Ladies and gentlemen, thank you for standing by, and welcome to JOYY Inc.'s second quarter 2026 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, Xinyuan Liu, the company's Head of Investor Relations. Please go ahead, Xinyuan.
Thank you, operator. Hello, everyone. Welcome to JOYY's second quarter 2026 earnings conference call. Joining us today are Ms. Ting Li, Chairperson and CEO of JOYY, and Mr. Alex Liu, Vice President of Finance. For today's call, management will provide a review of this quarter, followed by a Q&A session. The financial results and webcast of this conference call are available on our website, ir.joyy.com. Please note that today's call contains forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations. For detailed discussions of these risks and uncertainties, please refer to our latest annual report on Form 20-F, and other documents filed with the SEC.
Please also note that JOYY's earnings press release and this conference call include disclosures of GAAP and non-GAAP financial measures. A reconciliation of these non-GAAP measures to GAAP measures is included in today's earnings press release. All figures referenced on today's call are in U.S. dollars, unless otherwise noted. I will now turn the call over to our Chairperson and CEO, Ms. Ting Li. Please go ahead.
Hello, everyone. I'm Li Ting. Thank you for joining us. Building on a strong first quarter, we delivered another solid result in Q2, recording accelerated revenue growth and a notable improvement in operating profit. Our social entertainment, BIGO Ads , and the SHOPLINE business all advanced in tandem. While our globally diversified ecosystem continued to unlock growth momentum, propelling our long-term value to its next level. In the second quarter, we generated total revenue of $591 million, up 16.3% year-over-year, and 6.3% Q/Q. Social entertainment revenue was $423 million, up 7.4% year-over-year, and 5.6% Q/Q. BIGO Ads, including both first-party and third-party businesses, generated $134 million in revenue, up 53.1% year-over-year, with our third party, BIGO Audience Network, sustaining strong growth of 74.1% year-over-year. SHOPLINE revenue reached $34 million, with year-over-year growth further accelerating to 28.6%.
Non-live streaming revenue surpassed 31.8% of total revenue for the quarter. Non-GAAP operating profit reached $49 million, up 28.2% year-over-year, and non-GAAP EBITDA reached $57 million, up 18.1% year-over-year. Operating cash flow for the quarter was $65 million. As of June 30, 2026, we held $3.06 billion in net cash. Since the start of this year, we have accelerated our capital returns year-to-date. Through August 21, 2026, we have repurchased a cumulative $216 million in shares and paid $142 million in dividends, for a total return of $359 million in shareholders. Meaningful shareholders' returns remain a key part of our strategy as we continue to execute on the $1.5 billion shareholders' return program running through the end of 2028, which our board authorized this May. At this mid-year mark, I would like to take a few minutes to share our perspective on our overall strategy.
Today, JOYY is steadily evolving into a multi-engine global technology company. In the first half of this year, the core social entertainment business maintained a steady recovery, with all flagship products returning to solid growth and profitability continuing to improve. This further validates the effectiveness of the judgments we have made to our content ecosystem, user experience, and localized operations over the past several quarters. At the same time, our second growth curve, comprising ad tech and smart commerce sustained a strong performance, making increasingly greater contributions to the group. Looking ahead, we remain committed to building a global technology ecosystem driven by AI. By leveraging the synergies of social entertainment, programmatics, advertising, and omnichannel e-commerce, we are fueling our growth fly view, and building the core competitiveness that will define our future. First, social entertainment remains an important strategic cornerstone for the group.
We will continue to strengthen the growth momentum and profitability of our core products, while accelerating the build-out of our social product portfolio. These initiatives are expected to further reinforce the recovery trend and growth resilience of our core business, providing a stable foundation for profitability cash flow generation. At the same time, we are cultivating our ad tech and smart commerce businesses to boost overall revenue expansion. We will prioritize enhancing the standalone competitiveness of each business, expanding our customer base and business footprint, and further deepening our data, technology, and product capabilities. Looking ahead to 2028, as this business continues to scale, we currently expect non-live streaming segments to contribute close to half of the group's total revenue and operating profit. We see this as a testament to the strength of our multi- engine growth strategy and the validation of our long-term strategic approach.
AI is a critical foundational technology supporting our long-term strategy across all of our businesses. We continue to leverage AI to drive measurable product enhancements and efficiency gains across a range of scenarios, including our streamer ecosystem, content distribution, payment experience, advertising vertical models, and SHOPLINE merchant operations. We are also applying AI to enhance our team's data analysis, decision making, and execution capabilities. By turning proven experience and workflow into replicable AI capabilities, we can accelerate knowledge sharing and scale best practices, further improving overall operating efficiency. In addition to our long-term business development, shareholder returns remain a persistent strategic priority. Our strong cash position and robust operating cash flow provide a solid foundation for ongoing business investment and shareholder returns. We expect to continue actively advancing our share repurchase and dividend programs as the company grows over the long term.
We remain committed to validating the strategic path through solid operating results, driving great market recognition of our long-term value. Next, I will walk through our Q2 results and share our outlook for the future. In Q2, social entertainment revenue grew 7.4% year-over-year and 5.6% Q/Q. Within this segment, live streaming revenue grew 7.3% year-over-year and 5.9% Q/Q. Core live streaming paying users grew 3.9% year-over-year and 1.7% Q/Q. On the traffic side, our global average mobile MAUs reached 277 million, up 5.5% year-over-year, supported by strong user engagement and organic growth. Our instant messaging product increased its contribution towards total MAUs to 82%. Bigo Live, our flagship product, recorded stronger sequential growth in Q2.
This momentum was driven by ongoing enhancements to our streamer incentive and growth mechanism, a richer content ecosystem, and AI-powered improvements to content distribution and payment experiences, alongside localized operating campaigns. Together, these efforts effectively drove user engagement and greater willingness to pay. In Q2, Bigo Live's average daily active streamers increased 4.4% Q2, while newly signed streamer joining Live increased 5.4% Q2. As we further enhance our streamer recruitment, incubation, and development mechanism, the supply of high-quality content on our platform should continue to expand. In content distribution, we continue to develop and refine our AI-driven content understanding capabilities. In particular, our focus is on improving onboarding content for new users and depending users consumption. By more efficiently identifying and distributing high-quality content across regions, we can better match content with users' interests and improve their consumption experiences.
To improve payment experience, we have been expanding our AI-generated content and interactive virtual gifts. In May, these gifts accounted for 34.3% of total virtual gift consumption, further validating the value of AI in reaching our content supply and enhancing users' interactive experience. At the same time, our new YY Voice product portfolio continued to drive solid growth. In Q2, revenue from this new product increased more than 400% year-over-year, and 39% Q/Q, gradually becoming a meaningful complement to our social entertainment growth. Our current Q3 guidance projects moderate single-digit year-over-year growth for social entertainment revenue. In the second half, we will continue to strengthen localized operations, enrich content supply, and further optimize user and payment experiences. As core live streaming paying users expand steadily and our new YY Voice product portfolio contribute to further incremental growth, we expect stronger momentum for our social entertainment business.
Based on current trends, we are confident that our social entertainment business will achieve full-year revenue growth in 2026, and sustain a steady growth trajectory beyond. In Q2, BIGO Ads generated $134 million in revenue, up 53.1% year-over-year, and 7.1% Q/Q. Notably, our third-party business, the BIGO Audience Network, continued its strong momentum, delivering 74.1% year-over-year growth and 9.3% Q/Q growth. Accelerating traffic expansion, a more diversified advertiser mix, omni-channel positioning, and significant algorithm efficiency gains are all strengthening the flywheel effect. On the supply side, BIGO Ads developer ecosystem and global traffic coverage continued to expand. Our SDK traffic maintained a steady increase of 37.7% year-over-year in Q2. On the demand side, our strategy presence across multiple verticals, combined with AI-driven algorithm interventions, growing traffic scale, and regional market expansion drove strong advertiser demand.
As a result, performance advertising demand across multiple channels, including web and IAA, delivered stand out result. Web-based demand, primarily from lead generation and e-commerce, grew 91.7% year-over-year and 14.4% Q/Q. In Q2, we continued to expand our advertiser base in several verticals, such as sub-verticals to e-commerce, further enriching our advertiser mix. As we approach the peak seasons in the second half, we are making early preparations in Q3 and remain optimistic about the growth prospects of web-based demand. Meanwhile, IAA spending recorded 70.6% year-over-year growth. On the algorithm side, continued investments in algorithm and engineering infrastructure, like for algorithm capability and cost efficiency and converting into positive circle that will drive the next stage of BIGO Ads development. As we accumulate our customer feedback data and refine our multi-channel attribution capabilities, our user profiling and targeting capabilities are improving.
Building on this, we continue to integrate our vertical specific models and strengthen our platform algorithm capabilities. We are focusing on traffic segmentation and budget matching, traffic bidding and post-campaign optimization. Together, these efforts are improving the matching efficiency between budget and traffic, and overall monetization efficiency. At the same time, we are advancing upgrades to our algorithm and engineering system, and continuously optimizing compute scheduling and several costs, which allow us to manage infrastructure costs more efficiently, even as request values scale rapidly. As we build our three-layer system of vertical algorithms, platform algorithm capabilities, and engineering infrastructure, the data accumulated from growing customer and traffic base will feed back into model optimization efforts. We expect this will drive virtuous circle across delivery, performance, advertiser budget, and traffic monetization efficiency, and provide stronger technological momentum for the next stage of scale growth in our advertising business.
Looking ahead, we will continue to depend our focus on key verticals such as lead generation, e-commerce, and gaming. We aim to further bolster our differentiated competitive advantage by expanding customer scale and density, entering more regional markets, and improving our algorithms and product capabilities. Based on our progress to- date, we remain confident in our established long-term targets for the third-party advertising business. We are continuing to scale. We expect a steady structural improvement in profitability as the ad tech business gradually becomes an integral driver of group's revenue and profit growth. Turning to SHOPLINE. In Q2, SHOPLINE generated revenue of $34 million, up 28.6% year-over-year and 12.5% QoQ, with revenue growth building up from Q1. Business from cross-border merchants sustained strong growth of 73.5% year-over-year, driving the acceleration in overall revenue expansion.
Last quarter, we reported SHOPLINE as a standalone segment for the fourth time and defined it as an AI-native, one-stop, omni-channel commerce infrastructure. What we offer merchants is not simple a store build tool, but a full, open, connectable, and extensible omni-channel retail operating system. I would like to take this opportunity to share how AI is bringing new changes to the e-commerce industry and to SHOPLINE. AI is fundamentally reshaping the way consumers discover products, compare options, and complete purchases. New traffic and transaction entry points emerge. Commercial scenarios were becoming more diverse and fragmented. Against this backdrop, merchants need a unified, open, and connectable e-commerce infrastructure more than ever, and one that links product, transaction, and customer relationships across different channels. As commercial entry points diverge and diversify, merchant demand for a unified operating system grows, making SHOPLINE's value as an omni-channel commerce infrastructure even more pronounced.
In the first half, for SHOPLINE, merchants' page views from AI channels grew nearly 15-fold year-over-year, and order volumes grew over 35-fold year-over-year. It's gradually becoming a common e-commerce scenario for consumers to discover products through AI entry point and complete transactions directly in merchant stores. SHOPLINE has expanded its integrations with multiple leading AI agents, including ChatGPT, Claude, and Cursor. This enables merchants to capture the traffic and the transaction from these new entry points, while converting orders, customer relationships, and operating data across channels into a lasting asset for merchants. Drawing on more complete operational data accumulated on SHOPLINE, AI can better process and interpret a merchant's actual operating conditions, and use that understanding to improve operations and decision-making efficiency. In addition, SHOPLINE's Copilot, which allows merchants to manage their online stores more efficiently using natural language, has entered internal testing.
Our goal is not only to leverage AI to unlock new traffic entry points for merchants, but also to gradually integrate AI across the entire merchant operating journey, helping merchants connect with consumers, manage operations, and drive growth more efficiently in an increasingly fragmented business environment. Our revenue is powered by two engines. On one hand, high retention subscription services provide a stable revenue foundation. On the other, value-added services such as payments and marketing allow us to participate more deeply in merchants' GMV growth. As merchants reach consumers through more channels, driving continued growth in order volumes and GMV, SHOPLINE's revenue will expand accordingly. In Q2, value-added services maintained rapid growth and continued to increase their share of revenue. Because value-added services like payments technically carry lower gross margins than subscription services, this revenue mix shift led to the modest sequential pullback in gross margin from Q1.
What matters more to us is that value-added services can scale our existing merchant base on platform capabilities without a proportional increase in scale and R&D investment. As a result, their ongoing growth is expected to deliver stronger operating leverage, driving steady improvement in SHOPLINE's operating profit and margin. As merchant base and GMV continue to increase, we expect value-added services to make a great contribution to SHOPLINE's revenue and profit expansion in the future, further aligning our long-term growth with merchant success. Our current Q3 guidance implies SHOPLINE's revenue growth rate in the middle 20s year-over-year. As revenue and gross profit continue to increase and operating efficiency further improves, SHOPLINE remains firmly on track along its established path in profitability. Moving on to the share buybacks. In Q2, we repurchased a total of $108 million in shares.
Through August 21 of this year, we have repurchased a cumulative total of $216 million, maintaining an accelerated buyback pace. Given our strong operating momentum and long-term prospects, we believe our current share price does not yet fully reflect the company's intrinsic value. Going forward, we will continue to actively advance our share buyback program, while balancing business investment and long-term development. As our social entertainment and advertising businesses grow in scale and profit contribution, we will continue to work with our board to further refine our shareholder return framework, allowing shareholders to more fully benefit from the company's operating results. In closing, our Q2 results further validate our multi-engine growth strategy. The value of our strategic positioning and ecosystem is only beginning to unlock.
Looking ahead, as each of our three business segments becomes stronger and more competitive, we expect greater synergies across the group, driving our long-term value creation to its next phase. With that, I will now hand the call over to Alex Liu, our Vice President of Finance, to walk through our financial results in detail.
Thanks, Miss Li. Hello, everyone. In the second quarter of 2026, we recorded total net revenues of $591 million, securing a year-over-year growth of 16.3% and quarter-over-quarter growth of 6.3%. Our non-GAAP EBITDA for the quarter was $57 million, up 18.1% year-over-year and 24.4% quarter-on-quarter. Our operating cash flow was $65 million, and we ended the quarter with roughly $3.06 billion in net cash. As previously communicated, we accelerated our share buybacks since the start of 2026. As of August 21, we have bought back $128 million worth of our shares under the up to $600 million share repurchase program authorized in May, bringing total share repurchase to $216 million year-to-date. I will now dive deeper into our detailed financial performance. Social entertainment revenues were $423 million for the second quarter, up 7.4% year-over-year and 5.6% quarter-over-quarter.
In particular, live streaming revenue growth accelerated to 7.3% year-over-year and 5.9% quarter-over-quarter, further confirming the recovery momentum of our core business. Core live streaming paying users increased by 3.9% year-over-year, while ARPPU returned to positive growth up 2.4% year-over-year. Live streaming revenues from developed countries continued to deliver strong growth, increasing by 11.8% year-over-year. BIGO Ads revenues increased by 53.1% year-over-year and 7.1% quarter-over-quarter to $134 million. In particular, our third-party advertising business, BIGO Audience Network, delivered another exceptional result, recording 74.1% year-over-year and 9.3% sequential growth. On the traffic front, SDK network and ad requests increased by 37.7% year-over-year in the second quarter. We continued to optimize our auto-reserve to improve ad campaign performance and drive advertisers spending. Our multi-vertical strategy also helped us capture broader market opportunities. Web-based demand increased by 91.7% year-over-year, while mobile-based demand remained strong, with IAA spending up 70.6% year-over-year.
We remain firmly committed to our three-year strategic goal for BIGO Audience Network of $1 billion in revenue. As the business continues to scale, we are confident in its ongoing profitability, with room to further improve its economics over the medium term. SHOPLINE generated revenue of $34 million, with growth accelerating to 28.6% year-over-year and 12.5% quarter-over-quarter. Revenue from cross-border merchants increased by 33.5% year-over-year, while its revenue contribution rose by 7.2 percentage points compared with Q2 last year, making it an increasingly important driver of SHOPLINE's overall growth. Gross profit was $202 million in the quarter, up 8.8% year-over-year and 6.5% quarter-over-quarter, with gross margin remaining sequentially flat at 34.1%. Social entertainment gross margin was up quarter-over-quarter as we continued to improve user engagement and monetization. BIGO Ads gross margin was down quarter-over-quarter due to a shift in revenue mix, reflecting a higher contribution from lower-margin third-party advertising revenues.
SHOPLINE's gross margin was also down quarter-over-quarter, primarily driven by a higher contribution from lower-margin value-added service, particularly payments and marketing. While these surveys carry lower gross margin than subscription revenues, they technically require less incremental sales and R&D investment to scale. We therefore believe this makes SHOPLINE's lower-margin mix scale effectively and help safeguard operating leverage and long-term profitability. Our operating expenses for the quarter were $188 million, up 4.7% year-over-year and 2.6% quarter-over-quarter. Sales and marketing expenses were higher year-over-year, consistent with revenue increase. G&A expenses were also higher year-over-year, primarily due to increased share-based compensation expenses. R&D expenses were lower year-over-year as we remained prudent and disciplined in our total spending through enhanced resource sharing and operational synergy across different business units while strategically allocating incremental shares of our R&D resources towards BIGO Ads.
Our non-GAAP operating income for the quarter was $49 million, up 28.2% year-over-year and 29.4% quarter-over-quarter. Non-GAAP net income attributable to controlling interest of JOYY in the quarter was $63 million, representing a non-GAAP net margin of 10.7%. Our non-GAAP net income was lower year-over-year due to a higher FX loss of $14 million as the U.S. dollar weakened. Excluding the impact of FX losses, our non-GAAP net income would have been $77 million, broadly in line with the prior year. For the second quarter of 2026, we booked net cash inflows from operating activities of $65 million. Our balance sheet remains healthy, with a strong net cash position of $3.06 billion as of June 30, 2026. Moving to capital allocation, shareholder returns continued to be an important component of our capital allocation strategy.
As of August 21st, 2026, we have returned $359 million to our shareholders through dividends and share repurchase this year, already exceeding the total amount retained to shareholders for the full year of 2025. We believe we remain substantially undervalued and will continue to actively execute our share repurchase program. Turning now to our business outlook. Driven by continued growth momentum across our social entertainment, BIGO Ads, and SHOPLINE business, we expect our total net revenues for the third quarter of 2026 to be between $602 million and $622 million, implying year-over-year revenue growth of 11.4% - 15.2%. For the full year of 2026, we remain confident in delivering solid revenue growth across the group.
On the profitability front, backed by our better-than-expected original performance in the first half of the year and enhanced operating leverage from improved efficiency across our business segments, we now expect the group's full year 2026 non-GAAP operating income to grow around 20% year-over-year, up from our previous expectations of teens level growth. To summarize, we delivered a strong set of results in the second quarter, with all three business segments delivering encouraging growth and operating profitability continue to improve. Looking ahead, we remain confident in our growth outlook and will stay focused on improving operating efficiency, sustaining profitability growth, and creating long-term value for our shareholders. That concludes our prepared remarks. Operator, we would now like to open up the call to questions.
Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you are on a speakerphone, please pick up the handset to ask your question. When asking a question, please state your question in Chinese first, then repeat your question in English for the convenience of everyone on the call. Your first question comes from Xueqing Zhang with CICC. Please go ahead.
[Non-English content] Thanks management for taking my question and congratulations on this strong quarter. My question about live streaming business. We see live streaming revenue return to both year on year and quarter on quarter growth in the second quarter. Could management elaborate on the sustainability of this recovery and share your view on the longer term outlook for the live streaming business. Thank you.
[Non-English content]
Thank you Xueqing for your question. In the second quarter, our live streaming business grew 5.9% sequentially, with yearly growth further accelerating to 7.3%, driven by growth in both paying users and ARPPU. On the operation side, in Q2, we continue to optimize across multiple areas, including streamer incentive mechanism, content ecosystem development and AI-driven improvements across content distribution, user content consumption and payment experience. These AI-driven enhancements to the user experience further drove sustained improvements in paying conversion rates. Therefore, our core live streaming paying users grew 3.9% year-on-year. From a regional perspective, this recovery continued to be driven by revenue growth in developed markets. The Middle East market also delivered solid sequential growth, driven by our new voice product portfolio.
Our current third quarter guidance projects moderate single-digit yearly growth for social entertainment revenues. As core live streaming paying users continue to grow steadily and the new voice product portfolio contributes further incremental gains, we expect the growth momentum of our social entertainment business to continue strengthening. Based on current trends, we are confident that our social entertainment business will achieve full year revenue growth in 2026, while maintaining steady business momentum. Operator, next question please.
Your next question comes from Daniel Chen with JP Morgan. Please go ahead.
[Non-English content ] So I will translate myself. So we actually see that the second quarter advertising revenue business is growing very strong. So how should we look at the outlook for the third-party advertising in the second half of this year in terms of the growth rate and also the margin profile? Thank you.
[Non-English content]
Thank you Daniel for your question, I will take your question. In the second quarter, our third-party advertising business sustained its strong growth momentum, with revenue increasing 74.1% year-over-year and 9.3% quarter-over-quarter, exceeding our previous expectations. Growth in traffic and advertiser budgets, together with continued improvements in our advertising algorithms, further strengthened our business flywheel. On the traffic side, we continue to deepen our partnerships with mediation platforms, such as MAX and LevelPlay, further expanding our global reach while maintaining steady growth in SDK traffic. On the demand side, our strategic presence across multi verticals continued to drive strong advertiser demand. Leveraging our established capabilities across lead generation, web e-commerce and in-app advertising, our second quarter web-based demand grew 91.7% year-over-year, while IAA spending grew 70.6% year-over-year.
At the same time, we continue to expand our advertiser base in sub-verticals across lead generation and other key verticals, further enriching our advertiser mix. On the platform side, as traffic and budgets expand rapidly, we are continuously iterating our algorithms and data capabilities, driving more vertical specific optimizations and enhancing our bidding and delivery strategies. At the same time, we are advancing AI driven upgrades to our algorithm and engineering systems, optimizing compute scheduling to manage infrastructure costs efficiently, even as request volumes grow rapidly. Based on current business trends, we are highly confident that our third-party advertising business will continue to deliver strong growth. Turning to profitability, our third-party advertising business is still in a rapid expansion phase, requiring continued investment in research and development, sales capabilities and infrastructure this year.
That said, this business has healthy unit economics, giving us confidence that we can remain profitable while steadily improve margins over the medium term as we scale. Operator, next question please.
The next question comes from Thomas Chong with Jefferies. Please go ahead.
[Non-Englisg content ] Hi, good morning. Thanks management for taking my questions and congratulations on a very strong set of results. My question is about the full year outlook. Can management comment about the 2026 revenue and profit guidance across different business segments? Thank you.
[Non-English content]
Good morning, Thomas. Thank you for your question. Looking ahead to the third quarter of 2026, our current guidance implies 11.4%-15.2% year-over-year growth for our total revenue. By business segment, for social entertainment, we expect the third quarter revenue to deliver moderate single-digit year-over-year growth. BIGO Ads will continue to deliver strong double-digit year-over-year growth in Q3. For SHOPLINE, we expect it to remain more than 25% year-over-year growth. For the full year 2026, we expect social entertainment to deliver steady year-over-year growth. For BIGO Ads, with continued traffic expansion, deepening multiple vertical advertiser base, and ongoing algorithm optimization, we expect strong mid-double-digit year-over-year growth for the full year. For SHOPLINE, supported by maturing product capabilities, accelerating cross-border merchant penetration, and new market expansion, we expect its year-over-year growth to further accelerate, exceeding 20% year-over-year growth for the full year 2026.
With all these three segments on an upward trajectory, we are confident in the solid revenue growth for 2026. Regarding operating profits. Looking at the third quarter, we expect our non-GAAP operating profit to continue its year-over-year growth trend, while operating expenses are expected to rise slightly quarter-over-quarter due to the seasonality of certain cost items. For the full year 2026, regarding social entertainment. As live streaming returns to steady growth, overall live streaming operating profit will maintain modest year-over-year growth. As we mentioned earlier, with continued SKU expansion, Bigo Ads midterm profitability is also expected to steadily enhance. For SHOPLINE. With relatively fixed operating expenses, the growth of revenue and gross profit will continue to drive narrowing of its operating losses.
In summary, based on the better-than-expected overall operating performance in the first half of the year, as well as the operating leverage brought about by improved operating efficiency across businesses, we expect our full year non-GAAP operating profit to achieve around 20% year-over-year growth in 2026. We guided up our guidance. On net profit, I would like to add on a little bit regarding the foreign exchange loss items. Due to the continued weakening of the U.S. dollar, we recorded significant unrealized foreign exchange losses in the first half, and we expect a similar trend in the third quarter. However, these are not operational mark-to-market fluctuations and are unrelated to our underlying operating performance. Conversely, a strengthening U.S. dollar would also result in unrealized foreign exchange gains. Operator, next question, please.
Your next question comes from Brian Gong with Citi. Please go ahead.
[Non-English content] Thanks for management for taking my question. I have a question on SHOPLINE. We target to achieve profit breakeven for SHOPLINE in 2028. Could the management give us an update on the latest development and the growth drivers for SHOPLINE, and what would be the profit breakeven roadmap for the business? Thank you.
[Non-English content]
Thank you for the question. As we discussed earlier, AI is creating new growth opportunities for both the e-commerce industry and SHOPLINE. As the new traffic and transaction entry points continue to emerge, the e-commerce landscape is becoming increasingly diverse and fragmented, driving stronger demand for a unified operating system from merchants. This trend will further underscore SHOPLINE's value as our omni-channel commerce infrastructure. We remain firmly confident in the long-term prospects of this market. Our business model is closely aligned with the success of the merchants. Subscription fees provide us with a stable and recurring revenue base, while value-added services such as payments and marketing services enable us to participate more directly in the growth of the merchants' transactions and GMV. As merchants expand across more channels and scale their businesses on SHOPLINE, they tend to adopt more of our services, making the platform increasingly valuable to them.
As a result, our growth is driven not only by new merchant acquisition, but also by the continued growth of existing merchants and the increasing penetration of our services. We have already seen this dynamic play out in our cross-border business. In the second quarter, revenue from cross-border merchants, mainly led by brand customers, grew 73.5% year-over-year, helping drive a further acceleration in SHOPLINE's overall revenue growth. On the roadmap to breakeven, our R&D expense, which has been our primary OpEx for SHOPLINE, has largely stabilized. Continued growth in revenue and gross profit is driving operating leverage, resulting in significant narrowing of SHOPLINE's losses. With gross profit continuing to grow and operating expenses remaining relatively stable, we are confident that SHOPLINE will further narrow its losses in 2026 and reach operating breakeven by 2028. Operator, next question please.
Your next question comes from Sardonna Fong with UBS. Please go ahead.
Thank you for taking my question. [Non-English content] I'll translate myself. My question is on shareholder return. The company has a three-year $1.5 billion shareholder return program with ample net cash at present. Observe that management has accelerated buyback in 2Q and quarter- to- date. What will be the pace of future buybacks ahead? How does the group balance growth oriented investments versus cash return to shareholders? Thank you.
[Non-English content]
Thank you for your question. As I just mentioned, since the beginning of the year to August 21st, we have already bought back $216 million of our shares in total. Even under the new share buyback program authorized this May. As of August 21st, we have bought back $128 million of our shares. There is no inherent trade-off between investing for growth and returning capital to shareholders. We are backed by a strong net cash balance and robust cash generating capabilities. Firstly, we held a net cash position of $3.06 billion on our balance sheet by the end of the second quarter. Secondly, all three of our business segments have embarked on well-defined growth trajectory, which will drive continuous improvement in underlying business fundamentals and cash flow contribution. Therefore, our shareholder return framework is built on an exceptionally solid and resilient foundation.
We believe that the current share price still does not fully reflect the long-term growth potential of our three businesses. Our active share buybacks demonstrate the confidence from the senior management team in the company's longer-term value and prospects. Going forward, we will continue to actively return capital to shareholders. As our operating profit continues to grow, we believe shareholders can look forward to greater returns in the long run. Thank you.
There are no further questions at this time. I'll now hand back to the company for closing remarks.
Thank you. Thank you for all of the questions. We may conclude the call today. If you have any further questions, please feel free to reach out to the IR team. Thank you.
The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.