Earnings call: HUYA reports robust growth in game services amid challenges

In the third quarter of 2024, HUYA Inc . (NYSE: NYSE:HUYA) announced strong growth in its game-related services, with revenues reaching a record high and contributing significantly to the company's total net revenues of RMB 1.54 billion.

Despite a decrease in live streaming revenues and a challenging macroeconomic environment, the company's strategic focus on game distribution and in-game item sales has led to a substantial increase in game-related service revenues. The company also reported an increase in mobile monthly active users and paying users, while successfully managing to reduce operating expenses.

Key Takeaways

• Game-related service revenues hit a record high, contributing 26.7% to HUYA's total net revenues of RMB 1.54 billion.
• Mobile MAUs slightly increased to 84 million, and paying users grew by 9.5% to 4.6 million.
• HUYA's collaboration with content platforms led to content being viewed by over 140 million users in September.
• Game distribution revenue grew 20x year-over-year with popular titles such as Honor of Kings and QQ Speed Mobile.
• Operating expenses decreased by 20.9% year-over-year, resulting in a non-GAAP net income of RMB 78 million.
• HUYA entered a supplemental licensing agreement for League of Legends, expected to lower e-sports licensing costs.
• The company holds RMB 8.1 billion in cash reserves and has returned approximately USD 400 million to shareholders through dividends and share repurchases.

Company Outlook

• HUYA aims to enhance its game-related services and in-house content.
• The company is exploring new partnerships and broadening its market presence.
• Plans are in place to invest in live streaming content and optimize the ecosystem to improve user engagement.
• HUYA anticipates improved gross profit margins in Q4, driven by seasonal events and cost optimization.

Bearish Highlights

• Live streaming revenues decreased to RMB 1.13 billion, impacting gross profit margins.
• The company expects short-term pressure on live streaming revenue due to external factors.

Bullish Highlights

• Revenue from game distribution experienced a 20-fold increase compared to the previous year.
• Exclusive in-game items generated over RMB 50 million in sales.
• The company has a stable cash reserve of RMB 8.1 billion, with no debt.

Misses

• Total (EPA:TTEF) net revenues were down from RMB 1.66 billion year-over-year.
• Gross profit margin for Q3 was 13.2%, a slight decrease year-over-year.

Q&A Highlights

• HUYA is investing in self-produced content, including the second season of the League of Legends Cup.
• The company expects a noticeable improvement in gross profit margins in Q4 and year-over-year growth in non-GAAP results for both Q4 and the full year.
• Shareholder returns will continue, with future dividends and share repurchases dependent on the Board's approval and market conditions.

HUYA Inc.'s strategic shift towards game-related services and advertising has proven fruitful, as evidenced by the robust growth in this segment. While facing a dip in live streaming revenues, the company's efforts in reducing operating expenses and optimizing content procurement have laid the groundwork for anticipated margin improvements and sustained shareholder returns. With a strong cash position and a proactive approach to content and partnerships, HUYA is positioning itself to navigate the macroeconomic headwinds while capitalizing on the lucrative opportunities within the gaming and e-sports industries.

InvestingPro Insights

HUYA Inc.'s recent financial performance aligns with several key insights from InvestingPro. Despite the challenges in live streaming revenues, InvestingPro Tips highlight that HUYA's net income is expected to grow this year, which corresponds with the company's optimistic outlook for Q4 and full-year non-GAAP results. This projection is particularly noteworthy given that HUYA was not profitable over the last twelve months, as indicated by another InvestingPro Tip.

The company's strong cash position, mentioned in the article, is reinforced by InvestingPro Data showing a Market Cap of $697.89 million USD and the tip that HUYA holds more cash than debt on its balance sheet. This financial stability supports the company's ability to invest in game-related services and content production, as well as continue shareholder returns through dividends and share repurchases.

However, investors should note that HUYA's stock has faced challenges recently, with InvestingPro Data revealing a 1-month price total return of -24.88%. This decline may reflect the market's reaction to the decrease in live streaming revenues and the overall challenging macroeconomic environment mentioned in the article.

For those seeking a deeper analysis, InvestingPro offers 9 additional tips for HUYA, providing a more comprehensive view of the company's financial health and market position. These insights can be valuable for investors looking to make informed decisions in the dynamic gaming and e-sports industry.

Full transcript - HUYA Inc (HUYA) Q3 2024:

Operator: 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. Junhong Huang, our Acting Co-CEO and Senior Vice President; and Mr. Raymond (NS:RYMD) Peng Lei, our acting Co-CEO and CFO. Management will begin with prepared remarks, and the call will conclude with a Q&A session. Before we continue, please note that today's discussion will contain forward-looking statements made on 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 this and other risks and uncertainties is included in the company's prospectus 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 under 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 our Co-CEO and SVP, Mr. Huang. Please go ahead.

Junhong Huang: Okay. Hello, everyone. Thank you for joining our earnings conference today. We were pleased to make significant strides in developing our game-related services business during the third quarter. Game-related service, advertising and other revenues reached a new record high, contributing 26.7% of our total net revenues. To drive this progress, we continue to enhance content and upgrade product features on our platform, to improve users' experience while exploring new partnerships and business opportunities to expand our user reach and unlock our growth potential. Moreover, despite the ongoing challenges in the macroeconomic and industry environment, we maintained a relatively stable year-over-year operating performance and achieved a non-GAAP net income of RMB 78 million. Now let's take a detailed look at our recent operational and strategic achievements. First, our users. The engagement across our high-quality user base remained stable during the third quarter with mobile MAUs improving slightly sequentially to 84 million. While we maintained our disciplined approach to marketing and promotion spending, we also enriched our content and service offerings as well as product features to reinforce our users' engagement. Furthermore, we continue to strengthen our cooperation with various content platforms, joining hands with these partners to conduct cross-platform streaming and co-produce premium professional content. We also selectively distributed our comparing game live streaming and video content to product lines within Tencent (HK:0700)'s ecosystem and other content channels. Thanks to these initiatives, we estimate that HUYA's content reached a total of over 140 million users in September, taking into account other platforms users as well as our own mobile users. We believe our productive platform collaborations will continue to broaden our reach among gamer users, empowering us to explore more commercialization opportunities around game-related services and live streaming. Moving on to game-related services. Our game distribution in game item sales and game advertising business continued to grow robustly. Revenues from game-related services, advertising and others reached RMB 410.2 million for the third quarter of 2024, up by 209.3% year-over-year and 32.9% quarter-over-quarter. For game distribution, we work closely with game studios on new game release, version updates and related operational activities and incentivized our broadcasters to participate in game distribution. These efforts effectively promoted our growth this summer with total growth received generated through HUYA's game distribution channel in the third quarter, rising to more than 20x that of the year ago period. The quarter's top titles included Honor of Kings, Demi-Gods and Semi-Devils Mobile, D&F Mobile, QQ Speed Mobile and Peacekeeper Elite. We are confident of further developing our game distribution service as we expand our reach in the vast game market by offering distribution for a wider range of titles, including both mobile and PC games and collaborating with additional game studios. What's more, we plan to implement targeted initiatives for broadcasters to enable them to provide more tailored user services and drive users' interest in exploring and engaging with the games distributed via our platform. We have also strengthened our collaboration with major game titles in-game item sales, broadening the scope of our coverage in this area. In particular, we were promoting exclusive or customized in-game items for our platform and broadcasters and holding sales events for initial release of new in-game items. For instance, during the third quarter, we held a cross-fire workshop offering via exclusive Weapon Skins as well as an exclusive initial release of co-branded outfit skins featuring a well-known broadcaster on our platform, sold on that broadcasters channel. Both initiatives garnered great interest from our users. Notably, the total value of the co-branded outfit skins sold on the broadcasters channel during this initial release activity exceeded RMB 50 million, validating the growth potential of our in-game item sales business. In terms of game advertising, we responded to the Summer's increasing game marketing demand with comparing new game launch promotions and anniversary events for the existing games. In the third quarter, we collaborated with a number of game companies promoting popular games such as Arena Breakout, World of Warcraft and Naruto Mobile. Going forward, we will continue to diversify our advertiser base and enhance our game promotion and marketing capabilities through HUYA streamer created content and in-house produced events. Moving on to our professional content enrichment efforts on our platform, including licensed and in-house content. In the third quarter, we broadcasted over 90 licensed e-sports tournaments. The LPL, [PPL, Veterans Champions] and Esports World Cup were among the most watched events during the quarter. In addition to the tournament of more proven e-sports game titles, which continue to attract user attention, Veterans tournament have become increasingly popular since the game's launch in China last year. This year's Veterans Champions increased its viewership by approximately 160% compared to the previous edition, further boosting the popularity of the game's content on our platform. We also broadcasted the recently concluded LoL Worlds 2024, one of the year's most important e-sports events. We prepare comprehensively for LoL Worlds, and we are pleased to see our hard work drive positive outcomes. We optimized our tournament broadcast audio and video technology for the event, providing a variety of HDR video quality options to street users' various devices and network environments, which brought our users industry-leading image quality effects and viewing experiences. We also introduced a competition data analysis system for this event that instantly capture each data point and converted the data into a visual presentation, allowing viewers to see real-time changes in teams and players with win rates while they watch the competition. Also, in addition to our official streams, popular broadcasters and professional players on our platform created secondary live commentary for the event, providing our users with more diverse and entertaining tournament viewing experience unique to HUYA. Based on our initial statistics, we maintained our leading market share of this event's viewership and further increased our market share year-over-year, significantly ahead of other live streaming platforms. In terms of in-house content, we broadcasted over 20 self-organized e-sports tournaments and entertainment PGC shows in the third quarter. For example, we successfully hosted the HoK Streamers League in collaboration with 2 other major live streaming platforms to review across platforms. We also continued our Village Games series for community participation and hosted the [Zhejiang] Village Games for Honor of Kings. Additionally, we collaborated with well-known TV program to produce Streamer Rush Forward, a reality show featuring our game and entertainment broadcasters, which attracted strong user interest. For competing to the end, our interactive game play variety show that integrates game promotion and entertainment content, we covered more hot and new games in this quarter, such as HoK's New Mode [indiscernible] Naruto Mobile. Given that our in-house content generally delivers good ROI performance, we are strengthening our investment in this area to create more influential and commercially valuable event IPs. As our range of in-house content expands and become more diverse, we will also focus on scheduling these programs to seamlessly integrate with our licensed events to better complement and enrich our professional content library. For example, following the conclusion of LoL Worlds 2024, we commenced Season 2 of our LoL Legend Cup, building on the success of its inaugural season in May. Finally, we continue to explore innovative features to engage users and enhance interaction while differentiating HUYA's live streaming experiences, including product cooperation with leading game titles. For example, in the third quarter, HUYA became the first platform in the industry to integrate of Honor of Kings bullet chatting gameplay mode in live broadcast, adding both native feature and platform exclusive modification developed by HUYA using Honor of Kings tools. In this mode, viewers can activate special skill cards that impact the live game by sending bullet chats or visual gifts to the channel, creating unique gameplay situation that drive more interesting live streaming content. Given these features promise, we will continue to leverage HUYA's expertise in creating engaging game live streaming content to bring entertaining exclusive features to our streamers and users. Looking ahead, we will remain focused on fostering our in-house content initiatives. We are especially excited about Season 2 of our self-produced Legend Cup and look forward to amplifying this series success and influence. We will also deepen collaboration with content creators and industry partners to extend our content reach beyond the HUYA platform and explore broader cooperation with more game developers and publishers to expand our presence in the game market. We are confident these efforts will unleash new commercialization opportunities, propelling our long-term business development. With that, I will now turn the call over to our acting Co-CEO and CFO, Raymond Lei, who has been with us for a few months. He will share more details on our results. Raymond, please go ahead.

Lei Peng: Thank you, Huang, and hello, everyone. I'm delighted to be part of HUYA's management team and to speak with you for the first time. I will start with an overview of our financial performance. Our total net revenues were RMB 1.54 billion in the third quarter of 2024, the soft macro and industry environment, which impacted users' willingness to pay for live streaming continued to weigh on our live streaming revenues. Meanwhile, we proactively adjusted our business structure to support our strategic transformation and maintained prudent operations. Game-related services, advertising and other businesses showed strong momentum and made a more meaningful contribution to our top line, increasing by 209.3% year-over-year and 32.9% quarter-over-quarter, primarily due to increased revenue from game distribution and advertising services and in-game item sales. We are pleased to see more users paying for our game-related services, driving growth of 9.5% year-over-year in paying users to reach 4.6 million in the third quarter. Also, our continuous efforts to improve operational efficiency paid off with total operating expenses decreasing by 20.9% year-over-year. I'd also like to review our recent progress in optimizing our content. We continue to refine our strict procurement strategy for licensed content, striving for better commercial terms. As we disclosed in September, we entered into a second supplemental license agreement for a series of League of Legends matches that decreased the license fee, which we believe will help us further reduce our overall e-sports license costs this year and in 2025. Let's move on to more details of our Q3 financial results. Our total net revenues were RMB 1.54 billion for Q3, of which live streaming revenues were RMB 1.13 billion and game-related services, advertising and other business and other revenues were RMB 410 million compared with total net revenue of RMB 1.66 billion for the same period last year. Cost of revenues decreased by 6% year-over-year to RMB 1.33 billion for Q3, primarily due to decreased revenue sharing fees and content costs as well as bandwidth and server custody fees. Revenue sharing fees and the content costs decreased by 5% year-over-year to RMB 1.17 billion for Q3, primarily due to decreased live streaming revenue sharing fees associated with the decline in live streaming revenues as well as lower costs related to licensed e-sports content, partially offset by increased game-related services, advertising and other revenue sharing fees. Bandwidth (NASDAQ:BAND) and server custody fees decreased by 26% year-over-year to RMB 61 million for Q3, primarily due to continued technology and management enhancement efforts as well as favorable pricing terms. Gross profit was RMB 204 million for Q3 compared with RMB 243 million for the same period last year. Gross margin was 13.2% for Q3 compared with 14.6% for the same period last year. The change was primarily attributable to increased revenue sharing fees and content costs as a percentage of total net revenues, which rose mainly because the decrease in live streaming revenues outpaced the decrease in content costs. Excluding share-based compensation expenses, non-GAAP gross profit was RMB 207 million, and the non-GAAP gross margin was 13.5% for Q3. Research and development expenses decreased by 12% year-over-year to RMB 126 million for Q3, primarily due to decreased personnel-related expenses and share-based compensation expenses. Sales and marketing expenses decreased by 30% year-over-year to RMB 73 million for Q3, primarily due to decreased marketing and promotion fees as well as personnel-related expenses. General and administrative expenses decreased by 25% year-over-year to RMB 50 million for Q3, primarily due to decreased professional service fees and personnel-related expenses. Other income was RMB 13 million for Q3 compared with RMB 40 million for the same period last year, primarily due to realized damages received in the third quarter of 2023 from a favorable outcome in a broadcaster-related lawsuit and lower government subsidies. As a result, operating loss was stable at RMB 32 million for Q3 compared with the same period last year. Excluding share-based compensation expenses and amortization of intangible assets from business acquisition, non-GAAP operating loss was RMB 13 million for Q3 compared with RMB 15 million for the same period last year. Non-GAAP operating margin was negative 0.9% for Q3. Interest income was RMB 97 million for Q3 compared with RMB 128 million for the same period last year, which was primarily attributable to the special cash dividends paid in May and October 2024. Net income attributable to HUYA Inc. was RMB 24 million for Q3 compared with RMB 11 million for the same period last year. Excluding share-based compensation expenses, impairment loss of investments and amortization of intangible assets from business acquisitions, net of income taxes, non-GAAP net profit attributable to HUYA Inc. was RMB 78 million for Q3 compared with RMB 107 million for the same period last year. Non-GAAP net margin was 5.1% for Q3. Diluted net income per ADS was RMB 0.1 for Q3. Non-GAAP diluted net income per ADS was RMB 0.34 for Q3. As of September 30, 2024, the company had cash and cash equivalents, short-term deposits, short-term investments and long-term deposits of RMB 8.1 billion compared with RMB 8.2 billion as of June 30, 2024. Finally, an update on our shareholder returns. As of the end of September 2024, we had repurchased USD 61.1 million of HUYA shares through our share repurchase program. The 2 special cash dividends we paid this year also returned an aggregate value of approximately USD 400 million to our shareholders. We remain committed to consolidating our financial and operating performance and creating more value for shareholders. With that, I'd like to open the call to your questions.

Operator: Thank you, Raymond. [Operator Instructions]. Today's first question comes from Nelson Cheung from Citibank.

Fuk Lung Cheung: [Interpreted] So let me translate the question myself. My question is related to the game-related services. Wondering if management can share the latest update on the game-related services in third quarter and any new updates in fourth quarter right now? And how do we perceive the upcoming development plans for this business into 2025? And what would be the competitive advantage of HUYA?

Junhong Huang: [Foreign Language]

Unknown Executive: [Interpreted] In the third quarter, our game-related business continued to achieve rapid growth with revenues from game-related services, advertising and others reaching RMB 410 million, an increase of 209.3% year-over-year and 32.9% quarter-over-quarter. This accounted for a record high percentage of our total revenue at 26.7%.

Junhong Huang: [Foreign Language]

Unknown Executive: [Interpreted] With regard to game distribution, we closely collaborated with game developers on new game launches, version updates and related operational activities, incentivizing broadcasters to participate in game distribution services. But currently, the distribution revenue is the largest portion of our game-related services revenue. It is worth noting that distribution revenue is recognized on a net basis after the revenue sharing with the game developers. Therefore, the actual business volume and growth amount are significantly larger. In the third quarter, the total gross receipts from games distributed through HUYA's distribution channel increased to over 20x that of the same period last year. And going forward, we plan to continue providing distribution services for more games, including mobile and PC games, new and existing titles and deepen our collaboration with additional game developers. Furthermore, we plan targeted initiatives for broadcasters to encourage them to provide more customized user services, enhancing users' interest in exploring and engaging with the games distributed through our platform.

Junhong Huang: [Foreign Language]

Unknown Executive: [Interpreted] We have also strengthened our cooperation with major games and the in-game item sales, particularly by launching exclusive and customized in-game items for our platform and broadcasters as well as promoting initial release events for these items. For instance, in the third quarter, we held a cross-fire event offering HUYA exclusive game schemes. We also had an exclusive initial release of co-branded game schemes featuring a well-known broadcaster, sold in that broadcaster's stream. Both initiatives garnered enthusiastic response from our users, especially during the initial release event where the total value of co-branded skins sold existed RMB 50 million and validating the growth potential of our in-game item sales business. And in terms of game advertising, we responded to the increased marketing demand during the summer with promotional activities for new game launches and anniversary events for existing games, enhancing our game promotion and marketing capabilities through streamer created and in-house produced content while continuing to expand our advertiser base.

Junhong Huang: [Foreign Language]

Unknown Executive: [Interpreted] Overall, we believe HUYA has several key advantages in the continued development of game-related services. First, we have a high-quality gaming user base on our platform, where the average revenue per user or ARPU for several games we distribute is higher than the overall gaming market, indicating the commercial value potential for HUYA's gaming users. Second, our broadcasters play an active role in promoting game-related services, understanding users' gaming needs and participating in revenue sharing, which helps achieve mutual benefits. And third, HUYA has established long-term partnerships with various game developers through our live-stream business, laying down a good foundation for deeper collaboration on game distribution and in-game item sales. Additionally, we are strengthening our collaboration with multiple content platforms and selectively distributing HUYA's game live streams and video content across Tencent ecosystem and other content platforms. We estimated that as of September this year, HUYA's content ecosystem reached over 140 million users, including our own mobile users and those from other platforms, and we expect the scale to continue to grow. As we effectively collaborate to cover a broader game audience, we can explore more commercialization opportunities.

Junhong Huang: [Foreign Language]

Unknown Executive: [Interpreted] Finally, I want to mention that since the revenue from game-related services, especially from distribution is closely linked to gaming revenue itself, as we gradually expand this business, its income may be somewhat affected by the seasonal nature of the gaming industry. For example, peak seasons occurred during holidays and fluctuations can vary between quarters. According to public statistics, the domestic gaming market sales revenue exceeded RMB 300 billion in 2023. And overall, the market space for HUYA is still enormous. We will continue to explore diverse forms of cooperation with more game developers to achieve business growth.

Operator: And our next question comes from Thomas Chong from Jefferies.

Thomas Chong: [Foreign Language]

Junhong Huang: [Foreign Language]

Unknown Executive: [Interpreted] In the third quarter, our live streaming revenue continued to be influenced by the current macroeconomic and industry environment with users' willingness to spend on tipping remained weak. Meanwhile, during our strategic transformation, we proactively adjusted our business structure and maintained a prudent operational strategy. However, we have also observed rapid growth in revenues related to game advertising. From user behavior, we see that the engagement of our core users in live streaming remained relatively stable.

Junhong Huang: [Foreign Language]

Unknown Executive: [Interpreted] Due to external factors, we currently expect live streaming revenue to face short-term pressure. However, we believe that the external economic environment improvement will happen in the future, and the business will still have some room for flexibility. On one hand, we will closely monitor market conditions to adjust our operational activities accordingly. On the other hand, we will continue to invest in live streaming content, optimize the broadcaster and user ecosystem and constantly improve the technology and products to create a differentiated HUYA live streaming experience. We hope to maintain and enhance user engagement to prepare for a more diversified commercialization forms in the future. In the long run, we expect that with the expansion of game-related services, advertising and other revenue sales, the overall business will achieve a relatively stable development.

Operator: Now we will take our next question. It's from Lei Zhang from Bank of America.

Lei Zhang: [Interpreted] Can you give us more color on the driver of Q3's margin change? And how should we look at our margin trend going forward?

Lei Peng: [Foreign Language]

Unknown Executive: [Interpreted] In the third quarter, our gross profit margin was 13.2%, slightly down from the second quarter and the same period of last year. This quarter, we continue to optimize our content costs, reducing broadcaster signing costs year-over-year, and we further improved our strict licensed content procurement strategy to secure better commercial terms, which saved unlicensed content costs. However, the cost savings this quarter was still insufficient to offset the impact of the declining of live streaming revenue. In terms of operating expenses through continued efforts to enhance operational efficiency, particularly in better controlling our sales expenses, our total operating expenses decreased by 20.9% year-over-year. Therefore, overall operational performance remained relatively stable with a non-GAAP net profit of RMB 78 million.

Lei Peng: [Foreign Language]

Unknown Executive: [Interpreted] Regarding the future profit trends, we believe the following factors will be significant. On one hand, we need to consider changes in overall revenue scale, including the seasonal fluctuations in different businesses. On the other hand, we'll continue to adjust our cost structure to enhance the collaboration between broadcaster costs and revenue. On the professional content side, in September this year, we signed a second supplemental licensing agreement for a series of League of Legend matches, which reduced related licensing fees. We believe that this will help further optimize overall licensed e-sports events costs in the year and in this year and in 2025. However, quarter-to-quarter, since the major S14 event will mainly take place in the fourth quarter, the events licensing costs in the fourth quarter are expected to be higher than the third quarter. For self-produced content with a good investment returns, we plan to strengthen investment in this area to create more influential and commercially valuable event IPs such as holding the second season of the League of Legends Cup in this month, building on the success we have in its inauguration season.

Lei Peng: [Foreign Language]

Unknown Executive: [Interpreted] Nevertheless, we expect that the gross profit margin in the fourth quarter will show a relatively noticeable improvement compared to the low base from the same period last year. Therefore, we anticipate that the non-GAAP results for Q4 and this entire year will also show a relatively noticeable year-over-year growth.

Operator: Now we will take our last question today from [indiscernible] from CICC.

Unknown Analyst: [Interpreted] My question is about our shareholder return strategy. Could management help update our capital allocation strategy and the shareholder return plan in the future?

Lei Peng: [Foreign Language]

Unknown Executive: [Interpreted] As of the end of September, HUYA held approximately RMB 8.1 billion, about USD 1.15 billion in cash and cash equivalents, which remained stable compared to the end of June, partially influenced by the fluctuations in the U.S. dollar exchange rate. In October, we paid a special cash dividend of USD 215 million. Currently, the company still has approximately USD 900 million in cash and cash deposits with about half of it held overseas and the company has no debt.

Lei Peng: [Foreign Language]

Unknown Executive: [Interpreted] The overall strategy for cash usage is similar to what we mentioned in the last earnings call. We have sufficient cash to fund our daily operations and business development. While consolidating our financial fundamentals, the company will continue to allocate some funds for potential business development and as a reserve under uncertain external conditions. We will also remain open to suitable opportunities and investment projects related to the industry chain, so as to seize industry development opportunities.

Lei Peng: [Foreign Language]

Unknown Executive: [Interpreted] At the same time, we will continue to place importance on shareholder returns. In terms of dividends, this year, we have returned approximately USD 400 million to our shareholders through special cash dividend. In the future, we intend to share the company's profits and surplus cash with our shareholders. Future dividend plans, including the amounts and timing will depend on further review and approval by the company's Board of Directors. Regarding share repurchases, based on our up to USD 100 million repurchase plan as of the end of September, we had repurchased USD 61.1 million worth of HUYA's shares. In the future, we will comprehensively consider market conditions and stock liquidity when formulating our execution strategies.

Operator: Thank you once again for joining us today. If you have further questions, please feel free to contact HUYA's Investor Relations through the contact information provided on our website or Piacente Financial Communications. This concludes today's call, and we look forward to speaking with you again next quarter. Thank you.

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