Earnings call transcript Q2 2023

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Hello, ladies and gentlemen, thank you for standing by for the Second Quarter 2023 Earnings Conference Call for HUYA Inc. At this time, all participants are in a listen-only mode. Today's conference call is being recorded.

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

Hanyu Liu

welcome call. and issued second XXXX quarter today Hello, company's to financial conference online. The are were and earnings and everyone, posted HUYA'S operational earlier results

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

Mr. Participants on today's call will be

President Mr. Songtao Huang, Acting Vice of Senior Ms. HUYA; Junhong of Chairman and Lin, and HUYA; Co-CEO

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

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

may different today. be views expressed involve the materially as statements Forward-looking risks results and from inherent uncertainties, company's such the

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

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

turn call now Mr. over the will I to our Chairman,

Songtao Please ahead. Lin. go

Songtao Lin

Difficulty] [Technical

our today. you. for my It's of call conference pleasure in for with Hello, time first the call everyone. and HUYA'S participate joining earnings you to Thank all to speak

week, We milestone in are remarkable this a last celebrated Xth industry. anniversary our

with of team. have HUYA'S the May, and business review operations conducted comprehensive my the assumed Since management role I as in company's I company's business strategies a Chairman

by served number platform, since content As then, we games streaming industry its partners the are live enthusiast, a in inception. a the leading large having concentrators and of game

the to on in success industry. - company's Now and the with we aim HUYA'S role gaming experience build the

company whereas and latest this and opportunity ecosystem business sustainable month completeness brief user development. exploring would to We a take established our We earlier that the long-term, to will more you opportunities on shared plan. the community elaborate like HUYA, be drive with to today strategy

have partners, collaboration well-positioned record this track are game to and industry new proven with we in live streaming we close goal. achieve market Given the the

As of that a new company upgraded the and HUYA'S promote I’m future is phase growth. confident sustainable enters to our development, propel vision vitality

Now call the our I over discuss our to SVP, would turn detail. you. Co-CEO greater Junhong Huang in Acting to and Thank to like strategies

Junhong Huang

you our hi, with Okay. Thank Lin. Chairman's with To expand glad current share specific strategy. key speak some Mr. you, remarks, on new to And our let to today. our respect me objectives everyone. I'm about

we value plan inception, our which Since primarily forward generate our service we shift revenue exploring integrating by are we monetized more our our streaming our user related increasing largely by users to base through paid broadcasters. focus to and platform. visual First, gifts going commercialization into users' live game have commissioning service,

current conversion into users model. yet to improved. efficiency under relatively regular be has a core our process paying Converting involves And long users

part significant also users of know, our gamers. most as However, a of you are

on Also, than purchase. death active tend related and of the by in-game Based service proportion on amount game users user the game spending on and higher be we both play to are insight, our spend gamers. to of in-game live willing and gamer this are general

and users needs game game expansive export believe group’s meeting needs, related commercial we satisfied item our game content we in such models consumption advertising. this have broader and content game rich value their as with can user further capture and offerings game service by game Our already distribution sales

as item game in an take sales example. Let's

those tools, sales time marketing that promotional event functions in-game successful activities but several for held previously mainly and these as one have of We game were games.

and established other sales watch Going games in-game forward, especially of utilize items, regularize weapons, misuse cooperation broadcasters purchase demand when a we mechanism on items in-game schemes, with to these and for various recurrent live played item games HUYA. user ongoing plan to during

for will publisher platform, to to provide broadcasters this service our for boosting in-game expand offering, game income channels we new additional In promote and products monetization streams. addition our their

future We (Ph) games. type discussing addition and [commensal] currently this looking cooperation terms with forward of array studios are of are for an of game with to partnerships

of Furthermore, our this which items. be certain place. business our of more is in function, completed we the month, support already required this will embedded in-game shopping channels to implement into technical Earlier cart item live yellow development

in their the account, function buy accounts users buy game when games. we related on HUYA According their to watching content for plan, implement seamlessly they scale. items small using can Once game will with game our streaming live

is for and income to creators our cost optimize structure. streams content priority our Another expand content

At income present, gift of visual their share the revenue. [Xiom provide our and (Ph) broadcaster’s mainly consisted Fee] we

For many of is game broadcasters, Xiom income. source relatively the fixed a fee major

range a service including optimize related among service, service. to structure a related advertising wider develop we content revenue, income will work we to creator enabling our from sales, other them in-game item share and by and game distribution game As of of revenues earn explore greater game

our platform. streams also creators to our structure cost our and We revenue. cost will believe broadcasters financial basis their will to value the fan income more aligning to better increase with Diverse content content HUYA content this while attracting proposition broadcasters boost our adjustment

transformation, upgrade affect our To and we products. this harness service the various new first infrastructure technical for will to required technologies

in-game mentioned underway. item I function well more As is already our above,

to as or other upgrade personalized to which will well live to meeting plan attacks platform, as our allow across identify capturing their earlier interest. games content also We new to their users items, discover interest needs, in-game

latest and model tech of interactive large application and interest, technologies, to trends, to and plan chance explore the AI the including we content user language help embracing engaging actively more In capture AIGC create experiences. to,

sustain our operational healthy will in AI advanced to by and a powered investing atmosphere including system we our risk technologies, on addition, comprise In enhance monitoring capabilities further continuously an community content minimize platform.

of business location advance strategic our targeted several and toward to our proactively sustainable aspects internal more pathway. are We transit development a resource balanced restructuring for more of

well cost live and live spend streaming fixed our scale proportion effective features, that broadcasters. generating To incentives the of campaigns, certain revenue are back we as as streaming on end, planning financial less for to

Although, in may will we pursuit our financial long-term improvement. the near in operational fluctuation profitability leading this adjustment support capabilities in our metrics and term, our execution and market believe result position strong of

total Our primary revenue for and three-years, goal more of long-term is to revenues revenues service success. diverse within strengthen a to our XX% to balanced increase game related our approximately creating net foundation

We are transformation confident initiatives. with

and users, growth to We committed partners. we will as interest content needs the industry remain creators serving our and sustainable of empower more

now With to call finance, quarter to the share over Acting our on and VP I turn details will of result. second that, more our Co-CEO Ashley Wu

please Ashley, go ahead.

Ashley Wu

provide updates on will the financial metrics I second everyone. hello and Junhong for our quarter of XXXX. and you some operating Thank

the On million for in with XX.X the user MAUs quarter XX.X same quarter, the million first which the side, in million period second HUYA compared year. XX.X Live mobile and last

This to attributable content we the slight programs quarter, sequential increased entertainment mainly offer also platform's with the the was improvement game new in and enrich launches content. e-sports the game

Overall, some above app XX%. second short entertainment on public time affect holidays the we stable month's users the the quarter. activities user maintained to quarter in us Meanwhile, to broadcasters scale especially several a user degree, rates with continue staying next offline given spent during and retention

side. content the Now,

party attracting the quarter we In event, license forecasted professional XXXX, XX million. of terms XXX of viewership e-sports tournaments in second around of a e-sports approximately

we more a to last same the broadcasted implement of of We in for as period QX number continue in than higher events as year, scheduled, events fewer QX, content were tournaments policies. stricter procurement than in

around BLAST Summer, LPL - Leagues and Summer In proved CFPL for from as very CS:GO continue both we Spring, the world. Professional mid-season China Masters Domestic major and titles, Asia popular. the Invitational June, deliver performances. KPL the the strong teams professional such tournament to Tokyo, featuring game LOL a broadcasted Valorant’s Also, Paris and and

event, the engaging the on our official of before for as this new it this teacher an July, major China launch Given in and Valorant passion from our attracted of serve timing a game users platform. just

we Valorant more streamers tournaments HUYA, expect gradually domestic content, develops. self cultivating including its to on and as co-audience Currently, offer system related and is e-sports to its organized

than with the approximately We in XX self e-sports organized shows and quarter PGC also total million. XXX of entertainment more viewership second a broadcasted tournaments

The [indiscernible] the for and self For create metric high-quality ITs. King a in-house Elite our of of to quarter. of systems HUYA Peacekeeper among we new aim events content, Honor our produced during for cup watched were all-star branded most

alongside After multiple seasons, on of the competitions. funder KTL influential most official IPs series the HOK become one for platform, our has tournaments the

the CS:GO increasing from audience with live a the commentary event, our BLAST tournament in from During we program, our remainder and interaction [Indiscernible] event. conducted the studio Major Paris, community Paris user major

popularity programs offline recently online such success during of carnival Carnival a Billiards for season eighth that the series on Carnival, quarter, held long mentioning we programs, HUYA content. launch and also growing addition, extending leveraged Basketball the these run both Carnival and entertaining as integrating Kungfu demand capitalizing type we worth the its to sports of activities, In is

focus our professional content well across our user to In line and as continue enhancing programs. licensed strategies, as on generated professional ecosystem we content, and developing will generated self-produced our with community, new user user content,

and that We support superior transformation. will our high-quality continue business confident content user our are experience to

environment, amid XXXX. we terms profit revenue quarter and revenue Despite RMBX.XX a the of optimizing performance, of net total costs net billion, financial million continue to of micro year-over-year for make and in In and non-GAAP challenging RMBXXX we decrease expenses. regulatory achieve of second progress the

year-over-year our primarily by content driven savings QX, and in improves In margin growth quarter-over-quarter, both costs.

we our along a in operating to content As loss of with costs, particularly operating broadcaster scrutinize related quarter. loss spending, related second we maintain, million narrow RMBX gains approximately licensing further content with the the efficiency continue non-GAAP we and

to details. move our financial Let's QX on

from of HUYA in due billion of same the quarterly RMBX.XX Live the to users billion quarter were billion for XXXX life for the QX same X.X for primarily streaming of year, for RMBX.XX to period for last million revenues last year. paying X.X second for a net the Our a QX were revenues period of the million RMBX.XX decrease total decline billion same XXXX. from number compared period RMBX.XX with

of micro was platform. span in industry our and the on offline long environment, the tail in by paying which users the time affected soft, quarterly increase decline The primarily to entertainment as attributable users as the well number activities,

This significant million of period revenue. licensing our other metrics reduction If was year. for XXX and exclude the QX the compared in in for primarily as XXX impact to in RMB contents same last of of LOL due decrease January. agreement the content were licensing with revenue licensing we a result for of Advertising the revenues RMB million amended

portion primarily of revenue QX decline decreased in to well for XX% to sharing remaining billion digit Cost RMBX.XX streaming RMBX.XX to associated cost single of fees year-over-year as as revenues advertising revenues the through and primarily The sharing XX% fees as growth revenues revenue year-over-year. year-over-year decreased with cost by decrease due QX, creators. by billion due bandwidth cost and in as recorded the well - sharing decreased other for costs related content to live content lower and fees revenue content and content

RMBXXX improved bandwidth to Service profit cost million decreased this was cost management efforts. for RMBXXX technology XX% by QX, margin enhancement was due XX% through Gross million was year-over-year and continued primarily growth QX. for and

million profit to to share-based for Research non-GAAP primarily by RMBXXX expenses. Excluding was related decreased year-over-year decreased for RMBXXX compensation XX% QX. XX.X% margin development due gross gross and was expenses, personal non-GAAP expenses gat million QX and

by million expenses expenses. to to decreased RMBXX to X% increased fees. General personnel expenses XXX million marketing increased and Sales primarily due administrative for share-based primary year-over-year year-over-year due decreased related to compensation and QX and QX for promotional RMB X% expenses by

services. Other lower income to due tax XXXX for of million reform indirect compared with QX same RMBXX for the period was government primary RMBXX and million

million for period shorten same QX deposit management operating period to QX RMBXX RMBXX RMBXX the of primarily loss of million Interest with for investment compared million income RMBXXX the XXXX. compared million due rates XXXX, result, As and products. increased for interest was was improved same with of and for the

income to HUYA the with million of HUYA of Net period to million net for Inc attributable a compared RMBXX XXXX. loss RMBXX attributable for same QX, was million, RMBXX

loss impairment with compared million QX, attributable and Inc of million investments, Excluding for to net the income was XXXX. RMBXXX share-based the same expenses non-GAAP of compensation HUYA period for RMBX

was ADS per net was Non-GAAP income for net was diluted income income Non-GAAP X.X% for QX. QX. QX. per margin for Diluted net ADS RMBX.XX RMBX.XX

cash equivalents, the June million, company March RMBXX.X billion of long-term and of short-term XXXX. of XXXX, deposits RMBXX.X XX, with deposits as compared As cash had XX, and

further that, deepens XX-months. to the for announce program, next shares to Directors move Before we this of under repurchase I'm approved long-term conclude, or the has pleased share our shareholders. building HUYA'S believe I which XXX of may company over value its repurchase Board commitment million ASCs a our ordinary up to

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

Operator

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

Thomas Chong

Language] [Foreign

about first for about the and strategies, management, Can our there question that secondly, about details medium can talking more the target short, is you. implementation? My give strategies. Thank new us any, we long-term new targets And are our share?

Junhong Huang

[Foreign Language]

following existing new community, develop HUYA’s market, and content game value we breakthroughs our to trend improving and game our to further on main user and the the in of long-term plans linkage, in and bring industrial opportunities enhance the points. and sustainable the a game position includes the And content of and commercialization Based development hope ecosystem, long-term the strengthen HUYA promote goals business.

based commercial the game is of commercialization sales, of related our and focus items so population. gamer game users. the shift We game scam to scam as This on such explore distribution, advertisements, as significant towards value deeply services,

users our previous plan spend very able consumption related platform HUYA been more to our studios to the upstream on provide corporation and related we model. on And by game limited are and money strengthening to with has broadcasters. willing game their Although, due therefore, games, business services

These buy items broadcasters, beneficial game in to download in-game the revenue revenue gamers the but also needs bring is watching new live to of games, for additional all stream and when the discover for parties increase chain. titles the cannot only channels and the industry manufacturers which meet and

sign we fee items. sources and from the game revenue between structure of creators on and improve the income relevance strive our other the also expand. sign-on time, sales, and and cost let and enhancing the content cost of content get of virtual distribution, platform is same conducive broadcasters fees, and income This optimize the advertising the content to At efficiency the cost more gift to expand income the HUYA's reducing sharing the we fixed than broadcasters and income for on

provide functions engaged and for products commercial services, we're terms the stage also game negotiating business, needed and infrastructure game the of this and studios mainly in to including building At publishers. new creation relevant with related

basically and them we make in-game this the available the and the Earlier completed plan in-game items of sales month, process game items activate games. on and this distribution of development function year mall to of sales several

adjustments of the part are to in is have relatively of income At this time, we year broadcast also Therefore, live the same making scale expected a XXXX. small some business the to game games investment. the next and monetization business And to reduce some to and further services inefficient more resource titles, potential mainstream games, expand user we new including will related optimize experiences.

as services is part we strive goal related the of the of services increase continuously income and as And By our a to make income revenue company of which proportion this mean for hope income. whole. the achieve a three-years game balanced we XX% that gang structure to next in about the related total more to

Operator

Daniel Your Jang next from question comes line the from UBS.

Daniel Jang

Language] [Foreign

through a is me Let strategic myself. The going company major transformation. translate

this second year? margins of half Given what for the the the this, and revenue is outlook in

Ashley Wu

[Foreign Language]

business, allocate to adjust we resources our and a actively business. our in manner, in aspects have transforming In begun existing internal of order more targeted various mobilize to

we are activities, the the life example, functions, of broadcast For adjusting inefficient broadcaster and incentive sign-on fixed proportion some for fees. reducing live

than of fluctuations These small our year-over-year decline to when financial indicators short-term, of of due live in first relatively especially impact resource revenue adjustments and year, of of revenue larger, allocation. in may rate business business operational new that this half be the this the cause is the the the the half the may in second scale and year, broadcast in

obvious more revenue. this overall will So a on impact the have

increase costs expenditures. stricter promote efficiency, the reduce to and control adopt we to measures time, same At and over will the continue

research to such talent businesses, as broadcasters. will and to further related new will about and the and development be copyrights cautious there some continue acquisition be expenses, as investments, Although we new content such

whole increase terms XXXX. be we for And non-GAAP that, will in in profit, of narrower expenses. margin the than will loss and the year cautious be And still promotion that will the we about the the profit terms operating of gross net maintain in channel expectation

of margin In profit of than and income, we the to existing and content be related business revenue business, related improved of is bigger be closer margin the medium to sustainably. the broadcasters more with a overall to the situation live cost high higher that long-term, and expected because GP gross expect business the be mix game of will the broadcast maintained

Operator

the And Bank the comes Please from of go from question line Lei of America Zhang Securities. ahead.

Lei Zhang

Language] [Foreign

enrolment, question and any our business. My the first recent regulatory on is updates the regarding impact

performance the launched newly look should of in platform? we how the Tencent's you. our game Thank Secondly, at Valorant

Ashley Wu

Language] [Foreign

users more At of and the and broadcast present, protection becoming live the the on a behavior requirements systematic. more platform, miners broadcasters and the content standardized of of authority and are

therefore, sustainable standard also the to overall promote that and and strict. development. the of is the and relatively the promote benign management And trend purpose industry standardization believe is the We better

our healthier taken upgrade As optimize and and in recently content functions the of platform efficiency environment. operation a create strategy the a the improve and and refine leader and industry, the platform HUYA our has initiative to

more and the to also attention maintain will pay technical to compliance awareness platform and guilds and content We investment. the continue standardized broadcasters development model our on to platform strengthen to improving through a their capability for on guide healthy the compliance

Junhong Huang

Language] [Foreign

that audiences On It will as game new the and itself performances is content. of stable the to live derivative game new the a live and the front continues relatively attract we the be game, streaming of whole, also of more expect popular.

and and products we for the according the supports will the And to different launch companies HUYA organize with provides new also of the game launch game activities weighted prop provide support with together incentives and games. traffic characteristics. some

events and will content scam, ecology And for share achieved its advantages this Valorant, events. we For addition example, of on establishing have the market in focus scam popular leading in we a for e-sport including events, by scam, the more self-organized copyright of the launch broadcasters this events we to players to sector. the further enhance the and professional attended will activity official

Operator

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

Yiwen Zhang

[Foreign Language]

for thanks So taking my question.

our change with So shifting plan our commercialization make? focus, view, there content with we any to strategy? our Is

Junhong Huang

Language] [Foreign

deeply groups game core maintain game existing user help more providing which Are plan and attract users, rich new content We embedded strategic our Our helps ecology. in to will is support and on active also Are’s, Who to of and We content Who The services. goal game e-sports

platform, forms through The achieved with be broadcaster commercial and especially an broadcasters. on HUYA’s new also as sales part cooperation will continue prompt important content game our will to content distribution be the of such

detailed will and help promising We for also with combining by event daily more provide potential more into broadcasters commentary content content the content. game operation popular and digging content deep and create

of technical of also the interactive chatting, and will We such live time, bring to help as of application the content's technologies. bullet will At same products games, this presentation. support the AIGC, also virtual diversity will to broadcast live help interactive us which enhance improve functions the

As cost of performance copyright cover the of continue basis for evaluation. of also implement reduction major events cost top the we content on games and to spots, measures tier will the

made to will attention as we As and to Thunder made self give All-Star self high metrics, such high-quality, organized HUYA more HUYA self Cup. relatively create for ROI, IP due Series, Tianming the content, its Cup, content a and

user and experiences. continue to integration game will you. continue we broadcast, other addition, to Thank community content of forms attention quality bring and live pay In to the video,

Operator

seems There be you. no further Thank to questions.

to for company back Now closing over like turn remarks. the call to the would I

Hanyu Liu

you again once us for Thank today. joining

Piacente feel website Communications. contact provided Financial have you contact the to through further If free questions, Investor information for on HUYA our Relations please

Operator

concludes This call. conference this

you. disconnect may Thank line. your You now

HUYA (HUYA) 15 Aug 232023 Q2 Earnings call transcript