DouYu International Holdings Limited Q2 FY2024 earnings call

Under the strategy of fostering a healthy, vibrant game-centric content ecosystem, the company focused on leveraging top-tier streamers and premium content, deepening cooperation with game developers. Quarterly average mobile MAUs were 44.1 million, a 12.3% year-over-year decrease due to short video platform competition, but core user metrics like viewing hours remained stable. The company broadcasted nearly 30 large-scale official tournaments, ramped up collaboration with game developers on promotional campaigns. Streamer management was refined with widened recruitment scope, diversified channels, and improved incentives. In monetization, total paying users were 3.4 million with a quarterly ARPU of RMB243, and budget-friendly paid products were introduced to address macroeconomic impacts.

In the second quarter of 2024, DouYu's total net revenues decreased by 25.9% year-over-year to RMB1.03 billion. Livestreaming revenues were RMB0.79 billion, a decline of 37.2% from the same period in 2023. Innovative business, advertising and other revenues saw a significant increase of 80.7% to RMB242 million. Cost of revenues decreased by 21.2% to RMB0.95 billion. Gross profit in the second quarter was RMB84.2 million compared to RMB188.9 million in the same period of 2023. Gross margin dropped from 13.6% to 8.2%. Sales and marketing expenses decreased by 11.5% to RMB77 million, research and development expenses were reduced by 29.4% to RMB50.1 million, while general and administrative expenses increased by 3.4% to RMB48.5 million.

The company will stay proactive amidst macroeconomic headwinds, implementing innovative revenue diversification initiatives and tighter cost controls. It aims to broaden collaborations with more game developers, diversify and advance game prop commercialization avenues. The company expects innovative business, advertising and other revenues to maintain year-over-year growth and account for over 20% of total net revenue in 2024.

Facing intense market competition, particularly from short video platforms attracting low-frequency and low-stickiness users. Macro-economic headwinds affecting users' willingness to spend, leading to a decline in paying users and pressure on revenue.

Q: How does management view the current macro challenges and changes and the impact on the operations? How would you assess these challenges in terms of the impact on our business fundamentals as well as financials?

A: Mingming Su stated that the company faces intense market competition and macroeconomic headwinds. Market competition drew low-stickiness users, pressuring MAU in the short term, but core user base remained stable. Macro-economic headwinds affected traditional livestreaming revenue. The company will prioritize core users, continue content innovation and operational optimization.

Q: Based on current competition environment, how's the stability of the streamers on our platform and any large investment on streamer resources in future?

A: Simin Ren mentioned that DouYu's overall streamer assets remain stable. The company adjusts streamer strategies to address top-tier streamer competition, enhances content quality and efficiency. More resources will be allocated to streamer recruitment in summer, with revised recruitment model, improved reward mechanism, and clear streamer development path established.