HUYA, Inc. Q4 FY2024 earnings call

Business Transformation

• Made strides in game-related services, advertising, and others with strong year-over-year growth.

Game Distribution

• Increased operational excellence for new and existing titles, became primary distribution channel for several games. Launched Delta Force and encouraged broadcaster participation, driving growth in gross rich tips and live streaming content.

In-Game Item Sales

• Deepened focus on diversifying categories and improving traffic efficiency. Upgraded app sections, launched League of Legend Steam game item shop with Spring Festival promotion, achieving record high monthly GMV in January.

Advertising

• Enhanced sponsorship capabilities of self-organized e-sports tournaments. LOL Legend Cup Season 2 doubled sponsorship revenue, attracted diverse sponsors.

Live Streaming Content Ecology

• Strengthened content ecology through collaborations. In December 2024, content reach was record high. Broadcasted numerous licensed and self-organized e-sports tournaments and entertainment shows. Reduced gap between licensed and in-house produced content for League of Legends and Honor of Kings. Legend Cup series saw rising IP value and viewership metrics.

Technology and Product Upgrades

• Launched product features to enhance e-sport community vibe, including customizable team live channel skins, bullet chat effects, pre-match analysis. Introduced HUYA rating section for e-sport rating. Deployed DeepSeek-R1 model, first in game live streaming platform, with AI assistant for user search and interaction. Exploring AI + Live Streaming strategy for broadcasters' content creation and digital IP innovation.

For the full-year 2024, total net revenues were RMB6.08 billion. Live streaming revenues were RMB4.75 billion. Game-related services, advertising, and other revenues were RMB1.33 billion, up 145.4% year-over-year, accounting for 21.9% of total net revenues (compared to 7.8% in the previous year). In the fourth quarter, game-related services, advertising, and others revenues were RMB372 million, up 99.4% year-over-year.

Dividend Plan

• Introduced 2025-2027 dividend plan to distribute no less than $400 million over three years. 2025 declared cash dividend of $1.47 per ADS, totaling ~$340 million. 2026-2027 to distribute no less than $30 million annually.

Share Repurchase

• Up to $100 million share repurchase program, repurchased 19.1 million shares with $63.6 million as of Dec 31, 2024. Program renewed until March 31, 2026.

Future Business

• Intend to replicate successful self-organized tournament model to more e-sports titles. Launch new tournaments like Legend Cup Season 3, Dota 2 and [indiscernible] branded tournaments.

Seasonality

• Game industry seasonality impacts revenue, e.g., sequential decline in fourth quarter from third quarter peak.

Market Uncertainties

• External challenges and uncertainties in the market may affect business performance.

Investment Impairments

• Recognized impairment charges on investments due to weak financial performance of certain investees.

Q: What factors do we consider when we make shareholder return strategies?

A: Place great emphasis on enhancing shareholder returns, established 2025-2027 dividend plan, have sufficient internal funds, will study long-term return mechanism. For share repurchases, comprehensively consider market conditions, stock liquidity, etc.

Q: Can management share expectation into the other revenue, especially the game-related services, the business development, and also the growth driver going forward?

A: In fourth quarter, game-related services, advertising, and others nearly doubled year-over-year. Continue to enhance operational excellence for games, expand distribution and joint operations, diversify in-game item sales, enhance advertising sponsorship. Performance affected by seasonality and streamer participation. 2025 to advance commercialization transformation, strengthen cooperation with game developers.

Q: How does AI impact our product monetization strategy, cost structure, all these aspects?

A: Actively integrating AI large models. Launched AI assistant in February, developing AI powered streamer assistant, building virtual streamers. Application of streamer assistant increased viewer activity and gift revenue. Deepen AI + Live Streaming strategy to empower broadcasters and create new IP.

Q: Can you discuss our live streaming revenue trend and additional rate? Can you also touch upon our group overall profitability margin trend as well?

A: Fourth quarter live streaming revenue impacted by macroeconomic and industry environment. First quarter typically low season. Profitability: fourth quarter gross margin 11.4% (up from 1% last year). Future profitability influenced by revenue scale, cost control, including licensed content and streamer costs. Interest income expected to be lower this year due to shareholder return policy and declining market rates.