Earnings call transcript: HUYA beats Q2 2025 expectations with 31.25% EPS surprise

HUYA Inc. reported its second-quarter 2025 earnings, surpassing Wall Street expectations with an earnings per share (EPS) of $0.21, compared to the forecasted $0.16. This 31.25% surprise was accompanied by revenue of 1.57 billion RMB, exceeding the anticipated 1.54 billion RMB. Following the announcement, HUYA’s stock price rose by 4.53% in pre-market trading, reflecting investor confidence in the company’s performance and outlook. According to InvestingPro analysis, HUYA is currently undervalued, with strong financial health indicators and multiple positive signals identified by analysts.

Key Takeaways

• HUYA’s Q2 2025 EPS of $0.21 beat forecasts by 31.25%.
• Revenue reached 1.57 billion RMB, surpassing expectations.
• Pre-market stock price increased by 4.53%.
• The company reported its sixth consecutive profitable quarter.
• Strategic focus on AI and game-related services.

Company Performance

HUYA continues to solidify its position as a leader in the game livestreaming market, reporting its sixth consecutive profitable quarter. The company’s performance in Q2 2025 reflects a successful strategy of expanding its game distribution portfolio and integrating AI technologies into its operations. The gaming live streaming market is stabilizing, and HUYA’s strong partnerships, particularly with Tencent, bolster its competitive edge.

Financial Highlights

• Revenue: 1.57 billion RMB, up year-over-year and quarter-over-quarter.
• Live streaming revenues: 1.15 billion RMB.
• Game-related services revenues: 414 million RMB, accounting for 26.4% of total revenues.
• Gross margin: 13.5%.
• Non-GAAP net income: 48 million RMB.
• Cash and equivalents: 3.77 billion RMB.

Earnings vs. Forecast

HUYA’s EPS of $0.21 exceeded the forecast of $0.16, resulting in a 31.25% surprise. This significant beat is indicative of the company’s effective cost management and strategic focus on growth areas like game-related services. Revenue also surpassed expectations, coming in at 1.57 billion RMB against the forecasted 1.54 billion RMB, marking a 1.95% surprise.

Market Reaction

Following the earnings announcement, HUYA’s stock price increased by 4.53% in pre-market trading, rising from $3.31 to $3.46. This positive movement reflects investor optimism about the company’s future prospects and strong quarterly performance. Despite a slight dip of 1.81% in recent trading, the stock remains within its 52-week range, suggesting resilience amid broader market volatility.

Outlook & Guidance

Looking ahead, HUYA anticipates continued revenue growth in the second half of 2025, with game-related services as the primary growth driver. The company expects meaningful improvements in non-GAAP operating profit and plans to expand its international user base further. AI integration will deepen across gaming services, aligning with the company’s strategic focus.

Executive Commentary

"We are more than just a live streaming platform, but a game-related entertainment and service provider," stated Vincent Huang, Acting Co-CEO. This highlights HUYA’s strategic shift towards a broader entertainment ecosystem. CFO Raymond Lei emphasized, "We expect game-related services, advertising, and other revenues to be the main driver," underscoring the company’s growth strategy.

Risks and Challenges

• Market competition: Intensifying competition in the gaming and livestreaming sectors could impact market share.
• Regulatory environment: Changes in regulations could affect operations and profitability.
• Technological advancements: Rapid tech changes require continuous innovation and adaptation.
• Economic factors: Global economic conditions could influence consumer spending and advertising revenue.

Q&A

During the earnings call, analysts inquired about the growth potential of game-related services and the company’s overseas business strategy. Executives provided insights into the Delta Force esports event and detailed the integration of AI initiatives, reflecting HUYA’s commitment to innovation and expansion.

Full transcript - HUYA Inc (HUYA) Q2 2025:

Hanyul Liu, Investor Relations, HUYA: Good day and good evening, and thank you for standing by. Welcome to HUYA’s Second Quarter twenty twenty five Earnings Webinar. I’m Hanyul Liu from the HUYA Investor Relations. At this time, all participants are in listen only mode. Please be advised that today’s webinar is being recorded.

The company’s financial and operational results were issued earlier today and are posted online. You can also view the earnings press release by visiting the IR website at ir.huya.com. A replay of the call will be available on the IR website soon. Participants of management on today’s call will be Mr. Vincent Junghong Huang, our acting co CEO and senior vice president and Mr.

Raymond Peng Lei, our acting co CEO and CFO and Margaret Shi, Head of Capital Markets. Management will begin with prepared remarks, and the call will conclude with a Q and A session. Before we continue, please note that today’s discussion will contain forward looking statements made 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 latest annual report on Form 20 F 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 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.

Vincent Junghong Huang, Acting Co-CEO and Senior Vice President, HUYA: Okay. Hello, everyone. Thank you for joining our earnings conference today. It has been exactly two years since I first spoke with you on our August. Over this time, Huya has undergone a lot of transformation uncovering new opportunities, executing on clear strategy and deepening our strategic alignment with Tencent and the broader gaming industry.

Today, I’m pleased to share the progress we have made and the opportunities ahead. By leveraging our cross platform strategy, we have achieved an average of 162,000,000 monthly active user across Huya’s platforms and extended our reach even further through the distribution of our content and services on third party content platforms such as WeChat channels, Douyin and Kuaishou. Over the past year, we have strengthened collaborations with these platforms, enabling cross platform streaming and co creating professional content. This not only expand the reach of our high quality content, but also build the foundation for new monetization opportunities in game distribution, in game item sales, and potentially game publishing. One of the industry’s chance we are seeing is the rising importance of content driven marketing in publishing and long term operation of game titles.

This trend plays directly to Huya’s core strengths. Our top tier game live streaming capabilities, robust and influential esports ecosystem, and deep expertise in producing high impact short form videos optimized for each social platform. By comb combining our rich professional production capabilities and community influence, we are able to help game publisher engage players more deeply, extended the life circle of their titles, and drive player spending. As a result, our game related services, advertising and other revenues have grown significantly from million in Q2 twenty twenty three to RMB440 million this quarter. This segment now contributes over a quarter of our total net revenues and from gross billing perspective accounts for over 40% of Huya’s total transaction value.

We see this segment as a key growth engine going forward with substantial room for further expansion as we deepen our partnership with game developers and broaden our service offering. This quarter, we further increased our portfolio of jointly distributed games in the domestic market to over 300 titles. Tencent’s games such as Honor of Kings, Peacekeeper Elite, and League of Legend Mobile all performed strongly. Games from other partners such as Arturo two and also stood out this quarter. Progressing from our existing joint distribution of games, sales of in game accessories and domestic items are naturally the next step for us.

In the second quarter, gross billing from this category increased by 90% year over year, reflecting strong demand from our high engaged user base. Given our ability to integrate sales seamlessly into live streams, esports events, and other content, often featuring influential streamers, we believe this business line has significant potential to scale further and become an increasingly important part of Huya’s revenue mixed in the years ahead. Our community of game streamer remains one of Fuyat’s most strategic and valuable asset. We nurture their growth not only within the Fuyat’s ecosystem, but also across all leading content platforms, enabling them to broaden their reach and deepen audience engagement. Among the top 300 game live streamers nationwide, we are continue to command the largest representation in the industry, a testament to our unmatched ability to attract, develop, and retain top tier talent.

With a user base composed of highly engaged hardcore gamers, We are offer the perfect environment for emerging talent to gain visibility and build a loyal following quickly. Combined with the comprehensive professional support we provide, we continue to successfully introduce some of the most sought after personalities for new release. For example, one of the hottest games that is trending this summer is Tencent’s Delta Force, and the biggest live streamer of that game right now in terms of live channel average concurrent users and total short video views is on Huya. We help him build his fan on Huya from the ground up. As we go to destination for Esports live streaming in China, we continue to invest in Esports content, driving deeper user engagement and strengthening our market leadership.

In the second quarter, we livestreamed over 100 licensed esports tournament covering premier domestic leagues such as the League of Legend Pro League, Kings Pro League, and Crossfire Pro League, as well as major international events, including including the LOL mid season invitational and the CS two Austin Major. Currently, we are also bringing global competition to our audience through coverage of Esports World Cup in Saudi Arabia. Alongside licensed events, we produced over 40 in house produced tournament, including the LOL Legend Cup season three, DOTA two Imoto Cup, and honor of Kingstauder Cup gold tournament, as well as entertainment show likes clear the video table goals. The Imoto Cup finals showed down in just seven minutes, while our Fuya hyper esports carnival, branding esports music and culture tourism, deepened fan loyalty and expanded our audience reach. In July, in partnership with Tencent, we launched the inaugural Delta Force Diamond Champions summer season, featuring 24 leading domestic teams.

The event showcased we ask production and technology leadership from four k ultra high definition and 120 FPS streaming to multiscreen viewing and in term in team voice chat, delivering a truly premium and interactive experience for fans. Leveraging our content integration strengths, we have begun entering the game publishing arena. In q two, we piloted a content led launch strategy for Godliness for of Victory Nikki using live streaming showcases, esports promotion, and creator videos. The campaign campaign delivered strong result, and we are actively pursuing additional publishing partnership. Our overseas initiatives are also gaining momentum.

We are now reached tens of millions of monthly active users internationally through our mobile application service platform, live streaming, and others. Through these products, we are able to build up our gamer communities and local marketing capabilities and accumulate a suitable user base of hot call gamers, particularly in genres like FPS and mobile. These efforts will position us to capture opportunities in the growing overseas game related services market. Before I pass the call on to Raymond, I would like to update you on our AI strategy. AI is becoming embedded in every aspect of our operations from AI plus live streaming to AI plus IP and AI plus services using our proprietary gaming datasets, deep user insight and years of content.

We have built intelligent gaming analytic models and large language models for specific service needs. Some in this initiatives enhance user experience such as our AI agent, Hu Xiaoai, which deliver real time engaging commentary during esports streams, boosting viewer interaction during events like the AOL Legends season Legend Cup series three. We are also developing AI powered virtual live streamer using high fidelity avatar in an expression technologies to add new dimensions to our content. Others create new consumption opportunities. For example, our AI sparring partners for esports players provide real time tactical alerts, response to players’ emotions, and offers person person that person net net of encouragement.

This technology also powers the industry’s first AI game companion robot, the Huya I Superbot, launched with Invictus Gaming IG team at China Joy, which generated significant market fast. In short, with our dedicated efforts over the past two years have demonstrated to the market that we are more than just a live streaming platform, but a game related entertainment and service provider capable of adding value to the entire gaming ecosystem. We will continue to deepen our engagement in the gaming industry, strengthen collaborations with industry partners, expand our business boundaries, and innovate our service offerings. We will also focus on overseas expansion and AI initiatives paving the way for Ouya’s long term sustainable growth. With that, I will now turn the call over to our acting co CEO and CFO, Raymond Lei.

He will share more details on our results. Raymond, please go ahead.

Raymond Peng Lei, Acting Co-CEO and CFO, HUYA: Thank you, Vincent, and hello, everyone. I’ll start with an overview of our financial performance. Our total net revenues for the second quarter reached approximately RMB 1,570,000,000.00, increasing both year over year and quarter over quarter for two consecutive quarters. Of this, live streaming revenues stabilized with a slight sequential increase to RMB 1,150,000,000.00, and the game related services, advertising, and other revenues grew to r and b 414,000,000, accounting for 26.4% of total net revenues. The number of domestic paying users in the second quarter remained flat compared with the first quarter, standing at 4,400,000, excluding those who made in game purchase through our game distribution business but didn’t pay via our platform or related services, as well as overseas paying users.

Thanks to optimize content cost, particularly those related to esport tournaments, we improved our gross margins sequentially to 13.5% for the quarter. That this this also contributed to reaching breakeven non GAAP operating profit, a a significant milestone in our past to improve profitability. We also achieved a non GAAP net income of RMB 48,000,000, marking our sixth consecutive profitable quarter. Let’s move on to more details of our Q2 financial results. Our total net revenues were RMB 1,570,000,000.00 for Q2 compared with RMB 1,540,000,000.00 for the same period last year.

Live streaming revenues were RMB 1,150,000,000.00 for q two compared with RMB 1,230,000,000.00 for the same period last year, primarily due to the continued impact of the macroeconomic and the industry environments. Game related services, advertising, and the other revenues were RMB 414,000,000 for q two compared with I m p 309,000,000 for the same period last year. The increase was primarily due to higher revenue from game related services and advertising, which were main mainly attributable to our deepened cooperation with Tencent and other gaming companies. Cost of revenues increased by 2.1% to RMB 1,350,000,000.00 for q two, primarily due to increased revenue sharing fees and the content costs, partially offset by decreased bandwidth and the server custody fees. Revenue sharing fees and the content costs, a key component of cost of revenue, increased by 2.6% to RMB 1,200,000,000.0 for q two, primarily due to increase the broad customer related costs, partially offset by lower costs related to license eSports content.

Gross profit was RMB 212,000,000 for q two compared with RMB 215,000,000 for the same period last year. Gross margin was 13.5% for q two compared with 13.9% for the same period of last year. Primarily attributable to increase the revenue sharing fees and the common cost as a percentage of total net revenues. Excluding share based compensation expenses, non GAAP gross profit was RMB 216,000,000, and the non GAAP gross margin was 30.8% for q two. Research and development expenses decreased by 5% year over year to RMB 122,000,000 for q two, primarily due to decreased personnel related expenses and the share based compensation expenses.

Sales and the marketing expenses decreased by 6% year over year to r and b 58,000,000 for q two, primarily due to decreased channel promotion fees. General and administrative expenses remained flat year over year at RMB 64,000,000 for q two. Other income was RMB 8,000,000 for q two compared with RMB 13,000,000 for the same period last year, primarily due to a notable settlement income from disputes in the 2024 and the lower government subsidies. As a result, operating loss was RMB 24,000,000 for q two compared with a loss of RMB 26,000,000 for the same period last year. As including share based compensation expenses and the amortization of intangible assets from business acquisitions, non GAAP operating income reached a breakeven for q two compared to recent non GAAP operating loss of RMB 3,000,000 for the same period last year.

Interest income was RMB 59,000,000 for q two compared with RMB 103,000,000 for the same period last year, primarily due to a lower time deposit balance, which was primarily attributable to the special cash dividends paid. Net loss attributable to Huya Inc. Was RMB 5,000,000 for q two compared with net income attributable to Huya Inc. Of RMB 30,000,000 for the same period last year. Excluding share based compensation expenses, impairment loss of investments and the amortization of intangible assets from business acquisition, Net of income taxes, non GAAP net income attributable to Huya Inc was RMB 48,000,000 for q two compared with RMB 97,000,000 for the same period last year.

Non GAAP net margin was 3% for q two. Diluted net loss per ADS was approximately r b 2¢ for q two. Non GAAP diluted net income per ADS was RMB 21¢ for q two. As of 06/30/2025, the company had cash and cash equivalents, short term deposits, and the long term deposit of RMB 3,770,000,000.00 compared with RMB 6,250,000,000.00 as of 03/31/2024 2025. Finally, let me provide an update on our shareholder returns Through our up to US dollar 100,000,000 share repurchase program, we had repurchased 22,800,000.0 Huya shares with a total aggregate consideration of US dollar $75,400,000 as of the June 2025.

Additionally, we distributed a total of about US $340,000,000 in special cash dividends during the second quarter. Going forward, we will continue to focus on performance, advancing our expansion initiatives and deepening our industry alignment to create long term value for our shareholders. With that, I’d like to open the call to your questions.

Hanyul Liu, Investor Relations, HUYA: Thanks, Raymond, and hello, everyone. If you are dialing in by phone, please press 5 to ask a question, and then press 6 to unmute yourself. If you are accessing the call from the Tencent Meeting or both meeting applications, please click the raise hand button at the bottom left. For the benefit of all participants on today’s call, if you wish to ask your question to management in Chinese, please immediately repeat your question in English. Today’s first question comes from Richie Sun from HSBC.

Hi, Richie. Your line is open. Please go ahead.

Richie Sun, Analyst, HSBC: Vincent, Raymond, Margaret, Thank you management for taking my questions. I’d like to ask about the game related services business. So can you share more upon the updates? How does it look like in terms of the development, and how should we think about second half? Thank you.

Vincent Junghong Huang, Acting Co-CEO and Senior Vice President, HUYA: K.

Margaret Shi, Head of Capital Markets, HUYA: Hi, Richie. It’s Margaret. Let me translate that for you. We continue to expand and deepen our collaborations with game companies, increasing our portfolio of joint distributed distributed games in the domestic market to over 300 titles. Based on our games streamer ecosystem and the connections they have with our users, it is only natural that we take a step further and extend game services to the sales of in game accessories and cosmetics through these divas.

We’re at the initial stage of this effort and we have recorded a 90% year over year increase this quarter. As we further expand and diversify our in game accessories SKUs, perfect its related transaction infrastructures and enhance users’ mindset about our value proposition, we believe sell from games accessories is likely to be one of the new growth drivers for

Richie Sun, Analyst, HSBC: us. Okay.

Margaret Shi, Head of Capital Markets, HUYA: On top of that, we have strengthened our collaborations with various platforms and products. This approach has allowed us to expand the influence of our high quality content and services further to a wider audience. Building on our strong content integration capabilities, we are strategically entering the game publishing arena. In the second quarter, we piloted a comprehensive online content publishing strategy for the launch of good Goddess of Victory Nikki. With provident live streamers showcasing gameplay, promoting through esports events, then producing videos in collaboration provident with content creators, this campaign yielded impressive results.

Encouraged by this early success, we are actively pursuing more cooperation opportunities within the game sector.

Hanyul Liu, Investor Relations, HUYA: Thank you. And our next questions comes from Yiwen Zhang from China Renaissance. Yiwen, please go ahead.

Yiwen Zhang, Analyst, China Renaissance: So thanks for taking my question. So we have noticed the company has hosted the first spouse event for Dataforce. So can you discuss what data feed by so far, and how many for data demand to us? Thank you.

Raymond Peng Lei, Acting Co-CEO and CFO, HUYA: Okay.

Margaret Shi, Head of Capital Markets, HUYA: In July, in partnership with Tencent, we launched the inaugural Delta Force Diamond Champions summer season between 24 leading domestic teams. The event showcase who has production and technology leadership from four k ultra high definition and 120 frames per second streaming to multiscreen viewing and 18 voice chat, delivering a truly premium and interactive experience for fans. During the finals, viewers tuning to Hoya Live’s DDC exclusive stream will also get a chance to win rare in game items, especially prepared for the event, including some of the highly sought after bundles such as Beijing, Kunbang Bao, etcetera, making the experience much more fun and immersive.

Hanyul Liu, Investor Relations, HUYA: Thank you. And our next questions comes from Yan Yan Xiao from CICC. Hi, Yan Yan. Please go ahead.

Yan Yan Xiao, Analyst, CICC: Thanks management for taking my question, and my question is about overseas business. Can you provide us with a detailed update on the progress of overseas operation? Thank you.

Vincent Junghong Huang, Acting Co-CEO and Senior Vice President, HUYA: Okay.

Margaret Shi, Head of Capital Markets, HUYA: Our overseas initiatives are also gaining momentum. We are now reaching tens of millions of monthly active users internationally through our mobile application service platform, live streaming and others. Through these products, we are able to build up our gamer communities, our local marketing capabilities and accumulate a sizable user base of our hardcore gamers, particularly in runners like FPS and mobile. These efforts well positioned us to capture opportunities in a growing overseas game related service market. As you might have noticed, we changed our definition of MAU this quarter to reflect the progress we’ve made during this period of transformation, particularly in overseas markets.

What we’ve seen over the past few years and is convinced of is that the potential international user base is immense in terms of growth and monetization opportunities.

Hanyul Liu, Investor Relations, HUYA: Thank you. We will then take a question from Nelson Cheung from Citibank. Hi, Nelson. Please go ahead.

Nelson Cheung, Analyst, Citibank: Hey, Wei. Vincent, Raymond, Margaret, Thanks, management, for taking my questions, and congrats on the solid progress of business transformation during the quarter. My question is related to the company’s future plans on AI development, especially in live streaming experience, esports tournaments, Hu Xiao AI, AI desktop robot launched within this year, and future positioning in AI gaming. Thank you.

Vincent Junghong Huang, Acting Co-CEO and Senior Vice President, HUYA: Okay.

Margaret Shi, Head of Capital Markets, HUYA: As mentioned in prepared remarks, leveraging our proprietary gaming datasets, deep deep user insights, and years of content, We have built intelligent gaming analytic models and large language models for specific service needs. AI is is becoming embedded in every aspects of of our operations from AI live streaming to AIP and AI services. Some some initiatives in past user experience such as our AI agent, Huzai, which delivers real time engaging commentary during esports streams, boosting viewing interactions during those events. Others create new consumption opportunities such as Huya I Superbot, which is a great example of that. In collaboration with the well known esports team IG, we announced these next level robots that not only mirror players’ looks and voices, but also offer core experiences like virtual sparring and emotion emotional companionship.

Powered by our proprietary visual recognition technology and the strategy analysis, the robot is supposed to get the game, get you, and get your feelings. Leveraging our knowledge in games and esports, the robot is your sparring partner and your coach. Again, using our proprietary models, our robot reads your mood from your tone and then he responds. He also has a memory graph, which helps the robot remembers what our users’ favorite heroes are, what their preferred play styles are, and what their favorite moves are.

Hanyul Liu, Investor Relations, HUYA: Thank you. Now we will take our last question today from Maggie Ye from CLSA. Hello, Maggie. Please go ahead. Please unmute yourself.

Margaret Shi, Head of Capital Markets, HUYA: Thanks for taking my question. My question is related to the live stream business, which accounted for 74% of total revenue this quarter and seems to have stabilized quarter over quarter. How do you think about overall trend of live stream business and, as well as the total revenue trend for 2025, in addition to margin trend? Thanks a lot. Our live streaming revenue continues to stabilize with a slight increase to RMB 1,150,000,000.00 Q over Q.

We continue to see overall revenue back on its growth trajectory driven by our strong growth from gaming related services, advertising and others. This segment grew 34.1% year over year to RMB $4.01 4,000,000 this quarter. Based on what we are seeing right now, we expect live streaming revenues to remain broadly steady as the overall industry and user behavior continues to stabilize. On the other hand, we expect game related services, advertising, and other revenues to be the main driver for the company as we expand and deepen our partnerships with various game companies. And all in all, we expect our total net revenues to grow in the second half of the year as well as the full year.

In terms of profitability, in Q2, we continue to optimize our content costs, including those related to Esports events and benefited from higher total net revenues. As a result, our gross margin improved sequentially to 13.5%. Notably, we achieved non GAAP operating profit breakeven this quarter and recorded a non GAAP net profit of approximately RMB48 million. This is our sixth consecutive profitable quarter. We’ll continue to focus on enhancing our operating profitability and expect a meaningful improvement in our non GAAP operating profit for the full year 2025 compared to 2024 under normal circumstances.

And also as a reminder, our interest income in the second half of the year is expected to be significantly lower than in the first half, and this is due to a lower cash balance resulted resulting from the sizable shareholder return measures that we implemented since last year as well as the fluctuations in market interest rates. Please take this into consideration when doing your modeling for our net income for the remainder of the year. Thank you very much.

Hanyul Liu, Investor Relations, HUYA: Thank you, Mr. Again for joining us today. If you have further questions, please feel free to contact Huya Investor Relations through the contact information provided on our website or PS and 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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