HUYA - Earnings call transcript Q2 2024

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Hanyu Liu

Good day and good evening, and thank you for standing bye. Welcome to Huya's Second Quarter 2024 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 President Junhong Ms. Huya; Senior and of Huang, and Acting Co-CEO Vice

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

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

risks Forward-looking statements uncertainties. involve inherent and

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

Junhong Huang

from growth macro net backdrop were and in we Hello, in persistent Okay. industry for you the quarter-over-quarter of reached up the second rapid services, our X.XX quarter, by revenues milestone, to the for our revenues today. Against everyone. contributing and services, of other businesses. Thank advertising environment first reach total resume X.X% billion, other a net time. the pleased to total revenues revenue RMB quarter game-related Notably, game-related of XX% our conference the previous joining uncertainty in earning the and advertising driven growth landscape,

our million. sustained of net RMB also with profitability non-GAAP income approximately XX We

platform Solid strategic quarter's and execution across and technology business positive and advancement this and product transformation, outcomes. ecology upgrades content commercialization supported

detailed operational and our Now strategic let's at progress. take a recent look

First, The self-organized contributed million last MAUs recent million, XX.X the XX.X previous also XX.X e-sports for several mainly quarter of new period up average XX.X continuous same million reached metrics some million XXXX. launches second our the for of mobile year. engagement. user -- and growth success enhanced events. by for Live's from Various was experience Huya user game the user driven quarter and the improvement to

we on platforms our ecology enhance initiatives. we our call, and platform includes This broadcaster streaming to strengthening niche joint professionally-generated platform across a content promotion co-production, last As in users. and mentioned range are cooperation and wider various reach of our with products

the industry believe barrier-breaking a ecosystem. As increase further we platform's pioneer, can influence more Huya within this we content open

started other a product already selectively reached have approximately content users. Huya June, million XXX streaming within as our bring line live video the ecosystem. to content of as various content In total We Tencent platform mobile well and to

facilitate will more commercialization reach the broadened this creation confident are We of opportunities.

to on our strategic transformation. Moving

by advertising as innovative employed to the million. XXX.X% to programs PGC business quarter, development. quarter-over-quarter operational and XX.X% services, approaches more RMB game drive our continued and other In we streaming and from rapidly segment content leverage year-over-year XXX.X services revenues game-related Our titles, expand and game-related our collaborated to live with second increased

to and evergreen user we terms of return rates. improvement coverage In drive game in distribution, the expand continued games

of D&F distribution newly and the promotion quarter. the launched in Mobile participated second in also We

game's year's of Live programs top game game's this which for but Specifically, higher in of game section expected recruited ranked better streaming, also props the the we data with Huya popularity achieved live broadcasters this only exposure highlighting app, distribution. was the engaged pre-download indicators, on user result the viewership platform's In a not Center that set-up designed in per in-game especially users. our and increase platform. D&F high-value for game distribution game than live and Huya and Mobile area gamer in shows channel than for Game exclusive of games all significantly special this among and user deeply that game broader gifts helped of streaming base spend of our new particular, to early promoted channels,

and this of sales Legends, game's We prop in also combining in-game to item quarter, fully corresponding e-sports content. sales commenced leverage rich Rift second the VALORANT LoL: League game for Wild with innovatively tournaments

example, Skins purchase great LoL live streaming through sold channel, For our LoL interest. generated Cup Legend we Champion which

content distribution driving successfully worth In upcoming content to active of games. games, in mentioning thousand It received addition our half their integrates effective engage income summer's an the our promotion or up revenue prove that also is Yijing commissions the improving gradually [ sources game this gameplay in this year, competing gearing several advertising, levels. players and to income and we have broadcasters first services creators, the game-related variety for entertainment under for our prop till and platform of new end, corresponding sharing that from sales. on The of opened ] game our In terms and episode. of program game produced interactive in game users Daoudi each show promotion theme recently up different

content self-organized e-sports of core events. we offerings, e-sports via refine one represent As our continuously

format enhancement the and with from within team beginning Legends distributed prop gamers operational together We selection and e-sports videos viewers, progress quarter upgrading players active in of a is platforms. entire Cup both Huya's and event example competition player platform. Our event cooperation in professional and self-organized live-streamed of the in retired second tournament premium This is introduced and Legend our League and held League products perfect Cup outstanding and formation multiple innovations helped schedule. tournaments, interest in strategies. the brought widespread Legend bold across our attract highlight and outside Legends of game. with This

Cup special Live Legend the of Huya app. a features on for introduced our also We number

we example, tournament short event and hot designated area discussion videos news, to For information. topics, event set-up aggregate official player

function multiple rating showcasing allowed to increasing viewers players' players' aspects new card In addition, characteristics interaction diverse and on comment users' of performance, enjoyment. and a

event complement In terms instantly voice between integrated speech player's was players by the ecosystem. Legend cutting-edge schedules live technology an oral broadcast communication for Powered we the convert library, immersing created tournament. enrich automatic presentation, professional e-sport e-sports Legend content our and room recognition league a into feature into audience in experience. and Cup text, the capture this game of vocabulary to seamlessly LoL this Furthermore, to LoL's Huya's opportunities quickly entertaining record professional the new and fresh on audience. retired We see were drew top-tier events. provided also the this popularity event's the index to in-house attract and to viewership set Its platform e-sports content. while produced pleased to a its arena attention, for of Cup was professional top licensed crowd elements also of our a diverse return for expanding players viewers, that comparable professional

this to importantly, one, of the we monetization and hope More and the e-sports development. promote IPs like influence through e-sports event enhance sustainable events industry

Our made create develop events self-produced and high challenges. value. to our solid Huya's monetization. success, sold-out also in despite Champion live self-organized valuable commercial successful and prowess commercially will by Inspired external of across event influential progress continue and at Cup's popularity more we content this underscore demonstrated Legend the IPs. In Cup some we Skins finals have summary, of sale platforms Legend e-sports event Legends of League

We possibilities. and explore will develop continue long-term actively to our we consolidate business the our foundation as industry's

chain. With technology on more and While to content maintaining our acting I the results. that, core share our advancement and will ecology details the platform streaming, value competitiveness our over services product Wu, development VP we upgrades, of Huya's Ashley live in expanding with Co-CEO game in and presence turn drive Finance, call industry will game-related to game innovation,

Ashley Xin Wu

[ start with professional everyone. I'll update Vincent content ], enrichment. you, Thank on and an our hello,

second by licensed VALORANT In terms Pro welcomed we great also events. KPL Mid-Season over quarter most attracted XX broadcasted [indiscernible] users. tournaments of e-sports The remain of and The XX were Champions Invitational Counter-Strike leagues content, and X attention; LPL, Season professional LoL for popular our and CFPL League among our the XXXX. licensed professional the ESL in

addition leading on e-sports international platform. content China, to the our range events are of licensed In in expanding covering extensive e-sports we available

Esports starting July, content enriching are Cup in further our e-sports broadcasting we inaugural library. Arabia World instance, For in Saudi high-quality the

self-organized content in-house broadcasted and tournaments we the the On XX entertainment over e-sports PGC front, shows quarter. during

Cup game Yijing participate, together other professional players program teams the professional with In mentioned and also brought that co-hosted to demonstrated content KPL and massive players from Daoudi platform cooperation the Kings Cup This Legend with we Huya's viewer in second LoL industry with other in increased Thunder first -- for attention Honor addition capture the game Honor live streaming earlier, we to the of another co-creation. quarter. event

experiences a our featured streamers renowned in for Shandong reward e-sports an with HUYA more quarter. successfully event our recognize broadcasters. our by we Lianghe Kings Star participation, Boom event, themes, for and the Peacekeeper Night, to we Elite singers community All For second in traditional cultural game Gala event while as the well year's cultural e-sports events Annual broader immersive popularity. Furthermore, as game we promoting to as of these and combining popular targeting [indiscernible] also brought audience, e-sports on-stage Competition. and the village held costume April such Esports and hosted elements The Honor village local By performances

for online this and to offline features on event our interactive again upgrading a platform introduced viewers audience. engage The set also We new event of for record. once number both this

in second decline our more quarter streaming quarter-over-quarter Live revenues growth the rapid increase in-game grow This quarter other users continued game-related and quarter, the game-related of revenues, for business other services up second to growth quarter. our drove to revenue and quarter-over-quarter marks in X.X in Despite Turning the services performance. Also, revenues expanded. the our as in sequential with total fourth for business to first financial million. Huya paying XXXX. items advertising of since live the a services, paying users

and quarter Our content higher by affected revenues was streaming lower spending. gross second profit live

as operational with our efficiency to improvements, breakeven we achieved higher our close total However, results well enhanced game-related continued contribution the to business operating margin as operating a and revenues services our margin. non-GAAP further increased from

savings in drove expenses effectively sales reducing and we our marketing total year-over-year. operating costs, and expenses labor XX.X% Specifically, by

Let's move QX on details. our to financial

to QX transformation primarily and our revenues X.XX billion as of and macroeconomic for due as last and net and live streaming compared distribution QX. year-over-year produced X.XX game to live for sharing RMB to support Revenue terms decreased due decreased QX. fees and for by RMB RMB billion XX million total RMB game-related RMB the profit services environment to X.XX favorable to last XXX costs. fees RMB This streaming primarily well was enhancement the costs the associated and services, period same billion for well Game-related to by cost same the as partially X.XX due compared pricing cost with X.XX for sales. Cost RMB for decreased period billion bandwidth revenues RMB last primarily QX, by the was as content. item Our same increased million and decreased XXX with advertising RMB advertising industry costs management, business offset billion content for year-over-year for continued streaming and as decreased XXX strategic bandwidth QX year, well million content sharing decline QX our for Bandwidth primarily proactive billion gross in efforts. Gross year. Live XX.X% X.XX due due were adjustments and period QX, other primarily soft year-over-year RMB as XX% were and margin from sharing year, million was with revenues services, by sharing other to revenues XX% for costs revenue fees revenue operations. compared increased prudent with XX% fees improved revenues, revenues to advertising technology in-house revenue in-game to for were continued content

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

result, period operating was year. for RMB a same As XX loss for last RMB compared QX with million million XX the

XXX QX RMB RMB was amortization period HUYA for compared operating with last income of close for compensation period for loss X.X% million expenses the XX from million non-GAAP income for Net non-GAAP compared QX to year. million QX was Inc. with business operating RMB for RMB acquisitions, QX, million RMB year. XX share-based was and negative same intangible assets to attributable last margin for the and Excluding breakeven. Interest XXX million was same X

Excluding share-based income X.XX RMB attributable diluted Non-GAAP QX. compensation taxes, RMB income same net period amortization impairment Non-GAAP was QX. income million million and Diluted was acquisitions, RMB per ADS business net the assets loss XXX for per investments to compared Inc. with year. X.XX X.X% intangible expenses, was HUYA was for margin for of QX. for of ADS RMB last income net for XX non-GAAP QX of net from net

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

believe provide per special shares ADS, cash update requirements capital under shares August of aggregate shareholders. plan, renewal and our million shareholder of as the XX.X up of cash million the to USD program unutilized the the share our began existing of repurchase to million has June USD program to your quota forward. With March ordinary until XXX repurchase let to Board Directors like XXX also financials, a Huya and repurchased review million of XXXX, XX, XX.X a of for continued totaling end financial XXXX. usage authorized of an approximately are going our returns have our call of we questions. million deliver to open dividend Huya's I'd solid Huya's ability in Finally, improving with we share to USD USD balance USD total support consideration XX.X that that continue Furthermore, sheet fundamentals returns. pleased X.XX under business We declare on our XXXX. and shareholder that, the will Upon position, per or me

Hanyu Liu

Today's Jefferies. [Operator from question Chong comes Instructions] Thomas from first

Thomas Chong

[Interpreted] So and translate paying as myself. also My year-over-year current we this question MAU strategies user of on growth growth will users. of and sequential is saw sequential I mobile quarter

Junhong Huang

year, events million, of many [Interpreted] Thank due Huya's you for MAU your was of excellent XX.X question. to Mobile quarter In the the this quarter. performance mainly e-sports this second self-made

the In launch continue users year. are adopt same continuous activity. of improvement also to the with of user addition, strategy, QX the enhancing compared promotion of conducive period experience cautious and and games has number new user to we the Therefore, increased with channel last while a

attract system events user terms as and e-sports plan pyramid-shaped consolidate events. content well streamer as professional strategy, users high-quality complete and a to In is continue event mass increasing including e-sports influence to of we that our self-organized with participation content, through event copyright and

combined Huya's services to data interactive live that the a continues as launch broadcast industry. we have, communities upgrade Huya's open other bring we platform. million improve of the broadcast more of output the game-related broadcast with about to can providing also that on on volume lines of on more promote better this Based initiatives reached user product ecosystem in further retention overall At the so we the industry participate We distribution In video a and now, content games and and Huya as entire Right on well addition, of events live corresponding also can platform improve content in only the upgrading content as opportunities, multiple a live platforms to and ecology. the whole. On with pure of gameplay and platform and the to video commercial game In game of have users broadcasts to more do will mobile of platform especially and focus Huya, game of across and live Huya we range platforms this content cooperation from the transformation the of the basis, grow. Therefore, process and can so to begun and high-quality projects. we our other Tencent user environment, breaking of live short enhance are capabilities, professional XXX game of we and and more the on our in-game revenue broadcast June and believe content ecosystem. year, live carry cross-platform total same help participation commercialization of the Huya opportunities and and grow platforms barriers game Huya reached the the industry by including a multiple in time, strengthening acts content the selectively as construction as a products, an sales. games broadcast to broadcasters users multiple interaction the and through we can in on In reach expand and wider to and as co-creation, not deliver more this we and promotion to AI influence market. platforms larger users users -- serve and distribution, promote but environment influence advertising content prop drive distribution bring for the and broadcast platform MAU pioneer

Hanyu Liu

from Ye question CLSA. our from comes And Maggie next

Yifan Ye

repurchase and short-term USD overall the XXX of cash of could special use as going of billion this X.X RMB share cash us you forward? [Interpreted] We dividend the million of meanwhile, share of have declared program. and end strategy time we capital still Please investments cash with also and June. And renewed allocation deposits

Ashley Xin Wu

of which equivalent paid billion dividends, amount the to to [Interpreted] As XXX end in this USD of totaling and it was million were The million will with change the USD distribution and still expenses March of share RMB year, time, is equivalents held debt. and payments. X.X mainly cash XXX continue June than a of half dividend end this due XXX USD cash cash we the announced nearly the Huya this new X.X other USD no deposits to million, of repurchase in company that cash special funds to compared After billion, of more of have overseas. approximately estimated deposits the and

of use future operation Regarding the have sufficient currently company's for and cash daily cash, development. the we

for a While the are external in of -- will as also set expecting aside consolidating company improve. for continue reserve cash operating funds event we a the fundamentals, in flow business to to fund of uncertainty development financial portion The and environment. potential the

we related projects to addition, related In seize development remain investment open opportunities. to the to chain industry

So attach also to same set returns we to we especially fund will portion aside the importance returns, accordingly. time, a of to shareholder continue will At cash shareholders.

addition dividends, to also us with million in continue special management year, of this the shareholders In the company's future. the support to dividend terms of share profits in the announced to and intends company's USD surpluses who our XXX

the subject the Directors. Of specific the including course, company's Board of approval dividend review payout, and of the of to by the dividend amount timing policy, further is and

plan stock for been end terms an March is will including XXXX currently strategy and to a USD and of repurchase of of extended liquidity million. repurchase continue to In consider our repurchase. formulate conditions the XX company implementation there our to variety market repurchase, of has a factors, quota The approximately

Hanyu Liu

our Sun question from And from comes next HSBC. Ritchie

Ritchie Sun

expectation the the for [Interpreted] I latest this third progress management business? to the would services about Can and quarter in games-related discuss business. like ask the

Junhong Huang

total increased our and cooperation of development. [Interpreted] In for from part RMB by XXX.X% our of to and of rapid is or XX.X% business million revenue accounting innovative for of reached and businesses year-over-year also reaching other our XX% time. titles, adoption this approximately game PGC methods the promote milestone services, quarter-over-quarter, advertising closely of the and second utilization a the development game-related XXX with quarter, first programs live more operating content to The of related better business revenue

the D&F return the distribution, mainly we game. further add Looking Mobile promote -- terms and evergreen users the Amongst in new only numbers market, users users games. Huya broadcast year's live distributing to better not in The data significantly top is of game distribution. In than new its game in but platform's into high of particular, we of the these available, viewing recent games this we user Huya business D&F coverage according this to expected quarter, results of overall the in-game of reflecting indicator promoting have question, second game Mobile terms involved new platform, on in spend also this of higher in on the games, game. among of to game Huya channel in potential per ranks achieved continue distribution current than

downloads to continuous efforts results focus groups current reach are also we to optimization selling we through of content. League on a to and broadcaster are VALORANT. Legends, rate for Our accurately, of of to the increase able such registrations users. In based design unique distribution the also in-game to to our selling due League model users -- distribution second our on initial conversion game game quarter, of product games create More games and and started of items Mobile as Legends

sales e-sport of integrate the innovatively For games, these props corresponding events. with we

For League Cup sales broadcast Skins enthusiastic and popular. Champion very live example, room response of Legends super was Legends received in the

In exploring terms are new we advertising, directions. of game also

competing game Waves, corresponds combines theme with to and Party entertainment Mobile, Daoudi, For content. till episode games. Each D&F and and a currently show, Wuthering Eggy example, variety cooperated which launched recently innovatively different other Mingchao, it game the end promotion interactive or we has Yijing

is opportunities. users, income We believe broadcasters worth for the mentioning is the services. attract consolidate this also us. It In this company's increase their income popular also also our are Huya and thousands season sources services help prop first distribution of levels. broadcasters, seize of that a broadcasters brought hard to players and revenue generally have enhance peak and games we help helping game is working and have to can cost it correlation. Summer the new for corresponding received to this While from will to income sale also industry corresponding program for half year, Huya's game-related that effectively also them among to bringing our active of content

the prop business are expand and have will For new promote cooperate live popularity through we according sales, this summer the games programs. There will other and many of schedule we the and of covered the related and update content games also games to online scope games the coming further and distributions that broadcast that categories of game-related and and second with different quarter. in to continue cooperating We cooperation game-related segments in services Overall, revenue continue achieve the expand services, confident the will different in a business to to growth to other the compared partners. double-digit game are currently we from advertising expect QX future.

Hanyu Liu

Now we will from Zhang take China today our last from question Yiwen Renaissance.

Yiwen Zhang

[Interpreted] My margin question is our trend. regarding

and see gross fluctuation in we sequential So margin in some both QX Y-o-Y.

want what -- should So the And how are we behind? to trend? understand about look future reasons we how

Ashley Xin Wu

was in gross increase production year non-GAAP costs. due and [Interpreted] The XX.X%, X.X% in X.X% last the broadcast a margin in margin content this year. quarter slight same to was lower The the in and in gross decline quarter decline this than first period second quarter the the revenue live than representing the lower profit of mainly

is investment and This of the trend quarter-over-quarter of adjustment the second has the live half of -- consumption broadcast And half significantly year. was in in pace environment, to influence narrowed, has the users' costs the the content revert XX.X% other industry first broadcast X.X% in year revenue this also recovery same first year of the this The mainly in last and still The is to willingness lower ratio second broadcasters' the also quarter. The the revenue live still being large optimized. in started self-made had second the especially in is year. influence macro low. of year-on-year self-made the revenue content this impact, year. The its other high. because Although of further to of of broadcast total in in due and than period broadcast Legend stable the Cup with has the decline scale our second and remained in second XX% caused still advertising of business the and a to revenue last revenue high-quality Cup is live quarter stabilized scale the last and live and services, quarter quarter events Honor quarter share year increased Thunder we basically game-related of this amount quarter proportion from large in

broadcast early but this is stage live still our business we the significantly our As gross business in margin, the of fluctuations incentives. part cause is have business. some of will higher introduced some it These than gross platform-specific that margin development, still of of

gross retaining it in a attracting impact enough not our quarter. I'd an content has but overall a like is performance, to So company, investment big the to it point factors role of plays also margin important on as positive of that the offset impact content-driven users. still this out other and

and further increasing and results, to expenditure While been in content expenses. quarter investment XX.X% second X.X% in driving saved, expenses sales Therefore, the self-made also dynamically of the achieving year-over-year overall adjusted quarter-over-quarter. good we have the have sales operating expenses decrease by

margin by of optimization the margin. performance in has and it profit structure our is the is narrowed on balanced for high the long gross the quarter-over-quarter believe that improvement profit margin becomes as overall expected and believe impact gradually and room on will with revenue the large seasonal structure, year-over-year overall that QX decrease improved the fluctuation point. We scale and more further still non-GAAP overall based of the gross operating before live loss revenue breakeven improvement perspective, to So has negative that compared its closing our to a both operating profit operating profit gross and and significantly broadcast stabilized cost broadcaster the content from there we of revenue a profit events reduced. on is will costs, caused run, be operating In

full at the year increase. maintain and expectation increase will also we the profit this the compared to that XXXX, margin full gross profit for As year year, level same will time,

Hanyu Liu

Thank you once for today. joining again us

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

HUYA (HUYA) 13 Aug 242024 Q2 Earnings call transcript