HUYA Inc.

Hello, ladies and gentlemen. Thank you for standing by for the 2020 Third Quarter Earnings Conference Call for Huya Inc. At this time, all participants are in a listen-only mode. Today's conference call is being recorded. I'll now turn the call over to Ms. Dana Chen, Company Investor Relations. Please go ahead.

Hello, everyone, and welcome to Huya's 2020 Third Quarter Earnings Conference Call. 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 in a few hours. Participants on today's call will be Mr. Long Jie Dong, Chief Executive Officer of Huya, and Ms. Catherine Liu, Chief Financial Officer. 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 Security Litigation Reform Act of 1995, forward-looking statements involving hearing risks and uncertainties. As such, the company's results may be materially different from the views expressed today. Further information regarding these and other risks and uncertainties is included in the company's prospectus and other public filings as well as the U.S. SEC. The company does not assume any obligation to update any forward-looking statements except as required under accessible law. So please also note that we have earnings fresh release and this conference call includes discussions of unnotated gap financial information as well as unnotated non-gap financial measures. where press release contains the reconciliation of the unaudited non-GAAP measures to the unaudited most directly comparable GAAP measures. I will now turn the call over to our CEO, Mr. Longjie Dong. Please go ahead.

Hello, everyone. Thank you for joining our conference call today. We achieved solid results this quarter, and excitingly, the investments we have made in content, products, and the services are continuing to drive the growth of Huya's businesses and user communities. In Q3, our total revenues grew by 24% year-over-year to RMB 2.8 billion, while our gross profit increased by 53% year-over-year to RMB 621 million. keeping us in a strong position to fund our future growth and capture the opportunities ahead. Despite a relatively shorter summer vacation period due to the impact of COVID-19 in China, the average MAUs of Huya life still grew to 173 million in Q3, a net addition of over 4 million from last quarter and up 18% year-over-year. Additionally, an average of over 25 million users each month during the quarter watched Huya's livestreaming content across Tencent and other third-party platforms, nearly double last quarter. All together, we provided our compelling content to close to an average of 200 million users every month in Q3. The growth was mostly driven by the increase in esports tournaments, as well as a deeper cooperation with Tencent. Our live streaming content was broadcasted in Tencent, whereas products such as QQ Mobile, WeGame, WeChat, Game Center, and LOL Game. Specifically, our live streaming content related to the QQ Celebrity All-Star Tournament attracted a large number of users to watch in QQ Mobile. Our mobile MLs of real life reached 74 percent, a million in Q3, representing a year-over-year growth of 16 percent, but slightly lower than last quarter because of the relatively shorter summer vacation period and a higher base for the first half of the year due to the impact of COVID-19. Our Wuya Live app's next month retention rate continuously stabilized at over 70% in Q3. Our success in delivering solid financial results and continuous user growth underscores our capabilities in driven monetization and user engagement. Our thriving community reflects our team's continuous efforts, along with deeper cooperation with Tencent, to enrich content and make our products and services more innovative and attractive, delivering even greater value to ensure a supervised user experience. In September, we upgraded our VR live app to the 8.0 version, featuring novel functions such as live events, instant playback, on-the-fly video clip generation and sharing, smart AI assistance, and a real-time monitoring panel. functions, users are allowed to choose any specific time interval within a live streaming event to replay. Mark the eSports event highlights and generate video clips from live streams to share with friends. Furthermore, there is a smart assistant on top of the app featuring AI-enabled interactions to enhance user viewing experience. Meanwhile, our technology cooperation with Tencent also allowed us to create a real-time monitoring panel for esports tournament broadcasting. With this new panel, our hardcore viewers could obtain more information on the tournament and better analyze the game playing status. We believe these upgrades represent an exciting opportunity to innovate, provide new experience for our users, and grow our user base. In October, we formed a joint lab with the intent to carry out joint technology efforts in various fields, such as AI security applications. irregular activity detection, data security, and data annotation. We believe we can work together to improve AI-driven compliance on the platform and improve the health of the industry. Since we launched our open platform for third-party application developers, in November last year, we have empowered a growing number of third-party developers to develop tools to be used in Huya's products, mainly to improve interactions between broadcasters and users. It's been almost a year now, and we are glad that there have been around 160 tools developed and over 300,000 broadcasters have used these tools by end of Q3. We are confident our open platform will develop the interactions between broadcasters and the users with innovative and dynamic features. During the most recent LOL Awards, 2020, that was concluded end of October, we introduced new features and functions to help make the S10 broadcasting on Huya more innovative, immersive, and game-integrated. In addition to our upgraded 8.0 app, we also provide users high performance definition and latency-free viewing experience in 4K. We introduced a virtual broadcaster fully to interact with real-person broadcasters and viewers to improve experience. We also launched a Tencent-supported S10 live viewer passport. Having this viewer Passport, users of Huya will be able to gain awarded badges, game accessory items, or game skins within LOL once they have completed certain engagement activities during tournament viewing on Huya, such as sending bullet checks, virtual gifting, or viewing time. Lastly, I would like to share some of my thoughts on the ongoing merger with Douyu. On October 12, 2020, we announced with Douyu that we are entered into a merger agreement where we plan to acquire all the outstanding shares of Douyu through a stock-for-stock merger. Once the merger is effective, each ordinary share of Douyu will be exchanged for 7.3 class A ordinary shares of Huya, and each Douyu ADS will be exchanged for 0.73 Huya ADS. If the merger is completed, the shareholders of Huya and Douyu will each hold approximately 50% of the shares of the combined company on a fully diluted basis. Concurrent with the merger, Douyu will buy Tangian Esports from Tencent for $500 million. We believe the potential by nation will allow us to build on our complementary strengths, achieve significant synergies, and create more value. By joining together with Douyu and Kenji's professional team, we are solidifying our dedication to the pursuit of constructing a comprehensive online guest for game and esports-related content. With that, I will now turn the call over to our CFO, Katherine, to share her insights on the operating metrics and the financial details. Katherine, please go ahead.