HUYA - Earnings call transcript Q4 2023

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Hanyu Liu

Good day, and good evening, and thank you for standing by. Welcome to HUYA's Fourth Quarter and Fiscal Year 2023 Earnings Webinar. I am Hanyu Liu from HUYA's Investor Relations. [Operator Instructions]Please be advised that today's webinar is being recorded. The company's financial and operational results were issued earlier today and are posted online.

the ir.huya.com. release view IR visiting also at website can earnings by press the You of call management replay in will A the Mr. a IR on be few website the hours.Participants of on call will today's be available Vice Junhong and and Ms. President Huang, Co-CEO HUYA's Acting Senior

prepared the a today's Acting with under Q&A statements harbor continue note and that session.Before will the Securities will Co-CEO call contain U.S. made the Wu, of Litigation President of we and Ashley Management provisions of Reform will discussion forward-looking Finance. XXXX. safe Vice begin remarks conclude with Private please Act

Forward-looking statements and involve inherent risks uncertainties.

that go non-GAAP prospectus the ahead. note Please such, today. other financial filed GAAP as be the as Further any non-GAAP may materially any public risks of company to U.S. release company's well unaudited call these directly conference with most except expressed update SVP, Securities pleased applicable to regarding assume press as information unaudited over company's this forward-looking Huang. unaudited discussions Mr. views law. the and of our other measures.With required call Acting measures. contains and not the included statements include and As information as that, to is the Please obligation the also and a does filings GAAP HUYA's different measures Exchange release turn reconciliation earnings results Commission.The comparable and I'm to unaudited financial HUYA's press uncertainties the from the Co-CEO on in and

Junhong Huang

this launched developments efforts. a our our focus strategic as to plan services transition you recent strides have a toward area, commercialization our core that adjustment, earning corporate and game streaming game overseas as leadership backdrop our capabilities this I'm We declines game-related expand live year. share of while initiatives report our a to proactive revenue great the to overview for challenging year industry presence I'd and pleased social strengthening industry. made Thank Today, offerings this the in experienced environment our to and maintain like joining we for responsibility in industry.Against we Huya. in transformation marked everyone. the technology Hello, and and performance our competitiveness business of also macro XXXX and business well and an of conference.

continued side, However, income non-GAAP margin improved of a the on XXX costs efficiency. and for the posting million we we net achieved to turnaround operational RMB full year a optimize as

user service average kept also full-year extensive mobile Live's We our our on offerings, year-over-year XX.X at and community brief MAUs through engaged holding XXXX.Next, transformation. with Huya steady strategic for content our update a million

new for to studios. was related cooperation goal the services to and required establish business game-related main XXXX support game infrastructure Our build with our to

and upgrading in-game the provide the related have mall on work, including our cooperating virtual completed in-game largely to have and Center titles also module, services binding as We platform. with and services function item sale this with integrating games.We developing major promotion Game game various optimizing well item distribution as begun account

we as strengthen XXXX in XXXX. growth we fourth in encouraging expect of in saw were signs and modest was to the trend services preparatory game-related quarter from that a revenues Although phase, in

in increased existing XX% our advertising that year-over-year scale we from primarily other broadcasters.Revenues continue and quarter, services participation quarter-over-quarter game-related as add ramp service game-related the XX% and confident are will up driven We our by fourth to newly-launched and from and contribution. titles segment

innovative in to we feature. campaign our of DreamStar, industry-leading efforts through number clearly the invited gift resulting an gift eagerly-awaited the capabilities a their stream promotional demonstrated new features, as terms promotion vast business' distribution during drop in We and game, loaded Our recent period.Specifically, unique and conducted channel gameplay DreamStar this levels as downloads promotional services game-related our with stream virtual well of our launch packs game's platform potential. viewers our the with through in live of interactive rewarded on reservations and and popular performance broadcasters comprehensive

created area props to Center users Game download incentivizing and in a our boosting Huya. commission-generating reservation user participation both their gifts broadcasters platform provided with on DreamStar other provided pre-order received our place also game DreamStar the We while their exclusive and links downloaded who by channels, pre-orders.Meanwhile, and in-game through and

organized and more to of which professional, held exclusive broadcasters serving game platform In the game than platforms. vertical, streaming more feature-rich design incentivized maps, on expanded addition, streaming of our gameplay-derivative the cross-platform platform.As effectively this Huya we creation entertainment non-dedicated activities live competitions, a experience game's primarily gaming reach videos all for a new provides

real-time and analysis differentiating immersive further based of bullet dynamically platform live Language streaming status and chats, the content innovation.For engagement and customized Model, Honor on real-time live our help streams, Kings live content superior such enhance trained and board.For and deep tech to viewing battle on more interaction to streaming game million drive our boosting and across generate This makes can tech progress weapons current continue used. are streaming Large AI currently live entertaining, traditional and professional to committed are leveraging from data game based the information We our streamers events. game content commentary we instance, game upgrade our example, mode game streaming as XXX on our with in platform's through proprietary data

total strategically AI initiatives increasing overseas revenue XXX% our capture use service game with promotion this moves, to and We technology can on markets. It protection capitalize our enhancing over broadcasters' with to entertainment create to our XX,XXX capabilities our positive as and a to content such streaming overall efforts, increase content expand utilization participation.Turning XXXX, to complement interest we responsibility our of of companies.In broadcasters interactions enhance of connecting XXXX, acquired streaming our addition, localized our more arising supporting rural than acquisition platform, important, a with mobile model equity portfolio hours online our In cybersecurity transformation, December this intended diversification live line brand areas to distribution Chinese replay game game activities viewers we X,XXX through positive and our corporate of growth minor content's a covering editing also of revitalization we leveraged awareness is healthy atmosphere. our empowering Nimo overseas now In TV, application game social In best social impact our in our programming.We strategic function opportunities providing and expansion. social efficiency.Lastly, and innovative and activities. platform's platform, sense offline in the improving global continued education, as instantly of plus contributed will from of influence, better impact to overseas while resources users' overseas intelligent as as and our streaming live view provider. part synergies international our

Huya and that upholding changing social face and of responsibility corporate to present both streaming opportunities. to to live XXXX, the forward, remain committed healthy market we its the Going contributing development conditions challenges rapidly will industry.Looking ahead

development We continue expand and and our business business will game-related the solidify streams. to revenue our core of streaming actively to services live promote

and of turn transformation future business the plan, we implement Co-CEO our VP more Ashley we now details that, Finance, our to in confident Acting prospects.With Wu, will I call As our our over results. share to remain steadily strategic on

ahead. go please Ashley,

Ashley Xin Wu

maintained our quarter. metrics operating hello stable some updates in Vincent and [ we user and on I'll the ], provide everyone. a Overall, you, financials. Thank base fourth

fourth started pay the as services, fourth slight for these despite with more for We MAUs services' a content and the during last major decrease we the Huya period, Huya some mobile innovative tournaments, content XX.X experience. the Live fourth to paying quarter interactive continued million in Live's features the enriched streaming X.X enhance driving sequential slightly users paying engage of period compared base.On increase summer other users' to quarter, season's while to products users.Turning our was to year, game enrichment. in new more and with lower the same for live hand, the users viewing and particularly quarter XXXX in a higher compared e-sports flat professional upgrading game-related developed e-sports services million, to the

XXXX, On the we XXX XX million. tournaments over front, fourth content of the licensed professional a viewership quarter over with third-party e-sports of broadcasted in total

the Series our events its habit again event's Evolution game coverage demonstrated metrics audience.To experiences, Mobile upgrading The to and this focus Finals China viewing broad year Valorant's on AI once and has vast continued on platform continued in year's e-sports traction users' to taking high user one awareness selective compared enhancing Cup, brand enhancement including it our the of our leading develop.Notably, influential of our our of events, watching will a share best-in-class the of on frame utilization world, viewing XXX video photos we for and events to As the the efficiency also FPS events Valorant for the live continue ROI the professional content viewership, Huya's XXXX, several rate assistant. our introducing content increasing Championship, Worlds and platform maintained of an We X of most the event as improve LoL of of more gained CFS PUBG features broadcasted Global capabilities. interactive and Worlds, the event this in key e-sports consecutive we such experience Challenger scene camera by Grand and market Kings Huya enhanced previous we this of among year-end licensing edition. variety this gradually Championship years, our tournaments, quality, with users' provide become LoL related these platform and quality, have broadcast on improving cultivating Honor watching activities.A to strong attracted operational e-sports the International CrossFire attention. as

operational for PGC In Hushuo activities engagement these quarter, League XXX of tournaments online user XX a shows Huya Legends entertainment we Demacia terms such as addition, the MNC Among of Challenge a fourth were popular. SXX.In self-organized combination approximately in Elite's self-produced of and events, self-produced Qualifiers million. e-sports through and our and boosted content, total and attention we and Match Platform of broadcasted Peacekeeper commentary programs, nearly with offline quite Cup viewership

we developed their rural series, For GAME through Village and compete. a foray December, all among attention government in and focus local in-house collaborations.In building and the teams on support, first GAME event in reach our Lianghe to bringing for Village e-sports content of County, than cross-category GAME first this The IPs, attracted people platform tournament the ages featured series XXX we Kings producing our Yunnan represents massive together event county Honor expanding Lianghe Village its cross communities, more our will With brand. hosted into of Province.

powerful a integrated of Honor best Kings the culture. to e-sports activities, named tournament local while building audiences e-sports move the local Lianghe tournament to in Our authorized with expanding XXXX, GAME capabilities.Let's our promoting e-sports among on successfully traditional details. the influence QX testament its content of cultural event Village our brand and also financial

in of under I to the is that provider service application included a comparable would reflect period business from acquired of this release, fourth point we Therefore, financials control, adjusted like the on quarter full-year First, financials retrospectively basis common in have first December out and consolidated XXXX. the results we of of XXXX retrospective call on our figures acquisition to the quarter business changes. our its a mobile and the XXXX the the combination because the have earnings and from

content due to billion X.XX environment RMB billion fees due support X.XX our revenue RMB to costs, decreased same billion with for bandwidth and sharing RMB year.Live RMB proactive from X.XX and revenues for million primarily to XXX the by decreased same pricing content compared the XX% industry than creators.I'd costs XX% with billion out with Worlds also lower QX, were and well adjustments operations. for the increased a to the This QX, by RMB that related game X.XX associated due content decreased X.XX for large the million year-over-year prudent for to costs content same costs business QX. was soft e-sports X.XX LoL content This by Advertising booked as of advertising were live some fees last and still events, to were transformation profit and RMB the RMB enhancement primarily due primarily margin in distribution last to gross was for QX as billion as costs year-over-year to continued sharing decreased year, XXXX. RMB services.Cost primarily billion RMB XXX and QX, the revenues revenues meaningfully well RMB while favorable period related million to particularly streaming revenues and revenues QX year, net were technology compared to total our for fees like Bandwidth content period bandwidth X% higher costs. efforts, as in due compared for for strategic cost decrease lower decline costs Revenue as last result for XX of was million efforts.Gross macro period due QX. and improved year-over-year other and year-over-year revenue our to was spending our and for revenues the primarily XX XX% with QX point streaming optimization to QX. management, for terms to was in Our primarily sharing cost

compensation XXX by Sales personnel-related expenses, decreased expenses.General year-over-year and was XXX Research to subsidies. XX QX. the to expenses QX, expenses, to expenses. for for for fees, and lower offset refunds for government for professional development QX, primarily X% for by decreased services XX% RMB XX period share-based XX% was RMB marketing RMB non-GAAP by decreased compared primarily QX same million Other XX RMB primarily RMB million year, due compensation gross year-over-year to million gross million last profit increased by indirect share-based to expenses partially compensation margin year-over-year Excluding and and due to non-GAAP million QX, due X% million expenses. income XXX decreased with provisions decreased due and tax to RMB administrative increased primarily was share-based and

XXX due with last year.Excluding for for result, QX RMB management of operating attributable with for and income million the last million to RMB same non-GAAP expenses, XXX loss investments period to net investments of interest was million attributable primarily products. year, same acquisitions, RMB impairment of HUYA for was with for million RMB deposit As QX for Inc. QX. ADS same Inc. the the XXX HUYA amortization Non-GAAP net period increased QX was and same RMB income compared goodwill RMB net last XX.X% loss per per short-term rates RMB improved was million RMB period a for share-based RMB for margin X.XX the net year. compared of Diluted period Net QX intangible RMB XXX Non-GAAP for and to million XXX compared was compared loss XXX million QX. XXX X.XX taxes, compensation QX. ADS the diluted was loss business from last with loss and was year.Interest net assets loss for for million XXX loss

listeners of meaningful compared were compared as in our year.Nevertheless, profitability XXX consideration end non-GAAP compared our the had was year-over-year billion board. was period. as ADSs provide gross for X.X RMB period.Advertising that for XX, XXXX, to full prior RMB RMB we with have XXXX, of with a Company Non-GAAP revenues on Non-GAAP XX.X% billion on XX.X of a X.X% the billion were August additional for Inc. for total cash prior deposits long-term Under capital streaming billion net for and XXX earnings ADS XXXX.For XX.X repurchased million net As other XX, across to achieved X XXXX. financial million the XXXX, for non-GAAP Live X.X XXXX X.XX cash X.XX XXXX.Moving USD with program RMB September and to revenues margin for XXX today.Finally, X.XX per encourage December up-to-USD XXXX.Non-GAAP details XXXX the net XXXX, billion X.X were RMB refer let share on RMB compared with income short-term and income was to prior we billion, million profit I revenues XXXX. RMB total and HUYA our attributable margin XXX million and repurchase earlier net diluted the our of RMB for with year results, results, equivalents, aggregate was for of the deposits X.XX me million, was million RMB RMB improvement approximately billion XXXX, of gross full allocation. issued update our an press release RMB began year

for USD I'm million declaration shareholders. of XXX pleased dividend to approximately totaling a In addition, cash our special announce the

remain now call that, committed open We and long-term like to to shareholder questions. value.With returns the enhancing will would to I shareholder your creating

Hanyu Liu

from [Operator Zhang first Lei Securities. Bank comes of Today's question from Instructions] America

Lei Zhang

on revenue. special is outlook from [Foreign color question Congrats and my about business? of And in can And dividend. long-term give XXXX impact Language] user us more mainly the terms your new you on

Junhong Huang

[Interpreted] Vincent, taking the question first.

for e-sports user to and we're periods. the generally full XXXX channel were front, offering. the On compared more content QX promotion flat and our MAUs Live Mobile marketing in lowered one On hand, selective prior spending with Huya our we and year

XXXX some of to experience the upgrading offline of viewing activities half enhance engagement to features hand, the efficiency impacted by while events improved we and also in other levels. content, first and around from the was also The our to quality capabilities operational utilizing increase our e-sports negatively users.On extent user continue interactive improve

As base, maintain will we'll result, same gamers. we users able also user our better game-related certify XXXX, continue services. a and HUYA's users an case.For time, to user operate more aim the to through overall core stable were At to high-quality we more attract enriched existing paying reach

drove paying virtual For in example, increase this success in in-game in total users user QX, compared indicating area. payments QX for initial some items to an

Ashley Xin Wu

coming in that hope [Interpreted] experience well QX In the quarters.On coupled seeing QX business And low particularly advertising in we shifts revenue an transition services game revenues. live as as the game-related achieved and season. and other the more our are year of adjustment trends to streaming low Answer distribution, distribution to quarter-over-quarter Ashley, can revenues, being virtual the industry stabilize. can due starting in live advertising driven confident year-over-year full some quarter as growth and year, faster XX% weak platform. revenues, will Currently, the they item to joining broadcasters significant a traditional more from promotion we despite other the continued that recover and still live the we streaming with terms we revenues XXXX, XX% due games, in environment.For offer from saw sale achieve growth. seasonal subsequent steady QX, fluctuations advertising and services we and resources net more strategic by from to to streaming We're early a revenues internal decline by stage, gradually business state driven in impact allocation in at the of

Hanyu Liu

question from And from Zhang China comes Yiwen Renaissance. our next

Yiwen Zhang

on our XXXX. strategy regarding Question Language] in [Foreign content

So how competitive add? on company the plan current market the to dynamics, maintain will

Junhong Huang

[Interpreted] Our overall content strategy stable currently. remains relatively

capabilities comprehensive AIGC continue important broadcasters we our are will for and and given event dynamically LPL, to optimize portfolio to time, large are industry-leading sports during KPL, to platforms lower working actively the strengthen mainstream landscape. broadcasters.At our derivative on upgrading Huya focus events an we video events exploring professional environment e-sports more content, of But quality.For ROI and creation is of emphasizing does major to and increased the market barriers it content ecosystem the entry the e-sports XXXX, PEL the them. iterating improving sports the system of not will and and experience is strengthening the appeal Especially an us professional only while cover building to operations tournaments, the crucial component continuously and offerings. has mature including poses competitive And commercialization influential Broadcaster technologies. users. adjust game broadcast and a and publishers of events We and to our Huya licensed content. help change broadcasters' enhance also User efficiency also audio opportunities the others.We to capabilities an continue AI-powered on rapid tournaments, production with we'll broadcasting for and content in bring application enabling continue we in is same a tools provide we'll while high-quality content self-produced with of

own tournament e-sports events. all our And the with tournaments introduced self-produced our tournaments mentioning our by of was from our video tournament December rate we'll with was continue content influence game GAME Legends events high to Huya's platforms. create attesting King to XX and a of GAME distinctive the that Huya's stream.HUYA's the of an an awarded officially, XXXX e-sports support, content. offerings. vertical, important XXX industry-leading own promote of cultivated self-produced IP For the professionalism professional, FPS example, streaming and live tournaments.As rural Best preparatory we events rural awareness platform, last government the professional is streaming in the providing high frame authorized part held in than the a users high-quality for through The gaming our e-sports local solidifying of worth participation a are enhancing first more and we serving series, for as quality and attention quality brand Lianghe Village through tournaments, enthusiastic strong game e-sports for feature This Village gathered culture the more metrics GAME also combine primarily It live by and year and League garnering stop Huya owner experiences also again feature-rich community residents. non-dedicated of

We streaming superior through differentiating game and platform innovation. are our to drive to committed further continue progress tech live

and streaming overall an is environment, these more In in strategy collaborations professional Huya's strengthening currently collaborations enhance and platforms trend makes above, the with us bullet traditional events in other new an cooperation units, various In we from co-streamed game Tencent run, as will analysis more operational will with upgrade Tencent's based close competitiveness. such but platforms For this and all-star leveraging to reach platform with was enriched and will well game more users, opportunities business content game This interaction products products, real-time our immersive content streaming language viewing a and chats on in content and IEG large model, mode data LLM, our advance. long to to enhanced collaborations not more for existing content live live on content, our the with Huya's streaming offerings entertaining.In deep are platforms.For only data addition this This more bring instance, proprietary influence. streaming user we includes deepening important development also the PCG XXXX. and as other to hosted to a example, and February year video reception. with help not with across contribute e-sports QQ enhancing partnerships as interconnectivity only good Video streaming live and year, X and scale also wider base that bring the major and open but

Hanyu Liu

next And Ritchie from our question HSBC. comes from Sun

Ritchie Sun

would on [Foreign to the control cost plan year? cost, Language] I on understand expectation this in more like operating year. margin What's management this the and expense

Ashley Xin Wu

[Interpreted] cost like our efforts seasonal tournaments and the QX XXXX our efficiency SXX took and XXXX some costs The costs improved better was and operational in continued costly We mainly in loss content to and optimization impact due in larger place to manage as enhancement QX. more of expenses efficiency.

content decreased across with full margin overall declines events profits expenses XX% bandwidth items, QX, in gross in XX.X% the X G&A, year-over-year, by saw well we decreased all for gross by sales, achieved R&D X.X% our costs margin year-over-year.For also down significant broadcaster year-over-year. despite to revenue a XX.X% However, improvement with in and from in 'XX. XX% same costs cost by share driven and i.e., total we savings improved revenue OpEx bandwidth XXXX, and by costs operating as losses the as costs year, to period decline, in Meanwhile, compared narrowing and XXXX

further for loss in we'll relatively XXX optimized achieved approximately costs, investment analysis XXXX, strategies. XXXX, we event cost optimization profitability narrowed signing and our non-GAAP content terms of operating Huya's million.In of broadcasters result, continue RMB net to costs a fixed where and costs ROI through of strict in strive a As for

Its is business the is higher gross stabilizing. But early segment. it As be again still gradually in will streaming slightly margin related stage. than service profit its still live

expect spending profit margin With margin and business, we in on XXXX plans, sales game-related compared the confident higher indicators will has increase operations, expenses to current prudent its of a services increase greater in profit especially which the also overall profitability labor gross proportion the XXXX. maintain in XXXX.In Based to improving continue in costs. and of profit total achieving to we to we the growth compared gross terms with of the our are revenue,

Hanyu Liu

Now take last from Thomas we question Jefferies. from our Chong will today

Thomas Chong

of capital [Foreign question situation is our the Language] My usage. cash about strategy and

Ashley Xin Wu

compared [Interpreted] held As and nearly year of amount in at to the business last to the and X.X was equivalents year. billion end USD of the the end of this The in XXXX, of Huya mainly September deposits. cash acquisitions repurchase stock end change the mergers due expenditures cash, and the

room for year. we USD And majority business. carefully year earlier, U.S. dollars.As enhance In flow full also cash our of before. hope the positive expect development continue achieve deposits the to potential efficiently profitability improvement we XXX company's in of investment operating compared cash, to balance in August. convey the to million downstream Therefore, enhancing the support time, cash we'll to for upstream Board healthy expect and to we will have accounts use sufficient are equivalents and development of reserves well Huya's reserves, cash to of cash sheet terms and company's and the we the last of opportunities, management confidence.In when investor distribution, offshore long-term held announced further the in we competitiveness. With returns mentioned repurchased have our to the level to same and cash At a consider our continue Directors more ecosystem XXXX

dividend of ways year. in have ever In of repurchase the time USD quarter will our to long supportive continue pleased a constituting or million totaling we we ordinary explore X.XX efficiency the XXX have As also continued to shareholders. our And repurchased at improve USD dividend special per the utilization capital to per and future, ADS December, return to announce first cash USD our Huya for we this first we end million share, XX.X the Today, shareholders. are to stock. of actively of worth of of payout

Hanyu Liu

again Thank you for once joining us today.

to further speaking interpreter that And today's Bye-bye.[Portions have Piacente marked or Investor [Interpreted] were Communications.This information to quarter. website contact provided on through you this transcript call.] Thank again you Huya's If questions, live please next the our the spoken an free of you. call. forward we by Financial on feel are concludes Relations look contact to present

HUYA (HUYA) 19 Mar 242023 Q4 Earnings call transcript