HUYA Inc.

and thank you for standing by. Welcome to Huya's Third Quarter 2024 earnings webinar. I'm Han Yu Liu from the Huya's 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 .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. Jun Honghua, our acting co-CEO and the senior vice president, and Mr. Raymond Peng Lei, our acting co-CEO and CFO. 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 on the safe harbor provisions of the US 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 US 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 note that Huya's earnings press release and this conference call includes discussions of unaudited, gap financial information as well as unaudited, non-gap financial measures. Huya's press release contains a reconciliation of the unaudited, non-gap measures to the unaudited, most directly comparable gap measures. With that, I'm pleased to turn the call over to our co-CEO and SVP, Mr. Guan. Please go ahead.

Okay. Hello, everyone. Thank you for joining our earning conference today. We were pleased to make significant strides in developing our game-related services business during the third quarter. Game-related service advertising and other revenues reached a new record high, contributing .7% of our total net revenues. To drive this progress, we continue to enhance content and upgrade product features on our platform to improve users' experience while exploring new partnerships and business opportunities to expand our user reach and unlock our growth potential. Moreover, despite the ongoing challenges in the macroeconomic and industry environment, we maintain a relatively stable -over-year operating performance and achieve a non-gap net income of RMB 78 million. Now, let's take a detailed look at our recent operational and strategic achievements. First, our users' engagement across our high-quality user base remain stable during the third quarter, with mobile MAUS improving slightly sequentially to 84 million. While we maintain our discipline approach to marketing and promotion spending, we also enrich our content and service offerings as well as product features to reinforce our users' engagement. Furthermore, we continue to strengthen our cooperation with various content platforms, joining hands with these partners to conduct cross-platform streaming and co-produce premium professional content. We also selectively distributed our comparing game live streaming and video content to product lines within Tencent's ecosystem and other content channels. Thanks to these initiatives, we estimate that we ask content reach a total of over 140 million users in September, taking into account other platforms' user as well as our own mobile users. We believe our productive platform collaborations will continue to broaden our reach among gamer users, empowering us to explore more commercialization opportunities around game-related services and live streaming. Moving on to game-related services, our game distribution, in-game item sales, and game advertising business continue to grow robustly. Revenues from game-related services, advertising, and others reach RMB 410.2 million for the third quarter of 2024, up to by .3% year over year and .9% quarter over quarter. For game distribution, we work closely with game studios on new game release, version updates, and related operational activities and incentivize our broadcasters to participate in game distribution. These efforts effectively promoted our growth this summer, with total growth received, generated through Huya's game distribution channel in the third quarter, rising to more than 20 times that of the year ago period. The quarter's top titles included Honor of Kings, DemiGauss, and Semidevil Mobile, DF Mobile, QQ Speed Mobile, and Peacekeeper Elite. We are confident of further developing our game distribution service as we expand our reach in the vast game market by offering distribution for wider range of titles, including both mobile and PC games, and collaborating with additional game studios. What's more, we plan to implement targeted initiatives for broadcasters to enable them to provide more tailored user services and drive users' interest in exploring and engaging with the games distributed via our platform. We have also strengthened our collaborations with major game titles in game item sales, broadening the scope of our coverage in this area. In particular, we were promoting exclusive or customized in-game items for our platform and broadcasters, and holding sales events for initial release of new in-game items. For instance, during the third quarter, we held a crossfire workshop offering Fuyar exclusive weapon skins, as well as an exclusive initial release of co-branded outfit skins featuring a well-known broadcaster on our platform. So, on that broadcaster's channel, both initiatives garnered great interest from our users. Notably, the total value of the co-branded outfit skins sold on the broadcaster's channel during this initial release activity exceeded RMB 50 million, validating the growth potential of our in-game item sales business. In terms of game advertising, we responded to the summer's increasing game marketing demand with comparing new game launch promotions and anniversary events for the existing games. In the third quarter, we collaborated with a number of game companies promoting popular games such as Arena Breakout, World of Warcraft, and Neruka Mobile. Going forward, we will continue to diversify our advertiser base and enhance our game promotion and marketing capabilities so we are streamer-created content and in-house produce events. Moving on to our professional content enrichment efforts on our platform, including licensed and in-house content. In the third quarter, we broadcasted over 90 licensed e-sports tournaments. The LPL, KPL, Valorant Champions, and e-sports World Cup were among the most watched events during the quarter. In addition to the tournament of more proven e-sports game titles, which continued to attract user attention, Valorant's tournaments have become increasingly popular since the game's launch in China last year. This year's Valorant Champions increased its viewership by approximately 160% compared to the previous edition, further boosting the popularity of the game's content on our platform. We also broadcasted the recently concluded LOL Worlds 2024, one of the year's most important e-sports events. We prepare comprehensively for LOL Worlds and we're pleased to see our hard work drive positive outcomes. We optimized our tournament broadcast audio and video technology for the event, providing a variety of HDR video quality options to suit users' various devices and network environments, which brought our users industry-leading image quality effects and viewing experiences. We also introduced a competition data analysis system for this event that instantly captured each data point and converted the data into a visual presentation, allowing viewers to see real-time changes in teams and players with win-wraith. While they watched the competition. Also, in addition to our official streams, popular broadcasters and professional players on our platform created secondary live commentary for the event, providing our users with more diverse and entertaining tournament viewing experience unique to Huya. Based on our initial statistics, we maintained our leading market share of this event's viewership and further increased our market share year over year, significantly ahead of other live streaming platforms. In terms of in-house content, we broadcasted over 20 self-organized e-sports tournaments and entertainment PGC shows in the third quarter. For example, we successfully hosted the HOK Streamer League in collaboration with two other major live streaming platforms. To review across platforms, we also continued our village games series for community participation and hosted the Zhou Shan Village Games for Honor of Kings. Additionally, we collaborated with well-known TV program to produce Streamer Rush Forward, a reality show featuring our game and entertainment broadcasters, which attracted strong user interest. For competing to the end, our interactive game play variety show that integrates game promotion and entertainment content. We covered more hot and new games in this quarter, such as HOK's new mod, Black Mists Wukong Naruto Mobile. Given that our in-house content generally delivers good ROI performance, we are strengthening our investment in this area to create more influential and commercially valuable event IPs. As our range of in-house content expands and become more diverse, we will also focus on scheduling these programs to seamlessly integrate with our license events to better complement and enrich our professional content library. For example, following the conclusion of LOL World 2084, we commenced season two of our LOL Legend Cup, building on the success of its inaugural season in May. Finally, we continue to explore innovative features to engage users and enhance interaction while differentiating Huyas live streaming experiences, including product cooperation with leading game titles. For example, in the third quarter, Huyas became the first platform in the industry to integrate of Honor of Kings bullet-chatting gameplay mode in live broadcast, adding both native feature and platform exclusive modification developed by Huyas using Honor of Kings tools. In this mode, viewers can activate special skill cards that impact the live game by sending bullet chats or visual GIFs to the channel, creating unique gameplay situation that drive more interesting live streaming content. Given these features, promise we will continue to leverage Huyas expertise in creating engaging game live streaming content to bring entertaining exclusive features to our streamer and users. Looking ahead, we will remain focused on fostering our in-house content initiatives. We are especially excited about season two of our self-produced Legend Cup and look forward to amplifying this series' success and influence. We will also deepen collaboration with content creators and industry partners to extend our content reach beyond the Huyas platform and explore broader cooperation with more game developers and publishers to expand our presence in the game market. We are confident these efforts will unleash new commercialization opportunities propelling our long-term business development. With that, I will now turn the call over to our acting co-CEO and CFO Raymond Lei, who has been with us for a few months. We will share more, he will share more details on our results. Raymond, please go ahead.

Thank you, Vincent. And hello everyone. I'm delighted to be part of Huyas management team and to speak with you for the first time. I'll start with an overview of our financial performance. Our total net revenues will remain be 1.54 billion in the third quarter of 2024. The soft macro and the industrial environment which impacted users' willingness to pay for live streaming continue to weigh on our live streaming revenues. Meanwhile, we proactively adjusted our business structure to support our strategic transformation and the maintained prudent operations. Game related services, advertising and other businesses showed strong momentum and made a more meaningful contribution to our top line, increasing by .3% year over year and .9% quarter over quarter, primarily due to increased revenue from game distribution and advertising services and the in-game item sales. We are pleased to see more users paying for our game related services, driving growth of .5% year over year in paying users to reach 4.6 million in the third quarter. Also, our continuous efforts to improve operational efficiency paid off with total operating expenses decreasing by .9% year over year. I'd also like to review our recent progress in optimizing our content. We continue to refine our street procurement strategy for licensed content, striving for better commercial terms. As we disclosed in September, we entered into a second supplemental license agreement for a series of League of Legends matches that decreased the license fee, which we believe will help us further reduce our overall e-sports license costs this year and in 2025. Let's move on to more details of our Q3 financial results. Our total net revenues will remain be 1.54 billion for Q3, of which live streaming revenues will remain be 1.13 billion and the game related services advertising and other business, other revenues will remain be 410 million compared to its total net revenue of remaining be 1.66 billion for the same period last year. Cost of revenues decreased by 6% year over year to remain be 1.33 billion for Q3, primarily due to decreased revenue sharing fees and the content costs, as well as bandwidth and the server custody fees. Revenue sharing fees and the content costs decreased by 5% year over year to remain be 1.17 billion for Q3, primarily due to decreased live streaming revenue sharing fees associated with the decline in live streaming revenues, as well as lower costs relate to licensed e-sports contents. Partially offset by increased game related services, advertising and other revenue sharing fees. BanWiS and the server custody fees decreased by 26% year over year to remain be 61 million for Q3, primarily due to continued technology and the management enhancement efforts, as well as favorable pricing terms. Gross profit was remaining be 204 million for Q3 compared with remaining be 243 million for the same period last year. Gross margin was .2% for Q3 compared with .6% for the same period last year. The change was primarily attributable to increased revenue sharing fees and the content costs as a percentage of total net revenues, which rose mainly because the decreasing live streaming revenues outpaced the decrease in content costs. Executing share based compensation expenses, non-gapped gross profit was remaining be 207 million and the non-gapped gross margin was .5% for Q3. Research and development expenses decreased by 12% year over year to remain be 126 million for Q3, primarily due to decreased personal related expenses and the share based compensation expenses. Sales and marketing expenses decreased by 30% year over year to remain be 73 million for Q3, primarily due to decreased marketing and promotion fees as well as personal related expenses. General and administrative expenses decreased by 25% year over year to remain be 50 million for Q3, primarily due to decreased professional service fees and personal related expenses. Art income was remain be 13 million for Q3 compared with remain be 40 million for the same period last year, primarily due to realized damages received in the third quarter of 2023 from a favorable outcome in a broadcaster related lawsuit and lower government subsidies. As a result, operating loss was stable at remain be 32 million for Q3 compared with the same period last year. Excluding share based compensation expenses and the optimization of intangible assets from business acquisition, non-gapped operating loss was remain be 13 million for Q3 compared with remain be 15 million for the same period last year. Non-gapped operating margin was negative .9% for Q3. Interest income was remain be 97 million for Q3 compared with remain be 128 million for the same period last year, which was primarily attributable to the special cash dividends paid in May and October 2024. Net income attributable to Huya-Ying was remain be 24 million for Q3 compared with remain be 11 million for the same period last year. Excluding share based compensation expenses impair main loss of investments and the optimization of intangible assets from business acquisitions. Net of income taxes, non-gapped net profit attributable to Huya-Ying was remain be 78 million for Q3 compared with remain be 107 million for the same period last year. Non-gapped net margin was .1% for Q3. Diluted net income per ADS was remain be 0.1 for Q3. Non-gapped diluted net income per ADS was remain be 0.34 for Q3. As of September 30, 2024, the company had a cash and the cash equivalence, short-term deposits, short-term investments and the long-term deposit of remain be 8.1 billion compared with remain be 8.2 billion as of June 30, 2024. Finally, an update on our shareholder returns. As of the end of September, 2024, we had repurchased US dollar 61.1 million of Huya shares through our share repurchase program. The two special cash dividends we paid this year also returned an aggregate value of approximately US dollar 400 million to our shareholders. We remain committed to consolidating our financial and the operating performance and the creating more value for shareholders. With that, I'd like to open the call to your questions.

Thank you, Raymond. And hello everyone. If you are dialing in by phone, please press five to ask a question, then press six to unmute yourself. If you're accessing the call from Tencent meeting or Vogue meeting applications, please click right hand button at the bottom left. For the benefit of all participants on today's call, if you wish to ask your question to management in Chinese, please immediately repeat your question in English. Today's first question comes from Nelson Chong from Citibank. Nelson, your line is open. Please go ahead.

Hello, thank you, President Huang, President Lei and President Han Yu. This is my question. My question is about the problem of our game-related service business. I'd like to ask about some of the game-related business we've made in the last quarter. How is the progress? And in the fourth quarter, are there any new developments that we can share? And in the next 25 years, how do we see the future development of our business? And in the next 25 years, how do we maintain the game-related business and the advantages of Huya on this platform? So let me translate the question myself. So thanks, management, for taking my question. My question is related to the game-related services. Wondering if management can share the latest update on the game-related services in the first quarter and any new updates in fourth quarter right now? And how do we perceive the upcoming development plans for this business into 2025? And what would be the comparative advantage of Huya? Thank you.

Okay, thank you for your question, Nelson. I'll answer this question. First of all, we can see that in the third quarter, our game-related services continue to grow rapidly. Game-related services, advertisements, and other business income reached 4.1 billion. The same growth, 209.3%. The return on growth, 32.9%. The proportion of our entire income also reached a new height, reaching 26.7%.

In the third quarter, our game-related business contributed, continued to achieve rapid growth with revenues from game-related services, advertising, and others reaching RMB 410 million, an increase of .3% year over year and .9% quarter over quarter. This accounted for a record high percentage of our total revenue at 26.7%.

In terms of game distribution, we and game manufacturers are working on new game online version updates and related operations. We have also been working very closely and have encouraged the streamers to participate in our game distribution service. Currently, distribution revenue is the largest part of our game-related service revenue. I would like to point out that our game distribution revenue is mainly confirmed after the distribution of revenue which is based on the amount of revenue. The actual business flow size and growth amount are actually larger. In the third quarter, the total flow of games distributed through the Huyia branch was more than 20 times that of last year. Next, we plan to continue to provide more games and distribution services, including mobile games, end games, new games, and games that have been released. We will also further enhance our game manufacturers' cooperation. We also plan to launch more targeted operations to promote streamers to provide more customized user services to improve users' interest and participation in the Huyia platform for game distribution.

With regard to game distribution, we closely collaborated with game developers on new game launches, version updates, and related operational activities, incentivizing broadcasters to participate in game distribution services. But currently, the distribution revenue is the largest portion of our game-related services revenue. It is worth noting that distribution revenue is recognized on a net basis after the revenue sharing with the game developers. Therefore, the actual business volume and growth amount are significantly larger. In the third quarter, the total gross receipts from games distributed through Huyia's distribution channel increased to over 20 times that of the same period last year. And going forward, we plan to continue providing distribution services for more games, including mobile and PC games, new and existing titles, and deepen our collaboration with additional game developers. Furthermore, we plan targeted initiatives for broadcasters to encourage them to provide more customized user services, enhancing users' interest in exploring and engaging with the games distributed through our platform.

The total value of the game skin purchased in the stream of the streamer is over 50 million yuan. This also proves the potential of Huyia's development in the prop sales business. In terms of game advertising, we also launched a promotion campaign for new games and the current game anniversary campaign through the higher-level game marketing needs and enhanced our game promotion campaign and marketing capabilities to continue to expand our advertising customer group.

We have also strengthened our cooperation with major games and the in-game item sales, particularly by launching exclusive and customized in-game items for our platform and broadcasters, as well as promoting initial release events for these items. For instance, in the third quarter, we held a crossfire event offering Huyia exclusive game skins. We also had an exclusive initial release of co-branded game skins featuring a well-known broadcaster sold in that broadcaster's stream. Both initiatives garnered enthusiastic response from our users, especially during the initial release event where the total value of co-branded skins sold existed 50 million yuan and validating the growth potential of our in-game item sales business. And in terms of game advertising, we responded to the increased marketing demand during the summer with promotional activities for new game launches and anniversary events for existing games, enhancing our game promotion and marketing capabilities through streamer-created and -house-produced content while continuing to expand our advertiser base.

In terms of the game users of Huyia, we have a higher potential for commercial value. On the other hand, our broadcasters played a very positive role in promoting the development of game-related services. These broadcasters knew the user's needs for the game and the broadcasters were able to participate in the income division of the game. This also helped to achieve multiple benefits. Third, Huyia has established various long-term cooperation relationships with game manufacturers. This also laid the solid foundation for further expansion of game distribution, item sales, and other more in-depth cooperation. In addition, we are currently strengthening cooperation and cooperation with multiple content platforms and selectively distribute the game live and video content on Huyia to many products and other content platforms in Tencent's ecosystem. According to our estimates, in September this year, reached in the Huyia content ecosystem exceeded 1.4 billion, including Huyia's mobile users and other platform users. We also expect that this scale will continue to grow. As we work with effective platforms to cover more game users, we can also explore more business opportunities.

Overall, we believe Huyia has several key advantages in the continued development of game-related services. First, we have a high-quality gaming user base on our platform, where the average revenue per user, or up all, for several games we distribute is higher than the overall gaming market, indicating the commercial value potential for Huyia's gaming users. Second, our broadcasters play an active role in promoting game-related services, understanding users' gaming needs and participating in revenue sharing, which helps achieve mutual benefits. And third, Huyia has established long-term partnerships with various game developers through our live-stream business, laying down a good foundation for deeper collaboration on game distribution and in-game item sales. Additionally, we are strengthening our collaboration with multiple content platforms and selectively distributing Huyia's game live streams and video content across Tencent ecosystem and other content platforms. We estimated that as of September this year, Huyia's content ecosystem reached over 140 million users, including our own mobile users and those from other platforms. And we expect the scale to continue to grow. As we effectively collaborate to cover a broader game audience, we can explore more commercialization opportunities.

And finally, I would like to mention that due to the close connection between game distribution and game revenue, as we gradually expand our business, revenue will be affected by the seasonal impact For example, the game industry is forgotten in the summer. There may be some changes in the ecosystem. According to the public statistics, the sales revenue of the entire game market in China has exceeded 3 billion in the last two years. Overall, Huyia is still very large in terms of the entire game market. We will continue to explore and work with more game manufacturers to develop a variety of cooperation to achieve the development of our business. Finally,

I want to mention that since the revenue from game-related services, especially from distribution, is closely linked to gaming revenue itself, as we gradually expand this business, its income may be somewhat affected by the seasonal nature of the gaming industry. For example, peak seasons occur during holidays and fluctuations can vary between quarters. According to public statistics, the domestic gaming market sales revenue exceeded RMB 300 billion in 2023. And overall, the market space for Huyia is still enormous. We will continue to explore diverse forms of cooperation with more game developers to achieve business growth.

Okay, thank you. And our next question comes from Thomas Chung from Jefferies. Hi, Thomas, please go ahead.

Okay, thank you, Mr. Kuan. This is my question. My question is about our company's live streaming business. How do you see the sales trend of our company's live streaming business?

Okay, thank you for your question, Thomas. I will answer this question. Okay, I will continue. Our live streaming revenue in the third quarter is indeed affected by the current economic and industrial environment. The desire to reward users is still weaker. At the same time, in the process of the company's strategic transformation, we are actively adjusting the structure of the entire business and maintaining a more efficient operating strategy. At the same time, we can see that the revenue related to game advertising is also growing rapidly. From the behavior of users, the participation of the core users of the live streaming business is still very stable.

In the third quarter, our live streaming revenue continues to be influenced by the current macroeconomic and industrial environment, with users' willingness to spend on tipping remained weak. Meanwhile, during our strategic transformation, we proactively adjusted our business structure and maintained a prudent operational strategy. However, we have also observed rapid growth in revenues related to game advertising. From user behavior, we see that the engagement of our core users in live streaming remained relatively stable.

The impact of the external environment is expected to be under pressure in the short term of live streaming revenue. We believe that with the improvement of the external environment in the future, the business will still have a certain space to bounce. On the one hand, we will also closely monitor the market situation to make adjustments to business operations in time. At the same time, we will continue to pay attention to the live streaming content and optimize the live streaming and user ecology. We will also continue to improve technology and products to create a differentiated live streaming experience. We hope to maintain and improve the activity of users to prepare for a more diversified business model in the future. In the long term, we expect that with the expansion of game-related services, advertising and other revenue scales, the overall business will achieve more stable development

in the future. We certainly expect live streaming revenue to face short-term pressure. However, we believe that the external economic environment improve will happen in the future, and the business will still have some room for flexibility. On one hand, we will closely monitor market conditions to adjust our operational activities accordingly. On the other hand, we will continue to invest in live streaming content, optimize the broadcaster and user ecosystem, and constantly improve the technology and products to create a differentiated OUYA live streaming experience. We hope to maintain and enhance user engagement to prepare for a more diversified commercialization forms in the future. In the long run, we expect that with the expansion of game-related services, advertising and other revenue sales, the overall business will achieve relatively stable development.

Thank you. Now we will take the next question. It's from Lei Zhang from Bank of America. Hi, Lei. Please go ahead.

Hi, management. Good evening. Thank you for answering my question. My question is mainly about profit. Can you share with us the main driving factors of Q3's overall profit margin, and how we should look at the future profit margin trend? I will translate it for myself. Thank you for taking my question. Can you give us more color on the driver of Q3's margin change, and how should we look at our margin trend going forward? Thank you.

I will answer this question. Thank you, Lei Zhang. The profit margin of OUYA in the third quarter is 13.2%. Compared to the second quarter, it has dropped slightly in the same period as last year. In this quarter, we have continued to optimize the company's content cost, and the cost of the main stream signing has dropped. In terms of the copyright, we continue to improve the strict copyright content purchase strategy, and strive for better commercial conditions. The copyright content cost is contractual. However, the content cost of this quarter is not enough to offset the impact of the decline in live streaming revenue. In terms of operating costs, through continuous efforts to improve the efficiency of operation, we have improved the control of sales costs, and the total operating costs have been reduced by 20.9%. Therefore, the overall operating performance is more stable than before, and the net profit of GAP has reached 78 million yuan.

In the third quarter, our gross profit margin was 13.2%, slightly down from the second quarter and the same period of last year. This quarter, we continue to optimize our content costs, reducing broadcaster signing costs year over year, and we further improved our strict licensed content procurement strategy to secure better commercial terms, which saved unlicensed content costs. However, the cost savings this quarter were still insufficient to offset the impact of the declining of live streaming revenue. In terms of operating expenses, through continued efforts to enhance operational efficiency, particularly in better controlling our sales expenses, our total operating expenses decreased by .9% year over year. Therefore, overall operational performance remained relatively stable, with a non-GAP net profit of 78 million yuan.

We have signed the second supplementary agreement to reduce the related authorization costs. I believe this will help to further optimize the overall cost of the 2025 copyright e-sports competition. But in terms of the quarter, due to the large S14 competition, the copyright cost of the competition is expected to be higher than the third quarter. And for the self-produced content of the investment return performance, we plan to strengthen our investment in this area, to create more size IPs with more influence and commercial value. For example, on the basis that the first Heroic League Legend Cup was successfully won, we will also hold the second season

of the Legend Cup this month. Regarding the future profit trends, we believe the following factors will be significant. On one hand, we need to consider changes in overall revenue scale, including the seasonal fluctuations in different businesses. On the other hand, we'll continue to adjust our cost structure to enhance the collaboration between broadcaster costs and revenue. On the professional content side, in September this year, we signed a second supplemental licensing agreement for a series of legal legend matches, which reduced related licensing fees. We believe that this will help further optimize overall licensed e-sports events costs in the year, in this year and in 2025. However, quarter to quarter, since the major S14 event will mainly take place in the fourth quarter, the event licensing costs in the fourth quarter are expected to be higher than the third quarter. For self-produced content with good investment returns, we plan to strengthen investment in this area to create more influential and commercially valuable event IPs, such as holding the second season of the League of Legends Cup in this month, building on the success we have in its inauguration season.

Nevertheless,

we expect that the gross profit margin in the fourth quarter will show a relatively noticeable improvement compared to the low base from the same period last year. Therefore, we anticipate that the non-GAAP results for Q4 and this entire year will also show a relatively noticeable -over-year growth.

Thank you. Now we will take our last question today from Cheng Haoli from CICC. Cheng Hao, please go ahead.

Thank you, Manager Chen, for answering my question. I have a very simple question, I would like to ask about the company's current strategy and shareholder return plan. Can you please update us? OK, I will translate for myself. Hi, Manager Chen, thanks for taking my question and congratulations on another solid quarter. My question is about our shareholder return strategy. Could Manager Chen help update our capital allocation strategy and shareholder return plan in the future? Thank you.

Thank you, Cheng Hao. As of late September this year, the shareholder has a cash and other household items, including savings, worth 8.1 billion yuan, about 11.5 billion dollars. Compared to late June, the capital scale is relatively stable, some of which are affected by the change in the exchange rate of dollars. We have issued a special cash share of 2.5 billion dollars in October. Currently, the company still has a cash and savings worth about 9 billion dollars. As of

the end of September, Kuya held approximately RMB 8.1 billion yuan, about US dollars 1.15 billion, in cash and cash equivalents, which remained stable compared to the end of June. This is partially influenced by the fluctuations in the US dollar exchange rate. In October, we paid a special cash dividend of US dollar 215 million. Currently, the company still has approximately 900 million US dollars in cash and cash deposits, with about half of it held overseas, and the company has no debt.

The cash use strategy is similar to what we mentioned at the last press conference. Currently, we have sufficient cash to provide funds for daily operations and business development. At the same time as we consolidate the financial fundamentals, the company will continue to flow out some funds for potential business development, and as a reserve fund in the external environment that does not exist in a certain situation. We will also maintain an open attitude towards the appropriate opportunities and investment projects related to the nuclear industry, and to take advantage of the opportunities in the industry.

The overall strategy for cash usage is similar to what we mentioned in the last earnings call. We have sufficient cash to fund our daily operations and business development. While consolidating our financial fundamentals, the company will continue to allocate some funds for potential business development, and as a reserve under uncertain external conditions. We will also remain open to suitable opportunities and investment projects related to the industry chain, so as to seize industry development opportunities.

At the same time, we will continue to pay attention to the return of shareholders. In terms of the Paxi, we have already spent about 400 million US dollars on the return of shareholders through the special cash stock market. In the future, we will also have the intention to share the company's profits and cash with shareholders. The subsequent stock exchange plan, including the amount and the time, will also depend on further review and approval of the board of directors. In terms of repurchase, based on our plan of repurchase of up to 100 million US dollars, we have repurchased the Huyah stock, worth 6,110 million US dollars, by the end of September. In the future, we will consider the market situation and the liquidity of the stock in multiple ways, and develop a strategy.

At the same time, we will continue to place importance on shareholder returns. In terms of dividends, this year we have returned approximately 400 million US dollars to our shareholders through special cash dividends. In the future, we intend to share the company's profits and surplus cash with our shareholders. Future dividend plans, including the amounts and timing, will depend on further review and approval by the company's board of directors. Regarding share repurchases, based on our up to 100 million US dollars repurchase plan, as of the end of September, we had repurchased 61.1 million US dollars worth of Huyah's shares. In the future, we will comprehensively consider market conditions and stock liquidity when formulating our execution strategies.

Thank you, that's it. Thank you once again for joining us today. If you have further questions, please feel free to contact Huyah's investor relations through the contact information provided on our website or PearsonT financial communications. This concludes today's call, and we look forward to speaking with you again next quarter. Thank you.