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DouYu International Holdings Limited Reports First Quarter 2020 Unaudited Financial ResultsWUHAN, China, May 26, 2020 /PRNewswire/ -- DouYu International Holdings Limited ("DouYu" or the "Company") (Nasdaq: DOYU), a leading game-centric live streaming platform in China and a pioneer in the eSports value chain, today announced its unaudited financial results for the first quarter ended March 31, 2020. First Quarter 2020 Financial and Operational Highlights
Mr. Shaojie Chen, Chief Executive Officer of DouYu, commented, "We are pleased to announce that DouYu continued to build a diversified eSports-centric content platform while delivering solid financial and operational results in the first quarter of 2020. Our revenues reached RMB2.28 billion in this quarter, outperforming the high-end of our guidance. Our margins also hit a record high, with our gross margin increasing to 21.3% and our adjusted net margin reaching 13.0%. In addition, our paying user count continued to show strong growth and reached 7.6 million in the period. We believe that by leveraging our efficient operations and accelerating our resource deployment along the upstream and downstream segments of the eSports value chain, our platform will continue to maintain a solid growth trajectory going forward." Mr. Hao Cao, Vice President of DouYu, commented, "Our first quarter financial performance continued to exceed our expectations. Our revenue maintained its rapid growth as the result of our efficient operational strategy, while our platform's profitability also improved steadily. Looking ahead, we plan to continue to strengthen our operational efficiency and remain dedicated to generating sustainable long-term shareholder value." First Quarter 2020 Financial Results Total net revenues in the first quarter of 2020 increased by 53.0% to RMB2,278.0 million (US$321.1 million) from RMB1,489.1 million in the same period of 2019, primarily driven by the increase in live streaming and advertising revenues. Live streaming revenues in the first quarter of 2020 increased by 56.0% to RMB2,113.0 million (US$297.9 million) from RMB1,354.1 million in the same period of 2019. This increase was primarily driven by the following: 1) the Company's continuous efforts to develop and optimize its interactive platform features, which help to further strengthen the user-streamer interactions, and thus develop the user's willingness to pay and increase user's payment frequency; 2) improvements in management and monetization efficiency of mid-tier streamers as a result of closer cooperation with talent agencies; and 3) the ongoing monetization events of the Company, which have further boosted the revenue contribution from the daily operations on our platform. Advertising and other revenues in the first quarter of 2020 increased by 22.2% to RMB165.0 million (US$23.2 million) from RMB135.0 million in the same period of 2019, primarily attributable to the Company's improving brand awareness and the corresponding increase in demand from game advertisers. Cost of revenues in the first quarter of 2020 increased by 39.4% to RMB1,792.2 million (US$252.6million) from RMB1,286.0 million for the same period of 2019, primarily due to the increase in revenue sharing fees and content costs. Revenue sharing fees and content costs in the first quarter of 2020 increased by 47.5% to RMB1,574.8 million (US$222.0 million) from RMB1,067.4 million in the same period of 2019. This increase was primarily explained by: 1) increases in revenue sharing fees, which were basically in line with increases in total net revenues, and 2) increases in content costs attributable to the Company's investments in eSports-related and self-produced content. Bandwidth costs in the first quarter of 2020 decreased slightly by 5.8% to RMB152.9 million (US$21.6 million) from RMB162.3 million in the same period of 2019, primarily due to improved bandwidth utilization efficiency as a result of the Company's proactive management of user traffic during peak usage times as well as in-house technology upgrades. Gross profit in the first quarter of 2020 increased by 139.2% to RMB485.9 million (US$68.5 million) from RMB203.1 million in the same period of 2019. Gross margin in the first quarter of 2020 expanded to 21.3% from 13.6% in the same period of 2019. Sales and marketing expenses in the first quarter of 2020 decreased by 13.1% to RMB107.4 million (US$15.1 million) from RMB123.6 million in the same period of 2019, primarily attributable to the exemption of government-mandated social security contribution, and reduced office, travel and welfare expenses during the work-from-home period after COVID-19 outbreak. Research and development expenses in the first quarter of 2020 increased by 17.0% to RMB92.9 million (US$13.1 million) from RMB79.4 million in the same period of 2019, mainly due to increased investment in the development of new interactive product features as well as higher share-based compensation expenses, partially offset by exemption of government-mandated social security contribution, and reduced office, travel and welfare expenses during the work-from-home period after COVID-19 outbreak. General and administrative expenses in the first quarter of 2020 increased by 33.3% to RMB84.6 million (US$11.9 million) from RMB63.5 million in the same period of 2019, mainly due to higher share-based compensation expenses, partially offset by exemption of government-mandated social security contribution, and reduced office, travel and welfare expenses during the work-from-home period after COVID-19 outbreak. Other operating income, net in the first quarter of 2020 increased by 11.4% to RMB16.6 million (US$2.3 million) from RMB14.9 million in the same period of 2019. Operating income in the first quarter of 2020 was RMB217.6 million (US$30.7 million), compared with an operating loss of RMB48.4 million in the same period of 2019. Adjusted operating income[3] in the first quarter of 2020, which adds back share-based compensation expenses, was RMB259.5million (US$36.6 million), compared with an adjusted operating loss of RMB30.6 million in the same period of 2019. Income tax expenses in the first quarter of 2020 and 2019 were nil due to the Company's cumulative net losses and the resulting tax loss carryforward. Net income in the first quarter of 2020 was RMB254.5 million (US$35.9 million), compared with RMB18.2 million in the same period of 2019. Adjusted net income in the first quarter of 2020, which excludes share-based compensation expenses, share of income in equity method investments, and impairment loss of investments, was RMB296.9 million (US$41.9 million), compared with RMB35.3 million in the same period of 2019, implying an adjusted net margin of 13.0% for the first quarter of 2020. Basic and diluted net income per ADS[4] in the first quarter of 2020 were RMB0.82 (US$0.12) and RMB0.79 (US$0.11) respectively. Adjusted basic and diluted net income per ADS in the first quarter of 2020 were RMB0.95 (US$0.13) and RMB0.95 (US$0.13) respectively. Business Outlook The Company expects its total net revenues to be in the range of RMB2,360 million to RMB2,410 million in the second quarter of 2020, representing a year-over-year growth between 26.0% and 28.7%. This forecast reflects the Company's current and preliminary views on the market and operational conditions, which are subject to change. Conference Call Information The Company will hold a conference call on Tuesday, May 26, 2020 at 8:00 am Eastern Time (or 8:00 pm Beijing Time on the same day) to discuss the financial results. Listeners may access the call by dialing the following numbers:
The replay will be accessible through June 2, 2020, by dialing the following numbers:
A live and archived webcast of the conference call will also be available at the Company's investor relations website at http://ir.douyu.com/.
About DouYu International Holdings Limited Headquartered in Wuhan, China, DouYu International Holdings Limited (Nasdaq: DOYU) is a leading game-centric live streaming platform in China and a pioneer in the eSports value chain. DouYu operates its platform on both PC and mobile apps, through which users can enjoy immersive and interactive games and entertainment live streaming. DouYu's platform brings together a deep pool of top live streamers. By providing a sustainable streamer development system built on advanced technology infrastructure and capabilities, DouYu helps ensure a consistent supply of quality content. Through collaborations with a variety of participants across the eSports value chain, the Company has gained coveted access to a wide variety of premium eSports content, which further attracts viewers and enhances user experience. For more information, please see http://ir.douyu.com/. Use of Non-GAAP Financial Measures Adjusted operating income (loss) is calculated as operating income (loss) adjusted for share-based compensation expenses. Adjusted net income is calculated as net loss adjusted for share-based compensation expenses, share of income (loss) in equity method investments and impairment loss on investments. Adjusted net income attributable to DouYu is calculated as net income attributable to DouYu adjusted for share-based compensation expenses, share of income (loss) in equity method investments and impairment loss of investments. Adjusted basic and diluted net income per ordinary share is non-GAAP net income attributable to ordinary shareholders divided by weighted average number of ordinary shares used in the calculation of non-GAAP basic and diluted net income per ordinary share. The Company adjusted the non-cash impact of (i) share-based compensation expenses, (ii) share of income (loss) in equity method investments and (iii) impairment loss of investments to understand and evaluate the Company's core operating performance. The non-GAAP financial measures are presented to enhance investors' overall understanding of the Company's financial performance and should not be considered a substitute for, or superior to, the financial information prepared and presented in accordance with U.S. GAAP. Investors are encouraged to review the reconciliation of the historical non-GAAP financial measures to its most directly comparable GAAP financial measures. As non-GAAP financial measures have material limitations as analytical metrics and may not be calculated in the same manner by all companies, they may not be comparable to other similarly titled measures used by other companies. In light of the foregoing limitations, you should not consider non-GAAP financial measures as a substitute for, or superior to, such metrics in accordance with U.S. GAAP. For more information on these non-GAAP financial measures, please see the table captioned "Reconciliations of Non-GAAP Results" near the end of this release. Exchange Rate Information This announcement contains translations of certain RMB amounts into U.S. dollars at a specified rate solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to U.S. dollars are made at a rate of RMB7.0942 to US$1.00, the noon buying rate in effect on March 27, 2020, in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB amounts could have been, or could be, converted, realized or settled in U.S. dollars at that rate on March 31, 2020, or at any other rate. Safe Harbor Statement This press release contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. Statements that are not historical facts, including statements about the Company's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties, and a number of factors could cause actual results to differ materially from those contained in any forward-looking statement. In some cases, forward-looking statements can be identified by words or phrases such as "may," "will," "expect," "anticipate," "target," "aim," "estimate," "intend," "plan," "believe," "potential," "continue," "is/are likely to" or other similar expressions. Further information regarding these and other risks, uncertainties or factors is included in the Company's filings with the Securities Exchange Commission. The announced results of the fourth quarter and full year 2019 are preliminary and subject to audit adjustments. All information provided in this press release is as of the date of this press release, and the Company does not undertake any duty to update such information, except as required under applicable law. Investor Relations Contact Mao Mao Xinran Rao Media Relations Contact Iris Ding Edmond Lococo
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