Insights

3 Positive Takeaways from Huya’s Latest Results

This Chinese online game streaming company delivered some strong numbers recently. – 5G cloud gaming stocks that will benefit

Earlier this week, HUYA Inc (NYSE: HUYA), also known as the Twitch of China, reported its second-quarter results for the year ending 2020.

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

Key financial performance

Overall, Huya reported some solid numbers in the latest quarterly results. Net revenue for the quarter increased by 34.2% to RMB2.7 billion (US$388.8 million), up from RMB 2.0 billion for the same period last year thanks to higher income from live-streaming and advertising.

Net income performed even better, up by 86.2% to RMB 227 million in the quarter amid higher gross margin, which benefited from operating leverage.

Looking forward, Huya expects revenue for the third quarter to grow both on a year-on-year and quarter-on-quarter basis.

The company has stopped providing specific revenue guidance, which is in line with the practice of its largest shareholder, Tencent Holdings Ltd (SEHK: 700).

Operational metrics

Huya’s strong financial performance is a result of improvement in its business operations. Let’s look at a few metrics below.

Firstly, average monthly active users (MAUs) of Huya Live – Huya’s live-streaming platform – reached 168.5 million in the second quarter of 2020, up 17.1% from 143.9 million in the corresponding quarter of 2019.

Out of this, average mobile MAUs accounted for 75.6 million, an improvement of 35.2% from 55.9 million in the same period last year.

Secondly, the total number of paying users of Huya Live jumped 26.5% from 4.9 million last year to 6.2 million in the second quarter.

On average, these users spent more money on Huya’s platform in the second quarter, up by 5.6% from RMB 392 to RMB 414 per user.

A combination of higher MAUs, an increase in the number of paying users, as well as a stronger average spending per user, drove the strong financial performance.

Solid financial position

Another highlight from Huya’s latest results is its strong balance sheet.

As of June 30, 2020, Huya had RMB 10.7 billion in cash and cash equivalents, short-term deposits, and short-term investments, which improved from RMB 10.3 billion in the last quarter. It also had zero debt.

With its strong balance sheet, Huya is well-positioned to weather any short-term challenges amid the Covid-19 economic downturn.

Also, it can use its cash hoard to sustain its growth by investing in user growth and content acquisition.

Foolish conclusion

In sum, Huya delivered another solid quarter with strong performance across the board. The company also expects to continue growing its revenue 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 owns shares in Huya Inc.

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

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