Insights

3 Important Takeaways from Douyu’s Latest Results

DouYu International Holdings Ltd (NASDAQ: DOYU) delivered a stellar set of earnings. Here’s how it’s benefitting from the growth in live streaming. – Streaming stocks

On Monday (August 10), DouYu International Holdings Ltd (NASDAQ: DOYU), a leading game-centric live streaming platform in China, reported its second-quarter results for the year ending 2020.

Here are three important things that investors should know from the company’s latest earnings release.

Overall financial performance

Douyu delivered a strong quarter with improving metrics across the board.

Total net revenue for the quarter increased by 33.9% to RMB 2.5 billion (US$359.8 million), up from RMB 1.9 billion for the same period last year thanks to higher income from live-streaming and advertising.

Gross profit performed even better, up by 73.7% to RMB 522.9 million in the quarter thanks to higher revenue and improving gross margin.

Net profit reached RMB 319 million, an improvement of more than ten-fold from RMB 23.2 million last year.

Looking forward, it expects net revenues to be in the range of RMB 2.64-2.68 billion in the third quarter of 2020, representing year-on-year growth of between 42.1% and 44.2%.

Operational metrics

Douyu’s financial performance improved on the back of improving operational performance. Let’s look at a few metrics to illustrate this point.

Firstly, average monthly active users (MAUs) of its live-streaming platform reached 165.3 million in the second quarter of 2020, up by 2.5 million from the corresponding quarter of 2019.

Out of this, average mobile MAUs accounted for 58.4 million, an increase of 15.4% from the same period last year.

Secondly, the total number of paying users jumped 13.4% from 6.7 million last year to 7.6 million this quarter.

On average, these users spent RMB 305 on Douyu’s platform, an increase of about 20% from RMB 255 last year.

A combination of higher MAUs, an increase in the number of paying users, as well as a stronger average spending per user, drove Douyu’s live-streaming revenue for the quarter – which improved by 35.8% year-on-year.

Solid financial position

Last but not least, another highlight from Douyu’s latest results was its strong balance sheet.

As of 30 June, 2020, Douyu had RMB 8.2 billion in cash and cash equivalents, which improved from RMB 8.1 billion on 30 June, 2019. It also had zero debt on its balance sheet.

With its strong balance sheet, Douyu will is well-positioned to invest in new content and user acquisitions to sustain its long-term growth.

Foolish conclusion

Overall, Douyu delivered a solid quarter with strong performance across the board. It also expects to sustain its strong performance in the next quarter.

More reading

The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Hong Kong contributor Lawrence Nga doesn’t own shares in any companies mentioned.

The Motley Fool Hong Kong Limited(www.fool.hk) 2020

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