Taking a closer look at the quarter, adjusted EPS came in at $1.41, comfortably ahead of the $1.11 Capital IQ Consensus. Net margin was quite healthy at 24.1% vs. 22.1% in the year ago quarter. This improvement on the bottom line was driven by a couple factors. First, revenue growth was solid at 31% to $357.8 million. That did come up modestly below the $360.6 million estimate, but, investors are more interested in the company's growth. YY's strong growth was driven by new product offerings and the entrance into new verticals like outdoor and travel. Additionally, its live broadcasting content through its Huya platform has created better user stickiness. The accelerating popularity of its live broadcasting channels has had a positive impact on YY's margins
Looking specifically at its live streaming segment -- which is its largest business line -- revenue spiked higher by 41.7% to $319.5 million. Although its MAU growth has decelerated significantly since it went public in November 2012, it is still growing its mobile MAUs, up 5% from the previous quarter.
When YY went public, its online gaming segment was its largest at 42% of revenue. Now, that segment accounts for just 5% of the total as YY has shifted its attention to live streaming, and, away from the ultra-competitive online gaming business. For Q4, online gaming revenue dropped by 27% year/year to $18.1 million.
The company also did provide revenue guidance for 1Q17, forecasting CNY2.2-2.3 billion vs. the CNY2.47 billion consensus estimate. Interestingly, investors also shrugged off this slightly weaker-than-expected guidance. With the stock making a run over the past couple of months (up 30% YTD), the typical knee-jerk reaction would be to sell. However, investors are brushing that aside to instead focus on the broader, longer-term picture. In particular, as live streaming continues to grow, its margins should also continue to rise, generating stronger margins and profits. Furthermore, YY is expecting to introduce more live streaming content into additional verticals, leading to market share gains.