Welcome to YY Inc.'s second quarter 2019 earnings conference call. At this time, all participants are in a listen-only mode. After the management's prepared remarks, we will have a question and answer session. Please note this event is being recorded. I'd now like to hand the conference over to your speaker host today, Mr. Matthew Zhao, IR Director of YY Inc. Thank you, sir. Please go ahead.
Thank you, operator. Good morning and good evening, everyone. Welcome to YY's second quarter 2019 earnings conference call. Joining us today are Mr. David Xueling Li, Chairman and CEO of YY, Mr. Bing Jin, CFO of YY, and Ms. Ting Li, COO of YY. For today's call, management will first provide a review of the quarter and then we will conduct an Q&A session. The second quarter of 2019 financial results and the webcast of this conference call are available at ir.yy.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 applies to this call as we will make forward-looking statements. Finally, please know that unless otherwise stated, all figures mentioned during this conference call are in renminbi.
I will now turn the call over to our Chairman and CEO, Mr. David Xueling Li. Please go ahead, sir.
Thank you, Matthew. Hello, everyone. Welcome to YY's earnings conference call for the second quarter 2019. Following our successful acquisition of BIGO in March, the second quarter was the first time we had a full quarter consolidation of BIGO's financials. I would like to take this opportunity to share with you the latest business updates, as well as the strategy and development focus for JOYY Inc. As you all know, after the acquisition of BIGO, YY has evolved into a world-leading social media platform, offering a comprehensive suite of video-centric products and services, including instant messaging, short-form video, live streaming, and et cetera. During the second quarter, we have achieved notable progress on three fronts. First, introduced short-form video content into our instant messaging product, imo, and further enhanced its user stickiness. Second, drive rapid growth of overseas short-form video users through Likee.
Third, further strengthen YY Live and Bigo Live operations and solidify our global leadership in the entertainment live streaming market. Starting from this quarter, we have also revamped our disclosure of operating metrics. We believe that this heightened disclosure transparency will help investors to better understand and follow JOYY Inc.'s business development going forward. In the second quarter, our global average mobile MAUs reached 433.5 million. Short-form video mobile MAUs increased by 431.2% year-over-year to 90.3 million, and global live streaming mobile MAUs increased by 39.2% year-over-year to 1.4 million. More importantly, imo, our instant messaging product, achieved a massive user base of almost 212 million MAUs in the quarter.
The increasing diversity of our user base offers great potential for future monetization and the development of synergies across our business units. As a result, in the second quarter, our total revenues increased by 66.8% year-over-year to RMB 6.3 billion, exceeding the high end of our previous guidance range. Revenue from our live streaming business grew by 66.4% year-over-year to RMB 5.92 billion, of which RMB 906 million came from overseas markets.
接下来我介绍一下我们最主要的三个业务的状况。一个是我们的imo的即时通讯业务，一个是短视频业务，一个是直播业务。imo的这个目标是打造专属于年轻人的即时通讯平台。我们通过为imo引入不同类型的内容，进一步地加强即时通讯产品的黏性，并通过内容持续地提高活跃度，反哺UGC内容的生产的规模和数量。第二个季度开始，我们在imo里面逐步加入了来自于Likee的短视频内容。我们尝试性地向南亚、中亚和欧洲的40多个国家和地区，灰度投放了1,750万的imo的月活跃用户，为他们提供来自Likee的短视频内容服务，并可喜地看到了短视频用户的转化率达到了50%以上。
Next, I will introduce the latest update for our key three areas of business: imo, short-form video and live streaming. imo's goal is to become an instant messaging platform catered for young generation. As we embed a variety of content offerings into imo, we continue to enhance imo's product thickness. Meanwhile, the content offerings can also increase user engagement, which in turn drives the scale and quantity and quality of our UGC production. In the second quarter, we started to gradually embed short-form videos from Likee into imo. As a pilot program, for example, we made Likee short-form video content services available to more than 17.5 million MAUs in over 40 countries and regions across South Asia, Central Asia and Europe on the imo platform. We were very pleased to see that over 50% of imo's users were converted into short-form video users.
除了现阶段引入了短视频的内容服务以外，我们未来还计划在imo中持续地加入朋友圈、群组、公众账号、小游戏、直播等各种类型的内容服务，鼓励用户之间的社交互动。另外，在商业变现方面，imo也会进一步地发力广告收入。最近我们已经看到了广告收入可喜的增长势头。未来imo的内容信息流也会为广告变现提供更加广阔的发展空间。
Going forward, in addition to the short-form videos already embedded into imo, we also plan to introduce moments, group chats, official accounts, mini games, live streaming and other categories of content and services within imo to bolster social interactions among users. Furthermore, on the monetization front, imo's advertising business has already shown a very encouraging trend, and the content feeds within imo will provide much bigger monetization potential for the advertising in the future.
在第二个季度，Likee的短视频用户保持了强劲增长的势头。例如我们2019年的6月，Likee在印度尼西亚的月活跃用户环比增长了114%。同时，Likee也在印尼的Google Play的免费的app排行榜排到榜首。Likee通过用户生成的高质量短视频，不断地扩展平台的内容，为构建一个日益多样化、富有吸引力的娱乐性的内容库。Likee今年5月推出了自媒体的扶持计划，以吸引更多的优质的内容创作者。在第二季度，Likee的每日活跃的视频贡献者占到了日活用户的10%以上，在全球的短视频行业都名列前茅。
In the second quarter, Likee continued strong momentum for its users across the world. In Indonesia, for example, Likee's MAUs grew by 114% sequentially in June 2019, while constantly ranked at the top of Google Play's free apps list in Indonesia during the same month. Likee has continuously expanded the content offerings in the form of high-quality, user-generated short-form video. In May 2019, Likee introduced a WeMedia support program to attract more content creators to cultivate an increasingly diverse, engaging and entertaining content library. In the second quarter, Likee's daily active video uploaders remained above 10% of its total DAUs, outperforming the majority of other short-form video apps and platforms in the world.
此外，Likee在6月在印度与音乐电台、艺人经纪和数字媒体共同发起了首届数字影响者奖的颁奖典礼，吸引了众多的当地艺人、偶像、网络红人、时尚、美容、旅游、美食、健身等行业的KOL参与，极大地提升了Likee在年轻用户中的影响力，进一步推动了印度用户的快速增长。
Moreover, in June 2019, Likee co-organized an award ceremony for key influencers in digital world with local music radio stations, celebrity agencies, and digital medias in India. A large number of local artists, idols, as well as key opinion leaders in fashion, beauty, travel, food and bodybuilding participated in the event. This event increased Likee's influence among young generation and contributed to the rapid expansion of Likee's user base in India.
除了通过即时通讯和短视频为我们的增长引擎加压以外，我们还通过Bigo Live继续巩固我们在全球娱乐直播行业的领导地位。我们专注地培养Bigo Live的本地化能力，以确保区域市场的运营效率和文化敏感性。此外，我们继续在发达国家的市场站稳了脚跟。因此本季度Bigo Live收入中来自发达国家的部分继续增长，其中欧美国家的收入占比从上一个季度的14%提高到本季度的16%。对于新兴市场，BIGO LIVE Lite版本的应用降低了用户的访问门槛，也推动了Bigo Live在这些市场的用户增长。
In addition to supercharging our growth engine through instant messaging and short-form videos, we continue to fortify our global leadership in live streaming through BIGO LIVE. To ensure operation efficiency and cultural sensitivity in different markets and regions, we focused on developing BIGO LIVE's localization capabilities. We also continue to enhance our footprint in developed world and BIGO LIVE revenue generated in developed markets during the quarter continued to increase as a result. Revenues from North American and European countries in particular accounted for 16% of BIGO LIVE's total revenues, compared to 14% in the previous quarter. For emerging markets, the Lite version of BIGO LIVE app lowered the entry barrier for users and drove BIGO LIVE user growth in these markets simultaneously.
与此同时，我们的休闲游戏社交媒体的平台Hago也实现了商业生态的闭环的搭建。本季度在用户高速增长的同时，收入也快速增长。我们不仅继续在平台上增加小游戏的数量，丰富游戏的类型，还在Hago中嵌入了聊天室和卡拉OK等社交的功能，进一步增强了Hago的用户粘性。因此在第二季度，Hago的平均用户的日使用时长超过了60分钟。
Meanwhile, Hago, our casual game-oriented social media platform, rapidly grew its user base and revenues during the second quarter of 2019, forming a closed-loop monetization ecosystem. As we continue to add new game titles and diversifying game types on the platform, we also embedded additional social features into Hago, such as live streaming chat rooms and karaoke, which further increased the platform's user stickiness. As a result, the average user time spent on a daily basis for Hago exceeded 60 minutes in the second quarter of 2019.
回到国内市场，第二季度我们继续优化YY Live的内容创新模式。为了提供更新颖的直播内容，我们专注于促进不同主播和第三方内容创建者之间的协作，以鼓励他们在我们的平台上联合制作具有创造性的内容。例如，我们六月与乐华娱乐合作，独家上线直播了乐华家族音乐会。由于乐华派出了它旗下所有的顶级艺人参加此次音乐会的表演和互动。作为独家直播平台，我们吸引了大量的粉丝观众在平台上参与互动，并为支持的艺人打赏。在项目获得成功之后，未来我们将继续探索更多与明星艺人合作的可能性，通过我们平台上的直播内容，更好地承接和维系不同的艺粉、粉丝关系。
Returning to the domestic market, we continue to optimize YY Live's content creation model during the quarter. In order to provide more innovative live streaming content, we focused on facilitating collaborations between different hosts and third-party content creators to encourage the joint production of creative content on our platform. For example, we partnered with Yuehua Entertainment to launch an exclusive online broadcast of Yuehua Family's concert in June. Since the concert featured performances and interactions from all the top celebrities under Yuehua's management, we were able to leverage the exclusivity of our broadcast to attract a substantial number of fans and encourage them to interact and support their favorite celebrities through tipping on our platform. Following this success, we will continue to explore the possibility of partnering with more artists and celebrities to attract and maintain different cohorts of celebrity fans through live streaming content on our platform.
另外，正如大家留意到的，YY的股价目前是52周的一个新低，但是我们自己对公司的发展是充满了信心的。所以经过董事会的批准，我们也在今天宣布了在未来12个月内最高3亿美元的股票回购计划。
As many of you have noticed, YY's stock price has currently reached its lowest level during the past 52 weeks. As management, we remain fully confident about the company's future growth prospects. With the approval from the board, today we announced a share repurchase program under which the company may repurchase up to US$300 million of shares over the next 12 months.
We are only at the very initial stage of reaping benefits from our globalization strategy, and we are very excited about the unlimited potentials. Today, overseas users accounts for 78% of our global user base, but contribute less than 20% of our total revenue, leaving substantial headroom for financial growth. The capital infusion from our recent convertible bond offerings has supercharged our engine of innovation, creativity, and growth. As we continue to enhance our AI technology capabilities and invent new monetization venues, we are very confident that we will achieve our vision to connect people and to reach their lives through video. That concludes David's prepared remarks. Now as YY CFO, I will talk about the financial results. We continue to deliver solid financial operating metrics during the second quarter of 2019. Our total net revenue for the second quarter increased by 66.8% year-over-year to RMB 6.3 billion.
Specifically, our live streaming revenues for the second quarter increased by 66.4% year-over-year to RMB 5.92 billion, accounting for 94.1% of our total net revenues for the quarter. In the second quarter, mobile contributed 71.7% of our live streaming revenues. Cost of revenues for the second quarter increased by 80.4% year-over-year to RMB 4.17 billion. Revenue sharing fees and content costs paid to performers, guilds, and content providers increased to RMB 3.15 billion in the second quarter, which was in line with the increase in live streaming revenues of the company. In addition, bandwidth costs for the second quarter increased to RMB 423.8 million, primarily reflecting continued overseas user base expansion, mainly due to the impact of the consolidation of BIGO. Gross profit for the second quarter increased by 45.4% year-over-year to RMB 2.12 billion.
Gross margin was 33.7% compared to 38.7% in the prior period, primarily due to the impact caused by the relatively low gross margin of HUYA and BIGO segments as their contributions to net revenues increased substantially year-over-year. The decrease in gross margin was also attributable to the increase in revenue sharing fees and content costs. Operating expenses for the second quarter were RMB 2.09 billion, compared to RMB 779.6 million in the prior year period, primarily due to the increase in sales and marketing expenses of RMB 853.4 million and research and development expenses of RMB 359.5 million. Sales and marketing expenses for the second quarter were RMB 1.1 billion or 17.5% of total revenue, compared to RMB 246.1 million or 6.5% of total revenue in the prior year period.
The increase in sales and marketing expenses were primarily attributable to the company's increased efforts in sales and marketing activities in overseas markets and the impact of depreciation and amortization related to the consolidation of BIGO. Our R&D expenses for the second quarter were RMB 655.4 million or 10.4% of total revenues compared to RMB 295.9 million or 7.8% of total revenues in the prior period, mainly due to the increase in staff-related expenses related to R&D. GA&A expenses were RMB 336 million or 5.3% of total revenues in the second quarter compared to RMB 237.5 million or 6.3% of total revenues in the prior year period. Our GAAP operating income for the second quarter was RMB 71.9 million compared to RMB 713.8 million in the prior year period.
Operating margin for the second quarter was 1.1% compared to 18.9% in the prior period, primarily due to the decrease in gross margin, the consolidation of BIGO, and other overseas expansion initiatives. Our non-GAAP operating income for the second quarter, which excludes share-based compensation expenses, impairment of goodwill and investments, amortization of intangible asset from business acquisitions, as well as gain on deconsolidation and disposal of subsidiaries, was RMB 524.9 million, compared to RMB 933.1 million in the prior period. Our non-GAAP operating margin for the second quarter was 8.3% compared to 24.7% in the prior year period. GAAP net income attributable to continuing interest of YY for the second quarter of 2019 was RMB 42.1 million, compared to net loss attributable to continuing interest of YY of RMB 99.9 million in the prior period. Non-GAAP net income attributable to continuing interest of YY was RMB 424.2 million, compared to RMB 910.2 million in the prior period.
Non-GAAP net margin in the second quarter of 2019 was 6.7%, compared to 24.1% in the prior period. Diluted net income per ADS in the second quarter of 2019 was RMB0.27, compared to diluted net loss per ADS of RMB2.14 in the prior period. Non-GAAP diluted net income per ADS was RMB5.14, compared to RMB13.75 in the prior period. Looking forward to the third quarter of 2019, we expect our net revenues to be between RMB6.57 billion and RMB6.77 billion, representing a year-over-year increase of 60.2% to 65.1%. This forecast reflects our current and preliminary views on the market and operational conditions, which are subject to change. That concludes our prepared remarks. Operator, we would now like to open up the call to questions.
Ladies and gentlemen, we will now begin the question-and-answer session. 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 the pound or hash key. For the benefit of all participants on today's call, if you wish to ask your question to management, please ask in Chinese first and immediately repeat your question in English. To give more people the opportunity to ask questions, please keep yourself to no more than one question at a time, and you may press star one again if you have a follow-up question. Thank you. Your first question comes from the line of Thomas Chong from Jefferies. Please ask your question.
Thanks, management, for taking my questions. My question is about competition in overseas markets. As we see, our users are ramping up very quickly in overseas across different applications in Bigo Live, Likee, and also imo. How should we think about the competitive landscape and our spending in sales and marketing expenses in the second half and next year? Thank you.
This is David. Let me answer your first part of your questions. Firstly, in terms of the competition for the instant messaging platforms globally, what we monitor the trend is there always be 2 to 3 of the different platforms to exist in the market simultaneously. That makes the market bigger. There will not be have the similar situation that what happened in China, which is a winner-take-all situation.
We are still very confident in terms of the futures of IMO's development, especially in the future. Firstly, we will continue to bring in more technical forces to continue help BIGO to develop the different kind of functionalities. Meanwhile, as I mentioned in the prepared remarks, we also will brought in the different kind of content as well as the services into IMO to continue improve the user stickiness as well as the user scale. Meanwhile, if you look at the DNA of the company, we in the past decade, we actually has been accumulated a lot of experience in terms of develop the instant messaging related functionalities as well the services. From that perspective, we also very confident in terms of future IMO's development. Okay.
但是就是在海外市场，即时通讯产品一直对内容的重视度是不够的。从我们的Likee跟imo的合作其实也看出来了，我们有超过50%的用户都转化为短视频内容的观看者。这样的高的转化率其实也充分证明了即时通讯的用户对内容的渴望。
From another perspective, if you look at the instant messaging services, it really looks like the visual ID card for each individual user from the internet database. When we look at the overseas peers operations, it seems like they didn't put that much of the effort in terms of the content operations. In terms of the content operation, we were really good at that. For example, as we mentioned in the prepared remarks, imo currently the users conversion rate from the instant messaging to the short-form video services has reached over 50%. In the future, since we continue bringing more different kinds of content there, definitely we can continue to improve the ID card functionalities as well as people's participation into the instant messaging platform.
所以大家看到了Likee会跟imo产生一个非常良好的互动。Likee上的用户是以生产内容为多的，然后imo上的用户既消费内容也生产内容。这样的话，我们整个平台上的短视频的内容的消费者和生产者都会上一个新的台阶，这个对我们未来Likee在整个市场竞争中的地位是奠定了一个非常好的基础。
We are very optimistic in terms of the synergies between Likee and imo's platform in the future. For Likee's platform, the short-form video producers participation rate is much higher than other peers. For imo, since they have the video communication users, they also have more motivation to consume more short-form video content in imo's platform. The two parts of the platform will continue interactive and bring more synergies in the future, as Likee produce short-form video content and imo's users will consume as well as produce short-form video content at the same time. In the future, as mentioned, we definitely will see more synergies happen between the two platforms.
未来我们会把我们的直播业务、小游戏业务，还有公众号的这些业务都作为内容接入到imo整个的平台的生态系统中。同时这些内容也增加了imo的用户的使用时长和粘性，也反过来推动了通讯产品的联通的比例。
In the future, we also will bring in more different functionalities and services into imo, such as live streaming, mini games, as well as the media account, etc. Through those kinds of additional services, definitely we will continue to see the user time spent as well as user stickiness for imo will continue to grow.
我们的这种即时通讯平台和内容平台的互相推动的联动的商业模式，实际上是一个非常独特的，我觉得在全球我们都比较少有竞争对手。
We truly believe the business model, which is we bring more synergies between the content production platform as well as the instant messaging platform, is a very unique competitive edge for our company. We feel very confident in terms of the future of imo development.
Okay, let me address the second question in terms of the sales and marketing strategy. First of all, if you look at the second quarter margin impact, that is mainly due to the consolidation of BIGO. You have seen from the operating margins of BIGO business, the Likee, the short-form video app has achieved rapid growth. Also after we acquired imo, as David has mentioned, we have gradually embedded more content into imo and promote imo product on a global basis. The impact of margin came from the consolidation. That's the first point. Secondly, for sales and marketing, we will be more prudent going forward after the acquisition of BIGO. We will track the ROI for every single product in different markets. The second point is that if we look at the cost basis, the new user acquisition and old user retention cost, those tend to be lower than China in many of those emerging markets. I think the ROI tends to be better from that perspective. Thirdly, going forward, we will embed more content into imo, and then the marketing campaign focus will be gradually shifting to imo. Just take example, if we can achieve 50% user conversion from imo to short-form video, that means for every two users we acquire into imo, one of them will be converted into short-form video users. Plus that two users into imo, they will not only become a short-form video user, they could also become a live streaming user, they could also become WeChat group users. The efficiency of acquiring users into imo will be much better than the other product. I think those are the strategies around sales and marketing.
Your next question comes from the line of Daniel Chen from J.P. Morgan. Please ask your question.
早上好，王毅称。谢谢接受我的问题。我想问一下，我们的Likee在海外我看用户量其实增长得非常快，想问一下，我们怎么看这边的变现前景？因为国内的一个短视频产品像快手，它其实在直播上变现也做得非常成功。就想问一下管理层怎么看海外这个产品的变现。另外我看我们已经开始对Likee有测试一些直播的功能，就想问一下初期的转化率怎么样，包括现在变现的情况是什么样子。谢谢。I will translate myself. So my question is related to our overseas short video platform, Likee. We have seen a very robust growth in the user base, and we also see that in China, there is another short video platform, 快手, who is doing very well in terms of monetization. So just wondering, how are we looking at the Likee's monetization outlook, maybe in the next one to two years?
Recently, we see that we have just starting to test the live broadcasting function of Likee. What's the latest update in terms of user conversion and also monetization? Thank you.
感谢问题。第一个就是说，其实YY整个的公司，我们在直播领域的经验应该在全球是无与伦比的。所以我们对于海外的流量产品的直播变现能力其实是毫不怀疑的。反过来，因为Likee的这个阶段，我们现在还是在抢夺市场份额最主要的阶段，所以我们的精力并没有放到Likee的变现上，我们绝大多数的研发的力量都投入到了未来的增长。而且大家也知道，像短视频这样的产品，后台的人工智能的研发规模是特别大的。这是我们目前的一个状态。另外，Likee跟imo的合作也占据了我们巨大的研发精力。所以这是目前我们的一个状态。但是我是觉得像Likee这样的内容流产品，无论是广告变现还是直播变现，毋庸置疑都是非常容易的。所以我们对Likee未来变现能力是毫不怀疑的。
Thank you for your question. This is David, let me address your question. Firstly, YY as a company has very rich expertise in terms of the live streaming content operation as well as monetization in the world. we will still, excuse me. there has no doubt in terms of Likee's future monetization, we will definitely leverage our capabilities in terms of the live streaming monetization in the future. Currently, if you look at Likee's development group stage, we have to agree we are still in the development stage, which is focused on grabbing bigger market share rather than monetization. Currently, if you look at our spendings, we actually have the main focus on the R&D expenses, especially for all of the short video content.
One of the competitive edge will definitely coming from the very advanced AI capabilities. We also have the same kind of approach, which is spend a lot of effort and resources in terms of the AI development. At current stage especially, the synergies and the connections between Likee and imo's platform also has been caused our a lot of the focus in terms of the technical development strategies. Compare with the monetization at current stage, we really focus on to increase the market share. In the future, if we look at the nature of Likee products, since they providing the short video content streamings, those kind of format is very suitable for both of the live streaming monetization as well as advertisement monetization. In the long run, we are still very confident in terms of Likee's monetization from the global market. Thank you.
另外一个就是大家可以看一下，其实Likee和imo未来的商业模式实际上是一样的，它们两个其实都会依赖于大规模的内容的content feed，内容流。这些content feed我们都会有广告变现和直播变现的两个模式来相互支撑。
When you look at both Likee and imo, in terms of the future monetization model, it actually has seen since both of the products is focused on the content feeds of the services. In the future, definitely both of the product will using both of the live streaming and advertisement to monetize.
我们最近做了一些小规模的直播的实验，在Likee和imo上，但是都是特别早期的，量也非常小。
We actually recently start to do a trial version as well as provide live streaming services for some of the Likee users in a very small scale. It just started. The performance is very well, so we will definitely continue trial that.
可能再过一两个季度，我们就能看得更清楚。
Probably after one or two quarters, we will have more colors so we can share, and we will have more clear views in terms of the future monetization. Thank you.
Your next question comes from the line of Natalie Wu from CICC. Please ask your question.
Hi, good morning. Thanks for taking my question. I have two questions here. First one is regarding BIGO.
我先用中文问。好的。谢谢接受我的问题。我主要有两个问题，第一个是关于BIGO的。就想了解一下BIGO这一个季度的收入里头，在各条产品线上面的分布大概是怎么样？另外，BIGO这边用户的一个覆盖的情况，就比如说imo和Bigo Live和Likee之间的地区的覆盖度大概是怎么样的？在未来的六到十二个月当中，对于这三个产品，未来的在地区上面的用户获取的重点，不知道现在是怎么样的一个考量？就会更加侧重于在哪一个地区市场上，对于用户的一个获取。第二个问题是关于咱们自己YY Live的一个海外的，或是说Hago这边的这么一个情况。想了解一下Hago相关的这么一个sales and marketing，在这个季度大概有多少？然后Hago相关的一个收入，在这个季度大概有多少？还有Hago相关的一个margin profile是怎么样的？跟咱们这个YY Live的一个business会有怎么样的一个差别？I will translate myself briefly. I have mainly two questions.
First one is regarding BIGO, just want to get a sense about the revenue split among different product lines: LIKEE, imo, BIGO LIVE and other platforms. Would appreciate if we can get a sense of respective year-on-year growth behind the different business lines as well. Also, can management help us understand what's the current user geographic overlapping status quo among those three major platforms: LIKEE, imo, and BIGO LIVE? Also, what's your focus of areas for user growth in the following 6 to 12 months for those three products? Second question is related with HAGO. Just wondering, can you help us understand what's the related revenue contribution from HAGO? Also, the additional sales marketing spending related with the global expansion, especially with HAGO this quarter. Also, the margin profile of the HAGO product. Is there any difference versus your core live streaming business? Thank you.
Natalie, thanks. Let me address those questions. The first question regarding BIGO's revenue composition, I would say super majority is from live streaming. As I mentioned, imo, before acquisition, they have revenue coming from advertisement. After we acquire imo, we have tried new ways to further enhance the advertising dollar revenue. Again, as a total, BIGO's super majority revenue is due from live streaming. That's the first part of the first question. Secondly, regarding the original user composition for different product, imo's user mainly focus on South Asia. The top markets are India, Bangladesh, Pakistan, and then Middle East, and then some of the Southeast Asia markets. For the future user acquisition strategy, imo would definitely focus on its key markets. As I said, those key markets are South Asia and Middle East. It will continue to attract further users through the friends and friends' friends circle to grow the user base in those markets first. Once it reach a critical mass, once the content within imo reach a critical mass in terms of quality and quantity, imo definitely will reach out to other markets as well. As you all know, IM product tend to have a network effect. For every one user you acquire, you potentially can acquire five or six new users, because those new users are friends and families of the existing user. That's about imo. For BIGO LIVE, core markets are Southeast Asia markets, roughly 40%, and then roughly 30% something coming from Middle East, and then roughly over 20% from developed world, including U.S., Europe, Korea, and Japan. In terms of future strategies, BIGO LIVE will focus on, as we mentioned in the prepared remarks, will focus on developed world, because we see that developed world users tend to have more social features, and then high ARPU and monetization potential. The U.S., European, and Japan, and Korea market will grow faster than the existing emerging markets. That's about BIGO LIVE. For the next product, Likee. Likee's key markets are India, Indonesia, Russia, U.S., and some of the Latin American countries. In terms of strategy, it will be more balanced. Likee, because it's very easy for users to access and create short-form videos, we'll go parallel, both in terms of penetrating into emerging markets and developed world. As we mentioned that Likee has organized some of the offline events in India. Also in July, we organized a very popular event in Russia, attract thousands of users, young generations to play Likee in offline setting and make friends and do social interaction.
We do see a lot of potential for Likee to acquire both developed world and emerging markets traffic. That's the long answer to your first question. For Hago business, Hago's revenue is growing very rapidly. It's actually one of the main driver for YY's revenue growth. Again, in terms of percentage, it's still less than 10% of the total YY business. As I said, we see very encouraging growth pattern. For the sales and marketing, we have spent, I would say, decent amount of spending in second quarter. Again, right now, it's still not breaking even yet on a business standalone perspective, but we do see margin will improve and see break-even point coming in foreseeable future. That's the answer to the Hago question.
Your next question comes from the line of Jialong Shi from Nomura. Please ask your question.
早上好，管理层。谢谢刚刚David，就是玄霖总在一开始跟我们分享的关于我们海外的这些业务的进展，尤其是用户的数据，这些数据听上去都非常的强劲。我这个问题其实还是关于海外的业务，我想问一下，就是管理层讲的海外的这几个业务，imo、Likee、Bigo Live，还有这个Hago。我想如果让管理层挑出一个业务或者一个APP，管理层认为在未来的话，最有财务增长潜力的话，我不知道这个APP究竟是哪一个？第二个的话，就是刚刚金总也介绍了我们这几个不同的APP在海外主要的市场，我想再多问一下，在每一个APP所在的赛道里面，我们目前的主要的竞争对手是哪一些？能不能给我们多提供一些这方面的信息？最后的话，我们也能理解，投资者也能理解，海外的业务它可能不是一年或者两年的投资，它可能还需要几年的投资。想问一下，从管理层目前的评估看来的话，我们在海外的这样一个投资计划，大概还需要多少年，海外是可以给我们整个集团能带来一个正的利润的回报？我们看到收入其实增长得非常快，但是还是亏损的，大概还需要多少年，我们能看到一个盈亏平衡。这个是我的问题，我自己翻译一下。First of all, and thanks very much for the data points shared by management about overseas businesses.
We think these user engagement data about JOYY's overseas business are quite impressive. I have a few questions about your overseas businesses. For the 4 overseas apps, imo, Likee, Bigo Live and Hago. Which of the apps may have the biggest financial potential in the long run in the view of management? Also, just wondering if management can provide more colors on the competition landscape for the 4 overseas apps, such as who you guys are competing with in each of the 4 verticals. Finally, we think the overseas expansion may require multiple years investment. I just wonder where JOYY is now in that investment cycle, and when will we see a positive earnings contribution from your overseas business based on management best estimates? Thank you.
好的，谢谢您这个问题。我来回答一下这个问题。我觉得其实很简单地看，如果非要讲一个产品的话，我还是觉得imo未来的收入规模和增长能力都是最强的。因为imo现在变现的%比是特别低的。所以我们一旦在imo上开始做变现的话，增长的规模将会是巨大的，因为我们现在已经有两亿多的MAUs了。This is David. Let me address your question.
Firstly, if you have to ask me to pick out one of the favorable product in the future, especially in terms of monetization. The choice definitely will be imo. imo, if you look at the nature of the platform, it's an instant messaging platform with very strong growth potential in terms of the users as well as future monetization. At current stage, since imo is still in the very early stage, so we actually didn't put very aggressive actions in terms of to monetize current users. Since they already have over 200 million MAUs, which is a massive user base. In the long run, definitely we are more confident in terms of future imo's monetization.
另外一个，就是中国和国外的技术通讯产业有一个特别不一样的地方，就是
在中国，即时通讯产品的研发规模都是特别巨大的，动辄就投入上千人、几千人的研发团队。但是在海外，即时通讯往往都是特别小的团队制作的，甚至就十几个人、二十个人，长期就这样研发一个很小的即时通讯产品。所以其实反过来来讲，在整个即时通讯平台上嵌入内容的能力和把整个社区的产品做好，做得好用，做得更方便，我觉得中国团队是有无与伦比的优势的，我们会充分发挥这个优势，在全球的即时通讯市场上抢到更大的市场份额。
We look at the competitive conditions in terms of the instant messaging product in China, outside of China, which is actually quite different. In China, in most of the cases, the company will allocate a large scale of the research development teams, which is even over 1,000 people to develop the different functionalities of the services into the IM product. By contrast, if you look at the overseas IM product operation, normally it's coming from a very small team, like a couple dozens of people, but develop a very focused functionality. Definitely compare the two parts of the research and developing capabilities, it has a huge gap.
For the Chinese company, we definitely have the expertise in terms of how we can better embed the content as well as develop the different kinds of functionalities into the instant messaging product to continue improve the user stickiness. For that part, we have a very obvious competitive edge compared with the overseas peers.
对。所以我是觉得这是我们在即时通讯领域的一个机会。反过来，其实我们Bigo Live在海外一直是一个盈利的业务。其实我们以前一直是靠Bigo Live的盈利支撑Likee的亏损是绰绰有余的，只是我们最近加大了对Likee的投入，所以大家才看到我们在海外的业务是处于亏损的状态。但事实上，我们如果随时削减我们在Likee上的市场费用投入的话，我们是随时都可以盈利的一个状态。然后反过来讲，为什么我们在Likee的市场上投入这么大的规模呢？其实反过来也跟大家明确一个，像Likee这样的产品不是有钱就可以投的，你一定要让你的投资回报达到一定的一个正向循环，你才有机会扩大你的投资规模。所以我们是看到了非常多的正向的数字，支撑了我们这个业务持续扩大的长期的成长能力。所以从战略上来讲，才在短期内加大了投入。
First part is definitely we see a lot of opportunities in the instant messaging area. Meanwhile, if you look at the other product, especially I want to highlight Bigo Live, which is our major entertainment live streaming platform outside of China. Bigo Live actually has been profitable in the past one to two years already. Actually their profitability used to be good enough to support Likee's development. Why recently we have more aggressive campaign in terms of the Likee's investment, since we actually see the better ROI from the user acquisition part for the XiaoHongWuYu platform. That is why we have the relatively more aggressive spendings. Meanwhile, it doesn't mean we spend money blindly. We actually look at close monitor a lot of different kind of features and operation metrics.
When we look at the better and the positive ROI coming from those part of the investment, definitely that bring us more confident to continue spend and invest into the Likee's development in the future. As I mentioned before, the overall BIGO business could be profitable at any time, if we cut out the spendings from the Likee part. That means, we have very flexible of the control for this part of business. We can dynamically take control of the financial budget and close monitor that on a quarterly basis.
对，我们的短视频的月活跃用户规模已经成长到了9000多万，接近一个亿的规模了。这个成长速度其实是给我们带来了巨大的市场优势。而且我觉得随着Likee和imo的合作，我们短视频的日活跃触达用户规模还会急速成长。这个急速成长会带来一个用户规模和内容的正循环。一旦我们建立起了比竞争对手更好的内容和流量的正循环的商业ecosystem，正反馈的规模，我觉得未来我们就能够取得非常长远的竞争力。
Our XiaoHongWuYu users has been grow up several times on a year-over-year basis into 90 million in the second quarter. If we look at the massive user base, definitely there has a lot of potential. Meanwhile, going forward, since we have more synergies happened between imo and Likee, so definitely you will see the XiaoHongWuYu users converted from imo, which is the instant messaging products will rapidly grow. Since in the foreseeable future, once we build out the closed loop and the ecosystem for the XiaoFa video product, definitely we will see better financial leverage from this part as well. For the products such as Hago, H-A-G-O. Since Hago will become more mature for the product and it is focused on the monetization progress. Definitely, you also will start break even and generate positive cash in the foreseeable future.
In terms of the profitability roadmap for the overall BIGO business, we actually still stick on the original plan, which means until the end of next year, hopefully we can achieve the single month break even for the overall BIGO business. We will continue work on that goal. Thank you.
There are no further questions at this time. I'll now hand the conference back to the management team for the closing remarks.
Thank you, operator. Thank you for joining our call. We look forward to speaking with everyone next quarter. Thank you. Thank you.
Ladies and gentlemen, that does conclude our conference for today. Thank you for participating. You may now all disconnect.