HUYA

Sixth earnings webinar. I'm Hanyu Liu from the HUYA's Investor Relations. At this time, all participants are in listen 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 Junhong Huang, our Acting CEO, Mr. Raymond Peng Lei, 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 this and other risks and uncertainties is included in the company's latest annual reports on Form 20-F 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 under applicable law. Please also note that HUYA's earnings press release and this conference call include discussions of unaudited GAAP financial information as well as unaudited non-GAAP financial measures. HUYA'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, HUYA is the largest gaming MCN on WeChat channels and remain among the top three on Douyin. Across multiple leading game titles, nearly half of the core streamer 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 Duck Mobile continued to deliver impressive results.

Since its launch on January 7th, the game ranked number one on the iOS free 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 two, introducing a new map, Ancient Desert, as well as new roles, including Dueling Dodo 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 gameplay 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, Goose Goose Duck Mobile reached the top five on the iOS top-grossing game chart, with new skin 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 mini game version, which is currently scheduled for launch this summer. By integrating Goose Goose Duck 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 Goose Goose Duck 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 MMO. 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 CrossFire continue to contribute incremental growth. For example, our large-scale outdoor live-streaming event for Peacekeeper Elite Journey Season Two, not only effectively drove 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 solution for game developers.

Some of our earlier advertising campaign have proven very effective, gaining further recognition from leading advertisers, including Tencent, NetEase, and Hypergryph. For example, for Hypergryph recognized Arknights: Endfield open beta 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 UZI Cup, named after esports legend UZI, attracting more than 200 League of Legends 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 Dota 2 Immortal Cup Season two. We have also become the official production partner for multiple top-tier game tournaments, such as VALORANT 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' e-entertainment experience with a suite of game tools. In March, we officially launched the real-time navigation feature for our Delta Force map tool, as well as the League of Legends Hextech ARAM 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. HUYA is accelerating its strategic evolution from a game live-streaming platform into a full service game services platform, with game-related revenues reaching a record high percentage of total revenues, and our revenue mix continue to improve.

We will continue to deepen our game content ecosystem and focus on high-value opportunities across the game industry value chain. While 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 the sequential gross margin expansion to 14.6% this quarter. Furthermore, we achieved a non-GAAP net income of RMB 21 million for the quarter, despite lower interest income. Let's move on to more details of our Q1 financial results. Total net revenues were RMB 1.73 billion for Q1, up 15% from the same period last year. Live streaming revenues were RMB 1.1 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 1.48 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 content costs rose by 7% year-over-year to RMB 1.23 billion, mainly reflecting growth in our top line. Gross profits was RMB 253 million for Q1, up 34% from the same period last year.

Gross margin was 14.6% for Q1, improving from 12.5% from the same period 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 RMB 88 million for Q1, primarily due to marketing and the promotion efforts related to the launch of Goose Goose Duck Mobile. General and administrative expenses increased by 6% year-over-year to RMB 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 a loss of RMB 60 million for the same period last year. Excluding share-based compensation expenses and amortization of intangible assets from business acquisition, non-GAAP operating loss narrowed to RMB 3 million for Q1, compared with a 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. Net loss attributable to Huya Inc. was RMB 4 million for Q1, compared with a 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 intangible assets from business acquisitions, net of income tax, non-GAAP net income attributable to Huya Inc.

was CNY 21 million for Q1, compared with CNY 24 million for the same period last year. Diluted net loss per ADS was approximately CNY 0.02 for Q1. non-GAAP diluted net income per ADS was CNY 0.09 for Q1. As of March 31, 2026, the company had a cash and cash equivalent, short-term deposits, and a long-term deposit of CNY 3.46 billion, compared with CNY 3.82 billion as of December 31, 2025. With that, I'd like to open the call to your questions.

Thanks, Raymond, and hello, everyone. If you are dialing in by phone, please press five to ask a question, then press six to unmute yourself. If you are accessing 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 management in Chinese, please immediately repeat your question in English. Today's first question comes from Ritchie Sun from HSBC. Hello, Ritchie, your line is open. Please go ahead.

Vincent, Raymond, Margaret, [Non- English content] 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. What is the this year's operating strategy going to be?

Thank you.

[Non-English content]

Hi, Ritchie. This is Margaret. Let me just translate. Since its launch on January 7, Goose Goose Duck Mobile has continued to deliver impressive results ranking number one on the iOS free games chart for most of the quarter. This validates both the appeal of the game 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 this game remains to be growing the user base and user engagement.

[Non-English content]

In particular, there are three things we will be focusing our efforts on. Number one, we'll continue to build and strengthen our UGC mechanism. Goose Hunt is an early example of this work, 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 will add more UGC gameplay and casual game modes to the game. We believe this is crucial for game sustainable user engagement and the longevity.

Second, we will add more social and community features including inter-player connections, the home decoration system, and team up interactions so the game can evolve into a deeper social environment. Third, we are working on the WeChat mini game 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. We will take our next question from Nelson Cheung from Citi. Hi, Nelson, please go ahead.

[Non-English content] Let me translate the questions. Thanks management for taking my questions. My question is related to your AI progress. Wondering if management 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.

[Non-English content]

Our AI initiatives are focused on four areas centered around our business. Number one, that's the live streaming. Number two, game tools. Number three, IP based companionship. Number four, game production. For AI powered live streaming, we are exploring two main paths. Firstly, that's AI powered content creation and secondly, AI native live streaming. These products are still in early stages product iteration and user testing. We do not expect AI to replace real life streamers anytime soon, especially 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 tail live streaming content, 24-hour companionship, and certain interactive formats.

[Non-English content]

For AI-powered game tools, we are also progressing really well. In March, we launched the 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 HUYA's deep 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 assistant tool has very strong repeat user value. Going forward, we'll expand game tools to more titles and categories, including Golden Spatula, Goose Goose Duck Mobile, card and board games, strategy games and auto chess games.

[Non-English content]

AI enabled companionship. We're exploring IP based smart hardware, including physical AI companion products embedded with the multimodal AI capabilities. Based on our user feedback from Goose Goose Duck, we believe these products 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.

[Non-English content]

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 it to replace large scale Triple-A type of games in near future, we do see a lot of opportunities improving R&D efficiencies in casual games, web-based games, or small interactive games.

Thank you. Our next question comes from Weimeng from CICC. Hi Weimeng, please go ahead.

[Non-English content] So let me translate myself.

Just want to ask about the game publishing pipelines. Could 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.

[Non-English content]

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 genres 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.

[Non-English content]

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 Macao. 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 the overseas 3D puzzle matching category.

[Non-English content]

In terms of publishing strategy, we're leveraging our influence in streaming networks, cross-platform distribution and player communities. As mentioned in our prepared remarks, our estimated reach across external platforms now exceed 200 million users, including those on Douyin and WeChat platforms. This extensive user reach allows us to target core players more efficiently, create more appealing content, and enhance game longevity.

Thank you. We will take next question from Maggie Ye from CLSA. Hi Maggie, please go ahead.

Hey, thanks management for taking my question. [Non-English content] Could 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 forwards? Thank you.

[Non-English content]

Yeah. Live streaming remains a core part of HUYA's business. In the first quarter, live streaming revenue was CNY 1.1 billion, but we do feel the business may still be under some pressure due to the overall market environment. Therefore, we'll be more focused on improving ROI, cross content cost, which includes streamer cost and licensing cost. We believe one of HUYA's key differentiator 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 game distribution capabilities. In the first quarter of 2026, we offered around 55 licensed tournaments and more than 20 self-produced tournaments and variety shows. Among them, our self-producer UZI 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 the top entertainment live streamer for a collaboration at a major tourist attractions in Luoyang, generating strong online engagement and attracting over 100,000 peak concurrent viewers.

[Non-English content]

The key game titles will continue to build self-produced content around them. For example, Dota 2 Immortal Cup Season two is currently one of the largest third-party Dota 2 tournaments in China. For CrossFire, we recently worked with CF team on live streaming campaigns around the Kung Fu IP collaboration, including Crossfire Kung Fu HUYA Duel Night. These campaigns helped generate significant social buzz for the new update and further improve user engagement.

For Peacekeeper Elite, we launched Elite Journey Season two in the first quarter, which is a live streaming show that generated solid user participation that creatively combined game content, streamer influence, and outdoor scenarios. We think it's a great way to improve user engagement and help game content reach a broader audience.

[Non-English content]

HUYA also offers a broad range of highly engaging sports content. We have already secured full rights to 2026 Badminton World Federation events and 2026 World Snooker Tour, and will provide viewers with high definition live broadcasts 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, Ding Junhui and Zhao Xintong, reached a peak of nearly 20 million viewers in a single live streaming room.

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

[Non-English conent] Thanks company for taking my question. My question is on the advertising in-game item sales. Can you share some operation color on that? Thank you.

[Non-English content]

In the first 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 HUYA's revenue mix is continuing to improve, and non-live streaming game services have become an important growth driver.

[Non-English content]

For in-game item sales, revenue continued to grow rapidly year-over-year. In the domestic market, growth was mainly driven by leading titles such as Peacekeeper Elite and Honor of Kings. More specifically, Honor of Kings benefited from the exclusive skin sales and the Chinese New Year skin events, while Peacekeeper 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 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.

[Non-English content]

On advertising, HUYA continues to strengthen content-driven integrated game marketing solutions. By combining stream, streamer network, tournament integrations, UGC co-creation, and other core capabilities, we 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, NetEase, and Hypergryph.

Thank you. We will take our last question today from Rebecca Xu from Morgan Stanley. Rebecca, please go ahead.

Hi. Thank you for taking my question. I'm honored to be the last to raise question. 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. [Non-English content]

[Non-English content]

Our margins will continue to see improvement in the first quarter, with non-GAAP operating margin approaching break even. This improvement was mainly driven by continued revenue mix optimization with higher contributions from relatively higher 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 these higher margin businesses continue to scale and operating leverage gradually comes through, we expect further room for improvement in our overall gross margin operating margin for the full year. In addition, given the pace of investment related to Goose Goose Duck and other games, we expect improvement in both margins to become more visible in the second half of the year.

Okay, thank you once again for joining us today. If you have further questions, please feel free to contact HUYA's Investor Relations through the contact information provided on our website of Piacente Financial Communications. This concludes today's call, and we look forward to speaking to you again next quarter. Thank you.

Okay. Hello everyone, and thank you for joining our earnings call today. I'm proud to say 2025 was a record year for us. In the fourth quarter, total net revenues grew by 16% to RMB 1.74 billion, the highest in the last 10 quarters. While our live streaming business remains stable, revenues from game-related services, advertising, and other businesses grew 59% year-over-year, demonstrating our successful transformation to the gaming space. On a full year basis, total net revenues returned to growth and reached RMB 6.5 billion, up 7% year-over-year. In the fourth quarter, we recorded a one-off accounting provision. Excluding this provision, SBC and amortization items, we would have seen three consecutive quarters of positive growing operating profit and a full year operating profit. A robust content ecosystem and a stable user base underpin our performance.

In Q4, HUYA's total MAUs were approximately 160 million. We are also pleased to see our platform's influence continue to grow. In February, we welcomed the return of Uzi, one of the most legendary names in esports. His return further validates the strengths of HUYA's esports content ecosystem and our ability to attract and support top-tier streamers. The influence of our streamer ecosystem continued to expand, with more top streamers returning to HUYA and many of our streamers gaining recognition across our platforms, including WeChat channels, Douyin, and beyond. We are no longer just a game live streaming platform, but have evolved into a content-driven integrated game services provider with broad platform reach and a key strategic partner to game developers. Since our strategic transformation into games-related services in 2023, we have expanded and deepened our footprint across the industry's value chain.

We have expanded beyond live streaming into a broader range of game-related services, including game distribution, in-game item sales, and game advertising, further transforming HUYA into a more integrated game-related services provider. Our entry into game publishing with the success of Goose Goose Duck Mobile marks another important milestone in this transformation. Unlike traditional publishing models that rely primarily on user acquisition, we leverage the strengths of our content ecosystem and take a content-driven approach to publishing. Goose Goose Duck Mobile, launched in January, delivered outstanding results, attracting over 5 million new users within the first 24 hours and surpassing 10 million within 6 days, and has ranked number one on the iOS free game chart for most of the time since its launch. The game quickly became a market sensation and a clear validation of our strategy.

Since pre-registration stage, we have been working closely with top streamers across multiple platforms and produced two seasons of a live streaming variety show. Goose Goose Duck Night was fueled by strong social media buzz and anticipation prior to launch. We saw very strong user-generated content trending on social media as the game generated hundreds of millions of impressions and sparked over 100 social media trending moments on social platforms such as Douyin and RedNote. This content-driven marketing approach resulted in a much higher ROI that far, far exceeds traditional traffic acquisition channels. This underscores our effectiveness in content-driven marketing for new game launches and maintaining traction over time. We are pleased to see that two months after its launch, Goose Goose Duck Mobile continues to stay at the top of the chart and continues to outperform our expectations in terms of user retention.

Most of our players for this game are college student and young working professionals, with a higher proportion of iOS and female users. Looking ahead, we are excited to continue enhancing our social feature and building a stronger and more vibrant community. Monetization remains relatively limited for now as we focus on growing engagement. With major game content updates scheduled for later this year, we expect monetization to increase afterwards. The successful debut of Goose Goose Duck Mobile demonstrate the potential of our publishing strategy and give us great confidence in our next growth driver, fueled by our live streaming content ecosystem. We are excited by our strong publishing pipeline with multiple new titles coming later this year. At the same time, supported by the strength of HUYA's ecosystem, our other game-related businesses, including in-game item sales and advertising, continue to deliver solid performance.

For in-game item sales, revenue continued to grow year-over-year, increasing by more than 200%, driven by new titles such as Peacekeeper Elite and CrossFire Mobile. As the business further scales, we continue to expand and deepen our collaboration with game developers. In January, we became the first platform to secure exclusive pre-sale rights for the MVP skin in Honor of Kings, which is rare for the industry. We also partnered with Arena Breakout to launch a customized bundle exclusively for overseas players, which also delivers strong sales performance. Looking ahead, we will continue to expand customized rights offerings, joint marketing, and localized partnerships across more top-tier titles to further enhance user satisfaction. On the advertising side, HUYA's content-driven marketing capabilities are also gaining broader recognition from leading game developers, including Tencent and NetEase.

In the fourth quarter, we hosted NetEase Fantasy Westward Journey Mobile Wushuang Cup in collaboration with 32 top streamers. This helped the game to further expand its brand awareness to younger audience through live streaming. In our esports ecosystem, we delivered solid result across both licensed and self-produced events in Q4. During the quarter, we offered users close to 100 licensed tournaments, as well as around 40 self-produced tournaments and variety shows. One key highlight came in December when we hosted the Demacia Cup for the first time, one of the core professional tournaments in the League of Legends ecosystem. This also marked the first time that the official League of Legends organizer had granted hosting rights to a third-party live streaming platform.

It reflects strong recognition of HUYA's event planning, operational, and content production capabilities and marks our evolution from an exclusive live streaming partner to a full-service tournament organizer. Building on our summer success, we hosted the Delta Force Diamond Champions autumn season. The event set new bars for the game in terms of both scale and viewership in Delta Force esports circuit. On the product side, we see great opportunities in the AI wave today. We have made meaningful progress in AI-powered live streaming, with a growing number of production featuring prominently on viewership charts. We have integrated AI host into our esports programs who are equipped with realistic human-like avatars and capable of professional-level commentary and interaction. This visual host engage with viewer comment in real time, fostering strong audience resonance.

This has been particularly well-received among users of leading game categories such as League of Legends and CS:GO, driving longer viewing time and deeper community engagement. We are thrilled to continue exploring the latest technologies and integrating them directly into our game tools and products, creating richer and more engaging experience for our players that were not possible before. For example, in March, our Delta Force Map Tool will introduce a real-time navigation feature powered by our context-aware multimodal AI capabilities, enabling smoother gameplay and more intuitive interactions. Beyond this, we are actively exploring ways to embed these technologies across additional titles, including Golden Spatula and Goose Goose Duck Mobile. On the overseas front, we remain focused on improving the product experiences and strengthening our content ecosystem, which supported steady growth in both advertising and in-game item sales.

We will continue to incubate new products in a flexible manner and involve our monetization strategies. We believe this will further strengthen our capabilities and momentum for scaling our overseas publishing business as well as other monetization opportunities. Overall, marked a pivotal year for HUYA, defined by solid strategic execution and impactful milestones. From an operational perspective, we returned to growth and further enhanced our profit profile. Looking ahead, we will further scale our footprint across the entire gaming value chain. With our growth momentum on a robust and sustained upward trajectory, we are poised to embark on an ambitious new chapter of sustainable, high-quality development for HUYA. 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'll start with our fourth quarter results, followed by our full-year financial highlights and an update on our shareholder returns. In the first quarter, we delivered accelerated top-line growth, driven by robust expansion in our game-related services and advertising businesses. However, our operating results were impacted by a one-time RMB 66 million provision, which led to a non-GAAP operating loss of RMB 36 million for the quarter. Excluding the impact of this one-time item, we continue to see improvement in our core operating performance and the overall earning profile. Let's move on to more details of our Q4 financial results. Total net revenues were RMB 1.74 billion for Q4, up 16% from the same period last year.

Live streaming revenues were RMB 1.15 billion for Q4, up 2% from the same period last year, primarily due to higher average spending per paying user for live streaming services. The number of domestic paying users remained stable at 4.4 million for Q4. This figure excludes users who made in-game purchases through our game distribution business but didn't complete payments through our platform or related services, as well as overseas paying users. Game-related services, advertising, and other revenues were RMB 593 million for Q4, up 59% from the same period last year. The increase was primarily due to higher revenue from game-related services and advertising, which were mainly attributable to our deeper cooperation with game companies in China and overseas.

Cost of revenues increased by 30% year-over-year to RMB 1.49 billion for Q4, primarily due to increased revenue sharing fees and content costs, as well as increased costs related to in-game items. Within these, revenue sharing fees and content costs rose by 10% year-over-year to RMB 1.28 billion, reflecting growth in our top line. Gross profit was RMB 245 million for Q4, up 44% from the same period last year. Gross margin was 40.1% for Q4, improving from 11.4% from the same period last year. Excluding share-based compensation expenses, non-GAAP gross profit was RMB 248 million, and the non-GAAP gross margin was 40.3% for Q4.

Research and development expenses were RMB 123 million for Q4, largely flat year-over-year. Sales and marketing expenses increased by 24% year-over-year to RMB 78 million for Q4, primarily due to increased marketing and promotional efforts, including pre-launch preparations for Goose Goose Duck Mobile. General and administrative expenses increased by 55% year-over-year to RMB 126 million for Q4, primarily due to a RMB 66 million provision related to a receivable arising from a 2021 arrangement with a broadcaster, which was deemed to have a heightened risk of non-recoverability. Other income was RMB 80 million for Q4, compared with RMB 4 million in the same period last year, primarily due to increased government subsidies.

Operating loss narrowed to RMB 65 million for Q4, compared with a loss of RMB 93 million for the same period last year. Excluding share-based compensation expenses and the amortization of intangible assets from business acquisition, non-GAAP operating loss narrowed to RMB 36 million for Q4, compared with a loss of RMB 69 million in the same period last year. Interest income was RMB 32 million for Q4, down from RMB 75 million for the same period last year, primarily due to a lower time deposit balance following the payment of special cash dividends. Impairment loss of investments was RMB 81 million for Q4, compared with RMB 151 million for the same period last year. Primarily due to the recognition of impairment charge on the company's U.S. investments attributable to the weak financial performance of certain investees.

Net loss attributable to HUYA Inc. narrowed to RMB 180 billion for Q4 compared with loss of RMB 172 billion for the same period last year. Excluding share-based compensation expenses, impairment loss of investment and the amortization of intangible asset from business acquisitions, net of income taxes. Non-GAAP net loss attributable to HUYA Inc. was RMB 8 billion for Q4 compared with the non-GAAP net income attributable to HUYA Inc. of RMB 1 billion for the same period last year, primarily due to the provision item and the lower interest income as explained earlier. Diluted net loss per ADS was approximately RMB 0.51 for Q4. Non-GAAP diluted net loss per ADS was RMB 0.04 for Q4.

As of December 31st, 2025, the company has cash and cash equivalents, short-term deposits and long-term deposits of RMB 3.82 billion, largely flat compared to September 30th, 2025. Moving on to our full year 2025 results. Total net revenues were RMB 6.5 billion for 2025, increasing by 7% from the prior year. Live streaming revenues were RMB 4.59 billion for 2025 compared with RMB 4.75 billion for the prior year. Game related services, advertising and other revenues were RMB 1.91 billion for 2025 compared with RMB 1.33 billion for the prior year. Non-GAAP gross profit was RMB 884 million for 2025, up 7% from the prior year.

Non-GAAP gross margin remained flat at 30.6% for 2025. Non-GAAP net income attributable to HUYA Inc. was RMB 99 billion for 2025 compared with RMB 269 billion for the prior year. The non-GAAP net margin was 1.5% for 2025 compared with 4.4% for the prior year. To reiterate, the decline was largely due to the provision we discussed at the lower interest income rather than any change in our core business performance. Non-GAAP diluted net income per ADS was RMB 0.43 for 2025 compared with RMB 1.15 for the prior year.

Net cash used in operating activities was RMB 176 billion for 2025 compared with net cash provided by operating activities of RMB 94 billion for the prior year, primarily due to decreased interest income and increased amount due from related parties. For additional details on our full year 2025 financial results, I encourage listeners to refer to our earlier press release issued earlier today. Finally, let me provide an update on our shareholder returns. To implement our 2025-2027 dividend plan adopted in March 2025, we are pleased to declare a 2026 special cash dividend of $0.135 per ordinary share or $0.135 per ADS, for a total amount of approximately $31 million.

In addition, under our up to $100 million share repurchase program, we have repurchased 22.9 million HUYA shares with an aggregate consideration of $75.5 million as of the end of December 2025. 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 five to ask a question, then press six to unmute yourself. If you are accessing the phone from the Tencent Meeting or VooV 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 management in Chinese, please immediately repeat your question in English. Today's first question comes from Rebecca Xu from Morgan Stanley. Hi, Rebecca. Your line is open. Please go ahead.

Hi. Hi. 可以的。

可以。

太好了，太好了，谢谢。感谢管理层接受我的提问。我的问题是关于拨备计提以及投资减值部分，看起来这也是利润端的波动的主要的原因了。是否可以请管理层分享一下这些项目的具体的构成以及背后的原因。那么也想请教，就是类似的处理是否未来还会再出现，那么会对运营利润还有净利润的影响可能会持续多久。

Thanks management for taking my question, we see a profit fluctuation mainly driven by provisioning and investment impairment. Could management share the composition and underlying reasons for this item and how should we think of the future trend and on operation on OP and net profit. Thank you.

感谢Rebecca。我解释一下，本季度利润端波动主要来自两项因素。一是因为与某主播2021年的合作安排的应收款项有关，我们在本季度计提了人民币6,600万的一次性拨备，这也是拖累本季度经营利润的主要因素之一，造成了GAAP的运营亏损了大概3,600万。第二项是我们确认了大概8,100万元的投资减值，主要是与被投资企业的表现偏弱有关，这也对我们的净利润造成了影响。总体来看，这两项都属于管理层经过审慎评估，并通盘考虑后做的非现金会计处理，不代表公司核心经营利润趋势的变化，更偏向是一次性影响。公司仍会遵照会计准则的要求，对长期投资等进行定期评估。根据管理层的判断，目前并没有其他需要进一步减值的大额资产。

Thank you for the question. The fluctuation in our profit this quarter was mainly driven by two items. First, we recorded a RMB 66 million one-off provision related to a receivable arising from 2021 arrangement with broadcaster. This was recorded in G&A and contributed materially to our non-GAAP operating loss of RMB 36 million for the fourth quarter. Secondly, we recorded impairment loss of investments of RMB 81 million related to companies that were previously invested in and as underperforming. This contributed to our net loss. Overall these two items are non-cash accounting adjustments based on management's highly prudent and critical evaluation.

From our perspective, these are more like one-off impacts that do not reflect our operating trends. Going forward, we'll continue to perform regular impairment review in accordance with accounting standards. Right as of now, based on management's current judgment, we don't see any additional impairment required at the moment. Thank you.

Thank you. Our next question comes from Meng Wei from CICC. Hello, Meng Wei please go ahead.

感谢管理层，我有两个关于鹅鸭杀的问题。第一个的话是能否分享一下目前关于这个游戏的DAU留存、ARPU流水这些等等的情况，以及我们对于这个游戏今年有什么推广的KPI。另外的话就是想问一下，公司打算如何去延长这个游戏的生命周期。 So let me translate myself. Thanks for taking my question. My question is about Goose Goose Duck. First of all, could you maybe share some color on the current metrics like DAU retention, ARPU and revenue and etc. Also, what's the KPIs for 2026? Secondly, how does the management think about extending the game life cycle from here? Great, thank you.

感谢魏萌的提问，我来简要汇报一下鹅鸭杀的核心数据，还有我们的一些未来规划。首先我们从核心的数据表现来看，我们也可以看到，现在游戏的日常DAU都一直保持在一个比较高的水平，并且我们也看到它的表现还是非常稳健的。另外我们也可以关注到，从游戏上线到现在大概两个月的时间左右，我们可以看到我们依旧在整个iOS的免费下载榜处在一个前列的水平，我们整体整个的长线留存也是超出我们的预期的。往后面来看，我们随着暑期旺季的到来，还有我们在产品端的运营的持续深化，我们也预计我们的DAU仍然有进一步持续提升的空间。另外一方面，在商业化方面，这个阶段我们还是保持着一个相对比较克制的策略，商业化的释放内容目前也比较有限，因此我们看到日常的ARPU还是处在一个比较低的水平，但是在一些活动的节点，ARPU也会有一个大幅的增长。后续随着我们整个派对的玩法，还有家园系统的陆续上线，我们也会逐步地把日常的ARPU给拉起来。关于挖掘长期的潜力，还有延长生命周期，我们的主要战略主要是围绕三个点来展开的。第一方面，我们会保持一个紧凑的内容的持续迭代。第二方面，我们会多端地去寻找新的增量，包括我们微信的小游戏版本，预计也会在今年年内上线，我们也有望能够为我们整个活跃用户的提升带来一个非常显著的增长。第三个，就是稳步地去构建我们整个游戏的UGC生态系统。目前我们也具备了UGC编辑器的基础能力，后续我们也会持续地去完善相关的功能，来进一步地把用户卷进来，丰富我们整个游戏的玩法。谢谢。

Thank you for the question. Let me briefly walk you through the current performance and our future plans for Goose Goose Duck. The game's DAU has consistently stood high and steady since its launch, with user retention also exceeding our expectations. As mentioned earlier, we are very proud that two months after its launch the game is still at the very top of the iOS free download charts. We expect to see another DAU jump in the summer as we prepare a number of game events and content updates for that season. On monetization, we have been quite conservative, with only very limited monetization content introduced at this stage as we focus on growing the user base.

As a result, our baseline daily ARPU is still at a relatively low level. Having said that, whenever we push out a new event or a new update, we do see significant ARPU growth. This reiterates our belief that our users respond well to these content updates, and we will roll out more party game modes and home systems later this year, which we hope will be meaningful in driving daily ARPU. In terms of longer term potential and life cycle extension, we are focused on three things. First, keeping a rapid pace of content updates. Second, gaining additional user growth across multiple platforms. We expect to launch WeChat mini game version later this year, which could further expand our overall active user base. Third, building our UGC ecosystem. We are currently working on the UGC editor, and we will keep upgrading these functions to give our users the enriched UGC experience within the game. Thank you.

Thank you. Our next questions come from Ritchie Sun from HSBC. Hello, Richie, please go ahead.

Thank you, management, for taking my questions. I want to ask about AI. What has been the progress in terms of the AI, especially in AI live streaming, AI game tools, and internal organizational improvement in terms of efficiency, and what are the tangible results over there? Thank you.

感谢Richie的提问，由我来回答这个问题。确实，现在整个大环境来看，AI是每个公司都需要去思考的一个问题。我们在AI战略方面，主要也分为赋能我们现有的业务，还有就是我们怎么样去探索一些新的赛道，这两个方向。在赋能我们自有业务方面，我们前面也有提到AI直播间，包括我们AI工具的表现还是非常亮眼的。目前我们AI直播间已经贡献了我们公司整体DAU的10%左右这样的一个水平，而且头部的AI直播间在人均观看时长、七天留存，还有归因DAU这些核心指标上面，平均都较同类品类的直播间高出了40%。表现最突出的一些直播间，最高可以高到80%左右。今年，我们也将继续推出纯AI驱动的直播间内容能力，还有提升我们整个运营效率，来进一步提高我们在平台整体流量中的占比。另一方面，在AI游戏工具服务方面，我们也取得了比较积极的进展。上个季度，我们也推出了三角洲行动的Delta Force Map Tool，为玩家提供更加丰富的沉浸式3D跑图环境，来帮助他们更快地熟悉和更好地探索整个游戏。我们也把这个工具放到了海外，结果发现也大受欢迎，也被游戏官方关注到了，并且他们在官方社区也对我们整个游戏工具做了推荐。因此，对于AI技术的持续迭代，我们也致力于在今年三月份推出AI实时驱动的实时导航版本，放到整个游戏工具里面，来辅助整个用户在打游戏的过程中，进一步提高我们整个获客能力，包括我们用户的活跃度。另外在新赛道方面，我们也在布局AI硬件和AI互动产品，比如说我们结合鹅鸭杀这个IP，也将即将推出一个AI智能硬件。与此同时，大家也都知道最近OpenClaw也非常火，我们也在探索将OpenClaw，包括这种multi-agent的能力和虎牙前面积累的整个数字人技术能力相结合，融入到我们整个游戏场景里面，来提升整个互动体验，并且能够支持更多定制化的玩法。展望未来，我们还将计划将这些AI驱动的功能和辅助工具拓展到更多的游戏里面，比如金铲铲之战，包括前面讲到的鹅鸭杀这些热门IP游戏里面。

Thank you for the question. AI is something every company should think about. For us, it's about two things. One is empowering our existing business, and two, exploring new opportunities. For our existing business, both AI-powered live streaming channels and AI game tools continue to deliver very strong momentum. These AI-powered channels now contribute nearly 10% of our overall DAU, and the performance continues to stand out across the platform. On average, they outperform their real life peers by 40% across key metrics such as viewing time, retention, and attributed DAU, and that number goes up to 80% for the very best AI live streaming channels. This year, we'll continue to enhance content capabilities and operating efficiency of fully AI-powered live streaming channels and further increase their traffic contribution. AI game tools are also very promising.

Last quarter, we launched Delta Force Map Tool, which provided very rich, immersive, 3D environment for players to quickly get familiar and better navigate the game. We also launched this tool to overseas markets, and it was very well-received by international users. It drew great attention from the game's official team, and it was recommended on many of the official community channels. As we continue to iterate our AI capabilities, we are working on applying AI-powered real-time navigation into this map tool this month to expand user reach and engagement. Additionally, we are developing AI hardware and AI interactive products, including AI-enabled smart hardware based on Goose Goose Duck IP.

At the same time, we're exploring different ways to integrate new technologies such as OpenClaw, multi-agent systems, virtual live streamers into party game scenarios to enhance interactivity and support more customized gameplay experiences for Goose Goose Duck. Going forward, we also plan to create more AI-driven companion tools for other popular titles such as Battle of Golden Spatula. Thank you.

Thank you. We will take our next question from Nelson Cheung from Citigroup. Hi, Nelson, please go ahead.

Let me translate myself. Thanks, management, for taking my question. Can management share your future strategy of your game publishing business, latest publishing pipeline and the release schedule? Can management share your view on the growth expectation for the game distribution business and overall contribution to the group revenue as a whole? Thank you.

Okay, now-

Thank you. Our next question comes from Yiwen Zhang from China Renaissance. Hi, Yiwen. Please go ahead.

诶，谢谢管理层接受我的提问。我的问题是关于咱们利润率的。看到虽然 Q4 咱们的一个净利润率受到一些减值跟波动的影响，但本季度内的毛利还是有不错的增长。想问一下管理层怎么，如何看待公司未来毛利率的一个趋势，还有改善的空间。谢谢。 Thanks for taking my question, the question is on margin. We know despite some negative impact from provision impairment in Q4, there was notable improvement on our gross profit margin during the quarter. What is the management view on future gross profit margin trend and room for improvement? Thank you.

谢谢Yiwen Zhang。2025年公司的全年毛利率为13.4%，同比小幅提升0.1个百分点。从季度表现来看，2025年第四季度毛利率同比提升了2.7个百分点，主要受两方面带动。第一，四季度的广告收入占比有所提升，而广告业务毛利率相对较高。第二，道具业务延续较快增长，也对整体毛利率形成了积极的贡献。往前看，尽管我们的直播业务的毛利率面临一定的压力，但高毛利业务占比提升带来的正面影响正日益显现，这在我们第四季度的业绩中已经得到了体现。随着游戏发行、游戏道具等高毛利业务规模的持续扩大，以及经营杠杆的逐步改善，我们预计毛利率将呈现温和改善的趋势。

For the full year 2025, our gross margin was 13.4%, up 0.1 percentage points year-over-year. In Q4 2025 gross margin however improved by 2.7 percentage points year-over-year, mainly driven by two factors. First, advertising accounted for a high percentage of total revenue and carries a relatively high gross margin. Second, our in-game item business maintained very strong growth and also contributed positively to the margin improvement. Looking ahead, while gross margin of our live streaming business might be facing a bit of pressure, the benefits from our higher margin businesses are becoming much more visible, as reflected in our fourth quarter performance. As game publishing and in-game item sales business continue to grow, and as operating leverage gradually improve, we expect to see continued gross margin improvement.

Thank you. We will take our last question today from Maggie Ye from CLSA. Maggie, please go ahead.

晚上好，感谢管理层接受我的提问。我的问题是关于游戏道具业务的。那本季度咱们在看到收入增长之外，想请教一下在利润率、渠道结构和独家权益这几个方面是否有哪些实质性的进展？管理层如何看待这些业务未来几个季度的增长的可持续性，以及它们的盈利提升的空间。 Thanks for taking my question, and my question is related to game virtual item sales. Beyond the top line growth this quarter, could management share any, material progress regarding these segments margin profile, channel mix and any exclusive partnership initiatives? Furthermore, how should we think about the sustainability of this growth and the potential for future margin expansion over the coming quarters? Thank you.

感谢Maggie的提问。最后一道题我来回答这个问题。这个季度呢，我们可以看到整个道具的业务表现还是非常健康的，总体实现了规模还有利润质量的双重提升。从数据来看，2025年第四个季度，我们道具销售的收入继续保持同比200%以上的高速增长。同时呢，随着我们道具业务规模化效应的释放，我们也进一步优化了整个成本结构，带来了整个盈利质量的显著改善。业务的亮点方面主要体现在三个方面。第一个呢是我们独家权益的突破，我们首次拿下了王者荣耀的王昭君FMVP皮肤，并且能够享受这种独家超前预售的权益。上线首个小时呢，我们也得到了近千万的流水，并且能显著带动新增道具付费用户的增长，也充分验证了我们整个商业化的转化能力。其次呢，我们在整个渠道结构的优化，预计未来我们虎牙站内的商城交易占比也将进一步提升，我们也会将更多的交易沉淀到我们自有的场景中来。第三个呢，是我们重点品类的合作拓展，目前我们也在逐步覆盖腾讯、网易这些头部厂商的重点项目，我们整个的产品矩阵也在持续丰富。谢谢。

Thank you for the question. Overall our in-game item business delivered a very solid quarter with very strong growth and improved profitability. In the fourth quarter of 2025, revenue from in-game item sales continued to grow by over 200% year-over-year. As the business scaled, we also further optimized our cost structure, which then translated into meaningful improvement in earnings quality. There were three key highlights during the quarter. First, we achieved a meaningful milestone in exclusive rights partnership. For the first time, we secured exclusive pre-sale rights for Wang Zhaojun's FMVP skin in Honor of Kings. The launch generated close to RMB 10 million in gross billings within the first hour, and it drove very strong growth in new paying users demonstrating our monetization capability. Second, we continue to improve our channel mix.

We expect more transactions to be completed in our proprietary in-game item mall over time, which will further improve monetization efficiency. Third, we continue to work with some of the largest game companies in China, working on their key titles, including those from Tencent and NetEase. We hope to further expand our portfolio of games, and continue to grow our presence in the industry. Thank you.

Thank you once 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 Piacente Financial Communications. This concludes today's call and we're looking forward to speaking to you again next quarter. Thank you.