HUYA Inc. (NYSE:HUYA) Q2 2019 Earnings Conference Call - Final Transcript

Aug 13, 2019 • 08:00 pm ET

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HUYA Inc. (NYSE:HUYA) Q2 2019 Earnings Conference Call - Final Transcript

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Presentation
Executive
Henry Dachuan Sha

to RMB1,355.6 million in the second quarter of 2019 from RMB661.2 million in the same period of 2018, primarily due to the increase in virtual item revenue sharing fees, which grew at a similar pace with the Company's live streaming revenue and continued spending in e-sports content and content creators in both domestic and overseas markets.

Bandwidth costs increased by 21.5% to RMB195.7 million in the second of quarter of 2019 from RMB161 million in the same period of 2018, primarily due to the increase in bandwidth usage as a result of the increased user base on Huya's platforms and enhanced revenue live streaming video quality improved, partially offset by improved efficiency in bandwidth utilization through continued deployment of new technologies in content distribution.

Gross profit increased by 101.8% to RMB335.7 million in the second quarter of 2019 from RMB166.4 million in the same period of 2018. By excluding share-based compensation expenses, non-GAAP gross margin increased to 16.9% in the second quarter of 2019 from 16.3% in the same period of 2018, primarily due to technology innovation of bandwidth utilization, our enhanced monetization efforts and the continued leverage on economies of scale.

Research and development expenses increased by 75.8% to RMB105.4 million for the second quarter of 2019 from RMB60 million for the second quarter of 2018, mainly attributable to an increased headcount of R&D personnel and share-based compensation expenses related to share awards granted since the second half of 2018.

Sales and marketing expenses increased by 186.9% to RMB119.6 million for the second of quarter of 2019 from RMB41.7 million for the second quarter of 2018. The increase was primarily attributable to the increase in marketing expenses associated with our products and brand name in both domestic and overseas markets, including promotion activities for e-sports events and cooperation with various marketing channels.

General and administrative expenses decreased by 16% to RMB74.3 million for the second quarter of 2019 from RMB88.5 million for the second quarter of 2018, mainly due to lower share-based compensation expenses recognized in relation to share awards vesting schedule, partially offset by the increase in headcount of management personnel.

Operating income was RMB67.7 million for the second quarter of 2019, compared with operating loss of RMB17.3 million in the same period of 2018.

Non-GAAP operating income, which excludes share-based compensation expenses, increased by 104.7% to RMB116.3 million for the second quarter of 2019 from RMB56.8 million in the same period of 2018. Non-GAAP operating margin was 5.8% in the second of quarter of 2019 compared with 5.9% in the first quarter of 2019 and 5.5% in the second quarter of 2018.

Income tax expenses were RMB21.6 million for the second quarter of 2019, compared with income tax benefits of RMB60 -- RMB6.1 million in the same period of 2018.

Net income attributable to HUYA Inc. was RMB121.8 million for the second quarter of 2019, compared with a net loss attributable to Huya of RMB2,125.4 million in the same period of 2018. The loss in the second