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.