Q3 2023 HUYA Inc Earnings Call

[music].

Speaker 1: 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.

<unk> 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 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 this and other risks and uncertainties is included.

Speaker 1: Forward-looking statements involve inherent risks and uncertainties.

Speaker 1: 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 on the applicable law.

England company from Spectra's, 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.

Speaker 1: Please also know that we are earning press release and this conference call includes discussions of our audited GAAP financial information as well as our audited non- GAAP financial measures.

Please also know that we asked earnings press release and this conference call include discussions of our audited GAAP financial information as well as our audited non-GAAP financial measures.

Speaker 1: 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 acting co-CEO and SVP, Mr. Junhong Huang. Please go ahead.

We asked press release contains a reconciliation of the audited non-GAAP measures to the audited most directly comparable GAAP measures with that I'm pleased to turn the call over to our acting co CEO and as we P. Besides your Hong Kong. Please go ahead.

Okay Hello, everyone. Thank you for joining our new covenants today.

Third quarter of 'twenty to industry was a transition period for Korea.

The softer industry environment, and our proactive business adjustment.

Shift total net revenues of RMB win 1.65 billion in the third quarter.

Speaker 2: We also reported positive net profit exceeding our expectations with non-GAAP net income reaching RMB103 million in the quarter. As we continue to strengthen our user base, we are also beginning to make progress in our strategic transformation.

We also reported positive net profit exceeding our expectations with non-GAAP net income, reaching RMB 103 million in the quarter as we continue to strengthen our user base. We are also beginning to make progress in our strategic transformation.

As we discussed last quarter, our transformation targets or shifts in our commercialization focused building on our deep experience and success of we ask the game live streaming business.

Speaker 2: We plan to provide more game-related services, such as game distribution, in-game item sales, and game advertising. This will empower us to better capture our gamer users' commercial value by satisfying more of their game-related needs in addition to their content construction needs.

We plan to provide more game related services, such as game distribution in game item sales in game advertising. This will empower us to better capture our gamma users commercial value bias that is buying more of their game related needs.

Listen to their content consumption needs. Our main goal. This year is to build a business infrastructure required to support these new services, while developing terms of cooperation with game Studios.

Speaker 2: Our main goal this year is to build a business infrastructure required to support these new services while developing terms of cooperation with game studios.

Speaker 2: Let me share some details of our third quarter efforts.

Can you share some details of our third quarter effort.

Speaker 2: First, to enhance our game distribution capabilities, we recently upgraded the FUJIA Live Apps Existing Game Center, a one-stop shop where users can pre-order and download new games, obtain FUJIA exclusive gift game toolkits, and view latest game information. We enriched the game center's game library and improved the product download function, while also encouraging our streamers to participate in the event.

To enhance our again distribution capabilities were recently upgraded.

Alive apps existing game center, a one stop shop, where users can preorder on downhole Neo <unk> opt in we are exclusive gift game toolkit and video latest game inflammation with enriched again centres game library and improve the product download function. While also encouraged.

<unk> our tumor to participate.

In game promotion activities.

Speaker 2: During the quarter, we participated in the distribution of demigods and semi-devo to mobile and promoted the game on both our game center and broadcaster's channel pages. This early game distribution corporation's outcome was encouraging, with Huya's distribution channel achieving good initial results in terms of gross billings generated on the first day of the game's launch.

During the quarter.

We participated in the distribution of <unk> and semi tivo to mobile and promote it again on the both our a game center and broadcasters Journal pages.

Lee has already game distribution collaborations outcome was encouraging with <unk>.

As distribution channel achieving good initial initial results in terms of gross billings generated on the first day of the game's launch.

Speaker 2: While we continue to optimize our game distribution process and functions, we will also look to partner with more upcoming games for this service.

While we continue to optimize our game distribution process and functions. We will also look to panna was more upcoming games for these services.

Speaker 2: As for the in-game item sales business, we have completed development of our in-game item mall function and added to our app. This mall function not only offers users a convenient overview of GamePop products, but also allows us to prompt user check-ins and provide consumer rewards to maintain users' purchase dignity.

As for the in game item sales business, we have completed development of our in game item more function and added to our App is more function not only offers user to a convenient overview of Gan Pas products, but also allowed us to prompt user checkings and provide consumer rewards.

Minton users purchased stickiness. So far we have reached combination with aid game titles on in game item sales and including honour of Kings.

Speaker 2: So far, we have reached completion with eight game titles on in-game item sales, including Honor of Kings.

Speaker 2: Crossfire, and Demi-Gods and Demi-Devils to mobile. As the first step, a small number of skins and weapons from these games have been made available in the mall and in the yellow shopping cart on selected broadcasters' live channels.

Crossfire and demi gods and semi Devos tool mobile is.

The first is that a small number of schemes of weapons from these games have been men available in the mall in the more in need of yellow shopping cart on selected visit broadcasters live channels users.

Speaker 2: Users can purchase them directly from the yellow shopping cart while watching the broadcaster's live content. Going forward, we will further refine the entire purchasing experience from buying game pops on Huya and building users' Huya accounts with their respective game accounts through claiming purchased virtual items within games.

Users can purchase them directly from the Euro shopping cart, we're watching these broadcasters like content.

Going forward, we will further refine the entire purchasing experience from buying gas pumps. One for you on building users. We are accounts with their respective game accounts drove claiming purchased virtual items within games.

Speaker 2: At the same time, we are exploring various operational activities around in-game item sales. For example, in September , one of FIAT's broadcasters held a live event showcasing the first wearing of a newly designed skin item.

At the same time, we are exploring various operational activities around in game item sales for example in September one of <unk> broadcast of hail alive, even so casing to first wearing of newly designed skiing item and describe the skin's characteristics.

Speaker 2: and describe the skin's characteristics and effects in detail during gameplay.

Beck in detail during game play the shifts are not only attracted fans attention, but also give us a unique opportunity to gain insight into product before is offshore lunch. Furthermore, in October we collaborated with our game publisher to introduce a customized.

Speaker 2: The system not only attracted fans' attention, but also gave players a unique opportunity to gain insight into products before its official launch.

Speaker 2: Furthermore, in October , we collaborated with a game publisher to introduce a customized skinsuit for a popular broadcaster of that game on our platform.

Skiing shoot for Bureau broadcaster of the game on our platform.

Speaker 2: The scheme shows limited-time exclusive sales on that broadcaster's channel proves quite successful with sales exceeding expectations.

<unk> showed a limited time exclusive sale on that broadcasters channel provide growth.

Quite successful with sales exceeding expectations.

Speaker 2: As activities like this game traction, we will also develop and adopt operational strategy targeting different tiers of broadcasters, thus increasing broadcaster willingness and ability to participate in game item sale services.

Activities like this gain traction.

We'll also develop and adopt operational strategy targeting different tiers of broadcasters, thus encouraging broadcast their willingness and ability to participate in game item sales services.

Speaker 2: On the advertising services side, we have thoroughly analyzed our ad slots and ad types and have begun adjusting our approach accordingly for brand advertising, which accounts for the majority of our ads. We are deepening our collaboration with advertisers, especially on upcoming game promotions.

Only advertising services side, we have salary annualized our fs loss in AD types and have been begun adjusting our approach accordingly for brand advertising.

<unk> accounted for the majority of our <unk>, we are deepening our collaboration with advertiser, especially on upcoming game promotions.

Speaker 2: For example, we worked with Game Studio to organize cross-platform campaigns involving our streamers to increase brand exposure for its new game. Meanwhile, we are increasing our emphasis on performance-based advertising, especially for the currently popular minigames, and exploring other users to increase its effectiveness on our platform.

For example, we worked with game studio to organized cross platform campaigns involving our <unk> tumors through increased brand exposure for his new game. Meanwhile, we are increasing our emphasis on performance based advertising, especially for the current <unk> and <unk>.

If protein.

Other users to increases effectiveness on our platform.

Speaker 2: Along with these new strategic initiatives, we believe that sustainable development of our platform's content ecosystem remains vital to VR's future growth and success.

Along with these new strategic initiatives, we believe the sustainable development of our platforms content ecosystem remain vital to we as future growth and success game related services. We are both complement and enhance our live streaming videos as we realize the myriad of Synergist image.

Speaker 2: Game-related services will both complement and enhance our live-streaming business as we realize the myriad of synergies emerging across content and operations.

<unk> across content and operations, we are committed to solidifying we ask call user community and maintaining a healthy broadcast the ecology through high quality broadcasters generated content and professional esports content, while also leveraging new technologies, such as AI generated count.

Speaker 2: We are committed to solidifying who we are as a user community and maintaining a healthy broadcaster ecology through high-quality broadcaster-generated content and professional esports content, while also leveraging new technologies, such as AI-generated content.

<unk>.

Speaker 2: Let me give you an update on our latest progress on the AI front.

Let me give you an update on our latest progress on the AI front.

Speaker 2: We are actively exploring the re-application of AIGC across the entire broadcaster content production chain to further improve content creation quality and efficiency as well as user engagement.

We are actively exploring the application of aig's see across the entire broadcast content products on churn to further improve content creation quality and efficiency as well as user engagement.

Speaker 2: For example, our recently developed AI assistant feature offers intelligent chat, fan interaction, game analysis, and minigame widgets function, as well as array of content creation tools.

For example, our recently developed AI assistant feature August intelligent chat spend into exit Gamba analysis, and mini game widget function as well as array of content creation tools.

Powered by our tens of billions parameters last language model churn on data from broadcasters, Jimmy and content on our platform as well as Nathan language processing.

Speaker 2: Powered by our tens of billions parameters large language model, chained on data from broadcaster streaming content on our platform, as well as natural language processing technologies, AI assistant can imitate a broadcaster's style and tongue while chatting with viewers during live session for an authentic and entertaining user experience.

Technologies.

Our system can imitate our broadcaster style and tongue, while chatting with viewers during live session for an authentic and entertaining user in exploited Koreans.

Speaker 2: Furthermore, broadcaster can create customized digital avatar using AI assistance 2D and 3D digital human technologies and AIGC technologies to satisfy various scenario-specific requirements.

Furthermore, broadcaster can create customized digital avatar using AI assistance to D and three D digital human technologists, and Aig's C technologies to satisfy various scenarios specific requirement.

Speaker 2: AI Assistant is also equipped with image recognition and AI reasoning capabilities for viewing and evaluating game skins, empowering broadcasters to seamlessly provide real-time analysis of gameplay.

Our system is also equipped with image recognition and AI reasoning capabilities for viewing and evaluating games schemes empowering broadcasters to seamlessly provide real time analysis of game play.

Speaker 2: In addition, our intelligent editing and generation tools help broadcasters quickly generate high-quality video highlights of their live broadcast content and e-sports tournament, greatly improve the professionalism and production efficiency to the derivative content.

The Edison, we our intelligent editing and generation tools help broadcaster quickly generate high quality video highlights of their live broadcast content and esports tournament.

<unk> improved.

Professionalism and production efficiency two <unk>.

River <unk> content.

Speaker 2: In summary, steady execution of our strategy transformation plan in this quarter lays a solid foundation for our future development. We are confident that as we strengthen our game live streaming content ecosystem and expand our presence in the game value chain, we will drive more balanced and sustainable business growth in the long term.

In summary, steady execution of our strategy transformation plan in this quarter lay a solid foundation for our future development.

We are confident that strengthen our game live streaming content ecosystem and expand our presence in the gas value chain, we will drive more balanced and sustainable business growth in the long term.

Speaker 2: With that, I will now turn the call over to our Acting Co-CEO and VP of Finance, Ashley Wu, to share more details on our third quarter results. Ashley, please go ahead. Thank you, Vincent.

With that I will now turn the call over to our <unk> co CEO and VP of finance <unk> to share more details on our third quarter results <unk>. Please go ahead.

Thank you Vince and Hello, everyone.

Speaker 1: I'll continue with some updates on our operating metrics and financials.

I'll continue with some updates on our operating metrics and financials.

Speaker 3: On the user front, although we continue to be affected to some extent by users and broadcasters' time spent on offline entertainment activities,

On the user front, although we continue to be affected to some extent.

And broadcasters can spend on offline entertainment activity.

Speaker 3: Our diversified esports tournaments and entertainment programming during the summer session boosted Hoya's live mobile MAUs to $86 million for the third quarter of 2023, up 3.7% from $82.9 million.

Our diversified E sports tournaments.

Entertainment programming during the summer session Bostick, who yes, nice mobile MH.

$86 million for the third quarter of 2022 can be free.

Three 7% from $80 million to $90 million.

Speaker 3: for the period quarter and threat year-over-year.

The period quarter and year over year.

Speaker 3: Meanwhile, we maintain our strict marketing and channel spending policies to keep our expenses down.

Meanwhile.

We maintain our lack of pool and channel spending policy to keep our advantage Stan.

Speaker 3: In the third quarter, the Huya Life app's next month's user retention rate remained above 70%, demonstrating high user stickiness.

In the third quarter.

<unk> Alright, and next month, you said retention rate.

Above 70%.

Ms shaping high user thickness.

Speaker 3: Let me elaborate on our professional content enrichment.

Let me elaborate on our professional content enrichment.

Speaker 3: For licensed esports events, we broadcasted about 80 third-party professional esports tournaments in the third quarter of 2023.

Well licensed esports events.

Kathy about 80, Paki professional esports tournaments in the first quarter of 2023.

Speaker 3: with total value of approximately $480 million.

Lets total leadership.

Approximately $488 million.

Speaker 3: The Summer Spitz of LPL, KPL and LCK were the most watched tournaments of the quarter.

The summer Steve L. P. L. P P M and <unk> with the most watched Panama after quarter.

The counter strike two events E.

Speaker 3: The Counter-Strike 2 events, ETL Season 18, and IEM Column, which are exclusive to Huya in China, were also quite popular among our users.

E T L decent 18, and I am column, which are exclusive to <unk> in China.

Also quite popular among our users.

Speaker 3: Overall, we will continue to focus on implementing strict procurement processes for licensed esports tournaments and strengthening operational activities to improve the ROIs of the event.

All of them.

We will continue to focus on implementing street procurement processes.

Eitan E sports tournaments.

And strengthening operational activity to improve the ally of the events.

Speaker 3: For self-produced content, we continue to enhance our own IP metric and increase our IP smart kit influence.

Or self produced content.

We continue to enhance our own IP metric and increased our IP Mac influence.

Speaker 3: In the third quarter, we broadcasted about 30 self-organized esports tournaments and entertainment TGC shows.

In the third quarter.

We are forecasting about 30 sales organize esports tournaments and entertainment P. J C shows.

Speaker 3: with a cumulative viewership of more than 110 million. Lee Kuan Yew.

With the accumulative Leila shape of more than $110 million.

<unk> Hello Cup.

Speaker 3: Peacekeeper Elite All-Star Cup Summer and Honor of Kings Streamer League were our top performing self-produced events.

Peacekeeper elite of backup summer and honour of Kings extremely well our top performing sales produced events.

Speaker 3: We also hosted the Wuwei Cup All-Star Invitational for Water Rents, raising the profile of this newly launched game on our platform.

We also hosted <unk>.

<unk> come off that indication now for one event.

We think the profile of this newly launched game on our platform.

Speaker 3: During the China Joint Gaming Expo in Shanghai, we held a series of on-site competitions for HOK, LOL, LOL Warriors, and Water Runs, involving our fans, professional players, and popular broadcasters.

During the China gaming Expo in Shanghai.

A series of onsite competitions, well actual K L O L. L. A wildly and one event in moving our professional players and popular broadcasters.

Speaker 3: Promoting the integration of live content and offline activities.

The integration of nice content and offline activities.

Speaker 3: I also want to highlight that Goya broadcasted the Asian Games 2023 held in Hangzhou from late September to early October .

I also want to highlight that.

At Broadcasting Asian goal 2023.

In Hangzhou from late September early October.

Speaker 3: This year's event features the development of eSports competitions as a material program.

This year's event nature of it.

Competition as Matthew programs.

Speaker 3: Chinese e-sports teams performed well this year.

Chinese ethos team performed well this year.

Speaker 3: which boosted public awareness of e-sports nationwide.

<unk> 40 <unk>.

<unk> of esports nationwide.

Speaker 3: The Asian Games eSports events also attracted broad attention from our users, with our League of Legends and Honor of Kings events ranking among the top 5 of all our tournaments this quarter in terms of peak concurrent users.

The Asian games esports events.

So a champion.

Pension from our users with our league of legends and honour of Kings event ranking among the top five of all our tournament this quarter in terms of peak concurrent users.

Speaker 3: Notably, our Asian Games eSports broadcast showcased our advanced 4K HDR technology and our commitment to superior viewing experiences.

Notably.

Our Asian games esports forecast showcase our otherwise bulky HD.

And our commitment to Japan viewing experiences.

Speaker 3: We were the only broadcast platform to provide 4K HDR support across multiple devices, including Android and iOS app, website, and PC client.

We were the only broadcast platform to per LIFO, okay ish the asset across multiple devices.

Including Android and iOS App website and PC.

Speaker 3: for both live streaming and on-demand video replay.

For both nights streaming and on demand we deal with pain.

Speaker 3: which enable us to bring more delicate detail and richer color to the eSports game scene for our users.

Which enable us to bring more dedicated ehow and leach Ocala to the E book gains.

For our users.

Speaker 3: with our real-time SuperSolution image quality technology that supports various devices.

With our Alere can super solution image quality technology that.

Supports various devices.

Speaker 3: We were also able to improve video quality under weak network environments to better meet users' requirements for clarity and smoothness, optimizing their event viewing experience.

We were also able to improve retail quality until week network environment that.

That can meet users' requirements for clarity and smoothly.

<unk> been really experience.

Speaker 3: In addition, we produced commentary programs tailored to the Asian Games esports events to provide new esports viewers with competition-related background information, enhancing their understanding of the events while introducing them to Huya's high-quality engaging content.

In addition, we produced commentary programs.

To the Asian games esports events.

Hawaii, New esport really.

With competition related background information in.

Enhancing their understanding of the events, while introducing them to <unk> high quality engaging content.

Turning now to our financials.

Speaker 3: Our third quarter revenues continue to decline due to the challenging market environment and our proactive business adjustments in support of our strategic transformation and prudent operations.

Our first quarter revenues.

<unk> declined due to the challenging market environment, and our proactive business adjustments.

In support of our strategic transformation and prudent operations.

Nevertheless.

Speaker 3: Our gross margin remained resilient and reached 13.9% in Q3, as we continue to realize savings in content cost.

Our gross margin building resilience and reached 13, 9% in Q3.

SB continue julianna seating in content costs.

Speaker 3: particularly content licensing and broadcaster-related costs, as well as that.

<unk> content licensing and broadcaster related cost.

As well as bandwidth usage.

Speaker 3: Our total operating expenses in the third quarter decreased 20.7% year-over-year and 8.7% quarter-over-quarter, reflecting our ongoing...

Our total operating expenses in the third quarter decreased 27% year over year, and eight 7% quarter over quarter.

With renting our ongoing operational.

Speaker 3: optimization efforts across the organization.

Optimization efforts across the organization.

Speaker 3: Let's move on to our Q3 financial details.

Let's move onto our Q3 financial details.

Our total net revenues were RMB 165 billion for Q3.

Speaker 3: Our total net revenues were RMB $1.65 billion for Q3.

Speaker 3: compared with IMB $2.38 billion for the same period last year.

Compared with RMB coupon 38 billion for the same period last year.

Live streaming revenues.

Speaker 3: Live streaming revenues were RMB $1.53 billion for Q3 compared with RMB $2.02 billion for the same period last year.

RMB 158 billion for Q3.

With <unk> two dee.

<unk> billion for the same period last year.

Speaker 3: primarily due to a decrease in the number of quarterly paying users on Huya Life to 4.2 million for Q3 from 5.5 million for the same period of 2022.

Similarly, due to a decrease in the number of quarterly paying users encore ally to four <unk> million for Q3.

525.

$5 5 million for the same period of 2022.

Speaker 3: The decline in the number of quarterly paying users was primarily attributable to the soft micro and industry environment and our proactive business adjustment.

The decline in the number of quarterly paying users.

Was primary attributable to the soft Michael and industry environment, and our proactive business adjustments.

Speaker 3: as well as the increase in offline entertainment activities.

Well as the increase in offline entertainment activities.

Speaker 3: which affected the time spent by long-tail users on our platform.

Which in effect at the time spent by Montel users on our platform.

Speaker 3: Advertising and other revenues were RMB $116 million for Q3, compared with RMB $361 million for the same period last year.

Advertising and other revenues.

<unk> $116 million for Q3.

Compared with RMB 861 million for the same period last year.

Speaker 3: This was primarily due to a significant decrease in content sub-licensing revenue.

This was primarily due to a significant decrease in confidence of licensing revenues.

Speaker 3: If we exclude the impact of the reduction in contents of licensing revenues as a result of our amended licensing agreement for LOL matches in January , the remaining portion of advertising and other revenues recorded single-digit growth year over year.

If we exclude the impact of the reduction in content licensing revenues.

Yourself of our amended licensing agreement for <unk> in January.

The mainland portion of our advertising and other revenues recorded single digit growth year over year.

Speaker 3: Cost of revenues decreased by 30% year over year to RMB $1.42 billion for Q3.

Cost of revenues decreased by 30% year over year to RMB 142 billion for Q3.

Speaker 3: primarily due to decreased revenue-sharing fees and content costs, as well as bandwidth costs.

Primarily due to increased revenue sharing fees and content costs as well as bandwidth costs.

Speaker 3: Revenue sharing fees and content cost decreased by 31% year over year to RMB 1.23 billion for Q3.

Revenue sharing fees and content costs decreased by 31% year over year to RMB 123 billion for Q3.

Speaker 3: primarily due to the decrease in revenue sharing fees associated with the decline in live streaming revenues, as well as lower costs related to eSports content and content creators.

Primarily due to the decrease in revenue sharing fees associated with the decline in live streaming revenues as well as lower cost related to E sports content and content creators.

Speaker 3: Finance costs decreased by 28% year-over-year to RMB83 million for Q3.

<unk> costs decreased by 28% year over year to RMB 83 million full till fee.

Speaker 3: This was primarily due to improved bandwidth cost management, variable pricing terms, and continued technology enhancement efforts.

This was primarily due to improved bandwidth cost management.

No pricing terms and continued technology enhancement efforts.

Gross profit was RMB 228 million and gross margin was.

Speaker 3: Gross profit was RMB$228 million and gross margin was 13.9% for Q3.

One 9% for Q3.

Excluding share based compensation expenses.

Speaker 3: Excluding share-based compensation expenses, non-GAAP gross profit was RMB231 million, and non-GAAP gross margin was 14% for Q3.

non-GAAP gross profit was RMB 231 million and non-GAAP gross margin was 14% for Q3.

Speaker 3: Research and development expenses decreased by 17% year over year to RMB $142 million for Q3.

Research and development expenses decreased by 17% year over year to RMB 142 million for Q3.

Speaker 3: primarily due to decreased personnel-related expenses and share-based compensation expenses.

Primarily due to decreased personnel related expenses.

Share based compensation expenses.

Sales and marketing expenses.

Speaker 3: decreased by 24% year-over-year to RMB95 million for Q3.

<unk> by 24% year over year to RMB 95 million board feet.

Speaker 3: primarily due to decreased marketing and promotional fees as well as personnel-related expenses.

Primarily due to decreased marketing and promotional fee as.

As well as personnel related expenses.

Speaker 3: General and administrative expenses decreased by 23% year-over-year to RMB$60 million for Q3.

General and administrative expenses.

Increased by 23% year over year to RMB 60 million for Q3.

Speaker 3: primarily due to decreased share-based compensation expenses.

Primary due to decreased share based compensation expenses.

Other income was RMB four 8 million for Q3.

Speaker 3: Other income was RMB40 million for Q4.

Speaker 3: compared with RMB44 million for the same period last year.

Compared with <unk> $44 million for the same period last year.

Speaker 3: primarily due to lower indirect test response and conformance test subsets.

Primarily due to lower indirect tax equity funds and government subsidy.

Speaker 3: As a result, operating loss was RMB$29 million for Q3 compared with operating income of RMB$12 million for the same period last year.

As a result.

Operating loss was RMB <unk>.

19 million for Q3, compared with operating income of <unk> million for the same period last year.

Interest and shutdown investments income was RMB 128 million for Q3.

Speaker 3: interest and short-term investment income was RMB 128 million for Q3.

Speaker 3: compared with RMB $72 million for the same period last year.

Compared with RMB 17, 2 million for the same period last year.

Speaker 3: primarily due to increased interest rates and improved management of deposit products.

Murray due to increased interest rates and improved management of deposit products.

Net income attributable to <unk>, Inc was RMB <unk> <unk> million for Q3.

Speaker 3: Net income attributable to Huya Inc. was RMB $12 million for Q3.

Speaker 3: Compare with RMB $60 million for the same period last year.

Compared with RMB 16 $16 million for the same.

Yes.

Excluding the share based compensation expenses.

Speaker 3: excluding the share-based compensation expenses and impairment loss of investment.

And in parallel impairment loss of investments.

Speaker 3: Non-Gap Net Income, attributable to Huya Inc., was RMB103 million for Q3.

non-GAAP net income attributable to <unk>, Inc.

<unk> 100 million.

<unk> for Q3.

Speaker 3: compared with $106 million for the same period last year.

Compared with $106 million for the same period last year.

Speaker 3: non-gap net income margin was 6.3% for Q3.

non-GAAP net income margin was six 3% for Q3.

Speaker 3: Diminuted net income per ADF was IMB 0.05 for Q3.

Diluted net income per ads was RMB <unk> corn CLO five for Q.

Q3.

non-GAAP diluted net income per ads was RMB <unk> 42 for Q3.

Speaker 3: Non-GAAP-diluted net income per ADS was IMB 0.42 for Q3.

As of September 32023.

Speaker 3: as of September 30, 2023.

Speaker 3: The company had cash and cash equivalents, short-term deposits, and long-term deposits of RMB 10.6 billion.

The company had cash and cash equivalents short term deposits and long term deposits.

<unk> 10 6 billion.

Speaker 3: Compare with IMB 10.8 billion as of June 30, 2023.

Compared with RMB 10 8 billion.

June.

32020.

Speaker 3: Finally, let me provide an update on our Share with Purchase program.

Finally, let me provide an update on our share repurchase program.

Speaker 3: We announced our share repurchase program of up to U.S. dollar 100 million over a 12-month period in mid-August 2023.

We announced our share repurchase program of up to you.

U S dollar $100 million over a 12 month period in August 2023.

Speaker 3: Since then, we have repurchased a total of US$9 million of shares at the end of Q3.

Since then we have repurchased.

Total of U S dollar <unk> million of shares.

The end of Q3.

Speaker 3: We will continue to execute our share repurchase program, reinforcing our commitment to enhancing shareholder value.

We'll continue to execute our share repurchase program.

Enforcing our commitment to enhancing shareholder value.

Speaker 3: With that, I would now like to open the call to your questions.

With that I will.

Like to open the call to your questions.

Speaker 1: Thanks, Ashley, 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 attendance meeting or both meeting applications, please click the right-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.

Thanks, Ashley and Hello, everyone. If youre dialing in by phone. Please press <unk> to ask a question then press six two hour mute yourself. If we are accessing the call from the Central meeting ARVO meeting applications. Please click the return button at the bottom left for the <unk>.

<unk> of all participants on today's call. If you wish to ask your questions you mentioned mezzanine Chinese place immediately repeat your question in English.

Speaker 1: Today's first question comes from Yiwen Zhang from China Renaissance. Yiwen, your line is open. Please go ahead.

Today's first question comes from <unk> <unk> from China Renaissance.

Your line is open. Please go ahead.

Speaker 4: Good evening, Guan Yicong. Thank you for accepting my question. My question is about our strategic transformation. Since the launch of the strategic transformation in August , three months have passed. What is the latest development of the consumer company? And what are the expected changes before the transition? Thank you. So thanks for taking my question. So my question is about our strategic transformation. It has been three months since we first introduced back in August .

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Speaker 4: Can you guys discuss about the latest update there? Thank you.

Can you guys discuss about what the latest update there. Thank you.

Speaker 2: OK, let's talk about the current progress of our strategic transformation.

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Speaker 2: In August , we announced that we will focus on commercialization and we plan to provide more services related to games, such as game distribution, game prop sales, and game advertising.

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Speaker 2: In addition to meeting the needs of game users on our platform in terms of content consumption, it can also further meet their wider needs in terms of game-related aspects, thereby achieving a higher commercial value for some users.

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Speaker 2: We believe that the main advantage of Huya's development of these businesses is the active gaming user groups and streamers on the platform. The content of the streamers and their interaction with users can help achieve more game-related services. And Huya and game manufacturers have established a close cooperation relationship in terms of content.

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Speaker 5: In August , we announced the key transformation of commercialization and planned to provide more GAM-related services, including GAM distribution, GAM prop sales, and GAM advertisements.

And now just we announced the key transformation of commercialization and <unk>.

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Speaker 5: In addition to meeting the needs of the GAN users on our platform and content consumption, it can also further meet their broader needs in GAN-related aspects, thus obtaining higher commercial value for these users.

In addition to meeting the needs of the gain users on our platform and content consumption. It can also further meet the broader needs and game related aspects, thus obtaining higher commercial value for these users.

Speaker 5: We believe that the main advantage of Huya in developing these businesses are the active game users and streamers on the platforms. The content output of the streamers and their interaction with users can help achieve more game-related services and a close cooperation relationship between Huya and game manufacturers in terms of the content.

We believe that the men at vantage of Korea, and developing this businesses are the acts and scan uses and streamers on the platform the.

The content outputs of the streamers and their interaction with users can help achieve more again related services and our close cooperation relationship between Korea and can manufacturers in terms of the content.

Speaker 2: According to the plan, our main goal this year is to build the infrastructure needed for new business, including the development of related functions and products, as well as the connection between the user's Huya account and the game account, etc. At the same time, we will also establish new business cooperation with some game studios and games, achieve cooperation business terms, run business processes, etc.

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Speaker 2: In terms of products and functions, we have added the function of the game store that is used to sell game props in the Huya live app, and we have connected it with the function of the live car. At the same time, we have also upgraded the board of the game center for the distribution and transportation of games, optimized the download function and expanded the game library.

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According to our plan our men called US here is to build the infrastructure needed for the new business, including the development of relevant functions and products. The connection of users who your account and game accounts at the same time.

Speaker 5: According to our plan, our main goal this year is to build the infrastructure needed for the new business, including the development of relevant functions and products, the connection of users' Huya account and GAM account. At the same time, we would also establish new business cooperation with some GAM studios and GAMs.

We would also establish new business cooperation with some game studios and games.

To reach cooperate asbestos terms and to round through business processes for instance, if we.

Speaker 5: to reach cooperative business terms and to run through a business process.

Speaker 5: For instance, if we take it from the perspective of products and functions, we have now added the in-game item more function for the sale of game props in Huya's live broadcast app. And we also realized the connection with the yellow shopping cart function in the live broadcasting room.

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It from the perspective of Protos and functions. We have now added the in game item more function for the sell off game drops into yes live broadcast App and we also realize the connection with the yellow shopping card function.

In our live broadcasting room at the same time, we also upgraded began centre module for the distribution and intermodal transfer and optimize the download function and expand the game library that we have.

Speaker 5: At the same time, we also upgraded the GAM center module for the distribution and optimized the download function and extend the GAM library that we have.

Speaker 2: In terms of game cooperation, we have already reached an agreement with Prince of Glory, Crossfire, CF, and the new Dragon 8 mobile games in terms of prop sales. We also conducted a small-scale anchor sale.

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Speaker 2: For example, we had a live stream of the skin of the King of Glory. It attracted a lot of attention from the users on the platform. And we started to try to commercialize the skin of the King of Glory. We also did some preliminary cooperation with several games.

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Speaker 2: including the August launch of the new Dragon 8 mobile game, Adventure Island, The Legend of Wind, and so on.

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Speaker 2: In terms of game advertising, we are trying to work with game manufacturers to develop a more in-depth form of advertising cooperation. For example, we will organize our broadcasters to participate in cross-platform brand exposure and sales activities. For small games that are currently more popular, we will also pay more attention to small game advertising in the form of effect advertising.

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In terms of Canfor operation, we have reached cooperation with eight games, including the owner of King Crossfire semi gods and semi devils to mobile in terms of the selling of crops and Carryout Moscow stream ourselves.

Speaker 5: In terms of game cooperation, we have reached cooperation with eight games, including The Owner of King, Crossfire, Semi-Gods and Semi-Devils 2 Mobile, in terms of the selling of props and carry out small-scale streamer sales.

Speaker 5: At the same time, we also begin to explore the cooperation activities related to the sales of GamePulse as well. For example, we have a streamer who carried out the first launch of the Honor of Kings skins.

At the same time, we also begin to explore the cooperation activities related to the south of scan talks as well for example, we have a streamer who carry out the first launch of the <unk>.

Honour of Kings scarcity, and again high attention from users on the platform. We also begin to try streamer customized skin suits and other crops. We also made some initial cooperation with several games and Ken distributing including the new Diamond Gaza semi Devils.

Speaker 5: and gain high attention from users on the platform. We also begin to try streamer-customized skin suits and other props.

Speaker 5: We also made some initial cooperation with several GANs in GAN distributing, including the new Demigods and Semidevils Mobile and the MapleStory M, which was launched in August .

Mobile and in Maple story M, which was launched in August.

Speaker 5: In terms of game advertising, we have tried to explore some deeper forms of advertising cooperation with game companies, such as organizing our streamers to participate in the cross-platform brand exposure events. And for the currently popular mini-games, we also pay more attention to the mini-games advertising in the form of performance-based advertising.

In terms of game advertising, we have tried to explore some deeper forms of advertising cooperation with game companies such as organizing our streamers to participate in.

Cross platform brand exposure events and fund currently popular mini games, we also pay more attention to the pentagon's effort housing and a form of performance based advertising.

Speaker 2: Our overall progress is as expected, but due to the limited number of games in cooperation, and the cooperation of these games is still in a small scope, the income and profit contribution of our new business this year will be relatively small. We also hope that after doing all the preparatory work this year, the scale of business related to game services will be able to be effectively expanded and more income will be obtained.

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Speaker 5: At present, our overall progress is pretty much in line with our expectations. However, due to the limited number of cooperated games right now, the cooperation of these games are still in a small scale. The income and profit contribution of new business will be relatively small this year.

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Speaker 5: But we also hope that after all the preparation work has been completed this year, the business scale of game-related services can be effectively expanded and more income can be obtained from next year.

But we also hope that after all the preparation work have been completed this year the business scale of Gan related services can be effectively expanded and more income can be obtained from next year.

Speaker 1: Thank you. We will have next question. The next question comes from Rachel Sun from HSBC. Please go ahead.

Thank you we will have next question. The next question will come from Richardson from HSBC.

Please go ahead.

Okay.

Hong Zhang.

Speaker 6: Good evening, Mr. Huang, Ashley and Hanyu. Thank you for accepting my question. My question is about the transformation of the company and the adjustment of the business brought by regulators. In fact, how much impact do these factors have on our income? How do we look at the income in the next few quarters or next year? And when will new business grow faster?

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Speaker 6: I will quickly translate myself. Thank you, management, for taking my question. Can management dissect the revenue impact from Huya's own strategic transformation, as well as the operating adjustments to improve the regulatory compliance? And how does management view the revenue trends in the future? And when can we see the new revenue streams to have a better growth profile? Thank you.

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As well as the operating adjustments to improve the regulatory compliance and how just management fees the revenue trends in the future and when can we see the new revenue streams to have a better growth profile. Thank you.

Speaker 3: Okay, let me answer Richard's question. We mentioned in the last press conference that in the process of strategic transformation, we will make some proactive adjustments to the existing live streaming business in order to target internal resources.

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Speaker 3: At the same time, in order to create a healthier platform environment, Huya also takes the initiative to partially upgrade and optimize the content and functions on the platform.

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Speaker 3: In addition, the overall industry environment and user consumption desire and ability are still in the process of recovering, which has also affected our income level to a certain extent.

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Speaker 5: The last quarter meeting, we mentioned that in the process of strategic transformation of our business, in order to optimize the internal resources in a targeted manner, we will make some proactive adjustments to the existing live streaming business.

The last quarter of meeting we mentioned that in the process of strategic transformation of our business.

In order to optimize the internal resources in a targeted manner, we will make some proactive adjustments to the existing live streaming businesses.

Speaker 5: At the same time, in order to create a healthier platform environment, Huya has recently taken the initiative to upgrade and optimize the content and functions on the platform. These adjustments caused the decline of our live streaming revenue in the third quarter.

At the same time in order to create a healthier platform environment, who has recently taken the initiative to upgrade and optimize the content and functions on the platform.

These adjustments cost of debt.

Decline of our live streaming revenue in the third quarter.

Speaker 5: In addition, the overall industry environment and the users' willingness and affordability still need time to be fully restored, which has also affected our income level to some extent.

In addition, the overall industry environment, and the users' willingness and affordability still need time to be fully restored which has also affected our income level to some extent.

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Speaker 3: In the fourth quarter, we expect to continue to be affected by the number of sales factors and due to the impact of business adjustments in the entire quarter, live income may drop from the same rate as in the third quarter.

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Speaker 5: However, it is worth pointing out that we are actively optimizing the content cooperation and user experience in the third quarter. The impact of live streaming revenue was slightly smaller than the company's previous expectations.

However, it is worth pointing out that we are actively optimizing the content cooperation and user experience in the third quarter.

The impact of live streaming revenue with a slightly smaller than the company's previous expectations.

Speaker 5: In the fourth quarter, we expect to continue to be affected by the above-mentioned factors, and because it is a complete quarter affected by the business adjustments, the year-on-year decline of live streaming revenue may be greater than that in the third quarter.

And our fourth quarter, we expect to continue to be affected by the above mentioned factors and because it is a complete quarter affected by the business adjustments the year on year decline of live streaming revenue may be greater than that in the third quarter.

Speaker 5: We hope that after these adjustments, the live streaming revenue will gradually return to a stable trend.

We hope that after these adjustments the live streaming revenue will gradually return to a stable trend.

Speaker 3: In terms of advertising and other income, the third quarter is mainly affected by the decline in copyright revenue. This is due to the higher amount of copyright revenue in the same period last year. Although the revenue of new business will be relatively small in the second half of this year, but the decline in copyright revenue has increased in the third quarter of our advertising and other income.

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Speaker 3: and the proportion of its total revenue will be increased. Our goal is still the Earth. By 2025, the total revenue of game-related services will reach about 30%, achieving a more balanced revenue structure for the company.

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Speaker 5: In terms of advertising and other income, the third quarter was mainly affected by the decline in copyright income, which was due to higher amount of copyright income in the same period last year.

In terms of ever tightening in other income the third quarter was mainly affected by the decline in copyright income, which was due to higher amount of copyright income NSM period last year.

Speaker 5: Although the income of new business will be in a relatively small scale in the second half of this year, however, if we exclude the impact of the decline in copyrighted income, our third quarter advertising and other income level have achieved both an year-over-year and quarter-over-quarter growth.

Although the income of new business will be relatively small scale in the second half of this year. However.

However, if we exclude the impact of the decline and copyright at income our third quarter advertising and other income level have achieved both and year over year and quarter over quarter growth.

Speaker 5: When our preparations for the new DIM-related services business are completed, we expect that the new business income will increase faster next year, and its proportion to the total income will increase.

We're now preparations for the new game related services business are completed.

We expect that the new business income will increase faster next year and its proportion to the total income will increase.

Speaker 5: Our goal is still to strive to achieve a more balanced income structure by 2025 with the proportion of game-related services income accounting for about 30% of the total revenue.

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The proportion of game related services income accounting for about 30% of the total revenue.

Speaker 1: Thank you. We will take next question. The next question comes from Fiona Pham from Jeffries. Fiona, please go ahead.

Thank you we'll take next question.

The next question comes from Fiona <unk> from Jefferies. Please.

Please go ahead.

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Speaker 1: What preparations have you made for the S13 Grand Finals, and what impact have these preparations and events had on Huya's traffic?

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Question is what did we up here or what we are head down for the major events, such as Asian games, and ascertain and how it impacts on the <unk> platform Kathy. Thanks.

Speaker 2: The Huya platform broadcasted the Asian Games in Hangzhou at the end of September and the beginning of October . This was the first time the Asian Games was broadcasted as an e-sports event. We value the broadcast of the Asian Games very much. In order to better serve the audience of the Asian Games,

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Speaker 5: From the end of September to the beginning of October , Huya platform broadcasted the events of esports in Hangzhou Asian Games, including the, you know, when the esports became the first time as an official event in the Asian Games.

From the end of September to the beginning of October we are platform broadcasted the events of esports in Hangzhou Asian games, including the.

When the esports became the first time as an official events in the Asian games, we cherish this chance of broadcasting the Asian games esports events in order to better serve the audiences of the Asian games, we have provided for a K HDR support across multiple.

Speaker 5: We cherish this chance of broadcasting the Asian Games esports events. In order to better serve the audiences of the Asian Games, we have provided 4K HDR support across multiple devices for the Asian Games esports events.

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Speaker 5: and through real-time super-resolution image quality technology on the four devices' side in order to ensure the clarity and smoothness of users viewing in a weak network environment.

Speaker 5: In terms of the content, we also made commentaries and comments on the esports events at Asian Games to help the users understand the corresponding events.

In terms of the content. We also made commentaries and comments on the esports events at Asian games to help the users understand the corresponding events.

Speaker 2: This is the e-sports event of the Asian Games, which has gained widespread attention on our platform. Among them, the highest number of online players in the third quarter of the e-sports event of the Asian Games related to the League of Legends and Prince of Glory is ranked No. 5.

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Speaker 2: In addition, due to the influence of the Asian Games itself and the rich content of the sports event, it also helps us attract some new users. We hope to maintain this part of the users through the high-quality and diverse content provided by the platform. Overall, due to the shorter schedule of the Asian Games, the positive impact on the number of activities in the season will also be diluted.

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Speaker 5: The esports events of the Asian Games have received extensive attention from users on our platform, amongst which the peak concurrent users or PCEU of League of Legends and Honor of Kings related to Asian Games events ranked among the top five in the third quarter. In addition, because of the influence of Asian Games and its rich content of esports and events, it has also helped us to attract some new users.

The esports events of the Asian games has received extensive attention from users on our platform amongst which the peak concurrent users or a PC you of league of legends and honour of Kings related to Asian games events ranked among the top five in the third quarter.

In addition, because of the influence of Asian games in its rich content of E sports and events that has also helped us to attract some new users. We hope to maintain these users through the high quality and diversified content provided on our platform.

Speaker 5: We hope to maintain these users through the high quality and diversified content provided on our platform.

Speaker 5: On the whole, due to the short duration of the ancient games, the positive impact on quarterly MAU was diluted.

On the whole due to the short duration of the engine games, the positive impact on quarterly and they you with diluted.

Speaker 2: The Global Finals of the League of Legends is an important tournament for Q4. Huya has been broadcasting this tournament for six consecutive years, which has gradually cultivated the audience's brand awareness of this tournament, and professional tournament users have chosen to watch this tournament on the Huya platform. We continue to pay attention to the user's viewing and interaction experience, in addition to providing industry-leading broadcast quality all the time.

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Speaker 2: This time, we also provide customized reservation services and a variety of interactive forms such as viewing the match assistant and MVP voting function to provide professional match service to users.

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Speaker 2: In addition, by combining online and offline operations and Huya's self-made PGC program, we can better enhance the attention and user intimacy of the game.

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Speaker 5: The League of Legions World Championship is an important event in Q4. Huya has broadcasted this event for six consecutive years, gradually cultivating the audience's awareness of the event's brand, and also cultivated the habit of watching it on Huya platform from the professional event users. We continue to focus on users' viewing and interactive experiences.

The League of Legends World Championship is an important event in Q4.

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Speaker 5: In addition to providing industry-leading broadcast quality, this time, we also provide users with professional event services, such as customized reservation services, game watching assistance, and MVP voting functions, and other interactive functions.

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Addition to providing industry, leading broadcast quality. This time, we also provide users with professional event services such as customized reservation services game watching assistance and MVP voting functions and other interactive.

In addition, we will further enhance the attention and use a royalty of the advanced by combining online and offline operations and who you asked on P. G C programs.

Speaker 5: In addition, we'll further enhance the attention and user royalty of the event by combining online and offline operations and Huya's own PGC program.

Speaker 2: This year's S13 is not over yet. We are very happy that LPL has made it to the finals. We are looking forward to their performance in the finals. So far...

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Speaker 2: The overall data for this tournament is quite good. The audience and other key data have improved from last year's S12. It also keeps up with the market's winning rate. After the tournament is over, we will further assess the impact of this tournament. Thank you.

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Speaker 5: This year's S13 competition has not yet completed and we're very glad that one team from LPL made it into the final and we look forward to their great performance in the final.

This U S. S 13 competition has not yet completed and it we're very glad that one team from LPL made it into the final and we look forward to that great performance and a final.

Speaker 5: So far, the overall viewing data of this event is quite good, including the number of users and other key metrics, which have increased compared with S12 in the year of 2022. It has also, we will continue to maintain the leading market share. We will also further evaluate the impact of this event after the event closes up.

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It had also we will continue to maintain our leading market share.

We will also further evaluate the impact of this event after the event closest shop.

Speaker 5: Thank you. We will take the next question. The next question comes from Lei Zhang from Bank of America.

Okay, well, let's take the next question. The next question comes from Blake Chow from Bank of America.

Please go ahead.

Speaker 7: Hi, management, good evening. Thank you for accepting my question. My question is mainly about the profit margin. I see that our 3Q profit margin is also better than expected. Please share with us what you think about the trend of 4Q, especially in the history of our Q4, due to the seasonal impact of the market. At the same time, I don't know if there are any expectations for profit in 2024. Thank you. I will translate it myself. Thank you, management, for taking my question. My question is mainly regarding the margin trend.

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Speaker 7: seasonality impact for Q4 historically, so can you give us more color on the margin trend for Q4 and if any preliminary targets for the profits in 2024 will be appreciated. Thank you.

Any preliminary targets for the profits are in country towns. They fall will be appreciated. Thank you.

Speaker 3: Okay, let me answer this question. In the third quarter, we will continue to work on controlling costs and improving efficiency. The cost of broadcasting and the cost of loan can be optimized. Therefore, although the income has dropped, the interest rate level has shown a certain flexibility. The interest rate has reached 13.9.

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Speaker 3: In the third quarter, the total operating costs fell by 20.7%, and the management cost fell by 8.7%, which realized the net profit of GAP and non-GAP.

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Speaker 5: In the third quarter, we continue to work hard.

In the third quarter, we continue to work hard.

Speaker 5: to control the cost and improve the efficiency. The costs related to streamers and bandwidth were optimized. And therefore, despite the decline in income, the gross profit rate showed some resilience, reaching 13.9%.

To control cost and improve efficiency.

The costs related to streamers and bandwidth.

Our optimized and therefore, despite the decline in income the gross profit rate showed some resilience, reaching 13, 9%. We also continue to control various operating expenses, especially the south in the administrative expenses in the third quarter. The total operating.

Speaker 5: We also continue to control various operating expenses, especially the sales and administrative expenses. In the third quarter, the total operating expenses declined by 20% year over year, or 8.7% quarter over quarter, and achieved a net profit under GAAP and non-GAAP .

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Speaker 3: In the 4th quarter, due to the impact of the large-scale competition, our competition costs will increase significantly compared to Q3. Therefore, this seasonal factor will lead to quarterly losses. However, due to the overall optimization of content costs this year and the continuous reduction in operating costs, we expect that the losses in the 4th quarter this year will be less than the same period in 2022.

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Speaker 5: In the fourth quarter, due to the concentrated schedule of large events, especially the League of Legends S13, our event costs will increase significantly compared to the third quarter. Therefore, this seasonal factor will continue to play a role and may lead to a quarterly loss.

In the fourth quarter due to the concentrated schedule of large events, especially the legal flattens as 13 hour event costs will increase significantly compared to the third quarter. Therefore, these seasonal factor will continue to play a role in that.

They lead to a quarterly loss however, due to the overall optimization of content costs and continues our streamlining of operating expenses over the entire year. It is expected that the loss in the fourth quarter of this year will be less than the same period last year.

Speaker 5: However, due to the overall optimization of content costs and continuous streamlining of operating expenses over the entire year, it is expected that the loss in the fourth quarter of this year will be less than the same period last year.

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Speaker 3: For 2024, we hope to increase the ratio of game-related service business with a profit rate higher than the existing live business, and to maintain continuous caution and continuous optimization in content cost and domain expenditure, so that we can further improve the company's profitability and level.

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From what we can see currently because the company's profit level in the first three quarters is better than previously expected.

Speaker 5: From what we can see currently, because the company's profit level in the first three quarters is better than previously expected, we expect that non-GAAP net profit level in 2023 will turn positive with a small profit level, which is also ahead of our previous expectation of a break-even time for the year.

We expect that non-GAAP net profit level in 2023, well pad are positive with a small profit level, which is also ahead of our previous expectation of a breakeven time for the year.

Speaker 5: For the year of 2024, we hope that with the increase of the proportion of game-related services businesses, which, by the way, has a higher growth margin level than the existing live streaming business, and with cautious and continuous optimization of content costs and operating expenses, we can further enhance the profitability level of our company.

For the year of 2024, we hope that with the increase of the proportion of our game related services businesses, which by the way has a higher gross margin level than the existing luxury mean business and with cautious and continuous optimization of content costs and operating expenses, we can fill.

Other enhanced the profitability level of our company.

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Speaker 8: Thank you. Now we will take our last question today. It is from Evan Su from Morningstar. Evan, please go ahead.

Kevin. Please go ahead.

Speaker 9: Hello, Manager Guan. My question is about the re-purchase of stocks. Can you share your thoughts on the re-purchase of stocks? In the third quarter, the company re-purchased 9 million US dollars worth of stocks. In the next few quarters, is it possible to speed up the re-purchase? Finally, can you share your plans for the overall use of cash?

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Speaker 9: Can you share more of your thinking on shares buyback? Will you accelerate your buyback going into the next few quarters? And lastly, can you share your plan on spending down your strong net cash position? Thank you.

Can you share more of your thinking on share buyback.

Are you a seller at your buyback going into the next few quarters and elastic can assure your planned on spending down your strong net cash position. Thank you.

Speaker 3: In mid-August, we announced a stock buyback plan to buy back at most $100 million in the next 12 months. We also hope to use cash more effectively and show the Board of Directors and the management team's confidence in the company's future development.

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Speaker 3: We will continue to carry out this purchase plan in a rhythm in the hope of improving the value of the shareholder.

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Speaker 5: middle of August we announced a plan of buying back of up to 100 million u.s dollars worth of shares in the next 12 months we also hope to use cash more effectively and show the confidence of the board of directors and management of huya and the future development

Middle of August we announced a plan of buying back of up to 100 millennials dollars worth of shares in the next 12 months. We also hope to use cash more effectively and show the confidence of the board of directors and management of who we are and our future development and as of September.

Speaker 5: And as of September the 30th, we had bought back shares worth $9 million. We will continue to implement the buyback plan in good place so as to improve shareholders' value.

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Speaker 3: On the one hand, we will continue to invest in content ecology, technical products, overseas markets, etc. On the other hand, we will keep an open mind about investment or merger in the upstream and downstream of the Huya ecological chain, carefully consider potential potential opportunities, and will make dynamic adjustments based on the company's operating situation and market situation.

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Speaker 3: At the same time, we will also seriously consider the various forms of shareholder feedback, including repurchase and dividend, in order to restore long-term support for shareholders and improve the efficiency of the company's cash flow.

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Speaker 5: Regarding our usage of cash under the current micro environment and competitive climate, we believe that holding enough cash is conducive to maintaining a competitiveness of Huya.

Regarding our usage of cash under the current macro environment and competitive climate, we believe that holding enough cash as conducive to maintaining a competitiveness of who we are.

Speaker 5: On the one hand, we will continue to invest in content ecology, technology products, as well as overseas markets. On the other hand, we will remain open to investment or mergers or acquisitions in the upstream or downstream of our ecosystem, and carefully consider possible potential opportunities.

On the on the one hand and will continue to invest in content ecology technology products as well as overseas markets on the other hand, we will remain open to the investment or mergers or acquisitions in the upstream or downstream of our ecosystem and carefully considered a possible potential opportunities.

Speaker 5: We would also dynamically adjust according to the company's operating conditions and market climate. At the same time, we will also seriously consider various forms of return to our shareholders, including repo or dividends, in order to repay the long-term support of our shareholders and improve the efficiency of our cash.

We would also dynamically adjust according to the company's operating conditions and market climate.

At the same time, we're also seriously consider various forms of return to our shareholders, including repo or dividends in order to repay the old long term support of our shareholders and improve the efficiency of our cash.

Speaker 8: Okay, thank you. Thank you once again for joining us today. If you have further questions, please feel free to contact WhoYas Investor Relations through the contact information provided on our website or PS&T Financial Communications. This concludes today's call, and we look forward to speaking to you again next quarter. Thank you.

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Thank you once again for joining us today. If you have further questions. Please feel free to contact who we ask the investor relations so without <unk>.

Contact information provided on our website <unk> financial in Communications. This concludes today's call and we look forward to speaking to you again next quarter. Thank you.