Earnings call: HUYA reports robust Q1 2024 growth, expands user base

HUYA Inc. (HUYA) has announced a strong first quarter for 2024, with substantial growth in its game-related services and a healthy increase in its user base. The company’s strategic focus on commercialization, content, and technology advancements has led to a 137.6% year-over-year surge in game-related services, advertising, and other revenues, amounting to RMB 244 million. Despite a decline in live streaming revenues, HUYA achieved a net income of approximately RMB 92 million on a non-GAAP basis and plans to continue building shareholder value through operational improvements.

Key Takeaways

• HUYA’s game-related services, advertising, and other revenues grew by 137.6% YoY, reaching RMB 244 million.
• The company saw a slight increase in paying users and reported solid financial performance with a non-GAAP net income of RMB 92 million.
• Total operating expenses were reduced by 17.8% YoY, contributing to a meaningful profitability improvement.
• HUYA repurchased $48.5 million worth of stock and declared a special cash dividend of approximately $150 million.
• The company expects stable revenues throughout the year and foresees full-year profitability in 2024 to exceed that of 2023.

Company Outlook

• Revenue for the year is expected to remain stable, with game-related services projected to grow rapidly in upcoming quarters.
• HUYA is optimizing costs to improve gross profit margins and anticipates full-year profitability in 2024 to outpace 2023.
• The company aims to become an open ecological hub, promoting industry revolution through strategic cooperation.

Bearish Highlights

• Live streaming revenues saw a decline, with Q1 revenues dropping to RMB 1.26 billion from RMB 1.86 billion in the previous year.

Bullish Highlights

• The company has a strong cash position with RMB 9.4 billion in cash and cash equivalents as of March 31, 2024.
• GAAP net profit increased by about 79% in Q1, signaling a significant improvement in profitability.

Misses

• There were no specific misses mentioned in the earnings call summary provided.

Q&A Highlights

• HUYA plans to break down platform barriers and enhance cooperation with other platforms, including Tencent Group, to reach a broader user group and create more win-win situations.
• The company is expanding into short videos and will introduce their content to other platforms, aiming to boost user loyalty and activity.

In conclusion, HUYA Inc. has demonstrated a strong start to 2024, with a growing user base and a strategic focus on diversifying revenue streams. The company’s efforts to optimize costs and enhance cross-platform cooperation are expected to contribute to a stable revenue outlook and improved profitability for the full year.

InvestingPro Insights

HUYA Inc. has shown resilience and strategic agility in the face of a challenging market. Here are some InvestingPro Insights that shed light on the company’s financial health and market performance:

• HUYA’s management has been actively buying back shares, highlighting their confidence in the company’s value and future prospects. This aligns with the company’s announcement of a $48.5 million stock repurchase, further signaling a commitment to building shareholder value.

• The company’s strategic financial position is underscored by holding more cash than debt on its balance sheet. With a strong cash position of RMB 9.4 billion reported, HUYA appears well-prepared to navigate market uncertainties and invest in growth opportunities.

InvestingPro Data metrics provide additional context to HUYA’s financial landscape:

• The market capitalization stands at 1010M USD, reflecting the company’s current market valuation.

• HUYA’s price to book ratio as of the last twelve months ending Q4 2023 is 0.73, suggesting that the stock may be undervalued compared to its book value.

• Despite a revenue decline of 24.5% over the last twelve months, the company has experienced a significant return over the last week, with a 17.74% price total return, and an impressive 72.36% return over the past year.

For readers looking to delve deeper into HUYA’s financials and market performance, InvestingPro offers additional insights and metrics. With a total of 13 InvestingPro Tips available, investors can gain a comprehensive understanding of HUYA’s position and potential. To access these insights, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at https://www.investing.com/pro/HUYA.

Full transcript – HUYA Inc (HUYA) Q1 2024:

Hanyu Liu: Good day and good evening and thank you for standing by. Welcome to HUYA’s First Quarter 2024 Earnings Webinar. I am Hanyu Liu from 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 in a few hours. Participants of management on today’s call will be Mr. Junhong Huang, HUYA’s Acting Co-CEO and Senior Vice President; and Ms. Ashley Wu, Acting Co-CEO and Vice President of Finance. Management will begin with prepared remarks and the call will conclude with a Q&A session. Before we continue please note that today’s discussion will contain forward-looking statements made on the safe harbor provisions of the 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 company’s prospectus 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 our Co-CEO and SVP, Mr. Huang. Please go ahead.

Junhong Huang: Okay. Thank you, Hanyu. Hello, everyone. Thank you for joining our earning conference today. We are pleased to deliver first quarter results featuring a healthy user-based expansion, gross in-game-related services, and a more stable overall revenue trend. We also improved our profitability with non-GAAP net income reaching approximately RMB 92 million. With 2024 off to a good start, I’d like to share some details about the year’s key strategies and recent developments, including our strategic transformation and commercialization focus, content, and platform ecology upgrades, and technology and product advancements. Let me start with an update on our strategic transformation. We are making encouraging progress in the commercialization of our game-related services driven by the rapid growth of revenues from game distribution and advertising services as well as in-game item sales. Our game-related services, advertising, and other revenues, formerly known as advertising and other revenues, reached RMB 244 million for the first quarter, representing growth of 137.6% year-over-year and 30.7% quarter-over-quarter. This growth reflects a strong and engaged base of high-value gamer users on our platform and validates our new directions potential. In terms of game distributions, we are broadening our coverage to include more games, both upcoming and existing titles. Our gamer users tend to have high commercial value potential with users’ average spending level through HUYA’s distribution channel performing well, particularly in the MMO and SLG categories. We are also refining our operations to capitalize on their value as we develop game distribution services. For in-game item sales, we offer a diverse range of popular game props for a growing number of games. Additionally, we are expanding our offering of broadcaster-customized in-game virtual items to help strengthen connections between broadcasters and their fans. With regard to game advertising services, we are working with more game companies and carrying out innovative broadcaster promotion activities and campaigns. We are also actively preparing the upcoming launch of eagerly-awaited D&F Mobile game to seize related opportunities in game distribution and promotion. In addition to providing rich live streaming content and more comprehensive services related to this game for our users and the game studio, we will leverage this game to grow our game-related service revenues. In addition, I want to point out that we typically recognize revenues from game distribution and in-game item sales after revenue sharing with the game companies. That is on a net basis. That means game-related services actual total transaction value is much higher than its revenue. Game-related services’ strong and rapid growth this quarter reinforces our confidence that this business revenue will continue to scale. Also, as game-related services tend to offer higher gross margins, this business should accelerate improvements in our overall gross margin and profitability as its contribution to total revenues increase. In the long term, this transformation will not only enhance our revenue mix, but could also enhance our revenue scale and profit levels. Turning to content and platform ecology, strengthening our cooperation with various platforms and products to enhance our platform ecology is a key strategy for us in 2024. In the first quarter, we hosted the New Year’s Esports All-Star event in cooperation with three other major game live streaming platforms, featuring League of Legends, Honor of Kings, and Peacekeeper Elite competitions broadcast on multiple live streaming and content platforms. With an array of celebrities and popular broadcasters from each platform participating, the event was well-received by users during the Chinese New Year period and went viral beyond the e-sports audience. Its success also marked a major breakthrough for the game live streaming industry in terms of content co-creation. Through deep cooperation with our partners, we overcame platform barriers for the first time to mutually benefit from our complementary content. We believe this more open environment offers vast opportunities for HUYA to create win-win outcomes for platforms of all kinds. As an industry leader and barrier-breaking pioneer, our goal is to become a central hub within a more open content ecosystem. We are currently working with several live streaming platforms on professional-generated content production, broadcaster-across-platform streaming, and commercialization. We are also embracing the short-form video sector by bringing our video and live streaming content to these platforms. In addition, as we further enhance our cooperation with Tencent Group, our high-quality content is being featured on various product lines within the Tencent ecosystem, such as WeChat channels, Tencent Video, QQ, and an array of game products, touching a wider range of users. Thus, initiatives like these, we believe we can better meet users’ needs increase the HUYA platform’s influence and create future opportunities. Strategically, we are building a third-tiered pyramid of e-sports tournaments and event content. At the top are licensed professional e-sports tournaments. Our extensive coverage of top-tier licensed tournaments showcases our content quality while helping us improve our event operations capabilities. The middle tier is our premium self-produced events and programs, leveraging our leading position in the e-sports market and our abundant broadcaster and professional player resources. We are offering more and more influential self-produced content. Finally, the bottom tier comprises e-sports events we recognize targeting massive participation from local communities, which also help to broaden the audience for e-sports content. Actually, we’ll provide more details on our Q1 content activities later. In terms of technology and product advancements, we upgraded the HUYA live mobile application to version 12 in February. This release features enhanced e-sports information community content and game-related service functions, as well as new interactive features on game live channels. For example, a new dedicated event of [technical difficulty] e-sports categories and upgraded event live information reports. In the community section, we optimized the integration of game information and strategies for various games and added an e-sports encyclopedia tab with comprehensive data on events, teams, and players. All of these enhancements are designed to better meet users’ needs for professional game and e-sports content. On a related note, several new features we mentioned on our last call, including AI-powered customized commentary, real-time game status information, and intelligent editing for highlight replays also became available with this iteration. We remain dedicated to technology and product advancement, leveraging HUYA’s strengths in game data and AI to bring users a unique, super-real interactive experience in terms of real-time interaction. Watching while playing and deliberate content creation, in turn, these differentiated experiences will deepen our competitive mode. In summary, we will continue to embrace changes in user demand and industry dynamics as the industry and market evolve. Through innovation across content, platform, ecology, technology, products, and commercialization, as well as deepened cooperation with industry partners and content creators, we aim to propel HUYA’s business growth as we fortify our leading position in the game live streaming market and expand our presence in the game value chain, we will also drive the future development of the live streaming and game industries. With that, I will now turn the call over to our Acting Co-CEO and VP of Finance, Ashley Wu, to share more details on our results. Ashley, please go ahead.

Ashley Wu: Thank you, Vincent, and hello, everyone. I’ll provide some updates on our operating metrics and financials. On the user side, we continue to solidify our user base, despite the first quarter being the usual low season for live streaming activities. Upgrades to the HUYA Live app and innovative cross-platform e-sports events and operational activities drove HUYA Live’s average mobile MAUs to 82.6 million for the first quarter, up from 82.1 million for the same period last year. Also, the expansion of our game-related services and users paying for in-game virtual items contributed to a slight sequential increase in paying users on HUYA Live, reaching 4.4 million. Moving on to our professional content initiatives. On the licensed content front, we broadcasted over 65 licensed professional e-sports tournaments in the first quarter of 2024, with the spring speed of LPL, KPL and CFPL attracting the most viewers. Major Copenhagen for Counter-Strike 2 and Master’s Magic for VALORANT also emerged as it hits on our platform. During the quarter, our licensed tournaments spent over 20 titles, and the broad coverage of these popular e-sports games further enhanced our content competitiveness. In addition to licensed e-sports content, we broadcasted 14 self-organized e-sports tournaments and entertainment PGC shows during the quarter. Many of these performed quite well, even though the first quarter is traditionally the off-season for large events. In addition to the cross-platform New Year’s Esports All-Star event that we just mentioned, HUYA Champions Cup for CrossFire Mobile and the commentary program for Major Copenhagen event also captured viewer attention. Furthermore, we hosted the second stop of our Village Game series, the Youth Qujiang Village Games for Honor of Kings in Qujiang, Zhejiang Province. This event was a big success, advancing our efforts to expand the influence of e-sports content while also promoting local culture and village revitalization. In terms of our financial performance, revenues from game-related services, advertising, and other businesses increased rapidly, partially offsetting a decline in live streaming revenues. The game-related services, advertising, and other segments accounted for 16% of our total revenues in Q1, up from 12% last quarter and 5% a year ago, due to game-related services’ increasing contribution. As game-related services enjoy a high gross margin, their increased contribution to total revenues also contributed to our gross margin improvement this quarter, drifting gross margin to 14.7% in combination with our cost optimization efforts. As this segment’s revenue continues to grow, we expect our overall gross margin to benefit further. We also reduced total operating expenses by 17.8% year-over-year, with double-digit savings in all three OpEx line items. We were pleased to achieve a meaningful profitability improvement in the first quarter. Let’s move on to our Q1 financial details. Our total net revenues were RMB 1.5 billion for Q1, compared with RMB 1.96 billion for the same period last year. Live streaming revenues were RMB 1.26 billion for Q1, compared with RMB 1.86 billion for the same period last year, primarily due to the continuous soft microeconomic and industry environment, as well as our proactive business adjustments to support our strategic transformation and prudent operations. Game-related services, advertising, and other revenues were RMB 244 million for Q1, compared with RMB 103 million for the same period last year, primarily due to increased revenues from game distribution and advertising services and in-game item sales. Cost of revenues decreased by 24% year-over-year to RMB 1.28 billion for Q1, primarily due to decreased revenue sharing fees and content costs, as well as bandwidth costs. Revenue sharing fees and content costs decreased by 25% year-over-year to RMB 1.12 billion for Q1, primarily due to the decrease in revenue sharing fees associated with the decline in live streaming revenues, as well as lower costs related to e-sports content. Bandwidth (NASDAQ:) costs decreased by 36% year-over-year to 60 million for Q1. This was primarily due to improved bandwidth cost management, bearable pricing terms, and continued technology enhancement efforts. Gross profit was RMB 221 million, and gross margin was 14.7% for Q1. Excluding share-based compensation expenses, non-GAAP gross profit was RMB 225 million, and non-GAAP gross margin was 14.9% for Q1. Research and development expenses decreased by 12% year-over-year to RMB 135 million for Q1, primarily due to decreased share-based compensation expenses. Sales and marketing expenses decreased by 26% year-over-year to RMB 76 million for Q1, primarily due to decreased marketing and promotion fees, as well as personnel-related expenses. General and administrative expenses decreased by 18% year-over-year to RMB 60 million for Q1, primarily due to decreased share-based compensation expenses. Other income was RMB 12 million for Q1, compared with RMB 4 million for the same period last year, primarily due to higher government subsidies. As a result, operating loss was RMB 39 million for Q1, compared with RMB 57 million for the same period last year. Interest income was RMB 117 million for Q1, compared with RMB 96 million for the same period last year. Net income attributable to HUYA Inc. was RMB 71 million for Q1, compared with RMB 40 million for the same period last year. Excluding the share-based compensation expenses and amortization of intangible assets from business acquisition, lack of income tax, non-GAAP net income attributable to HUYA Inc. was RMB 92 million for Q1, compared with RMB 85 million for the same period last year. Non-GAAP net margin was 6.1% for Q1. Diluted net income per ADS was RMB 0.3 for Q1. Non-GAAP diluted net income per ADS was RMB 0.39 for Q1. As of March 31, 2024, the company had cash and cash equivalents, short-term deposits, short-term investment, and long-term deposits of RMB 9.4 billion, compared with RMB 9.9 billion as of December 31, 2023. Finally, let me provide an update on our shareholder returns. Under our up to U.S. dollar 100 million share repurchase program that began in August 2023, we have repurchased 15.2 million HUYA ADS, with a total aggregate consideration of US$48.5 million as of the end of March 2024. We also announced a special cash dividend declaration, totaling approximately US$150 million in March 2024. These initiatives are expected to return an aggregate value of nearly US$200 million to our shareholders. We will continue to focus on improving our financial and operational performance while building long-term shareholder value. With that, I would now like to open the call to your questions.

Operator: Thank you, Ashley. And hello, everyone. [Operator Instructions] Today’s first question comes from Lei Zhang from Bank of America Securities. Lei, your line is open. Please go ahead.

Lei Zhang: [Foreign Language] Thanks management for taking my question. My question is regarding the game related business. Can you give us some updates here? And we also noticed some new game to launch such as D&F Mobile. And will this bring more opportunity to us? Thank you.

Junhong Huang: [Foreign Language] We started our strategic transformation last August, focusing on commercialization upgrading and providing more game related services. At present, we have made positive progress in the commercialization of game related services. Through the rapid growth of revenue from game distribution and advertising services and in-game item sales, the revenue of our game related services, advertising and other segments in Q1 reached 244 million, up by 137.6% year-on-year and 30.7% quarter-over-quarter. This growth not only reflects the high quality gamer user base on HUYA platform, but also validates the development potential of our new business direction. Specifically, in terms of game distribution, we are constantly expanding the coverage of games to include more new and existing titles. This year, we have covered the distribution of popular games, including Honor of King, Battle of Golden Spatula, and performed very well. For the new games we participated in before, such as Demi-Gods and Semi-Devils 2 mobile and DreamStar, HUYA distribution channels have also achieved leading results, especially by our pool of users in the game, which proves that the game users on HUYA platform have high commercial potential. In this regard, we are constantly optimizing our operations in order to make better use of this advantage. In terms of sales of game props, we provide a variety of popular props for more games, which have covered dozens of games at present. At the same time, we are also cooperating with the companies to customize props for broadcasters, which helps to strengthen the relationship between the broadcasters and fans. For example, one of our previous broadcasters achieved a transaction value of more than RMB 10 million when selling personal customized game skins in just one streaming session, reflecting the potential of this business model. In terms of advertising services, we are cooperating with more different game companies and carrying out innovative broadcaster promotion activities to seize the opportunity of new games and mini games promotion in the market. At present, the game license permits are released normally, with more new titles appearing in the market. This not only can bring more rich live game content, but also bring more opportunities for us to develop game-related services. For example, we are now actively preparing for the upcoming D&F Mobile game, working closely with the game studio. We are also recruiting broadcasters for live streaming and doing promotion work for the launch of exclusive props and gifts. We have also set up a special pre-download area in the game center section of HUYA Live. Based on the long-term large-scale audience of D&F content in HUYA platform, we hope that D&Fs mobile games will also be popular on our platform and help the growth of game-related services revenue. Finally, in addition, I want to point out that we typically recognize revenues from game distribution and in-game item sales after revenue sharing with the game companies on a net basis. So that means game-related services’ actual total transaction value is much higher than its revenue and growing more rapidly. Game-related services’ strong and rapid growth in this quarter reinforces our confidence that this business revenue will continue to scale up. Also, as game-related services tend to offer higher gross margins, this business should accelerate the improvements in our overall gross margin and profitability as its contribution to total revenues increases. In the long term, this transformation will not only enhance our revenue mix, but also enhance our revenue scale and profit levels.

Operator: Thank you. And our next question comes from Yiwen Zhang from China Renaissance. Yiwen, please go ahead.

Yiwen Zhang: Thanks for taking my question. So this year, the second year of our three-year roadmap, can you update on 2024 revenue and profit expectations for this year. Thank you.

Ashley Wu: In the first quarter, our total revenue was RMB 1.5 billion, and the rapid growth of revenue from game-related services, advertising, and others partially offset the decline in live broadcast revenue. Therefore, although Q1 is usually an off-season for live broadcast business due to the influence of less large-scale events and more holidays during the Spring Festival for broadcasters, our total revenue only decreased by 1.7% compared with Q4 last year, and the overall revenue tends to be quite stable. In terms of revenue mix, game-related services, advertising, and others accounted for 16% of the total Q1 up from 12% in the previous quarter and 5% in the same period last year. On the profit, due to the high gross margin of game-related services, advertising, and other segments, the increase of their contribution to total revenue also pushed up gross margin in this quarter. With our continuous efforts in cost optimization, Q1’s gross profit margin increased to 14.7% from 13.7% in the same period last year. We also reduced the total operating expenses by 17.8% year-over-year, and all the three OpEx line items, achieved double-digit year-on-year decline. On the whole, the profit level in Q1 achieved an effective improvement, of which GAAP net profit, increased by about 79%. As for this year’s revenue, we expect that in Q1 live revenue from and year-over-year point of view will continue to be affected, by last year’s strategic transformation of internal resources allocation, and more prudent operation. However, compared with the first quarter, the revenue level is expected to continue to be stable, and more so in the following quarters. As for the game-related services, everything and others, we expect that the following quarters of the year, will see a relative fast growth, which will lead to a gradual recovery of our overall revenues from the previous quarter. As mentioned just now, most of the revenue from game-related services is recognized after revenue sharing, with the game companies as the net revenue. So despite the rapid growth of our business scale, we recognized value not as that much, and at the same time, given the nature of the business, we think that it would lead to a higher level of gross – profit margins. From a full year perspective, due to the changes in revenue mix brought about, by the new business growth, the proportion of higher gross margin business and total revenue will gradually increase. We will continue to optimize our events content costs and broadcaster’s costs. So compared to 2023, we expect the gross profit for the year will continue to improve. Gross margin, is also an indicator that we are now placing greater emphasis on operational side, will continue more prudent in our spending particularly on selling expenses and labor costs. Overall, we will continue to maintain our expectations of a full year profitability in 2024, and profit growth over 2023. Thank you.

Operator: Our next question comes from Ritchie Sun from HSBC. Ritchie, please go ahead.

Ritchie Sun: Thank you management, for taking my questions. I have a question about cash usage. We have $1.3 billion cash on hand and we are half way through the buyback program. So any update plans in terms of say the buyback progress to extend it, or even increase the quota as well as any plans for annual dividend down the road? Thank you very much.

Junhong Huang: We announced a share repurchase program of up to $100 million in mid-August last year. And in the first quarter of this year, we repurchased nearly $20 million worth of our stock. As of the end of March, we had repurchased a total of $48.5 million. And in March, we announced a special cash dividend totaling approximately $150 million. So in total, these initiatives have returned nearly $200 million to HUYA’s shareholders. At the end of March 2024, the company held cash, cash equivalents, and deposits totaling approximately $1.3 billion. The change compared to the number at the end of last December is a result of share repurchase expenses, and payments from operations. After the completion of the current cash dividend payment of $150 million, we expect to have over $1.1 billion in cash, cash equivalents, and deposits. Shareholder returns are a key focus of the management, and we will continue to carry out our shareholder return initiatives, in a manner that aligns with the market conditions, and the company’s operations. In order to reward the shareholders, for their support and to enhance the company’s efficient use of cash. Thank you.

Operator: Now, we will take our last question today from Thomas Chong from Jefferies. Thomas, please go ahead. Thomas, please unmute yourself.

Thomas Chong: Thanks management for taking my question. My question, is about the live streaming industry trend. How should we think about the competitive landscape, or the relationship among different live streaming platforms? And how should we think about these changes will affect HUYA users as well as the hosts? Thank you.

Ashley Wu: From the industry’s point of view, the overall environment has become more open, and we believe that the platforms are no longer isolated, or purely competitive to each other. The game live broadcasting industry has entered into a new paradigm of growth that features both cooperation and competition. In this new market environment, we also believe that it brings broader opportunities to platforms, to helping them to one another and share content and resources, thus creating more win-win possibilities. Therefore, HUYA, as the leader in this industry, is also striving to breakdown platform barriers, and meet multiple needs of the users, and seize business growing opportunities. Strengthening cooperation and linkage, with various platforms and products and upgrading the platform ecology, is one of our important strategies this year. On the one hand, we are cooperating more with some live broadcasting platforms in professional content production, cross-platform broadcasting, and commercialization. The New Year’s e-sports All-Star events hosted by HUYA in February this year is the first All-Star events event for, which we have broken down the industry barriers. It also marks a major breakthrough in content co-creation in the live game industry. At present, we have a number of cross-platform self-made events, and activities in preparation. In addition to the broadcasters and signed e-sports players on HUYA platform, these events will also invite players from other platforms to participate in them. So as to achieve in-depth cooperation on multiple platforms. For example, the upcoming HUYA LoL Legend Cup, will bring together outstanding retired players and active e-sports players, from the whole network for competition. The players’ selection and forming of teams have attracted widespread interest from League of Legends players, and e-sports viewers on multiple platforms. And this response has been very enthusiastic, which demonstrates HUYA’s brand influence as well as its strength in tournament production and operation. In addition, we are also embracing the field of short video. Based on HUYA’s rich broadcaster’s resources and broadcast operational experiences, we will introduce our video and live content into these platforms helping the broadcasters in HUYA, to obtain more opportunities for commercialization. At the same time, with further strengthening our cooperation with Tencent Group, we are delivering high-quality content to various product lines within the Tencent ecosystem, such as Tencent Video, QQ, and multiple game products, so as to reach in larger user groups. In terms of the platform ecology, we hope to become a more open ecological hub and promote a revolution in the industry, by strengthening cooperation with live broadcasters and video platforms and game companies. Under the new business model, our service recipient will not only be limited to users on HUYA Live, but also to the larger user group on more platforms, throughout the wider network. So that we can also participate in a larger market. For existing users on HUYA, they will get more exciting content, which is conducive to enhancing user loyalty and activity. In addition, we are taking advantage of HUYA’s technology and product advantages in live games, and create a differentiated user interaction experience on HUYA’s platform, through game data capabilities and AI capabilities. Through our efforts in ecological upgrading, our broadcasters will also have the opportunity to expand their popularity, and enjoy wider sources of revenue. Our more diversified cooperation with game companies, and innovative game-related services initiatives, will also help the broadcasters to expand their revenue channels, so as to cement the relationship between HUYA and broadcasters’ community and enhance the attraction of HUYA platform to broadcasters. Thank you.

Operator: 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, or Piacente Financial Communications. This concludes today’s call, and we look forward to speaking to you again next quarter. Thank you. Bye-bye.

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