Huya Inc ((HUYA)) has held its Q1 earnings call. Read on for the main highlights of the call.
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Huya Inc.’s latest earnings call struck an optimistic tone despite lingering headwinds in its core live-streaming business. Management highlighted a solid 15% jump in total net revenue, rapidly growing game-related income and expanding gross margins, arguing that a more diversified revenue mix is starting to offset pressure on legacy live-streaming and near-term cost inflation.
Revenue Growth
Total net revenues climbed 15% year over year to RMB 1.73 billion in the first quarter of 2026, underscoring Huya’s ability to grow even as the domestic live-streaming market slows. Management framed this as evidence that the company’s pivot toward games, advertising and new formats is gaining traction and broadening its top-line drivers.
Game-Related Revenues Surge
Game-related services, advertising and other revenues surged 69% year over year to a record RMB 627 million, now accounting for 36% of total revenue. This record mix shift signals that Huya is becoming less dependent on virtual gifting and traditional live streaming, with higher-potential game publishing and ad models taking center stage.
Gross Profit and Margin Expansion
Gross profit rose 34% from a year earlier to RMB 253 million, lifting gross margin to 14.6% from 12.5% as the revenue mix improved. On a non-GAAP basis, gross margin reached 14.8%, suggesting that scaling higher-margin businesses is already feeding through to the bottom line despite rising content costs.
Non-GAAP Profitability Progress
Non-GAAP net income attributable to Huya came in at RMB 21 million, equivalent to non-GAAP diluted net income of RMB 0.09 per ADS, marking a clear improvement versus last year. The non-GAAP operating loss narrowed sharply to RMB 3 million from RMB 36 million, indicating that operating leverage is beginning to emerge as new businesses scale.
Successful Goose Goose Duck Mobile Launch
Goose Goose Duck mobile, launched on January 7, was a standout, ranking first on China’s iOS free chart for much of the quarter and later entering the top five iOS grossing list in April as monetization ramped. New content such as Season 2 and the PGC-style Goose Hunt mode is driving strong engagement, positioning the title as a key growth pillar.
Expanding Reach and Content Ecosystem
Huya’s external platform reach more than doubled year on year to over 200 million users across platforms including Douyin and WeChat, greatly expanding its distribution funnel. The company is now the largest gaming MCN on WeChat and a top-three player on Douyin, with nearly half of core streamers linked to Huya, deepening its content ecosystem.
Advertising and Tournament Momentum
Advertising and tournament activities delivered impressive exposure, demonstrating Huya’s growing influence in competitive gaming. A high-profile Arknights campaign generated more than 70 million views, while the Uzi Cup drew over 200 teams and exceeded 100 million views amid a slate of 55 licensed tournaments and over 20 self-produced events.
Product Innovation and AI Initiatives
On the product side, Huya rolled out tools like the Delta Force real-time navigation assistant and the Hextech ARAM helper to improve player experience. Management also highlighted broader AI efforts across live streaming, game tools, IP-based companionship and game production, aimed at boosting engagement and differentiating Huya’s offerings.
Live Streaming Revenue Under Pressure
Traditional live-streaming revenues slipped to RMB 1.1 billion from RMB 1.14 billion a year earlier, reflecting tough competition and a weaker broader market. Executives acknowledged that this business remains under pressure, reinforcing the strategic urgency of shifting users and monetization toward games, tools and advertising.
Net Loss and Interest Income Decline
Huya reported a modest GAAP net loss attributable to the company of RMB 4 million, or roughly RMB 0.02 per ADS, despite its non-GAAP profit. Interest income fell to RMB 30 million from RMB 65 million as cash balances dropped following special dividends, reducing the contribution from low-risk financial assets.
Rising Costs and Revenue Sharing
Total cost of revenues rose 12% year over year to RMB 1.48 billion, driven mostly by revenue-sharing and content costs that increased 7% to RMB 1.23 billion. Management tied the higher outlays to richer content offerings and item-related spending, a trade-off that supports engagement but weighs on near-term margins.
Higher Sales and Marketing Spend
Sales and marketing expenses jumped 45% from a year earlier to RMB 88 million, largely due to promotions around Goose Goose Duck mobile. While this spending pressures current operating results, Huya framed it as an investment to build the game’s user base and brand, which could pay off as monetization deepens.
Cash Balance Trend
Cash, cash equivalents and deposits declined to RMB 3.46 billion as of March 31, 2026 from RMB 3.82 billion at the end of 2025, reflecting cash returns to shareholders and growth investments. The company still retains a sizeable liquidity cushion, but investors will watch whether continued expansion can be funded without eroding this buffer too quickly.
Early-Stage Monetization for New Titles
Management stressed that monetization for Goose Goose Duck remains in its early stages and is being ramped gradually to balance user experience and revenue. That approach leaves short-term income from the title uncertain but potentially extends its lifecycle and opens room for more sustainable growth in in-game spending.
Outlook and Margin Guidance
Looking ahead, Huya expects margins to keep improving, with non-GAAP operating margin approaching breakeven by the third quarter and more visible gross and operating margin expansion in the second half of 2026. The company plans to gradually scale Goose Goose Duck monetization, launch a WeChat mini-game this summer and release additional titles like a 3D puzzle game to drive incremental advertising, in-game item sales and publishing revenue.
Huya’s earnings call portrayed a platform in transition, leaning on blockbuster games, advertising and AI-driven tools to offset structural pressure in live streaming. While rising costs, a small net loss and lower interest income temper the picture, investors focused on the accelerating game-related revenue mix and margin trajectory may see a strengthening long-term story taking shape.