HUYA Inc.

Good day and good evening, and thank you for standing by. Welcome to WHOYA's first quarter 2026 earnings webinar. I'm Han Yu Liu from the WHOYA's Investor Relations. At this time, all participants are in written-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 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 Junhonghua, our acting CEO, Mr. Raymond Penglei, our 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 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 these and other risks and uncertainties is included in the companies' 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 WHO has earnings press release and this conference call includes discussions on audits. GAAP financial information as well as unaudited non-GAAP financial measures. WHOYA's press release contains a reconciliation of the unaudited non-GAAP measures to the unaudited most directly comparable GAAP measures. With that, I'm pleased to turn the call over to Mr. Huang. Please go ahead.

Okay. Hello, everyone, and thank you for joining our earnings call today. First, I would like to share our overall performance for the quarter. In the first quarter, total net revenues grew by 15% year-over-year to RMB 1.73 billion, primarily driven by continuous strong growth from game-related services, advertising, and other businesses. Game-related services, advertising, and other revenues reached RMB 627 million. up 69% year-over-year, and further increased to record 36% of total net revenues. Live streaming revenues were RMB 1.1 billion for the quarter, underpinned by our vibrant, diversified, and high-quality live streaming content ecosystem. With the integration of AI, we are able to offer an enriched, more creative experiences to our users. Our ecosystem of game content live streamer is becoming increasingly influential across the broader social platforms, while our own channels, including the Huya live app, continue to enjoy a stable user base. Our estimated reach across external platforms doubled from last year, exceeding 200 million users, including those on Douyin and WeChat platforms. According to our internal data, GUI is the largest gaming MCN on WeChat channels and remains among the top three on Douyin. Across multiple leading game titles, Nearly half of the core streamers are connected to Huya. This broad content network enables us to provide games with strong content-driven marketing and user reach, which is what's driving our growth in our collaboration with game developers in game item sales and advertising as well as game publishing. On the game publishing front, Goose Goose Dark Mobile continued to deliver impressive results. Since its launch on January 7, the game ranked number one on the iOS 3 games chart for most of the first quarter. We have been accelerating the pace of content updates since March, and on April 1, we launched Season 2, introducing a new map, Ancient Desert, as well as new laws including during Doodle and Raven. At the same time, we continue to work on our UGC mechanism, which we believe will be an important driver of player engagement, social interaction, and long-term content vitality for the game. Building on this foundation, we launched our first PGC game play mode, Goose Hunt, on April 29, which received positive feedback from players and further expanded the game's content ecosystem. As we continue to focus on building a healthy user ecosystem with robust and fun game content, we are also ramping up its monetization gradually. In April, GooseGoose Dark Mobile reached the top five on the iOS top-grossing game chart, with new skins offered, validating its monetization potential. Looking ahead, we will further enrich the game's content and social environment with new features such as party mode and a home decoration system, and introduce more IP collaborations to meet players' growing demand for role-playing experiences. Meanwhile, we are working on the WeChat minigame version, which is currently scheduled for launch this summer. By integrating GooseGooseDuck Mobile more deeply with the WeChat user ecosystem, we hope to leverage WeChat social graph to further reactivate existing users and attract new ones. With the successful debut of GooseGoose.Mobile, we are gaining more recognition from game developers of our publishing capabilities through our content ecosystem. We now have a handful of new titles in the pipeline to launch this year across various genres, including casual, SLG, and AMO. For in-game item sales, revenues continue to grow solidly year over year. On the domestic front, item for titles including Peacekeeper Elite, Honor of Kings, and Gloss Fire continue to contribute incremental growth. For example, our large-scale outdoor live streaming event for Peacekeeper Elite, Elite Journey Season 2, not only effectively dropped in-game item sales, but also generated strong social buzz for the game IP. On the overseas front, in-game item sales for PUBG Mobile, Genshin Impact and Arena Breakout also delivered impressive performance. On the advertising side, leveraging our influence across streamer networks, tournament production capabilities, and UGC creation know-how. We provide fully integrated content marketing solutions for game developers. Some of our earlier advertising campaigns have proven very effective in further recognition from leading advertisers including Tension, NetEase, and HyperGrip. For example, for HyperGrip, Grip recognized That field opened better campaign in the first quarter. We connected multiple top streamers to generate in-depth live streaming content, generating more than 70 million views across the Internet. This not only drove strong live streaming traction on Huya Live app, but also sparked extensive UGC content across all social platforms, broadening the game's user reach. In terms of our content offerings on our own platform, we continue to enhance our live streaming tournament ecosystem, introducing 55 licensed tournaments as well as more than 20 self-produced tournaments and variety shows. In late March, we created UGI Cup named after esports legend UGI. attracting more than 200 lead operations teams across China. The event generated more than 100 million views across the Internet and appeared on Weibo's trending list 22 times. Building on this momentum, we hosted additional self-produced events including the Delta Force Qijia Cup and Delta II Immortal Cup Season 2. We have also become the official production partner for multiple top-tier game tournaments, such as Veterans 2026 National Tournament and 2026 Jiangsu Esports Super League. Hosting and producing these events creates organic synergies with our live streaming content, in-game item sales, and other businesses. On the product side, we remain committed to upgrading our platform ecosystem through game services and enriching users' entertainment experience with a suite of game tools. In March, we officially launched a real-time navigation feature for our Delta Force Map tool, as well as the League of Legends Hashtag Error Assistant tool, helping players make better in-game decisions. Beyond this, we are actively developing assistant tools for more titles, including Golden Spatula and Goose Goose Duck Mobile, further establishing game tools as differentiated products gateway. We are also developing a physical AI companion around the appeal of Goose Goose Duck, creating richer and differentiated game play and companionship value. Overall, we deliver solid progress across multiple business lines in the first quarter. Game publishing, in-game item sales, advertising, marketing, and tournament operations all achieved meaningful breakthroughs. We are accelerating its strategic evolution from a game live streaming platform into a full game services platform, which gain relative revenues reaching a record high percentage of total revenues. And our revenue may continue to improve. We will continue to deepen our game content ecosystem and focus on high value opportunities across the game industry value chain. By scaling the business, we will continue to enhance earnings quality and strive to deliver resilient and sustainable growth for our shareholders. With that, I will now turn the call over to our CFO, Raymond Lei. He will share 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, we delivered a steady top-line growth with continued improvement in both our revenue mix and operating performance. Notably, the increased revenue contribution from business with higher gross margins led to both year-over-year and sequential gross margin expansion to 14.6% this quarter. Furthermore, we achieved a non-debt net income of RMB21 million for the quarter, despite lower interest income. Let's move on to more details of our Q1 financial results. Total net revenues were RMB1.73 billion for Q1, up 15% from the same year last year. Live streaming revenues were RMB1.1 billion for Q1, compared with RMB 1.14 billion from the same period last year, primarily reflecting the live streaming industry's current environment. Game-related services, advertising, and other revenues were RMB 627 million for Q1, up 69% from the same period last year. The increase was primarily driven by higher revenues from in-game item sales, and advertising, mainly attributable to the company's deepened and broadened collaboration with game companies. Cost of revenues increased by 12% year-over-year to RMB 1.4 billion for Q1, primarily due to increased cost of in-game virtual items, as well as increased revenue sharing fees and content costs. Within this, revenue sharing fees and accounting costs rose by 7% year-on-year to RMB 1.23 billion, mainly reflecting growth in our top line. Growth profits was RMB 253 million for Q1, up 34% from the same period last year. Growth margin was 14.6%. for Q1, improving from 12.5% from the same year last year. Excluding share-based compensation expenses, non-GAAP gross profit was RMB 256 million, and the non-GAAP gross margin was 14.8% for Q1. Research and development expenses increased by 2% year-over-year to RMB 132 million for Q1. Sales and marketing expenses increased by 45% year-over-year to RMD $88 million for Q1, primarily due to marketing and promotion efforts related to the launch of Goose Goose Stock Mobile. General and administrative expenses increased by 6% year-over-year to RMD $65 million for Q1, primarily due to increased share-based compensation expenses. Other income was RMB 3 million for Q1 compared with RMB 4 million for the same period last year, primarily due to lower government subsidies. Operating loss narrowed to RMB 29 million for Q1 compared with the loss of RMB 60 million for the same period last year. Excluding share-based compensation expenses and amortization of intangible assets from business acquisitions, Lung gap operating loss narrowed to RMB 3 million for Q1, compared with the loss of RMB 36 million in the same period last year. Interest income was RMB 30 million for Q1, down from RMB 65 million for the same period last year, primarily due to a lower time deposit balance, following the payment of special cash dividends. That loss attributable to Hu Yayin was RMB 4 million for Q1 compared with the net income attributable to Huya Inc of RMB 1 million for the same period last year. Excluding share based compensation expenses and the amortization of integral assets from business acquisitions, net of income test, non-GAAP net income attributable to Huya Inc was RMB 21 million for Q1 compared with RG24 million for the same period last year. Diluted lead loss per ADS was approximately RMB 2 cents for Q1. Long-term diluted lead income per ADS was RMB 9 cents for Q1. As of March 31, 2026, the company had a cash-in-cash equivalent, short-term deposit and a long-term deposit of RMB 3.46 billion compared with RMB 3.82 billion as of December 31, 2025. With that, I'd like to open the call to your questions.

Thanks, Ramesh. And hello, everyone. If you are dialing in by phone, please press 5 to ask a question, then press 6 to unmute yourself. If you are accessing the call from the Tencent Meeting or both meeting applications, please click the 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 Richie Sun from HSBC. Hello, Richie. Your line is open. Please go ahead.

Vincent, Raymond, Margaret, Henry, Louis, good evening. Thank you for giving me the opportunity to ask a question. First of all, congratulations on the very good performance of Elyasha. I would like to ask, what kind of updates are there for the latest operation and commercialization of this game? And what is the direction of the operation strategy for this game this year? Thank you, management, for taking my questions. Congrats on a solid start from Goose Goose Duck. I want to ask about the latest operating and strategy and also commercialization progress for this game. And what is this year's operating strategy going to be? Thank you.

OK. Thank you, Richard. I will answer this question. Since we launched on January 7th, we have been performing very well. In most of the time in a whole quarter, we can see that we have maintained a very long time in the first of the free version of iOS. This also proves the attraction of our game's own social play. At the same time, it also proves that Huya is in the business mode of content, ecology, energy and game publishing. In the first quarter, we mainly focus on the marketing and promotion of the game. At the same time, we are also continuing to polish the gameplay and game content. We also hope to take advantage of the performance of the users in the past. At present, the commercialization of the game is still in a very early stage. We are also gradually advancing. Hi, this is Margaret. Let me just translate.

Since its launch on January 7th, Boosterstock Mobile has continued to deliver impressive results, ranking number one on the iOS free game chart for most of the quarter. This validates both the appeal of the game's social gameplay and Huya's content-driven game publishing model. In the first quarter, we have been mainly focused on marketing and promoting the game, as well as perfecting our gameplay and in-game operations to keep up with the better-than-expected user numbers. As of now, we're still at an early stage in terms of monetization, but we're ramping it up gradually. For 2026, especially the first half, our priority for the game remains to be growing the user base

and using engagement. First, professional teams design and create. As our related capabilities gradually mature, we will continue to add more similar content and light games to further encourage players to participate and have a social interaction, and to enrich the entire content ecosystem of the game for a long time. Second, we will also strengthen the attributes of social and community, including social relationships, family planning, team interaction, and these functions. so that EYASA can gradually become a stronger social scene. Thirdly, the small game version. As I said before, we are also actively developing and promoting it, and it will be launched in the summer. Since EYASA itself also has a strong party game attribute, we also hope to use the micro-channel ecosystem and social network to further revive and promote it.

In particular, there are three things we'll be focusing our efforts on. Number one, we'll continue to build and strengthen our UGC mechanism. Good Hunt is an early example of this framework, with its gameplay and content currently led by a PGC team. As we continue to enhance our UGC mechanism and related know-how, we'll add more UGC gameplay and casual game modes to the game. We believe this is crucial for the game's sustainable user engagement and longevity. Second, we will add more social and community features, including interplayer connections, the home decoration system, and team-up interactions, so the game can evolve into a deeper social environment. Third, we are working on a WeChat minigame version, which is currently scheduled for launch this summer. Given the game's strong party game nature, we believe the WeChat ecosystem and social graph can help us further reactivate existing users and attract new ones.

Thank you. And we will take our next question from Nelson Chong from Citi. Hi, Nelson, please go ahead.

Hey, Vincent, Raymond, Margaret, hi, 晚上好。 我的问题是关于我们公司目前的一个AI相关的一个进展。 不知能否请管理员分享一下虎牙最新的一些AI布局呢? 我们如何把这些AI的应用, 应用到公司以及一些核心的业务中呢? So let me translate the questions. Thank you, Benjamin, for taking my questions. And my question is related to your AI progress. I'm wondering if Benjamin can share your latest strategic planning on AI for the company and how should we integrate your AI applications into the company core business? Thank you.

Okay. 感谢那个Nielsen的一个提问。 The whole AI layout of Guya is mainly around our specific business scenarios. There are four main aspects. We are mainly around AI plus live broadcast, AI plus game tools, AI plus IP accompaniment, and AI plus game production. In terms of AI plus live broadcast, we are also exploring two paths. One is AI's second creation content and AI's original live broadcast. At present, these products are still in a relatively early stage of delivery and user support. We also believe that in the short term, AI may not be able to replace real anchors, especially some head anchors. Their emotional value and time interaction are relatively difficult to replicate. But we look forward to an opportunity to say that AI can help us in the live broadcast content of the Central Committee and the Standing Committee, 20 hours of accompaniment, and some interactive gameplay.

Yeah, so our AI initiatives are focused on four areas centered around our business. Number one, that's live streaming. Number two, game tools. Number three, IT-based companionship. And number four, game production. So for AI-powered live streaming, we are exploring two main hubs. Firstly, that's AI-powered content creation. And secondly, it's AI-native live streaming. So these products are still in early stages of product iteration and user testing. We do not expect AI to replace real-life streamers anytime soon, especially the top ones, whose emotional connection with users and real-time interactivity remain difficult to replicate. Instead, we think the real value of AI in live streaming is to help us explore more opportunities in mid-tier and long-term live streaming content, 24-hour companionship, and certain interactive formats.

In terms of AI and game tools, we can see that in March, we also officially launched the map navigation function of the triangle axis action map tool. There is also a support tool for the Hero League Hex Battle. The core of this tool is not simply to give the player a fixed strategy, but to combine the AI ability and the long-term accumulation of game understanding with the player to provide a more real-time, more realistic decision-making support for the scene. For example, the map tool can help players quickly figure out where the resource point is, how to walk the route, and the high-risk area to reduce the user's threshold. The support tool of the Hikers Battle can provide the hero's recommendation, the suggestion of the outfit, and the idea of the way to fight according to each game. And so for AI-powered game tools, we're also progressing really well.

In March, we launched a real-time navigation feature for our Delta Force Map tool, as well as the Hextech ARAM Assistant tool for League of Legends. These tools are not just static guides for players. Instead, they combine AI capabilities with a holistic understanding of games to provide more real-time and context-aware decision support. For example, our Delta Force Map tool helps players quickly identify resource points, routes, and high-risk areas, lowering their learning curve. The Hextech ARAM tool can provide champion recommendations, item build suggestions, and gameplay ideas for each match. Since every match requires players to make new decisions, this kind of match-based assistance tool has very strong repeat use value. Going forward, we'll expand game tools to multi-tools and categories, including Golden Spatula, GooseGhost.Mobile, card and board games, strategy games, and auto-check games.

那在AI加IP陪伴方面,我们也在探索IP化的智能的硬件。 比如说内置多模态AI的实体的AI陪伴产品。 AI-enabled companionship was exploring IP-based smart hardware, including physical AI companion products embedded with the multimodal AI capabilities.

Based on our user feedback from Gustav Stark, we believe this product can go beyond emotional companionship and create deeper integration with the game itself, including in-game interactions and post-game reviews. This can further extend the connection between the IP and the players.

For AI-assisted game production,

We are also exploring how AI can help us generate and test casual game content more efficiently. We do not expect to replace large-scale AAA type of games in the near future, but we do see a lot of opportunities improving R&D efficiencies in casual games, web-based games, or small interactive games.

Thank you. And our next questions come from Guimeng from CICC. Hi, Guimeng. Please go ahead.

So let me translate myself. Just want to ask about the game publishing pipelines. fit management, maybe share some colors on those pipelines, and what's the rough timeline for those releases, and what kind of revenue contribution should we expect from them? Thank you.

Okay, thank you for the question. Currently, we have a very rich stock of 8-type products in the game industry. We will continue to launch many new games this year, including the cooperation between Tencent and Jinshan, these leading game companies. Currently, we have a robust publishing pipeline, and we expect to launch multiple new games this year.

These include collaborations with leading game companies such as Tencent and Kingsoft. The pipeline covers multiple launchers, including casual, strategy, SLG, MMO, and others. We will pace the launches based on the product testing, license approval progress, and the right market windows.

接下来我们发行储备中的一款重点的产品就是我们代理的一款3D的叠销类的玩法的修行游戏。 我们也计划在暑期档能够上线。 We have exclusive rights to release this game in mainland China and Hong Kong and Taiwan. This product has already been released in the overseas market. The ability of users to attract and commercialize has been fully verified. According to the public third-party data calculation, its accumulated download volume is already tens of millions of levels. It has also remained at the forefront on the income board of overseas 3D retail products.

The next in our pipeline is a casual 3D puzzle matching game that we licensed, which is scheduled for launch for the summer holidays. We have exclusive publishing rights for mainland China, Hong Kong, and Macau. The game is already proven in overseas markets in terms of user appeal and monetization. Based on third-party estimates, its cumulative downloads exceed 10 million, and the title has remained among the top-grossing titles in overseas 3D puzzle matching categories.

In terms of the release of the game, we will also make full use of the network of Huya in China, the spread of the epidemic, and the influence of players in the community. As we mentioned in our speech earlier, the current user size of Huya can reach more than 200 million people. It also covers many platforms such as Douyin, Sipin, etc. In terms of publishing strategy, we're leveraging our influence in streamer networks, cross-platform distribution, and player communities.

As mentioned in our prepared remarks, our estimated reach across external platforms now exceeds 200 million users, including those on the original WeChat platform. This extensive user reach allows us to target core players more efficiently, create more appealing content, and enhance game longevity.

Thank you. We'll take the next question from Maggie Yeh from CLFA. Hi, Maggie. Please go ahead.

Thank you, management, for taking my question. Can management share your perspective on the recent trends and future outlook for the live streaming business? In addition to that, what are the core strategic levers and key drivers for the company to maintain stability in this segment moving forward? Thank you.

Thank you for your question, Maggie. Live streaming is a very important basic platform for us. In the first quarter, the live streaming income was $1 billion. However, we also noticed that the current market environment will still bring some pressure to the live streaming business. So we will also pay more attention to our ROI in terms of content investment, including the cost of live streaming and the cost of copyright purchase. We think that This is a very important advantage of other live streaming platforms. We can continue to produce game content that is influential. And through this content, we can better drive the release of games. This is also a piece of the depth of cooperation between us and the leading streamer. The experience of live production and the ability to distribute games across platforms. In the first quarter of 2026, we also provided users with more than 55 copyrighted sites and more than 20 self-made sites and media. Among them, Huya's self-made UGI competition received more than 100 million views on the whole platform. This can reflect the value of the streamer IP plus self-made site mode. Yeah, so live streaming remains a core part of Huya's business.

In the first quarter, live streaming revenue was around $1.1 billion, but we do feel this business may still be under some pressure due to the overall market environment. Therefore, there will be more focus on improving ROI across content costs, which includes streamer costs and licensing costs. We believe one of Huya's key differentiators versus any other live streaming platform is our ability to consistently create influential gaming content and leverage that content to better support game publishing and distribution. This capability is backed by our close relationships with top streamers, our know-how in tournament production, and our cross-platform games distribution capabilities. In the third quarter of 2026, we offered around 55 licensed tournaments and more than 20 self-produced tournaments and variety shows. Among them, our self-produced The You Guys Cup generated over 100 million views across the Internet, demonstrating the value of our streamer IP plus self-produced tournament model. Also, during the quarter, we partnered with a top entertainment live streamer for a collaboration at a major tourist attraction in Luoyang, generating strong online engagement and attracting over 100,000 pizza-carrying viewers.

In terms of the key game platforms, we will continue to surround the platform-advantaged platforms to build up our own content. For example, like Dota 2. The second season is the third largest in China. This is the first season of Dota 2. In terms of participating in the hotline, we have recently launched a live marketing program of this PGC, such as the hotline, Tiger Teeth Battle Leaf, around the official IP link version of CF. To further enhance the heat of the entire new version content and user interaction, In terms of peace of mind, we also launched the S2, the S2, the S2, the S2, the S2, the S2, the S2, the S2, the S2, the S2, the S2, the S2, the S2, the S2,

The key game titles will continue to build self-produced content around them. For example, Dota 2, Immortal Cup Season 2, is currently one of the largest third-party Dota 2 tournaments in China. For Crossfire, we recently worked with the CF team on live streaming campaigns around the Kung Fu ID collaboration, including Crossfire Kung Fu Huya Dual Knight. These campaigns helped generate a significant social buzz for a new update and a further improved user engagement. For Peacekeeper Elite, we launched Elite Journey Season 2 in the third quarter, which is a live streaming show that generated solid user participation that creatively combined game content, streamer influence, and outdoor scenarios. We think this is a great way to improve user engagement and help game content reach a broader audience.

Wuyang also provides a variety of content for users to participate in. We have already won the World Tournament of the World in 2026, as well as all the titles of the World Snorkeling Tournament in 2026. We also provided the audience with a full-length, blue-light, high-definition live broadcast. In the just-finished Snorkeling World Tournament of the World in 2026, the total number of viewers on the Huya platform exceeded 150 million, especially those of Ding Junhui against Zhao Xintong. The maximum number of viewers in the three broadcast rooms was close to 20 million.

Huya also offers a broad range of highly engaging sports content. We have already secured full rights to the 2026 Badminton World Speculation Event and the 2026 World Snooker Tour, and will provide viewers with a high-definition live broadcast of these events. The recently concluded 2026 World Snooker Championship generated more than 150 million total views on Huya. In particular, the match between the two Chinese players, Lin Junhui and Zhao Xintong, reached a peak of nearly 20 million viewers in a single live streaming room.

Thank you. We will take the next question from Yiwen Zhang from China Reliance. Yiwen, please go ahead.

My question is on the advertising of in-game item sales. Can you share some of the operation data on that? Thank you. Okay, thanks for the question, Yiwen.

In the first quarter, Huya's game-related services, advertising, and other income reached 6.27 billion yuan. It has increased by 69% and our total revenue has also increased by 36%. The growth is mainly due to the continuous growth of props sales and advertising businesses. At the same time, part of it is due to the contribution of new businesses from game publishing. This also reflects the continuous improvement of our entire revenue structure. The non-直播的遊戲服務已經成為我們公司增長的重要驅動力

In the third quarter, game-related services, advertising, and other revenues reached RMB 226 million, up 69% year-over-year, and increased to 36% of the total net revenue. The growth was mainly driven by the continued expansion in in-game item sales, advertising, while game publishing also contributed incremental growth. This shows that the revenue mix is continuing to improve. and long-life gaming game services have become an important growth driver.

In terms of game, props, and sales, our revenue continues to grow relatively fast. In terms of domestic growth, it mainly comes from He Ping Jing Ying, Wang Zi Rong Yao, and other investment games. In general, Wang Zi Rong Yao mainly relies on exclusive skin sales and Spring Festival skin activities. He Ping Jing Ying mainly focuses on combining our own content and ecosystem to continuously optimize the content quality of props and goods, and further promote sales transformation. At the same time, in crossing the fire line, we have also gained momentum from important retail outlets and copyright market resources. In overseas, such as PUBG Mobile, Genshin Impact, and Anchi Tuwei, these games are also continuing to contribute to our growth. For in-game item sales, revenue continues to grow rapidly year over year.

In a domestic market, growth was mainly driven by leading titles such as Thief Keeper Elite and Honor of Kings. More specifically, Honor of Kings benefited from the exclusive skin sales and the trans-New Year skin events, while Thief Keeper Elite saw better sales conversion as we continue to optimize item offering and content quality through our content ecosystem. Crossfire and other titles also benefited from key sales windows and tournament-related resources. Overseas, titles such as PUBG Mobile, Genshin Impact, and Arena Breakout continue to contribute to incremental growth. We will continue to expand our overseas in-game items supply and strengthen our localized service capabilities. Looking ahead, we will continue to develop more customized bundles and rights-based partnerships, while bringing more transactions into Huya's own platform ecosystem.

On advertising, Huya continues

to strengthen content-driven integrated game marketing solutions by combining streamer network, tournament integrations, UGC co-creation, other core capabilities which provide game developers with end-to-end marketing solutions. Our ROI performance on these advertising campaigns continue to earn recognition from leading advertisers such as Tencent, Naive, and Hypergryph.

Thank you. Now we will take our last question today from Rebecca Hsu from Morgan Stanley. Rebecca, please go ahead.

Hi. Thank you for taking that question. I'm honored to be the last to raise questions. My question is about margin and net profit trend. Can management share some color on the margin and net profit trend, maybe in the full year basis? Yeah, I will translate for myself. I would like to ask the management how they view the annual profit rate and the annual profit trend. Thank you. I will answer this question.

Thank you, Rebecca. In terms of profit rate, in the first quarter, our overall profit rate continued to improve. The turnover rate of Langeb is close to zero. Improvement mainly comes from several aspects. The input structure continues to be optimized. Advertising, game props, game release, these labor-intensive, relatively higher business contributions are being increased. At the same time, the company is also continuing to enhance cost-benefit management and operating efficiency. Looking back, as these high labor-intensive businesses continue to grow, the business momentum is gradually manifesting. We expect that the overall labor rate and turnover rate throughout the year will have room for further improvement. At the same time, Our margins will continue to see improvement in the third quarter, with non-debt operating margin approaching break-even.

This improvement was mainly driven by continued revenue mix optimization with high contributions from relatively high-margin business, such as advertising game items and game publishing. We also continue to strengthen cost and expense management and improve operating efficiency. Looking ahead, as this margin, as this higher margin businesses continue to scale and operating leverage gradually comes through, we expect further improvement in our overall growth margin operating margin for the full year. In addition, given the pace of investment related to stock and other gains, we expect improvement in both margins to become more visible in the second half of the year.

Thank you once again for joining us today. If you have further questions, please feel free to contact FUYA's investor relations through the contact information provided on our website of the S&P Financial Communications. This concludes today's call, and we look forward to speaking to you again next quarter. Thank you.