Earnings call: Huya reports revenue growth and operational efficiency By Investing.com (2024)

In the Second Quarter 2024 Earnings Webinar, Huya Inc. (NYSE:HUYA) reported a slight increase in total net revenues to RMB 1.54 billion, marking a 2.5% rise from the previous quarter. This growth was notably driven by a significant surge in revenues from game-related services, advertising, and other segments, which for the first time accounted for 20% of the total net revenues.

Despite a downturn in live-streaming revenues, Huya achieved near breakeven non-GAAP operating margins through cost control measures and operational efficiency improvements. The company also highlighted its strong cash position, with RMB 8.2 billion in cash and cash equivalents, and declared a special cash dividend of US$1.08 per ordinary share.

Key Takeaways

Huya's total net revenues increased by 2.5% quarter-over-quarter to RMB 1.54 billion.
Game-related services, advertising, and other revenues grew to 20% of total net revenues, a notable first for the company.
Average mobile MAUs for Huya Live rose to 83.5 million, attributed to successful esports events and new game launches.
Huya is expanding its platform ecology within the Tencent ecosystem, bringing its content to various platforms.
The company reported a near breakeven non-GAAP operating margin, thanks to reduced operating expenses and improved efficiency.
Huya announced a special cash dividend of US$1.08 per share and renewed its share repurchase program.
The company has nearly US$900 million in cash deposits and no debt, with plans to allocate funds for potential business development and as a reserve.

Company Outlook

Huya plans to continue growing its user base through high-quality streamer content and professional esports content.
The company aims to improve its platform ecology by collaborating with other platforms and products.
Huya expects its game-related services business to keep expanding in the third quarter.

Bearish Highlights

Live-streaming revenues have declined, impacting gross profit.
Gross profit margin decreased to 14.2%, down by 0.7% from the previous quarter and 1.8% year-over-year.

Bullish Highlights

Huya's game-related services business saw a significant increase, accounting for 20% of total revenue for the first time.
The company's operational efficiency has improved, with operating losses narrowing.

Misses

The company has experienced a decrease in live broadcast revenue, which has stabilized but remains lower than the previous year.

Q&A Highlights

Huya plans to use its strong cash position for daily operations and future development, with an emphasis on shareholder returns.
The company is committed to improving its operating cash flow and maintaining a reserve fund for uncertain external environments.
Huya expects the gross profit margin to improve in the long run as the revenue structure becomes more balanced and costs are optimized.

In summary, Huya's second quarter of 2024 showed resilience in the face of declining live-streaming revenues, with growth in other business areas and a commitment to maintaining operational efficiency and shareholder value.

InvestingPro Insights

In light of Huya Inc.'s (HUYA) recent earnings webinar, InvestingPro provides additional insights that may be valuable for investors considering the company's financial health and market performance. With a market capitalization of $1.15 billion, Huya presents a unique profile in the tech and streaming sector.

Full transcript - HUYA Inc (HUYA) Q2 2024:

Hanyu Liu: Good day and good evening, and thank you for standing bye. Welcome to Huya's Second Quarter 2024 Earnings Webinar. I am Hanyu Liu from Huya's Investor Relations. At this time, all participants are in listen-only mode. Please be advised that today's webinar is being recorded. The company's financial and operational results were issued earlier today and are posted online. You can also view the earnings press release by visiting the IR website at ir.huya.com. A replay of the call will be available on the IR website in a few hours. Participants of management on today's call will be Mr. Junhong Huang, Acting Co-CEO and Senior Vice President of Huya; and Ms. Ashley Xin Wu, Acting Co-CEO and Vice President of Finance. Management will begin with prepared remarks and the call will conclude with a Q&A session. Before we continue please note that today's discussion will contain forward-looking statements made under the safe harbor provisions of the US Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company's results may be materially different from the views expressed today. Further information regarding these and other risks and uncertainties is included in the company's prospectus and other public filings as filed with the US Securities and Exchange Commission. The company does not assume any obligation to update any forward-looking statements except as required under applicable law. Please also note that Huya's earnings press release and this conference call include discussions of unaudited GAAP financial information, as well as unaudited non-GAAP financial measures. Huya's press release contains a reconciliation of the unaudited non-GAAP measures to the unaudited most directly comparable GAAP measures. With that, I'm pleased to turn the call over to our Co-CEO and SVP, Mr. Huang. Please go ahead.

Junhong Huang: Okay. Hello, everyone. Thank you for joining our earning conference today, Against the backdrop of persistent uncertainty in the macro environment and industry landscape, we were pleased to resume quarter-over-quarter growth in total net revenues in the second quarter, up 2.5% from the previous quarter to reach RMB1.54 billion, driven by the rapid revenue growth of our game-related services, advertising and other businesses. Notably, game-related services, advertising and other revenues reached a milestone, contributing 20% of our total net revenues for the first time. We also sustained our profitability, with non-GAAP net income of approximately RMB97 million. Solid strategic execution across business and commercialization transformation, content and platform ecology upgrades, and technology and product advancement supported this quarter's positive outcomes. Now, let's take a detailed look at our recent operational and strategic progress. First, some user metrics for the second quarter of 2024. Huya Live's average mobile MAUs reached 82.5 million -- 83.5 million, up from 82.6 million for the previous quarter and 82.9 million for the same period last year. The growth was mainly driven by the success of several self-organized e-sports events. Various recent new game launches and our continuous user experience improvement also contributed to enhanced user engagement. As we mentioned on our last call, we are strengthening our cooperation with various platforms and products to enhance our platform ecology and reach a wider range of users. This includes professionally-generated content co-production, broadcaster across platform streaming and joint promotion in niche initiatives. As a barrier-breaking industry pioneer, we believe we can further increase the Huya platform's influence within this more open content ecosystem. We have already started to selectively bring our live streaming and video content to other content platform as well as various product line within the Tencent ecosystem. In June, Huya content reached a total of approximately 120 million mobile users. We are confident this broadened reach will facilitate the creation of more commercialization opportunities. Moving on to our strategic transformation. Our game-related services continue to expand rapidly as we collaborated with more game titles, leverage our live-streaming content and PGC programs, and employed innovative operational approaches to drive business development. In the second quarter, revenues from our game-related services, advertising and other segment increased by 152.7% year-over-year and 26.6% quarter-over-quarter to RMB308.5 million. In terms of game distribution, we continue to expand evergreen games coverage and drive improvement in the user return rates. We also participated in the promotion and distribution of newly launched DnF Mobile in the second quarter. Specifically, we set up a special pre-download area for list game being the Game Center section of Huya Live app, promoted the game with specially designed programs and exclusive props and gifts, and recruited broadcasters for the game's live streaming, all of which help to increase the game's exposure and popularity on our platform. DnF Mobile not only ranked top among this year's new games in live streaming viewership indicators, but also achieved better-than-expected result in game distribution. In particular, early data shows that in-game spend per user of Huya distribution channel user for this game was significantly higher than that of broader game channels, highlighting our platform's deeply engaged base of high-value gamer users. We also commenced in-game item sales for League of Legends (LoL): Wild Rift, and VALORANT in the second quarter, innovatively combining game prop sales with corresponding tournaments to fully leverage this game's rich e-sports content. For example, we sold LoL Champion Skins through our LoL Legend Cup live-streaming channel, which generated great purchase interest. In terms of game advertising, in addition to gearing up for the promotion of this summer's upcoming games, we recently produced [Yijing Daoudi] (ph), or competing till the end, an interactive gameplay variety show that integrates game promotion and entertainment content under different game theme in each episode. The program successfully engage users on our platform and prove effective in driving active players to corresponding games. It is worth mentioning that our game-related services have also opened up new income resources -- sources for our content creators, gradually improving their income levels. In the first half of this year, several thousand of our broadcasters received revenue sharing and commissions from game distribution and prop sales. As e-sports content represent of -- one of our core offerings, we continuously refine via self-organized e-sports events. Our Legend Cup held in the second quarter is a perfect example of our progress in upgrading tournaments, products, and operational strategies. Legend Cup is our premium self-organized tournament in cooperation with League of Legends game. This event brought together outstanding retired and active professional players and introduced [bold] (ph) innovations in the competition format and schedule. We livestreamed the entire event beginning with player selection and team formation and distributed highlight videos across multiple platforms. This enhancement help attract widespread interest from League of Legends gamers and e-sports viewers, both within and outside Huya's platform. We also introduced a number of special features for the Legend Cup on our Huya Live app. For example, we set up designated [event] (ph) discussion area to aggregate event hot topics, player news, short videos and official tournament information. In addition, a new rating card function allowed viewers to comment on multiple aspects of players' performance, showcasing players' diverse characteristics and increasing users' interaction and enjoyment. In terms of event presentation, we created a voice capture live broadcast room for this tournament. Powered by cutting-edge automatic speech recognition technology and an e-sport professional vocabulary library, this feature instantly convert oral communication between players into text, immersing the audience in the player's game experience. Furthermore, our Legend Cup was seamlessly integrated into LoL's professional league schedules to complement and enrich the LoL e-sports content ecosystem. Legend Cup also provided opportunities for retired professional players to return to the top arena and quickly attract attention, while its entertaining elements drew a diverse crowd of fresh viewers, expanding the e-sports and the audience. We were pleased to see this event's viewership set a new record for Huya's in-house produced content. Its popularity index on our platform was also comparable to that of top-tier licensed professional events. More importantly, through events like this one, we hope to enhance the influence and monetization of e-sports event IPs and promote the e-sports industry sustainable development. Our successful sale of League of Legends Champion Skins at the Legend Cup demonstrated Huya's prowess in e-sports event monetization. Legend Cup's high popularity across platforms and sold-out of live finals also underscore our self-organized events commercial value. Inspired by this success, we will continue to develop self-produced content and create more influential and commercially valuable event IPs. In summary, we have made solid progress despite some external challenges. We will continue to consolidate our foundation and actively develop our business as we explore the industry's long-term possibilities. While maintaining our core competitiveness in game live streaming, we will drive game-related services development with content and platform ecology upgrades, technology advancement, and product innovation, expanding Huya's presence in the game industry value chain. With that, I will turn the call over to our acting Co-CEO and VP of Finance, Ashley Wu, to share more details on our results. Ashley, please go ahead.

Ashley Xin Wu: Thank you, Vincent, and hello, everyone. I'll start with an update on our professional content enrichment. In terms of licensed content, we broadcasted over 80 licensed professional esports tournaments in the second quarter of 2024. The LoL Mid-Season Invitational attracted great attention, and the LPL, KPL, and CFPL professional leagues remain among our most popular events. The VALORANT Champions [indiscernible] and ESL Pro League Season 19 for Counter-Strike 2 were also welcomed by our users. In addition to covering extensive leading licensed e-sports events in China, we are expanding the range of international e-sports content available on our platform. For instance, we are broadcasting the inaugural Esports World Cup in Saudi Arabia starting in July, further enriching our high-quality e-sports content library. On the in-house content front, we broadcasted over 20 self-organized e-sports tournaments and entertainment PGC shows during the quarter. In addition to the LoL Legend Cup and the Yijing Daoudi program that we mentioned earlier, we also co-hosted the first Thunder Honor Cup for Honor of Kings with another game live-streaming platform in the second quarter. This event brought together professional teams from KPL to participate, capture massive viewer attention and demonstrated Huya's increased cooperation with other game players, with other industry players in professional content co-creation. For e-sports events targeting community participation, we successfully hosted the Lianghe village game for Honor of Kings, in the Shandong village game for Peacekeeper Elite in the second quarter. By combining these e-sports event with local cultural elements, such as traditional costume and food themes, we brought more immersive cultural experiences to a broader audience, while also promoting e-sports popularity. Furthermore, we held our Annual Gala event, HUYA Boom Night, in April to recognize and reward our broadcasters. The year's event featured on-stage performances by renowned singers and our popular streamers, as well as an all-star e-sports competition. We also introduced upgrading interactive features for this event to engage both online and offline audience. The number of viewers for this event on our platform once again set a new record. Turning to our financial performance. Despite the decline in live-streaming revenues, rapid growth in game-related services, advertising and other business revenues drove a quarter-over-quarter increase in our total revenues for the second quarter. This marks our first quarter of sequential revenue growth since the fourth quarter of 2022. Also, with more users paying for in-game items and other services as the game-related services business expanded, Huya Live paying users continued to grow in the second quarter, up quarter-over-quarter to 4.5 million. Our second quarter gross profit was affected by lower live-streaming revenues and higher content spending. However, with the increased contribution from our higher-margin game-related services business to total revenues as well as our continued operational efficiency improvements, we further enhanced our operating results and achieved a close to breakeven non-GAAP operating margin. Specifically, we effectively drove savings in sales and marketing expenses and labor costs, reducing our total operating expenses by 26.3% year-over-year. Let's move on to our Q2 financial details. Our total net revenues were RMB1.54 billion for Q2 compared with RMB1.84 billion for the same period last year. Live-streaming revenues were RMB1.23 billion for Q2 compared with RMB1.72 billion for the same period last year, primarily due to the continued soft macroeconomic and industry environment, as well as our proactive business adjustments to support our strategic transformation and prudent operations. Game-related services, advertising and other revenues were RMB309 million for Q2 compared with RMB122 million for the same period last year, primarily due to increased revenues from game distribution and advertising services and in-game item sales. Cost of revenues decreased by 14% year-over-year to RMB1.33 billion for Q2, primarily due to decreased revenue-sharing fees and content costs, as well as bandwidth costs. Revenue-sharing fees and content costs decreased by 13% year-over-year to RMB1.17 billion for Q2, primarily due to decreased live-streaming revenue sharing fees associated with the decline in live-streaming revenues, partially offset by increased game-related services, advertising and other revenue-sharing fees as well as content costs for in-house produced content. Bandwidth (NASDAQ:BAND) cost decreased by 40% year-over-year to RMB61 million for Q2. This was primarily due to improved bandwidth cost management, favorable pricing terms and continued technology enhancement efforts. Gross profit was RMB215 million and gross margin was 13.9% for Q2. Excluding share-based compensation expenses, non-GAAP gross profit was RMB219 million and non-GAAP gross margin was 14.2% for Q2. Research and development expenses decreased by 11% year-over-year to RMB129 million for Q2, primarily due to decreased personnel-related expenses and share-based compensation expenses. Sales and marketing expenses decreased by 48% year-over-year to RMB62 million for Q2, primarily due to decreased marketing and promotion fees, as well as personnel-related expenses. General and administrative expenses decreased by 21% year-over-year to RMB64 million for Q2, primarily due to decreased professional service fees, personnel-related expenses and share-based compensation expenses. Other income was RMB13 million for Q2 compared with RMB24 million for the same period last year, primarily due to lower government subsidies. As a result, operating loss was RMB26 million for Q2 compared with RMB33 million for the same period last year. Excluding share-based compensation expenses and amortization of intangible assets from business acquisitions, non-GAAP operating loss was RMB3 million for Q2 and non-GAAP operating margin was negative 0.2% for Q2, close to breakeven. Interest income was RMB103 million for Q2 compared with RMB125 million for the same period last year. Net income attributable to HUYA Inc. was RMB30 million for Q2 compared with RMB20 million for the same period last year. Excluding share-based compensation expenses, impairment loss of investments and amortization of intangible assets from business acquisitions, net of income taxes, non-GAAP net income attributable to HUYA Inc. was RMB97 million for Q2 compared with RMB117 million for the same period last year. Non-GAAP net margin was 6.3% for Q2. Diluted net income per ADS was RMB0.13 for Q2. Non-GAAP diluted net income per ADS was RMB0.42 for Q2. As of June 30, 2024, the company had cash and cash equivalents, short-term deposits, short-term investments and long-term deposits of RMB8.2 billion compared with RMB9.4 billion as of March 31, 2024. Finally, let me provide an update on our shareholder returns. Upon review of our financials, business plan, capital requirements and cash position, we are pleased to declare a special cash dividend of US$1.08 per ordinary shares or per ADS, totaling approximately US$250 million for our shareholders. Furthermore, under our up to US$100 million share repurchase program that began in August 2023, we have repurchased 17.1 million Huya shares with a total aggregate consideration of US$56.7 million as of the end of June 2024. Huya's Board of Directors has also authorized the renewal and continued usage of the unutilized quota under the existing share repurchase program of US$43.3 million until March 31, 2025. We believe that Huya's solid balance sheet and improving financial fundamentals will continue to support our ability to deliver shareholder returns going forward. With that, I'd like to open the call to your questions.

A - Hanyu Liu: Thank you, Ashley, and hello everyone. [Operator Instructions] Today's first question comes from Thomas Chong from Jefferies. Thomas, your line is open. Please go ahead.

Unidentified Analyst: [Foreign Language] [indiscernible] Thanks management for taking my question. My question is, our current user strategies as we saw this quarter year-over-year and sequential growth of mobile MAU and also sequential growth of paying user? Thanks.

Junhong Huang: [Foreign Language] [Interpreted] Thank you for your question. In the second quarter of this year, Huya's mobile MAU was 83.5 million, mainly due to the excellent performance of many self-made e-sports events this quarter. In addition, the launch of new games and the continuous improvement of user experience are also conducive to enhancing user activity. Therefore, while we continue to adopt a cautious channel promotion strategy, the number of users has increased compared with Q1 and with the same period last year. [Foreign Language] [Interpreted] In terms of user strategy, we plan to continue to attract and consolidate users through high-quality streamer content and professional content, including our pyramid-shaped e-sports event system that is a complete copyright e-sports event with self-organized events and increasing influence, as well as mass participation events. In addition, we will carry the interaction of game users through the games and events communities on our platform to improve the user retention of Huya and corresponding other game projects. Based on the live broadcast and game data that we have, combined with AI capabilities, we can better promote the output of high-quality content and the launch of interactive live broadcast gameplay, so as to improve our user participation as a whole. [Foreign Language] [Interpreted] On this basis, we focus on construction and upgrading of the platform ecology. In an overall more open industry environment, Huya acts as a pioneer in breaking industry barriers and we are strengthening cooperation with multiple platforms and products, including professional content co-creation, cross-platform live broadcasts, and commercialization initiatives, so as to reach a wider range of users and further expand the influence of Huya platform. Right now, we have begun to selectively deliver Huya's live broadcast and video content to other live broadcast and short video platforms, as well as multiple product lines in the Tencent ecosystem. In June this year, the total mobile MAU reached by Huya content ecosystem reached about 120 million, and this volume continues to grow. [Foreign Language] [Interpreted] Therefore, we do not only serve the users on Huya, but also users on more platforms across the entire environment and industry. We can also participate in a larger market. At the same time, we believe that upgrade of content and platform can bring more commercial opportunities, especially in the process of Huya's transformation from a pure game live broadcast platform to providing more game-related services, and the distribution of game content on multiple platforms and, the broadcast content can help to drive distribution and promote -- and promotion of the games and enhance the influence of broadcasters and bring more opportunities for revenue to grow in game distribution, advertising, and prop sales.

Hanyu Liu: Thank you. And our next question comes from Maggie Ye from CLSA. Maggie, please go ahead.

Maggie Ye: [Foreign Language] Good evening, management. Thanks for the opportunity to ask question. We declared US$250 million special cash dividend this time and also renewed share repurchase program. And meanwhile, we still have cash deposits and short-term investments of RMB8.2 billion as of end of June. Please could you share with us the overall strategy of capital allocation and the use of cash going forward? Thank you.

Ashley Xin Wu: [Foreign Language] [Interpreted] As of the end of June this year, Huya held cash and cash equivalents and deposits totaling approximately RMB8.2 billion, equivalent to US$1.1 billion, of which more than half were still overseas. The change in this amount of funds compared to the end of March was mainly due to the distribution of US$150 million in dividends, share repurchase expenses and other payments. After we announced and paid the new special cash dividend of US$250 million, this time, it is estimated that the company will continue to have a cash deposits nearly US$900 million with no debt. [Foreign Language] [Interpreted] Regarding the use of cash, we currently have sufficient cash for the company's daily operation and future development. While consolidating the financial fundamentals, we are also expecting operating cash flow to improve. The company will continue to set aside a portion of funds for potential business development and as a reserve fund for -- in the event of uncertainty in the external environment. In addition, we remain open to investment projects related to the industry chain to seize related development opportunities. So, we will also set aside a portion of fund accordingly. [Foreign Language] [Interpreted] At the same time, we will continue to attach importance to shareholder returns, especially cash returns to shareholders. In terms of dividends, in addition to the special dividend of US$400 million announced this year, the company's management also intends to continue to share the company's profits and surpluses with our shareholders who support us in the future. Of course, the specific dividend policy, including the amount of the dividend and the timing of payout, is subject to further review and approval by the company's Board of Directors. In terms of repurchase, our repurchase plan has been extended to the end of March 2025 and there is currently a repurchase quota of approximately US$43 million. The company will continue to consider a variety of factors, including market conditions and stock liquidity, to formulate an implementation strategy for our repurchase.

Hanyu Liu: Okay, thank you. And our next question comes from Ritchie Sun from HSBC. Hi, Ritchie, please go ahead.

Ritchie Sun: [Foreign Language] [Interpreted] Thank you management for taking my questions. I would like to ask about the games-related services business. Can management discuss the latest progress and the expectation in the third quarter for this business? Thank you.

Junhong Huang: [Foreign Language] [Interpreted] In the second quarter, revenue from our game-related services, advertising and other businesses increased by 152.7% year-over-year or 26.6% quarter-over-quarter, reaching approximately RMB310 million, and also reached a milestone of accounting for 20% of the total revenue for the first time. The rapid development of this part of our business is closely related to our cooperation with more game titles, better utilization of live content and PGC programs, and adoption of innovative operating methods to promote business development. [Foreign Language] [Interpreted] Looking further into this question, in terms of game distribution, we continue to add coverage of evergreen games to promote the return of users of these games. Amongst recent new games, in second quarter, we mainly involved in promoting and distributing the DnF Mobile game. The DnF Mobile game not only ranks among the top in its new -- in this year's new game live broadcast viewing indicator numbers on Huya platform but we also have achieved better-than-expected results in terms of distribution. In particular, according to current data available, the in-game spend per user of Huya distribution channel users is significantly higher than the overall market, reflecting the high business potential of Huya platform's game users on this game. Our current initial results in game distribution are also due to our continuous efforts to create a unique distribution model based on game content. More accurately, we are able to reach users through our broadcaster groups and focus on product design optimization to increase the conversion rate of game downloads and registrations of users. [Foreign Language] [Interpreted] In the second quarter, we also started to selling games of -- to selling items for games such as League of Legends, League of Legends Mobile, and VALORANT. For these e-sport games, we innovatively integrate the sales of props with corresponding events. For example, the League of Legends Champion Skins sales in Legends Cup live broadcast room received very enthusiastic response and was super popular. In terms of game advertising, we are also exploring new directions. For example, we recently launched competing till the end, or Yijing Daoudi, interactive variety show, which innovatively combines game promotion and entertainment content. Each episodes corresponds to a different game theme, and it has currently cooperated with Mingchao, Wuthering Waves, DnF Mobile, Eggy Party, and other games. While this program is popular among users, it can also effectively help bringing active players to the corresponding games for us. [Foreign Language] [Interpreted] It is also worth mentioning that our game-related services have also brought new sources of income for Huya's broadcasters, helping them to increase their income levels. In the first half of this year, thousands of broadcasters have received income from game distribution and prop sale services. We believe that this will also help Huya to consolidate and attract broadcasters and enhance the company's content cost to revenue correlation. [Foreign Language] [Interpreted] Summer is generally a peak season for our industry, and we are also working hard to seize corresponding opportunities. For games that have covered distributions and prop sales, we will cooperate according to the popularity of the games and the update schedule of the games, and promote related business through live broadcast content and other programs. There are also many new games coming online this summer, and we will further expand the scope of cooperation in different game categories and with different cooperating partners. Overall, we are confident that the game-related services business will continue to expand in the future. We currently expect revenue from game-related services, advertising and other segments in Q3 to continue to achieve a double-digit growth compared to the second quarter.

Hanyu Liu: Thank you. Now we will take our last question today from Yiwen Zhang from China Renaissance. Yiwen, your line is open.

Yiwen Zhang: [Foreign Language] So, thanks for taking my question. My question regarding our margin trend. So, we see some fluctuation in gross margin in Q2 both sequential and YoY. So, we want to understand how -- what are the reasons behind and how should we look about future trend? Thank you.

Ashley Xin Wu: [Foreign Language] [Interpreted] The non-GAAP gross profit margin in the second quarter of this year was 14.2%, representing a 0.7% lower than the first quarter and 1.8% lower than the same period last year. The slight decline in gross margin in this quarter was mainly due to the decline in live broadcast revenue and the increase in content production costs. Although the trend of live broadcast revenue has stabilized and the quarter-over-quarter decline has further narrowed, its scale is still significantly lower than the same period last year. This is mainly because our adjustment of the live broadcast business started in the second half of last year. The year-on-year pace of live broadcast revenue in the first half of the year was still high. And due to the influence of the macro and industry environment, the recovery of users' consumption willingness to [reward] (ph) is still low. The large investment in a second -- in self-made content in the second quarter has also caused a impact, especially we had Legend Cup and Thunder Honor Cup and other high-quality self-made events with large scale and influence in this quarter. [Foreign Language] [Interpreted] The live broadcast revenue share ratio remained basically stable this quarter, and the amount of broadcasters' contract costs is also being optimized. The proportion of game-related services, advertising and other revenue in total revenue increased from 6.2% in second quarter last year to 16.2% in the first quarter this year to 20% in the second quarter of this year. As it is still the early stage of our business development, we have introduced some platform-specific incentives. These will cause some fluctuations in our gross margin, but the gross margin of this part of business is still significantly higher than that of live broadcast business. So, it has a positive impact on our overall gross margin performance, but it is still not big enough to offset the impact of other factors of this quarter. [Foreign Language] [Interpreted] I'd also like to point out that as a content-driven company, the content investment plays an important role in attracting and retaining users. While increasing investment in self-made content and achieving good results, we have also dynamically adjusted the expenditure of sales expenses. Therefore, sales expenses in the second quarter have been further saved, driving the overall operating expenses to decrease by 26.3% year-over-year and 6.4% quarter-over-quarter. So, from the operating profit perspective, our overall operating performance has improved compared to before and the operating loss has narrowed both year-over-year and quarter-over-quarter, and the non-GAAP operating profit is closing to a breakeven point. [Foreign Language] [Interpreted] We believe that as the live broadcast revenue becomes stabilized and its negative impact on overall gross profit margin will gradually decrease with the improvement of overall revenue structure, it is suspected that the gross profit margin fluctuation caused by seasonal high cost of large-scale events in Q4 will be significantly reduced. In the long run, based on a more balanced revenue structure and the optimization of broadcaster and content costs, we believe that there is still room for further improvement on our gross profit margin. As for this year, we maintain the expectation that the full year gross profit margin will increase compared to 2023, and at the same time, full year profit level will also increase.

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

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