Ladies and gentlemen, thank you for standing by, and welcome to the JOYY Inc's third quarter 2023 earnings call. At this time, all participants are in a listen-only mode. After 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 third quarter 2023 earnings conference call. Joining us today are Mr. David Xueling Li, Chairman and CEO of JOYY, Ms. Ting Li, our COO, and Mr. Alex Liu, the Vice President 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 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 would like to remind you that we may make forward-looking statements, which are inherently subject to risks and uncertainties that may cause actual results to differ from our current expectations.
For detailed discussions of the risks and uncertainties, please refer to our latest annual report on Form 20-F and other documents filed with the SEC. 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 2023 earnings call. First, we will provide a quick snapshot of our performance for the quarter. During the third quarter, we once again delivered a strong performance. Our group revenue come in at $567.1 million, at 3.6% sequential increase. Approaching the high end of our guidance, we hit a non-GAAP net profit of $81.2 million, 5.5% year-over-year increase, with a non-GAAP net margin of 14.3%. Our core business segment, BIGO, maintained its recovery momentum and recorded revenues of $494.1 million, a sequential increase for 4.9% and a year-over-year increase of 2.2%. The first year-over-year top line growth for BIGO in six quarters.
BIGO's revenue rebound was accompanied by improvements in user activity and monetization efficiency. At the group level, our global average mobile MAUs grew by 2.6% year-over-year to 276.8 million. Mostly, Bigo Live's MAUs maintained its strong growth trajectory, increasing by 14% year-over-year to 40.3 million. BIGO's number of paying user experienced a steady increase for 6.6% year-over-year, with ARPU also improving sequentially during the quarter. With monetization recovering and as we continued to enhance our operational efficiency, BIGO's non-GAAP operating profit grew by 11.7% year-over-year, reaching $81.9 million. Representing expanded non-GAAP operating profit margin of 16.6%.
As one of the leaders in the global social entertainment sector, we have always been committed to building equitable diverse and inclusive global user community. We aim to provide users with unique value and exceptional experience through our broad range of social entertainment products. We firmly believe that creating of positive user value and experience are the foundations of effective user management and monetization. To maximize product value for our users, we have always... Our highly localized operations and innovative product optimization are our most effective instrument for enhancing user content and improving user social interaction experience. To give you a better understanding of our progress on those two fronts, I'd like to share some examples from the third quarter. On the content front, Bigo Live extend its collaborations with top KOLs and introduce more diverse and viral content.
We also launched several major updates for our content separations, strategies, and recommendation algorithm. These upgrades improved our ability to effectively channel users to content they enjoy, particularly our new user cohorts. On the social interaction front, we prioritize the optimization of interactive tools within Bigo Live's family feature and allocated additional operation resources to support families. We also further entered new social features such as Real Match, which cater to different use cases and help users expand their social networks. These targeted initiatives have effectively driven positive progress in user engagement and monetization. The introduction of more diverse and viral content, alongside collaborations with KOLs and successfully enhance our brand exposure, expanding products outreach and foster organic user growth.
This acceleration of organic traffic has been the primary reason for our robust user growth in recent quarters, even as we adhere to disciplined marketing expense. At the same time, our amplification of family social functions has yielded positive results in terms of user acquisition, payment conversion, and recruitment of long tail streamers. Our improved user engagement and user experience, coupled with exciting seasonal improvements such as regional mid-year galas, have fueled recovery in user paying activity and overall monetization. Looking ahead to the fourth quarter, we anticipate that BIGO's global business will maintain its recovery trajectory on a year-over-year basis. However, given the ongoing uncertainty in the global macro landscape, we believe the pace of recovery across different markets will vary and short-term fluctuations in users' paying sentiments may persist.
We will remain cautiously optimistic. We focus on our operational strategies and prioritize high quality growth. We will also continue to explore innovations across our products and operations, and drive the steady recovery of our global business with a sustained focus on improving operating cash flow. Now, let's take a closer look at our products. We will start with Bigo Live. Bigo Live maintained its double-digit user growth momentum in the third quarter, with MAUs increasing 14% year-over-year to 40.3 million. We saw growth across several key regions, with year-over-year increase by 12.9% in Europe, and 15.3% in the Middle East, and 40.4% in Southeast Asia and other emerging markets. In the third quarter, Bigo Live recorded mid-single-digit revenue growth in a sequential basis.
The developed country region, especially Europe and Asia-Pacific countries, outpaced other markets and generated a high single-digit sequential growth in revenue. As mentioned earlier, Bigo Live introduced a diverse range of high-quality and virtual content during the third quarter. In the Middle East, Bigo Live premiered T he A cting C oach exclusive show in which legendary Jordanian actor shared his personal insight into the art of acting. In Indonesia, Bigo Live debuted Friends of Live, a collaborative mini series featured in three Bigo Live streamers and some local up-and-coming actors. The show was broadcast on a popular Indonesian video platform called Vidio, introducing Bigo Live streamers to new audience. Bigo Live also expand its collaboration with top KOLs in the third quarter.
We launched a summer wide campaign in the MENA region, and team up with several local KOLs who have tons of millions of followers to share the freshest summer fashion trends and travel experience, significantly boosting user engagement and inspiring creative creativity. Building upon the success of last quarter's Family Month campaign, we continue to encourage users to explore and participate in family activities on Bigo Live. The third quarter saw a steady increase in the size of families, with a 5.1% sequential increase in daily use and 17.4% sequential increase in the number of contracted streamers in families. With regards to interaction and optimization of our product features, we retain our focus on content enrichment and improve social interactions. We further refined our content recommendation algorithm and continued to incentivize the BAR features.
We started to develop a premier content pool on our BAR channel, covering popular genres such as K-pop, pets, and workout. In the third quarter, the number of users sharing videos on BAR surged by 42.8% from the prior quarter. Well, the average effective views per person for video content rose by 29.3% in the same period. At the same time, we fine-tune the features to enhance the appeal and the interactivity, the activity inside the live streaming rooms. This drove an 8.5% sequential increase in the total number of live streamers, along with a 3.7% sequential increase in the number of live streamers in multi-guest rooms.
In line with our commitment to fostering social interaction and forging relationships, we enhanced the Bigo Live's Real Match features to make it easier to connect with people nearby by simply swiping through profiles. The upgrade fueled 18.3% sequential increase in the number of people mutually following each other through Real Match, and 21% sequential increase in direct chat messages. Next, let me show some updates for our other products. As we have previously mentioned, we compared to Bigo Live, our other products have a much larger aggregated user base. But they are generally in the early phase of monetization as their contributions to revenue and profit are relatively small. As such, our main objective of those products is systematically enhance our monetization, efficiency, and profitability, while strengthening their ability to organically acquire new users.
Since these products start to generate consistent profit, we will have a solid foundation from which we can renovate their user growth. Let's begin with Likee in the third quarter. Likee's revenue grew by middle single digits sequentially, and it continued to be profitable at the product level. On the user front, despite a sequential decline in Likee MAUs in this quarter, it still used in core region, particularly in the developed country region, maintained a high single-digit sequential growth. In September, Likee orchestrated a series of offline community events in celebration of National Day. This include streamers, pre-parties, and movie days accompanied by online discussion designed to deepen connections among user creators and the platform.
During the quarter, Likee also partnered with a number of popular creators to exhibit at the Asia Culture & Gaming Festival event, and captive fans of, I mean, K-pop and more, highlighting the ACG that is an integral component of Likee's content ecosystem and community. At the product level, Likee remained dedicated to fostering community interaction d riving 40.5% sequential increase in average user time spent. Overall, user engagement as measured by the ratio of DAUs to MAUs increased by 1% sequentially, while the IM penetration rate rose by one point to 5% over the same period. Next, let's take a look at the Hago. During the third quarter, Hago achieved a sequential middle single-digit percentage increase in revenue, and its operating cash flow remained positive during the quarter.
Efficiently, content remained a priority, along with a refined push notification strategy designed to boost participation in multi-guest interactive rooms across regions. Hago also iterated, enhanced its IM and interactive features, helping to drive increased social activity among users. Notably, average user time spent in social channels reached nearly 95.8 minutes per day. And average time spent in multi-guest audio live streaming rooms grew by 1.2% sequentially. Besides Hago's 3D Space, Hago is actively exploring alternative social interactive applications and combining live streaming and interactive gaming experience powered by AR. Finally, some updates on cash flow and capital return. We continue to drive to generate robust positive operating cash flow, reaching $72.9 million in the third quarter.
Meanwhile, we maintained an active pace of share repurchases and bought back an additional 43.5 million of our shares. Our board has authorized an extension of the buyback program, which stood at $530 million as of the end of the third quarter until November 2024. To summarize, effective conclusion of our operational strategies and driven the ongoing recovery of BIGO's revenue, profit, and user activity. Looking ahead into the remainder of 2023 and beyond, we remain committed to our long-term targeted strategies to pursue high-quality growth. We will continue to explore ways to innovate across our products and operations, and drive the steady recovery of our global business with a continued focus on improving operational cash flows.
We will further concentrate our resources on building our core strengths and the global business that align with our long-term strategies, and effectively pursue growth opportunities. At the same time, we will continue to enhance shareholders' return through share buybacks. This concludes my prepared remarks. I will now turn the call to our Vice President of Finance, Alex Liu, for our financial updates.
Thanks, David. Hello, everyone. Despite the ongoing macro uncertainties, we achieved solid progress in the third quarter. Our global business segment, BIGO, booked positive year-over-year growth in both revenue and non-GAAP operating income during the quarter. We continued to grow our global MAUs, even as we adhere to our disciplined marketing spend. The monetization efficiency ratios were also up during the quarter, with the number of BIGO's quarterly paying users up by 5.1% and ARPU up by 2.2% quarter-over-quarter. It's a result of our continuing dedicated strategy to optimize product value and user experience, and the strong execution of our global operational team. Now, let's look at the numbers in detail. Our total net revenues were $567.1 million in the third quarter.
Revenues from BIGO segment were $494.1 million, up by 2.2% year-over-year. The first year-over-year top line growth in six quarters, mainly driven by strong growth in the developed countries. Cost of revenues for the quarter decreased to $357.9 million, among which our revenue sharing fees and content costs decreased to $232.3 million. BIGO's cost of revenues were $299.2 million, which was up year-over-year, consistent with rebound in live streaming revenue. Gross profit was $209.2 million in the quarter, with a gross margin of 36.9%. BIGO's gross profit was $194.8 million, with a gross margin of 39.4%.
Our group's operating expenses for the quarter were $191.3 million, compared with $202.2 million in the same period of 2022. Among the operating expenses, sales and marketing expenses decreased to $92.5 million from $96.8 million in the same period of 2022. Primarily due to the optimization of overall sales and marketing strategies across various product lines to be more focused on ROI and effectiveness of user acquisition. R&D expenses increased to $71.6 million from $61.2 million in the same period of 2022, primarily due to increased R&D personnel-related expenses as we prioritize the resources into building our technological capabilities. BIGO's operating expenses for the quarter were $126.7 million, down by 5.3% year-over-year.
Our group's GAAP operating income for the quarter was $12 million. Our non-GAAP operating income for the quarter, which excludes SBC expenses, amortization of intangible assets from business acquisitions, loss on the consolidation and disposal of subsidiaries, as well as impairment of goodwill and investments, was $40.4 million in this quarter, with a non-GAAP operating income margin of 7.1%. BIGO's GAAP operating income for the quarter was $68.5 million, and BIGO's non-GAAP operating income was $81.9 million, representing a non-GAAP operating income margin of 16.6%, up from 15.2% in the same period last year. Our group's GAAP net income, attributable to controlling interest of JOYY in the quarter, was $72.9 million, compared to net income of $515.3 million in the same period of 2022.
GAAP net income margin was 12.9% in the third quarter of 2023, compared to net income margin of 87.8% in the corresponding period of 2022. Our group's GAAP net income was larger in the third quarter last year, primarily due to a one-off remeasurement gain of our equity investment. BIGO's GAAP net income in the quarter was $70.2 million, with a GAAP net margin of 14.2%. non-GAAP net income, attributable to controlling interest of JOYY in the quarter was $81.2 million, compared to $76.9 million in the same period of 2022. The group's non-GAAP net income margin was 14.3% in the quarter, compared to 13.1% in the same period of 2022.
Our non-GAAP net income was $81.9 million, with a non-GAAP net margin of 16.6%. For the third quarter of 2023, we booked net cash inflows from operating activities of $72.9 million. We remain healthy, benefiting from a strong cash position of $3.8 billion as of September 30th, 2023. In the third quarter, we continued to enhance returns to shareholders, and repurchased an additional approximately $43.5 million of our shares. In the first three quarters of 2023, we have returned an aggregate amount of $355.4 million to our shareholders through dividends and share buybacks, which altogether represent 155.6% of our aggregated non-GAAP net income during the corresponding periods. We will continue to actively utilize our share repurchase program in the coming quarters.
Turning now to our business outlook. We anticipate continued recovery in our global operations. However, due to the ongoing uncertainty in the global macro landscape, we recognize that the pace of recovery may vary across different markets, and there may be short-term fluctuations in users' paying sentiment. Separately, as previously communicated, we had made proactive adjustments to certain non-core operations in line with our commitment to high quality growth and global positioning. Taking all factors into consideration, we expect our net revenues for the fourth quarter of 2023 to be between $551 million and $559 million. This forecast reflects our preliminary views on the market and operational conditions and business adjustments, which are subject to changes.
In conclusion, our dedicated efforts to enhance product value and optimize user experience are yielding positive results, as shown in our re-accelerating user growth and top-line recovery. Simultaneously, our financial discipline has allowed us to further expand profitability and fortify our financial standing. Moving forward, we will maintain a focused operational strategy and direct our resources towards high potential business that align with our long-term objectives. We will also strive for a steady recovery in our global operation, while prioritizing improvement in operating cash flows. With a strong foundation and our proven execution capabilities, we are confident that we are well-positioned to seize growth opportunities and deliver sustainable value to 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're on a speakerphone, please pick up the headset 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 Thomas Chong from Jefferies. Please go ahead.
[Foreign language] Thanks, management, for taking my questions. My first question is about the margin trend for BIGO in 2024, as well as the outlook for the group blended margins. My second question is about shareholders capital return. Can management share your thoughts on this one? Thank you.
[Foreign language]
Thank you, Thomas. This is Alex. I will take your first question. So if you look at our Q3 results, we actually deliver better than our previous expectation. BIGO segment's n on-GAAP gross margin was improved from 39% to 39.5%, with a non-GAAP OP margin improved from 16% to 16.6%. Although we did spend more on content incentives and sales and marketing for our midyear gala, our better than expected profit was mainly due to accelerating top line recovery.
Looking ahead to Q4, as we enter the year-end peak of operational activities, we expect BIGO's content cost and sales and marketing expenses to be sequentially up. Therefore, BIGO will have a slightly lower gross margin and non-GAAP operating margin in Q4 as a result. However, if you look at our progress so far, in the first three quarters of 2023, we have already, for BIGO segment, we have already achieved a non-GAAP OP of 15.4%. So for the full year of 2023, we are still expecting the non-GAAP OP of BIGO segment to be higher than the level of 2022, which was 14.4%.
[Foreing language]
As for the outlook for 2024, we believe it's still early to give a detailed guidance, as our profit potential also depends on the pace of top line recovery. In general, we aim to strike a balance between scale and efficiency, and on a constant currency basis, we expect BIGO segment to pursue steadily top line recovery while maintaining a relatively stable OP margin, non-GAAP OP margin. As for the All O thers segment, excluding the impact from our proactive adjustments to certain products, it has been on a continuing trend of narrowing operating losses, which we expect to continue in 2024. So to sum up, we continue to value profit and positive cash flow, and drive a further improvement in our operating efficiency. At group level, we still expect to remain profitable and continue to generate positive operating cash flows.
[Foreign language]
For your second question on capital return, if you look at Q3, we have repurchased approximately 43.5 million of our shares during the quarter. In the first three quarters of 2023, our aggregated capital return has reached $355 million through dividends and share buyback, which it's representing 156% of our aggregated non-GAAP net income during the corresponding periods. So as of the end of Q3, we still have $530 million unutilized quota under our previous share buyback plan, and our board has just authorized an extension of the program for another year. So shareholder returns will remain one of our top focuses, and we will continue to steadily execute our share buyback. Thank you. Next question, please.
Next question comes from Brian Gong from Citi. Please go ahead.
[Foreign language] Regarding BIGO Live's recovery, can you elaborate a little bit more on the expected growth momentum across different regions in 2024? What factors are driving this recovery? Thank you.
[Foreign language]
Thank you, Brian. This is David. On your question about Bigo Live's recovery, if you look at our Q3 results, you can see that our revenue recovery in the quarter was better than expected. Looking at a product stand-alone basis, Bigo Live actually deliver a higher QoQ growth than the Bigo segment, and that was mainly driven by a high single digit QoQ growth from the developed countries region.
Actually, the developed countries has been on sequential recovery momentum for quite a few quarters already, and we've also a book of positive growth, a decent QoQ recovery for the Southeast Asia region as well during the quarter. And if we look at the driving factors, we believe it's mainly attributes to a strong MAU growth and also our pool recovery. I think it's the result of our continued implementation of the highly targeted operational strategies, which actually prioritizes our user acquisition spending, product optimization and offer, and other operational resources towards premium and users and also the developed countries.
[Foreign language]
However, as I just mentioned, given the global macro uncertainties, we believe the pace of recovery across different regions still vary, and that users' paying sentiment are still in a fluctuating status. Therefore, our current Q4 guidance, we actually expect Bigo Live to achieve a modest growth year-over-year. I think it's still early to give guidance on 2024, but generally speaking, we expect Bigo Live to resume a top-line year-over-year recovery gradually, driven by MAU growth, together with stabilizing monetization efficiency. Next question, please.
The next question comes from Yiwen Zhang from China Renaissance. Please go ahead.
[Foreign language] Thank you for taking my questions. So a couple questions. First on user side, how should we think about overall user trend into 2024? And then secondly, we see the ongoing impact of the global microenvironment. How should we think about its impact to our business, such as in Europe? And what have the company done to mitigate such adverse effects? Thank you.
[Foreign language]
Thank you, Yiwen. This is David. So on user growth, if we look at our progress in the past two quarters, we managed to achieve a rebound in our group's MAU year-over-year while we maintain a relatively disciplined marketing spend. Our group's MAU rebound achieved positive year-over-year growth for two consecutive quarters, and Bigo Live continued double-digit user growth for the sixth consecutive quarters. I believe that overall speaking, our user acquisition efficiency has steadily improved as shown by an increasing trend in our organic traffic, influencer-led traffic, and also a higher percentage of premium users. So I think that believe the current user growth strategy of Bigo Live has been effective.
Moving forward, we believe that there are a few actionable points for continuing our user growth. First of all, we will continue to remain targeted in terms of our user acquisition strategy and prioritizing quality of user growth with a focus on the ROI. Second, we'll continue to leverage our localized operational operations with primary focuses on content and social experiences as the key drivers of our user acquisition. In the recent quarters, you can see that Bigo Live has successfully expanded product outreach by with our own original content, for example, our variety shows, mini series, as well as some third-party high-quality content. Our new feature, Real Match, actually received very positive user feedback in Southeast Asia and drove an increase of downloads in those markets.
By collaborating with KOLs, we have maintained a positive momentum in influencer-led traffic, especially in Southeast Asia and Latin America, and other emerging countries.
[Foreign language]
And thirdly, we will continue to work on product features and user experiences for targeting user groups to further improve our user retention. In the recent quarters, we have actually introduced refined content segregation policies and differentiated recommendation algorithms for tailored to different target user groups. And after several rounds of iterations focusing on premium users, new users and female user cohorts, we've actually found that the retention rate and also their user time spent has been consequently improved within those target groups. And as we previously mentioned, Bigo Live has a very diverse global user community, and there is empty room for targeted optimization, and we aim to continue to make perfection in each and every dimension, and further enhance user experiences within each and every user groups.
And to sum up, we expect Bigo Live to maintain a relatively healthy and steady user growth in the year 2024. For other products, I believe that our goal is still to focus on the core functionalities and cultivation of core product value, and once they start to generate a consistent profit, then we can—t hen we will have a solid foundation to revisit user growth. The actual timeline may vary, some might be slightly ahead, the others may be slightly behind. However, I don't think that it will interfere the big picture here, which is the recovering user growth at group level.
Next question comes from Lei Zhang from Bank of America Securities. Please go ahead.
[Foreign language] Thanks, management, for taking my question. I want to see any updates on your global business, in terms of regulatory risk? Thank you.
[Foreign language]
This is Alex. I will take the question. For a global social entertainment company, the regulatory landscape across different markets actually varies and have been and is subject to constant evolvement. And we have always consider business compliance, and business safety as the crucial prerequisites for a high-quality growth of our global business. And to achieve that, we will remain vigilant in monitoring the regulatory developments, and actively engage with the local regulatory authorities. And internally, we'll continue to optimize our compliance frameworks and execution, and more proactively adapt our business and operations with the regulatory changes to ensure alignment with the evolving regulatory and industry requirements. So that was the end of our Q&A session. It's been great catching up with everyone. Thank you so much for joining our call. We look forward to speaking with you next quarter.
This conference is now concluded. Thank you for attending today's presentation. You may now disconnect.