omniture

HUYA Inc. Reports First Quarter 2020 Unaudited Financial Results

2020-05-21 06:00 10813

GUANGZHOU, China, May 21, 2020 /PRNewswire/ -- HUYA Inc. ("Huya" or the "Company") (NYSE: HUYA), a leading game live streaming platform in China, today announced its unaudited financial results for the first quarter ended March 31, 2020.

First Quarter 2020 Highlights

  • Total net revenues for the first quarter of 2020 increased by 47.8% to RMB2,411.9 million (US$340.6 million), from RMB1,631.5 million for the same period of 2019.
  • Net income attributable to HUYA Inc. was RMB171.2 million (US$24.2 million) for the first quarter of 2020, representing an increase of 169.8% from RMB63.5 million for the same period of 2019.
  • Non-GAAP net income attributable to HUYA Inc.[1] was RMB263.4 million (US$37.2 million) for the first quarter of 2020, representing an increase of 100.7% from RMB131.3 million for the same period of 2019.
  • Average mobile MAUs[2] of Huya Live in the first quarter of 2020 reached 74.7 million, representing an increase of 38.6% from 53.9 million in the first quarter of 2019.
  • Average MAUs[3] of Huya Live in the first quarter of 2020 reached 151.3 million, representing an increase of 22.2% from 123.8 million in the first quarter of 2019.
  • Total number of paying users[4] of Huya Live in the first quarter of 2020 reached 6.1 million, representing an increase of 13.0% from 5.4 million in the first quarter of 2019.

[1] "Non-GAAP net income attributable to HUYA Inc." is defined as net income attributable to HUYA Inc. before share-based compensation expenses, gain on fair value change of investments, and income tax effects on non-GAAP adjustments. For more information, refer to "Use of Non-GAAP Financial Measures" and "Reconciliations of GAAP and Non-GAAP Results" at the end of this press release.


[2] Refers to average monthly active users on our mobile apps. Average mobile MAUs for any period is calculated by dividing (i) the sum of active users on our mobile apps for each month during such relevant period, by (ii) the number of months during such relevant period.


[3] Refers to average monthly active users on our platform. Average MAUs for any period is calculated by dividing (i) the sum of active users on our platform for each month during such relevant period, by (ii) the number of months during such relevant period.


[4] Refers to the sum of user accounts that made payments for various products and services on our platform at least once during such relevant period.

"Despite the impact of the COVID-19 pandemic, we were still able to achieve fast user growth," said Mr. Rongjie Dong, Chief Executive Officer of Huya. "Our mobile MAUs increased 38.6% year-over-year in the first quarter, reaching 74.7 million. This is a record high that further demonstrates the vitality and engaging nature of our ecosystem. I am exceptionally proud of our team, and their ability to work through this stressful period to help people stay connected and provide them with rich online entertainment content."

Mr. Dong added, "Since Tencent became our largest shareholder in April 2020, we have been strengthening our collaboration, especially in terms of our live streaming content and capabilities. To better serve our users and broadcasters, we are working closely with Tencent across areas such as games, e-sports and AI technology, as well as developing new features, products and services. With Tencent's strong support and massive user community, we believe we are well positioned to strengthen our leadership in game live streaming and capture more opportunities across the gaming value chain. We see this cooperation as the start of a new journey for Huya, and we look forward to being an active participant in a dynamic and growing market." 

Ms. Catherine Liu, Chief Financial Officer of Huya, commented, "Our first quarter financial performance underscored the solid execution capabilities and strong operating efficiency of Huya. Our revenues increased 47.8% year-over-year to RMB2,411.9 million, and continued to exceed the top-end of our revenue guidance. Our margins continued to improve both year-over-year and quarter-over-quarter, as we successfully elevated our ability to leverage economies of scale, while prudently controlling expenses. On a GAAP basis, our gross margin and operating margin increased to 19.7% and 5.5%, respectively. Our non-GAAP gross margin and operating margin also grew to 20.3% and 9.4%, respectively. As we forge ahead in the near-term challenging environment, we will continue to invest in and improve our content, technology and user experience to bolster our position as the leading player in China's game live streaming industry."

First Quarter 2020 Financial Results

Total net revenues for the first quarter of 2020 increased by 47.8% to RMB2,411.9 million (US$340.6 million), from RMB1,631.5 million for the same period of 2019.

Live streaming revenues increased by 46.5% to RMB2,274.5 million (US$321.2 million) for the first quarter of 2020, from RMB1,552.5 million for the same period of 2019, primarily due to the increase in average spending per paying user and the number of paying users on Huya Live. The increase in average spending per paying user was primarily driven by the enhancement of content attractiveness and the improvement in user experience. The increase in the number of paying users was primarily driven by the Company's user growth.

Advertising and other revenues increased by 74.0% to RMB137.5 million (US$19.4 million) for the first quarter of 2020, from RMB79.0 million for the same period of 2019, primarily driven by the rising demand from an increasing number of advertisers, the advertising distribution platform launched by the Company in the third quarter of 2019 and strengthened recognition of Huya's brand name in China's online advertising market.

Cost of revenues increased by 42.6% to RMB1,937.1 million (US$273.6 million) for the first quarter of 2020 from RMB1,358.1 million for the same period of 2019, primarily attributable to the increase in revenue sharing fees and content costs, bandwidth costs and personnel-related costs.

Revenue sharing fees and content costs increased by 37.7% to RMB1,532.6 million (US$216.4 million) for the first quarter of 2020 from RMB1,113.1 million for the same period of 2019, primarily due to the increase in virtual item revenue sharing fees in relation to higher live streaming revenues, and continued spending in content creators and e-sports content in both domestic and overseas markets. The year-over-year increase was partially offset by benefits from economies of scale.

Bandwidth costs increased by 42.1% to RMB240.1 million (US$33.9 million) for the first quarter of 2020 from RMB169.0 million for the same period of 2019, primarily due to an increase in bandwidth usage as a result of the Company's larger user base and enhanced live streaming video quality, partially offset by improved efficiency in bandwidth utilization through continued technology enhancement efforts.

Gross profit increased by 73.7% to RMB474.8 million (US$67.1 million) for the first quarter of 2020 from RMB273.4 million for the same period of 2019. Gross margin increased to 19.7% for the first quarter of 2020 from 16.8% for the same period of 2019.

Research and development expenses increased by 73.3% to RMB156.1 million (US$22.0million) for the first quarter of 2020 from RMB90.0 million for the same period of 2019, mainly attributable to increased personnel-related expenses.

Sales and marketing expenses increased by 36.3% to RMB106.5 million (US$15.0 million) for the first quarter of 2020 from RMB78.2 million for the same period of 2019. The increase was primarily attributable to the increased marketing expenses associated with the promotions for the Company's products and brand name in both domestic and overseas markets, as well as increased personnel-related expenses.

General and administrative expenses increased by 5.1% to RMB90.2 million (US$12.7 million) for the first quarter of 2020 from RMB85.8 million for the same period of 2019, mainly due to the increased personnel-related expenses.

Operating income increased by 372.5% to RMB133.3 million (US$18.8 million) for the first quarter of 2020 from RMB28.2 million for the same period of 2019. Operating margin increased to 5.5% for the first quarter of 2020 from 1.7% for the same period of 2019.

Non-GAAP operating income, which excludes share-based compensation expenses, increased by 136.5% to RMB227.2 million (US$32.1 million) for the first quarter of 2020 from RMB96.0 million for the same period of 2019. Non-GAAP operating margin increased to 9.4% for the first quarter of 2020 from 5.9% for the same period of 2019.

Income tax expenses increased by 98.0% to RMB37.6 million (US$5.3 million) for the first quarter of 2020 from RMB19.0 million for the same period of 2019.

Net income attributable to HUYA Inc. for the first quarter of 2020 increased by 169.8% to RMB171.2 million (US$24.2 million), from RMB63.5 million for the same period of 2019.

Non-GAAP net income attributable to HUYA Inc. for the first quarter of 2020, which excludes share-based compensation expenses, gain on fair value change of investments, and income tax effects on non-GAAP adjustments, increased by 100.7% to RMB263.4 million (US$37.2 million), from RMB131.3 million for the same period of 2019.

Diluted net income per American depositary share ("ADS") was RMB0.73 (US$0.10) for the first quarter of 2020, compared with RMB0.29 for the same period of 2019. Each ADS represents one Class A ordinary share of the Company.

Non-GAAP diluted net income per ADS was RMB1.12 (US$0.16) for the first quarter of 2020, compared with RMB0.59 for the same period of 2019.

Balance Sheets and Cash Flow

As of March 31, 2020, the Company had cash and cash equivalents, short-term deposits and short-term investments of RMB10,316.7 million (US$1,457.0 million), compared with RMB6,329.1 million as of March 31, 2019.

Net cash provided by operating activities decreased to RMB135.1 million (US$19.1 million) for the first quarter of 2020, from RMB501.7 million for the same period of 2019. The decrease was primarily attributable to the increase of annual cash bonuses paid to our employees, the increase of fees paid to broadcasters and the increase of licensing fees paid for broadcasting e-sports tournaments.

Business Outlook

For the second quarter of 2020, Huya currently expects total net revenues to be in the range of RMB2,600 million to RMB2,630 million, representing a year-over-year growth of between 29.3% and 30.8%. This forecast considers the potential impact of the COVID-19 pandemic, including the temporary suspension of public entertainment activities during China's national day of mourning on April 4, 2020, and reflects our current and preliminary views on the market and operational conditions, which are subject to change, particularly as to the potential impact of the COVID-19 on the economy in China and elsewhere in the world.

Conference Call

The Company's management will host an earnings conference call at 8:00 p.m. U.S. Eastern Time on May 20, 2020 (8:00 a.m. Beijing/Hong Kong time on May 21, 2020).

For participants who wish to join the call, please complete online registration using the link provided below at least 20 minutes prior to the scheduled call start time. Upon registration, participants will receive the conference call access information, including dial-in numbers, the unique access PIN number, the Passcode and an e-mail with detailed instructions to join the conference call.

Participant Online Registration: https://s1.c-conf.com/diamondpass/10006750-invite.html

Once complete the registration, please dial-in at least 10 minutes before the scheduled start time of the earnings call and enter the PIN number and the Passcode as instructed to connect to the call.

Additionally, a live and archived webcast of the conference call will be available on the Company's investor relations website at http://ir.huya.com.

A replay of the conference call will be accessible approximately one hour after the conclusion of the live call until May 28, 2020, by dialing the following telephone numbers:

United States:

+1-855-833-1031

International:

+61-7-3107-6325

Hong Kong, China:

800-930-639

Replay Access Code:

10006750

About HUYA Inc.

HUYA Inc. is a leading game live streaming platform in China with a large and active game live streaming community. The Company cooperates with e-sports event organizers, as well as major game developers and publishers, and has developed e-sports live streaming as one of the most popular content genres on its platform. The Company has created an engaged, interactive and immersive community for game enthusiasts of China's young generation. Building on its success in game live streaming, Huya has also extended its content to other entertainment content genres. Huya's open platform also functions as a marketplace for broadcasters and talent agencies to congregate and closely collaborate with the Company.

Use of Non-GAAP Financial Measures

The unaudited condensed consolidated financial information is prepared in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP"), except that the consolidated statement of changes in shareholders' equity, consolidated statements of cash flows, and the detailed notes have not been presented. Huya uses non-GAAP gross profit, non-GAAP operating income, non-GAAP net income attributable to HUYA Inc., non-GAAP net income attributable to ordinary shareholders, and non-GAAP basic and diluted net income per ADS, which are non-GAAP financial measures. Non-GAAP gross profit is gross profit excluding share-based compensation expenses allocated in cost of revenues. Non-GAAP operating income is operating income excluding share-based compensation expenses. Non-GAAP net income attributable to HUYA Inc. is net income attributable to HUYA Inc. excluding share-based compensation expenses, gain on fair value change of investments, and income tax effects on non-GAAP adjustments. Non-GAAP net income attributable to ordinary shareholders is net income attributable to ordinary shareholders excluding share-based compensation expenses, gain on fair value change of investments, and income tax effects on non-GAAP adjustments. Non-GAAP basic and diluted net income per ADS is non-GAAP net income attributable to ordinary shareholders divided by weighted average number of ordinary shares used in the calculation of non-GAAP basic and diluted net income per ADS. The Company believes that separate analysis and exclusion of the non-cash impact of (i) share-based compensation expenses, (ii) gain on fair value change of investments and income tax effects on non-GAAP adjustments. The Company reviews these non-GAAP financial measures together with GAAP financial measures to obtain a better understanding of its operating performance. It uses the non-GAAP financial measure for planning, forecasting and measuring results against the forecast. The Company believes that non-GAAP financial measure is useful supplemental information for investors and analysts to assess its operating performance without the non-cash effect of (i) share-based compensation expenses, which have been and will continue to be significant recurring expenses in its business, and (ii) gain on fair value change of investments and income tax effects on non-GAAP adjustments, which may recur when there is observable price change in the future. However, the use of non-GAAP financial measures has material limitations as an analytical tool. One of the limitations of using non-GAAP financial measures is that they do not include all items that impact the Company's net income for the period. In addition, because non-GAAP financial measures are not measured in the same manner by all companies, they may not be comparable to other similar titled measures used by other companies. In light of the foregoing limitations, you should not consider non-GAAP financial measure in isolation from or as an alternative to the financial measure prepared in accordance with U.S. GAAP.

The presentation of these non-GAAP financial measures is not intended to be considered in isolation from, or as a substitute for, the financial information prepared and presented in accordance with U.S. GAAP. For more information on these non-GAAP financial measures, please see the table captioned "HUYA Inc. Reconciliations of GAAP and Non-GAAP Results" near the end of this release.

Exchange Rate Information

This announcement contains translations of certain RMB amounts into U.S. dollars at a specified rate solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to U.S. dollars are made at a rate of RMB7.0808 to US$1.00, the rate in effect as of March 31, 2020 as certified for customs purposes by the Federal Reserve Bank of New York.

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Among other things, the business outlook and quotations from management in this announcement, as well as Huya's strategic and operational plans, contain forward-looking statements. Huya may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission ("SEC"), in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about Huya's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: Huya's goals and strategies; Huya's future business development, results of operations and financial condition; the expected growth of the game live streaming market; the expectation regarding the rate at which to gain active users, especially paying users; Huya's ability to monetize the user base; fluctuations in general economic and business conditions in China; the impact of the COVID-19 to Huya's business operations and the economy in China and elsewhere generally; and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in Huya's filings with the SEC. All information provided in this press release and in the attachments is as of the date of this press release, and Huya does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

For investor and media inquiries, please contact:

In China:

HUYA Inc.
Investor Relations
Tel: +86-20-2290-7829
E-mail: ir@huya.com

The Piacente Group, Inc.
Jenny Cai
Tel: +86-10-6508-0677
E-mail: huya@tpg-ir.com

In the United States:

The Piacente Group, Inc. 
Brandi Piacente
Tel: +1-212-481-2050
E-mail: huya@tpg-ir.com

 

HUYA INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(All amounts in thousands, except share, ADS, per share data and per ADS data)



As of December 31,


As of March 31,


2019


2020


2020


RMB


RMB


US$







Assets






Current assets






Cash and cash equivalents

1,113,193


658,888


93,053

Restricted cash

1,392


1,392


197

Short-term deposits

6,743,445


7,220,004


1,019,659

Short-term investments

2,219,531


2,437,789


344,282

Accounts receivable, net

61,708


62,702


8,855

Amounts due from related parties

51,936


48,794


6,891

Prepayments and other current assets

400,615


398,783


56,319







Total current assets

10,591,820


10,828,352


1,529,256







Non-current assets






Deferred tax assets

45,816


89,676


12,665

Investments

379,424


402,790


56,885

Property and equipment, net

96,686


86,262


12,183

Intangible assets, net

45,085


44,142


6,234

Right-of-use assets, net

102,824


97,932


13,831

Prepayments and other non-current assets

104,895


86,197


12,173







Total non-current assets

774,730


806,999


113,971







Total assets

11,366,550


11,635,351


1,643,227







Liabilities and shareholders' equity






Current liabilities






Accounts payable

3,725


2,770


391

Advances from customers and deferred revenue

845,966


727,554


102,750

Income taxes payable

26,051


82,270


11,619

Accrued liabilities and other current liabilities

1,460,025


1,365,603


192,864

Amounts due to related parties

79,032


123,892


17,497

Lease liabilities due within one year

31,878


33,806


4,774







Total current liabilities

2,446,677


2,335,895


329,895







Non-current liabilities






Lease liabilities

70,110


66,154


9,343

Deferred tax liabilities

-


540


76

Deferred revenue

164,913


177,363


25,048







Total non-current liabilities

235,023


244,057


34,467







Total liabilities

2,681,700


2,579,952


364,362







 

 

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)

(All amounts in thousands, except share, ADS, per share data and per ADS data)



As of December 31,


As of March 31,


2019


2020


2020


RMB


RMB


US$







Shareholders' equity






Class A ordinary shares (US$0.0001 par value; 750,000,000 shares authorized as of December 31, 2019 and March 31, 2020, respectively; 67,101,314 and 67,135,314 shares issued and outstanding as of December 31, 2019 and March 31, 2020, respectively)

44


44


6

Class B ordinary shares (US$0.0001 par value; 200,000,000 shares authorized as of  December 31, 2019 and March 31, 2020, respectively; 152,357,321 and 152,357,321 shares issued and outstanding as of December 31, 2019 and March 31, 2020, respectively)

100


100


14

Additional paid-in capital

10,081,946


10,175,375


1,437,037

Statutory reserves

64,679


64,679


9,134

Accumulated deficit*

(1,986,054)


(1,817,895)


(256,736)

Accumulated other comprehensive income

524,135


633,096


89,410







Total shareholders' equity

8,684,850


9,055,399


1,278,865







Total liabilities and shareholders' equity

11,366,550


11,635,351


1,643,227


* On January 1, 2020, the Company adopted ASC326, "Financial Instruments-Credit Losses" using modified-retrospective transition approach. Following the adoption of this guidance, a cumulative-effect adjustment accumulated deficit, amounting to RMB3.1 million, was recognized as of January 1, 2020.

 

 

HUYA INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(All amounts in thousands, except share, ADS, per share data and per ADS data)



Three Months Ended


March 31,
2019


December 31,
2019


March 31,
2020


March 31,
2020


RMB


RMB


RMB


US$









Net revenues








Live streaming

1,552,482


2,346,141


2,274,490


321,219

Advertising and others

78,996


121,329


137,458


19,413









Total net revenues

1,631,478


2,467,470


2,411,948


340,632









Cost of revenues(1)

(1,358,105)


(2,000,909)


(1,937,145)


(273,577)









Gross profit

273,373


466,561


474,803


67,055









Operating expenses(1)








Research and development expenses

(90,044)


(178,290)


(156,058)


(22,040)

Sales and marketing expenses

(78,164)


(118,324)


(106,536)


(15,046)

General and administrative expenses

(85,811)


(96,367)


(90,206)


(12,740)









Total operating expenses

(254,019)


(392,981)


(352,800)


(49,826)









Other income

8,864


28,046


11,327


1,600









Operating income

28,218


101,626


133,330


18,829









Interest and short-term investments income

54,585


88,346


85,740


12,109

Gain on fair value change of investments

-


-


2,160


305

Other non-operating expenses

-


-


(10,010)


(1,414)

Foreign currency exchange (losses) gains,  net

(374)


99


(1,425)


(201)









Income before income tax expenses

82,429


190,071


209,795


29,628









Income tax expenses

(18,968)


(27,599)


(37,556)


(5,304)









Income before share of loss in equity method investments, net of income taxes

63,461


162,472


172,239


24,324









Share of loss in equity method investments, net of income taxes

(1)


(2,802)


(1,013)


(143)









Net income attributable to HUYA Inc.

63,460


159,670


171,226


24,181









Net income attributable to ordinary shareholders

63,460


159,670


171,226


24,181









 

 

HUYA INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(All amounts in thousands, except share, ADS, per share data and per ADS data)







Three Months Ended


March 31,

December 31,

March 31,

March 31,

2019

2019

2020

2020


RMB

RMB

RMB

US$






Net income per ADS*





Basic

0.31

0.73

0.78

0.11

Diluted

0.29

0.68

0.73

0.10

Net income per ordinary share





Basic

0.31

0.73

0.78

0.11

Diluted

0.29

0.68

0.73

0.10






Weighted average number of ADS used in calculating net income per ADS





—Basic

203,923,069

219,382,541

219,934,053

219,934,053

—Diluted

221,440,050

236,144,302

236,044,992

236,044,992






* Each ADS represents one Class A ordinary share.






(1) Share-based compensation was allocated in cost of revenues and operating expenses as follows:







Three Months Ended


March 31,

December 31,

March 31,

March 31,


2019

2019

2020

2020


RMB

RMB

RMB

US$






Cost of revenues

4,020

14,806

14,880

2,101

Research and development expenses

11,824

36,369

36,323

5,130

Sales and marketing expenses

904

2,640

2,578

364

General and administrative expenses

51,078

28,370

40,050

5,656


 

 

HUYA INC.

RECONCILIATIONS OF GAAP AND NON-GAAP RESULTS

(All amounts in thousands, except share, ADS, per share data and per ADS data)



Three Months Ended


March 31,
2019


December 31,
2019


March 31,
2020


March 31,
2020


RMB


RMB


RMB


US$









Gross profit

273,373


466,561


474,803


67,055

Share-based compensation expenses allocated in cost of revenues

4,020


14,806


14,880


2,101









Non-GAAP gross profit

277,393


481,367


489,683


69,156









Operating income

28,218


101,626


133,330


18,829

Share-based compensation expenses

67,826


82,185


93,831


13,251









Non-GAAP operating income

96,044


183,811


227,161


32,080









Net income attributable to HUYA Inc.

63,460


159,670


171,226


24,181

Gain on fair value change of investments

-


-


(2,160)


(305)

Share-based compensation expenses

67,826


82,185


93,831


13,251

Income tax effects on non-GAAP adjustments

-


-


540


76









Non-GAAP net income attributable to HUYA Inc.

131,286


241,855


263,437


37,203









Net income attributable to ordinary shareholders

63,460


159,670


171,226


24,181

Gain on fair value change of investments

-


-


(2,160)


(305)

Share-based compensation expenses

67,826


82,185


93,831


13,251

Income tax effects on non-GAAP adjustments

-


-


540


76









Non-GAAP net income attributable to ordinary shareholders

131,286


241,855


263,437


37,203









Non-GAAP net income per ordinary share








Basic

0.64


1.10


1.20


0.17

Diluted

0.59


1.02


1.12


0.16









Non-GAAP net income per ADS








Basic

0.64


1.10


1.20


0.17

Diluted

0.59


1.02


1.12


0.16









Weighted average number of ADS used in calculating Non-GAAP net income per ADS








—Basic

203,923,069


219,382,541


219,934,053


219,934,053

—Diluted

221,440,050


236,144,302


236,044,992


236,044,992

 

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Source: HUYA Inc.
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