HUYA Inc.

Please be advised that today's webinar is being recorded. The company's financial and operational results were issued earlier today and are posted online. You can also view the earnings press release by visiting the IR website at ir.huya.com. A replay of the call will be available on the IR website soon. Participants of management on today's call will be Mr. Vincent Junhong Huang, our Acting Co-CEO and Senior Vice President, Mr. Raymond Peng Lei, our Acting Co-CEO and CFO, and Ms. Margaret Shi, Head of Capital Markets. 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 latest annual report on Form 20F 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 note that WHOIA's earnings press release and this conference call include discussions of unaudited GAAP financial information as well as unaudited non-GAAP financial measures. WHOIA's press release contains a reconciliation of the unaudited long 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. Huang. Please go ahead.

Okay. Hello, everyone. Thank you for joining our earning conference today. I'm pleased to report a short-lived third quarter. Total net revenues reached approximately RMB 1.7 billion. the highest level yet in the past nine quarters, with year-over-year growth accelerating to around 10%. Non-GAAP operating profit was approximately RMB 6.3 million, representing a meaningful improvement over the same period last year. This encouraging performance was mainly driven by strong growth in game-related services advertising and other revenues, while our live streaming revenues remain stable. Revenues from game relative service, advertising and others have now surpassed the 30% of total net revenues of the first time this quarter. Our platform ecosystem and user base remain resilient in the third quarter, with total MAUS stable at around 162 million. The influence of our streamer ecosystem continues to expand as more top streamers are returning to Huya, and many of our streamers are also gaining recognition across other platforms, including WeChat channels, Douyin, and beyond. Across all major competitive titles, including Honor of Kings, League of Legends, Delta Force, and Peacekeeper Elite, our top tier streamers consistently rank among the leading creators in their respective categories. In addition to our own products and app, we estimate through our top creators, we are able to reach over 100 million users across other platforms, expanding our audience, influence and monetization opportunities across the wider gaming and streaming landscape. This impact is reflected in our third quarter performance, where our game-related service, advertising, and other segments grew 30% year-over-year, reaching 532 million RMB in revenue. We think these segments in game item sales have become a significant growth driver as we deepen our collaboration with game developers, expand our SKU offerings, and leverage the increasing synergy between our live streaming and gaming ecosystems, in-game item sales revenue grew by more than 200% year over year in the third quarter. Partnerships with flagship titles in both China and abroad, including Peacekeeper Elite, League of Legends, Arena Breakout, and PUBG Mobile delivered short-lived results. Looking ahead, we are confident that in-game item sales will maintain robust growth momentum as we continue to broaden partnerships and enhance operations. In terms of game publishing, we are thrilled to announce the upcoming launch of our first title, Goose Goose Dark Mobile, a social deduction game centered on teamwork and strategic gameplay. The game has gone through its second round of testing throughout October, with pre-registration quickly surpassing $10 million during that period, leveraging our powerful streamer influence and stronger content-driven marketing capabilities. In October, we created a live streaming variety show, which brought together top streamers for a group gaming session. The show attracted strong players' engagement and brought market attention. We view GoodSchoolStock Mobile as a key step in our strategy to diversify into game publishing, an important milestone that will not only validate our publishing capabilities, but also position us for sustainable growth in this space. As we continue to step up for our efforts in key areas, including in-game item sales, game publishing, advertising, we believe this segment will remain a sustainable driver of our revenue growth. Let's move on to live streaming, where revenues increased by about 3% year over year, making our first quarter of positive year over year growth since the third quarter of 2021. Our content mix has become more balanced and vibrant, which that the outdoor live streaming category delivering solid gains in both viewing hours and monetization this quarter. At the same time, we continue to enhance both our mobile and PC platform to ensure users enjoy a truly best-in-class live streaming and esports experience Our latest update introduced a new short-form video hub, an interactive 3D game map tool of Delta Force, and other cool features. The short-form video hub enables users to conveniently discover short clips from livestreams directly within the Huya Live app, enhancing our content ecosystem. and driving a notable increase in short video daily active users and time spent. Meanwhile, the Delta Force Map tool provide rich immersive 3D environments for Delta Force players to quickly get familiar and better navigate the game, attracting more hardcore players to our platform. E-Sport live streaming remains a crucial part of our content offerings. We streamed nearly 100 licensed tournaments and hosted around 40 self-produced events in the third quarter of 2025. During the recently-congratulated League of Legends World Champions, one of the most watched licensed esports events in China, we remain the top livestreaming platform in terms of average concurrent users. Building on our fan base, we hosted the 2025 League of Legends Asian Asia Invitational, the first ever LOL international professional tournament produced by a live streaming platform. This event was an important milestone for us, attracting massive viewership outside of China and significantly enhancing our international brand recognition. We are also excited to announce that we will be hosting the Demacia Cup, for League of Legends later this year. Again, we are privileged to be the first live streaming platform ever to be hosting this flagship official event for this game. Additionally, we have a shown lineup of other highly anticipated esports tournament that we will be hosting, including the Delta Force Diamond Champions Autumn Season, following the success we had in the summer. on the international expansion front. Our user base continue to grow steadily during the quarter through our overseas platforms. We are deepening our presence in key geographic market by focusing on user experience and the content ecosystem to enhance engagement and retention. We have also built closer partnership with popular game partners, and diversified monetization strategy, driving sustainable growth and improving profitability. To sum up, we made solid progress expanding our content ecosystem, unlocked new monetization opportunities, and advanced our emerging business models in a disciplined and sustainable manner. Looking ahead, we will remain focused on long-term development, deepening collaboration with partners, improving monetization efficiency and product experience, strengthening our content and technology capabilities, and steadily expanding internationally to deliver sustainable, highly quality growth. With that, I will now turn the call over to our Acting Co-CEO and CFO Raymond Lei. He will share more details on our results. Raymond, please go ahead.

Thank you, Vincent, and hello everyone. I will start with an overview of our financial performance. Our total net revenues for the third quarter reached approximately RMB 1.69 billion, increasing 10% year-over-year. Of this, Live streaming revenues has resumed growth at 3% year-over-year to RMB 1.16 billion. And game-related services, advertising, and other revenues grew around 30% year-over-year to RMB 532 million, accounting for 31.5% of total net revenues. We also achieved a non-gap operating income of RMB 6.3 million. another quarter of solid improvement since we first broke even at operating level last quarter. Furthermore, we still achieved a positive net income for the quarter with non-GAAP net income of RMB 36 million, despite a substantial decrease in interest income compared with previous periods, primarily due to a special dividends pay down Let's move on to more details of our Q3 financial results. Live streaming revenues were under $1.16 billion for Q3, up 3% from the same period last year, primarily due to the improvement of average spending per paying user for live streaming services. The number of the domestic paying users remained stable at 4.4 million in the third quarter. This figure excludes users who made in-game purchases through our game distribution business but didn't pay via our platform or related services, as well as overseas paying users. Game-related services. Advertising and ad revenues were RMB 532 million for Q3, up 30% from the same period last year. The increase was primarily due to higher revenues from gaming-related services and advertising, which were mainly attributable to our deepened cooperation with game companies in China and abroad. Cost of revenues increased by 10% to RMB 1.46 billion for Q3, primarily due to increased revenue sharing fees and accounting costs, as well as cost of in-game items. Within this, revenue sharing fees and accounting costs rose by 8% year-over-year to RMB 1.26 billion, reflecting growth in our top line. Gross profit was RMB 227 million for Q3, up 11% from the same period last year. Gross margin was 13.4% for Q3, also an improvement from 13.2% from the same period last year. Executing share-based compensation expenses, Non-GAAP growth profit was RMB 228 million, and the non-GAAP growth margin was 30.5% for Q3. Research and development expenses decreased by 3% year-over-year to RMB 122 million for Q3, primarily due to decreased staff costs as a result of enhanced inefficiency. Sales and marketing expenses decreased by 4% year-over-year to RMB 70 million for Q3, primarily due to decreased general promotion fees. General and administrative expenses increased by 15% year-over-year to RMB 58 million for Q3, primarily due to increased professional service fees and staff costs. Other income was RMB 9 million for Q3 compared with RMB 13 million for the same period last year, primarily due to lower government subsidies. As a result, operating loss narrowed significantly to RMB 14 million for Q3 compared with a loss of RMB 32 million for the same period last year. Excluding share-based compensation expenses and amortization of intangible assets from business acquisitions, non-GAAP operating income reached RMB 6 million for Q3, a meaningful improvement from non-GAAP operating loss of RMB 13 million in the same period last year. Interest income was RMB 35 million for Q3, reduced from RMB 97 million for the same period last year, primarily due to a lower time deposit balance as a result of the special cash dividend space. Net income attributable to Huya Inc. was RMB 10 million for Q3 compared with RMB 24 million for the same period last year. Executed share-based compensation expenses Gain arising from disposal of an equity investment. Net of income taxes. Impairment loss of investments and amortization of intangible assets from business acquisitions. Net of income taxes. Net income attributable to Huya Inc. was RMB 36 million for Q3 compared with RMB 78 million for the same period last year. The decrease was mainly due to the lower interest income as an expanded area. Diluted net income per ADS was approximately RMB 4 cents for Q3. Non-GAAP diluted net income per ADS was RMB 60 cents for Q3. As of September 30, 2025, the company had cash and cash equivalents short-term deposit and long-term deposits of RMB 3.83 billion, compared with RMB 3.77 billion as of June 30, 2025. With that, I'd like to open the call to your questions.