HUYA Q3 2024 Earnings Report

HUYA EPS Results

• Actual EPS: $0.34
• Consensus EPS: $0.04
• Beat/Miss: Beat by +$0.30
• One Year Ago EPS: $0.05

HUYA Revenue Results

• Actual Revenue: $1.54 billion
• Expected Revenue: $1.53 billion
• Beat/Miss: Beat by +$4.64 million
• YoY Revenue Growth: -7.60%

HUYA Announcement Details

• Quarter: Q3 2024
• Date: 11/12/2024
• Time: Before Market Opens
• Conference Call Date: Tuesday, November 12, 2024
• Conference Call Time: 7:00AM ET

HUYA (NYSE:HUYA) Inc. is a leading interactive live streaming platform based in Guangzhou, China, primarily focused on video game and esports content. The company operates a proprietary technology platform that enables users to broadcast and view live gameplay, participate in real-time chat, and engage with hosts through virtual gifting. Its services are accessible via web browsers, desktop applications and mobile apps for both iOS and Android.

At the core of HUYA’s business are user-generated live streams hosted by professional gamers, influencers and esports organizations. The platform features coverage of popular game titles, championships and tournaments, as well as original entertainment programs. HUYA monetizes its content through a combination of virtual item sales, advertising partnerships and subscription services, and collaborates with game publishers to secure exclusive broadcasting rights for premier gaming events.

Founded in 2014 as the game streaming arm of YY Inc., HUYA completed its spin-off and initial public offering on the New York Stock Exchange under the ticker HUYA in May 2018. The company maintains a strategic investment relationship with Tencent, which holds a significant equity stake. This partnership supports HUYA’s access to exclusive content and further integration with leading game developers.

Under the leadership of Founder and Chief Executive Officer Duan Wei, HUYA continues to expand its platform capabilities, enhance user experience and explore international market opportunities. While its primary audience remains in Mainland China, the company has laid groundwork for cross-border streaming services and collaboration with global esports leagues.

HUYA Q3 2024 Earnings Call Transcript

Key Takeaways

• Game related services revenue reached a record RMB410.2 million in Q3, up 209.3% year-over-year and 32.9% quarter-over-quarter, accounting for 26.7% of total net revenues.
• Operational efficiency improvements cut total operating expenses by 20.9% year-over-year, driving a non-GAAP net income of RMB78.1 million in Q3.
• Live streaming revenues continued to face pressure from weak macroeconomic conditions and subdued user spending, contributing to a sequential decline in top-line performance.
• User engagement remained stable with mobile MAUs at 84 million and platform content reaching over 140 million users through expanded cross-platform partnerships.
• Strong liquidity with RMB8.1 billion in cash, US$61.1 million of shares repurchased and US$400 million returned via special dividends, highlighting robust shareholder return focus.

Presentation

[Operator]

Please note that today's webinar is being recorded. The company's financial and operational results were issued earlier today and are posted online. You can also view the earnings press release by visiting the IR website at ir.huya.com. A replay of the call will be available on the IR website soon. Participants of management on today's call will be Mr. Junhong Huang, our Acting Co-CEO and a Senior Vice President, and Mr. Raymond Peng Lei, our Acting Co-CEO and CFO. Management will begin with prepared remarks, and the call will conclude with a Q&A session. Before we continue, please note that today's discussion will contain forward-looking statements made on the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company's result may be materially different from the views expressed today.

[Operator]

Further information regarding this and other risks and uncertainties is included in the company's prospectus and other public filings as filed with the U.S. Securities and Exchange Commission. The company does not assume any obligation to update any forward-looking statements except as required under applicable law. Please also note that HUYA's earnings press release and this Conference Call include discussions of unaudited GAAP financial information as well as unaudited non-GAAP financial measures. HUYA's press release contains a reconciliation of the unaudited non-GAAP measures to the unaudited most directly comparable GAAP measures. With that, I'm pleased to turn the call over to our Co-CEO and SVP, Mr. Huang. Please go ahead.

[Junhong Huang, Co-CEO and SVP at HUYA]

Okay. Hello everyone. Thank you for joining our earnings conference today. We were pleased to make significant strides in developing our Game-related services business during the Q3. Game-related services, advertising, and other revenues reached a new record high, contributing 26.7% of our total net revenues. To drive this progress, we continue to enhance content and upgrade product features on our platform to improve users' experience while exploring new partnerships and business opportunities to expand our user reach and unlock our growth potential. Moreover, despite the ongoing challenges in the macroeconomic and industry environment, we maintain a relatively stable year-over-year operating performance and achieve a non-GAAP net income of RMB 78 million. Now, let's take a detailed look at our recent operational and strategic achievements.

[Junhong Huang, Co-CEO and SVP at HUYA]

First, our users' engagement across our high-quality user base remained stable during the Q3, with mobile MAUs improving slightly sequentially to 84 million, while we maintained our disciplined approach to marketing and promotion spending. We also enriched our content and service offerings as well as product features to reinforce our users' engagement. Furthermore, we continue to strengthen our cooperation with various content platforms, joining hands with these partners to conduct cross-platform streaming and co-produce premium professional content. We also selectively distributed our competitive game live streaming and video content to product lines within Tencent's ecosystem and other content channels. Thanks to these initiatives, we estimate that HUYA's content reached a total of over 140 million users in September, taking into account other platforms' users as well as our own mobile users.

[Junhong Huang, Co-CEO and SVP at HUYA]

We believe our productive platform collaborations will continue to broaden our reach among gamer users, empowering us to explore more commercialization opportunities aroundGame-related servicess and live streaming. Moving on toGame-related servicess, our game distribution in game item sales and game advertising business continues to grow robustly. Revenues fromGame-related servicess, advertising, and others reached RMB 410.2 million for the Q3 of 2024, up by 209.3% year-over-year and 32.9% quarter-over-quarter. For game distribution, we work closely with game studios on new game releases, version updates, and related operational activities, and incentivized our broadcasters to participate in game distribution. These efforts effectively promoted our growth this summer, with total gross receipts generated through HUYA's game distribution channel in the Q3 rising to more than 20 times that of the year-ago period.

[Junhong Huang, Co-CEO and SVP at HUYA]

The quarter's top titles included Honor of Kings, Demi-Gods and Semi-Devils Mobile, DNF Mobile, QQ Speed Mobile, and Peacekeeper Elite. We are confident of further developing our game distribution service as we expand our reach in the vast game market by offering distribution for a wider range of titles, including both mobile and PC games, and collaborating with additional game studios. What's more, we plan to implement targeted initiatives for broadcasters to enable them to provide more tailored user services and drive users' interest in exploring and engaging with the games distributed via our platform. We have also strengthened our collaborations with major game titles in game item sales, broadening the scope of our coverage in this area. In particular, we were promoting exclusive or customized in-game items for our platform and broadcasters, and holding sales events for initial release of new in-game items.

[Junhong Huang, Co-CEO and SVP at HUYA]

For instance, during the Q3, we held a Crossfire workshop offering HUYA exclusive weapon skins, as well as an exclusive initial release of co-branded outfit skins featuring a well-known broadcaster on our platform, sold on that broadcaster's channel. Both initiatives garnered great interest from our users, notably the total value of the co-branded outfit skins sold on the broadcaster's channel during this initial release activity exceeded RMB 50 million, validating the growth potential of our in-game item sales business. In terms of game advertising, we responded to the summer's increasing game marketing demand with campaigns for new game launch promotions and anniversary events for the existing games. In the Q3, we collaborated with a number of game companies promoting popular games such as Arena Breakout, World of Warcraft, and Naraka Mobile.

[Junhong Huang, Co-CEO and SVP at HUYA]

Going forward, we will continue to diversify our advertiser base and enhance our game promotion and marketing capabilities through HUYA's streamer-created content and in-house produced events. Moving on to our professional content enrichment efforts on our platform, including licensed and in-house content. In the Q3, we broadcasted over 90 licensed esports tournaments. The LPL, KPL, VALORANT Champions, and Esports World Cup were among the most watched events during the quarter. In addition to the tournaments of more proven esports game titles, which continue to attract user attention, VALORANT tournaments have become increasingly popular since the game's launch in China last year. This year's VALORANT Champions increased its viewership by approximately 160% compared to the previous edition, further boosting the popularity of the game's content on our platform. We also broadcasted the recently concluded LOL Worlds 2024, one of the year's most important esports events.

[Junhong Huang, Co-CEO and SVP at HUYA]

We prepared comprehensively for LOL Worlds, and we're pleased to see our hard work drive positive outcomes. We optimized our tournament broadcast audio and video technology for the event, providing a variety of HDR video quality options to suit users' various devices and network environments, which brought our users' industry-leading image quality effects and viewing experiences. We also introduced a competition data analysis system for this event that instantly captured each data point and converted the data into a visual presentation, allowing viewers to see real-time changes in teams and players' win rates while they watch the competition. Also, in addition to our official streams, popular broadcasters and professional players on our platform created secondary live commentary for the event, providing our users with a more diverse and entertaining tournament viewing experience unique to HUYA.

[Junhong Huang, Co-CEO and SVP at HUYA]

Based on our initial statistics, we maintained our leading market share of this event's viewership and further increased our market share year-over-year significantly ahead of other live streaming platforms. In terms of in-house content, we broadcasted over 20 self-organized eSports tournaments and entertainment PGC shows in the Q3. For example, we successfully hosted the HOK Streamer League in collaboration with two other major live streaming platforms to raise views across platforms. We also continued our Village Games series for community participation and hosted the Zhongshan Village Games for Honor of Kings. Additionally, we collaborated with a well-known TV program to produce Streamer Rush Forward, a reality show featuring our game and entertainment broadcasters, which attracted strong user interest. For Competing to the End, our interactive gameplay variety show that integrates game promotion and entertainment content.

[Junhong Huang, Co-CEO and SVP at HUYA]

We covered more hot and new games in this quarter, such as HOK's new mode, Black Myth: Wukong, Naruto Mobile. Given that our in-house content generally delivers good ROI performance, we are strengthening our investment in this area to create more influential and commercially valuable event IPs. As our range of in-house content expands and becomes more diverse, we will also focus on scheduling these programs to seamlessly integrate with our licensed events to better complement and enrich our professional content library. For example, following the conclusion of LOL Worlds 2024, we commenced season two of our LOL Legend Cup, building on the success of its inaugural season in May. Finally, we continue to explore innovative features to engage users and enhance interaction while differentiating HUYA's live streaming experiences, including product cooperation with leading game titles.

[Junhong Huang, Co-CEO and SVP at HUYA]

For example, in the Q3, HUYA became the first platform in the industry to integrate Honor of Kings Bullet Chatting Game Play Mode in live broadcast, adding both native features and platform-exclusive modifications developed by HUYA using Honor of Kings tools. In this mode, viewers can activate special skill cards that impact the live game by sending bullet chats or visual gifs to the channel, creating unique game play situations that drive more interesting live streaming content. Given these features' promise, we will continue to leverage HUYA's expertise in creating engaging game live streaming content to bring entertaining exclusive features to our streamers and users. Looking ahead, we will remain focused on fostering our in-house content initiatives. We are especially excited about season two of our self-produced Legend Cup and look forward to amplifying this series' success and influence.

[Junhong Huang, Co-CEO and SVP at HUYA]

We will also deepen collaboration with content creators and industry partners to extend our content reach beyond the HUYA platform and explore broader cooperation with more game developers and publishers to expand our presence in the game market. We are confident these efforts will unleash new commercialization opportunities, propelling our long-term business development. With that, I will now turn the call over to our Acting Co-CEO and CFO, Raymond Lei, who has been with us for a few months. We will share more details on our results. Raymond, please go ahead.

[Raymond Peng Lei, Co-CEO and CFO at HUYA]

Thank you, Junhong. And hello, everyone. I'm delighted to be part of HUYA's management team and to speak with you for the first time. I'll start with an overview of our financial performance. Our total net revenues were RMB 1.54 billion in the Q3 of 2024. The soft macro and the industry environment, which impacted users' willingness to pay for live streaming, continued to weigh on our live streaming revenues. Meanwhile, we proactively adjusted our business structure to support our strategic transformation and maintained prudent operations.

[Raymond Peng Lei, Co-CEO and CFO at HUYA]

Game-related services, advertising, and other businesses showed strong momentum and made a more meaningful contribution to our top line, increasing by 209.3% year-over-year and 32.9% quarter-over-quarter, primarily due to increased revenue from game distribution and advertising services and in-game item sales. We are pleased to see more users paying for ourGame-related servicess, driving growth of 9.5% year-over-year in paying users to reach 4.6 million in the Q3. Also, our continuous efforts to improve operational efficiency paid off, with total operating expenses decreasing by 20.9% year-over-year. I'd also like to review our recent progress in optimizing our content.

[Raymond Peng Lei, Co-CEO and CFO at HUYA]

We continue to refine our strategic procurement strategy for licensed content, striving for better commercial terms. As we disclosed in September, we entered into a second supplemental license agreement for a series of League of Legends matches. That decreased the license fee, which we believe will help us further reduce our overall eSports license costs this year and in 2025. Let's move on to more details of our Q3 financial results. Our total net revenues were RMB 1.54 billion for Q3, of which live streaming revenues were RMB 1.13 billion, andGame-related servicess, advertising, and other business revenues were RMB 410 million, compared with total net revenue of RMB 1.66 billion for the same period last year. Cost of revenues decreased by 6% year-over-year to RMB 1.33 billion for Q3, primarily due to decreased revenue sharing fees and content costs, as well as bandwidth and server hosting fees.

[Raymond Peng Lei, Co-CEO and CFO at HUYA]

Revenue sharing fees and content costs decreased by 5% year-over-year to RMB 1.17 billion for Q3, primarily due to decreased live streaming revenue sharing fees associated with the decline in live streaming revenues, as well as lower costs related to licensed eSports contents, partially offset by increasedGame-related servicess, advertising, and other revenue sharing fees. Bandwidth and server custody fees decreased by 26% year-over-year to RMB 61 million for Q3, primarily due to continued technology and management enhancement efforts, as well as favorable pricing terms. Gross profit was RMB 204 million for Q3, compared with RMB 243 million for the same period last year. Gross margin was 13.2% for Q3, compared with 14.6% for the same period last year.

[Raymond Peng Lei, Co-CEO and CFO at HUYA]

The change was primarily attributable to increased revenue sharing fees and content costs as a percentage of total net revenues, which rose mainly because the decrease in live streaming revenues outpaced the decrease in content costs. Excluding share-based compensation expenses, non-GAAP gross profit was RMB 207 million, and non-GAAP gross margin was 13.5% for Q3. Research and development expenses decreased by 12% year-over-year to RMB 126 million for Q3, primarily due to decreased personnel-related expenses and share-based compensation expenses. Sales and marketing expenses decreased by 30% year-over-year to RMB 73 million for Q3, primarily due to decreased marketing and promotion fees, as well as personnel-related expenses. General and administrative expenses decreased by 25% year-over-year to RMB 50 million for Q3, primarily due to decreased professional service fees and personnel-related expenses.

[Raymond Peng Lei, Co-CEO and CFO at HUYA]

Other income was RMB 13 million for Q3, compared with RMB 40 million for the same period last year, primarily due to realized damages received in the Q3 of 2023 from a favorable outcome in a broadcaster-related lawsuit and lower government subsidies. As a result, operating loss was stable at RMB 32 million for Q3, compared with the same period last year. Excluding share-based compensation expenses and the amortization of intangible assets from business acquisition, non-GAAP operating loss was RMB 13 million for Q3, compared with RMB 15 million for the same period last year. Non-GAAP operating margin was negative 0.9% for Q3. Interest income was RMB 97 million for Q3, compared with RMB 128 million for the same period last year, which was primarily attributable to the special cash dividends paid in May and October 2024.

[Raymond Peng Lei, Co-CEO and CFO at HUYA]

Net income attributable to HUYA Inc. was RMB 24 million for Q3, compared with RMB 11 million for the same period last year. Excluding share-based compensation expenses, impairment loss of investments, and the amortization of intangible assets from business acquisitions, net of income taxes, non-GAAP net profit attributable to HUYA Inc. was RMB 78 million for Q3, compared with RMB 107 million for the same period last year. Non-GAAP net margin was 5.1% for Q3. Diluted net income per ADS was RMB 0.1 for Q3. Non-GAAP diluted net income per ADS was RMB 0.34 for Q3. As of September 30, 2024, the company had cash and cash equivalents, short-term deposits, short-term investments, and long-term deposit of RMB 8.1 billion, compared with RMB 8.2 billion as of June 30, 2024. Finally, an update on our shareholder returns.

[Raymond Peng Lei, Co-CEO and CFO at HUYA]

As of the end of September 2024, we had repurchased $61.1 million of HUYA shares through our share repurchase program. The two special cash dividends we paid this year also returned an aggregate value of approximately $400 million to our shareholders. We remain committed to consolidating our financial and operating performance and creating more value for shareholders. With that, I'd like to open the call to your questions.

[Operator]

Thank you, Raymond. And hello, everyone. If you are dialing in by phone, please press 5 to ask a question, then press 6 to unmute yourself. If you are accessing the call from Tencent Meeting or VooV Meeting applications, please click the raise hand button at the bottom left. For the benefit of all participants on today's call, if you wish to ask your question to management in Chinese, please immediately repeat your question in English. Today's first question comes from Nelson Cheung from Citibank. Nelson, your line is open. Please go ahead.

[Operator]

[Foreign language]. So let me translate the question myself. So thanks, Management, for taking my question. My question is related to theGame-related servicess. Wondering if Management can share the latest update on theGame-related servicess in the Q1 and any new updates in the Q4 right now. And how do we perceive the upcoming development plans for this business into 2025, and what would be the comparative advantage of HUYA? Thank you.

[Operator]

[Foreign language] In the Q3, our game-related business continued to achieve rapid growth, with revenues fromGame-related servicess, advertising, and others reaching RMB 410 million, an increase of 209.3% year-over-year and 32.9% quarter-over-quarter. This accounted for a record high percentage of our total revenue at 26.7%. [Foreign language] With regard to game distribution, we closely collaborated with game developers on new game launches, version updates, and related operational activities, incentivizing broadcasters to participate in game distribution services. Currently, the distribution revenue is the largest portion of ourGame-related servicess revenue. It is worth noting that distribution revenue is recognized on a net basis after the revenue sharing with the game developers.

[Operator]

Therefore, the actual business volume and growth amount are significantly larger. In the Q3, the total gross receipts from games distributed through HUYA's distribution channel increased to over 20 times that of the same period last year. And going forward, we plan to continue providing distribution services for more games, including mobile and PC games, new and existing titles, and deepen our collaboration with additional game developers.

[Operator]

Furthermore, we plan targeted initiatives for broadcasters to encourage them to provide more customized user services, enhancing users' interest in exploring and engaging with the games distributed through our platform.[Foreign language] We have also strengthened our cooperation with major games in the in-game item sales, particularly by launching exclusive and customized in-game items for our platform and broadcasters, as well as promoting initial release events for these items. For instance, in the Q3, we held a Crossfire event offering HUYA exclusive game skins. We also had an exclusive initial release of co-branded game skins featuring a well-known broadcaster sold in that broadcaster's stream.

[Operator]

Both initiatives garnered enthusiastic response from our users, especially during the initial release event, where the total value of co-branded skins sold exceeded RMB 50 million, validating the growth potential of our in-game item sales business. In terms of game advertising, we responded to the increased marketing demand during the summer with promotional activities for new game launches and anniversary events for existing games, enhancing our game promotion and marketing capabilities through streamer-created and in-house produced content, while continuing to expand our advertiser base. [Foreign language] Overall, we believe HUYA has several key advantages in the continued development ofGame-related servicess.

[Operator]

First, we have a high-quality gaming user base on our platform, where the average revenue per user or up for several games we distribute is higher than the overall gaming market, indicating the commercial value potential for HUYA's gaming users. Second, our broadcasters play an active role in promotingGame-related servicess, understanding users' gaming needs and participating in revenue sharing, which helps achieve mutual Bandwidth.

[Operator]

Third, HUYA has established long-term partnerships with various game developers through our live stream business, laying down a good foundation for deeper collaboration on game distribution and in-game item sales. Additionally, we are strengthening our collaboration with multiple content platforms and selectively distributing HUYA's game live streams and video content across Tencent ecosystem and other content platforms. We estimated that as of September this year, HUYA's content ecosystem reached over 140 million users, including our own mobile users and those from other platforms, and we expect the scale to continue to grow. As we effectively collaborate to cover a broader game audience, we can explore more commercialization opportunities.

[Operator]

[Foreign language] Finally, I want to mention that since the revenue fromGame-related servicess, especially from distribution, is closely linked to gaming revenue itself, as we gradually expand this business, its income may be somewhat affected by the seasonal nature of the gaming industry. For example, peak seasons occur during holidays, and fluctuations can vary between quarters. According to public statistics, the domestic gaming market sales revenue exceeded RMB 300 billion in 2023, and overall the market space for HUYA is still enormous. We will continue to explore diverse forms of cooperation with more game developers to achieve business growth.

[Operator]

Okay, thank you. And our next question comes from Thomas Chong from Jefferies. Hi, Thomas, please go ahead.

[Operator]

[Foreign Language]

[Operator]

[Foreign Language]In the Q3, our live streaming revenue continued to be influenced by the current macroeconomic and industry environment, with users' willingness to spend on tipping remained weak. Meanwhile, during our strategic transformation, we proactively adjusted our business structure and maintained a prudent operational strategy. However, we have also observed rapid growth in revenues related to game advertising. From user behavior, we see that the engagement of our core users in live streaming remained relatively stable. [Foreign language] Due to external factors, we currently expect live streaming revenue to face short-term pressure. However, we believe that the external economic environment improvement will happen in the future, and the business will still have some room for flexibility.

[Operator]

On one hand, we will closely monitor market conditions to adjust our operational activities accordingly. On the other hand, we will continue to invest in live streaming content, optimize the broadcaster and user ecosystem, and constantly improve the technology and products to create and differentiate HUYA live streaming experience. We hope to maintain and enhance user engagement to prepare for more diversified commercialization forms in the future. In the long run, we expect that with the expansion ofGame-related servicess, advertising, and other revenue sales, the overall business will achieve relatively stable development.

[Operator]

Thank you. Now we will take the next question. It's from Lei Zhang from Bank of America. Hi Lei, please go ahead.

[Operator]

[Foreign language]Thank you, management, for taking my question. Can you give us more color on the driver of Q3's margin change? And how should we look at our margin trend going forward? Thank you.

[Operator]

[Foreign language] Sorry. In the Q3, our gross profit margin was 13.2%, slightly down from the Q2 and the same period of last year. This quarter, we continue to optimize our content costs, reducing broadcaster signing costs year over year, and we further improved our strict licensed content procurement strategy to secure better commercial terms, which saved on licensed content costs. However, the cost savings this quarter were still insufficient to offset the impact of the declining of live streaming revenue. In terms of operating expenses, through continued efforts to enhance operational efficiency, particularly in better controlling our sales expenses, our total operating expenses decreased by 20.9% year over year. Therefore, overall operational performance remained relatively stable, with a non-GAAP net profit of RMB 78 million.

[Operator]

[Foreign language]`. Regarding the future profit trends, we believe the following factors will be significant. On one hand, we need to consider changes in overall revenue scale, including the seasonal fluctuations in different businesses.On the other hand, we'll continue to adjust our cost structure to enhance the collaboration between broadcaster costs and revenue. On the professional content side, in September this year, we signed a second supplemental licensing agreement for a series of League of Legends matches, which reduced related licensing fees. We believe that this will help further optimize overall licensed Esports events costs in the year and in this year and in 2025. However, quarter to quarter, since the major S14 events will mainly take place in the Q4, the event licensing costs in the Q4 are expected to be higher than the Q3.

[Raymond Peng Lei, Co-CEO and CFO at HUYA]

For self-produced content with good investment returns, we plan to strengthen investment in this area to create more influential and commercially valuable event IPs, such as holding the second season of the Legend Cup in this month, building on the success we have in its inauguration season. [Foreign language] Nevertheless, we expect that the gross profit margin in the Q4 will show a relatively noticeable improvement compared to the low base from the same period last year. Therefore, we anticipate that the Non-GAAP results for Q4 and this entire year will also show a relatively noticeable year-over-year growth.

[Raymond Peng Lei, Co-CEO and CFO at HUYA]

Thank you. Now we will take our last question today from Cheng Hao Li from CICC. Cheng Hao, please go ahead.

[Raymond Peng Lei, Co-CEO and CFO at HUYA]

[Foreign language] Okay, I'll translate for myself. Hi Management, thanks for taking my question and congratulations on a solid quarter. My question is about our shareholder return strategy. Could management help update our capital allocation strategy and the shareholder return plan in the future? Thank you.

[Raymond Peng Lei, Co-CEO and CFO at HUYA]

[Foreign language] As of the end of September, Huya held approximately RMB 8.1 billion, about $1.15 billion, in cash and cash equivalents, which remained stable compared to the end of June, partially influenced by the fluctuations in the US dollar exchange rate. In October, we paid a special cash dividend of $250 million. Currently, the company still has approximately $900 million in cash and cash deposits, with about half of it held overseas, and the company has no debt.[Foreign language] The overall strategy for cash usage is similar to what we mentioned in the last earnings call. We have sufficient cash to fund our daily operations and business development.

[Raymond Peng Lei, Co-CEO and CFO at HUYA]

While consolidating our financial fundamentals, the company will continue to allocate some funds for potential business development and as a reserve under uncertain external conditions. We will also remain open to suitable opportunities and investment projects related to the industry chain so as to seize industry development opportunities.[Foreign language] At the same time, we will continue to place importance on shareholder returns. In terms of dividends, this year we have returned approximately $400 million to our shareholders through special cash dividends. In the future, we intend to share the company's profits and surplus cash with our shareholders.

[Raymond Peng Lei, Co-CEO and CFO at HUYA]

Future dividend plans, including the amounts and timing, will depend on further review and approval by the company's board of directors. Regarding share repurchases, based on our up to $100 million repurchase plan as of the end of September, we had repurchased $61.1 million worth of HUYA's shares. In the future, we will comprehensively consider market conditions and stock liquidity when formulating our execution strategies.

[Operator]

Okay, thank you, Lei Zhang. Thank you once again for joining us today. If you have further questions, please feel free to contact HUYA's investor relations through the contact information provided on our website or Piacente Financial Communications. This concludes today's call, and we look forward to speaking with you again next quarter. Thank you.

Participants

Executives

• Raymond Peng Lei, Co-CEO and CFO
• Junhong Huang, Co-CEO and SVP

Analysts

• Translator 5
• Translator 3
• Translator 4
• Translator 1
• Translator 2