HUYA Inc.

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. Junpeng Huang, our Acting Co-CEO and Senior Vice President, and Ms. 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 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 of applicable law. Please also note that WHOIA's earnings press release and this conference call include discussions of unaudited gap financial information as well as un-audited, non-gap financial measures. Guya's press release contains a reconciliation of the un-audited, non-gap measures to the un-audited, most directly comparable gap 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. In the first quarter of 2025, Huya's total net revenues stabilized year over year and grew quarter over quarter to RMB 1.51 billion. This was supported by our steady execution of our strategic business transformation, which drove a 52.1% year-over-year increase in game-related services advertising and other revenue to RMB 370 million. This segment accounted for 24.6% of total net revenues, up from 16.2% in the same period last year. We were also pleased to deliver a net profit this quarter Meanwhile, we continue to strengthen our live streaming content ecosystem, deepen collaborations with game companies and content platforms, and explore the integration of AI capabilities in our esports experiences, laying a solid foundation for future development. Now, let me share the details of our recent business progress, starting with our business transformation As I just mentioned, our game-related services, advertising, and other revenues reached RMB $370 billion this quarter. It's worth noting that revenues from game distribution and in-game item sales primarily recognized on net basis after revenue sharing with game companies. As such, the total transaction value of our game-related services, mainly comprised of the gross receipts generated through our game distribution channel and the GMV for our in-game item sales, is actually much higher than our reported revenue. Let's begin with a closer look at our domestic game-related services and advertising businesses. In terms of game distribution, we proactively deepen our engagement with existing games despite a quota with few major new game launches. by working with game studios, refining operational strategy and unlocking the consumption potential of high commercial value user groups that have naturally congregated within our game live streaming ecosystem. We achieve a solid and more balanced game distribution performance Total gross receipts generated through Wuya's game distribution channel in the first quarter more than doubled year over year and increased sequentially. In particular, thanks to various game events during the Spring Festival, several titles including QQ Speed Mobile, Peacekeeper Elite, Delta Force, and League of Legends Mobile recorded significant increase in gross receipts through the Huya channel, with each growing more than 50% compared to the fourth quarter of last year. Several games we distributed from new partners also performed well, as we continued to collaborate with additional game companies These results underscore our extensive capabilities in operations and game promotions. As we continue to expand our role as game distribution and promotion channel, we plan to deepen our exploration of distribution service, such as the inclusive distribution model to advance our progress. For in-game item sales, we are consistently expanding our in-game item SKU offerings while enhancing our platform sales channel and purchasing experience, leading to a record GMV for in-game item sales in the first quarter. As in-game item sales scale up, 75 events, including popular competitions such as League of Legends, LPL, and Oh, sorry. Okay. Yeah, so benefiting our broadcaster ecosystem was again, broadcaster generating more income from in-game item sales. In addition to live channels and the more section, our community section has emerged as an access point for in-game item sales. In early April, we successfully showed an inclusive game skin for a popular esports player from Honor of Kings beyond the bars generated by the skin's initial release live streaming section. These players continue engagement within the community that use us to purchase the skin through this channel, making it the second largest scale channel for this skin on our platform, with the number of purchasers more than 60% higher than other similar inclusive skin activities. As users who are active in our community section tend to be more hardcore gamers, we believe that there is great potential within this section to expand our customer base for in-game item purchase and improve repeat purchase rate. On the advertising side, lower brand advertising revenue due to fewer tournaments and promotions, as well as the high base contributed by some large-scale new games in the first quarter of last year, caused our advertising revenue to decline year over year and quarter over quarter. On the other hand, at the end of last year, we upgraded the presentation format for live channels on the We Are Live apps, creating more efficient performance-based advertising scenario to strengthen our advertising business. While maintaining a strong focus on our domestic market, we have begun to actively explore and enhance our game-related commercialization capabilities in overseas markets, particularly through our global mobile application service platform to better leverage the commercial value of our content and user traffic. In addition to our existing app promotion and live streaming service, we are developing diverse business models targeting overseas market, including game distribution, in-game item sales, regional inclusive distribution, and game advertising services. We are strengthening our partnership with Chinese game companies that are expanding overseas, as well as local firms. As of the first quarter, we have partnered with multiple game companies to distribute or sell in-game items for approximately 50 games, including PUBG Mobile, Honor of Kings, Arena Breakout, Delta Force, and Devil May Cry. We have also launched operational activities tailored to each game's characteristic and key events. such as brand challenge feature and enhance localized game promotion by collaborating with local broadcasters on our overseas game live streaming platform. These initiatives are demonstrating Promising growth with our overseas game-related services delivering a multi-fold sequential revenue growth in the first quarter. Given current development and market trends, we are confident that they will continue to help expand our overseas user base and scale up our business. We believe overseas game-related commercialization initiative hold significant potential, making them a key growth engine for our company going forward. Next, our professional content enrichment efforts. We continue to solidify our leading position in licensed esports tournament in the first quarter. We broadcast a proxy monthly 75 events, including popular competitions, such as League of Legends LPL, First Stand Tournament, Honor of Kings KPL, Crossfire CFPL, Counter-Strike 2 EPL Season 21, Veterans VCT Bangkok Masters, and Peacekeeper A-List EPL. This diverse line of caters to the viewing needs of a wide range of esports in Suji East. Our internal data indicates that we as market share in esports broadcasting continue to improve this quarter, reinforcing our position at the top game live streaming platform for watching esports tournaments. We are also consistently innovating diverse in-house produced content and broadcast approximately 25 self-organized esports tournaments and entertainment PGC shows this quarter. Our highly anticipated Huya League of Legends Legend Cup Season 3 commenced at the end of March and is still underway. Building on the success of the previous two editions, we upgraded this event with the establishment of dual competition jumps in China and South Korea, enhancing the competitive pace and match excitement. The Legend Cup Season 3 has also partnered with the Comprehensive International Esports Event, serving as the Asia Championship League's LOL Tournament, a key cooperation that underscores we are a professional influence in esports. During the first quarter Lantern Festival, we launched our pig and chicken catcher streaming challenges, developed in collaboration with a well-known television network. Through offline activities integrated with online interaction and a brand of themes across agricultural products, folks, transitions, shopping, and entertainment. This entertainment program attracted viewership comparable to some top tier esports content. In addition, we introduced Competing to the end, Singles Season, an e-sport music crossover program featuring professional singers and popular broadcasters, which received positive audience feedback and expanded our content reach. As we entered the second quarter, we kick off our self-organized Dota 2 tournament, the Immortal Cup in early May. This event featuring top retired professional Dota 2 players has already attracted great attention. We will also introduce several large-scale events produced in-house in the coming months, including an offline esports music festival and a top-tier Valorant tournament. Turning to product upgrades, Under our AI plus live streaming strategy, we are exploring the integration of AI capabilities in our esports experience. At the Legend Cup Season 3, we leverage end-to-end AI solution to transform the viewing experience and introduce Huya, Hu Xiao, Ai, a pioneering or scenario AI agent for esports viewing as a smart viewing companion for our users. Wu Xiaoyi acts as a strategy microscope in the pre-match team formatting phase, analyzing team's champion pool capability with data driven insights, which transforms team captain's decision making from experience experience-based to visual strategy simulation-based. During the in-match ban and peak phase, Wu Xiaoyi becomes a tactical prophet, generating real-time counter-strategy heat maps that offer viewers a deep dive into professional players' tactical decisions. In poster match analysis and engagement, Hu Xiaoyi acts as a professional esports coach, rapidly producing highlights reels and injecting humor into post-match analysis with meme-filled MVP reviews in elevating the entertainment value of esports content. Hu Xiaoyi can understand the game, grace esports dynamics, and provide live commentary throughout tournaments, engaging users with a viewing companion that is both tactical and entertaining. Our statistics show that as of early May, over 300,000 bullet chats were generated during the Lesion Cup Season 3, with approximately 17% of them related to interactive discussions initiated by Wu Xiaoyan. This demonstrates a substantial leap in the viewing experience, with fans actively engaging with the content in a more immersive and interactive way. We are encouraged by these initial results and will continue to advance our AI-driven initiatives under our AI Plus live streaming strategy. By applying AI models throughout the entire cycle of live streaming content production, distribution, and consumption, we aim to create long-term value for Huya in live streaming, esports, and other areas. In summary, we believe that our positive progress across various business segments in the first quarter has laid a solid foundation for our development throughout the year. We will continue to enhance and expand our game content and service platform and explore new commercial opportunities moving towards a more diversified and sustainable business model that deliver values to our users and stakeholders alike. With that, I will now turn the call over to our Acting Co-CEO and CFO Raymond Lei. He will share more more details on our results. Raymond, please go ahead.

Thank you, Vincent, and hello everyone. I'll start with an overview of our financial performance. In the first quarter of this year, our total net revenues stabilized year-over-year after previous declines, driven by the year-over-year growth in gaming-related services, advertising, and other businesses. Notably, live streaming revenues saw a slight sequential increase this quarter, contributing to a marginal sequential improvement in our total net revenues. The number of paying users in the first quarter remained flat year over year, standing at 4.4 million, excluding those who made in-game purchases through our game distribution business but didn't pay via our platform or related services. On the cost side, We continued to optimize content costs, particularly those related to esports tournaments, but increased incentives for broadcasters to participate in live streaming and provide gaming-related services during the live streaming industries off-season around Chinese New Year, resulting in a gross margin of 12.5% for the quarter. Furthermore, despite a substantial decrease in interest income compared with the previous periods. Primarily due to our dividend payments, we still achieved a positive net income for the quarter, with non-GAAP income of RMB 24 million. Let's move on to more details of our Q1 financial results. Our total net revenues were RMB 1.51 billion for Q1 compared with RMB 1.5 billion for the same period last year. Live streaming revenues were RMB 1.14 billion for Q1 compared with RMB 1.26 billion for the same period last year, primarily due to the continued impact of the macroeconomic and the industrial environment. Game-related services, advertising, and other revenues were R&B 370 million for Q1, compared with R&B 244 million for the same period last year. The increase was primarily due to higher revenues from game-related services, which were mainly attributable to our deepened cooperation with Tencent and other game companies. partially offset by decreased bandwidth or advertising revenues. Cost of revenues increased by 3% to RMB 1.32 billion for Q1, primarily due to increased revenue sharing fees and accounting costs, partially offset by decreased bandwidth and server custody fees. Revenue sharing fees and accounting costs a key component of cost of revenues, increased by 4% to RMB 1.17 billion for Q1, primarily due to increased broad customer-related costs, partially offset by lower costs related to licensed esports content and in-house produced content. Gross profit was RMB 188 million for Q1, compared with RMB 221 million for the same period last year. Gross margin was 12.5% for Q1 compared with 14.7% for the same period last year, primarily attributable to increased revenue sharing fees and accounting costs as a percentage of total net revenues. Excluding share-based compensation expenses, Non-GAAP gross profit was RMB 192 million, and non-GAAP gross margin was 12.7% for Q1. Research and development expenses decreased by 4% year-over-year to RMB 130 million for Q1, primarily due to decreased personal related expenses and share-based compensation expenses. Sales and marketing expenses decreased by 20% year-over-year to RMB 61 million for Q1, primarily due to decreased marketing and promotion fees as well as personal related expenses. General and administrative expenses increased by 2% year-over-year to RMB 61 million for Q1, primarily due to higher share-based compensation expenses. Harder income was RMB 4 million for Q1 compared with RMB 12 million for the same period last year, primarily due to lower government subsidies. As a result, operating loss was RMB 60 million for Q1 compared with a loss of RMB 39 million for the same period last year. excluding share-based compensation expenses and amortization of intangible assets from business acquisition. Non-GAAP operating loss was RMB 36 million for Q1, compared with a loss of RMB 16 million for the same period last year. Non-GAAP operating margin was negative 2.4% for Q1. Interest income was RMB 65 million for Q1 compared with RMB 117 million for the same period last year, primarily due to a lower time deposit balance, which was primarily attributable to the special cash dividend paid in May and October 2024. Net income attributable to Huya Inc. was RMB 1 million for Q1 compared with RMB 71 million for the same period last year. Excluding share-based compensation expenses and the amortization of intangible assets from business acquisition, net of income taxes, non-GAAP net income attributable to Huya Inc. was RMB 24 million for Q1, compared with RMB 92 million for the same period last year. Non-GAAP net margin was 1.6% for Q1. Diluted net loss per ADS was approximately 0 RMB for Q1. Non-GAAP diluted net income per ADS was RMB 10 cents for Q1. As of March 31, 2025, the company had cash and cash equivalents, short-term deposit and long-term deposit of RMB 6.25 billion compared with RMB 6.73 billion as of December 31, 2024. Finally, let me provide an update on our shareholder returns. Through our up to USD 100 million share repurchase program, we had repurchased 21 million OUYA shares with a total aggregate consideration of USD 69.8 million as of the end of March 2025. Looking ahead, we will remain committed to reinforce our business and operational foundations and returning value to our shareholders through dividends and share repurchase. 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 5 to ask the question, then press 6 to unmute yourself. If you are processing the call from the Tencent meeting or both meeting applications, please click the Raise Hand button at the bottom left. For the benefit of all participants on today's call, if you wish to ask your question to the management in Chinese, please immediately repeat your question in English. First question comes from Nelson Chong from Citibank. Nelson, your line is open. Please go ahead.

Thank you, Mr. Huang, Mr. Lei, and Mr. Yu for accepting my question. Congratulations to the company on achieving good results in the first quarter. Given the relative growth of the game-related income in the first quarter, I don't know if the management can explain the current business progress and growth of the game-related income. So let me translate myself into English. Thanks management for taking my questions and congratulations for Huya with a solid quarter in first quarter and with a solid year-on-year growth for game related revenues in first quarter. Wondering if management could elaborate more on the business outlook and the prospect for this segment. Thank you.

Okay, thank you for your question. Let me answer the first question. In the first quarter, we saw a growth of 52.1% for the game services, advertising, and other income. This growth is mainly due to the growth of game services. Part of it may be due to the decline in advertising revenue in the brand category. The decline in advertising revenue in the brand is mainly due to relatively less competition and promotion activities during the Q1 this year. And last year, the impact of large-scale online games in the same period brought about this kind of high-tech impact. It is worth noting that due to the distribution of games and the sale of props, most of them are confirmed by the amount after the income is divided by the game company. In other words, it is confirmed by the amount as the basis. Therefore, the overall scale of our game-related services is much larger than our income.

In the first quarter, Huya's game-related services, advertising, and other revenues reached $370 million, representing a year-over-year increase of 52.1%. This growth was primarily driven by the increase in game-related services revenues, partially offset by a year-over-year decline in brand advertising revenues. The decrease in brand advertising revenues was primarily due to fewer tournaments and promotional activities during Q1 this year, as well as the high base effect from major new game launches in the same period from last year. It is worth noting that since our game distribution and in-game item sales revenue is primarily recognized on a net basis after revenue sharing with game companies, the total transaction value of our game-related services is significantly higher than our reported revenue.

In terms of domestic game distribution, with limited new games on the market this quarter, we are also actively deepening the existing game. Through the linkage with the game studio, as well as the detailed operation strategy, we continue to dig into the consumer capacity of the user group with high commercial value of the game, which is naturally gathered in the game streaming ecosystem. The formation of game distribution business is a more stable and balanced support. In the first quarter, compared to the same period last year, there was a growth in the total flow of oil from Huya's distribution channel. In addition, there has been a growth in return. During the Spring Festival, with the help of game activities, the mobile game of QQ Flying Car, Peace Elite, Triangle Movement, Heroes Alliance, and other mobile games have grown significantly in the share market of the Guya platform. In addition, in the fourth quarter of last year, the return growth has exceeded 50%. In addition, we are also cooperating with more game manufacturers to participate in the distribution. This part of the game has also achieved a good growth. These results show the depth and breadth of Huya in game operation and promotion. At the same time, with Huya as a stable game distribution and marketing channel, we plan to strengthen the exploration of game agent publishing business in the future, including the development of game booklets and other forms. to further expand our business. We also expect that as more new oil comes into the market, Huyao will be able to seize this opportunity.

Specifically, in terms of domestic game distribution, despite limited major new game launches in the market this year, we proactively deepened our engagement with existing games through cooperations with game studios and refined operational strategies. We continued to unlock the consumption potential of high commercial value user groups that have naturally congregated within our game live streaming ecosystem, forming a more stable and balanced foundation for our game distribution business. In the first quarter, the total gross revenue generated through Huya's scam distribution channel more than doubled year over year and increased quarter over quarter. In particular, thanks to various game events during the Spring Festival, several titles including QQ Speed Mobile, Peacekeeper Elite, Delta Force, and League of Legends Mobile recorded significant increases in gross revenue through the Huya channel, with each growing more than 50% compared to the fourth quarter of last year. Additionally, games from new partners that we collaborated with also performed well. These results underscore our extensive capabilities in operations and game promotions. As we continue to solidify our position as a game distribution and marketing channel, we plan to enhance our exploration of game agency publishing, including exclusive distribution models, to further expand our business. We also look forward to capturing opportunities as more new games launch in the market.

SKU, which is rich in props, and the experience of optimizing platform sales channels and purchases, also promoted the GMV of prop sales in the first quarter, creating a new height. At the same time, with the increase in the scale of prop sales, this is also a good way to replenish the ecosystem of streamers. More game streamers have obtained better commercial profits through prop sales, In addition to the live broadcast and the commercial version, the community version has also become one of the most effective entrances for our users to access props and sales. At the beginning of April, we successfully sold a exclusive skin of a well-known e-sports player, Wang Zhirong. Not only did we organize a skin hand-sewing live broadcast, but also aroused the attention of the users. This player's long-term effective operation in the Huya community has also attracted a lot of users to purchase through this channel. It has become the second largest channel of skin sales on our Huya platform. The number of buyers has also exceeded more than 60% of the previous similar exclusive skin sale activities. Due to the community users' interest in games, we also believe that this will help us expand the prop purchase user group, increase the resale rate, and stimulate greater potential.

For in-game item sales, we are consistently expanding our in-game item SKU offerings while enhancing our platform's sales channels and also purchasing experiences, leading to a record high in GMV for in-game item sales in the first quarter. As in-game item sales scale up, they are also benefiting our streamer's ecosystem, with more game broadcasters generating better commercial income from in-game item sales. In addition to live channels and the mall session, our community section has emerged as an effective access point for in-game item sales. In early April, we successfully sold an exclusive game skin for a renowned Honor of Kings esports player. Beyond the buzz generated by the skin's initial release session, the player continued its effective engagement within the community, it has also attracted many users to purchase through this channel, making it the second largest sales channel for the skin in our platform, with the number of purchases more than 60% higher than the previous similar exclusive skin activities. As users who are active in our community section tend to be more hardcore gamers, we believe that there is great potential to expand our customer base for in-game item purchases and improve repeating purchase rates.

In overseas, we have started to actively explore and improve the commercialization capabilities of overseas games through international mobile application service platforms and other overseas businesses, in order to better discover the commercial value of platform content and user traffic. In addition to the existing application marketing promotion and live broadcast business in the overseas market, we are also trying to develop various business models, including game distribution and transportation, game props sale, regional exclusive and game advertising services, etc. On the other hand, we have deepened cooperation with domestic and overseas game manufacturers and local game manufacturers. At the same time, we also combine the characteristics of the game and its activities to launch special operating activities. In addition, we strengthen the effect of local game promotion through the local streamer of the overseas live broadcast platform.

While maintaining a strong focus on our domestic market, we have begun to actively explore and enhance our game-related commercialization capabilities in overseas markets. particularly through our global mobile application services platform to better leverage the commercial value of our content and user traffic. In addition to our existing app promotion and live streaming services in overseas markets, we are developing diverse business models, including game distribution, in-game item sales, regional exclusive distribution, and game advertising services. We're strengthening our partnerships with Chinese game companies that are expanding overseas, as well as local firms. At the same time, we've launched operational activities tailored to each game's characteristics and key events. Furthermore, we're enhancing localized game promotion by collaborating with local broadcasters on our overseas game live streaming platform.

We have started to develop these new businesses quickly. The revenue of overseas game-related services has increased several times in the first quarter compared to the fourth quarter. Based on the current business trajectory and the future of the market, we are also very confident that by expanding the coverage and business scale of overseas users, overseas game-related commercialized businesses are also expected to become one of the major growth engines of the company.

These emerging initiatives are demonstrating promising growth with our overseas game-related services delivering multifold revenue growth in the first quarter. Given current business trajectory and market outlook, we are confident that by expanding our overseas user coverage and business scale, our overseas game-related commercialization business has the potential to become one of the company's important growth engines.

Thank you. And our next question comes from Richie Sun from HSBC. Hi, Richie. Please go ahead.

Thank you management for taking my questions. So I have two questions. So first of all, can management comment on the outlook, second quarter outlook and four-year outlook for the revenue? And second of all, is given the geopolitical tensions and there have been some risks around the listing, can management comment on how do we plan to address this risk? Thank you management for accepting my question. I have two questions. Thank you, Richard. I will answer these two questions.

The first question is about the trend of subsequent income. In the first quarter, the total income of Huya was slightly increased, reaching 15.1 billion yuan. Due to the same growth in game related services, advertising and other businesses, the total income achieved the same drop and rise. This also reflects the steady development of our strategic transformation and the company's performance.

Thank you for your questions. With regard to the first question, in the first quarter, Huya's total net revenue increased slightly quarter over quarter to approximately $1.51 billion. Thanks to the year-over-year growth in game-related services, advertising, and other businesses, our total net revenue has stabilized year-over-year after previous declines. This also reflects the steady progress of our strategic business transformation and the company's execution capabilities.

According to the current situation, we expect the total revenue to be at the bottom. On the one hand, we are constantly weakening due to the impact of editing brought by the economic and industry environment. And we continue to optimize live broadcast operation and strengthen the interaction function of users. Live broadcast revenue is expected to stabilize. On the other hand, we expect the growth of game related services, advertising and other income this year will achieve the same rate as before. Especially on the basis of the continued growth of domestic game related services and advertising businesses, Based on what we are currently seeing, we expect that our total revenue has essentially bottomed out.

On one hand, as the marginal year over year impact from economic and industry conditions weakens, and as we continue to optimize our live streaming operations and enhance our user interaction features, live streaming revenues are expected to stabilize. On the other hand, we anticipate that game-related services, advertising and other business revenues will achieve relatively fast year-over-year growth this year. particularly on the foundation of continued growth in domestic game-related services and advertising business. The enhancement of overseas game commercialization is also expected to become another future growth engine. Therefore, based on the current business situation, we expect Huya's total revenue to achieve a growth this year.

Regarding the company's view on the potential risk of debt withdrawal, the company will continue to pay attention to the regulations and regulatory requirements of U.S. listed companies, and to the responsibilities and obligations of listed companies when traveling. Facing the changing international situation and global economic situation, we are closely monitoring the potential impact of external environmental changes on the capital market. As far as the company is concerned, Regarding the recent media coverage of the forced retirement risk of Chinese stocks, the U.S. government has not yet issued a new formal rule of law. Therefore, we will continue to monitor. At the same time, the company is also reviewing the potential risks and actively discussing relevant solutions, including the opportunity to evaluate other capital markets. As we have always emphasized, the stock market is as important as ever and is committed to protecting the interests of investors.

The company continuously monitors U.S. listing regulations and regulatory requirements and is committed to fulfilling the responsibilities and obligations of a public company. Facing the constantly changing international situation and global economic trends, we closely monitor potential impacts that changes in the external environment may have on capital markets. To the company's knowledge regarding the first day listing risks for US-listed China-based companies, recently reported by the media, the US government has not yet issued new formal regulations. We will continue to monitor this situation. Meanwhile, the company is also prudently assessing potential risks and actively exploring corresponding situation, including evaluating opportunities in other capital markets. As we have always emphasized, Huyao consistently values and is committed to protecting investors' interests. If there is any material information, the company will make timely announcement in strict accordance with relevant requirements and fulfill its disclosure obligations.

Okay, thank you. Now we will take next question from Yanyan Xiao from CICC. Hi, Yan Yan, please go ahead.

Okay, thank you, Guan Licheng, for accepting my question. My question is how to view the company's future profit trend. And I will translate myself. And thanks, management, for taking my question. And my question is, how should we estimate the company's future profit trend? Thank you.

Thank you, Chloe. I will answer this question. In this quarter, the company continues to optimize the cost of contests and other content, but in order to stimulate the opening and participation of streamers during the spring festival season, and provide game-related services, the platform has increased the incentive measures for streamers. In addition, the advertising revenue of brands with higher interest rates has been affected by seasonal weakness and last year's high-end numbers, which have dropped in comparison. As a result, the interest rate of this quarter decreased slightly compared to the same period last year, but it increased by 12.5% compared to the fourth quarter last year. Although interest income has been greatly reduced due to the decline in interest, we have still achieved positive net profit in this quarter. The net profit of Langevin reached 24 million yuan.

This quarter, we continue to optimize costs related to esports content, but increased incentives for broadcasters to encourage the streaming and participation in providing game-related services during the Spring Festival's quiet season. Additionally, we have higher margin brand advertising revenue declined both year over year and quarter over quarter due to seasonal weakness and the high base effect from last year. As a result, our gross margin this quarter decreased slightly compared to the same period last year, but increased quarter over quarter to 12.5%. Despite significantly lower interest income due to dividend payments, we still achieved a positive net income for the quarter, with non-GAAP net income reaching $24 million. 未来的利润趋势方面,考虑到我们的股东回报措施将导致账面现金盈余降低。

In addition to factors such as market interest rate decline, interest income this year, especially in the second half of the year, will be significantly lower than in the same period of 2024. Therefore, this year's net profit performance will depend more on the company's improvement in the net profit level.

Regarding future profit trends, considering that our shareholder return measures will result in reduced cash surplus on our balance sheet, coupled with factors such as declining market interest rates. This year's interest rate income, especially in the second half of the year, will be significantly lower than the same period in 2024. Therefore, this year's bottom-line performance will rely more on the improvements in the company's operational results. 具体来看,在成本费用端,我们会适度加大对自治内容的投入。

This will also benefit the commercialization of game related services and advertising and other businesses. At the same time, we expect that the cost of copyright content in the future will be improved, and the profit situation will be affected to a certain extent by the overall income scale and structural changes. Overall, we expect that the profit level of the company's non-GAAP management this year will be improved.

Specifically, on the cost and expenses side, we will moderately increase investment in self-produced content, which will also benefit the commercialization of development of game-related services, advertising, and other business. At the same time, we expect further improvements in copyright content costs in the future. Profit performance will also be affected to some extent by changes in overall revenue scales and structure. Overall, we expect that the company's non-GAAP operating results will show notable improvement this year.

Thank you. That's all for our Q&A session today. Thank you Wes again for joining us today. If you have further questions, please feel free to contact Huya Investor Relations through the contact information provided on our website or PS&T Financial Communications. This concludes today's call and we look forward to speaking to you again next quarter. Thank you.