Game live-streaming platform Huya saw surging total revenues and gross profit in the first quarter of 2019, driven primarily by a substantial year-on-year increase in the number of paying users.
Total net revenues increased by 93% year-on-year, reaching RMB 1.63 billion ($243 million). Around 95% of net revenues came from the company’s livestreaming business, which grew by 95.8% year-on-year. According to Huya, the growth was powered primarily by increases in the number of paying users and their average spending.
The number paying users reached 5.4 million, representing a 57.4% year-on-year increase, of which more than 70% are mobile users, CFO Sha Dachuan said. However, they still account for just around 4% of the platform’s average MAUs, which reached 123.8 million in the first quarter of 2019.
Gross profit more than doubled year on year to RMB 273 million, and gross margin improved to 16.8% compared with the 15.5% in Q1 2018, mainly due to the company’s enhanced monetization efforts. “In the short term, our emphasis is on refining operations and monetization,” CEO Dong Rongjie said in the earnings call.
Cost of revenues also rose sharply by more than 90% to RMB 1.36 billion, mainly driven by revenue sharing fees which more than doubled, and content costs that come in the form of virtual item revenue sharing and e-sports content expenses. According to Dong, however, e-sport tournament expenses would not see a sharp increase in the second half of 2019. “The money required has already been spent in the first half of the year,” he said.
Huya is likely to focus less on poaching star livestreamers in the long turn. “We believe the time when growth is driven by poaching star livestreamers from other platforms will pass. In the near future we will continue doing it, but it shouldn’t be what drives our growth,” Dong said.
Huya expects the total net revenues of Q2 to be between RMB 1.73 billion and RMB 1.79 billion.
In April 2019, the company raised around $314 million in net proceeds in a share offering of American Depositary Shares (ADSs), twice the amount it raised with its 2018 IPO, which it said it would put toward content costs and e-sport partners.