue increased by 8.6% year-over-year in the third quarter. Our efforts to cultivate a global diversified content pool have been effective in further expanding the product reach of Bigo Live.
As Bigo Live's MAU increased by 10.7% year-over-year to $31 million in the quarter. The continued execution of our localized operation strategy has contributed a gradual build-up in the paying behaviors of our users as the number of paying users increased by 60.1% year-over-year. We also continued to deliver a robust performance of Bigo Live in multiple regions. In particular, on a year-over-year basis, revenue and the paying user from Europe increased by 50.6% and 26.7% respectively, while revenues and paying users from Southeast Asia and other emerging regions increased by 29.6% and 31.7% respectively. As we expand Bigo 's Live operation into multiple regions, our revenue mix continued to diversify, avoiding reliance on any individual market.
Looking at the development of the global live streaming industry, we believe that the penetration rate for live streaming remains at very low levels, leaving us with tremendous growth opportunities ahead. Going forward, we will continue to deepen penetration in multiple key markets, including North America, Europe, Middle East and Asia Pacific regions, and dedicate more resources toward the emerging markets as well. In doing so, we will further solidify our leading global market position in the social and entertainment live streaming sector. With regards to our content efforts, in the past few quarters, we have been enlarging our talent pool of content creators and expanding our localized premium content library via various cross-industry partnerships and a series of localized operational activities. We have focused on a handful of categories, including talent entertainment, gaming and lifestyles, and further expanded our product reach.
For example, for the talent entertainment category, the first live broadcasting music competition, Voice of Bigo Live, wrapped up recently, achieving a huge success in Thailand, attracting more than 100,000 concurrent viewers for its final event. In North America, Bigo Live launched a new channel feature and attracted many influencers to create their own personal channels on the platform, covering some of the hottest topics and pop culture, including Canadian singer Trisha Paytas's finance channel, Sam Asghari's fitness channel, and American variety star and singer Farrah Abraham's mental health channel. On one hand, we provide a platform for those influencers to showcase their talent and creativity. On the other hand, we leverage our influencers to promote content diversification and high-quality engagement on Bigo Live platform.
In the gaming category, we partner with two mobile game heavyweights in July, further enriching Bigo Live's gaming content. In France, Bigo Live partner with a popular mobile RPG, Saint Seiya: Awakening, which was published globally by GTarcade, and hosted a series of incentive events for Bigo Live gaming content creators. Meanwhile, through our cooperation with Garena, we hosted and streamed the Free Fire League, a national level eSports tournament in Southeast Asia. As a result, we further enrich our gaming UGC during the quarter. We are also further expanding our connections while unlocking new interactive sectors. In the lifestyle category, we made our initial foray into e-commerce live streaming in Southeast Asia.
In August, we launched the Bigo Marketplace channel in Indonesia, Malaysia and Thailand, and we conducted a controlled beta test of the in-app shop feature, which enable a small group of pilot users to complete their purchase through punch-out links with registered third-party merchants. While Bigo Marketplace is still in its infancy in terms of development, it has the potential to expand our product reach by providing a diversified interactive experience for our users. During the quarter, we continued to introduce innovative product features on Bigo Live to further improve our user experience. New features include picture-in-picture, new live streaming modes supporting 12 simultaneous streamers for multi-user chat room, and more.
As a result, the number of streamers of multi-users chat room increased by 2.3%, and average duration per live streaming session increased by 5.3% sequentially. In addition, we updated Bigo Live's non-real-time content sharing feature, BAR, and improved its user engagement further, achieving an eight point one percent sequential increase in average user time spent viewing BAR postings. Also, by optimizing its content recommendation algorithm with more precise user profiling, we eased Bigo Live's user discovery of interested, interest-based content beyond live streaming rooms, increasing its next day user retention rate by 0.5%. Going forward, we plan to further enrich our localized content offerings. We believe that it will help our users establish more fulfilling interest-based social connections, further expand our product's reach, fuel our user base expansion, and ultimately help build a diverse, inclusive global community.
Next on Likee. In line with our emphasis, long-term growth, and sustainability, we have been fine-tuning Likee's marketing strategy since the first quarter of this year, and prioritizing our investment on our content and social ecosystem. As a result, Likee's overall MAU experienced some short-term fluctuations, and declined to $76.8 million. However, we are starting to see a slowdown in the downward trend, especially in the Gulf space from the Middle East region. Therefore, Likee's live streaming revenue grew further by 58.1% year over year, mainly driven by the Middle East region, as revenues from the Middle East increased by 1.5 times year over year. In the past quarter, our efforts have been centered on identifying, cultivating, and supporting talent content creators to cultivate a friendly and vibrant content creation community.
We launched a series of incentive programs offering both user traffic and other economy rewards to influential content creators with more than 10,000 fans. At the same time, we continued to uncover the most talented content creators through a variety of localized themes, events, and challenges. As a result, the number of certified creators increased by 17% sequentially in the third quarter. As part of the incentive programs, Likee introduced a new product feature called Super Like in Russia, Indonesia, the Middle East, and other regions. With the new feature, users are able to obtain Super Like either through purchasing or viewing in-app commercials, and then grant it to their favorite creators and short videos.
Essentially, Super Like enables creators to engage with a large range of fan group in non-real-time manner, stimulating social interactions and adding a diversified monetization tool for creators, motivating the production of more premium content. As a result, in Russia, for example, Likee's launch of Super Like garnered widespread interest from creators and evidenced by 7.1% month-over-month increase the number of certified creators joined the Likee community. Looking ahead, with the recruitment of an increasing number of talented creators, we should be able to augment Likee's rich and dynamic content ecosystem, and pave the way towards the revival of its user base expansion. Lastly, on Hago. Hago's live streaming revenue continued its rapid growth momentum as its revenue grows by 78.7% year-over-year, and its number of paying user increased by 1.5 times.
In terms of product development over the last few quarters, we made some strategic changes to Hago's positioning, transitioning from an interactive platform primarily focused on casual games to audio and video multiplayer social interaction and entertainment platform. We made successive launches of features updates in the past few quarters, including the Hago 4.0 update with a major revamp of its channel feature focusing on the improvement of multi-user social interactive activities, the virtual family group function, and most recently, the team up audio service for mobile games. Those new features enable users to continue meeting the ever-evolving entertainment and interaction needs for our users. Following the series of adjustments, we have achieved a preliminary transformation in Hago's traffic structure, driving significant improvements in user interaction. On a sequential basis, channel penetration rates increased by 4.0%.
In Q3, the penetration of our virtual family group function increased by 9.9%. The average duration of voice chat room increased by 40.3% to 80 minutes, while the penetration rates of team up audio live streaming service for mobile games increased significantly from 0% to 4.4%. In the future, we will continue to provide users with a more diverse multiplayer interactive entertainment experience and cultivate an interest-based social entertainment community. All in all, during the third quarter, despite the recent volatility in the macro environment and the increased uncertainty due to COVID-19, our persistent execution of our globalization strategy helped us to achieve substantial progress in multiple fronts.
Our efforts of enhancing our diversified and localized content ecosystem have helped Bigo Live further expand its product reach and user base, while continuing the cultivation of talented content creators and effectively increasing engagement levels in Likee's content community through the combination of improved synergy among various products, enhanced operation leverage, and prudent marketing strategies. We have achieved a steady expansion in profitability for both Bigo segment and for the entire group. Going forward, we will continue to cultivate our localized content and social ecosystems, nurture interest-based interactive social connections, and pursue long-term sustainable growth for our global business.
Lastly, in light of the current market condition, on top of the current $200 million new share purchase plan announced in September 2021, our board of directors had just authorized an additional share purchase plan under which the company may purchase up to $1 billion of our shares till November 2021 to demonstrate our confidence in the company's long-term growth prospects and to reward our shareholders for their long-term support of the company. This concludes my prepared remarks. I will now turn the call to our General Manager of Finance, Alex Liu, for a more detailed explanation of our quarterly financial results.
Thanks, David. Hello, everyone. As JOYY's General Manager of Finance, I will talk about the financial results. Since a majority of our revenues and expenses are now denominated in USD, starting from January 1st, 2021, we have changed our reporting currency from RMB to US dollar to better illustrate our operational results. Please note that the financial information and non-GAAP financial information disclosed in our third quarter earnings press release is presented on a continuing operations basis, unless otherwise specifically stated. As the sale of YY Live was substantially completed on February 8th, 2021, with certain customary matters to be completed in the near future. The historical financial results of YY Live are reflected in the company's consolidated financial statements as discontinued operations accordingly, starting from the fourth quarter of 2020.
During the third quarter of 2021, despite the recent volatility in the macro environment and increased uncertainty due to COVID-19, we continued to deliver promising financial results. Our total net revenues for the third quarter increased by 21.7% year-over-year to $650.5 million, from $534.4 million in the same period of 2020, primarily attributable to the continued paying users growth of BIGO. In particular, our live streaming revenues for the third quarter increased by 19.7% year-over-year to $612.2 million. Other revenues in the third quarter increased by 66.8% to $38.4 million.
Through the combination of improved synergy among multiple products, enhanced operating leverage, and prudent marketing strategy, we have achieved a steady expansion in profitability for both BIGO segment and for the entire group. Cost of revenues for the third quarter increased by 16.1% year-over-year to $439.8 million. Revenue sharing fees and content costs increased to $290.1 million in the third quarter from $234 million in the same period of 2020. Which was in line with the increase in live streaming revenues. Bandwidth cost decreased to $90 million from $27.6 million in the same period of 2020. Primarily due to the company's improved efficiency and the termination of bandwidth usage for India users after the Indian government ban of Chinese apps in late June 2020.
Partially offset by user base expansion outside India. Gross profit increased by 35.5% year-over-year to $210.8 million. Gross margin in the third quarter of 2021 improved to 32.4% from 29.1% in the same period of 2020. Operating expenses for the third quarter decreased to $208.7 million from $249.4 million in the same period of 2020. Among the operating expenses, sales and marketing expenses decreased to $106.3 million from $134.6 million due to disciplined spending on user acquisition via advertisement for certain products, including Likee and Hago.
Our GAAP operating income for the third quarter was $6.9 million, compared to operating loss of $89.3 million in the same period of 2020. Operating income margin for the third quarter was 1.1% compared to operating loss margin of 16.7% in the same period of 2020. Our non-GAAP operating income for the third quarter, which excludes share-based compensation expenses, amortization of intangible assets from business acquisitions, as well as impairment of goodwill and investments and gain on the sale of subsidiaries and business, was $31.3 million in the quarter, compared to non-GAAP operating loss of $39.5 million in the same period of 2020.
Our non-GAAP operating income margin for the third quarter was 4.8% compared to non-GAAP operating loss margin of 7.4% in the prior year period. GAAP net income from continuing operations attributable to controlling interest of JOYY in the third quarter of 2021 was $7.5 million, compared to net income of $191 million in the same period of 2020. Net income margin was 1.2% in the third quarter of 2021, compared to 35.7% in the corresponding period of 2020. Our net income was higher in the same period last year, mainly due to the gain from the partial disposal of equity interest in Huya.
Non-GAAP net income from continuing operations attributable to continuing interest of JOYY was $35.1 million in the third quarter compared to non-GAAP net loss of $26.6 million in the same period of 2020. Non-GAAP net income margin was 5.4% in the third quarter of 2021 compared to non-GAAP net loss margin of 5% in the same period of 2020. This means that we have attained non-GAAP profitability at group level for the first time this quarter since we deconsolidated YY Live.
Notably, BIGO continued to achieve a positive non-GAAP net income for three quarters, as its non-GAAP net income expanded to $49.6 million in the third quarter, with non-GAAP net income margin improved to 8.7% from non-GAAP net loss margin of 2.1% in the prior year period. Diluted net income per ADS in the third quarter of 2021 was $0.07, compared to $2.22 in the same period of 2020. Non-GAAP diluted net income per ADS was $0.42, compared to non-GAAP diluted net loss of $0.33 per ADS in the same period of 2020.
In addition, in accordance with our quarterly dividend plan approved on August 11, 2020, and on November 16, 2020, we will be distributing a dividend of $0.51 per ADS for the third quarter of 2021. This is expected to be paid on December 23, 2021 to shareholders of record as of the close of business on December 10, 2021. Also, we would like to provide an update to our execution of the share repurchase program announced in August 29, 2019, and later extended in May 2020. The board of directors has authorized a share repurchase program in which the company may repurchase up to $300 million of its shares till August 2021. As of September 30th, 2021, such share repurchase program already expired.
The company had almost fully executed this share repurchase program and repurchased approximately $300 million of its shares. In September 2021, the company announced that its board of directors has authorized a new share repurchase plan in which the company may repurchase up to $200 million of its shares till September 2022. As of September 30, 2021, the company had repurchased approximately $16.7 million of its shares under this program. Earlier today, our board of directors has just authorized an additional share repurchase plan in which the company may repurchase up to $1 billion of our shares till November 2022 to demonstrate our confidence in the company's long-term growth prospects and to reward our shareholders for their long-term support of the company.
As David just mentioned, we will continue to further expand our global market reach, cultivate our highly engaged user community, and enhance our high-quality content offerings. We will also continue to actively explore other ways to maximize shareholder value. Beginning in the second quarter, we have anticipated some negative impact on users' online social entertainment activities from the gradual lift of pandemic-related lockdowns in certain countries. We expect our net revenues for the fourth quarter to be between $652 million and $661 million, representing a year-over-year increase between 14.7% to 16.3% on a constant currency basis. Excluding the revenue contribution from YY Live in the same period of last year, we currently have limited visibility surrounding the COVID-19 epidemic's long-term impact, impacts and geopolitical uncertainties on our business and the market in which we operate.
Therefore, this forecast only reflects our current and preliminary views on the market and operational conditions. These are subject to change. That concludes our prepared remarks. Operator, we would now like to open up the call to questions. Thanks.
As a reminder, to ask a question you will need to press star one on your telephone. To withdraw your question, press the pound or hash key. When asking a question, please state your question in Chinese first, then immediately repeat your question in English. Thank you. Your first question comes from the line of Thomas Chong from Jefferies. Please ask your question.
[Non-English content]. Thanks management for taking my questions. I have three questions. The first question is about the COVID situation and how would that impact the user behavior in terms of the time spent, engagement, and how that actually affects our monetization. Can we talk about by geographies how that impact these metrics? My second question is about the Q4 revenue guidance. Can management elaborate a bit more about the trend for different business line? My third question is about the cost and expense trend, how we should think about it going forward? Thank you.
[Non-English content].
Thank you, Thomas. I will answer your first question. If you recall, last year we realized very substantial growth in our global business. Our year-over-year growth in many quarters has actually surpassed 100% for multiple quarters. On top of that, when COVID there has been some short-term fluctuation caused by COVID-19, it has put some extra pressure for us to realize or maintain such a high level of growth continuing business. You can see that at the end of second quarter, we have encountered increased uncertainty due to COVID-19. On the one hand, you see some countries gradually lifting lockdown bans, and there has been negative impact on users online social entertainment activity.
On the other hand, with the resurgence of COVID-19 in certain areas, we've seen weakened consumer confidence on the economy, which have negative impact on users' paying behavior. This varies across different regions as well. We have seen that, with our efforts to continue to introduce diversified content and new product features which have improved user engagement. We see Bigo Live user time spent and retention rate in key markets have remained stable. There has been some short-term fluctuation of Bigo's monetization capabilities, such as paying ratio and ARPU in certain regions, such as, U.S. and the Middle East.
So far, we do have limited visibility into the precise impact related to COVID-19. That's why we have provided a relatively conservative estimate for our Q4 revenue, which implies a year-over-year growth of 14.7%-16.3% at group level. We will provide further updates once we have better visibility.
Okay, Thomas. [Non-English content].
This is Alex. I will answer your second question. As there would be an increased number of marketing and operating activities in Q4, we expect our content costs and sales and marketing expenses to increase modestly in the fourth quarter, both in terms of absolute amount and expense margin, over the third quarter level, resulting in a slight decrease in our gross margin and non-GAAP net margin for BIGO segments in Q4 on a sequential basis. As you can notice, BIGO has achieved non-GAAP net profit for three consecutive quarters. For the full year, we believe that BIGO segment will achieve a low single digit non-GAAP net margin. For year 2022, after a few quarters of marketing spend adjustments to Likee, we have seen some positive preliminary results to the product.
We will continue to observe Likee user engagement level, retention rate, and content ecosystem progress, and flexibly adjust Likee marketing spend in the coming year. Overall speaking, we will ensure a steady and balanced growth strategy, balanced growth and profitability of our global business in 2022, and increase investment in sales and marketing activities, and further expand our global localized operational teams. We expect BIGO segment to achieve steady growth in terms of revenue and will remain profitable in 2022. In the longer term, with the group's multiple products gradually moving towards breakeven, we believe that the overall profit margin will be gradually increased. Thank you.
Thank you.
Your next question comes from the line of Alex Poon from Morgan Stanley. Please ask your question.
[Non-English content]. My first question is related to Bigo Live and Likee. Can management share some of the new features and content, the user feedback, revenue contribution from these features in Q3? Going forward, what new features and content are we looking for to expand into? My second question is related to our deal progress update with Baidu. Thank you very much.
[Non-English content].
Thank you, Alex. This is David. I will answer your question. Both for Bigo Live and Likee, we have been trying out new content and new product features in the past few quarters. In early August, as I've just mentioned, for Bigo Live, we have beta tested the BIGO Pasar Malam, which is the night market e-commerce live streaming channel in Malaysia, and received some preliminary positive user reaction, with average user views per live streaming session reaching 150,000-200,000 per live streaming session. In response, in late August, we officially launched the Bigo Marketplace channel in Malaysia, Indonesia and Thailand.
The viewers DAU penetration rate was as high as 25% in certain regions. While Bigo Marketplace is still in its infancy in terms of development, it has the potential to expand our product outreach by providing a diversified interactive experience for our users. We do not charge the merchants any commission at this stage yet, so there would be no contribution to revenue at this stage. In Q4, we will be launching gifting functions under our non-real-time content community, the BAR feature, to further improve the engagement level of BAR feature. For Likee, as I've just mentioned in my prepared remarks, we introduced a feature called Super Like in Russia, Indonesia, Middle East and also in the U.S. in late August.
We have seen Super Like MAU penetration rate reached 7.7% in the first month in certain regions. As the creators could actually obtain the revenue share from Super Like, we believe that the feature could motivate the production of more premium content and help creators better engage with their fan groups. As of today, the revenue contribution from Super Like at this stage is very limited, and we will continue to monitor our users' feedback. In addition to Super Like, in Q4, we are planning to launch subscription feature under Likee to continue our support for the KOLs and to help them pursue long content creation as a lifelong career.
[Non-English content].
As for the updates of the YY Live deal, there hasn't been new information since our previous communication. As mentioned in the SEC filings that the company released, we have substantially completed the sale of our YY Live to Baidu, and there are still customary matters in progress. Both sides have agreed to extend the closing date of the proposed transaction to a date mutually agreed upon by the parties. If there is any further updates, we will disclose it when and as required by applicable securities laws. Thank you.
[Non-English content] .
Your next question comes from the line of Yiwen Zhang from China Renaissance. Please ask your question.
[Non-English content]. So the first question regarding Likee, you mention it's more like a flexible marketing strategy. Can you share more color on this that depends on the landscape or the user acquisition cost or other factors and what is your perspective on the like live streaming trend into 2022. Secondly, can you give us an update on the overseas live streaming and short video competition landscape? Thank you.
[Non-English content].
First of all, I'd like to separate two questions and begin with some thoughts on live streaming first. We've got the impression that the market is actually very concerned about the potential negative impact live streaming platforms might have from the mega social platforms with huge traffic. Actually, based on our observation of the Chinese peers and also competitors data, we've seen that for these larger scale social platforms, their monetization efficiency via live streaming is actually very low. It's lower than live streaming, and it's lower than their own advertising business. That's why you never see for these social platforms to put live streaming business as their priority of growth engine, because they would believe that the efficiency and the ROI is actually lower than them pursuing an advertising driven model.
What we'd love to emphasize here is that for these mega relatively larger scale social platforms, they do not actually compete with our business directly, because that is by nature of priority of their business growth model. We believe that we will still be able to obtain a longer term sustainable growth from our live streaming business.
[Non-English content].
As for Likee, what I'd like to emphasize is that we've not only adjusted the marketing spend of Likee, we've also changed our product strategy as well. You can see that as compared to our competitors, we're actually going through a different direction. We are advocating private traffic, enabling KOLs, celebrities, gaming companies with existing or established fan groups to establish or to attract their fan groups onto Likee, and also to be able to monetize their fan groups via the platform.
If you look at the appearance of Super Like, it looks like a gifting feature in its own, but actually in nature, it's about helping these KOLs, helping these influencers to be able to locate the fan groups who are willing to pay for their content and be able to enable these KOLs and influencers to monetize their fan group. The introduction of the new feature subscription is also one of the monetization tool that we will provide for these KOLs. You can see that, if you look at our competitors' platforms, you can see that a lot of the traffic distribution is prioritizing the public domain, centering, emphasizing the platform's control over traffic distribution and diminishing the KOLs and influencers' own personal influence on their fan group.
What we would like to do is the opposite. We would like to advocate private traffic, help these users, help these KOLs and influencers to drive their own fan group, establish fan groups from other products or platforms to Likee. We, by providing such diversified monetization tools, including the existing live streaming, Super Likes, subscription, and even e-commerce, diversify monetization toolbox to these KOLs and influencers so that we will be able to drive the further growth of Likee. All in all, you can see that we'd love to see a big change to Likee's business model, where not only the marketing strategy is adjusted, but also we have go for a differentiated product strategy which avoids direct competition with other platforms.
Going forward, you'll be able to see that we'll be able to continue to grow Likee's revenue with narrowing loss. In the future, by continuing centering private traffic domain for these KOLs, we'll be able to further empower these KOLs and influencers and be able to drive further expansion both for our user base and monetization level. Thank you.
I would now like to hand the conference back to the management for closing remarks. Please continue.
That concludes the end of today's call, and we look forward to speaking with everyone next quarter. Thank you.
Thanks.
Yes, this concludes today's conference call. Thank you for participating. You may now disconnect.