HUYA Inc. (NYSE: HUYA), a leading game live streaming platform in  China, today announced its unaudited financial results for the fourth quarter and fiscal year ended  December 31, 2020.

Fourth Quarter 2020 Highlights

• Total net revenues  for the fourth quarter of 2020 increased by 21.2% to  RMB2,990.3 million  (US$458.3 million), from  RMB2,467.5 million  for the same period of 2019.
• Net income attributable to HUYA Inc.  was  RMB253.2 million  (US$38.8 million) for the fourth quarter of 2020, representing an increase of 58.6% from  RMB159.7 million  for the same period of 2019.
• Non-GAAP net income attributable to HUYA Inc. was  RMB305.9 million  (US$46.9 million) for the fourth quarter of 2020, representing an increase of 26.5% from  RMB241.9 million  for the same period of 2019.
• Average mobile MAUs  of Huya Live  in the fourth quarter of 2020 reached 79.5 million, representing an increase of 29.1% from 61.6 million in the fourth quarter of 2019.
• Average MAUs  of Huya Live  in the fourth quarter of 2020 reached 178.5 million, representing an increase of 18.8% from 150.2 million in the fourth quarter of 2019.
• Total number of paying users  of Huya Live  in the fourth quarter of 2020 reached 6.0 million, representing an increase of 17.6% from 5.1 million in the fourth quarter of 2019.

“Throughout 2020 we have continuously invested in high-quality broadcasters, e-sports tournaments, and entertainment programs to enrich our content offerings, and have thus seen significant user growth and high level of user engagement, despite the challenges presented by the global COVID-19 pandemic,” said Mr.  Rongjie Dong, Chief Executive Officer of Huya. “Our mobile MAUs reached 79.5 million in the fourth quarter, an increase of 29.1% year-over-year. Moving through 2021, we will continue to make investments into our content offerings, improve our products, and extend the breadth and diversity of our platform, to provide users with more enjoyable experience.”

Ms.  Catherine Liu, Chief Financial Officer of Huya, commented, “We are pleased to deliver solid financial results in 2020. For the full year, our total net revenues were up 30.3%, reaching  RMB10.9 billion  and our net income increased by 88.9% to  RMB884.2 million. The year 2020 ended on a strong note, with total net revenues and gross profit for the fourth quarter up 21.2% and 28.1%, respectively, year-over-year. With continued top-line expansion and our ability to drive operating leverage, our operating margin improved to 6.3% in the fourth quarter from 4.1%, and our non-GAAP operating margin increased to 9.0% from 7.4%, both compared with the same quarter of 2019. Leveraging our team’s strong execution capabilities, we will continue to capture growth opportunities to drive value for our users and shareholders.”

Fourth Quarter 2020 Financial Results

Total net revenues  for the fourth quarter of 2020 increased by 21.2% to  RMB2,990.3 million  (US$458.3 million), from  RMB2,467.5 million  for the same period of 2019.

Live streaming revenues  increased by 20.0% to  RMB2,814.9 million  (US$431.4 million) for the fourth quarter of 2020, from  RMB2,346.1 million  for the same period of 2019, primarily due to the increase in the number of paying users and the average spending per paying user on Huya Live. The increase in the number of paying users was primarily driven by the Company’s overall user growth. The increase in the average spending per paying user was primarily driven by the year-end promotional activities and the enrichment and enhancement of content, products and services.

Advertising and other revenues  increased by 44.6% to  RMB175.5 million  (US$26.9 million) for the fourth quarter of 2020, from  RMB121.3 million  for the same period of 2019, primarily driven by the increasing and diversifying advertiser base, mainly attributable to strengthened recognition of Huya’s brand name in  China’s  online advertising market.

Cost of revenues  increased by 19.6% to  RMB2,392.7 million  (US$366.7 million) for the fourth quarter of 2020 from  RMB2,000.9 million  for the same period of 2019, primarily attributable to the increase in revenue sharing fees and content costs.

Revenue sharing fees and content costs  increased by 29.8% to  RMB2,044.6 million  (US$313.3 million) for the fourth quarter of 2020 from  RMB1,575.1 million  for the same period of 2019, primarily due to the increase in revenue sharing fees in relation to higher live streaming revenues, and the increase in spending in e-sports and self-produced content, as well as on content creators.

Bandwidth costs  decreased by 26.1% to  RMB166.7 million  (US$25.5 million) for the fourth quarter of 2020 from  RMB225.6 million  for the same period of 2019, primarily due to improved management in bandwidth costs and continued technology enhancement efforts.

Gross profit  increased by 28.1% to  RMB597.7 million  (US$91.6 million) for the fourth quarter of 2020 from  RMB466.6 million  for the same period of 2019.  Gross margin  increased to 20.0% for the fourth quarter of 2020 from 18.9% for the same period of 2019.

Research and development expenses  increased by 21.0% to  RMB215.7 million  (US$33.1 million) for the fourth quarter of 2020 from  RMB178.3 million  for the same period of 2019, mainly attributable to increased personnel-related expenses.

Sales and marketing expenses  increased by 63.2% to  RMB193.1 million  (US$29.6 million) for the fourth quarter of 2020 from  RMB118.3 million  for the same period of 2019, primarily attributable to the increased marketing expenses to promote the Company’s content, products, services and brand name, as well as increased personnel-related expenses.

General and administrative expenses  decreased by 0.3% to  RMB96.1 million  (US$14.7 million) for the fourth quarter of 2020 from  RMB96.4 million  for the same period of 2019, mainly due to improved management efficiency.

Operating income  increased by 84.4% to  RMB187.4 million  (US$28.7 million) for the fourth quarter of 2020 from  RMB101.6 million  for the same period of 2019.  Operating margin  increased to 6.3% for the fourth quarter of 2020 from  4.1% for the same period of 2019.

Non-GAAP operating income, which excludes share-based compensation expenses, increased by 46.5% to  RMB269.3 million  (US$41.3 million) for the fourth quarter of 2020 from  RMB183.8 million  for the same period of 2019.  Non-GAAP operating margin  increased to 9.0% for the fourth quarter of 2020 from 7.4% for the same period of 2019.

Income tax expenses  increased by 35.1% to  RMB37.3 million  (US$5.7 million) for the fourth quarter of 2020 from  RMB27.6 million  for the same period of 2019.

Net income  attributable to HUYA Inc.  for the fourth quarter of 2020 increased by 58.6% to  RMB253.2 million  (US$38.8 million), from  RMB159.7 million  for the same period of 2019.

Non-GAAP net income attributable to HUYA Inc.  for the fourth quarter of 2020, which excludes share-based compensation expenses, gain on fair value change of investments and equity investee’s investments, and equity investee’s partial disposal of its investment, net of income taxes, increased by 26.5% to  RMB305.9 million  (US$46.9 million), from  RMB241.9 million  for the same period of 2019.

Diluted net income per American depositary share (“ADS”)  was  RMB1.05  (US$0.16)  for the fourth quarter of 2020, compared with  RMB0.68  for the same period of 2019. Each ADS represents one Class A ordinary share of the Company.

Non-GAAP diluted net income per ADS  was  RMB1.27  (US$0.19)  for the fourth quarter of 2020, compared with  RMB1.02  for the same period of 2019.

Balance Sheets and Cash Flow

As of  December 31, 2020, the Company had cash and cash equivalents, short-term deposits and short-term investments of  RMB10,474.9 million  (US$1,605.3 million), compared with  RMB10,798.3 million  as of  September 30, 2020. The decrease was primarily attributable to the land use right acquisition of approximately  RMB310 million  in Foshan City in November 2020.

Net cash provided by operating activities was  RMB458.9 million  (US$70.3 million) for the fourth quarter of 2020.

Fiscal Year 2020 Financial Results

Total net revenues  in fiscal year 2020 increased by 30.3% to  RMB10,914.4 million  (US$1,672.7 million), from  RMB8,374.5 million  in the prior year.

Live streaming revenues  increased by 29.3% to  RMB10,311.6 million  (US$1,580.3 million) in fiscal year 2020, from  RMB7,976.2 million  in the prior year, primarily due to the increase in the number of paying users and the average spending per paying user on Huya Live. The increase in the number of paying users was primarily driven by the Company’s overall user growth. The increase in the average spending per paying user was primarily driven by the enrichment and enhancement of content, products and services.

Advertising and other revenues  increased by 51.3% to  RMB602.8 million  (US$92.4 million) in fiscal year 2020, from  RMB398.3 million  in the prior year, primarily driven by the increasing and diversifying advertiser base, mainly attributable to strengthened recognition of Huya’s brand name in  China’s  online advertising market.

Cost of revenues  increased by 25.4% to  RMB8,646.3 million  (US$1,325.1 million) in fiscal year 2020 from  RMB6,892.6 million  in the prior year, primarily attributable to the increase in revenue sharing fees and content costs, bandwidth costs and personnel-related costs.

Revenue sharing fees and content costs  increased by 27.6% to  RMB7,086.8 million  (US$1,086.1 million) in fiscal year 2020 from  RMB5,552.7 million  in the prior year, primarily due to the increase in revenue sharing fees in relation to higher live streaming revenues, and the increase in spending in e-sports and self-produced content, as well as on content creators.

Bandwidth costs  increased by 9.8% to  RMB879.2 million  (US$134.7 million) in fiscal year 2020 from  RMB800.8 million  in the prior year, primarily due to an increase in bandwidth usage as a result of the Company’s larger user base, partially offset by improved management in bandwidth costs and continuous technology enhancement efforts.

Gross profit  increased by 53.0% to  RMB2,268.1 million  (US$347.6 million) in fiscal year 2020 from  RMB1,481.9 million  in the prior year.  Gross margin  increased to 20.8% in fiscal year 2020 from 17.7% in fiscal year 2019.

Research and development expenses  increased by 44.3% to  RMB734.3 million  (US$112.5 million) in fiscal year 2020 from  RMB508.7 million  in the prior year, mainly attributable to increases in personnel-related expenses.

Sales and marketing expenses  increased by 27.3% to  RMB558.0 million  (US$85.5 million) in fiscal year 2020 from  RMB438.4 million  in the prior year, primarily attributable to the increased marketing expenses to promote the Company’s content, products, services and brand name, as well as increased personnel-related expenses.

General and administrative expenses  increased by 26.1% to  RMB445.0 million  (US$68.2 million) in fiscal year 2020 from  RMB352.8 million  in the prior year, mainly due to increase in personnel-related expenses.

Operating income  increased by 177.4% to  RMB725.0 million  (US$111.1 million) in fiscal year 2020 from  RMB261.4 million  in the prior year.  Operating margin  increased to 6.6% in fiscal year 2020 from 3.1% in the prior year.

Non-GAAP operating income, which excludes share-based compensation expenses, increased by 108.6% to  RMB1,133.2 million  (US$173.7 million) in fiscal year 2020 from  RMB543.1 million  in the prior year.  Non-GAAP operating margin  increased to 10.4% in fiscal year 2020 from 6.5% in the prior year.

Income tax expenses  increased by 84.0% to  RMB176.8 million  (US$27.1 million) in fiscal year 2020 from  RMB96.1 million  in the prior year.

Net income  attributable to HUYA Inc.  increased by 88.9% to  RMB884.2 million  (US$135.5 million) in fiscal year 2020 from  RMB468.2 million  in the prior year.

Non-GAAP net income attributable to HUYA Inc.  in fiscal year 2020, which excludes share-based compensation expenses, gain on fair value change of investments and equity investee’s investments, and equity investee’s partial disposal of its investment, net of income taxes, increased by 68.2% to  RMB1,261.5 million  (US$193.3 million), from  RMB749.9 million  in the prior year.

Diluted net income per ADS  was  RMB3.71  (US$0.57)  in fiscal year 2020, compared with diluted net income per ADS of  RMB2.02  in the prior year.

Non-GAAP diluted net income per ADS  was  RMB5.29  (US$0.81)  in fiscal year 2020, compared with  RMB3.23  in the prior year.

Net cash provided by operating activities  was  RMB1,239.9 million  (US$190.0 million) for fiscal year 2020.

Conference Call

The Company’s management will host an earnings conference call at  7:00 a.m.  U.S. Eastern Time on  March 23, 2021  (7:00 p.m.  Beijing/Hong Kong  time on  March 23, 2021).

For participants who wish to join the call, please complete online registration using the link provided below at least 20 minutes prior to the scheduled call start time. Upon registration, participants will receive the conference call access information, including dial-in numbers, Direct Event passcode, a unique registrant ID and an e-mail with detailed instructions to join the conference call.

Participant Online Registration:  http://apac.directeventreg.com/registration/event/2296665

Once complete the registration, please dial-in at least 10 minutes before the scheduled start time of the earnings call and enter the Direct Event passcode and registrant ID as instructed to connect to the call.

Additionally, a live and archived webcast of the conference call will be available on the Company’s investor relations website at  http://ir.huya.com.

A replay of the conference call will be accessible approximately two hours after the conclusion of the live call until  March 30, 2021, by dialing the following telephone numbers:

About HUYA Inc.

HUYA Inc. is a leading game live streaming platform in  China  with a large and active game live streaming community. The Company cooperates with e-sports event organizers, as well as major game developers and publishers, and has developed e-sports live streaming as one of the most popular content genres on its platform. The Company has created an engaged, interactive and immersive community for game enthusiasts of  China’s  young generation. Building on its success in game live streaming, Huya has also extended its content to other entertainment content genres. Huya’s open platform also functions as a marketplace for broadcasters and talent agencies to congregate and closely collaborate with the Company.