Huya Inc’s Earnings Call: Growth Amid Challenges

Huya Inc ((HUYA)) has held its Q2 earnings call. Read on for the main highlights of the call.

Huya Inc’s recent earnings call paints a picture of a company experiencing significant growth and transformation, despite facing some challenges. The sentiment expressed during the call was predominantly positive, with notable achievements in game-related services and strategic expansions. However, there were concerns over declining live streaming revenues and interest income. Overall, the company’s growth initiatives and strategic partnerships appear to be driving improved financial performance.

Significant Growth in Game-Related Services

Game-related services, advertising, and other revenues saw a remarkable increase, growing from RMB 122 million in Q2 2023 to RMB 414 million this quarter. This segment now contributes over a quarter of Huya’s total net revenues and accounts for more than 40% of the company’s total transaction value, highlighting the successful pivot towards diversified revenue streams.

Expansion in Joint Distributed Games

Huya has expanded its portfolio of jointly distributed games in the domestic market to over 300 titles. The company has seen strong performances from popular Tencent games such as Honor of Kings, Peacekeeper Elite, and League of Legends Mobile, underscoring the effectiveness of its strategic partnerships in the gaming sector.

Increase in Gross Billings from In-Game Accessories

Reflecting strong demand from its engaged user base, Huya reported a 90% year-over-year increase in gross billings from in-game accessories and cosmetics items. This growth indicates a successful integration of these items into live streams and e-sports events, enhancing user engagement and monetization.

Improved Financial Performance

Huya’s total net revenues for the second quarter reached approximately RMB 1.57 billion, marking an increase both year-over-year and quarter-over-quarter for two consecutive quarters. The company achieved a non-GAAP net income of RMB 48 million, marking its sixth consecutive profitable quarter, showcasing the effectiveness of its business strategies.

Investment in AI and Technology

The company is embedding AI across its operations, enhancing user experience with AI agents like Hu Xiao Ai, and developing AI-powered virtual live streamers and sparring partners for e-sports players. These initiatives are designed to boost user engagement and create new consumption opportunities.

Decline in Live Streaming Revenues

Despite the positive developments, Huya faced a decline in live streaming revenues, which were RMB 1.15 billion for Q2 compared to RMB 1.23 billion last year. This decline is attributed to the continued impact of the macroeconomic and industry environment.

Decrease in Interest Income

Interest income decreased to RMB 59 million for Q2, down from RMB 103 million in the same period last year. This decrease was primarily due to a lower time deposit balance and special cash dividends paid, reflecting challenges in optimizing financial returns.

Flat Domestic Paying Users

The number of domestic paying users remained flat at 4.4 million in the second quarter, indicating a stabilization in user growth within the domestic market.

Forward-Looking Guidance

Looking ahead, Huya expects steady live streaming revenues and continued growth in game-related services. The company plans to focus on improving operating profitability and expanding its business boundaries. Strategic alignment with Tencent, expansion into game publishing, and overseas market growth are key components of Huya’s forward-looking strategy, aiming to reach tens of millions of monthly active users internationally.

In conclusion, Huya Inc’s earnings call reflects a company in transition, leveraging strategic partnerships and technological advancements to drive growth. While challenges remain in live streaming and interest income, the positive momentum in game-related services and AI investments provides a strong foundation for future success.