HUYA, Inc. Aktie

Good day and good evening, [indiscernible]. Welcome to HUYA 2nd quarter 2026 earnings webinar. I'm Zicheng Liu from the HUYA Investor Relations. At this time, all participants are in listen-only mode. Please be advised that today's webinar is being recorded. The company's financial and operational results were issued earlier today and are posted online. You can also view the earnings press release by visiting the IR website at ir.huya.com. A replay of the call will be available on the IR website soon. Participants of management on today's call will be Mr. Vincent Junhong Huang, our Acting CEO, Mr. Raymond Peng Lei, our CFO, and Ms. Margaret [Shi], Head of Capital Markets. Management will begin with prepared remarks, and the call will conclude with a Q&A session.

Before we continue, please note that today's discussion will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties.

As such, the company's results may be materially different from the views expressed today. Further information regarding these and other risks and uncertainties is included in the company's latest annual report on Form 20-F, and other public filings as filed with the U.S. Securities and Exchange Commission. The company does not assume any obligation to update any forward-looking statements, except as required under applicable law. Please also note that HUYA's earnings press release and this conference call include discussions of unaudited GAAP financial information, as well as unaudited non-GAAP financial measures. HUYA's press release contains a reconciliation of the unaudited non-GAAP measures to the unaudited most directly comparable GAAP measures. With that, I'm pleased to turn the call over to Mr. Huang. Please go ahead.

Okay. Hello, everyone. I'm Vincent, and thank you for joining our earnings call today. Let me begin with a brief overview of our second quarter performance. We deliver another quarter of sustainable growth, with total net revenues increasing by 11% year-over-year to RMB 1.74 billion. Game-related services, advertising, and other revenues maintain strong momentum, growing by 54% year-over-year to RMB 638 million and contributing approximately 37% of total net revenues. Behind this growth is our long-term positioning along the game industry value chain, which is steadily translating into sustainable growth momentum. Over the past three years, we have steadily expanded our presence across the game industry value chain, evolving from game distribution to in-game item sales, advertising and marketing, and now game publishing.

Throughout this journey, we have built differentiated user acquisition capabilities that have been increasingly recognized and validated by both our partners and the market. This give us the confidence to extend beyond our capacity as a publishing partner and take on the full game publisher role, which allow us to participate more deeply across the entire game life cycle. Our publishing model is built around content rather than paid traffic acquisition, leveraging our strengths in content creation, streamer network, and user communities. We foster high-quality UGC, expand our reach, and generate social buzz across platforms such as Douyin, [indiscernible], and WeChat Channels. This differentiated approach to publishing let us acquire users more efficiently while reducing our reliance on traditional paid traffic channels. Goose Goose Duck Mobile is our first success story published under this framework, maintaining an active user base and a vibrant content ecosystem.

Since July, we have stepped up our efforts to improve the in-game voice environment, launching an AI-powered voice moderation system and a tiered matchmaking system under the Goose Goose Alliance program. These measures have laid a solid foundation for a healthy in-game environment and sustained user engagement. On July 20, we launched a collaboration with the classic IP Journey to the West, together with a new party game play mode that expands player interaction across multiple sim spaces. The update expanded the experience beyond the game's core social deduction game play into a broader range of immersive social experiences, resulting in enthusiastic reception by players. Supported by our ongoing efforts to improve the in-game environment and introduce compelling content updates, Goose Goose Duck Mobile returned to the number 1 position on the iOS free game chart in the Chinese mainland at the end of July.

The performance of Goose Goose Duck Mobile has demonstrated the effectiveness of HUYA's content-driven marketing approach, while also helping us develop a repeatable publishing playbook and build valuable operational expertise for future titles. Next up in our pipeline are two titles we are publishing exclusively: The Legend of Swordsman: Reunion, the classic martial arts MMORPG, and Xiao Xiao Qi Yu, a 3D match-based casual mobile game. Our transition from co-publishing to exclusive publishing marks another step forward in the evolution of our publishing strategy. Officially licensed from Xishanju, The Legend of Swordsman: Reunion is the latest entry in the renowned Legend of Swordsman franchise, building on more than 2 decades of rich heritage. It was developed by the original core team behind the PC game [indiscernible], and offers a seamless cross-platform experience featuring synchronized account data and gameplay across mobile app, PC, and mini-program platforms.

The game has completed its first round of testing and received encouraging user feedback. By combining our content marketing capabilities with the reach of our streamer network, we aim to bring this classic franchise to a broader audience while preserving the authentic gameplay that has made it a fan favorite for generations. Xiao Xiao Qi Yu is a 3D match-based casual mobile game featuring the official licensed [indiscernible] and represents an expansion into the match category for HUYA. The title is well-aligned with our content-driven publishing model, with strong potential to generate user-created content, social engagement, and organic traffic across live-streaming and short-form video platforms. On the self-developed game front, we were pleased to see our first self-developed title, [indiscernible], receive regulatory approval for publication in July.

As a casual SLG centered on [indiscernible] collection, the game represents another important step in building an in-house game development capabilities. We are now actively preparing for its upcoming testing and look forward to sharing more updates as development progresses. On the advertising side, we continue to strengthen our content-driven integrated marketing solution for game developers during the quarter while broadening our advertiser base.

Hearthstone has emerged as an important new customer this quarter. We partnered with leading streamers to deliver a series of tournaments and content collaborations for Hearthstone, highlighted by Da Men Global Invitational, the first global third-party platform tournament for Hearthstone Battlegrounds. It debuted in China and generated more than 200 million impressions across online platforms during tournament play, and received strong recognition from the client.

On the in-game item sales front, revenues maintained triple-digit year-over-year growth with Peacekeeper Elite, PUBG Mobile, Genshin Impact, and Arena Breakout as key contributors. For Peacekeeper Elite, we continue to invest in the broader game ecosystem. In particular, our coverage and commentary around PEL tournaments generated strong audience interest and engagement, enhanced the appeal of our in-game item offerings, and contributed to continued growth in related sales. In our live-streaming business, the outdoor entertainment content category continued to perform well during the quarter, while our overall streamer ecosystem remains stable. We are also exploring ways to drive greater synergies between game streaming and our entertainment verticals to boost the revenue contribution from top streamers.

Since the beginning of the second half of the year, we have also been proactively reviewing the economics of our live streamer partnership, aiming to improve the efficiency of our content investment and support a healthier, more sustainable live-streaming ecosystem. In terms of tournament content, we offer more than 100 licensed tournaments and approximately 20 self-produced tournaments on the HUYA platform during the quarter. Our self-produced events continued to grow in scale and build stronger proprietary event brands. For the CF Grand Master Cup, we officially partnered with CrossFire to stage an international invitational featuring 8 professional teams and 4 leading overseas teams. The tournament also featured a crossover with the film Kung Fu Hustle, further integrating e-sport and broader entertainment content. The Dota 2 Immortal Cup Season 2 generated widespread online buzz and more than 2.5 billion impressions across online platforms.

In July, we launched [indiscernible] Streamer Championship and the Peacekeeper Elite Mengnan [Superstar] Cup. Together, these events expanded our presence across leading shooter titles, strengthened our portfolio of self-produced tournaments, and enhanced HUYA's appeal among core gamers. We also helped host the Valorant National Tournament, earning further recognition from game developers for our tournament hosting and product capabilities. On product and AI, we continue to apply AI technologies across our game content ecosystem to improve both our products and overall platform experience. For popular titles such as Delta Force, League of Legends, and Teamfight Tactics, we have launched a range of AI-powered game tools, including map navigation and combat assistance features. These tools have driven solid user engagement and retention.

Users of this tool have also shown higher activity levels, longer viewing time, and greater monetization potential on the HUYA platform, reinforcing our view that AI-powered game tools will play an increasingly important role in reaching our live-streaming ecosystem and creating long-term value. In July, we released VAM version 1.0, our self-developed real-time multi-modal digital human model. VAM can rapidly generate AI-powered virtual hosts with natural speech, thinking capabilities, and expressive body movements, enabling highly realistic real-time interaction. We believe VAM has the potential to meaningfully improve the economics of live-streaming content. Unlike traditional live streaming, where content supply is inherently constrained by the number and availability of human streamers, VAM enables us to scale content production more efficiently. As development expands, deployment expands, we expect operating leverage to increase with our marginal content creation cost declining while content supply become more scalable.

Looking back at the quarter, we continue to make steady progress in executing our long-term strategy across publishing, self-development, AI innovation, and game-related services. We have further strengthened our capabilities and expanded our role across the game industry value chain. Looking ahead, we remain focused on executing our content-driven strategy, deepening our partnership across the gaming ecosystem, and investing in the capabilities that will support our next phase of growth. We believe these efforts will further strengthen HUYA's competitive position and create sustainable long-term value for our shareholders. Thank you. With that, I will now turn the call over to our CFO, Raymond Lei. He will share more details on our results. Raymond, please go ahead.

Thank you, Vincent, and hello, everyone. I will start with an overview of our financial performance. In the second quarter, we delivered steady top-line growth while continuing to improve our revenue mix and operating performance. With a larger revenue contribution from our higher-margin game-related services, advertising, and other businesses, our gross margin expanded to 14.7%. Operating loss narrowed to RMB 7 million and the non-GAAP operating income improved both year-over-year and sequentially to RMB 16 million. Let's move on to more details of our Q2 financial results. Total net revenues were RMB 1.74 billion for Q2, up 11% from the same period last year. Live streaming revenues were RMB 1.1 billion for Q2, compared with RMB 1.15 billion for the same period last year, primarily reflecting the live streaming industry's current environment. Game-related services, advertising, and other revenues were RMB 638 million for Q2, up 54% from the same period last year.

The increase was primarily driven by higher revenues from in-game item sales and advertising, as well as the contribution from the commercialization of Goose Goose Duck Mobile. Cost of revenues increased by 10% year-over-year to RMB 1.48 billion for Q2, generally in line with the increase in revenues, primarily due to increased revenue sharing fees and the cost of in-game virtual items. Within this, revenue sharing fees and the content cost rose by 3% year-over-year to RMB 1.21 billion. Gross profit was RMB 255 million for Q2, up 20% from the same period last year. Gross margin was 14.7% for Q2, improving from 13.5% for the same period last year. Excluding share-based compensation expenses, non-GAAP gross profit was RMB 257 million, and the non-GAAP gross margin was 14.8% for Q2. Research and development expenses decreased by 1% year-over-year to RMB 120 million for Q2.

Sales and marketing expenses increased by 58% year-over-year to RMB 91 million for Q2, primarily due to continued marketing and promotional efforts related to Goose Goose Duck Mobile. General and administrative expenses decreased by 8% year-over-year to RMB 58 million for Q2, primarily due to decreased professional service fees. Other income was RMB 7.8 million for Q2, compared with RMB 7.6 million for the same period last year. Operating loss narrowed to RMB 7 million for Q2, compared with a loss of RMB 24 million for the same period last year. Excluding share-based compensation expenses and amortization of intangible assets from business acquisition, non-GAAP operating income increased to RMB 16 million from RMB0.4 million in the same period last year.

Interest income was RMB 26 million for Q2, down from RMB 59 million for the same period last year, primarily due to a decrease in the average deposit balance as a result of special cash dividends and lower interest rates. Net income attributable to HUYA Inc. was RMB 1.6 million for Q2, compared with a net loss attributable to HUYA Inc. of RMB 5.5 million for the same period last year. Excluding share-based compensation expenses and amortization of intangible assets from business acquisitions, net of income taxes, non-GAAP net income attributable to HUYA Inc. was RMB 36 million for Q2, compared with RMB 48 million for the same period last year. [indiscernible] and diluted net income per ADS were each RMB 0.01 for Q2. Non-GAAP basic and diluted net income per ADS was each RMB 0.16 for Q2.

As of June 30, 2026, the company had cash and cash equivalents, short-term deposits, and long-term deposits of RMB 3.21 billion, compared with RMB 3.46 billion as of March 31, 2026. With that, I'd like to open the call to your questions.

Thanks, Raymond, and hello everyone. [Operator Instructions] [Operator Instructions] For the benefits of all participants on today's call, if you wish to ask your question to management in Chinese, please immediately repeat your question in English. Today's first question comes from Ritchie Sun from HSBC. Your line is open. Please go ahead.

Vincent, Raymond, Margaret [Foreign Language] Good evening management, thank you for the opportunity to ask a question. I would like to ask about the progress of Goose Goose Duck. Could you please share the operation update, monetization performance, and summer promotion progress for Goose Goose Duck? Thank you.

[Foreign Language]

In the second quarter, Goose Goose Duck Mobile continued to maintain a healthy and engaged player base with users aged between 18 to 25 remaining our core demographic. Long-term retention remained stable with limited user churn, reflecting continued engagement among our core users. We also continue to invest in building a healthy and a positive game environment. Last month, we launched an AI-powered voice moderation system to improve the quality of in-game voice chat and foster a more positive community environment. This has helped enhance both the gameplay and social experience for our players and further supports the long-term health of the game.

[Foreign Language]

[indiscernible] continues to demonstrate its strong commercial potential. Since our very first IP collaboration with Empresses in the Palace in April, we have continued to unlock new monetization opportunities. Subsequently, we had collaborations with Fox Spirit Matchmaker in June, Journey to the West and B.Duck in July, further boosted player engagement and helped the game return to the number 1 spot on iOS free game charts at end of July. We aim to have a robust pipeline of collaborations with new themed events planned on almost monthly basis. In August, for example, we plan to launch additional collaborations including JX3, further expanding our content offerings and creating new opportunities to drive player engagement and monetization.

[Foreign Language]

On the content front, it's encouraging to see UGC modes such as Goose Hunt, [Pool] and Mahjong continue to account for an increasing share of total player time. We also have a robust summer content lineup. In July, we launched a personal island home decorating system, giving players greater freedom to design and customize their own islands. From August through September, we plan to roll out a series of updates spanning core gameplay, social features, AI-powered matches, and tournament features, further enhancing the overall play experience.

[Foreign Language]

We're also working closely with R&D team to develop the WeChat mini game version. At this stage, we are focused on ensuring product stability and testing key operating metrics while taking advantage of WeChat's built-in social and sharing features to make it easier for players to invite friends and organize game sessions. With a solid user base established in the first half of the year, the WeChat mini game version gives us an opportunity to reach new audience across the WeChat ecosystem and drive the next phase of our user growth. Overall, we remain fully confident in the long-term health and stability of Goose Goose Duck Mobile ecosystem, as well as its user engagement and monetization potential.

Our next question comes from Maggie from CLSA. Please go ahead. Maggie, please unmute yourself.

[Foreign Language]

I will translate your question. Could management elaborate a bit more on HUYA's overall AI initiative? For example, the creator tools, content recommendation as well as any interactive features. How are these capabilities expected to drive user growth as well as monetization over the next few months and then over the midterm as well? Thank you.

[Foreign Language]

As mentioned last quarter, our AI initiatives remain focused on four areas: live streaming, game tools, IP-based companionship, and AI-assisted game development. In AI-powered live streaming, we launched VAM 1.0, our proprietary real-time multi-modal digital human model during this quarter. VAM is among the leading solutions in a real-time full duplex digital human space, and we believe it is helping digital humans to move beyond visual and display purposes towards more practical and real-time interactions. By reducing the time and cost constraints associated with human live streamers, VAM could help accelerate the industry's shift towards a hybrid content ecosystem powered by both humans and AI. Our proprietary model enables us to scale AI-powered content across a broader range of user cases with greater efficiency and a lower marginal cost, creating new opportunities to expand our content supply on our platform.

[Foreign Language]

We will continue to enhance our VAM model, focusing on improving the [avatar] consistency, facial expressions, and body movements, as well as the naturalness of real-time dialogue and speech, while further reducing latency and computing costs.

[Foreign Language]

AI game tools, the Delta Force map tool and Hextech ARAM assistant have delivered steady performance since their launches. Within 6 months, they have attracted more than 1 million users and maintained healthy retention. In the second quarter, we launched Teamfight Tactics assistant, marking our first expansion of AI assistant into auto chess genre. Given its strategic complexity and strong need for real-time decision making, Teamfight Tactics is a natural fit for real-time in-game AI assistance. This further demonstrate that our AI assistant capabilities can be applied across game genres. Based on user demand, we will gradually explore tools for additional strategy games.

[Foreign Language]

The value of our AI-powered game tools to the HUYA platform is becoming increasingly more evident. Take our Hextech ARAM assistant as an example. After adopting the tool, users more than doubled their monthly active days on HUYA platform, while also watching more frequently and for longer periods, resulting in higher overall user engagement and value.

[Foreign Language]

We also continuing to explore AI-enabled IP companionship and AI-assisted game development through multi-agent workflows. Later this year, we plan to begin pre-launch promotion for a physical multi-modal AI companion product. Our AI system game development efforts is also at a quite early testing stage with current applications focused on generating and testing casual and lightweight interactive content.

Our next questions comes from Nelson from Citi. Please go ahead.

[Foreign language]

So let me translate into English. Thanks management for taking my question. Following the success of Goose Goose Duck, how would HUYA position its game publishing business in future? Can management share the latest update on your product pipeline and publishing schedule going forward? Thank you.

[Foreign Language]

The game publishing is a key part of our transformation from a live streaming platform into a more integrated game service provider. Our core strength goes beyond traffic acquisition. What sets us apart is strength of our content ecosystem, which enables us to build awareness, engage users, and support games throughout their lifecycle. The successful launch of Goose Goose Duck Mobile validated our content-driven publishing approach and the role of a social engagement in enhancing the game experience. It also helped us to begin building integrated end-to-end capabilities spanning product launch, user acquisition and long-term operations.

[Foreign Language]

In selecting products, we will continue to focus on high quality games and premium IP, prioritizing titles with strong content appeal, social interactivity and long-term operational potential, while gradually broadening our genre mix and user reach. As mentioned in our prepared remarks, we are actively advancing three key titles: Legend of Swordsman: Reunion, Xiao Xiao Qi Yu, both of which will be exclusively published by HUYA, and our self-developed title, Zhe Dao You Huan Shou. Several other additional titles are also under preparation.

[Foreign Language]

We'd like to emphasize that the success of publishing strategy is not dependent on Goose Goose Duck Mobile game alone. It was just the beginning. We are building a diversified portfolio across multiple genres, including social [indiscernible], classic martial art, and casual match three games. We remain committed to a quality-first approach and disciplined investments marketing following a phased strategy that includes pre-launch content marketing, product testing and data validation, gradual scaling and long-term operations. This approach will enable us to build broader and more sustainable growth drivers for our game-related services.

Our next question comes from [Raphael] from [BOCI]. Please go ahead. Please go ahead, Raphael.

[Foreign language] Thanks management for letting me ask question. I am just wondering how does management assess current streaming performance and future streaming operational strategies? Following content optimization executions, what is the potential upside for cost savings in the second half of this year? Thank you.

[Foreign Language]

In the second quarter, live streaming revenue approximately RMB 1.1 billion, down by low single digit percentage year-over-year and broadly stable sequentially. Relative to the broader industry, our performance remained resilient. Paying user numbers and ARPU have also remained within a relatively stable range over the past several quarters.

[Foreign Language]

The industry continues to face pressure from softer user spending and intensifying competition among platforms. In this environment, we will place greater focus on the returns from our content investment. We are actively reviewing our streamer contracts and tournament licensing agreements to make sure we are getting the right returns from our content investments.

[Foreign Language]

We are also strengthening collaboration between entertainment and game streamers to drive cross-category user engagement. At the same time, we are expanding monetization opportunities through branded advertising campaigns, joint game operations, and live stream commerce, helping our game streamers to generate more value from their content and audience.

Our next question comes from Wei Meng from CICC. Please go ahead.

[Foreign Language]

Hello, Wei Meng, we cannot hear from you.

[Foreign Language]

[Foreign Language] So, let me translate myself, I would like to ask about the margins, especially the operating performance outlook. As the game publishing revenue scales up, when do you expect the profit contribution to start showing up? Thank you.

[Foreign Language]

Our gross margin improved by 1.2 percentage points year-over-year in the second quarter. Non-GAAP operating profit reached RMB 16 million, a very significant year-over-year improvement and a quarter with a meaningful level of operating profit. Looking ahead, as higher margin businesses such as game publishing make up a larger share of our revenue, we continue to improve spending efficiency and we see further opportunities to improve both gross margin and operating margin.

Now we will take our last question today from Rebecca from Morgan Stanley. Please go ahead.

[Foreign language] Thanks management for taking my questions. Could you please share the latest progress of the company's share buyback and [indiscernible] plan for the shareholder return going forward? Thank you.

[Foreign Language]

On shareholder returns, we continue to return capital to the shareholders through cash dividends and share repurchases. In the second quarter, we repurchased approximately 3.2 million ADS, representing approximately 1.4% of our total outstanding shares. A portion of these ADSs have already been canceled and the remainder will be canceled as planned. We continue to repurchase shares pursuant to our existing Rule 10b5-1 trading plan.

[Foreign Language]

We are also very pleased to announce that the board has approved the expansion of our 2026 share repurchase program from $50 million to $100 million. The expanded authorization reflects our confidence in HUYA's business outlook and our continued commitment to enhancing long-term shareholder value. Rebecca, maybe I can add a bit more here. If we calculate at our current market cap of around $554 million, plus our $100 million buyback program, that would mean roughly $50 million share repurchases each year if spread over two years. Combined with at least $30 million in annual cash dividends, that would translate into a shareholder yield of around 14%-15% per year. Thank you.

Thank you once again for joining us today. If you have further questions, please feel free to contact HUYA's Investor Relations through the contact information provided on our website or Piacente Financial Communications. This concludes today's call and we look forward to speaking to you again next quarter. Thank you.

Thank you.

Thank you.

Good day, and good evening, and thank you for standing by. Welcome to HUYA's First Quarter 2026 Earnings Webinar. I'm Hanyu Liu from the HUYA's Investor Relations. [Operator Instructions] Please be advised that today's webinar is being recorded.

The company's financial and operational results were issued earlier today and are posted online. You can also view the earnings press release by visiting the IR website at ir.huya.com. A replay of the call will be available on the IR website soon.

Participants of management on today's call will be Mr. Vincent Junhong Huang, our acting CEO; Mr. Raymond Peng Lei, our CFO; and Ms. Marguerite Xie, Head of Capital Markets. Management will begin with prepared remarks, and the call will conclude with a Q&A session.

Before we continue, please note that today's discussion will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company's results may be materially different from the views expressed today.

Further information regarding this and other risks and uncertainties is included in the company's latest annual report on Form 20-F and other public filings as filed with the U.S. Securities and Exchange Commission. The company does not assume any obligation to update any forward-looking statements, except as required under applicable law.

Please also note that HUYA's earnings press release and this conference call include discussions of unaudited GAAP financial information as well as unaudited non-GAAP financial measures. HUYA's press release contains a reconciliation of the unaudited non-GAAP measures to the unaudited most directly comparable GAAP measures.

With that, I'm pleased to turn the call over to Mr. Huang. Please go ahead.

Okay. Hello, everyone, and thank you for joining our earnings call today. First, I would like to share our overall performance for the quarter. In the first quarter, total net revenues grew by 15% year-over-year to RMB 1.73 billion, primarily driven by continued strong growth from game-related services, advertising and other businesses.

Game-related services, advertising and other revenues reached RMB 627 million, up 69% year-over-year and further increased to record 36% of total net revenues. Live streaming revenues were RMB 1.1 billion for the quarter, underpinned by our vibrant, diversified and high-quality live streaming content ecosystem.

With the integration of AI, we are able to offer an enriched more creative experiences to our users. Our ecosystem of game content live streamer is becoming increasingly influential across the broader social platforms, while our own channels, including the HUYA Live app, continue to enjoy a stable user base.

Our estimated reach across external platforms doubled from last year, exceeding 200 million users, including those on Douyin and WeChat platforms. According to our internal data, HUYA is the largest gaming MCN on WeChat channels and remain among the top 3 on Douyin.

Across multiple leading game titles, nearly half of the core streamers are connected to HUYA. This broad content network enables us to provide games with strong content-driven marketing and user reach, which is what's driving our growth in our collaboration with game developers in game item sales and advertising as well as game publishing.

On the game publishing front, Goose Goose Duck mobile continued to deliver impressive results. Since its launch on January 7, the game ranked #1 on the iOS free games chart for most of the first quarter.

We have been accelerating the pace of content updates since March. And on April 1, we launched Season 2, introducing a new map, Ancient [ Desert ] as well as new roles, including Dueling Dodo and Raven. At the same time, we continue to work on our UGC mechanism, which we believe will be an important driver of player engagement, social interaction and long-term content vitality for the game. Building on this foundation, we launched our first PGC gameplay mode, Goose Hunt on April 29, which received positive feedback from players and further expanded the game's content ecosystem.

As we continue to focus on building a healthy user ecosystem with robust and fun game content, we are also ramping up its monetization gradually. In April, Goose Goose Duck mobile reached the top 5 on the iOS top grossing game chart with new skin offered validating its monetization potential. Looking ahead, we will further enrich the game's content and social environment with new features such as party mode and a home decoration system, and introduce more IP collaborations to meet players' growing demand for low playing experiences.

Meanwhile, we are working on the WeChat mini-game version, which is currently scheduled for launch this summer. By integrating Goose Goose Duck mobile more deeply with the WeChat user ecosystem, we hope to leverage WeChat social graph to further reactivate existing users and attract new ones.

With the successful debut of Goose Goose Duck mobile, we are gaining more recognition from game developers of our publishing capabilities through our content ecosystem. We now have a handful of new titles in the pipeline to launch this year across various genres, including casual, SLG and AMO.

For in-game item sales, revenues continue to grow solidly year-over-year. On the domestic front, item 4 titles, including Peacekeeper Elite, Honor of Kings and Crossfire continue to contribute incremental growth. For example, our large-scale outdoor live streaming event for Peacekeeper Elite journey season 2, not only effectively drop in-game item sales, but also generated strong social buzz for the game IP.

On the overseas front, in-game item sales for PUBG Mobile, Genshin Impact and Arena Breakout also delivered impressive performance.

On the advertising side, leveraging our influence across streamer networks, tournament production capabilities and UGC creation know-how, we provide fully integrated content marketing solution for game developers.

Some of our earlier advertising campaigns have proven very effective, gaining further recognition from leading advertisers, including Tencent, NetEase and Hypergryph. For example, for Hypergryph's Arknights:Endfield opened better campaigns in the first quarter, we connected multiple top streamers to generate in-depth live streaming content, generating more than 70 million views across the Internet. This not only drove strong live streaming traction on HUYA Live app, but also sparked extensive UGC content across all social platforms, broadening the game's user reach.

In terms of our content offerings on our own platform, we continue to enhance our live streaming tournament ecosystem, introducing 55 licensed tournaments as well as more than 20 self-produced tournaments and variety shows.

In late March, we created Uzi Cup named after e-sports legend Uzi, attracting more than 200 League of Legends teams across China. The event generated more than 100 million views across the Internet and appear on Weibo's trending list 22 times. Building on this momentum, we hosted additional self-produced events, including the Delta Force [ Shija ] Cup and Dota 2 Immortal Cup Season 2.

We have also become the official production partner for multiple top-tier game tournaments such as Valorant 2026 National tournament and 2026 Jiangsu E-Sports Super League. Hosting and producing these events creates organic synergies with our live streaming content in-game item sales and other businesses.

On the product side, we remain committed to upgrading our platform ecosystem through game services and enriching users' entertainment experience with a suite of game tools.

In March, we officially launched the real-time navigation feature for our Delta Force Map Tool as well as the League of Legends Hextech ARAM assistant tool, helping players make better in-game decisions. Beyond this, we are actively developing assistant tools for more titles, including Golden Special and Goose Goose Duck mobile, further establishing game tools as a differentiated product gateway. We are also developing a physical AI companion around the appeal of Goose Goose Duck, creating richer and differentiated game play and companionship value.

Overall, we delivered solid progress across multiple business lines in the first quarter. Game publishing, in-game item sales, advertising marketing and tournament operations all achieved meaningful breakthroughs.

HUYA is accelerating its strategic evolution from a game live streaming platform into a full-service game services platform with game-related revenues reaching a record high percentage of total revenues and our revenue mix continue to improve.

We will continue to deepen our game content ecosystem and focus on high-value opportunities across the game industry value chain. While scaling the business, we will continue to enhance earnings quality and strive to deliver resilient and sustainable growth for our shareholders.

With that, I will now turn the call over to our CFO, Raymond Lei. He will share more details on our results. Raymond, please go ahead.

Thank you, Vincent, and hello, everyone. I'll start with an overview of our financial performance. In the first quarter, we delivered a steady top line growth with continued improvement in both our revenue mix and operating performance. Notably, the increased revenue contribution from business with higher gross margins led to both year-over-year and sequential gross margin expansion to 14.6% this quarter. Furthermore, we achieved a non-GAAP net income of RMB 21 million for the quarter despite lower interest income.

Let's move on to more details of our Q1 financial results. Total net revenues were RMB 1.73 billion for Q1, up 15% from the same period last year. Live streaming revenues were RMB 1.1 billion for Q1 compared with RMB 1.14 billion from the same period last year, primarily reflecting the live streaming industry's current environment.

Game-related services, advertising and other revenues were RMB 627 million for Q1, up 69% from the same period last year. The increase was primarily driven by higher revenues from in-game item sales and advertising, mainly attributable to the company's deepened and broadened collaboration with game companies.

Cost of revenues increased by 12% year-over-year to RMB 1.48 billion for Q1, primarily due to increased cost of in-game virtual items as well as increased revenue sharing fees and content costs. Within this, revenue sharing fees and the content costs rose by 7% year-over-year to RMB 1.23 billion, mainly reflecting growth in our top line.

Gross profit was RMB 253 million for Q1, up 34% from the same period last year. Gross margin was 14.6% for Q1, improving from 12.5% from the same period last year. Excluding share-based compensation expenses, non-GAAP gross profit was RMB 256 million and non-GAAP gross margin was 14.8% for Q1.

Research and development expenses increased by 2% year-over-year to RMB 132 million for Q1. Sales and the marketing expenses increased by 45% year-over-year to RMB 88 million for Q1, primarily due to marketing and the promotion efforts related to the launch of Goose Goose Duck mobile. General and administrative expenses increased by 6% year-over-year to RMB 65 million for Q1, primarily due to increased share-based compensation expenses.

Other income was RMB 3 million for Q1 compared with RMB 4 million for the same period last year, primarily due to lower government subsidies.

Operating loss narrowed to RMB 29 million for Q1 compared with a loss of RMB 60 million for the same period last year. Excluding share-based compensation expenses and amortization of intangible assets from business acquisition, non-GAAP operating loss narrowed to RMB 3 million for Q1 compared with a loss of RMB 36 million in the same period last year.

Interest income was RMB 30 million for Q1, down from RMB 65 million for the same period last year, primarily due to a lower time deposit balance following the payment of special cash dividends.

Net loss attributable to HUYA Inc. was RMB 4 million for Q1 compared with net income attributable to HUYA Inc. of RMB 1 million for the same period last year. Excluding share-based compensation expenses and the amortization of intangible assets from business acquisitions net of income tax, non-GAAP net income attributable to HUYA Inc. was RMB 21 million for Q1 compared with RMB 24 million for the same period last year.

Diluted net loss per ADS was approximately RMB 0.02 for Q1. Non-GAAP diluted net income per ADS was RMB 0.09 for Q1.

As of March 31, 2026, the company had cash and cash equivalents, short-term deposits and long-term deposits of RMB 3.46 billion compared with RMB 3.82 billion as of December 31, 2025.

With that, I'd like to open the call to your questions.

[Operator Instructions] Today's first question comes from Ritchie Sun from HSBS.

Congrats on a solid start from Goose Goose Duck. I want to ask about the latest operating and strategy and also commercialization progress for this game. And what is the -- this year's operating strategy going to be?

[Interpreted] Since its launch on January 7, Goose Goose Duck mobile has continued to deliver impressive results, ranking #1 on the iOS free game chart for most of the quarter. This validates both the appeal of the game social gameplay and HUYA's content-driven game publishing model. In the first quarter, we have been mainly focused on marketing and promoting the game as well as perfecting our gameplay and in-game operations to keep up with the better-than-expected user numbers. As of now, we are still at an early stage in terms of monetization, but we're ramping up gradually. For 2026, especially the first half, our priority for this game remains to be growing the user base and user engagement.

In particular, there are 3 things we'll be focusing our efforts on. Number one, we'll continue to build and strengthen our UGC mechanism, and Goose Hunt is an early example of this framework with its gameplay and content currently led by a PGC team. As we continue to enhance our UGC mechanism and related know-how, we will add more UGC gameplay and casual game modes to the game. We believe this is crucial for game sustainable user engagement and the longevity. Second, we will add more social and community features, including interplayer connections, the home decoration system and team-up interactions so the game can evolve into a deeper social environment. Third, we are working on the WeChat mini-game version, which is currently scheduled for launch this summer. Given the game's strong party game nature, we believe the WeChat ecosystem and social graph can help us further reactivate existing users and attract new ones.

And we will take our next question from Nelson Cheung from Citi.

And my question is related to your AI progress. Wondering if management can share your latest strategic planning on AI for the company. And how should we integrate your AI applications into the company core business?

[Interpreted] Yes. So our AI initiatives are focused on 4 areas centered around our business. Number one, that's live streaming; number two, game tools; number three, IP-based companionship; and number four, game production. So for AI-powered live streaming, we are exploring 2 main parts. Firstly, that's AI-powered content creation and secondly, it's AI-native live streaming. So these products are still in early stages of product iteration and user testing. We do not expect AI to replace real live streamers anytime soon, especially top ones with emotional connection with users and real-time interactivity remain difficult to replicate. Instead, we think the real value of AI in live streaming is to help us explore more opportunities in mid-tier and long-tail live streaming content, 24-hour companionship and certain interactive formats.

For AI-powered game tools, we are also progressing really well. In March, we launched the real-time navigation feature for our Delta Force Map tool as well as the Hextech ARAM assistant tool for League of Legends. These tools are not just static guide for players, instead they combine AI capabilities with HUYA's deep understanding of games to provide more real-time and context-aware decision support. For example, our Delta Force Map Tool helps players quickly identify resource points, routes and high-risk areas, lowering their learning curve. The Hextech ARAM tool can provide champion recommendations, item build suggestions and gameplay ideas for each match. Since every match requires players to make new decisions, this kind of match-based assistant tool has very strong repeat use value. Going forward, we'll expand game tools to more titles and categories, including Golden Spatula, Goose Goose Duck mobile, card and board games, strategy games and auto chat games.

AI-enabled companionship were exploring IP-based smart hardware, including physical AI companion products embedded with the multimodal AI capabilities. Based on our user feedback from Goose Goose Duck, we believe this product can go beyond emotional companionship and create deeper integration with the game itself, including in-game interactions and post-game reviews. This can further extend the connection between IP and the players.

For AI-assisted game production, we are also exploring how AI can help us generate and test casual game content more efficiently. We do not expect to replace large-scale AAA type of games in the near future, but we do see a lot of opportunities improving R&D efficiencies in casual games, web-based games or more interactive games.

And our next questions come from Wei Meng from CICC.

Just want to ask about the game publishing pipeline. Could management maybe share some colors on those pipelines and what's the rough timeline for those releases and what kind of revenue contribution should we expect from them?

[Interpreted] Currently, we have a robust publishing pipeline, and we expect to launch multiple new games this year. These include collaborations with leading game companies such as Tencent and Kingsoft. The pipeline covers multiple genres, including casual, strategy, SLG, MMO and others. We will pace the launches based on product testing, license approval progress and the right market windows.

The next in our pipeline is the casual 3D puzzle matching game that we licensed, which is scheduled for launch for the summer holidays. We have exclusive publishing rights for Mainland China, Hong Kong, and Macau. The game is already proven in overseas markets in terms of user appeal and monetization. Based on third-party estimates, its cumulative downloads exceed 10 million and the title has remained among the top grossing titles in overseas 3D puzzle matching category.

In terms of publishing strategy, we're leveraging our influence in streamer networks, cross-platform distribution and player communities. As mentioned in our prepared remarks, our estimated reach across external platforms now exceed 200 million users, including those on Douyin and WeChat platforms. This extensive user reach allows us to target core players more efficiently, create more appealing content and enhance game longevity.

We will take next question from Maggie Ye from CLSA.

Could management share your perspective on the recent trends and future outlook for the live streaming business? In addition to that, what are the core strategic levers and key drivers for the company to maintain a stability in this segment moving forward?

[Interpreted] So live streaming remains a core part of HUYA's business. In the first quarter, the live streaming revenue was RMB 1.1 billion, but we do feel this business may still be under some pressure due to the overall market environment. Therefore, we'll be more focused on improving ROI across content cost, which includes streamer costs and licensing costs.

We believe one of HUYA's key differentiator versus any other live streaming platform is our ability to consistently create influential gaming content and leverage that content to better support game publishing and distribution. This capability is backed by our close relationships with top streamers, our know-how in tournament production and our cross-platform game distribution capability.

In the third quarter of 2026, we offered around 55 licensed tournaments and more than 20 self-produced tournaments and variety shows. Among them, our self-produced Uzi Cup generated over 100 million views across the Internet, demonstrating the value of our streamer IP plus self-produced tournament model.

Also during the quarter, we partnered with a top entertainment live streamer for collaboration at major tourist attractions in Luoyang, generating strong online engagement and attracting over 100,000 peak concurrent viewers.

The key game titles will continue to build self-produced content around them. For example, Dota 2 Immortal Cup Season 2 is currently one of the largest third-party Dota 2 tournaments in China. For Crossfire, we recently worked with CF team on live streaming campaigns around the Kung Fu IP collaboration, including Crossfire Kung Fu HUYA Duel Night. These campaigns helped generate significant social buzz for new updates and further improve user engagement. For Peacekeeper Elite, we launched Elite Journey Season 2 in the third quarter, which is a live streaming show that generated solid user participation that creatively combines game content, streamer influence and outdoor scenarios. We think this is a great way to improve user engagement and help game content reach a broader audience.

HUYA also offers a broad range of highly-engaging sports content. We have already secured full rights for 2026 Badminton World Federation events and 2026 World Snooker Tour and will provide viewers with high-definition live broadcast of these events. The recently concluded 2026 World Snooker Championship generated more than 150 million total views on HUYA. In particular, the match between the 2 Chinese players, Ding Junhui and Zhao Xintong reached a peak of nearly 20 million viewers in a single live streaming room.

We will take the next question from Yiwen Zhang from China Renaissance.

My question is on the advertising and in-game item sales. Can you share some operational color on that?

[Interpreted] In third quarter, game-related services, advertising and other revenues reached RMB 226 million, up 69% year-over-year and increased to 36% of the total net revenue. The growth was mainly driven by the continued expansion in in-game item sales, advertising, while game publishing also contributed incremental growth. This shows that HUYA's revenue mix is continuing to improve and non-live streaming game services have become an important growth driver.

For in-game item sales, revenue continued to grow rapidly year-over-year. In the domestic market, growth was mainly driven by leading titles such as Peacekeeper Elite and Honor of Kings. More specifically, Honor of Kings benefited from the exclusive skin sales and Chinese New Year skin events, while Peacekeeper Elite saw better sales conversion as we continue to optimize item offering and content quality through our content ecosystem. Crossfire and other titles also benefited from key sales windows and tournament-related resources.

Overseas, titles such as PUBG Mobile, Genshin Impact and Arena Breakout continue to contribute to incremental growth. We will continue to expand our overseas in-game items supply and strengthen our localized service capabilities. Looking ahead, we will continue to develop more customized bundles and rights-based partnerships while bringing more transactions into HUYA's own platform ecosystem.

On advertising, we have continued to strengthen content-driven integrated game marketing solutions. By combining streamer network, tournament integrations, UGC co-creation, other core capabilities, we provide game developers with end-to-end marketing solutions. Our ROI performance on these advertising campaigns continue to earn recognition from leading advertisers such as Tencent, NetEase and Hypergryph.

Now we will take our last question today from Rebecca Xu from Morgan Stanley.

I'm honored to be the last to raise question. My question is about margin and net profit trend. Can management share some color on the margin and net profit trend maybe in the full year basis?

[Interpreted] Our margins will continue to see improvement in the third quarter with non-GAAP operating margin approaching breakeven. This improvement was mainly driven by continued revenue mix optimization with higher contributions from relatively high-margin business such as advertising, game items and game publishing. We also continue to strengthen cost and expense management and improve operating efficiency.

Looking ahead, as this margin -- as the higher-margin businesses continue to scale and operating leverage gradually come through, we expect further improvement in our overall gross margin and operating margin for the full year. In addition, given the pace of investments related to Goose Goose Duck and other games, we expect improvement in both margins to become more visible in the second half of the year.

Thank you once again for joining us today. If you have further questions, please feel free to contact HUYA's Investor Relations through the contact information provided on our website of Piacente Financial Communications. This concludes today's call, and we look forward to speaking to you again next quarter. Thank you.

Good day, and good evening, and thank you for standing by. Welcome to Huya's Fourth Quarter and Fiscal Year 2025 Earnings Webinar. I'm Hanyu Liu from the Huya Investor Relations.

[Operator Instructions]

Please be advised that today's webinar is being recorded. The company's financial and operational results were issued earlier today and are posted online. You can also view the earnings press release by visiting the IR website at ir. huya.com. A replay of the call will be available on the IR website soon.

Participants of management on today's call will be Mr. Vincent Junhong Huang, our Acting Co-CEO and Senior Vice President; Mr. Raymond Peng Lei, our Acting Co-CEO and CFO; and Ms. Marguerite Xie, Head of Capital Markets. Management will begin with prepared remarks, and the call will conclude with a Q&A session.

Before we continue, please note that today's discussion will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995.

Forward-looking statements involve inherent risks and uncertainties. As such, the company's results may be materially different from the views expressed today. Further information regarding this and other risks and uncertainties is included in the company's latest annual report on Form 20-F and other public filings as filed with the U.S. Securities and Exchange Commission.

The company does not assume any obligation to update any forward-looking statements, except as required under applicable law. Please also note that Huya's earnings press release and this conference call include discussion of unaudited GAAP financial information as well as unaudited non-GAAP financial measures.

Huya's press release contains a reconciliation of the unaudited non-GAAP measures to the unaudited most directly comparable GAAP measures. With that, I'm pleased to turn the call over to our Co-CEO, Mr. Huang. Please go ahead.

Okay. Hello, everyone, and thank you for joining our earnings call today. I'm proud to say 2025 was a record year for us. In the fourth quarter, total net revenues grew by 16% to RMB 1.74 billion, the highest in the last 10 quarters, while our live streaming business remained stable. Revenues from game-related services, advertising and other businesses grew 59% year-over-year, demonstrating our successful transformation to the gaming space.

On a full year basis, total net revenues returned to growth and reached RMB 6.5 billion, up 7% year-over-year. In the fourth quarter, we recorded a one-off accounting provision, excluding lease provision, SBC and amortization items, we would have seen 3 consecutive quarters of positive growing operating profit and the full year operating profit.

A robust content ecosystem and a stable user base underpin our performance. In Q4, Huya's total MAUs were approximately 160 million. We are also pleased to see our platform's influence continue to grow.

In February, we welcomed the return of UGI, one of the most legendary names in Esports. This return further validates the strength of Huya's Esports content ecosystem and our ability to attract and support top-tier streamers. The influence of our streamer ecosystem continued to expand with more top streamers returning to Huya and many of our streamers gaining recognition across our platforms, including WeChat channels, Douyin and beyond.

We are no longer just a game live streaming platform, but have evolved into a content-driven integrated game services provider with broad cross-platform reach and a key strategic partner to game developers.

Since our strategic transformation into games-related services in 2023, we have expanded and deepened our footprint across the industry's value chain. We have expanded beyond live streaming into a broader range of game-related services, including game distribution, in-game item sales and game advertising, further transforming Huya into a more integrated game-related services provider. Our entry into game publishing with the success of Goose Goose Duck Mobile marks another important milestone in this transformation. Unlike traditional publishing model that rely primarily on user acquisition, we leveraged the strength of our content ecosystem and take a content-driven approach to publishing.

Goose Goose Duck Mobile launched in January delivered outstanding results, attracting over 5 million new users within the first 24 hours and surpassing 10 million within 6 days and has ranked #1 on the iOS free game chart for the most of the time since its launch.

The game quickly become a market sensation and a clear validation of our strategy. Since preregistration stage, we have been working closely with top streamers across multiple platforms and produced 2 seasons of a live streaming variety show. [indiscernible] with full strong social media buzz and anticipation prior to launch. We saw very strong user-generated content trending on social media as the game generated hundreds of millions of impressions and sparked over 100 social media trending moments on social platforms such as Douyin and Red Note. This content-driven marketing approach resulted in a much higher ROI that far exceed traditional traffic acquisition channels.

This underscore our effectiveness in content-driven marketing for new game launches and maintaining traction over time. We are pleased to see that 2 months after this launch, Goose Goose Duck Mobile continues to stay at the top of the chart and continue to outperform our expectation in terms of user retention.

Most of our players for this game are college students and young working professionals with a higher proportion of iOS and female users. Looking ahead, we are excited to continue enhancing our social feature and building a stronger and more vibrant community.

Monetization remains relatively limited for now as we focus on growing engagement, but with major game content updates scheduled for later this year, we expect monetization to increase afterwards. The successful debut of Goose Goose Duck Mobile demonstrates the potential of our publishing strategy and give us great confidence in our next growth driver fueled by our live streaming content ecosystem.

We are excited by our strong publishing pipeline with multiple new titles coming later this year. At the same time, supported by the strength of Huya's ecosystem, our other game-related businesses, including in-game item sales and advertising continue to deliver solid performance.

For in-game item sales, revenue continued to grow year-over-year, increasing by more than 200%, driven by new titles such as Peacekeeper Elite and Crossfire Mobile. As the business further scales, we continue to expand and deepen our collaboration with game developers.

In January, we became the first platform to secure exclusive presale rights for the MVP scheme in Honor of Kings, which is rare for the industry. We also partnered with Arena Breakout to launch a customized bundle exclusively for overseas players, which also delivered strong sales performance.

Looking ahead, we will continue to expand customized rights offerings, joint marketing and localized partnerships across more top-tier titles to further enhance user satisfaction. On the advertising side, Huya's content-driven marketing capabilities are also gaining broader recognition from leading game developers, including Tencent and NetEase.

In the fourth quarter, we hosted NetEase's Fantasy Westward Journey Mobile, [Foreign Language] Cup in collaboration with 32 top streamers. This helped the game to further expand its brand awareness to younger audience through live streaming. In our e-sports ecosystem, we delivered solid results across both licensed and self-produced events in Q4. During the quarter, we offered users close to 100 licensed tournaments as well as around 40 self-produced tournaments and variety shows. One key highlight came in December when we hosted the Demacia Cup for the first time, one of the core professional tournament in the League of Legends ecosystem.

This also marked the first time that the official League of Legends organizer had granted hosting rights to a third-party live streaming platform. It reflects strong recognition of Huya's event planning, operational and content production capabilities and marks our evolution from an exclusive live streaming partner to a full-service tournament organizer.

Building on our summer success, we hosted the Delta Force Diamond Champions autumn season. The event set new bars for the game in item in terms of both scale and viewership in Delta Force e-sports circuit.

On the product side, we see great opportunities in the AI wave today. We have made meaningful progress in AI-powered live streaming with a growing number of production featuring permanently on viewership charts.

We have integrated AI host into our e-sports programs who are equipped with realistic human-like avatars and capable of professional level commentary and interaction. This visual host engaged with viewer comment in real time, fostering strong audience resonance.

This has been particularly well received among users of leading game categories such as League of Legends and CS:GO, driving longer viewing time and deeper community engagement.

We are thrilled to continue exploring the latest technologies and integrating them directly into our game tools and products, creating richer and more engaging experience for our players that were not possible before. For example, in March, our Delta Force Map tool will introduce a real-time navigation feature powered by our context-aware multimodal AI capabilities, enabling smoother game play and more intuitive interactions.

Beyond this, we are actively exploring ways to embed these technologies across additional titles, including Golden Spatula and Goose Goose Duck Mobile. On the overseas front, we remain focused on improving the product experiences and strengthening our content ecosystem, which supported steady growth in both advertising and in-game item sales.

We will continue to incubate new products in a flexible manner and evolve our monetization strategies. We believe this will further strengthen our capabilities and momentum for scaling our overseas publishing business as well as other monetization opportunities.

Overall, marked a pivotal year for Huya, defined by solid strategic execution and impactful milestones. From an operational perspective, we returned to growth and further enhanced our profit profile. Looking ahead, we will further scale our footprint across the entire gaming value chain. With our growth momentum on a robust and sustained upward trajectory, we are poised to embark on an ambitious new chapter of sustainable high-quality development for Huya.

With that, I will now turn the call over to our Co-Acting CEO and CFO, Raymond Lei. He will share more details on our results. Raymond, please go ahead.

Thank you, Vincent, and hello, everyone. I'll start with our fourth quarter results, followed by our full year financial highlights and an update on our shareholder returns.

In the fourth quarter, we delivered accelerated top line growth driven by robust expansion in our game-related services and advertising businesses. However, our operating results were impacted by a onetime RMB 66 million provision, which led to a non-GAAP operating loss of RMB 36 million for the quarter. Excluding the impact of this onetime item, we continue to see improvement in our core operating performance and the overall earnings profile.

Let's move on to more details of our Q4 financial results. Total net revenues were RMB 1.74 billion for Q4, up 16% from the same period last year. Live streaming revenues were RMB 1.15 billion for Q4, up 2% from the same period last year, primarily due to higher average spending per paying user for live streaming services.

The number of domestic paying users remained stable at 4.4 million for Q4. This figure excludes users who made in game purchases through our game distribution business, but didn't complete payments through our platform or related services as well as overseas paying users. Game-related services, advertising and other revenues were RMB 593 million for Q4, up 59% from the same period last year. The increase was primarily due to higher revenue from game-related services and advertising, which were mainly attributable to our deepened cooperation with game companies in China and overseas.

Cost of revenues increased by 30% year-over-year to RMB 1.49 billion for Q4, primarily due to increased revenue sharing fees and content costs as well as increased costs related to in-game items. Within this, revenue sharing fees and content costs rose by 10% year-over-year to RMB 1.28 billion, reflecting growth in our top line.

Gross profit was RMB 245 million for Q4, up 44% from the same period last year. Gross margin was 14.1% for Q4, improving from 11.4% from the same period last year. Excluding share-based compensation expenses, non-GAAP gross profit was RMB 248 million and non-GAAP gross margin was 14.3% for Q4. Research and development expenses were RMB 123 million for Q4, largely flat year-over-year. Sales and marketing expenses increased by 24% year-over-year to RMB 78 million for Q4, primarily due to increased marketing and promotional efforts, including pre-launch preparations for Goose Goose Duck mobile.

General and administrative expenses decreased by 55% year-over-year to RMB 126 million for Q4, primarily due to RMB 66 million provision related to a receivable arising from 2021 arrangement with a broadcaster, which was deemed to have heightened risk of non-recoverability. Other income was RMB 18 million for Q4 compared with RMB 4 million for the same period last year, primarily due to increased government subsidies.

Operating loss narrowed to RMB 65 million for Q4 compared with a loss of RMB 93 million for the same period last year. Excluding share-based compensation expenses and amortization of intangible assets from business acquisition, non-GAAP operating loss narrowed to RMB 36 million for Q4 compared with a loss of RMB 69 million in the same period last year.

Interest income was RMB 32 million for Q4, down from RMB 75 million for the same period last year, primarily due to a lower time deposit balance following the payment of special cash dividends. Impairment loss of investments was RMB 81 million for Q4 compared with RMB 151 million for the same period last year, primarily due to the recognition of impairment charge on the company's investments attributable to the weak financial performance of certain investees.

Net loss attributable to HUYA Inc. narrowed to RMB 118 million for Q4 compared with loss of RMB 172 million for the same period last year. Excluding share-based compensation expenses, impairment loss of investment and amortization of intangible assets from business acquisitions, net of income taxes. Non-GAAP net loss attributable to HUYA Inc. was RMB 8 million for Q4 compared with non-GAAP net income attributable to HUYA Inc. of RMB 1 million for the same period last year, primarily due to the provision item and lower interest income as explained earlier.

Diluted net loss per ADS were approximately RMB 0.51 for Q4. Non-GAAP diluted net loss per ADS was RMB 0.04 for Q4. As of December 31, 2025, the company has cash and cash equivalents, short-term deposits and long-term deposits of RMB 3.82 billion, largely flat compared to September 30, 2025.

Moving on to our full year 2025 results. Total net revenues were RMB 6.5 billion for 2025, decreased by 7% from the prior year. Live streaming revenues were RMB 4.59 billion for 2025 compared with RMB 4.75 billion for the prior year. Game-related services, advertising and other revenues were RMB 1.91 billion for 2025 compared with RMB 1.33 billion for the prior year. Non-GAAP gross profit was RMB 884 million for 2025, up 7% from the prior year. Non-GAAP gross margin remained flat at 13.6% for 2025. Non-GAAP net income attributable to HUYA Inc. was RMB 99 million for 2025 compared with RMB 269 million for the prior year, and the non-GAAP net margin was 1.5% for 2025 compared with 4.4% for the prior year. To reiterate, the decline was largely due to the provision we discussed and the lower interest income rather than any change in our core business performance. Non-GAAP diluted net income per ADS was RMB 0.43 for 2025 compared with RMB 1.15 for the prior year.

Net cash used in operating activities was RMB 176 million for 2025 compared with net cash provided by operating activities of RMB 94 million for the prior year, primarily due to decreased interest income and increased amounts due from related parties. For additional details on our full year 2025 financial results, I encourage listeners to refer to our earnings press release issued earlier today.

Finally, let me provide an update on our shareholder returns. To implement our 2025 to 2027 dividend plan adopted in March 2025, we are pleased to declare a 2026 special cash dividend of USD 0.135 per ordinary share or USD 0.135 per ADS for a total amount of approximately USD 31 million. In addition, under our up to USD 100 million share repurchase program, we have repurchased 22.9 million Huya shares with an aggregate consideration of USD 75.5 million as of the end of December 2025.

With that, I'd like to open the call for your questions.

[Operator Instructions] Today's first question comes from Rebecca Xu from Morgan Stanley.

[Foreign Language] I will translate myself. We see profit fluctuations mainly driven by provisioning and investment impairments. Could management share the composition and underlying reasons for this item? And how should we think of the future trend on OP and net profit?

[Interpreted] Thank you for the question. The fluctuate in our profit this quarter was mainly driven by 2 items. First, we recorded a RMB 66 million one-off provision related to a receivable arising from 2021 arrangement with broadcaster. This was recorded in G&A and contributed materially to our non-GAAP operating loss of RMB 36 million for the fourth quarter. And secondly, we recorded impairment loss of investments of RMB 81 million related to companies that were previously investees as underperforming. This contributed to our net loss. So overall, these 2 items are noncash accounting adjustments based on management's highly prudent and critical evaluation. So from our perspective, these are more like one-off impacts that do not reflect our core operating trends.

So going forward, we'll continue to review -- to perform regular impairment review in accordance to the accounting standards. But right as of now, based on management's current judgment, we don't see any additional impairment required at the moment.

Our next question comes from Wei Meng from CICC.

[Foreign Language] Let me translate myself. My question is about Goose Goose Duck. First of all, could you maybe share some color on the current metrics like DAU retention, ARPU and revenue, et cetera. And also what's the KPIs for 2026? And secondly, how does the management think about extending the game life cycle from here?

[Interpreted] Thank you for the question. Let me briefly walk you through the current performance and our future plans for Goose Goose Duck. The game's DAU has consistently stood high and steady since its launch with user retention also exceeding our expectations. As mentioned earlier, we are very proud that 2 months after this launch, the game is still at the very top of the iOS download charts. We expect to see another DAU jump in the summer as we prepare a number of game events and content updates for that season.

On monetization, we have been quite conservative with only very limited monetization content introduced at this stage as we focus on growing the user base. As a result, our baseline daily ARPU is still at a relatively low level. Having said that, whenever we push out a new event or a new update, we do see significant ARPU growth. This reiterates our belief that our users respond well to these content updates, and we will roll out more party game modes and home systems later this year, which we hope will be meaningful in driving daily ARPU.

In terms of longer-term potential and life cycle extension, we are focused on 3 things: first, keeping a rapid pace of content updates; second, gaining actual user growth across multiple platforms. We expect to launch WeChat mini-game version later this year, which could further expand our overall active user base; third, building our UGC ecosystem. We are currently working on the UGC editor, and we will keep upgrading these functions to give our users an enriched UGC experience within the game.

And our next questions come from Ritchie Sun from HSBC.

[Foreign Language] I want to ask about AI. So what has been the progress in terms of the AI, especially in AI live streaming, AI game tools and internal organizational improvement in terms of efficiency? What are the tangible results over there?

[Interpreted] Thank you for the question. So AI is something every company should think about. For us, it's about 2 things: one, is empowering our existing business; and two, exploring new opportunities. So for our existing business, both AI-powered live streaming channels and AI game tools continue to deliver very strong momentum. These AI-powered channels now contribute nearly 10% of our overall DAU and the performance continues to stand out across the platform.

On average, they outperformed their real life peers by 40% across key metrics such as viewing time, retention and attributed DAU. And that number goes up to 80% for the very best AI live streaming channels. This year, we'll continue to enhance content capabilities and operating efficiency of fully AI-powered live streaming channels and further increase their traffic contribution. AI game tools are also very promising. Last quarter, we launched Delta Force Map Tool, which provides a very rich, immersive 3D environment for players to quickly get familiar and better navigate the game. So we also launched this tool to the overseas market, and it was very well received by international users. It draw great attention from games official team and was recommended on many of the official community channels.

So as we continue to iterate our AI capabilities, we are working on applying AI-powered real-time navigation into this map tool this month, further expand user reach and engagement. Additionally, we are developing AI hardware and AI interactive products, including AI-enabled smart hardware based on Goose Goose Duck IP. At the same time, we're exploring different ways to integrate new technologies such as open call, multi-agent systems, virtual live streamers into party game scenarios to enhance interactivity and support more customized gameplay experiences for Goose Goose Duck. Going forward, we also plan to create more AI-driven companion tools for other popular titles such as Battle of Golden Spatula.

We will take our next question from Nelson Cheung from Citibank.

[Foreign Language] So let translate myself. Can management share your future strategy on your game publishing business, latest publishing pipeline and the release schedule? Can management share your view on the growth expectation for the game distribution business and overall contribution to the group revenue as a whole?

[Interpreted] The in-game publishing, we remain firmly committed to a content-driven strategy. The industry is rapidly shifting towards content-driven publishing, which fits very well with Huya's strength in live streaming, short-form video content and community engagement. Rather than relying mainly on traditional user acquisition, we're building a more integrated publishing model driven by content. Having publishing rights help us to better measure user conversion efficiency and build a scalable publishing capability.

From a pipeline perspective, we have a number of mini games and mobile games in the pipeline for the year. Most of them either have very strong content appeal or clear e-sports and entertainment potential. This is where Huya's strength in live streaming and e-sports content can be fully leveraged. We see game publishing as the most important driver of our growth as we continue to diversify beyond our traditional live streaming business. While we might have better visibility into revenue contribution after the games are launched, we do have a very strong conviction that our publishing business will be an important part of our revenue mix over time.

Our next question comes from Yiwen Zhang from China Renaisance.

[Foreign Language] So translating my question. The question is on margin. We note despite some net impact from provision impairment in Q4, there was not improvement on our gross profit margin during the quarter. So what is the management's view on future gross profit margin trend and the room for improvement?

[Interpreted] Full year 2025, our gross margin was 13.4%, up 0.1 percentage points year-over-year. In Q4 2025, gross margin, however, improved by 2.7 percentage points year-over-year, mainly driven by 2 factors: first, advertising accounted for a high percentage of total revenue and carries a relatively high gross margin; second, our in-game item business maintained very strong growth and also contributed positively to the margin improvement.

Looking ahead, while gross margin of our live streaming business might be facing a bit of pressure, the benefits from our higher-margin businesses are becoming much more visible as reflected in our fourth quarter performance. As game publishing and in-game item sales business continue to grow and as operating leverage gradually improve, we do -- we expect to see continued gross margin improvement.

We will take our last question today from Maggie Ye from CLSA.

[Foreign Language] My question is related to game virtual item sales. So beyond the top line growth this quarter, could management share any material progress regarding this segment's margin profile, channel mix and any exclusive partnership initiatives? And furthermore, how should we think about the sustainability of this growth and the potential for future margin expansion over the coming quarters?

[Interpreted] Thank you for the question. So overall, our in-game item business delivered a very solid quarter with a very strong growth and improved profitability. In the fourth quarter of 2025, revenue from in-game item sales continued to grow by over 200% year-over-year. As the business scaled, we also further optimized our cost structure, which then translated into meaningful improvement in earnings quality.

So there were 2 -- there were 3 key highlights during the quarter. First, we achieved a meaningful milestone in exclusive rights partnership. For the first time, we secured exclusive presale rights for Wang Zhaojun's FMVP skin in Honor of Kings. The launch generated close to RMB 10 million in gross billings within the first hour and drove very strong growth in new paying users, demonstrating our monetization capability.

Second, we continue to improve our channel mix. We expect more transactions to be completed in our proprietary in-game item more over time, which will further improve monetization efficiency. Third, we continue to work with some of the largest game companies in China, who are working on their key titles, including those from Tencent and NetEase. We hope to further expand our portfolio of games and make -- and continue to grow our presence in the industry. Thank you.

Thank you once again for joining us today. If you have further questions, please feel free to contact the Huya Investor Relations through the contact information provided on our website or Piacente Financial Communications. This concludes today's call, and we're looking forward to speaking to you again next quarter. Thank you.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

[Audio Gap]

Huya's press release contains a reconciliation of the unaudited non-GAAP measures to the unaudited most directly comparable GAAP measures.

With that, I'm pleased to turn the call over to our Co-CEO and SVP, Mr. Huang. Please go ahead.

Okay. Hello, everyone. Thank you for joining our earnings conference today. I'm pleased to report a solid third quarter. Total net revenues reached approximately RMB 1.7 billion, the highest level yet in the past 9 quarters with year-over-year growth accelerating to around 10%.

Non-GAAP operating profit was approximately RMB 6.3 million, representing a meaningful improvement over the same period last year. This encouraging performance was mainly driven by strong growth in game-related services, advertising and other revenues, while our live streaming revenues remained stable.

Revenues from game-related service, advertising and others have now surpassed 30% of total net revenues of the first time this quarter. Our platform ecosystem and user base remained resilient in the third quarter, with total MAUs stable at around 162 million.

The influence of our [ streamer ] ecosystem continues to expand as more top streamers are returning to Huya. And many of our streamers are also gaining recognition across other platforms, including WeChat channels, Douyin and [ Beiyang ].

Across all major competitive titles, including Honor of Kings, League of Legends, Delta Force and Peacekeeper Elite, our top-tier streamers consistently rank among the leading creators in their respective categories, in addition to our own products and app.

We estimate through our top creators, we are able to reach over 100 million users across other platforms, expanding our audience influence and monetization opportunities across the wider gaming and streaming landscape. This impact is reflected in our third quarter performance, where our game-related service, advertising and other segment grew 30% year-over-year, reaching RMB 532 million in revenue.

Within this segment, in-game item sales have become a significant growth driver as we deepen our collaboration with game developers, expand our SKU offerings and leverage the increasing synergy between our live streaming and gaming ecosystems. In-game item sales revenue grew by more than 200% year-over-year in the third quarter.

Partnerships with flagship titles in both China and abroad, including Peacekeeper Elite, League of Legends, Arena Breakout and PUBG Mobile delivered short-lived results. Looking ahead, we are confident that in-game item sales will maintain robust growth momentum as we continue to broaden partnerships and enhance operations.

In terms of game publishing, we are thrilled to announce the upcoming launch of our first title, Goose Goose Duck Mobile, a social deduction game centered on teamwork and strategic game play. The game has gone through its second round of testing throughout October with preregistration quickly surpassing 10 million during that period, leveraging our powerful streamer influence and stronger content-driven marketing capabilities.

In October, we created a live streaming variety show, [ A SIKA ZIYE ], which brought together top streamers from -- for a group gaming session.

The show attracted strong player engagement and brought market attention. We view Goose Goose Duck Mobile as a key step in our strategy to diversify into game publishing, an important milestone that will not only validate our publishing capabilities, but also position us for sustainable growth in this space.

As we continue to step up for our efforts in key areas, including in-game item sales, game publishing, advertising, we believe this segment will remain a sustainable driver of our revenue growth.

Let's move on to live streaming, where revenues increased by about 3% year-over-year, making our first quarter of positive year-over-year growth since the third quarter of 2021. Our content mix has become more balanced and vibrant with the outdoor live streaming category delivering solid gains in both viewing hours and monetization this quarter.

At the same time, we continue to enhance both our mobile and PC platform to ensure users enjoy a truly best-in-class live streaming and e-sports experience. Our latest update introduced a new short-form video hub and interactive 3D game map tool of Delta Force and other cool features.

The short-form video hub enables users to conveniently discover short clips from live streams directly within the Huya Live app, enhancing our content ecosystem and driving a notable increase in short video daily active users and time spent.

Meanwhile, the Delta Force map tool provide rich immersive 3D environment for Delta Force players to quickly get familiar and better navigate the game, attracting more hard-core players to our platform.

E-sport live streaming remains a crucial part of our content offering. We streamed nearly 100 licensed tournament and hosted around 40 self-produced events in the third quarter of 2025 during the recently concluded League of Legends World Championship, one of the most watched licensed e-sports events in China.

We have remained the top live streaming platform in terms of average concurrent users. Building on our fan base, we hosted the 2025 League of Legends Asia Invitational, the first ever LOL international professional tournament produced by a live streaming platform. This event was an important milestone for us, attracting massive viewership outside of China and significantly enhancing our international brand recognition.

We are also excited to announce that we will be hosting the Demacia Cup for League of Legends later this year. Again, we are privileged to be the first live streaming platform ever to be hosting this flagship official event for this game.

Additionally, we have a strong lineup of other highly anticipated e-sports tournament that we will be hosting, including the Delta Force Diamond Champions autumn season following the success we had in the summer.

On the international expansion front, our user base continued to grow steadily during the quarter through our overseas platforms. We are deepening our presence in key geographic market by focusing on user experience and the content ecosystem to enhance engagement and retention.

We have also built closer partnership with popular game partners and diversified monetization strategy, driving sustainable growth and improving profitability.

To sum up, we made solid progress expanding our content ecosystem, unlocked new monetization opportunities and advanced our emerging business models in a disciplined and sustainable manner.

Looking ahead, we will remain focused on long-term development, deepening collaboration with partners, improving monetization efficiency and product experience, strengthening our content and technology capabilities and steadily expanding internationally to deliver sustainable, high-quality growth.

With that, I will now turn the call over to our Acting Co-CEO and CFO, Raymond Lei. He will share more details on our results. Raymond, please go ahead.

Thank you, Vincent, and hello, everyone. I'll start with an overview of our financial performance.

Our total net revenues for the third quarter reached approximately RMB 1.69 billion, increasing 10% year-over-year. Of this, live streaming revenues has resumed growth at 3% year-over-year to RMB 1.16 billion and game-related services, advertising and other revenues grew around 30% year-over-year to RMB 532 million, accounting for 31.5% of total net revenues.

We also achieved a non-GAAP operating income of RMB 6.3 million, another quarter of solid improvement since we first broke even at operating level last quarter. Furthermore, we still achieved a positive net income for the quarter with non-GAAP net income of RMB 36 million despite a substantial decrease in interest income compared with previous periods, primarily due to special dividends paid out.

Let's move on to more details of our Q3 financial results. Live streaming revenues were RMB 1.16 billion for Q3, up 3% from the same period last year, primarily due to the improvement of average spending per paying user for live streaming services.

The number of the domestic paying users remained stable at 4.4 million in the third quarter. This figure excludes users who made in-game purchases through our game distribution business but didn't pay via our platform or related services as well as overseas paying users.

Game-related services, advertising and other revenues were RMB 532 million for Q3, up 30% from the same period last year. The increase was primarily due to higher revenues from game-related services and advertising, which were mainly attributable to our deepened cooperation with game companies in China and abroad.

Cost of revenues increased by 10% to RMB 1.46 billion for Q3, primarily due to increased revenue sharing fees and content costs as well as cost of in-game items. Within this, revenue sharing fees and content costs rose by 8% year-over-year to RMB 1.26 billion, reflecting growth in our top line.

Gross profit was RMB 227 million for Q3, up 11% from the same period last year. Gross margin was 13.4% for Q3, also an improvement from 13.2% from the same period last year.

Excluding share-based compensation expenses, non-GAAP gross profit was RMB 228 million and the non-GAAP gross margin was 30.5% for Q3.

Research and development expenses decreased by 3% year-over-year to RMB 122 million for Q3, primarily due to decreased staff costs as a result of enhanced efficiency. Sales and marketing expenses decreased by 4% year-over-year to RMB 70 million for Q3, primarily due to decreased channel promotion fees.

General and administrative expenses increased by 15% year-over-year to RMB 58 million for Q3, primarily due to increased professional service fees and staff costs. Other income was RMB 9 million for Q3 compared with RMB 13 million for the same period last year, primarily due to lower government subsidies.

As a result, operating loss narrowed significantly to RMB 14 million for Q3 compared with a loss of RMB 32 million for the same period last year. Excluding share-based compensation expenses and amortization of intangible assets from business acquisitions, non-GAAP operating income reached RMB 6 million for Q3, a meaningful improvement from non-GAAP operating loss of RMB 13 million in the same period last year.

Interest income was RMB 35 million for Q3, reduced from RMB 97 million for the same period last year, primarily due to a lower time deposit balance as a result of the special cash dividends paid. Net income attributable to HUYA Inc. was RMB 10 million for Q3 compared with RMB 24 million for the same period last year.

Excluding share-based compensation expenses, gain arising from disposal of an equity investment, net of income taxes, impairment loss of investments and amortization of intangible assets from business acquisitions, net of income taxes, non-GAAP net income attributable to HUYA Inc. was RMB 36 million for Q3 compared with RMB 78 million for the same period last year.

The decrease was mainly due to the lower interest income as explained earlier.

Diluted net income per ADS was approximately RMB 0.04 for Q3. Non-GAAP diluted net income per ADS was RMB 0.60 for Q3. As of September 30, 2025, the company had cash and cash equivalents, short-term deposits and long-term deposits of RMB 3.83 billion compared with RMB 3.77 billion as of June 30, 2025.

With that, I'd like to open the call to your questions.

[Operator Instructions] Today's first question comes from Rebecca Xu from Morgan Stanley.

[Foreign Language] My question is regarding the in-game item sales business. Could you please share some color on the updates from the past quarter as well as the future outlook for this segment?

[Interpreted] This quarter, in-game item sales continued to scale rapidly, supported by our strong live streaming ecosystem and deeper partnerships with flagship titles, including Honor of Kings, Peacekeeper Elite, League of Legends, Arena Breakout and PUBG Mobile.

With broader SKU offerings and more engaging in-game events, in-game item sales revenue grew over 200% year-over-year in the third quarter, giving our users a much wider and more compelling selection on our platform.

So looking ahead, our focus is threefold. Number one is to further enrich item categories in existing titles. And secondly, to expand into additional game partnerships to diversify our portfolio. And third one is to improve our storefront and merchandising systems, enhancing overall purchase experience, making it easier for our users to discover and buy our items.

As collaboration expands and our operating model continues to mature, we expect in-game item sales to deliver sustainable, healthy and high-quality growth.

And our next questions come from Maggie Ye from CLSA.

This is regarding company's overall revenue growth. Firstly, live stream revenue has resumed positive year-over-year growth this quarter. So could you share your views on the segment growth going forward?

And secondly, for the non-live stream business, which now accounting for over 30% of total revenue, what is your expectation on this segment future growth going forward? And what will be the primary growth driver?

[Interpreted] So we saw promising performance from both our live streaming business and our game-related services. Live streaming revenue has returned to growth for the first time since Q3 2021. Our game-related services, advertising and other revenues, on the other hand, grew 30% year-over-year to RMB 530 million, now accounting for over 31.5% of the total net revenues.

The growth was driven in large part by very strong in-game item sales this quarter. So we expect live streaming revenues to remain stable into the fourth quarter, while non-live streaming businesses should continue growing at a very strong pace, potentially accelerating further due to in-game item sales expansion and other deeper game collaborations.

Looking ahead to 2026, we expect overall revenue growth to accelerate versus 2025. Live streaming should remain stable, while game-related services, advertising and others continue to drive the majority of our growth.

And our next questions comes from Ritchie Sun from HSBC.

[Foreign Language] So I would like to ask about the publishing of Goose Goose Duck and overall the game publishing business. So what is our strategy as well as outlook going forward?

[Interpreted] So maybe I'll start by giving you an overview of our publishing strategy. Over the years, we have built a very robust content creator e-sports ecosystem with roughly 162 million MAUs on the platform in the third quarter.

On top of that, in addition to our own apps and products, we estimate through our top creators outside of our platforms we are able to reach another 100 million-plus users across other platforms and this gives us a natural advantage in game publishing.

The mobile version of Goose Goose Duck is our very first full-fledged publishing effort. The game has gone through a second round of testing throughout October with preregistrations quickly surpassing 10 million during that period. We expect the game to be ready for launch pretty soon.

Now for this game specifically, we created a dedicated live streaming variety show, A SIKA ZIYE, which brought together top streamers for group gaming session, helping boost social buzz and community engagement. This project serves as an important milestone in validating our publishing playbook and execution, laying the foundation for titles to come.

Going forward, we will continue to follow a content-driven publishing strategy. We rely on our stream of network, short-form media reach and e-sports presence to focus on titles that work well in live streaming and interactive settings. This allow us to bring more high-quality games to players and drive sustainable growth in this business.

We will take next question from Nelson Cheung from Citi.

[Foreign Language] With the solid momentum of Delta Force launch this year, we also observed a lot of like collaboration between Huya and this title. Maybe have management to elaborate more on their ongoing partnership.

[Interpreted] Our focus on Delta Force is about building a vibrant community engagement and a sophisticated e-sports tournament ecosystem for that game. As part of community engagement effort, we launched Delta Force Map tool recently, which provides rich immersive 3D environments for players to quickly get -- to get familiar and better navigate the game, attracting more hard-core players to our platform.

Over time, it will serve as a new entry point for value-added services, helping us to build a more complete ecosystem around that game.

On e-sports side, we host the first [ EDC ] Diamond Championship in July for Delta Force, which was a great success. Building on that, we'll be hosting the second season in the coming months, gradually building a consistent structured e-sports presence around that game.

So now we will take our last question from [ Wei ] from CICC.

[Foreign Language] My question is on the new business. Can you break down their financial impact in our profitability? And how should we think about the trend for our profit of this going forward?

[Interpreted] Our gross margin remained stable this quarter as we further scale and expand our game-related services and optimization of cost structures, we expect to see gradual margin improvement over time. This quarter, our gross profit actually grew over RMB 23 million, which is 11% year-over-year, which led to further improvement at operating level.

Thank you. Thank you once again for joining us today. If you have further questions, please feel free to contact Huya's Investor Relations through the contact information provided on our website or Piacente Financial Communications.

This concludes today's call, and we look forward to speaking to you again next quarter. Thank you.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]