DouYu International Holdings Ltd. Q2 FY2023 earnings call

• User Base: Mobile MAUs for the quarter were 50.3 million, quarterly average paying users were 4 million. Mobile MAUs declined 9.8% year-over-year but were on par with the last quarter. Reasons included cut back on low ROI marketing spend and focus on content-driven user growth.
• Content Ecosystem: Refined diversified tournament system, broadcasted over 20 large-scale official events and nearly 60 self-produced eSports tournaments. Rolled out more interactive entertainment content and upgraded content management review procedures.
• Monetization Strategies: Quarterly average paying users were 4 million, ARPU was RMB326. Upgraded revenue-generating products, launched user profiling system based on spending, iterated membership functions, and saw steady growth in membership business.
• Product R&D: Launched all-new big data system for streamers analysis, enabling real-time interaction, statistics, and analysis of live streaming content data.

In the second quarter of 2023, total net revenues were RMB1.39 billion, down 24.1% year-over-year. Live streaming revenues were RMB1.26 billion, a decrease of 28.8% from the same period in 2022. Advertising and other revenues were RMB133.9 million, an increase of 106.5% from the same period in 2022. Cost of revenues was RMB1.2 billion, a decrease of 21.1% compared with the same period in 2022. Sales and marketing expenses were RMB87.1 million, a significant decrease of 48% from the same period in 2022. Research and development expenses were RMB71 million, representing a 30.2% decrease from the same period in 2022. General and administrative expenses were RMB46.9 million, a drop of 48.2% from the same period in 2022. Adjusted net income was RMB61.4 million, surging 138% quarter-over-quarter.

• Focus on fostering a vibrant game-centric content ecosystem for long-term sustainable growth.
• Continue to explore more commercialization channels and new growth avenues while maintaining leading position in domestic gaming content industry.
• Plan to improve gaming community ecosystem by increasing investment in content-based recommendation algorithms and prioritizing operations to enhance community features.

• Regulatory environment: Regulators are strengthening supervision of live streaming industry, and any non-compliance could impact business. For example, ongoing on-site inspections and need to continuously optimize compliance programs.
• Macro uncertainties: Could affect paying user base as users are more cautious about discretionary spending.

Q: What's the update on the regulator on-site review in May and the impact of current regulatory environment?

A: During the on-site inspection, the team cooperated fully, continued to enhance content-related support team capabilities. After inspection, improved relevant rules and procedures, actively cooperates with regulators and focuses on long-term healthy development.

Q: How do new games drive user growth and revenue?

A: New games bring great content to attract new users, provide more content choices for existing users. Benefit in game promotion by being involved early in streamer selection and content buildup, and have positive effect on game operations through various activities based on game status.

Q: Progress and target of operating strategy adjustments?

A: Transitioned from channel promotions to content-driven approach, adjusted revenue-related operating activities, upgraded revenue-generating products, and plan to improve gaming community ecosystem through content recommendation and community feature enhancements.

Q: Updates on host stability and measures to motivate hosts, and MAU and paying user trend?

A: Host stability is secured during contract periods, actively discusses renewals with hosts about to expire. For user trend, MAU may remain at current level with fluctuation in second half, paying users may have slight fluctuation due to macro uncertainties but focus on maintaining core paying users through revenue product upgrades