Regulatory headwinds continue to drag on HUYA's revenue.
HUYA Inc. (HUYA) is a leading live streaming platform in China that focuses on gaming and e-sports content. The company is headquartered in Guangzhou, China, and operates primarily in the Greater China region. HUYA has partnerships with various gaming companies, e-sports teams, and individual streamers to provide a diverse range of content for its users.
One specific challenge HUYA faces is intense competition in the live-streaming market in China. There are several other major players in the industry, such as Douyin and Douyu, and HUYA will need to continue to innovate and differentiate itself in order to maintain its market position. Despite the competitive landscape, HUYA has had several notable successes. The company has been successful in attracting a large user base and building a strong community around its platform. An even bigger challenge comes from regulators which have affected the monetization of our domestic live broadcast business.
Regulatory Headwinds
It is worth emphasizing that China's live-streaming sector is closely monitored by the country's officials and regulators. The regulatory obstacles for the Chinese game live-streaming business have clearly had a detrimental impact on HUYA's income. Although regulatory and policy uncertainties continue to be significant negatives for HUYA, the stock's values reflect such obstacles, yet the company's profitability has been excellent. HUYA produced three consecutive quarters of positive non-GAAP earnings per share or EPS in 2022, following a normalized net loss in the fourth quarter of 2021. The leading game live-streaming platform reported its third-quarter 2022 financial results on November 15, 2022, showing a decrease in net revenues for the third quarter of 2022 compared to the same period in 2021.
"Faced with ongoing macro headwinds that impacted the broader industry and our Company, we continued to drive live-streaming technology improvements, explore new product features and enrich our quality content. These steps are designed to improve our resilience in uncertain market conditions by helping us to better engage with our users, placing us in a stronger position to capture future opportunities in the game and live streaming market."
- Rongjie Dong, CEO of Huya
HUYA 3Q22
Total net revenues for the third quarter of 2022 were RMB2,378.5 million (US$334.4 million), compared with RMB2,975.5 million for the same period of 2021. The decrease in net revenues was primarily due to a decrease in live streaming revenues, which were RMB2,017.1 million (US$283.6 million) for the third quarter of 2022, compared with RMB2,601.9 million for the same period of 2021. This decrease was attributed to a decrease in the number of paying users and lower average spending per paying user on Huya Live, as the recent macro and regulatory environment adversely affected the sentiment of the HUYA's paying users.
Advertising and other revenues were also down, coming in at RMB361.4 million (US$50.8 million) for the third quarter of 2022, compared with RMB373.7 million for the same period of 2021. This decrease was primarily due to the soft demand for advertising services resulting from the challenging macro environment.
As a result of the decrease in revenues, gross profit for the third quarter of 2022 was RMB342.4 million (US$48.1 million), compared with RMB504.0 million for the same period of 2021, and gross margin was 14.4% for the third quarter of 2022, compared with 16.9% for the same period of 2021.
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Stock Ticker | Open: Dec 21, 2022 | Close: Jan 20, 2023 | ROI% |
HUYA Inc. (HUYA) | $3.21 | $5.35 | 66.98% |
Subscribers who bought HUYA stock based on our AI forecast for the 1-month time frame on Dec 21st, 2022 would have generated a significant profit of 66.98% or $2.15 per share on this single trade. Discretion should always be used when analyzing the market. Your own due diligence is always required and you should always get advice from a certified financial counselor prior to implementing any financial plans.
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Sources: 1. HUYA Investor Relations, "HUYA Inc. Reports Third Quarter 2022 Unaudited Financial Results" (2022)
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