DouYu International Holdings Limited Reports Second Quarter 2019 Unaudited Financial Results
WUHAN, China, Aug. 13, 2019 /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 second quarter ended June 30 and first half of 2019.
Second Quarter 2019 Highlights
-- Total net revenues for the second quarter of 2019 increased by 133.2% to
RMB1,872.7 million (US$272.8 million) from RMB802.9 million in the same
period of 2018.
-- Gross profit increased by 823.8% to RMB301.1 million (US$43.9 million)
from RMB32.6 million in the same period of 2018, implying a gross margin
of 16.1% in the second quarter of 2019 compared with 4.1% in the same
period of 2018.
-- Net income was RMB23.2 million (US$3.4 million) for the second quarter
of 2019, compared with net loss of RMB228.7 million in the same period
of 2018, implying an net margin of 1.2%, compared with a net loss margin
of 28.5% in the same period of 2018.
-- Adjusted net income([1]) was RMB52.6 million (US$7.7 million) for the
second quarter of 2019, compared with an adjusted net loss of RMB221.9
million in the same period of 2018, implying an adjusted net margin of
2.8% compared with an adjusted net loss margin of 27.6% in the same
period of 2018.
-- Average MAUs([2]) in the second quarter of 2019 reached 162.8 million,
representing an increase of 32.6% from 122.8 million in the second
quarter of 2018.
-- Average mobile MAUs in the second quarter of 2019 reached 50.6 million,
representing an increase of 42.5% from 35.5 million in the second
quarter of 2018.
-- Quarterly average paying user base in the second quarter of 2019 reached
6.7 million, representing an increase of 123.3% from 3.0 million in the
second quarter of 2018.
Mr. Shaojie Chen, Chief Executive Officer of DouYu, commented, "Our second quarter results demonstrated robust growth, as our quarterly average MAUs grew by 32.6%, average mobile MAU by 42.5%, and total net revenues by 133.2% year over year. We are convinced of the growth potential in China's eSports market. Going forward, we will continue to focus on building a game-centric premium content ecosystem while strategically improving our monetization efficiency across all content genres."
Mr. Hao Cao, Vice President of DouYu, commented, "We achieved solid financial results in the second quarter. After our initial public offering in July 2019, we continue to strive to strengthen our value proposition in the game-centric live streaming industry and explore the eSports value chain both upstream and downstream. Looking ahead, we will continue to drive our revenue growth through user base expansion, paying ratio enhancement, and ARPPU improvement. We will also further optimize our operating efficiency and operating leverage to improve our margins."
Second Quarter 2019 Financial Results
Total net revenues for the second quarter of 2019 increased by 133.2% to RMB1,872.7 million (US$272.8 million) from RMB802.9 million in the same period of 2018, primarily due to the increase in live streaming revenues.
Live streaming revenues increased by 156.0% to RMB1,708.3 million (US$248.8 million) in the second quarter of 2019 from RMB667.3 million in the same period of 2018, primarily due to the Company's continuing efforts to cultivate users' paying habits as well as the growth in both the number of paying users and ARPPU.
Advertising and other revenues increased by 21.2% to RMB164.4 million (US$24.0 million) in the second quarter of 2019 from RMB135.6 million in the same period of 2018, primarily driven by the increasing integrated promotion activities during live streaming as a result of improvements in the Company's brand awareness.
Cost of revenues increased by 104.0% to RMB1,571.7 million (US$228.9 million) in the second quarter of 2019 from RMB770.3 million in the same period of 2018, primarily attributable to the increase in revenue sharing fees and content costs as well as bandwidth costs.
Revenue sharing fees and content costs increased by 121.2% to RMB1,326.6 million (US$193.2 million) in the second quarter of 2019 from RMB599.8 million in the same period of 2018, primarily due to: 1) increases in revenue sharing fees which were in line with increases in live streaming revenue, and 2) increases in content costs primarily attributable to the high-quality content created on the Company's platform as well as eSports related content investment.
Bandwidth costs increased by 15.2% to RMB153.3 million (US$22.3 million) in the second quarter of 2019 from RMB133.0 million in the same period of 2018, primarily due to the increases in bandwidth usage necessary to support the growth of user traffic on the platform and improve the quality of live streaming video to enhance user experience, partially offset by the improved bandwidth utilization efficiency primarily attributable to the continued deployment of new technologies in content distribution.
Gross profit increased by 823.8% to RMB301.1 million (US$43.9 million) in the second quarter of 2019 from RMB32.6 million in the same period of 2018. Gross margin increased to 16.1% in the second quarter of 2019 from 4.1% in the same period of 2018, primarily due to the Company's continuing improvements on monetization capabilities, bandwidth utilization through technology upgrades, and operational efficiency, which has also contributed to the development of economies of scale on the platform.
Sales and marketing expenses increased by 17.4% to RMB167.8 million (US$24.4 million) in the second quarter of 2019 from RMB142.9 million in the same period of 2018, mainly attributable to greater efforts in promoting the Company's brand awareness, eSports contents and offline events.
Research and development expenses remained relatively stable at RMB84.4 million (US$12.3 million) in the second quarter of 2019, compared to RMB82.9 million in the same period of 2018.
General and administrative expenses increased by 98.4% to RMB73.3 million (US$10.7 million) in the second quarter of 2019 from RMB37.0 million in the same period of 2018, mainly due to the significant increase in share-based compensation expenses related to the awarding of restricted shares in connection with the acquisition of Nonolive in October 2018, as well as the increase in salaries and benefits of the management team as a result of the Company's business growth.
Other operating income, net was RMB14.5 million (US$2.1 million) for the second quarter of 2019, compared with RMB21.2 million in the same period of 2018.
Operating loss was RMB10.0 million (US$1.5 million) in the second quarter of 2019, compared with an operating loss of RMB209.0 million in the same period of 2018.
Adjusted operating income in the second quarter of 2019, which excludes share-based compensation expenses, was RMB17.4 million (US$2.5 million) for the second quarter of 2019, compared with an adjusted operating loss of RMB204.6 million in the same period of 2018.
Income tax expenses were nil for the second quarter of 2019 and 2018, due to the Company's cumulative net losses and the resulting tax loss carryforward.
Net income was RMB23.2 million (US$3.4 million) in the second quarter of 2019, compared with a net loss of RMB228.7 million in the same period of 2018.
Adjusted net income in the second quarter of 2019, which excludes share-based compensation expenses, share of loss (income) in equity method investments, and impairment loss of investments, was RMB52.6 million (US$7.7 million) in the second quarter of 2019, implying an adjusted net margin of 2.8% and compared with an adjusted net loss of RMB221.9 million in the same period of 2018.
Basic and diluted net income per ordinary share was RMB0.86 (US$0.13) and RMB0.82 (US$0.12), respectively for the second quarter of 2019, compared with a basic and diluted net loss per ordinary share of RMB28.07 and RMB28.07, respectively for the same period of 2018.
Adjusted basic and diluted net income per ordinary share was RMB4.51 (US$0.66) and RMB1.91 (US$0.28), respectively for the second quarter of 2019, compared with an adjusted basic and diluted net loss per ordinary share of RMB27.25 and RMB 27.25 for the same period of 2018.
Recent Development
In July 2019, the Company successfully completed its initial public offering ("IPO") of 44,924,730 American depositary shares ("ADSs") at a price of US$11.5 per ADS, with the selling shareholders offering an additional 22,462,380 ADSs. Every ten ADSs represents one ordinary share. The Company received a total of approximately US$489.9 million in net proceeds from the IPO, after deducting the underwriting discounts and commissions, and estimated offering expenses payable.
Upon its completion of IPO, the Company had a total of 32,462,368 ordinary shares issued and outstanding. Every ten ADSs represents one ordinary share.
Business Outlook
The Company expects its total net revenues to be in the range of RMB1,950 million to RMB2,000 million in the third quarter of 2019, representing a year-over-year growth between 90.3% and 95.2%. 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, August 13, 2019, at 8:00 a.m. Eastern Time or 8:00 p.m. Beijing Time on the same day to discuss the financial results. Listeners may access the call by dialing the following numbers:
International:
1-412-317-6061
United States Toll Free:
1-888-317-6003
China:
4001-206115
Hong Kong Toll Free:
800-963976
Conference ID: 4987940
The replay will be accessible through August 20, 2019, by dialing the following numbers:
International:
1-412-317-0088
United States Toll Free:
1-877-344-7529
Conference ID: 10134203
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/.
[1] "Adjusted net income" is defined
as net income excluding share-based
compensation expenses, share of loss
(income) in equity method
investments, and impairment loss of
investments. For more information,
refer to "Use of Non-GAAP Financial
Measures" and "Reconciliations of
Non-GAAP Results" at the end of this
press release.
[2] Refers to the average total MAUs
during a given period of time
calculated by dividing (i) the sum of
active users, including active PC
users and active mobile users for
each month of such period, by (ii)
the number of months of such period.
MAUs refers to the number of active
users, including active PC users and
active mobile users in a given month.
Active users refers to users who
visited the Company's platform
through PC or mobile app at least
once in a given period? the number of
active PC users is measured as the
number of independent cookies
generated by the Company's website
when users visited the Company's
platform through PC in a given
period, and the number of active
mobile users is measured as the
number of mobile devices that
launched the Company's mobile apps in
a given period. The number of active
users is calculated by treating each
distinguishable independent cookie or
mobile device as a separate user even
though some individuals may access
the Company's platform with more than
one independent cookie or using more
than one mobile device and multiple
individuals may access the Company's
services with the same independent
cookie or using the same mobile
device.
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 shared-based compensation expenses. Adjusted net income(loss) is calculated as net loss adjusted for shared-based compensation expenses, share of loss (income) in equity method investments and impairment loss on investments. Adjusted net income (loss) attributable to DouYu is calculated as net income (loss) attributable to DouYu adjusted for shared-based compensation expenses, share of loss (income) in equity method investments and impairment loss on investments. Adjusted basic and diluted net income per ordinary share is non-GAAP net income (loss) 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) shared-based compensation expenses, (ii) share of loss (income) in equity method investments and (iii) impairment loss on 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 US 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 RMB6.8650 to US$1.00, the noon buying rate in effect on June 30, 2019, 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 June 30, 2019, 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. 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
DouYu International Holdings Limited
Email: ir@douyu.tv
Phone: +1 (646) 224-6934
Xinran Rao
ICR, Inc.
Email: DouYu.IR@icrinc.com
Phone: +1 (646) 224-6934
Media Relations Contact
Joy Yin
DouYu International Holdings Limited
Email: pr_douyu@douyu.tv
Phone: +1 (646) 308-1475
Edmond Lococo
ICR, Inc.
Email: DouYu.PR@icrinc.com
Phone: +1 (646) 308-1475
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(All amounts in thousands, except share, ADS, per share and per ADS data)
As of December 31 As of June 30
2018 2019 2019
RMB
RMB US$ (1)
ASSETS
Current assets
Cash and cash equivalents 5,562,205 4,399,996 640,932
Account receivables, net 129,465 216,290 31,506
Prepayments 135,755 96,266 14,023
Amounts due from related parties 64,070 76,445 11,135
Other current assets 225,514 410,562 59,805
Total current assets 6,117,009 5,199,559 757,401
Property and equipment, net 50,428 43,770 6,376
Intangible assets, net 131,014 189,773 27,644
Investments 134,252 145,479 21,191
Goodwill 13,568 30,772 4,482
Other non-current assets 48,581 36,878 5,372
Total non-current assets 377,843 446,672 65,065
TOTAL ASSETS 6,494,852 5,646,231 822,466
LIABILITIES, CONVERTIBLE REDEEMABLE PREFERRED SHARES
AND SHAREHOLDERS' DEFICIT
LIABILITIES
Current liabilities:
Accounts Payable 800,370 1,125,934 164,011
Advances from customers 9,708 20,179 2,939
Deferred revenue 112,072 158,379 23,071
Accrued expenses and other current liabilities 313,455 305,077 44,439
Amounts due to related parties 1,628,308 307,001 44,720
Total current liabilities 2,863,913 1,916,570 279,180
TOTAL LIABILITIES 2,863,913 1,916,570 279,180
Convertible redeemable preferred shares 6,644,823 6,644,823 967,928
Shareholders' deficit
Ordinary shares 5 5 1
Additional paid-in capital 48,989 94,202 13,722
Accumulated deflict (3,388,471) (3,345,680) (487,353)
Accumulated other comprehensive income 325,593 331,814 48,333
Total DouYu Shareholders' deficit (3,013,884) (2,919,659) (425,297)
Non-controlling interests 4,497 655
Total Shareholders' Deficit (3,013,884) (2,915,162) (424,642)
TOTAL LIABILITIES, CONVERTIBLE REDEEMABLE PREFERRED SHARES 6,494,852 5,646,231 822,466
AND SHAREHOLDERS' DEFICIT
===
(1) Translations of certain RMB amounts into U.S. dollars at a specified rate is solely for the convenience of the reader. Unless otherwise
noted, all translations from RMB to U.S. dollars are made at a rate of RMB6.8650 to US$1.00, the noon buying rate in effect on June 30,
2019, in the H.10 statistical release of Federal Reserve Board.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(All amounts in thousands, except share, ADS, per share and per ADS data)
Three Months Ended
Six Months Ended
---
June 30, March 31, June 30, June 30, June 30, June 30, June 30,
2018 2019 2019 2019 2018 2019 2019
RMB
RMB
RMB US$ (1)
RMB
RMB US$ (1)
Net Revenues 802,909 1,489,124 1,872,729 272,794 1,469,391 3,361,853 489,709
Cost of revenues (770,320) (1,285,996) (1,571,679) (228,941) (1,412,171) (2,857,675) (416,267)
Gross profit 32,589 203,128 301,050 43,853 57,220 504,178 73,442
Operating expenses
Sales and marketing expenses (142,942) (123,569) (167,759) (24,437) (219,630) (291,328) (42,437)
Research and development expense (82,872) (79,421) (84,404) (12,295) (155,467) (163,825) (23,864)
General and administrative expenses (36,961) (63,459) (73,344) (10,684) (68,110) (136,803) (19,928)
Other operating income, net 21,229 14,886 14,497 2,112 21,232 29,383 4,281
Total operating expenses (241,546) (251,563) (311,010) (45,304) (421,975) (562,573) (81,948)
Loss from operations (208,957) (48,435) (9,960) (1,451) (364,755) (58,395) (8,506)
Other expenses, net (277) (113) (3,766) (549) (1,228) (3,879) (565)
Foerign exchange gains (losses) (27,169) 32,045 (27,169) 32,045 4,668
Interest Income,net 10,066 33,952 35,166 5,123 12,551 69,118 10,068
Income (loss) before income taxes (226,337) 17,449 21,440 3,123 (380,601) 38,889 5,665
Income tax expenses
Share of loss (income) in equity method investments (2,365) 702 1,716 250 (3,766) 2,418 352
Net income (loss) (228,702) 18,151 23,156 3,373 (384,367) 41,307 6,017
Less: Net loss attributable to non-controlling interest - (604) (880) (128) (1,484) (216)
Net income (loss) attributable to DouYu (228,702) 18,755 24,036 3,501 (384,367) 42,791 6,233
Net income (loss) per ordinary share
Basic (28.07) 0.67 0.86 0.13 (47.88) 1.53 0.22
Diluted (28.07) 0.64 0.82 0.12 (47.88) 1.46 0.21
Weighted average number of ordinary shares used in calculating net income(loss) per ordinary share
Basic 8,146,208 8,063,790 8,063,790 8,063,790 8,167,499 8,063,790 8,063,790
Diluted 8,146,208 29,380,734 29,351,365 29,351,365 8,167,499 29,343,741 29,343,741
(1) Translations of certain RMB amounts into U.S. dollars at a specified rate is solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to
U.S. dollars are made at a rate of RMB6.8650 to US$1.00, the noon buying rate in effect on June 30, 2019, in the H.10 statistical release of Federal Reserve Board.
Reconciliations of Non-GAAP Results
(All amounts in thousands, except share, ADS, per share and per ADS data)
Three Months Ended
Six Months Ended
---
June 30, March 31,
June 30, June 30, June 30, June 30, June 30,
2018 2019 2019 2019 2018 2019 2019
RMB
RMB
RMB US$ (1)
RMB
RMB US$ (1)
Loss from operations (208,957) (48,435) (9,960) (1,451) (364,755) (58,395) (8,506)
Add:
Share-based compensation expenses 4,394 17,830 27,383 3,989 8,787 45,213 6,586
Adjusted Operating income (loss) (204,563) (30,605) 17,423 2,538 (355,968) (13,182) (1,920)
Net income (loss) (228,702) 18,151 23,156 3,373 (384,367) 41,307 6,017
Add:
Share-based compensation expenses 4,394 17,830 27,383 3,989 8,787 45,213 6,586
Share of loss (income) in equity method investments 2,365 (702) (1,716) (250) 3,766 (2,418) (352)
Impairment loss of investment 3,790 552 3,790 552
Adjusted net income (loss) (221,943) 35,279 52,613 7,664 (371,814) 87,892 12,803
Net income (loss) attributable to DouYu (228,702) 18,755 24,036 3,501 (384,367) 42,791 6,233
Add:
Share-based compensation expenses 4,394 17,830 27,383 3,989 8,787 45,213 6,586
Share of loss (income) in equity method investments 2,365 (702) (1,716) (250) 3,766 (2,418) (352)
Impairment loss of investment 3,790 552 3,790 552
Adjusted net income (loss) attributable to DouYu (221,943) 35,883 53,493 7,792 (371,814) 89,376 13,019
Adjusted Net income (loss) per ordinary share
Basic (27.25) 2.79 4.51 0.66 (46.34) 7.31 1.06
Diluted (27.25) 1.28 1.91 0.28 (46.34) 3.20 0.47
Weighted average number of ordinary shares 8,146,208 29,380,734 29,351,365 29,351,365 8,167,499 29,366,050 29,366,050
used in calculating diluted net income(loss)
per ordinary share
Less: Restricted Share Units (1,410,839) (1,381,470) (1,381,470) (1,396,155) (1,396,155)
Weighted average number of ordinary shares 8,146,208 27,969,895 27,969,895 27,969,895 8,167,499 27,969,895 27,969,895
used in calculating adjusted diluted net
income(loss) per ordinary share
Weighted average number of ordinary shares used in calculating Adjusted net income(loss) per ordinary share
Basic 8,146,208 8,063,790 8,063,790 8,063,790 8,167,499 8,063,790 8,063,790
Diluted 8,146,208 27,969,895 27,969,895 27,969,895 8,167,499 27,969,895 27,969,895
(1) Translations of certain RMB amounts into U.S. dollars at a specified rate is solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to U.S.
dollars are made at a rate of RMB6.8650 to US$1.00, the noon buying rate in effect on June 30, 2019, in the H.10 statistical release of Federal Reserve Board.
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SOURCE DouYu International Holdings Limited
