HUYA

LLM Evaluations

Transcript Summary

HUYA's Q1 2026 results highlight a successful strategic pivot toward becoming a full-service game services platform. Total revenues grew 15% YoY to RMB 1.73 billion, driven by a 69% increase in game-related services and advertising, which helped offset a sluggish live streaming market. The breakout success of Goose Goose Duck mobile served as a proof of concept for HUYA's content-driven publishing model. The company's reach across external platforms like WeChat and Douyin now exceeds 200 million users, strengthening its value proposition to game developers for item sales and integrated marketing. Management also outlined a comprehensive AI strategy focusing on game tools and interactive companionship to enhance user engagement. Financially, gross margins expanded to 14.6%, and the company posted a non-GAAP net income of RMB 21 million. Looking ahead, HUYA expects further margin improvement as its revenue mix continues to shift toward higher-margin game services and its publishing pipeline matures in the latter half of the year.

5-year share-count history (top 10 holders by peak, incl. exited) + price

Filing Risk Scores

HUYA Inc.: Tencent-Controlled VIE Navigating Operational Deterioration and Aggressive Related-Party Repricing

Full Earnings Call Transcript — Q1 • 2026-05-12

Hanyu Liu: Good day, and good evening, and thank you for standing by. Welcome to HUYA's First Quarter 2026 Earnings Webinar. I'm Hanyu Liu from the HUYA's Investor Relations. [Operator Instructions] Please be advised 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. Vincent Junhong Huang, our acting CEO; Mr. Raymond Peng Lei, our CFO; and Ms. Marguerite Xie, Head of Capital Markets. 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 under 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 results may be materially different from the views expressed today. Further information regarding this and other risks and uncertainties is included in the company's latest annual report on Form 20-F 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 Mr. Huang. Please go ahead.
Junhong Huang: Okay. Hello, everyone, and thank you for joining our earnings call today. First, I would like to share our overall performance for the quarter. In the first quarter, total net revenues grew by 15% year-over-year to RMB 1.73 billion, primarily driven by continued strong growth from game-related services, advertising and other businesses. Game-related services, advertising and other revenues reached RMB 627 million, up 69% year-over-year and further increased to record 36% of total net revenues. Live streaming revenues were RMB 1.1 billion for the quarter, underpinned by our vibrant, diversified and high-quality live streaming content ecosystem. With the integration of AI, we are able to offer an enriched more creative experiences to our users. Our ecosystem of game content live streamer is becoming increasingly influential across the broader social platforms, while our own channels, including the HUYA Live app, continue to enjoy a stable user base. Our estimated reach across external platforms doubled from last year, exceeding 200 million users, including those on Douyin and WeChat platforms. According to our internal data, HUYA is the largest gaming MCN on WeChat channels and remain among the top 3 on Douyin. Across multiple leading game titles, nearly half of the core streamers are connected to HUYA. This broad content network enables us to provide games with strong content-driven marketing and user reach, which is what's driving our growth in our collaboration with game developers in game item sales and advertising as well as game publishing. On the game publishing front, Goose Goose Duck mobile continued to deliver impressive results. Since its launch on January 7, the game ranked #1 on the iOS free games chart for most of the first quarter. We have been accelerating the pace of content updates since March. And on April 1, we launched Season 2, introducing a new map, Ancient [ Desert ] as well as new roles, including Dueling Dodo and Raven. At the same time, we continue to work on our UGC mechanism, which we believe will be an important driver of player engagement, social interaction and long-term content vitality for the game. Building on this foundation, we launched our first PGC gameplay mode, Goose Hunt on April 29, which received positive feedback from players and further expanded the game's content ecosystem. As we continue to focus on building a healthy user ecosystem with robust and fun game content, we are also ramping up its monetization gradually. In April, Goose Goose Duck mobile reached the top 5 on the iOS top grossing game chart with new skin offered validating its monetization potential. Looking ahead, we will further enrich the game's content and social environment with new features such as party mode and a home decoration system, and introduce more IP collaborations to meet players' growing demand for low playing experiences. Meanwhile, we are working on the WeChat mini-game version, which is currently scheduled for launch this summer. By integrating Goose Goose Duck mobile more deeply with the WeChat user ecosystem, we hope to leverage WeChat social graph to further reactivate existing users and attract new ones. With the successful debut of Goose Goose Duck mobile, we are gaining more recognition from game developers of our publishing capabilities through our content ecosystem. We now have a handful of new titles in the pipeline to launch this year across various genres, including casual, SLG and AMO. For in-game item sales, revenues continue to grow solidly year-over-year. On the domestic front, item 4 titles, including Peacekeeper Elite, Honor of Kings and Crossfire continue to contribute incremental growth. For example, our large-scale outdoor live streaming event for Peacekeeper Elite journey season 2, not only effectively drop in-game item sales, but also generated strong social buzz for the game IP. On the overseas front, in-game item sales for PUBG Mobile, Genshin Impact and Arena Breakout also delivered impressive performance. On the advertising side, leveraging our influence across streamer networks, tournament production capabilities and UGC creation know-how, we provide fully integrated content marketing solution for game developers. Some of our earlier advertising campaigns have proven very effective, gaining further recognition from leading advertisers, including Tencent, NetEase and Hypergryph. For example, for Hypergryph's Arknights:Endfield opened better campaigns in the first quarter, we connected multiple top streamers to generate in-depth live streaming content, generating more than 70 million views across the Internet. This not only drove strong live streaming traction on HUYA Live app, but also sparked extensive UGC content across all social platforms, broadening the game's user reach. In terms of our content offerings on our own platform, we continue to enhance our live streaming tournament ecosystem, introducing 55 licensed tournaments as well as more than 20 self-produced tournaments and variety shows. In late March, we created Uzi Cup named after e-sports legend Uzi, attracting more than 200 League of Legends teams across China. The event generated more than 100 million views across the Internet and appear on Weibo's trending list 22 times. Building on this momentum, we hosted additional self-produced events, including the Delta Force [ Shija ] Cup and Dota 2 Immortal Cup Season 2. We have also become the official production partner for multiple top-tier game tournaments such as Valorant 2026 National tournament and 2026 Jiangsu E-Sports Super League. Hosting and producing these events creates organic synergies with our live streaming content in-game item sales and other businesses. On the product side, we remain committed to upgrading our platform ecosystem through game services and enriching users' entertainment experience with a suite of game tools. In March, we officially launched the real-time navigation feature for our Delta Force Map Tool as well as the League of Legends Hextech ARAM assistant tool, helping players make better in-game decisions. Beyond this, we are actively developing assistant tools for more titles, including Golden Special and Goose Goose Duck mobile, further establishing game tools as a differentiated product gateway. We are also developing a physical AI companion around the appeal of Goose Goose Duck, creating richer and differentiated game play and companionship value. Overall, we delivered solid progress across multiple business lines in the first quarter. Game publishing, in-game item sales, advertising marketing and tournament operations all achieved meaningful breakthroughs. HUYA is accelerating its strategic evolution from a game live streaming platform into a full-service game services platform with game-related revenues reaching a record high percentage of total revenues and our revenue mix continue to improve. We will continue to deepen our game content ecosystem and focus on high-value opportunities across the game industry value chain. While scaling the business, we will continue to enhance earnings quality and strive to deliver resilient and sustainable growth for our shareholders. With that, I will now turn the call over to our CFO, Raymond Lei. He will share more details on our results. Raymond, please go ahead.
Lei Peng: Thank you, Vincent, and hello, everyone. I'll start with an overview of our financial performance. In the first quarter, we delivered a steady top line growth with continued improvement in both our revenue mix and operating performance. Notably, the increased revenue contribution from business with higher gross margins led to both year-over-year and sequential gross margin expansion to 14.6% this quarter. Furthermore, we achieved a non-GAAP net income of RMB 21 million for the quarter despite lower interest income. Let's move on to more details of our Q1 financial results. Total net revenues were RMB 1.73 billion for Q1, up 15% from the same period last year. Live streaming revenues were RMB 1.1 billion for Q1 compared with RMB 1.14 billion from the same period last year, primarily reflecting the live streaming industry's current environment. Game-related services, advertising and other revenues were RMB 627 million for Q1, up 69% from the same period last year. The increase was primarily driven by higher revenues from in-game item sales and advertising, mainly attributable to the company's deepened and broadened collaboration with game companies. Cost of revenues increased by 12% year-over-year to RMB 1.48 billion for Q1, primarily due to increased cost of in-game virtual items as well as increased revenue sharing fees and content costs. Within this, revenue sharing fees and the content costs rose by 7% year-over-year to RMB 1.23 billion, mainly reflecting growth in our top line. Gross profit was RMB 253 million for Q1, up 34% from the same period last year. Gross margin was 14.6% for Q1, improving from 12.5% from the same period last year. Excluding share-based compensation expenses, non-GAAP gross profit was RMB 256 million and non-GAAP gross margin was 14.8% for Q1. Research and development expenses increased by 2% year-over-year to RMB 132 million for Q1. Sales and the marketing expenses increased by 45% year-over-year to RMB 88 million for Q1, primarily due to marketing and the promotion efforts related to the launch of Goose Goose Duck mobile. General and administrative expenses increased by 6% year-over-year to RMB 65 million for Q1, primarily due to increased share-based compensation expenses. Other income was RMB 3 million for Q1 compared with RMB 4 million for the same period last year, primarily due to lower government subsidies. Operating loss narrowed to RMB 29 million for Q1 compared with a loss of RMB 60 million for the same period last year. Excluding share-based compensation expenses and amortization of intangible assets from business acquisition, non-GAAP operating loss narrowed to RMB 3 million for Q1 compared with a loss of RMB 36 million in the same period last year. Interest income was RMB 30 million for Q1, down from RMB 65 million for the same period last year, primarily due to a lower time deposit balance following the payment of special cash dividends. Net loss attributable to HUYA Inc. was RMB 4 million for Q1 compared with net income attributable to HUYA Inc. of RMB 1 million for the same period last year. Excluding share-based compensation expenses and the amortization of intangible assets from business acquisitions net of income tax, non-GAAP net income attributable to HUYA Inc. was RMB 21 million for Q1 compared with RMB 24 million for the same period last year. Diluted net loss per ADS was approximately RMB 0.02 for Q1. Non-GAAP diluted net income per ADS was RMB 0.09 for Q1. As of March 31, 2026, the company had cash and cash equivalents, short-term deposits and long-term deposits of RMB 3.46 billion compared with RMB 3.82 billion as of December 31, 2025. With that, I'd like to open the call to your questions.
Hanyu Liu: [Operator Instructions] Today's first question comes from Ritchie Sun from HSBS.
Ritchie Sun: Congrats on a solid start from Goose Goose Duck. I want to ask about the latest operating and strategy and also commercialization progress for this game. And what is the -- this year's operating strategy going to be?
Junhong Huang: [Interpreted] Since its launch on January 7, Goose Goose Duck mobile has continued to deliver impressive results, ranking #1 on the iOS free game chart for most of the quarter. This validates both the appeal of the game social gameplay and HUYA's content-driven game publishing model. In the first quarter, we have been mainly focused on marketing and promoting the game as well as perfecting our gameplay and in-game operations to keep up with the better-than-expected user numbers. As of now, we are still at an early stage in terms of monetization, but we're ramping up gradually. For 2026, especially the first half, our priority for this game remains to be growing the user base and user engagement. In particular, there are 3 things we'll be focusing our efforts on. Number one, we'll continue to build and strengthen our UGC mechanism, and Goose Hunt is an early example of this framework with its gameplay and content currently led by a PGC team. As we continue to enhance our UGC mechanism and related know-how, we will add more UGC gameplay and casual game modes to the game. We believe this is crucial for game sustainable user engagement and the longevity. Second, we will add more social and community features, including interplayer connections, the home decoration system and team-up interactions so the game can evolve into a deeper social environment. Third, we are working on the WeChat mini-game version, which is currently scheduled for launch this summer. Given the game's strong party game nature, we believe the WeChat ecosystem and social graph can help us further reactivate existing users and attract new ones.
Hanyu Liu: And we will take our next question from Nelson Cheung from Citi.
Fuk Lung Cheung: And my question is related to your AI progress. Wondering if management can share your latest strategic planning on AI for the company. And how should we integrate your AI applications into the company core business?
Junhong Huang: [Interpreted] Yes. So our AI initiatives are focused on 4 areas centered around our business. Number one, that's live streaming; number two, game tools; number three, IP-based companionship; and number four, game production. So for AI-powered live streaming, we are exploring 2 main parts. Firstly, that's AI-powered content creation and secondly, it's AI-native live streaming. So these products are still in early stages of product iteration and user testing. We do not expect AI to replace real live streamers anytime soon, especially top ones with emotional connection with users and real-time interactivity remain difficult to replicate. Instead, we think the real value of AI in live streaming is to help us explore more opportunities in mid-tier and long-tail live streaming content, 24-hour companionship and certain interactive formats. For AI-powered game tools, we are also progressing really well. In March, we launched the real-time navigation feature for our Delta Force Map tool as well as the Hextech ARAM assistant tool for League of Legends. These tools are not just static guide for players, instead they combine AI capabilities with HUYA's deep understanding of games to provide more real-time and context-aware decision support. For example, our Delta Force Map Tool helps players quickly identify resource points, routes and high-risk areas, lowering their learning curve. The Hextech ARAM tool can provide champion recommendations, item build suggestions and gameplay ideas for each match. Since every match requires players to make new decisions, this kind of match-based assistant tool has very strong repeat use value. Going forward, we'll expand game tools to more titles and categories, including Golden Spatula, Goose Goose Duck mobile, card and board games, strategy games and auto chat games. AI-enabled companionship were exploring IP-based smart hardware, including physical AI companion products embedded with the multimodal AI capabilities. Based on our user feedback from Goose Goose Duck, we believe this product can go beyond emotional companionship and create deeper integration with the game itself, including in-game interactions and post-game reviews. This can further extend the connection between IP and the players. For AI-assisted game production, we are also exploring how AI can help us generate and test casual game content more efficiently. We do not expect to replace large-scale AAA type of games in the near future, but we do see a lot of opportunities improving R&D efficiencies in casual games, web-based games or more interactive games.
Hanyu Liu: And our next questions come from Wei Meng from CICC.
Meng Wei: Just want to ask about the game publishing pipeline. Could management maybe share some colors on those pipelines and what's the rough timeline for those releases and what kind of revenue contribution should we expect from them?
Junhong Huang: [Interpreted] Currently, we have a robust publishing pipeline, and we expect to launch multiple new games this year. These include collaborations with leading game companies such as Tencent and Kingsoft. The pipeline covers multiple genres, including casual, strategy, SLG, MMO and others. We will pace the launches based on product testing, license approval progress and the right market windows. The next in our pipeline is the casual 3D puzzle matching game that we licensed, which is scheduled for launch for the summer holidays. We have exclusive publishing rights for Mainland China, Hong Kong, and Macau. The game is already proven in overseas markets in terms of user appeal and monetization. Based on third-party estimates, its cumulative downloads exceed 10 million and the title has remained among the top grossing titles in overseas 3D puzzle matching category. In terms of publishing strategy, we're leveraging our influence in streamer networks, cross-platform distribution and player communities. As mentioned in our prepared remarks, our estimated reach across external platforms now exceed 200 million users, including those on Douyin and WeChat platforms. This extensive user reach allows us to target core players more efficiently, create more appealing content and enhance game longevity.
Hanyu Liu: We will take next question from Maggie Ye from CLSA.
Yifan Ye: Could management share your perspective on the recent trends and future outlook for the live streaming business? In addition to that, what are the core strategic levers and key drivers for the company to maintain a stability in this segment moving forward?
Junhong Huang: [Interpreted] So live streaming remains a core part of HUYA's business. In the first quarter, the live streaming revenue was RMB 1.1 billion, but we do feel this business may still be under some pressure due to the overall market environment. Therefore, we'll be more focused on improving ROI across content cost, which includes streamer costs and licensing costs. We believe one of HUYA's key differentiator versus any other live streaming platform is our ability to consistently create influential gaming content and leverage that content to better support game publishing and distribution. This capability is backed by our close relationships with top streamers, our know-how in tournament production and our cross-platform game distribution capability. In the third quarter of 2026, we offered around 55 licensed tournaments and more than 20 self-produced tournaments and variety shows. Among them, our self-produced Uzi Cup generated over 100 million views across the Internet, demonstrating the value of our streamer IP plus self-produced tournament model. Also during the quarter, we partnered with a top entertainment live streamer for collaboration at major tourist attractions in Luoyang, generating strong online engagement and attracting over 100,000 peak concurrent viewers. The key game titles will continue to build self-produced content around them. For example, Dota 2 Immortal Cup Season 2 is currently one of the largest third-party Dota 2 tournaments in China. For Crossfire, we recently worked with CF team on live streaming campaigns around the Kung Fu IP collaboration, including Crossfire Kung Fu HUYA Duel Night. These campaigns helped generate significant social buzz for new updates and further improve user engagement. For Peacekeeper Elite, we launched Elite Journey Season 2 in the third quarter, which is a live streaming show that generated solid user participation that creatively combines game content, streamer influence and outdoor scenarios. We think this is a great way to improve user engagement and help game content reach a broader audience. HUYA also offers a broad range of highly-engaging sports content. We have already secured full rights for 2026 Badminton World Federation events and 2026 World Snooker Tour and will provide viewers with high-definition live broadcast of these events. The recently concluded 2026 World Snooker Championship generated more than 150 million total views on HUYA. In particular, the match between the 2 Chinese players, Ding Junhui and Zhao Xintong reached a peak of nearly 20 million viewers in a single live streaming room.
Hanyu Liu: We will take the next question from Yiwen Zhang from China Renaissance.
Yiwen Zhang: My question is on the advertising and in-game item sales. Can you share some operational color on that?
Junhong Huang: [Interpreted] In third quarter, game-related services, advertising and other revenues reached RMB 226 million, up 69% year-over-year and increased to 36% of the total net revenue. The growth was mainly driven by the continued expansion in in-game item sales, advertising, while game publishing also contributed incremental growth. This shows that HUYA's revenue mix is continuing to improve and non-live streaming game services have become an important growth driver. For in-game item sales, revenue continued to grow rapidly year-over-year. In the domestic market, growth was mainly driven by leading titles such as Peacekeeper Elite and Honor of Kings. More specifically, Honor of Kings benefited from the exclusive skin sales and Chinese New Year skin events, while Peacekeeper Elite saw better sales conversion as we continue to optimize item offering and content quality through our content ecosystem. Crossfire and other titles also benefited from key sales windows and tournament-related resources. Overseas, titles such as PUBG Mobile, Genshin Impact and Arena Breakout continue to contribute to incremental growth. We will continue to expand our overseas in-game items supply and strengthen our localized service capabilities. Looking ahead, we will continue to develop more customized bundles and rights-based partnerships while bringing more transactions into HUYA's own platform ecosystem. On advertising, we have continued to strengthen content-driven integrated game marketing solutions. By combining streamer network, tournament integrations, UGC co-creation, other core capabilities, we provide game developers with end-to-end marketing solutions. Our ROI performance on these advertising campaigns continue to earn recognition from leading advertisers such as Tencent, NetEase and Hypergryph.
Hanyu Liu: Now we will take our last question today from Rebecca Xu from Morgan Stanley.
Rebecca Xu: I'm honored to be the last to raise question. My question is about margin and net profit trend. Can management share some color on the margin and net profit trend maybe in the full year basis?
Junhong Huang: [Interpreted] Our margins will continue to see improvement in the third quarter with non-GAAP operating margin approaching breakeven. This improvement was mainly driven by continued revenue mix optimization with higher contributions from relatively high-margin business such as advertising, game items and game publishing. We also continue to strengthen cost and expense management and improve operating efficiency. Looking ahead, as this margin -- as the higher-margin businesses continue to scale and operating leverage gradually come through, we expect further improvement in our overall gross margin and operating margin for the full year. In addition, given the pace of investments related to Goose Goose Duck and other games, we expect improvement in both margins to become more visible in the second half of the year.
Hanyu Liu: 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 of Piacente Financial Communications. This concludes today's call, and we look forward to speaking to you again next quarter. Thank you.