DouYu International Holdings Limited Reports Third Quarter 2019 Unaudited Financial Results
WUHAN, China, Nov. 27, 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 third quarter and nine months ended September 30, 2019.
Third Quarter 2019 Highlights
-- Total net revenues for the third quarter of 2019 increased by 81.3% to
RMB1,858.5 million (US$261.0 million) from RMB1,024.8 million in the
same period of 2018.
-- Gross profit increased by 450.5% to RMB316.8 million (US$44.5 million)
from RMB57.5 million in the same period of 2018, implying a gross margin
of 17.0% in the third quarter of 2019 compared with 5.6% in the same
period of 2018.
-- Net loss was RMB165.4 million (US$23.2 million) for the third quarter of
2019, compared with RMB220.5 million in the same period of 2018,
implying a net loss margin of 8.9% compared with 21.5% in the same
period of 2018.
-- Adjusted net income([1]) was RMB72.2 million (US$10.1 million) for the
third quarter of 2019, implying an adjusted net margin of 3.9%, compared
with an adjusted net loss of RMB214.2 million in the same period of
2018.
-- Average MAUs([2]) reached 163.6 million in the third quarter of 2019,
representing an increase of 14.7% from 142.7 million in the third
quarter of 2018.
-- Average mobile MAUs reached 52.1 million in the third quarter of 2019,
representing an increase of 26.1% from 41.3 million in the third quarter
of 2018.
-- Quarterly average paying user count reached 7.0 million in the third
quarter of 2019, representing an increase of 66.0% from 4.2 million in
the third quarter of 2018.
Mr. Shaojie Chen, Chief Executive Officer of DouYu, commented, "Our business maintained a solid growth trajectory in the third quarter of 2019. Moreover, our user base, particularly our mobile MAUs, continued to expand as we took advantage of the continuous gamer and eSports population growth in China, summer holiday season, introduction of several new mobile phone models, and blockbuster game title launches. In addition, we made substantial improvements in both user engagement and monetization efficiency during the quarter by continuously enriching our content, enhancing user-streamer interactions, and upgrading our streamer management system. Such operational improvements in turn contributed to our total revenue growth."
Mr. Hao Cao, Vice President of DouYu, commented, "We are pleased to achieve continuous revenue growth for the third quarter of 2019. Our gross and adjusted net profit margin expanded due to our effective cost control efforts and improved operating leverage. We will strive to achieve revenue growth, further improve our operational efficiency, and explore additional monetization opportunities going forward."
Third Quarter 2019 Financial Results
Total net revenues for the third quarter of 2019 increased by 81.3% to RMB1,858.5 million (US$261.0 million) from RMB1,024.8 million in the same period of 2018, primarily due to the increase in live streaming revenues.
Live streaming revenues increased by 83.0% to RMB1,662.4 million (US$233.4 million) in the third quarter of 2019 from RMB908.4 million in the same period of 2018, primarily driven by increases both in the number of paying users and ARPPU([3]) as the Company implemented effective monetization strategies, upgraded product features, diversified its high-quality content offerings, and enhanced user experience.
Advertising and other revenues increased by 68.5% to RMB196.1 million (US$27.5 million) in the third quarter of 2019 from RMB116.4 million in the same period of 2018, as the Company was able to capitalize on the broadening of its brand awareness while increasing the number of integrated promotional activities during live streaming.
Cost of revenues increased by 59.4% to RMB1,541.7 million (US$216.5 million) in the third quarter of 2019 from RMB967.3 million in the same period of 2018, primarily attributable to increased revenue sharing fees and content costs.
Revenue sharing fees and content costs increased by 66.0% to RMB1,308.8 million (US$183.8 million) in the third quarter of 2019 from RMB788.5 million in the same period of 2018, primarily due to: 1) increases in revenue sharing fees which were 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 increased by 6.1% to RMB150.8 million (US$21.2 million) in the third quarter of 2019 from RMB142.2 million in the same period of 2018, primarily due to the increases in bandwidth usage caused by higher traffic and user engagement on the platform, offset by a lower unit purchase price and improved utilization efficiency as a result of technology upgrades.
Gross profit increased by 450.5% to RMB316.8 million (US$44.5 million) in the third quarter of 2019 from RMB57.5 million in the same period of 2018. Gross margin increased to 17.0% in the third quarter of 2019 from 5.6% in the same period of 2018.
Sales and marketing expenses increased by 18.6% to RMB173.2 million (US$24.3 million) in the third quarter of 2019 from RMB146.0 million in the same period of 2018. The increase was mainly attributable to share-based compensation expenses recognized following the Company's IPO as well as the increased efforts in promoting eSports content and brand awareness marketing activities.
Research and development expenses increased by 47.2% to RMB119.9 million (US$16.8 million) in the third quarter of 2019 from RMB81.4 million in the same period of 2018, mainly due to share-based compensation expenses recognized following the Company's IPO as well as enhanced research and development efforts for various business segments.
General and administrative expenses increased by 326.3% to RMB232.9 million (US$32.7 million) in the third quarter of 2019 from RMB54.6 million in the same period of 2018, mainly due to share-based compensation expenses recognized following the Company's IPO.
Other operating income, net was RMB11.8 million (US$1.7 million) for the third quarter of 2019, compared with RMB16.4 million in the same period of 2018.
Operating loss was RMB197.4million (US$27.7 million) in the third quarter of 2019, compared with RMB208.1 million in the same period of 2018.
Adjusted operating income in the third quarter of 2019, which adds back share-based compensation expenses, was RMB30.8 million (US$4.3 million), compared with an adjusted operating loss of RMB203.7 million in the same period of 2018.
Income tax expenses were nil for the third quarter of 2019 and 2018, due to the Company's cumulative net losses and the resulting tax loss carryforward.
Net loss was RMB165.4 million (US$23.2 million) in the third quarter of 2019, compared with RMB220.5 million in the same period of 2018.
Adjusted net income, which excludes share-based compensation expenses, share of loss (income) in equity method investments, and impairment loss of investments, was RMB72.2 million (US$10.1 million) in the third quarter of 2019, implying an adjusted net margin of 3.9%, compared with an adjusted net loss of RMB214.2 million in the same period of 2018.
Basic and diluted net loss per ADS([4]) were both RMB0.59 (US$0.08), and adjusted basic and diluted net income per ADS were both RMB0.26 (US$0.04) for the third quarter of 2019.
Business Outlook
The Company expects its total net revenues to be in the range of RMB1,960 million to RMB2,030 million in the fourth quarter of 2019, representing year-over-year growth between 68.9% and 75.0%. 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 Wednesday, November 27, 2019, at 8:00 a.m. Eastern Time or 9:00 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
Mainland China Toll Free:
4001-206115
Hong Kong Toll Free:
800-963976
Conference ID: 4090529
The replay will be accessible through December 4, 2019, by dialing the following numbers:
International:
1-412-317-0088
United States Toll Free:
1-877-344-7529
Conference ID: 10136827
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 adding back 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.
[3] "ARPPU" refers to average live
streaming revenue per paying user in
a given period.
[4] Every ten ADSs represent one
ordinary share.
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(loss) is calculated as net loss adjusted for share-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 share-based compensation expenses, share of loss (income) in equity method investments and impairment loss of 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) share-based compensation expenses, (ii) share of loss (income) 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 RMB7.1218 to US$1.00, the noon buying rate in effect on September 27, 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 September 27, 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 September 30
---
2018 2019 2019
===
RMB
RMB US$
(1)
ASSETS
Current assets
Cash and cash equivalents 5,562,205 8,216,706 1,153,740
Account receivables, net 129,465 194,460 27,305
Prepayment 135,755 86,007 12,076
Amounts due from related parties 64,070 57,508 8,075
Other current assets 225,514 185,778 26,086
---
Total current assets 6,117,009 8,740,459 1,227,282
Property and equipment, net 50,428 44,262 6,215
Intangible assets, net 131,014 196,916 27,650
Investments 134,252 145,126 20,378
Goodwill 13,568 31,165 4,376
Other non-current assets 48,581 63,242 8,880
---
Total non-current assets 377,843 480,711 67,499
---
TOTAL ASSETS 6,494,852 9,221,170 1,294,781
===
LIABILITIES, CONVERTIBLE REDEEMABLE PREFERRED SHARES AND SHAREHOLDERS' EQUITY (DEFICIT)
LIABILITIES
Current liabilities
Accounts Payable 800,370 982,571 137,967
Advances from customers 9,708 37,775 5,304
Deferred revenue 112,072 210,660 29,580
Accrued expenses and other current liabilities 313,455 303,782 42,655
Amounts due to related parties 1,628,308 257,270 36,124
---
Total current liabilities 2,863,913 1,792,058 251,630
Deferred revenue 50,045 7,027
Total non-current liabilities 50,045 7,027
TOTAL LIABILITIES 2,863,913 1,842,103 258,657
---
Convertible redeemable preferred shares 6,644,823
Shareholders' equity (deficit)
Ordinary shares 5 22 3
Additional paid-in capital 48,989 10,340,241 1,451,914
Accumulated deficit (3,388,471) (3,510,317) (492,897)
Accumulated other comprehensive income 325,593 537,558 75,481
---
Total DouYu Shareholders' equity (deficit) (3,013,884) 7,367,504 1,034,501
Non-controlling interests 11,563 1,623
Total Shareholders' Equity (Deficit) (3,013,884) 7,379,067 1,036,124
---
TOTAL LIABILITIES, CONVERTIBLE
REDEEMABLE PREFERRED SHARES
AND SHAREHOLDERS' EQUITY (DEFICIT) 6,494,852 9,221,170 1,294,781
===
(1) Translations of certain RMB amounts into U.S. dollars at a specified rate are solely for the convenience of the reader. Unless otherwise noted, all translations from RMB
to U.S. dollars are made at a rate of RMB7.1218 to US$1.00, the noon buying rate in effect on September 27, 2019, in the H.10 statistical release of the Federal Reserve
Board.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(All amounts in thousands, except share, ADS, per share and per ADS data)
Three Months Ended Nine Months Ended
---
September
30, June 30, September 30, September 30, September 30, September 30, September 30,
2018 2019 2019 2019 2018 2019 2019
---
RMB RMB
RMB US$
RMB
RMB US$
(1) (1)
Net Revenues 1,024,820 1,872,729 1,858,476 260,956 2,494,211 5,220,328 733,007
Cost of revenues (967,276) (1,571,679) (1,541,670) (216,472) (2,379,447) (4,399,344) (617,729)
---
Gross profit 57,544 301,050 316,806 44,484 114,764 820,984 115,278
Operating expenses (2)
Sales and marketing
expenses (146,029) (167,759) (173,249) (24,327) (365,659) (464,577) (65,233)
Research and
development
expense (81,428) (84,404) (119,862) (16,830) (236,894) (283,686) (51,912)
General and
administrative
expenses (54,634) (73,344) (232,907) (32,703) (122,744) (369,710) (39,833)
Other operating
income, net 16,409 14,497 11,840 1,663 37,641 41,222 5,788
---
Total operating
expenses (265,682) (311,010) (514,178) (72,197) (687,656) (1,076,751) (151,190)
---
Loss from
operations (208,138) (9,960) (197,372) (27,713) (572,892) (255,767) (35,912)
Other expenses, net 516 (3,766) (11,104) (1,559) (713) (14,982) (2,104)
Foreign exchange
gains (losses) (51,586) (78,755) 32,045 4,500
Interest Income,
net 40,608 35,166 42,118 5,914 53,159 111,236 15,619
---
Income (loss)
before income
taxes (218,600) 21,440 (166,358) (23,358) (599,201) (127,468) (17,897)
Income tax expenses -
Share of income
(loss) in equity
method (1,882) 1,716 958 135 (5,648) 3,375 474
investments
---
Net income (loss) (220,482) 23,156 (165,400) (23,223) (604,849) (124,093) (17,423)
Less: Net loss
attributable to
non- - (880) (763) (107) (2,247) (316)
controlling interest
---
Net income (loss)
attributable to
DouYu (220,482) 24,036 (164,637) (23,116) (604,849) (121,846) (17,107)
===
Net income (loss) per ordinary share
Basic (27.34) 0.86 (5.88) (0.83) (75.19) (8.29) (1.16)
Diluted (27.34) 0.82 (5.88) (0.83) (75.19) (8.29) (1.16)
Net income (loss) per ADS(3)
Basic (0.59) (0.08) (0.83) (0.12)
Diluted (0.59) (0.08) (0.83) (0.12)
Weighted average number of ordinary shares used in calculating net income (loss) per ordinary share
Basic 8,063,790 8,063,790 27,992,342 27,992,342 8,132,929 14,706,641 14,706,641
Diluted 8,063,790 29,351,365 27,992,342 27,992,342 8,132,929 14,706,641 14,706,641
Weighted average number of ADS used in calculating net income (loss) per ADS(3)
Basic 279,923,419 279,923,419 147,066,406 147,066,406
Diluted 279,923,419 279,923,419 147,066,406 147,066,406
(1) Translations of certain RMB amounts into U.S. dollars at a specified rate are solely for the convenience of the reader. Unless otherwise noted, all translations from RMB
to U.S. dollars are made at a rate of RMB7.1218 to US$1.00, the noon buying rate in effect on September 27, 2019, in the H.10 statistical release of the Federal Reserve
Board.
(2) Share-based compensation expenses were allocated in cost of revenues and operating expenses as follows:
Three Months Ended Nine Months Ended
---
September
30, June 30, September 30, September 30, September 30, September 30, September 30,
2018 2019 2019 2019 2018 2019 2019
---
RMB RMB
RMB US$
RMB
RMB US$
(1) (1)
Research and
development
expenses - 33,289 4,674 33,289 4,674
Sales and marketing
expenses - 15,754 2,212 15,754 2,212
General and
administrative
expenses 4,394 27,383 179,173 25,158 13,181 224,386 31,507
(3) Every ten ADSs represent one ordinary share.
RECONCILIATIONS OF GAAP AND NON-GAAP RESULTS
(All amounts in thousands, except share, ADS, per share and per ADS data)
Three Months Ended
Nine Months Ended
---
September 30, June 30,
September 30,
September 30,
September 30,
September 30,
September 30,
2018 2019 2019 2019 2018 2019 2019
RMB
RMB
RMB US$
(1)
RMB
RMB US$
(1)
Loss from operations (208,138) (9,960) (197,372) (27,713) (572,892) (255,767) (35,912)
Add:
Share-based compensation expenses 4,394 27,383 228,216 32,044 13,181 273,429 38,393
Adjusted Operating income (loss) (203,744) 17,423 30,844 4,331 (559,711) 17,662 2,481
Net income (loss) (220,482) 23,156 (165,400) (23,223) (604,849) (124,093) (17,423)
Add:
Share-based compensation expenses 4,394 27,383 228,216 32,044 13,181 273,429 38,393
Share of income (loss) in equity 1,882 (1,716) (958) (135) 5,648 (3,375) (474)
method investments
Impairment loss of investment - 3,790 10,311 1,448 14,101 1,980
---
Adjusted net income (loss) (214,206) 52,613 72,169 10,134 (586,020) 160,062 22,476
Net income (loss) attributable to (220,482) 24,036 (164,637) (23,116) (604,849) (121,846) (17,107)
DouYu
Add:
Share-based compensation expenses 4,394 27,383 228,216 32,044 13,181 273,429 38,393
Share of income (loss) in equity 1,882 (1,716) (958) (135) 5,648 (3,375) (474)
method investments
Impairment loss of investment - 3,790 10,311 1,448 14,101 1,980
---
Adjusted net income (loss) (214,206) 53,493 72,932 10,241 (586,020) 162,309 22,792
attributable to DouYu
Adjusted net income (loss) per
ordinary
share
Basic (26.56) 4.51 2.61 0.37 (72.87) 11.04 1.55
Diluted (26.56) 1.91 2.61 0.37 (72.87) 11.04 1.55
Adjusted net income (loss) per ADS(2)
Basic - 0.26 0.04 1.10 0.16
Diluted - 0.26 0.04 1.10 0.16
Weighted average number of ordinary 8,063,790 29,351,365 27,992,342 27,992,342 8,132,929 14,706,641 14,706,641
shares used in calculating diluted net
income (loss) per ordinary share
Less: Restricted Share Units - (1,381,470)
---
Weighted average number of ordinary 8,063,790 27,969,895 27,992,342 27,992,342 8,132,929 14,706,641 14,706,641
shares 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 8,063,790 8,063,790 27,992,342 27,992,342 8,132,929 14,706,641 14,706,641
Diluted 8,063,790 27,969,895 27,992,342 27,992,342 8,132,929 14,706,641 14,706,641
Weighted average number of ADS used in calculating net income(loss) per ADS(2)
Basic - 279,923,419 279,923,419 147,066,406 147,066,406
Diluted - 279,923,419 279,923,419 147,066,406 147,066,406
(1) Translations of certain RMB amounts into U.S. dollars at a specified rate are solely for the convenience of the reader. Unless otherwise noted, all translations from RMB
to U.S. dollars are made at a rate of RMB7.1218 to US$1.00, the noon buying rate in effect on September 27, 2019, in the H.10 statistical release of the Federal Reserve
Board.
(2) Every ten ADSs represent one ordinary share.
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SOURCE DouYu International Holdings Limited
