HUYA Inc.: A Company That Strives to Unleash Future Potential in a Changing Global Environment

Huya Inc., a leading game live streaming platform in China, announced its Fourth Quarter and Full Year 2021 financial results on Tuesday. Against the backdrop of a tough macro and regulatory environment, the company has demonstrated resilience in its financial performance and made continued and unremitting efforts in expanding user base.

Let’s take a look at the company’s core numbers. Total net revenues in fiscal year 2021 grew to 11.35 billion yuan ($1.78 billion), an increase of 4.0 percent from a year earlier; net income for 2021 stood at 583 million yuan. In the fourth quarter of 2021, Huya’s total net revenues was 2.81 billion yuan, and the average mobile MAU hit record-breaking level of 85.4 million, up 7.4% year-on-year. As the company remained focused on keeping up content investment, advancing technology and enhancing products, Huya Live app’s next month user retention rate above 70% on average in 2021, according to the Company’s earnings conference call.

Douyu, another leading game-centric live streaming platform in China, also posted its latest results on March 16, 2022. Douyu has recorded net loss for five consecutive quarters, and its net loss for the full year of 2021 stood at 620.2 million yuan, compared with net income of 404.7 million yuan in the same period of 2020.

In comparison, Huya’s performance remained strong and steady. Still, when compared to Huya’s previous quarters, the latest results might also seem less exciting. Dong Rongjie, Chief Executive Officer of Huya, offered a solid explanation for this at the conference call on Tuesday evening.

According to Dong Rongjie, the slowdown of revenue growth in the fourth quarter of 2021 was primarily due to a soft macro environment. Even so, the Company continued to step up strategic efforts in content investment and boost user growth, which Dong believed is the key to sustainable business development. As a result, such strategic layout drove up costs and affected margins. But correspondingly, efforts were paid off in aspects of technology and product advancement, content enrichment and business diversification.

With respect to technology and product improvement, Huya launched a series of innovative and interactive features in the fourth quarter of 2021, to enhance user loyalty and interaction during game live streaming sessions. For instance, Huya had joined force with PeaceKeeper Elite to initiate a three-day campaign that allowed popular streamers to promote in-game skins and other virtual items during live broadcasts and achieved satisfactory results, which turned out to be quite successful and could potentially be a win-win situation for Huya, streamers and game studios.

Additionally, Huya’s open platform for third-party application developers continues to grow rapidly and gain popularity among users, broadcasters and developers. Those mini tools developed on the open platform could help improve interactions between streamers and users, and data have told the same story. In the fourth quarter of 2021, the average number of broadcasters using mini tools per day increased by approximately 160% year-on-year, and those tools engaged more than five million daily active users during the quarter, achieving over 240% year-on-year growth.

When it comes to professional e-ports content expansion, this is no doubt one of Huya’s strongest capabilities. During the fourth quarter, Huya broadcasted 125 licensed e-sports tournaments, generating total viewership of approximately 605 million. In particular, the Worlds 2021 received record-high viewership on Huya platform, with the peak concurrent viewers of Worlds 2021 doubled when compared with the previous edition in 2020.

What’s equally important, the Company has continued to broaden its e-sports broadcasting rights in the fourth quarter last year. In November, Huya signed an exclusive media Chinese rights agreement with ESL Gaming for a series of its key events in 2022 and 2023, including ESL’s Dota 2 and ESL Mobile ecosystems, as well as the ESL Pro Tour for CS:GO and StarCraft II. This collaboration would help Huya enhance the licensed coverage for those games’ tournaments as well as add high-quality international e-sports content to Huya platform.

With the intention of reshaping its business landscape, Huya has also made encouraging progress in business diversification. On the one hand, Huya has joined forces with its existing core broadcasters and established new cooperation with video content creators, with the aim of enriching video content on Huya platform. As a result, the number of videos uploaded and video viewership both recorded double-digit sequential growth in the fourth quarter. The synergies built between video content and live streaming content is likely to promote user growth and content consumption and provide more commercialization opportunities.

On the other hand, Huya’s international business—Nimo TV’s average MAUs increased to more than 30 million in the fourth quarter, highlighted by strong user growth in Indonesia. Particularly, by cooperating with game studios and broadcasting local hit e-sports tournaments, Nimo TV solidified its leading position in Indonesia. As Nimo TV refined cooperation with local talent agencies for more sustainable and healthy future revenue growth, its revenues grew by over 110% year-on-year in the fourth quarter.

Apart from business moves and plans, as a socially responsible corporate, Huya has redoubled efforts by upgrading its risk control and compliance system, expanding Huya volunteer team and encouraging broadcasters to create more content with potential for positive social impact. In 2021, over 9,600 broadcasters on Huya platform joined campaigns to promote a healthier and more positive social environment and performed approximately 83 thousand hours of related livestreaming, covering a wide range of topics such as anti-fraud education, volunteer social activities and culture heritage.

It is known that tech sector in China has undergone a series of regulatory moves over the past couple of years. Furthermore, facing a soft macro environment globally also poses challenges for Chinese tech companies listed abroad. With all factors combined, Chinese tech stocks as a whole underperformed in a bearish market.

Given Huya’s leadership position in the game streaming industry and its strong value proposition in the massive game and e-sports market, Dong Rongjie remained confident with Huya’s business fundamentals and operational capabilities. According to Dong at the earnings conference call, he believed that “as the market evens out and user sentiment returns to more favorable levels, we expect to see a recovery in our financials with our investments paying off.”

And he also pointed out the path to deliver long-term value to stakeholders, which is to “strategically focus on enriching the quality and diversity of our content, cultivating content creators, and advancing technology and product innovations, as well as further improving operational efficiency and exploring new business opportunities as we strive to support a better, happier community.”

Combined with the company’s strong user base and steady financial fundamentals, why not be patient and see what happens?

Source: Pandaily