YY Profit Tops Estimate - Update

(RTTNews) - Chinese video-based social network YY Inc (YY), Tuesday reported a better-than-expected increase in third-quarter profit, led by a more than two-fold jump in revenues as well as strong operating margins.

The company said it expects strong growth in revenues for the current quarter.

"We entered the second half of 2014 with strong momentum, propelled by both the new initiatives that have diversified our product offerings as well as the continuing strength of our core growth engines," said CEO David Xueling Li.

Shares of the company gained about 3 percent in after-hours trade on the Nasdaq.

YY posted quarterly net earnings of 286 million yuan or 4.77 yuan per American Depositary Share, or ADS. This compares with earnings of 129 million yuan or 2.17 yuan per ADS last year.

In U.S dollars, earnings for the quarter totaled $46.6 million or $0.78 per share.

Excluding items, adjusted earnings for the quarter were 5.37 yuan per ADS or $0.87 per ADS, compared with 2.87 yuan per ADS a year ago.

On average, eight analysts polled by Thomson Reuters expected earnings of $0.76 per ADS for the quarter.

Revenues for the quarter surged to a record 1 billion yuan from 487 million yuan last year. In U.S. dollar, revenues were $163 million, surpassing analysts' consensus estimate of $152.5 million.

YY said growth was due to strength in internet value-added services, consisting of online music, entertainment and games.

Gross margin for the quarter rose to 51.7 percent from 49 percent last year, and operating margin to 30.9 percent from 27.5 percent.

The company expects fourth-quarter revenues of 1.08 billion yuan to 1.10 billion yuan, up 76 to 80 percent from last year.

Analysts currently expect revenues of $574.6 million for the year.

YY closed Tuesday at $79.78, down $2.65 or 3.21%, on a volume of 2.4 million shares on the Nasdaq. In after-hours, the stock gained $2.22 or 2.78% at $82.00.