HUYA, Inc. Q3 FY2024 earnings call

Users

• Mobile MAUs improved slightly in Q3, engagement of high-quality user base remained stable. Content reached over 140 million users in September through partnerships with content platforms.

Game-related services

• Game distribution, in-game item sales, and advertising grew. Game distribution revenues up, in Q3 total gross receipts from games distributed via HUYA's channel rose over 20x y-o-y. In-game item sales had co-branded skins sold over RMB 50 million in initial release. Advertising responded to summer marketing demand with new game launches and existing game anniversary events.

Professional content

• Broadcasted over 90 licensed e-sports tournaments, over 20 in-house e-sports tournaments and entertainment PGC shows. Optimized LoL Worlds 2024 broadcast with audio/video tech and data analysis. Investing in in-house content to create more influential IPs like Season 2 of LoL Legend Cup.

Product features

• Integrated Honor of Kings bullet chatting gameplay mode in live broadcast, enhancing user interaction.

In the third quarter, total net revenues were RMB 1.54 billion. Live streaming revenues were RMB 1.13 billion. Game-related services, advertising and other business revenues were RMB 410 million, which is 26.7% of total net revenues. Game-related services, advertising and other revenues reached RMB 410.2 million for Q3 2024, up by 209.3% year-over-year and 32.9% quarter-over-quarter. Paying users grew 9.5% y-o-y to 4.6 million in Q3.

Game-related services

• Expect continued growth in game-related services, plans to expand game distribution to more games and deepen partnerships.

Margin

• Anticipate gross profit margin in Q4 to show noticeable improvement compared to low base of same period last year, with non-GAAP results expected to grow y-o-y.

Shareholder returns

• Continue to share profits and surplus cash with shareholders, future dividend plans depend on board approval; share repurchases will consider market conditions.

• Macroeconomic and industry challenges impacting performance.
• Seasonal fluctuations in gaming revenue affecting game-related services.
• Dependence on licensed content costs and market competition.

Q: Please share the latest update on game-related services in Q3 and any new updates in fourth quarter and plans for 2025? And what's HUYA's competitive advantage?

A: Game-related services, advertising and others reached RMB 410 million in Q3, up 209.3% y-o-y. Plan to continue game distribution for more games, target initiatives for broadcasters, strengthen in-game item sales and game advertising. Competitive advantages include high-quality gaming user base, active broadcasters, long-term partnerships with game developers, and content ecosystem reaching over 140 million users.

Q: Can you give more color on the driver of Q3's margin change and how to look at margin trend going forward?

A: Q3 gross profit margin 13.2% was affected by live streaming revenue decline vs cost savings. Future, margin expected to improve in Q4 due to lower base and cost optimization efforts, with non-GAAP results likely to grow y-o-y.

Q: Could management help update our capital allocation strategy and the shareholder return plan in the future?

A: HUYA had RMB 8.1 billion in cash/cash equivalents as of Sep 30. Paid special cash dividends, will continue to share profits with shareholders, future dividends and share repurchases will consider market conditions and board approval.