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HUYA (HUYA)

Participants
Dana Cheng Investor Relations
Rongjie Dong Chief Executive Officer
Catherine Liu Chief Financial Officer
Thomas Chong Jefferies
Vincent Yu Needham and Co.
Binnie Wong HSBC
Billy Leung Haitong International
Daniel Chen JP Morgan
Lei Zhang Bank of America
Call transcript
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Operator

Hello, ladies and gentlemen. Thank you for standing by for the 2020 Third Quarter Earnings Conference Call for HUYA Inc. [Operator Instructions] Today's conference call is being recorded. I would now turn the call over to Ms. Dana Cheng, Company Investor Relations. ahead. go Please

Dana Cheng

welcome Call. and issued XXXX Quarter Third today Hello, company's to financial Conference online. The are were and Earnings and everyone, posted HUYA's operational earlier results

with Rongjie release can on and Officer. by ir.huya.com. You today's replay be Mr. call IR on a the be Dong, of the few remarks, begin website Ms. Management view Liu, earnings in A visiting will IR a website Officer also the with at available HUYA; the Chief will the call of press then Financial hours. Catherine Chief will conclude call prepared and Executive will Session. Q&A Participants

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

risks Forward-looking uncertainties. statements inherent and involve

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

Rongjie Dong

future billion, services quarter XX% investments conference total you results are revenues by for businesses to Despite continuing We year-over-year a XXX position the excitingly relatively grew RMBXXX year-over-year. increased of RMBX.X communities. in HUYA drive opportunities over and in our HUYA’s four million, joining to QX a the and our by keeping and in million up we us gross XX% the Hello, while to profit and to the QX. the capture today. and still A growth COVID-XX due Live strong In MAUs content of fund grew solid vacation call to XX% average growth million products year-over-year net addition shorter period user summer our made impact everyone. to of Thank last China, our achieved in from ahead. quarter have this of

during e-sports the in tournaments, quarter streaming average was in our Additionally, provided on month of driven game. every well to growth last Tencent. cooperation mostly our platforms average month Game a the All Tencent’s quarter. was QX. by such and each close increase XXX deeper products, to The live as and content content compelling watched YoYoYo WeChat, QQ across streaming Center Mobile, with content broadcasted as WeGame, various QX, as In in double HUYA’s live other over third-party quarter, we Tencent XX together users users million double nearly last million our nearly

attracted Specifically, to number live All-Star Day related users our of QX content in mobile. Tournament a streaming Labor the QQ the towards larger

base lower vacation to period in reached half the of the of summer year-over-year of a shorter for COVID-XX. quarter year representing of million Live first relatively Our than the QX, but XX%, mobile the due of HUYA MAUs growth a because slightly and XX higher impact last

QX. our retention However, continuously over average rates at month XX% next HUYA in Live stabilized

results delivering solid and the our in continues underscores in financial user user capabilities engagement. growth success driving and Our monetization

the user and Tencent attractive, make enrich innovative and delivering to greater superior to smart along deeper content with reflects X.X monitoring to with Our and September, live In value app assistant clip our even services AI we ensure thriving and instant novel panel. efforts, video and community and products version HUYA functions prime generation such events, sharing, the team’s our as featuring our real-time continuous playback, upgraded cooperation more experience. Live

out functions, to around and are play. part assistant and between by security technology for data AI-driven these any live these fields, specific to game a technology of the third-party upgrades be year AI live in event helping we broadcasting. almost interactions Since application streaming launched our tournament users. believe new joint choose video in as to of mainly joint to We within platform various and with users viewing innovate, work clippers and irregular featuring provide this panel improve the of broadcasters allowed there XXX,XXX create can and number formed cooperation interval are of users’ monitoring event end year, undertaking. are top the grow to and to October, We experience in to information exciting broadcasters users with is e-sports carry to on together that an industry. growing for the and analyze Furthermore, a Mark new XXX in on time represent obtain the activity enhance platform health applications, we experience. with AI-enabled last share efforts a used Meanwhile, glad products, us generate tools the such data our our highlights a venture we to our a developers new being have more It’s developers With to stream compliance user of base. app e-sports from With detection, tools used the developers smart over they November friends. a real-time status. our QX. the playing open and for viewers develop security could we Tencent allowed tournament these opportunity Tencent improve HUYA’s now interactions better improve have third-party we panel, the also hardcore believe on In to

features. develop open between users innovative will platform our confident and the the and broadcasters are interactions We dynamic with

XXXX more the and introduced concluded October, make the was game of we help integrated. Awards end recent features immersive that broadcasting During new functions innovative, and AOL on to SXX the most HUYA

our users high to to XK. Hulu, experience. viewers we broadcast, viewing virtual In experience and definition upgraded addition to our person latency free with interact We broadcasters X.X also and introduced in improve app, real provide

We engagement gadgets, also schemes once live completed Tencent AOL supported or launched SXX be viewer game are this accessory Having users to will passport. awarded HUYA items have within of they certain activities. passport, gain viewer able game

such wearing checks, gifting During on tournament, [ph] real impact. sending virtual as or quality HUYA,

allow operating merger our more the to now the US$XXX of the on Catherine, with outstanding the for dedication is her a I By we merger value. Lastly, and stock-for-stock shares X.XX on would and With diluted to be shareholders each we will with entered buy DouYu solely will ongoing million. basis. the share X.XX insights combined with to If On October XX, will into approximately that, DouYu together financial will a where that Concurrent Catherine, like achieve HUYA on are DouYu exchanged to ADS. us e-Sports ADS for joining of go to of we will shares significant exchanged team, DouYu pursuit ordinary of shares the build complementary potential acquire CFO, comprehensive my have merger, we defining combination company of the our is Tencent all and Tencent’s from We of effective, call hold merger. DouYu constructing completed, for e-sports-related Penguin a details. game thoughts and announced to merger A metrics plan with please agreement, Class over of each the create the for professional be XX% DouYu. some strengths, HUYA the HUYA, destination of will believe a Once share DouYu on fully ahead. share the merger XXXX, content. online I turn ordinary through and the each our and synergies, DouYu

Catherine Liu

you, Dong, hello, Thank and Mr. everyone.

enrichment LCK KPL we quarter, million the World LPL Among e-sports for diversification. In Total tournaments a Mr. Dong’s HoK these around updates XX% XXX Champion Cup, in year-over-year I tournaments for top Summer, included XXXX XXX content XXXX. reached will our representing the broadcasted start and historical Following and of high growth. remarks, viewership third QX, XXXX, third-party awards on the which, tournaments. from

e-sports representing XX% million, of On we entertainment self-produced front our XXX total growth. content, XX and shows tournaments and organized the year-over-year of generated viewership a

Following in brought last X Cup quarter, Season more users Destiny and its season. success growth HUYA’s maintained momentum last than its

or Summer performed HUYA and peacekeeper in XXXX a Additionally, All-Star HUYA’s event signature on light platform. Cup built itself well also

paying in XX% the top-performing Season non-gaming the record we the fluctuations paying resulted XX On was in in typically Fu average of increased HUYA year-over-year to our The All-Star our Idle show, an users. live a arts in The entertainment COVID-XX X, the users MAUs paying competition, mobile in continued quarter-over-quarter. year-over-year number and a our Kung the side, million, due and to Season in revenue impact, number were GodLie content. long-standing MAUs. a X, the XX% show short-term werewolf with directly over Live show year-over-year as average increase mobile Talking per summer quarter. a mixed The million efforts period quarter, reached and and third increased compared of martial high XXX strong about HUYA for user HUYA remained increased dedicated second fluctuation of Academy, million quarter, year-over-year. of this our but to representing is slightly decreased game which mobile traffic shows, Live users vacation Carnival talent X entertainment streaming by this our from PGC XX% paying MAUs by with our quarterly of the million MAUs quarter the in X.X both associated The the

XX relationship more the broadcasters local better-than-expected was game over and achieved deepened tournaments, MAUs we with we mostly e-sports quarter. in our business, The because growth introduced developers. overseas our For attracted million third more

over our net Next, financial XX% our highlights. to RMBX.X by billion. revenues you through I grew will year-over-year In QX, total walk

growth increased of live the in of Advertising year-over-year RMBXXX diversifying increase both third increasing in and other the due number to driven QX. revenues revenues have the Our to paying primarily by and close in XX% and revenue number increase streaming per by in by billion year-over-year The advertisers. was the user, quarter, million to paying RMBX.X close increased which users to of to expanded. primarily XX%

the have our and leverage quarter to improve efficiency. we continued given in profitability operational cost bandwidth this Our

Our compared in non-GAAP XX.X%, XX.X% to with QX XXXX. gross margin improved

with QX year. And operating non-GAAP year. margin margin X.X% XX.X%, was with non-GAAP last compared last Our net was compared in QX XX.X%, X.X% in our

fees primarily XX% sharing margin economies gross Sales quarter, Now, RMBXXX bandwidth revenue management the personnel-related of fees higher attributable by for million in efforts. million in let personnel-related by revenues increase revenue expenses costs, in third to XX% development third to scale. excludes increased billion third million to income administrative company’s year-over-year quarter. Revenue and to and the from for the and primarily operating by the million increase expenses. to by technology to X.X% due name, RMBX.X for and to million RMBX.XX to profit third which in by for the to attributable personnel-related the increased by was by as in in Income for by XXX% share-based revenues, primarily income Non-GAAP our RMBXXX was expenses expenses. the services the summer expenses by RMBXXX content for RMBXXX increased and and then and as net sharing expenses the promote quarter, due well third XX% to tax decreased in million QX. increased creators, million Inc., Net attributable XX% details. quarter. me XX% XX% HUYA mainly to to net quarter. content, sharing move increased XXX% RMBX.X professional And spending costs. increased increased the increase to due billion financial fees increased continued to the increased increased products, The XX% third was RMBXXX RMBXXX quarter. net the enhancement expenses, and margin RMBXXX to improved XX% as costs and content to by on And quarter, quarter. the as per diluted income streaming RMBXX Diluted million to marketing expenses, increased quarter. Gross Cost brand increased increased million to income X.X% mainly associated margin the increase by to for third with for to the for increased which in increased XX.X%. to for third expenses DouYu. the non-GAAP attributable third to RMBX.X and to QX, Bandwidth by quarter. of HUYA the attributable operating primarily ADS compensation the non-GAAP third partially company’s General quarter. XXX% well for relation Non-GAAP content costs to The increased Research quarter. quarter, third third fees ADS to compensation share-based by for And operating Inc. RMBXXX RMBXXX in with excludes per increased income, offset content. million Operating third XX% the to e-sports benefits costs increased income ongoing merger was self-produced the process live marketing increased

and after holders date HUYA, the DouYu merger. the the course. as the authorized to record of on deposits on the holders cash close the with shareholder September of cash merger billion. the an had designated dividend record of ADS cash ordinary announced date of of XX, million and mentioned announcement, as our Such Directors closing due of be approval shares investments date when be closing Dong a of Board the As and Along certain the business is equivalents, approved date aggregate merger – including will and and be required Mr. short-term payment prior of – HUYA in the paid short-term obtained RMBXX.X US$XXX officer XXXX, to the the the by of amount of around of the business ADS company of of or to will date holders, HUYA’s also in earlier,

auction. force approximately that, the now that winning another bid land Province, Guangdong company your approximately future the operating With RMBXXX Foshan right to square to public Here’s to was million. of a long-term reduce We obtained costs questions. just office open happened piece with price XX,XXX expenses. in an today expansion usage land area The space I update in today. work and The of to meters through company’s City, intends order call like on to and accommodate the would develop a

Operator

and we call, participants begin Chong in of to of much. wish question management go question gentlemen, the will comes benefit ask you Instructions] your very Ladies from the repeat Please on ahead. [Operator your all in our the today's session. please now if Jefferies. first Thomas Thank For English. question to you of Chinese, And immediately line question-and-answer

Thomas Chong

XXXX My DouYu, particular as about user is for in the [Foreign revenue in the synergies question trend, terms as there's you. this taking Thanks stage. Language] management profitability and Tencent my growth, of how questions. the and any color more about outlook, if at think Thank well we with should

Catherine Liu

Thank the process Thomas. still we expected first next be possibly that merger questions. Currently, half year. in we're of your answer I could of in completed merger and will ongoing the you, the the

impact it's stage, at merger. this So tell of the for us too still early quantitative to the

to we efficiencies. able be give measures our would still the So also monetization we direction, for intended big and explore quantitative revenues and new probably opportunities I improve But grow this. our grow operational and not on think, to you users

you. the and some our together monetization terms with there synergies Penguin, In of and efficiencies. such the achieve and to content and user also base to DouYu a directions as synergies new larger think, we that several could attract to are over potential Thank operational opportunities users new explore leveraging also develop products generate

Thomas Chong

you. Thank

Operator

the for you Thank questions.

go Next Yu of question Vincent comes Co. from of ahead. and the Please Needham line

Vincent Yu

on in seeing pay any or that change China? category. COVID we after our pan-entertainment other paying user's strategy. pan-entertainment to is shift for being forward, wondering Or like question will content the think current gaming change the for you the we're top my we Second after user do like offering? has question should going Thank we cohort question. the cohorts see and Language] gaming see different user like willingness taking content the a This strategy the on any counseling only from plus the [Foreign about about HUYA's merger? is for management Are How mostly we contest especially categories

Catherine Liu

Mr. will I for Dong. Okay. translate

strategy Regarding about. our there next a our first risk talk for question separate content is to actually year,

do related what bucket. a is to one-stop we First to aiming concept own are a is building that family for would we one shopping up construct to content currently like gaming

only include game-related videos are what live adding at not that in streaming, also community and So do we tools, content bucket. but game to good game to our offerings and in services total and

we base on in we So that video two been have And roadmapping very And content that combination for about the in secondly, each strategy experience video – complementary business actually the user my viewers of our strategy two content specifically actually, will of we quality. and on next each the other. years, the good has is its potential two And last the the and our them impact year, level. a the users research the have business. of years our actually can own content considerable are platform. one-stop our to doing make platforms, confidence to a shopping a have that video until next pool and And point

each the platforms to own – the competitive as better targeting content the content us at on leverage has in broadcasters, we we the agencies, offerings consolidate are users. And and its better the better the XXXX, the advantages. – year the is to serve serve of content as quality talent what As each of developers, well game to

can across a value streaming live industry the role game better that So play chain.

first second paying Vincent, I question in question. I users. will, So the terms answer for of your will that's

third As increased both paying ARPU you quarter, can the year-over-year users quarter-over-quarter. and has our see the in

generally has I China. from after the recovering we are – seeing think in COVID-XX the

there increase different content content different of also ARPU. opportunities seasonality our for categories course, our But as is improve ARPU enrich our to to our We mentioned, ARPU. has will and continue you and still monetization

our first the would be events. I a lower quarter, ARPU ARPU fourth Hope due answered be the given quarter, annual higher the in relatively in the Spring to typically monetization festival. And generally questions. So the would your

Vincent Yu

Yes, thank you.

Operator

for you the question. Thank

will come from line questions of ahead. HSBC. Wong Next go of the Please Binnie

Binnie Wong

the users evening, right, is add a last also is on achieving you a My which X quarter, might question expect I overseas, overseas then net you than actually on debt, million actually Nimo Good target versus if right, quarter, million management. this at think Hello. earlier XX And earlier. the that looked quarter TV.

that this that way you. things at if done synergies in [Foreign XX strategies or to what the look you might use quarter So the Thank have some that futures? this achieve what you level. are the also, of what of or acquisitions are And million the we DouYu some this Language] overseas maybe see with are

Catherine Liu

Okay. translate Dong. Mr. I for will

your yes, the a I Regarding the the user last improve are this quite first on is that overseas, MAU better the call, focusing better spoke we to model. is overseas noticeable And overseas outstanding. monetization to what question this is actually in in ecosystem year our as and time market quarter it earnings growth in cultivate

two as that acquire strategy for the doing are year buy what users. channel this the to new with the last we years So is

down cutting cost the that. actually for are We

effective. So user It's given that actually the be down business. to out strategy our channel considerable buy ecosystem has to the still achieved overseas been build we for growth proved cutting

substantial actually focus to second are is third has is business ecosystem. It how constructing starting in the use potential they will So overseas to to focus still get be focus the sense business. And to build not going regarding the business. build up more the financial but we year we more forward, especially in the and been we and for on us what ecosystem the synergies, user a only healthy just construct market. develop growth a understand what and we strategically also can up overseas combination, And overseas healthy the markets question for a future focusing will of the on improve overseas the your status to better

in in of exploring two very are I think terms DouYu early a stage for for right HUYA, or market. the now whether it's overseas actually the parties

is now focus other. So rather more collaboration right compete each to what on to we'll than with more do the

will combination business synergies I the believe the potential won't overseas well. in create So as

Binnie Wong

ask very just a here. follow-up Sorry, quick may I

margin when you the at longer you point like the If side, time a at do see margins state, certain steady systems you right, how more become look see profitable will domestically how at and compared the a could that overseas to overseas it

Catherine Liu

different one the operating to side. I single October, question, achieve we to relatively other think entire still country I think your breakeven the invest sort countries. behaviors. ARPU countries for start For some in for higher – the would But or would paying say the we because next of the be need we to different probably margin overseas In user ratio than see countries, years few business, have

at be the just healthy But building – next we focusing each So the each few still in will investment by on be years, we Dong as in ecosystem country. it that think that stage. country Thank the will eco Mr. you. mentioned,

Binnie Wong

Thank you.

Operator

questions. the for you Thank

line from question Next Leung of comes Billy go ahead. International. the Please of Haitong

Billy Leung

[Foreign questions. Language] two I have for taking Thank my questions. management you

development one color management gaming is Can game you. our service, first share speech the developments relatively this new question well? as the And on companion. Thank here on on related The is latest Can latest management to share cloud second progress. any app? a

Rongjie Dong

the on is spending of of it we this gamming the lot are for a can game portal to reduce achieve own through almost to smoothly playing beta reaching optimize experience, is And user platform. optimize and and latency what time the Yowa gaming platform heat been months platform Yowa, want platform cloud trying [Foreign the right and launched personnel. technology that was much – better great gaming gaming devices titles are Language] that games been innovation first what to actually as regarding R&D highlight we been we on completely that testing. our made Okay, PC as cloud Yowa you play also we playing users’ to game they angles by have mobile, gaming, while And just the we mobile viewing XXX our and has a powered here cloud cloud question as is Actually so of many we experiences. have cloud And experience after a officially our developed seamlessly only optimize now. that through yesterday four have this example, users’ the platform ratio,

believe launched cloud will gaming question will But been invest said own for to has flyaway opportunity wait data lies And I every is gaming games. much business. we business. the didn’t gaming has given term, promoting platform and the ahead realize a to downloaded user platform gaming was cloud be probably the to officially play their for if And try beta to stores, to for we and cloud promote to gaming market in can app with see those before And games. that to our into platform there experience cloud will this only better And little effort of gaming earlier short the we As opportunities this cloud is which many if just the take technology we next been yesterday, Catherine bit on through see we try play time the the your ready will massive platform. users switching But experiences. now cutting base it testing, are take a to huge edge to is cloud this ready for

Catherine Liu

is our growth [indiscernible]. companion APP still game And companion for game business experiencing our especially your second for fast regarding a business, question

So we think game a growth it's business. relatively companion the solid for

is business. for net policy companion virtual only recognition casino, we from revenue the our game because revenues business companion different are game recognizing Our

accounting game the the of charge contribution though margins GAAP higher is business pretty than the accounting gifting companion revenue the So business the from small. then companion the significant much relatively perspective has pure from perspective. still is virtual then But even and game

your answers question? Okay. Hope this Next.

Operator

Thank you questions. the for

the comes I’ll Chen go off ahead. of – the proceed Morgan. question JP next requests. Please just question to have next line from we Daniel from the sorry lost Our take

Daniel Chen

have Language] two [Foreign I questions.

is the and one the industry and two on product side? also key in first what on in side, in one next is – saying the three second years to competition. management opportunities monetization the on The video are The the game the the stream is

competitive also Bilibili in as aggressive them advantage million And which reached in Kuaishou So top briefing. has you. investment is game-streaming aggressive hosts, are XXX very rights? also game large of agency’s what's our or Thank key the Kuaishou top quite against obtaining quite broadcasting MAU is and for both over

Rongjie Dong

[Foreign Bilibili, will start regarding Bilibili. competitive Language] you landscape Kuaishou chasing I Okay, complication with the with on mentioned your the question and

itself, has Bilibili the already for the to transforming the Bilibili’s competition broadcasters as an quite by of VTubers live industry quotes Kuaishou. end, we why is And the impact limited. browsed players think I game to to the facing come streaming is think which traditional

different. what big, thinking internally, we is I I they course business think monitored are impacts quite streaming from the But have on of and to ideas especially about also year-over-year so is growth, live game their think, huge. not the especially impact its irrelevance

policies right live are that doing proactively, on facing operations. constructing content ecosystem [indiscernible] on that is focused centralized Kuaishou’s kind the game now, library they building have content while running focusing the on for streaming side especially What business competition. of of is kind are the the HUYA’s we Here this to we more community points a more Kuaishou up

HUYA in what good alliance So especially are good been with the is industry talent our we facing historically, such players, that has competition. advantages been broadcasters. at agencies very this as Kuaishou’s a And has and as the facing, the

kind of it. growth industry leverages collaboration our is monetization the players think operating capabilities. user drive better That's efficiency improve to waging and a to improve our with I to

Operator

to Zhang of comes the last In go time question the of line questions. the America. for you Lei of interest of Please ahead. Bank Thank from

Lei Zhang

call share And can the League in streaming quarter? fourth platform? the regulatory [Foreign Season secondly, us. XX, Class the on engagement Language] margin I share you would new of and is especially translate can drive view gross you impact myself. Thanks A management question for My spend what's taking simply, with Legends my first any color to about our to you. on live Thank And our on questions.

Catherine Liu

you, Thank Lei.

growth As the But have this lower in the last SXX fourth think, to hold has for SXXs bought year. And that SXX SXX relatively compared we of most the the the user the then incremental, year sort to to because was of compared increased. noticed the year would quarter. last our I in

for your mostly the which the and recognized governments have cooperating to guidelines. to are quarter, as SXX in we the cost government gross implement quarter. understand with margins the the And So third terms second policies or authorities’ fourth or some in some guidelines, of compared trying would are authorities the will on be we our question, to impact new

course be when discussing with the the guideline we compliance be actively are cooperating guidelines. issued, will and and of be the government with We to going in actual is

So we will the impact be then that long-term. to help the are guidelines, live in the the trying role government time. believe then if to authorities to the issued, But broadcasting better business going think is of we the value at that or we

think So our we will be for the don't long-term. business impact

Lei Zhang

Thank you.

Operator

to for I'd the company to much. very you Thank like closing remarks. over the turn call back

Dana Cheng

All And speaking all right, you the feel joining to thank And you if you. earnings our you questions, look with to quarter. out Thank have conference today. next ir@huya.com. to in call for we reach further Bye-bye. free forward

Operator

this gentlemen, conference Ladies concludes call. today's and

now disconnect may You you. your lines. Thank