HUYA Inc. (NYSE:HUYA) Q2 2019 Earnings Conference Call - Final Transcript
Aug 13, 2019 • 08:00 pm ET
Henry Dachuan Sha
quarter 2018 was mainly due to a fair value loss of RMB2,273.4 million on derivative liabilities of preferred shares that existed before our initial public offering, resulting from the increase in Huya's enterprise value as indicated by the price of its IPO.
GAAP net income -- GAAP net margin reached 60 -- 6.1% in the second quarter of 2019, compared with 3.9% in the first quarter of 2019 and a negative margin from the same period last year.
Non-GAAP net income attributable to HUYA Inc. in the second quarter of 2019, which excludes share-based compensation expenses and other one-off adjustments, increased by 61.7% to RMB170.4 million from RMB105.4 million in the same period of 2018. Non-GAAP net margin was 8.5% in the second quarter of 2019, compared with 8% in the first quarter of 2018 -- of 2019, and 10.1% from the same period last year.
Diluted net income per ADS was RMB0.52 for the second quarter of 2019, compared with diluted net loss per ADS of RMB13.7 for the same period of 2018. Each ADS represents one Class A ordinary share.
Non-GAAP diluted net income per ADS was RMB0.73 for the second quarter of 2019, compared with RMB0.37 for the same period of 2018.
Now, turning to our balance sheet and cash flows. As of June 30, 2019, the Company had a cash, cash equivalents, short-term deposits and short-term investments of RMB9,112.9 million. We completed a follow-on offering in April and raised approximately $313.8 million in net proceeds to fuel the mid- to long-term expansion in the global live streaming space.
Net cash provided by operating activities was RMB569.9 million for the second quarter of 2019, compared with RMB105.6 million in the same period of 2018. The increase was mainly attributable to the improved profitability, reduced cash settlement period by directly settling with payment service providers for streaming business, and the increase in accrued revenue sharing fees and content costs to be paid to content creators. We believe healthy operating cash flow is quite a significant for tech companies sustainability in the fast-growing stage like us.
Now, business outlook. For the third quarter of 2019, Huya currently expects total net revenues to be in the range of RMB2,120 million to RMB2,200 million, representing a year-over-year growth between 66.1% and 72.3%. This forecast reflects our current and preliminary views on the market and the operational conditions, which are subject to change.
This concludes our prepared remarks. We will now open the call to questions. Operator, please go ahead.