On Tuesday, HUYA (NYSE:HUYA) discussed first-quarter financial results during its earnings call. The full transcript is provided below.

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The full earnings call is available at https://webcast.cdn.huya.com/nb2gd3

Summary

HUYA Inc reported a 15% year-over-year increase in total net revenues for Q1 2026, reaching RMB 1.73 billion, driven by strong growth in game-related services, advertising, and other businesses.

The company highlighted the successful launch and monetization progress of Goose Goose Dark Mobile, which has maintained a high ranking on the iOS games chart.

HUYA is focusing on strategic initiatives such as integrating AI in live streaming and game tools, enhancing user engagement, and expanding its game publishing pipeline with multiple new titles expected to launch this year.

Management emphasized the importance of strengthening their content ecosystem, increasing game-related service revenues, and improving gross margins, which rose to 14.6% in Q1 2026.

Future guidance suggests continued growth in high-margin businesses like advertising and game publishing, with expected improvement in overall gross and operating margins throughout 2026.

Full Transcript

OPERATOR

Good day and evening and thank you for standing by. Welcome to Huya's first quarter 2026 earnings webinar. I'm Hanyuliu from the Huya's Investor Relations. At this time, all participants are in listen only mode. Please be advised that today's webinar is being recorded. The Company's financial and operational results were issued earlier today and are posted online. You can also view the earnings press release by visiting the IR website at ir.huya.com A replay of the call will be available on the IR website soon. Participants of management on today's call will be Mr. Vincent Trinhong, our acting CEO, Mr. Raymond Peng Lei, our CFO, and Ms. Margaret Shi, head of Capital Markets Management will begin with prepared remarks and the call will conclude with a Q and A session. Before we continue, please note that today's discussion will contain forward looking statements made under the safe harbor provisions of the U.S. private Securities Litigation Reform act of 1995. Forward looking statements involve inherent risks and uncertainties. As such, the Company's results may be materially different from the views expressed today. Further information regarding these and other risks and uncertainties is included in the Company's latest annual Reports on Form 20F and other public filings as filed with the U.S. securities and Exchange Commission. The Company does not assume any obligation to update any forward looking statements except as required on the applicable law. Please also note that Huya's earnings press release and this conference call include discussions of unaudited GAAP financial information as well as unaudited non GAAP financial measures. Huya's press release contains a reconciliation of the unaudited non GAAP measures to the unaudited most directly comparable GAAP measures. With that, I'm pleased to turn the call over to Mr. Huang. Please go ahead. Okay.

Vincent Trinhong (Acting CEO)

Hello everyone and thank you for joining our earnings call today. First, I would like to share our overall performance for the quarter. In the first quarter, total net revenues grew by 15% year over year to RMB 1.73 billion, primarily driven by continuous strong growth from game related services, advertising and other businesses. Game related services, advertising and other revenues reached RMB627 million, up 69% year over year and further increased to record 36% of total net revenues. Live streaming revenues were RMB 1.1 billion for the quarter, underpinned by our vibrant, diversified and high quality live streaming content ecosystem. With the integration of AI, we are able to offer and enriched more creative experiences to our users. Our ecosystem of game content live streamer is becoming increasingly influential across the broader social platforms, while our own channels, including the Huya Live app, continue to enjoy a stable user base. Our estimated reach across external platforms doubled from last year, exceeding 200 million users, including those on Douyin and WeChat platforms. According to our internal data. Huya is the largest gaming MCN on WeChat channels and remain among the top three on Douyin across multiple leading game titles. Nearly half of the core streamer are connected to Huya. This broad content network enables us to provide games with strong content driven marketing and user reach, which is what's driving our growth in our collaboration with game developers in game item sales and advertising as well as game publishing. On the game publishing front, Goose Goose Duck Mobile continue to deliver impressive results. Since its launch on January 7th, the game ranked number one on the iOS 3 games chart for most of the first quarter. We have been accelerating the pace of content updates since March and on April 1st we launched season two, introducing a new map, Ancient Desert as well as new lore including Touring Doodle and Raven. At the same time, we continue to work on our UGC mechanism which we believe will be an important driver of player engagement, social interaction and long term content vitality for the game. Building on this foundation, we launched our first PGC gameplay mode Goose Hunt on April 29th which received positive feedback from players and further expanded the game's content ecosystem. As we continue to focus on building a healthy user ecosystem with robust and fun game content, we are also ramping up its monetization gradually. In April, Goose Goose Duck Mobile reached the top five on the iOS top glossing game chart with new skins offered, validating its monetization potential. Looking ahead, we will further enrich the game's content and social environment with new features such as Party mode and a home decoration system and introduce more IP collaborations to meet players growing demand for role playing experiences. Meanwhile, we are working on the WeChat mini game version which is currently scheduled for launch this summer. By integrating Goose Goose Duck dark mobile more deeply with the WeChat user ecosystem, we hope to leverage WeChat Social Graph to further reactivate existing users and attract new ones. With the successful debut of Goose Goose Duck Mobile, we are gaining more recognition from game developers of our publishing capabilities through our content ecosystem. We now have a handful of new titles in the pipeline to launch this year across various genres including Casual, SLG and nmo. For in game item sales revenues continue to grow solidly year over year. On the domestic front, item four titles including Peacekeeper Elite, Honor of Kings and Gloss Fire continue to contribute incremental growth. For example, our large scale outdoor live streaming event for Peacekeeper Elite Elite Journey Season 2 not only effectively drove in game item sales but also generated strong social buzz for the game ip. On the overseas front in game item sales for PUBG Mobile, Genshin Impact and Arena Breakout also delivered impressive performance on the advertising side, leveraging our influence across streamer networks, tournament production capabilities and UGC creation. Know how we provide fully integrated content marketing solution for game developers. Some of our earlier advertising campaign have proven very effective, gaining further recognition from leading advertisers including Tencent NetEase and Hyper Grid. For example for hypergrowth, Arcnized and Field Open Beta campaign in the first quarter we connected multiple top streamers to generate in depth live streaming content generating more than 70 million views across the Internet. This not only drove strong live streaming traction on we are live app but also sparked extensive UGC content across all social platforms, broadening the game's user reach. In terms of our content offerings on our own platform, we continue to enhance our live streaming tournament ecosystem, introducing 55 licensed tournaments as well as more than 20 self produced tournaments and variety shows. In late March, we created Uzi cup named after Esports Legend Ugi, attracting more than 200 League of Legends teams across China. The event generated more than 100 million views across the Internet and appear on weibo's trending list 22 times. Building on this momentum, we hosted additional self produced events including the Delta Force Qijia cup and Dota 2 Immortal Cup Season 2. We have also become the official production partner for multiple top tier game tournaments such as Veterans 2026 National Tournament and 2026 Jiangsu Esports Super League. Hosting and producing these events creates organic synergies with our live streaming content in game item sales and other businesses. On the product side, we remain committed to upgrading our platform ecosystem through game services and enriching users entertainment experience with a suite of game tools. In March, we officially launched the real time navigation feature for our Delta Force Map tool as well as the League of Legend hextech Aaron Assistant tool, helping players make better in game decisions. Beyond this, we are actively developing assistant tools for more titles including Golden Spatula and Couscous Duck Mobile, further establishing game tools as differentiated products gateway. We are also developing a physical AI companion around the appeal of Goose Goose Dag, creating richer and differentiated gameplay and companionship value. Overall, we deliver solid progress across multiple business lines. In the first quarter, game publishing in game item sales, advertising, marketing and tournament operations all achieved meaningful breakthroughs. Wuya is accelerating its strategic evolution from a game live streaming platform into a full service game services platform. With game related revenues reaching a record high percentage of total revenues and our revenue mix continue to improve, we will continue to deepen our game content ecosystem and focus on high value opportunities across the game industry value chain. While scaling the business. We will continue to enhance earnings quality and strive to deliver resilient and sustainable growth for our shareholders. With that, I will now turn the call over to our CFO Raymond Le. He will share more details on our results. Raymond, please go ahead.

Raymond Le

Thank you Vincent and hello everyone. I will start with an overview of our financial performance in the first quarter. We delivered a steady top line growth with continued improvement in both our revenue mix and operating performance. Notably the increased revenue contribution from business with higher gross margins net to both year over year and the sequential gross margin expansion to 14.6% this quarter. Furthermore, we achieved a non GAAP net income of RMB 21 million for the quarter despite lower interest income. Let's move on to more details of our Q1 financial results. Total net revenues were RMB 1.73 billion for Q1, up 15% from the same period last year. Live streaming revenues were RMB 1.1 billion for Q1 compared with RMB 1.14 billion from the same period last year, primarily reflecting the live streaming industry's current environment. Game related services, advertising and other revenues were RMB627 million for Q1, up 69% from the same period last year. The increase was primarily driven by higher revenues from in game item sales and advertising, many attributable to the company's deepened and broadened collaboration with game companies. Cost of revenues increased by 12% year over year to RMB 1.48 billion for Q1, primarily due to increased cost of in game value items as well as increased revenue sharing fees and accounting costs. Within this revenue sharing, fees and accounting costs rose by 7% year over year to RMB 1.23 billion, mainly reflecting growth in our top line. Gross profit was RMB253 million for Q1, up 34% from the same period last year. Gross margin was 14.6 for Q1, improving from 12.5% from the same period last year. Excluding share based compensation expenses. Non GAAP gross profit was RMB256 million and the non GAAP gross margin was 14.8% for Q1. Research and development expenses increased by 2% year over year to Rp132 million for Q1. Sales and marketing expenses increased by 45% year over year to RMB88 million for Q1 primarily due to marketing and promotion efforts related to the launch of Good School stock, Mobile General and Administrative expenses increased by 6% year over year to RMB65 million for Q1 primarily due to increased share based compensation expenses. Other income was RMB3 million for Q1 compared with RMB4 million for the same period last year, primarily due to lower government subsidies. Operating loss narrowed to RMB 29 million for Q1 compared with a loss of RMB 60 million for the same period last year, excluding share based compensation expenses and the amortization of intangible assets from business acquisition. Non GAAP operating loss narrowed to RMB3 million for Q1 compared with a loss of RMB36 million in the same period last year. Interest income was RMB 30 million for Q1 down from RMB 65 million for the same period last year, primarily due to a lower time deposit balance following the payment of special cash dividends. Net loss attributable to HUYA Inc was earned before million for Q1 compared with the net income attributable to huya Inc. Of RMB1 million for the same period last year, excluding share based compensation expenses and the amortization of intangible assets from business acquisitions. Net of income tax. Non GAAP net income attributable to huya Ying was RB21 million for Q1 compared with RV24 million for the same period last year. Diluted LAD loss per ads was approximately RMB $0.02 for Q1. Non GAAP diluted net income per ADS was RMB $0.09 for Q1 as of March 31, 2026. The Company had a cash and cash equivalent short term deposits and a long term deposit of RMB 3.46 billion compared with RMB 3.82 billion as of December 31, 2025. With that, I'd like to open the call to your question.

OPERATOR

Thanks very much and hello everyone. If you are dialing in by phone, please press 5 to ask a question, then press 6 to unmute yourself. If you are accessing the call from the tencent meeting or both meeting applications, please click the Raise hand button at the bottom left. For the benefit of all participants on today's call, if you wish to ask your question to Management in Chinese, please immediately repeat your question in English. Today's first question comes from Richard sun from hsbc. Hello Richie, your line is open. Please go ahead.

Richard Sun (Equity Analyst at HSBC)

Vincent Raymond Margaret. Thank you Management for taking my questions. Congrats on a solid start from Gust Gustuck. I want to ask about the latest operating and strategy and also commercialization progress for this game and what is this year's operating strategy going to be? Thank you.

Marco

Okay, now Thank you for the question. Hi. Which is Marco? Let me just translate. Since its launch on January 7, Goose Goose Duck Mobile has continued to deliver impressive Results, ranking number one on the iOS3 games chart for most of the quarter. This validates both the appeal of the game's social gameplay and Huya's content driven game publishing model. In the first quarter, we have been mainly focused on marketing and promoting the game as well as perfecting our gameplay and in game operations to keep up with the better than expected user numbers. As of now, we're still at an early stage in terms of monetization, but we're ramping up gradually for 2026, especially the first half. Our priority for this game remains to be growing user base and user engagement like. We are focusing on user engagement and expansion. In particular, there are three things we'll be focusing our efforts on. Number one, we'll continue to build and strengthen our UGC mechanism. Goose Hunt is an early example of this framework with its gameplay and content currently led by a PGC team. As we continue to enhance our UGC mechanism and related know how, we'll add more UGC gameplay and casual game modes to the game. We believe this is crucial for the game's sustainable user engagement and the longevity. Second, we'll add more social and community features including interplayer connections, the home decoration system and team up interactions so the game can evolve into a deeper social environment. Third, we are working on a WeChat minigame version which is currently scheduled for launch this summer. Given the game's strong party game nature, we believe the WeChat ecosystem and SocialGraph can help us further reactivate existing users and attract new ones.

OPERATOR

Thank you. And we will take our next question from Nelson Chong, Graham City. Hi Nelson. Please go ahead.

Nelson Chong

Hey. So let me translate the questions. Thanks management for taking my questions. And then my question is related to your AI progress. Wondering if management can share your latest strategic planning on AI for the company and how should we integrate your AI applications into the company core business? Thank you.

Vincent Trinhong (Acting CEO)

Yeah, so our AI initiatives are focused on four areas centered around our business. Number one, that's live streaming, number two, game tools, number three, IP based companionship and number four, game production. So for AI powered live streaming, we are exploring two main paths. Firstly, that's AI powered content creation and secondly is AI native live streaming. So these products are still in early stages, product iteration and user testing. We do not expect AI to replace real life streamers anytime soon, especially top ones whose emotional connection with users and real time interactivity remain difficult to replicate. Instead, we think the real value of AI in live streaming is to help us explore more opportunities in mid tier and long tail live streaming content, 24 hour companionship and certain interactive formats. Naturally, We believe in enhancing user experience through AI. For AI powered game tools, we are also progressing really well. In March we launched a real time navigation feature for our Delta Force Map tool as well as the hextech Aram Assistant tool for League of Legends. These tools are not just static guides for players. Instead they combine AI capabilities with Huya's deep understanding of games to provide more real time and context aware decision support. For example, our Delta Force Map tool helps players quickly identify resource points, routes and high risk areas, lowering their learning curve. The Hextech Aram tool can provide champion recommendations, item build suggestions and gameplay ideas for each match. Since every match requires players to make new decisions, this kind of match based assistant tool has very strong repeat use value. Going forward, we'll expand game tools to more titles and categories including Golden Spatula, Goose, Goose, Duck, mobile card and board games, strategy games and Autochet games. AI Enabled companionship we're exploring IP based smart hardware including physical AI companion products embedded with multimodal AI capabilities. Based on our user feedback from GuccooStark. We believe these products can go beyond emotional companionship and create deeper integr with the game itself, including in game interactions and post game reviews. This can further extend the connection between IP and the players. AI assisted game production we are also exploring how AI can help us generate and test cargo game content more efficiently. We do not expect it to replace large scale AAA type of games in the future, but we do see a lot of opportunities improving R and D efficiencies in kaggle games, whether it's games or small interactive games.

OPERATOR

Thank you and our next questions come from Weimon from cicc. Hi Weimang, Please go ahead.

Weimon

So let me translate myself. Just want to ask about the game publishing pipelines. Could management maybe share some colors on those pipelines and what's the rough timeline for those releases and what kind of revenue contribution should we expect from them? Thank you.

Vincent Trinhong (Acting CEO)

Now. Currently we have a robust publishing pipeline and we expect to launch multiple new games this year. These include collaborations with leading game companies such as Tencent and Kingsoft the pipeline covers multiple genres including casual strategy, slg, MMO and others. We will pace the launches based on the product testing, license approval progress and the right market windows. Next in our pipeline is a casual 3D puzzle matching game that we licensed which is scheduled for lunch for the summer holidays. We have exclusive publishing rights for Mainland China, Hong Kong and Macau. The game is already proven in overseas markets in terms of user appeal and monetization. Based on third party estimates, its cumulative downloads exceed 10 million and the title has remained among the top grossing titles in overseas 3D puzzle matching category. In terms of publishing strategy, we're leveraging our influence in streamer networks, cross platform distribution and player communities. As mentioned in our prepared remarks, our estimated reach across external platforms now exceed the 200 million users including those on Douyin and WeChat platforms. This extensive user reach allows us to target core players more efficiently, create more appealing content and enhance game longevity.

OPERATOR

Thank you. We will take next question from Maggie Ye from clsa. Hi Maggie, please go ahead.

Maggie Ye

Thanks management for taking my question. Could management share your perspective on the recent trends and future outlook for the live streaming business? In addition to that, what are the core strategic levers and key drivers for the company to maintain stability in this segment moving forwards? Thank you.

Vincent Trinhong (Acting CEO)

Young wayner. Chow. Yeah, so live streaming remains a core part of Huya's business. In the first quarter, live streaming revenue was around 1.1 billion, but we do feel the business may still be under some pressure due to the overall market environment. Therefore, we'll be more focused on improving ROI cross content cost which includes streamer cost and licensing cost. We believe one of Huya's key differentiator versus any other live streaming platform is our ability to consistently create influential gaming content and leverage that content to better support game publishing and distribution. This capability is backed by our close relationships with top streamers, our know how in tournament production and our cross platform game distribution capabilities. In the first quarter of 2026 we offered around 55 licensed tournaments and more than 20 self produced tournaments and variety shows. Among them, our self producer USAI cup generated over 100 million views across the Internet, demonstrating the value of our streamer IP plus self produced tournament model. Also during the quarter we partnered with the top entertainment live streamer for a collaboration at a major tourist attraction in Luoyang, generating strong online engagement and attracting over 100,000 peak current viewers. Gongfu ip. The key game titles will continue to build self produced content around them. For example, Dota 2 Immortal Cup Season 2 is currently one of the largest third party Dota 2 tournaments in China. For Crossfire, we recently worked with CF Team on live streaming campaigns around the Kung Fu IP collaboration, including Crossfire Kung Fu Huiya Dual Night. These campaigns helped generate a significant social buzz for the new update and further improve user engagement for Peacekeeper Elite. We launched Elite Journey Season 2 in the first quarter, which is a live streaming show that generated solid user participation that creatively combined game content, streamer influence and outdoor scenarios. We think this is a great way to improve user engagement and help game content reach a broader audience. We also offer the broad range of highly engaging sports content. We have already secured full rides to 2026 Badminton World Federation events and 2026 World Snooker Tour and will provide viewers with high definition live broadcasts of these events. The recently concluded 2026 World Snooker Championship generated more than 150 million total views on Huya. In particular, the match between the two Chinese players Ding Jinghui and Jia Xing Tong reached a peak of nearly 20 million viewers in a single live streaming room.

OPERATOR

Thank you. We will take next question from Yi Wen Zhang from China Renaissance. Hi Yiwen, please go ahead.

Yi Wen Zhang

So thanks Kami for taking my question. My question is on the advertising in game item sales. Can you share some operation color on that? Thank you.

Vincent Trinhong (Acting CEO)

In the first quarter, game related services, advertising and other revenues reached RMB226 million, up 69% year over year and increased to 36% of the total net revenue. The growth was mainly driven by the continued expansion in game item sales advertising while game publishing also contributed incremental growth. This shows that Huya's revenue mix is continuing to improve and non live streaming game services have become an important growth driver. For in game item sales, revenue continued to grow rapidly year over year. In a domestic market, growth was mainly driven by leading titles such as Peacekeeper Elite and Honor of Kings. More specifically, Honor of Kings benefited from the Exclusive Skin Sales and Chinese New Year Skin events while Peacekeeper Elite saw better sales conversion. As we continue to optimize item offering and content quality through our content ecosystem. Crossfire and other titles also benefited from key sales, windows and tournament related resources. Overseas titles such as PUBG Mobile, Ganser Impact and Arena Breakout continue to contribute incremental growth. We will continue to expand our overseas in game items supply and strengthen our localized service capabilities. Looking ahead, we will continue to develop more customized bundles and the rights based partnerships while bringing more transactions into Huya's own platform ecosystem. On advertising, we are continuing to strengthen content driven integrated game marketing solutions by combining streamer network tournament integrations, UGC co creation, other core capabilities we provide game developers with end to end marketing solutions. Our ROI performance on these advertising campaigns continue to earn recognition from leading advertisers such as Tencent, NetEase and HyperGriph.

OPERATOR

Thank you. Now we will take our last question today from Rebecca Xu from Morgan Stanley. Rebecca, please go ahead.

Rebecca Xu

Hi. Thank you for taking my question. I'm honored to be the last to raise question. My question is about margin and net profit trend. Could management share some color on the margin and net profit trend maybe in the full year basis? Yeah, I'll translate for myself.

Raymond Le

Consequence. Our margins will continue to see improvement in the first quarter with non GAAP operating margin approaching break even. This improvement was mainly driven by continued revenue mix optimization with high contributions from relatively high margin business such as advertising, game items and game publishing. We also continue to strengthen cost and expense management and improve operating efficiency. Looking ahead, as these higher margin businesses continue to scale and operating leverage gradually come through, we expect further room for improvement in our overall gross margin operating margin for the full year. In addition, given the pace of investment related to Google Stock and other games, we expect improvement in both margins to become more visible in the second half of the year.

Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.