HUYA Inc.

Hello, ladies and gentlemen. Thank you for standing by for the second quarter 2022 earnings conference call for Huya Inc. At this time, all participants are in listen-only mode. Today's conference call is being recorded. I'll now turn the call over to Ms. Han Yu Liu, Company Investor Relations. Please go ahead.

Hello, everyone, and welcome to Huya's second quarter 2022 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. Rongjie Dong, Chief Executive Officer of Huya, and Ms. Ashley Wu, Vice President of Finance. 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 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 except as required on the applicable law. Please also know that WHO-YA's earnings press release and this conference call include discussions of unaudited gap financial information as well as unaudited non-gap financial measures. WHO-YA's press release contains a reconciliation of the unaudited non-gap measures to the unaudited most direct comparable gap measures. I will now turn the call over to our CEO, Mr. Rongjie Dong. Please go ahead.

Hello, everyone. Thank you for joining our conference call today. Our 2022 second quarter was largely conditioned by the turbulence in the macro and regulatory environment. We mentioned in our previous earnings that the new domestic live streaming regulations, which were introduced in May, mainly focused on tipping behavior and protection for mirrors. Accordingly, we adjusted the associated products and operations on our platform, and we will continue to closely follow policy updates and make timely adjustments to ensure compliance. The prudent adjustments we undertook in Q2 carried a very immediate impact to certain facets of our business. And together with the macro headwinds, Q2 domestic live streaming revenue decreased by many single digits on a quarter-over-quarter basis. Despite the impact, we still managed to grow our user base as well as achieve approximately RMB 2.3 billion in revenues and approximately RMB 6 million in non-GAAP net income in the second quarter of 2022. We will work to mitigate the effect on our business by dynamically adjusting our monetization strategies across our platform's operations. Essentially, our strong foundation and business fundamentals will carry us through the long term. We are confident we have leverage in our business as we scale further in the game live streaming industry through consistent investments in quality content and innovative products while continuing to provide attractive game, esports, and entertainment content that satisfies the core needs of our users. Our business is a resilient when which we expect to rebound and prosper as market conditions stabilize. With that in mind, we remain focused on future opportunities. In spite of all the external factors, our Q2 results market Another quarter of user expansion. We sustained growth in mobile MLs and instituted formative measures across our product upgrades and game industry value chain integration. Now, let me walk you through some of our key metrics, starting with user growth. Huya Live's mobile emails reached 83.6 million in the second quarter, representing encouraging growth of 7.7% from the year-over-year period. This growth was mainly due to the continuous enrichment of quality content as well as product upgrades and optimization. which leveled up our platform's user appeal. Additionally, it further highlights both the necessity and efficiency of our content investment strategies and product improvements. User stickiness also improved, with total user time spent on our platform in the quarter growing by about percent year-over-year. Our Huya Life efforts next month's user retention rate remained above 70 percent in addition to our growing active user base. With respect to product upgrades, we have found positive strides in introducing product innovations for our users. Our newest version 10.0 of Huya Live app further integrates community features and enhances the user interaction experience. More specifically, version 10.0 of Huya Live adds a social community called Tiger ChatChat which features broad-based content ranging from videos, images, and text posts to game Q&A strategies and events. The community also serves as a discussion board between users and their favorite broadcasters, promoting better interaction between broadcasters and their fans. to cultivate deeper bonds during non-streaming hours. Engaged in community interactions and activities, users are more motivated to produce high-quality UGC in the video category through our algorithm-driven recommendations and operations. Furthermore, segments for different game titles and tournaments have also been created, and official accounts operated by game studios can join the community to provide the latest game information and strategies. In addition, based on the interactive one-click to join broadcasters' gameplay, feature, which is available in our live streaming channels. We launched a competition function called Community Contest, enabling users to participate in a game competition with peers. We are initiating battles in the matching system with just one click. Here, users can win prizes offered by the platform and also have the chance to compete with celebrity game broadcasters. This new feature is another testament to our ability to recognize and fulfill user needs.