Earnings call transcript Q4 2022

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Operator

Hello, ladies and gentlemen. Thank you for standing by for the Fourth Quarter and Fiscal Year 2022 Earnings Conference Call for HUYA Inc. [Operator Instructions].

I'll now turn the call over to Ms. Hanyu Liu, Company Investor Relations. ahead. go Please

Hanyu Liu

welcome XXXX and operational Fourth and posted Quarter were Hello, Conference to Call. Year online. are and Earnings earlier and The Fiscal issued everyone, today HUYA's company's results financial

earnings the ir.huya.com. on at of the view also website replay can press by a IR A be visiting will call in release the IR website the available hours. You few

HUYA; Mr. and call today's Chief Dong, on Rongjie will be Ms. Officer Participants of Executive

the and will Ashley begin President with a Wu, session. conclude of will Q&A remarks Vice with Management Finance. prepared call

Before statements we Securities continue, the harbor contain please XXXX. note that Private today's made provisions discussion will Litigation U.S. safe of forward-looking Reform Act under the of

inherent involve statements Forward-looking and uncertainties. risks

materially from may As such, expressed results the the different company's today. be views

in filed and public any as company to Further applicable information regarding forward-looking the this with does and obligation except other Exchange company's included not filings other the Commission. as risks update statements, Securities is law. U.S. and and any The under assume prospectus required uncertainties

Please GAAP financial also non-GAAP include unaudited to information mostly unaudited press as of this note a release as well reconciliation comparable GAAP the and earnings of contains measures unaudited discussions directly the that HUYA's financial measures. press HUYA's measures. non-GAAP conference call unaudited release

over I go ahead. Mr. to will the now Rongjie turn call CEO, our Dong. Please

Rongjie Dong

year everyone. you us. for volatile headwinds, our for was conference joining XXXX call Hello, a Thank macro today. Amid ongoing

came in loss. billion, delivered we net growth RMBX.X year, our user at steady While revenues an year for and annual full showing a decline the

foundation as market content we've In for in improved corporate our aspects commitment while meantime, and Our our improvements fulfilling business operational efficiency, shore where as prepare focus our our honed product to we growth of solid make the favorable to the environment our offerings, has more responsibility. social on can well up a ahead. controlling been and

forward. today, this with our of to strategy would and moving on like opportunity the to progress I call share take some you

e-sports high-quality to to side, On users. the continued tournaments our programs and user bring we entertainment

enhanced experience and also studios. viewer the game with We interactive further broadcaster by partnering

able healthy stable were we level result, a to a in scale and user engagement achieve As the fourth quarter. user

mobile policies marketing the same spend our and compared period XX% adopted our for MAUs from year-over-year. slightly reached expenses sales expenses the year. million, time, quarter, keep MAUs XX.X by basis, lowering the million, an up growing down, same At Huya Live's QX In the we to XX.X annual XX.X last XXXX. fourth with million were stringent X% by in On marketing mobile

above the maintained Live also rate full We average XX% month retention Huya year. for our user a app's next

on share Next, you updates some companies. let game the me efforts highlights with and our collaboration recent product with

have live been interactive our features. expanding streaming of portfolio We

In Gift Treasure Drops addition upgraded to feature. popular an we recently Digging feature, the introduced

to broadcasters only then in broadcaster completes certain by props viewers These be live activities, broadcasters' streaming-related a claim. to allow of game treasure with via check-ins can suitable earn be posting comments. or broadcast company. also Users streaming the exclusive and room, additions users traded-in to other the further participating game link not for audiences, for by Ores a released rewards activities. relevant digging stream Ores provided Ores obtain rewards, their participating but can for variety collect also will and behaviors After a time

five achieving Games been activities has our on system rewards popular we for with together platform, This digging Last major broadcasters Carnival proven with of treasure League effective our Riot users. highly December, launched the game XX-day and free users campaign, XXX The studio offered a participated in cumulative from tools pieces a games. our innovative IP outcome successful X.X Legends cooperation. million of XXX, game

around to game to games in increase also chain. industry provide and our more Our representation ambition good the Huya's value our of effort collaboration is and a diversify services continuous presence

production, to creators with be our enrich that utilized is In function more business, our joining of mentioning platform Huya's worth processing video editing motivate supply our broadcasters continued and improve It Through video content production more of also users is video This driving capabilities, content. creators. real-time original of content. our terms the to AI editing often we our efficiency re-creation tool by can automatic and and being of broadcasters. both force facilitates live the

did to both drove viewing community Meanwhile, support and by videos Our we with by efforts users' in embedded video been video consumption. vertical-video our the an our format. XX%, total previous experience XXXX of video number content in year. viewing have compared nearly enhancing up this creators We through uploads introducing immersive game and the

on total growth viewing With in videos we app same the about period enhancements, last in quarter, compared on-demand time mobile with for achieved our these XX% year. fourth the

ecosystem, out user As video content increase our also build Huya we stickiness we drive a more communitization can comprehensive platform. believe across and we

such and corporate protection initiatives, terms In Topics responsibility more online held environment as preservation, X,XXX culture of than with from sessions our XXXX and promoting we partnered broadcasters purifying areas over negative social positive in environmental social traditional impact. streaming X,XXX influences. the covered live

the During campaign. we Our to forces the Planet" international few "Protect launch a NGOs joined also year, Home with

high-profile a broadcasters. leading included related and of public These series KOLs awareness activities featuring our

in the the which the influence tournament but a tailor-made virtual for These have we was venue live Millions development the of integrated LoL promoted by format. campaign enhanced new not Season using virtual final healthy of viewers to of Championship efforts also Additionally, industry. Huya's this QX. new e-sports only into World also streaming contributed enjoyed digital gallery XXXX format, our brand

policies compliance spending year requirements have for by both for the healthy constrained achieved higher instituting live were power. market added year, sectors. industry by weak streaming While and Regulatory we XXXX, gaming which scale placed pressure user on the also the in during relatively the we expansion introduced impacted user environment

us benefit products market will in place to expenses meet we Accordingly, to position the we taken optimize ensure to have to operations, costs in development. strong begins and recover. sustainable compliance a to our to The made prudent our our adjustments strengthen abilities regulations continue and our XXXX and and operations, steps once

provide uncertainties the and still for strengthen some environment market to in in XXXX are and creators, and high-quality services content there term, the in forward. will near content we continue Although users going our

We product our implement capabilities development technology Huya's consolidate will competencies. core and further also innovative to advance

so, China. doing diversify market can game maximize live the streaming revenue streams meantime, maintain we broaden our In to business in leading the advantages we actively in opportunities and our our our position In will and ecosystem. explore

of our details With over turn our more that overview, VP call share financials. I Ashley to the Wu, will metrics now operating and on to Finance,

ahead. go please Ashley,

Ashley Wu

Thank you, and Dong, everyone. Mr. hello,

Dong's and Following start I'll enrichment on content initiatives. our remarks, diversification Mr. some with updates

tournaments, reached approximately XXX we Cup XX of Finals. The viewership CFS events LoL and quarter fourth quarter the over International largest Honor broadcasted Demacia and for those total of XXXX, In XXXX, of the Championship, during million. Worlds Kings Grand the professional viewership third-party e-sports was

our and While overall between cooperation make broadcast differences of viewing with These prediction tournament for our features live also switch we In time on a between data streaming the stable. channel the deepened the League views, of matches. experience the game users in-game the gained features XK-HDR Wild and U.S. China lot innovative Wild for zone on also Rift LoL with and Rift Season particular, the impact remained it XXXX Worlds platform. some viewing core traction. had easier our those users X viewing, to a for introduced interactive

disruptions quarters, was seasonality as in resurgence. the certain mainly in due content tournament as supply The high to event and not previous COVID-XX from QX licensed

we of such, period. programs As the we approximately total broadcasted PGC self-produced million. tournaments XX added quarter, over entertainment the during XXX and viewership fourth In e-sports more generating Huya-organized shows,

Huya All Star Elite PeaceKeeper as Demacia users. such of fan-favorites qualifier great platform Honor with Cup, of series Annual gained held to the addition we which In traction and the Thunder for Invitational our Kings,

XXXX International both also of Championship, programs commentary those players the by helped HoK hosted former promote professional and The streamers and events. well-known for Worlds popularity

during content Hours, the two quarter, launched Additionally, XX on platform. Heartbeat the show seasons further variety the our pan-entertainment enriching we dating of

procurement process previous production, programs screening our had with total licensed year. the XX% we Under over strict fewer events and and and XXXX, compared content self-produced in for

remained data, viewing total Our steady. however,

our which striving achieve quarter, that loss our true will major better costs focus to higher gross Although tournament users, ROIs. while the XXXX, for popular significantly licensing to Worlds a events we key covering QX contributor among were was of to to are due our stay

entered in licensing League into series We will an this costs of believe effectively we we in XXXX. amended of agreement Legends lower January, licensing tournament for a matches. As disclosed overall our

XX% fourth our also In usage. bandwidth continued broadcaster-related quarter, the expenses operating our and optimize total and with reducing quarter-over-quarter. costs to by efficient year-over-year we became XX% QX, more operating expenses in We

cost strategy expenses markets savings we localization. we business, overseas narrowed and our to primarily and lower move to and our loss, thanks We on and personnel. prudent forward. greater expense In by to channels plan operating strategy marketing driven strengthening continue concentrate associated with Our control were our further key as promote our sales

details. Next, moving financial on to our QX

net period last revenues QX, RMBX.X same a billion year. decline were the from for billion total Our for RMBX.XX

were Live Live, macro was with RMBX.XX number the decreased users' The due last paying for sentiment. year. primarily same average decrease compared period streaming revenues and as spending affected a billion on lower RMBX.XX paying for and to paying of QX, billion adversely user per users Huya the regulatory challenging environment

revenues from RMBXXX was lower environment, This soft well were demand sub-licensing as due the RMBXXX other the advertising macro revenues. primarily services million same for challenging QX, with compared resulting million year. period Advertising for last and to as for content

League to XXXX, XXXX to own of like during longer was to revenues would our matches XXXX in revenues following our point the that of content Since sub-licensing we for the Legends also significantly the content in in contributor primary January, sub-licensing sub-licensing the XXXX. for licensing the no expect agreement to amended a sub-licensing period. decline rights matches I LPL matches we out LPL

revenue XX% bandwidth content due for and sharing well QX, as Cost costs. to to decreased of billion decreased revenues by primarily fees RMBX.XX costs, as year-over-year

live related XXXX. was the revenue fees fees revenues. is to the partially by by sharing booked content costs XX% decline in offset increase to and for decreased year-over-year due the in on with the to cost which RMBX.XX This decrease associated Revenue QX, content XXXX Worlds for in e-sports spending streaming mainly higher in primarily content, billion LoL sharing QX

XX% decreased for a costs adjustments improved usage was technology less to management continued as RMBXXX to as to markets. well bandwidth This in on strategic of overseas by as and million focused result cost enhancement business QX. primarily our stay Bandwidth bandwidth due key year-over-year efforts,

due revenues related costs to QX, million RMBXXX e-sports Gross XXXX. lower was XX.X% primarily for and loss Worlds was to negative content increased content, margin for particularly Gross QX.

loss XX.X% non-GAAP negative expenses, gross was compensation non-GAAP RMBXXX margin gross and share-based million, for QX. was Excluding

XX% RMBXXX fees, personnel-related year-over-year marketing decreased to Research million Sales decreased promotion expenses for personnel-related XX% by by expenses as well and and for and million share-based marketing and decreased RMBXXX decreased to QX, due to expenses primarily development primarily due year-over-year compensation QX, to expenses. expenses. as

for subsidies. million lower RMBXX with RMBXX and by refunds expenses to XXXX, primarily General million primarily QX, period decreased for administrative decreased due the expenses. Other same tax to for and to compensation government million due was QX, income year-over-year XX% share-based of compared RMBXX

As compared million for for the operating RMBXX of was result, Interest QX, million a same the increased were and due with income short-term RMBXXX same XXXX, loss for interest RMBXXX investments XXXX. period of million RMBXXX rates. to period compared for million primarily QX, with

compared Net QX, RMBXXX XXXX. net QX. for Inc. loss was ADS RMBXXX attributable to to margin attributable the period was per net Non-GAAP of same for with for Non-GAAP QX. for net was HUYA million RMBX.XX loss Inc. loss for RMBXXX RMBX.XX QX, QX. million the XXXX. XX.X% Non-GAAP Diluted compared net ADS RMBXXX loss for HUYA diluted million was per for period loss million of same with was

of December billion, As XXXX. investments cash and XX, of cash equivalents, September compared with short-term deposits, deposits XXXX, RMBXX.X had XX, RMBXX the and long-term as billion Company of short-term

XXXX, prior RMBXX.XX our year revenues for RMBX.XX the to year. billion net billion for year. on billion the other billion for billion, compared with from the RMBX.X XXXX to decreased year. with results. Moving were Live prior for full for XXXX RMBXX.XX XXXX, Advertising revenues and prior billion RMBX.XX were Total for revenues streaming compared RMBX.XX

loss million Non-GAAP net RMBXXX non-GAAP gross to XXXX. ADS loss margin X% diluted Non-GAAP Non-GAAP non-GAAP was attributable and net was net XXXX. gross loss for XXXX. X.X% margin HUYA RMBXXX Inc. was per for RMBX.XX and for million, was was profit

earlier our full mindful be on of financial press release details XXXX issued the of today. To our listeners results, I our call, earnings encourage length earnings refer year to to for additional

I questions. With would your to call to the that, open like now

Operator

[Operator Instructions].

Our line of Jefferies. the Chong from Thomas first from question comes

Thomas Chong

I have two questions.

this getting for approvals. question about is two momentum? user first we number How The about trend should is the my think approved the with -- year? about new And and growth user the games

Rongjie Dong

you. Thank

pay will product and the year on compared on user we'll also platform promotion In consumption content and improve to MAU, attention improve and more participation the of At terms interactive platform. expansion the more on rates, the users user users' interaction strategy users' community-based with Through same and this strategies, we increase as of time, the immersive the payment of to overall spend we platform. will prudently stickiness to the the to and continue so retention channels. our on

future the fact China, signs and number In a that the It on so had year number impacts the But first to to the Spring year up at are stable off-line of swift MAU the a this user due these infections we course, economy seen platform recently. was and the quarter stabilizing also activities, that open beginning just users trend. has the of the more due level to short-term expected some COVID in temporary Festival to return this the of the is in we of decreased the would relatively that affected. believe will broadcasters and of have

With licenses have of or soon. games, be been the major launched some gone launched will of have have licenses the normalization -- and of release obtained games

launch games more user of we live conducive opportunity with the if of the are and also we games, believe events and the of these additional that it of these users they e-sports is be growth the will us of growth. So content will live the have to bring platform, to popular

game and timely games recruitment studios such the streamers to incentives new events, the manner. support make for new traffic hosting the for in provide with of time, a resources games, games sufficient for as we'll as provide preparations cooperating other At the of launch of to launch new new or same the games seize of so opportunities

Operator

comes question Renaissance. Yiwen next of from Our the Zhang line from China

Yiwen Zhang

back we and agreement for January, specifically, impact live what's question My signed in And on this strategy a the of regarding our management [indiscernible] year. tournament is operation? the stream -- financial

Rongjie Dong

strengthen and revenue of the the of time, virtual for the enhance streamers we'll live by content, broadcast also to streamers At same enrich continue help to functions perspective From platform services the the and broadcast the for life live of the interesting make the forms to technologies of more the and more advantages innovative application will the more the and of competitiveness sources providing us live forecast content users. interaction and them. usage

strictly that investment in self-run e-sports the and call we opportunities of in the events, conference terms In mentioned events. copyrighted previous we'll to continue screen

on in the competition in championship, some and for and content, reduce for we'll performing strive of consolidate we terms continue all And metrics content, self-made content. copyrighted will to better focus brand self-made event investment the commercial with high-quality HUYA And the more the to poor procurement and copyright we'll relatively forming IP owners.

main the PEL the present, LoL, our event. the cover At LPL as to we'll of the Elite, continue KPL, Mobile the of LL and the professional Peacekeeper league CrossFire

LCK of events Legends. also ESL and series events CS:GO of will the Dota We of or some have X such exclusive events as League

made are we dynamically there introduce evaluate is on that new also e-sports events market events would if new possible. the available, game-related if and So

Ashley Wu

and As for agreement throughout of on year specifically supplementary financial XXXX. in the this we event a legal year reached the friendly supplementary negotiation the through -- the XXXX the operational of with agreement, to copyright impact owner in and January a

championship such and copyright Demacia addition a LPL-related In events, to the key events of as added we Cup.

the the of In agreement significantly the cost covered in the XXXX. in than terms of finance, be total that will lower event

the revenue same positive events In which revenue XXXX, the distribution copyright of on that reduction more will events, will the right our longer compared cost XXXX we decrease our overall general, of have the sublicense company. from effect copyright HUYA with time, At in than of is relevant will cost the to a the the decrease. no as LPL expect structure

we vigorous our of covering better perspective, the platform, e-sports From overall dilution on not platforms there these help will we watching this be users' is that also but believe event as the development which do itself going more of conducive controllable, be the is there ecosystem. dissemination that and in population rule events, out the impact to to are some

There are copyrighted still only self-made some in and available events events top-tier HUYA.

improve we be interactive users. will in gaining continue events, our addition, us viewing those to very to the and which experiences competitive advantages In for for platform

Operator

Sun from HSBC. Next comes Our Ritchie of question the line from

Ritchie Sun

question live I will revenue the translate streaming as this the myself. about revenue as well total overall is My recovery situation growth expectation. XXXX

Ashley Wu

May, requirement according terms the we the subsequently to mainly new of after of the on In it in policy live last the broadcast and of impact revenue began these June. adjustments revenue, implemented launch

relatively first domestic of case, this forecast was high. the revenue half base in the So XXXX live in

the So will in be we year-on-year. this first revenue weaker expect year that half of the

fewer will Moreover, COVID streaming affected from the festival and open this some as due revenue, factors, also to a a up is and live and New Year activities be perspective, generally factors for other off-season seasonal the QX well. Chinese year by after

that operations, subsequent and will the activities to monetization enhance we to revenue such our of optimistic So introducing also optimizing of we hand, about year-on-year quarters one because gift. business design of and economic polish hope the new the on we launch better, environment the the and as as same the as are our recovery the will as gradually well be base stabilize the so of operational some remain overall more the continuing plays of games. virtual product At time, interactive

to conducive our for basis the expand performance improvements generate operation, content, revenue strengthen overseas entertainment revenue our our XXXX. decrease experienced And NIMO's of we overseas be also business optimization comes second the And A will present, had year-on-year live's quarter we and continuing the NIMO. on commercial business, believe our at the to business. of small localized from last since which of part to an April, revenue for due the since

market this coming the of revenues, recovery In this will revenue opportunity we year, some terms and other the of up environment recover with have that again believe year. licensing to advertising

the revenue factors supplementary the games because that XXXX, lead some in predict our et other in hoping may copyright time, are to agreement and revenue we business with compared will success. overall January, exploring signed we the opportunities, this year However, new get we At and of cetera, to including advertising the decline of some also decline. to same

Operator

Our next Bank Zhang from question America. from of line Lei comes the of

Lei Zhang

what this on some My about you forecast Can give for our question operation And is XXXX? business. video our updates business? video production us is

Rongjie Dong

video production, in for of we terms In volume video addition terms live a and the our our video of materials processing. content been lot original of to have for in have creators content business, accumulate us, we streamers, large able to also of joining content

clips to the that in automatically content live AI analyze function in also And enthusiasm the live editing the conventional the by which uploads video highlights help nearly production can number of the addition technology AI real-time users and have processes content increased XX%, provide the generate platform. streaming of can tools, video XXXX, our year HUYA we and support for recognition to enriching on and in and the to through competitive creation, editing effective the events, that streamers. games of capture available real-time video has improve of In efficiency in stream and are

optimize uses our content consumption increased. vertical our HUYA with ecosystem At we screen the same time, embedded continually has format, of in also content significantly video video game being combined community, the immersive video viewing as content

reached on XX% the on quarter app penetration than HUYA new At by time the rate increased last total video more a screen high. the year, application content In year-on-year. of of same time, fourth the

a integrated believe has ecosystem of that and an we of promoted develop an for our And live So overall form a ecosystem the will for business video it further community-based HUYA. broadcasting consumption pan-live broadcasting. be development with that will video format towards content HUYA, and development

to users. help increase to to will channels attractiveness to also increase of us This and the obtain And run, revenue. the in long the users would the platform help it expand

promote to we continue businesses consolidate the upgrades, and of year continue video XXXX, the will advantages HUYA's community. product for of promote to And core

companies, full-link the value to of games streaming promotion our we'll utilize for game prepare events to attach importance and for in companies and a game-related growth provide expertise long revenue term. streaming, pan-live operation for mid addition, new events our the service more capability services in In streamers, also as the of to games in our for operation and upgrading the and ourselves the so game

Operator

UBS. comes from line question from Liu next the Felix of Our

Unidentified Analyst

Let Daniel Liu. is on Felix me UBS from translate of myself. questions I today. This have behalf two

in competition improvement could please from for about my is the cost? First, sector? second expect streaming game year? the And sharing on XXXX? question content ratio is, how outlook briefly us you How tell the margin the landscape last competitive sequential revenue margins current impact would and Can we a live

Rongjie Dong

you this for question. Thank

field is games the share which lies professional with a in have the dominant of and supply we competitiveness close content each competition that system e-sports the companies. mature market Overall, [indiscernible] rational from game We benefited in well as a we also, game our HUYA's and as had live content behavior exists, high-quality games. more of platform live e-sports, content ecosystem, cooperation stable market with production especially group and through in of streaming self-made than content have Our still we believe core of more user that stable of our the more [indiscernible]. relatively still and maintained the position but is

and trends. cost the profit Covered

while under and updates, we adjustment. -- proportion the the And relatively ratio the contracting cost stable situation and current proportion terms In competition, there trend depend future probably be room remain for year's will and in that will and the the but been of our expect on sharing ratios will commission this costs, signing some sharing stable increased relatively sharing our XXXX, of sharing in XXXX. market commission since have market

the margin quarters of the of same of smaller XXXX between and optimization tournament of our fluctuation the we XXXX. the will as than expect content year the of rate the gross on on championship the profit compared the based with that the the increase gross cost well time, that and cost, At optimization year be whole as will

Ashley Wu

operational operating and strengthen Since expenses, the to consecutive improvement started to cost the And the efficiency operating year-on-year of efficiency. have by double for year quarter of measures XXXX, in already. have X improve we'll terms strengthen digits measures quarters expenses to second continue the we our and declined In reduction of continue cutting. and profitability for budget maintain long-term to 'XX, focus this we this will foundation losses a work, we'll be and Reducing and improved the cost results lay control our that strict the subsequent profitability year's consolidate a of return the will hope growth to finance of and good company.

Operator

no to As I'd the questions, further call remarks. back closing there are now for like company turn to the

Hanyu Liu

today. Thank you once us again for joining

questions, Thank HUYA you contact website or free to through contact Group If have the further please Relations. feel Relations Piacente on provided our Investor information you. Investor the

Operator

concludes This conference today's call.

may disconnect lines. your now you. Thank You

HUYA (HUYA) 21 Mar 232022 Q4 Earnings call transcript