管理層發言
Good day and good evening and thank you for standing by. Welcome to HUYA's Fourth Quarter and Fiscal Year 2024 Earnings Webinar. I'm Hanyu Liu from the HUYA Investor Relations. At this time, all participants are in listen-only mode. 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. Junhong Huang, our Acting Co-CEO and the Senior Vice President; and then Mr. Raymond Peng Lei, our Acting Co-CEO and CFO. Management will begin with the 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 on 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 prospectus 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 as except as required under applicable law. Please also note that HUYA's earnings press release and this conference call include discussion 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 our Co-CEO and SVP, Mr. Huang. Please go ahead.
Okay. Hello, everyone. Thank you for joining our earning conference today. Despite the external challenges in 2024, we delivered a solid year by seizing opportunities arising from our strategic transformation and new game launches. Notably, revenues from game-related services, advertising, and other segments increased by 145.4% year-over-year to RMB1.33 billion for the full year. This segment accounted for 21.9% of our total net revenues for the year, a substantial rise from 7.8% in the previous year. We recorded total net revenues of RMB6.08 billion for the full year with improving profitability. Non-GAAP net income reached RMB269 million, up by 125.6% year-over-year, with net cash provided by operating activities turning positive at RMB94 million. These advancements are largely attributed to our strategic commercialization model update, as well as our enhanced live streaming content ecology and technology and product upgrades.
Now let me share the details of our recent business progress. First, we made encouraging strides in our business transformation. For the fourth quarter, revenues from game-related services, advertising, and others increased by 99.4% year-over-year to RMB372 million. Despite a sequential revenue decline from the third quarter peak due to the game industry seasonality, this sector's overall performance remains solid. Regarding game distribution, we continue to increase operational excellence for both new and existing titles and are pleased to see the HUYA platform emerging as one of the primary distribution channels for several games. Following the recent launch of Delta Force, we actively encourage our broadcasters' participation in the title’s live streaming and game promotion. This led to rapid growth in gross tips for the game generated through the HUYA distribution channel, while also boosting its live streaming content performance.
In addition, we plan to collaborate with more game developers and publishers on distribution and joint operations, and we conducted some meaningful trials with third-party game studios in the fourth quarter. We look forward to these initiatives contributing to the future development of our game distribution business. For in-game item sales, we deepened our focus on diversifying in-game item categories and improving traffic efficiency on live channels. We also upgraded the more section on our app, integrating popular game schemes, tools, and user incentive activities. In January, we launched our first League of Legends Steam game item shop, accompanied by a Special Spring Festival promotion featuring exclusive benefits. Excitingly, our efforts drove a record high in our monthly total in-game item sales GMV for January. On the advertising front, it's worth noting that our in-house LOL Legend Cup Season 2 doubled its sponsorship revenue compared to its inaugural event, leveraging Legend Cup's increased influence and IP value.
The event attracted a wider range of well-known sponsors from the beverage, automotive, and local service sectors. Furthermore, we began leveraging our international business presence to explore diverse revenue streams in overseas markets in 2024 by providing game distribution, in-game item sales, and game marketing services, yielding promising early results. Moving on to our live streaming content ecology, we continue to strengthen our content ecology through collaborations with various content platforms during the quarter. This has brought our broadcasters quality content and services to a broader game audience, expanding our market presence and setting the stage for future commercialization initiatives. In December 2024, we reached a record high number of viewers, estimated to be more than double the number of our mobile active users. Our professional content enrichment efforts have enhanced market share of several major events.
Our licensed tournaments covered approximately 40 game titles in 2024. In the fourth quarter alone, we broadcast over 100 licensed e-sport tournaments featuring major events such as League of Legends Worlds 2024, Demacia Cup, Honor of Kings KPL Grand Finals, Counter-Strike 2 Shanghai Major, and BLAST Premier: World Final, solidifying our content advantage. We also broadcast over 35 self-organized e-sports tournaments and entertainment PGC shows during the fourth quarter. Among these events, LOL's Legend Cup S2, HOK's Super Platform Cup, and VALORANT WALL-E Cup were quite popular. In addition, we hosted the Jiangsu Village Games for HOK and CrossFire competitions in the fourth quarter, attracting widespread participation from local communities. Furthermore, this year, we will continue to develop our self-organized tournaments to complement the licensed tournaments on our platform and provide our users with a steady stream of fresh content.
In doing so, we reduced the gap between our major licensed tournaments and in-house produced content for both League of Legends and Honor of Kings significantly from over a month in 2023 to no longer than two weeks in 2024. We also enhanced the influence of our in-house produced content by engaging more popular broadcasters and fostering greater interactions in our game community. We are currently listed in the industry for the number of top-tier in-house produced e-sports events and audience scale. According to our internal statistics, HUYA captured over half of the market share for the industry's top-tier in-house produced e-sports events in 2024. In particular, our Flagship Legend Cup H2 has set a new standard for premier self-organized tournaments across various platforms. Building on the success of its inaugural season, we boosted the event's viewing and entertainment value this year with upgraded team formation rules, match scheduling, and gameplay design, including participation from international players.
Increased derivative content and sponsorship revenues clearly reflect Legend Cup's rising IP value. We are also delighted to see that the viewership metrics of the Legend Cup series on our platform nearly equal or even surpass those of some top-tier licensed e-sports events. In 2025, we intend to replicate our successful self-organized tournament model to encompass a wider array of popular e-sports titles on our platform. Alongside the upcoming Legend Cup Season 3, which will begin in March, we will also launch premier branded tournaments for Dota 2, creating more high-quality IPs. We invite everyone to stay tuned for these exciting events. Turning now to our technology and product upgrades, which drove business improvements throughout the year. To further enhance HUYA's e-sport community vibe, we launched a series of product features on our app around tournaments to increase viewers' engagement and facilitate access to professional e-sports analysis.
During the Mercia Cup, we introduced customizable team live channel skins and bullet chat effects, as well as pre-match analysis and real-time data based on event statistics. Additionally, we developed features that allow viewers to access team chats during matches and flexibly switch between the first-person perspectives of different players, which will gradually be integrated with our content release to provide inclusive content for team fans. We also launched a HUYA rating section on our platform, providing users with a professional forum for e-sport ratings and reviews of e-sport players, tournaments, broadcasters, and more. This section has quickly gained recognition and active participation from users. For instance, by the end of the event in early March, this year's LPL Split 1 received 6.8 million total user ratings, representing an increase of approximately 80% compared to the cumulative ratings of last year's LPL summer split and more than double that of the event on another well-known rating platform during the same period.
This not only reflects high user engagement with HUYA ratings, but also demonstrates its significant impact on our interactions with the e-sport community. Furthermore, we are actively embracing cutting-edge technologies such as AI. In February, we became the first game live streaming platform to deploy the DeepSeek-R1 model, which offers an AI assistant feature to help users efficiently search for game strategies and live channels of interest. We will further advance our AI + Live Streaming strategy by applying AI large models to improve broadcasters' content creation efficiency through smart interaction upgrades, full process automation, and data-driven operational support. This will also foster AI-powered digital IP innovation and facilitate the design of more distinctive visual streamers, delivering a novel experience for both users and content creators. By leveraging AI technologies throughout the entire cycle of live streaming content production, distribution, and consumption, we expect to energize the live streaming creator ecosystem with intelligent tools, preparing the human-driven live streaming industry for a technology-driven future.
We believe these innovative AI-driven endeavors will create more immersive, interactive experiences for users and generate long-term value for HUYA in live streaming, e-sports, and more areas. Building on the meaningful achievements we have made so far, we will continue to progress our strategic transformation. Although challenges and uncertainties exist, we remain committed to building a more comprehensive game content and service platform, exploring new technologies, and deepening their applications to holistically improve our content creators' and user experience. Moving into 2025, we will continue to respond pragmatically to changes in the market environment and capitalize on market opportunities, driving our long-term sustainable business development. With that, I will now turn the call over to our Acting Co-CEO and CFO, Raymond Lei, who will share more details on our results.
Thank you, Huang, and hello everyone. I'll start with our fourth quarter results, followed by our full-year financial highlights and an update on our shareholder returns. Our total net revenues in the fourth quarter of 2024 were approximately RMB1.5 billion, with gaming-related services, advertising, and other businesses nearly doubling their revenues year-over-year, not fully offsetting the macroeconomic and industry environments' continued impact on live streaming revenues. The number of paying users in the fourth quarter rose year-over-year to 4.5 million, excluding those who made in-game purchases through our game distribution business but didn't pay via our platform or related services, demonstrating engagement across our core user base. Due to the seasonal nature of major e-sports events scheduling and the related cost allocation, we faced gross margin pressure in the fourth quarter in recent years.
Nevertheless, in 2024, we further rationalized broadcaster-related and e-sports content costs, including costs related to LOL Worlds, resulting in an increase in our fourth-quarter gross margin to 11.4% from 1% in the same period last year. Moreover, enhanced operational efficiencies resulted in a 23.8% year-over-year reduction in total operating expenses, further contributing to the improvement in our profit metrics. We achieved a non-GAAP net income of RMB1.2 million in the quarter, marking a turnaround from the same period last year. We recorded non-GAAP net profit in all four quarters of 2024, highlighting significant progress in our business optimization efforts. Let's move on to more details of our Q4 financial results. Our total net revenues were RMB1.5 billion for Q4, of which live streaming revenues were RMB1.12 billion, and game-related services, advertising, and other revenues were RMB372 million, compared with total net revenues of RMB1.53 billion for the same period last year.
Cost of revenues decreased by 12% year-over-year to RMB1.33 billion for Q4, primarily due to decreased revenue sharing fees and the content costs, as well as bandwidth and server custody fees. Revenue sharing fees and content costs decreased by 12% year-over-year to RMB1.16 billion for Q4, primarily due to decreased live streaming revenue sharing fees associated with the decline in live streaming revenues, as well as lower costs related to licensed e-sport content and in-house produced content, partially offset by increased cable-related services, advertising, and other revenue sharing fees. Service and server custody fees decreased by 33% year-over-year to RMB55 million for Q4, primarily due to continued technology and management enhancement efforts as well as favorable pricing terms. Gross profit was RMB170 million for Q4 compared with RMB15 million for the same period last year. Gross margin was 11.4% for Q4 compared with 1% for the same period last year, primarily attributable to decreased revenue sharing fees and content costs as a percentage of total net revenues.
Excluding share-based compensation expenses, non-GAAP gross profit was RMB174 million, and the non-GAAP gross margin was 11.6% for Q4. Research and development expenses decreased by 10% year-over-year to RMB123 million for Q4, primarily due to decreased personnel-related expenses, partially offset by higher share-based compensation expenses. Sales and marketing expenses decreased by 45% year-over-year to RMB63 million for Q4, primarily due to decreased marketing and promotion fees as well as personnel-related expenses. General and administrative expenses decreased by 19% year-over-year to RMB81 million for Q4, primarily due to decreased provision and office expenses, partially offset by higher share-based compensation expenses. Other income was RMB4 million for Q4 compared with RMB13 million for the same period last year, primarily due to lower government subsidies. As a result, operating loss was RMB93 million for Q4 compared with a loss of RMB322 million for the same period last year.
Excluding share-based compensation expenses and the amortization of intangible assets from business acquisition, non-GAAP operating loss was RMB69 million for Q4, compared with a loss of RMB360 million for the same period last year. Non-GAAP operating margin was slightly 4.6% for Q4. Interest income was RMB75 million for Q4 compared with RMB129 million for the same period last year, primarily due to lower time deposit balance, which was mainly attributable to the special cash dividend paid in May and October 2024. Impairment loss of investments was RMB151 million for Q4 compared with RMB8 million for the same period last year, as we recognized impairment charges on our investment attributable to the weak financial performance of certain investees. Net loss attributable to HUYA Inc. was RMB172 million for Q4 compared with a loss of RMB275 million for the same period last year. Excluding share-based compensation expenses, impairment loss of investments, and amortization of intangible assets from business acquisitions, net of income taxes, non-GAAP net income attributable to HUYA Inc. was RMB1 million for Q4 compared with a non-GAAP net loss attributable to HUYA Inc. of RMB190 million for the same period last year.
Non-GAAP net margin was 0.1% for Q4. Diluted net loss per ADS was RMB0.75 for Q4. Non-GAAP diluted net income per ADS was RMB0.01 for Q4. As of December 31, 2024, the company has cash and cash equivalents, short-term deposits, and long-term deposits of RMB6.73 billion compared with RMB8.08 billion as of September 30, 2024. Moving on to our full-year 2024 results, total net revenues were RMB6.08 billion for 2024 compared with RMB6.99 billion for the prior year. Live streaming revenues were RMB4.75 billion for 2024 compared with RMB6.45 billion for the prior year. Game-related services, advertising, and other revenues were RMB1.33 billion for 2024 compared with RMB544 million for the prior year. Non-GAAP gross profit was RMB825 million for 2024 compared with RMB831 million for the prior year. Non-GAAP gross margin was 30.6% for 2024, up from 11.9% for the prior year. Non-GAAP net income attributable to HUYA Inc. was RMB269 million for 2024, up from RMB119 million for the prior year.
The non-GAAP net margin was 4.4% for 2024, up from 1.7% for the prior year. Non-GAAP diluted net income per ADS was RMB1.15 for 2024, up from RMB0.48 for the prior year. Net cash provided by operating activities was RMB94 million for 2024 compared with net cash used in operating activities of RMB32 million for the prior year. For additional details of our full-year 2024 financial results, I encourage listeners to refer to our earnings press release issued earlier today. Finally, let me provide an update on our shareholder returns. To enhance our shareholder returns and optimize our capital structure, we are pleased to introduce our 2025 to 2027 dividend plan, which is expected to distribute a total of no less than $400 million to our shareholders over the next three years. Specifically, for 2025, we have declared a cash dividend of $1.47 per ordinary share or per ADS, totaling approximately $340 million for 2026 and 2027.
We expect to distribute no less than $30 million in cash dividends annually. In addition, through our up to $100 million share repurchase program, we had repurchased 19.1 million HUYA shares with a total aggregate consideration of $63.6 million as of the end of December 2024. HUYA's Board of Directors has also authorized the renewal and continued usage of the unutilized quota under the existing share repurchase program until March 31, 2026. With that, I'd like to open the call to your questions.
Thank you, Raymond. Hello, everyone. For all participants on today's call, if you would like to ask your question to management in Chinese, please repeat your question in English as well. Our first question comes from Thomas Chong from Jefferies. Your line is open. Please go ahead.
分析師問答
Thank you for taking my question. My question is about our shareholder return strategy. What factors do we consider when developing our shareholder return strategies? Thank you.
We place great emphasis on enhancing shareholder returns and have established a dividend plan for 2025 to 2027, aiming to distribute at least $400 million in cash dividends to HUYA's shareholders over the next three years. In particular, for 2025, we have declared a cash dividend of $1.47 per ADS, amounting to approximately $340 million. For 2026 and 2027, we expect to pay at least $30 million in cash dividends each year. This plan is intended to reward HUYA shareholders further, optimize the company's capital structure, and improve our cash utilization efficiency. HUYA currently has sufficient internal funds. As of the end of December 2024, the company held over $900 million in cash, cash equivalents, and deposits with no debt. For the full year of 2024, our non-GAAP net profit significantly increased compared to 2023, reaching RMB270 million, and we achieved positive operating cash flow for the year.
Even without future business cash flows, after completing the full dividend payments under this three-year plan, HUYA will still have about $500 million remaining, ensuring enough financial support for future business development. Given that HUYA is in a special phase of strategic transformation, we will consider studying long-term return mechanisms after this dividend plan, such as a regular dividend policy based on the company's operating condition and visibility to achieve sustainable development and shared value with our shareholders. Regarding share repurchases, under the current program of up to $100 million, we had repurchased HUYA shares for a total of $63.6 million as of December last year. The repurchase program has been extended until March 31, 2026. We will consider various factors, including market conditions, stock liquidity, and overall shareholder returns to prudently advance the repurchase program.
Thank you. And our next question comes from Nelson Cheung from Citi. Nelson, please go ahead.
Thank you for taking my question. I would like to ask about the growth of other revenue. With the strong growth expected in 2024, could you share your outlook for other revenue, particularly regarding game-related services and business development, as well as what you see as the main growth drivers moving forward? Thank you.
In the fourth quarter, despite a sequential decline in revenues from game-related services, advertising, and others compared to the peak summer season, these revenues nearly doubled year-over-year, reaching RMB372 million, indicating a strong overall performance. In-game distribution has seen improvements in operational excellence for both new and existing game titles on the HUYA platform, making us a key distribution channel for several games. Following the launch of the new game Delta Force, we encouraged platform broadcasters to engage in live streaming and promotional activities, resulting in rapid growth of game receipts via the HUYA distribution channel and fostering a positive lifecycle with live streaming content. We are also expanding distribution and collaborations with more game developers and conducted significant trial partnerships with third-party game studios during the fourth quarter of 2024.
Regarding in-game item sales, we are diversifying the categories of items to improve traffic efficiency. We optimized the more section on our app by integrating popular items and user incentive activities. In advertising, we enhanced the sponsorship capabilities of our self-organized e-sports tournaments, particularly for the LOL Legend Cup S2, which doubled its sponsorship revenue from the first season and attracted a wider array of well-known sponsors from beverage, automotive, and local life sectors. It is important to recognize that the performance of our game-related services business is influenced not only by the seasonality of the game industry but also by streamer participation. Thus, even though the Spring Festival period usually serves as a peak season for the game industry, a decline in live streaming rates during this time could impact our business. In 2024, we successfully engaged in the distribution and promotion of several major new game launches, and the release schedule and market performance of upcoming game products are anticipated to affect the growth of our related business revenue.
Reflecting on the past year, HUYA has achieved significant progress in its commercialization transformation, with non-live streaming business revenue constituting over 20% of total revenue for the year. Moving into 2025, we will continue to advance our commercialization efforts, aiming to further increase revenues from game-related services and advertising. In addition to refining our existing operations, we also plan to strengthen partnerships with various game developers and platforms and explore exclusive distribution models to create more opportunities for the sustainable development of our business.
Thank you. And our next question comes from Ritchie Sun from HSBC. Ritchie, please go ahead.
Thank you, management, for addressing my questions. We have observed the recent rise of DeepSeek and AI in general. How does this influence our product monetization strategy, cost structure, and other related aspects? Thank you.
HUYA is a technology-driven entertainment platform that is actively integrating various AI large model solutions. We are utilizing the platform's technical resources to enhance game live streaming content and data, aiming to create long-term value for HUYA in live streaming, e-sports, and other areas, which could lead to future revenue and profit growth. In February, the HUYA Live app integrated the full version of the DeepSeek-R1 model and launched an AI assistant to help users efficiently search for popular events, topics, and engaging live streaming rooms. This assistant will also support features like game guides and real-time interactions during live streams. We are also exploring how AIGC can improve live streaming content and user services. Currently, we are developing an AI-powered streaming assistant to help broadcasters plan live streaming scripts more effectively, support data-driven operations, respond to viewer interactions in real-time, and enhance user experiences.
Additionally, by leveraging the reasoning and multimodal capabilities of AI large models and integrating them with the unique commentary styles of our platform's streamers, we aim to create a range of stylized AI-powered virtual streamers that will enrich event content and offer more differentiated gaming experiences in areas like event commentary and match analysis. Our early testing indicates that the streamer assistant has significantly boosted viewer activity and gift revenue from interactions. We are also making progress in creating virtual streamer styles and real-time reasoning outputs of large models and will continue to optimize these aspects. Looking ahead, HUYA plans to deepen its AI + Live Streaming strategy by empowering broadcasters with AI large models to increase their efficiency, create new AI IP models, and design more stylized virtual streamers, delivering a fresh experience for users and content creators.
We will utilize AI large models across the entire content production, distribution, and consumption cycle, employing intelligent tools to energize the live streaming creator ecosystem and transition the industry from being human-driven to technology-driven.
Thank you. Now we will take our last question today from Yiwen Zhang from China Renaissance. Yiwen, please go ahead.
Thank you for taking my questions. Can you discuss the trend in our live streaming revenue and any additional rates? Also, could you touch on the overall profitability margin trend of our group? Thank you.
In the fourth quarter, our live streaming revenue was still affected by the broader economic and industry conditions, with users not yet ready to spend on gifting. We are taking a cautious operational approach, leading to persistently weak live streaming revenue. Typically, the first quarter is a slow period for the live streaming sector. During the Spring Festival holiday and the surrounding timeframe, there are fewer broadcasters going live, and with a lack of related activities this quarter, we anticipate a seasonal decline in live streaming revenue compared to the fourth quarter of last year. However, we have observed that some streamers are gradually returning to live streaming after the Spring Festival. Regarding profitability, costs rose sequentially in the fourth quarter due to more large-scale licensed and self-organized e-sports events. Nevertheless, when compared to the same period last year, content costs have significantly decreased, thanks to effective savings in licensing fees for events such as LOL Worlds 2024 and a more efficient streamer cost structure.
Consequently, our gross margin for the fourth quarter reached 11.4%, slightly lower than in the third quarter but up by 10.4% compared to the fourth quarter of 2023. In terms of operating expenses, we maintained a cautious spending strategy, which contributed to a year-over-year improvement in our overall operating performance in the fourth quarter, with a non-GAAP net income turning profitable compared to the same period last year. Looking ahead, our future profitability will depend on changes in overall revenue scale. While we plan to moderately increase investments in self-produced content, we also see potential for further improvement in licensed content costs and streamer cost structures, and we will continue to strictly manage operating expenses. Importantly, due to our proactive shareholder return policy, which has reduced our cash surplus, along with declining market interest rates, we expect interest income this year to be significantly lower than in 2024. Therefore, our bottom line performance this year will largely hinge on improvements in the company’s operating results.
Okay. Thank you. 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 or Piacente Financial Communications. This concludes today's call, and we look forward to speaking with you again next quarter. Thank you.