HUYA Inc. Reports First Quarter 2019 Unaudited Financial Results

GUANGZHOU,China,May 17,2019 -- HUYA Inc. ("Huya" or the "Company") (NYSE: HUYA),a leading game live streaming platform in China,today announced its unaudited financial results for the first quarter ended March 31,2019.

First Quarter 2019 Highlights

Total net revenues for the first quarter of 2019 increased by 93.4% to RMB1,631.5 million (US$243.1 million),from RMB843.6 million in the same period of 2018.

Net income attributable to Huya was RMB63.5 million (US$9.5 million) for the first quarter of 2019,representing an increase of 102.1% from RMB31.4 million in the same period of 2018.

Non-GAAP net income attributable to Huya[1] was RMB131.3 million (US$19.6 million) for the first quarter of 2019,representing an increase of 94.1% from RMB67.6 million in the same period of 2018.

Average mobile MAUs[2] in the first quarter of 2019 reached 53.9 million,representing an increase of 29.8% from 41.5 million in the first quarter of 2018.

Average MAUs[3] in the first quarter of 2019 reached 123.8 million,representing an increase of 33.3% from 92.9 million in the first quarter of 2018.

Total number of paying users[4] in the first quarter of 2019 reached 5.4 million,representing an increase of 57.4% from 3.4 million in the first quarter of 2018.

Mr. Rongjie Dong,Chief Executive Officer of Huya,commented,"We are pleased to deliver another record-setting quarter as our business continued the strong momentum from last year. Our overall traffic increased to record high levels. Notably,we are benefitting from our mobile strategy with promising results as Huya mobile MAUs in the first quarter of 2019 maintained a fast-growing pace,up 29.8% year-over-year and 6.3% quarter-over-quarter. We achieved year-over-year revenue growth of 93.4% to over RMB1.63 billion in this quarter,further demonstrating our strong growth trajectory. With a sustainable business roadmap in-hand,we will execute aggressively on our monetization capabilities across multiple fronts to fortify our leadership in China's game live streaming industry. By deploying new technologies and entering into new overseas markets,we believe we are well positioned to extend our business territories and achieve sustainable growth in the long term."

Mr. Henry Sha,Chief Financial Officer of Huya,"The solid execution of our strategies is evidenced by our financial and operational performance this quarter. In particular,the year-over-year revenue growth exceeded the high end of our guidance range for the fourth consecutive quarter since our IPO. Benefiting from optimized efficiency in bandwidth utilization and operations,non-GAAP gross margin further improved to 17.0% in the first quarter of 2019 from 15.6% in the first quarter of 2018,and from 16.1% in the fourth quarter of 2018. While maintaining investment to expand our competitive advantages,we are promoting our monetization strength to enhance profitability,achieving a 94.1% year-over-year increase in our non-GAAP net income to RMB131.3 million for this quarter. Our commercialization capability and strong cash position set a solid financial foundation,which we believe will support a larger Huya platform to expand our market share and accomplish our long-term goals together with our content ecosystem partners."

[1]

"Non-GAAP net income attributable to Huya" is defined as net income attributable to Huya before share-based compensation expenses,fair value loss on derivative liabilities,and loss on fair value change of investments and equity investee's investments. For more information,refer to "Use of Non-GAAP Financial Measures" and "Reconciliations of GAAP and Non-GAAP Results" at the end of this press release.

[2]

Refers to average monthly active users on the Huya Live mobile app. Average mobile MAU for any period is calculated by dividing (i) the sum of our active users on our Huya Live mobile app for each month of such period,by (ii) the number of months in such period.

[3]

Refers to average monthly active users on Huya's platform. Average MAU for any period is calculated by dividing (i) the sum of active users for each month of such period,by (ii) the number of months in such period.

[4]

Refers to a registered user that has purchased virtual items on Huya's platform at least once during the period presented.

First Quarter 2019 Financial Results

Total net revenues for the first quarter of 2019 increased by 93.4% to RMB1,from RMB843.6 million in the same period of 2018.

Live streaming revenues increased by 95.8% to RMB1,552.5 million (US$231.3 million) in the first quarter of 2019,from RMB792.8 million in the same period of 2018,primarily due to the increases in both the number of paying users on Huya's platform and average spending per paying user. The increase in the number of paying users was primarily driven by the Company's mobile strategy,diversification of content offerings and continued efforts in converting active users into paying users.

Advertising and other revenues increased by 55.5% to RMB79.0 million (US$11.8 million) in the first quarter of 2019,from RMB50.8 million in the same period of 2018. This increase was primarily driven by increased demand from gaming advertisers and further recognition of Huya's brand name in China's online advertising market.

Cost of revenues increased by 90.6% to RMB1,358.1 million (US$202.4 million) in the first quarter of 2019 from RMB712.5 million in the same period of 2018,primarily attributable to the increase in revenue sharing fees and content costs,as well as bandwidth costs.

Revenue sharing fees and content costs increased by 116.7% to RMB1,113.1 million (US$165.9 million) in the first quarter of 2019 from RMB513.6 million in the same period of 2018,primarily due to the increase in virtual item revenue sharing,which was in line with the Company's live streaming revenue growth,and continued spending in e-sports content and content creators in both domestic and overseas markets.

Bandwidth costs increased by 8.3% to RMB169.0 million (US$25.2 million) in the first quarter of 2019 from RMB156.1 million in same period of 2018,primarily due to an increase in bandwidth usage as a result of increased user base on Huya's platform and enhanced live streaming video quality improvement,partially offset by improved efficiency in bandwidth utilization through continued deployment of new technologies in content distribution.

Gross profit increased by 108.6% to RMB273.4 million (US$40.7 million) in the first quarter of 2019 from RMB131.0 million in the same period of 2018. Gross margin increased to 16.8% in the first quarter of 2019 from 15.5% in the same period of 2018,primarily due to Huya's enhanced monetization efforts,technology innovation on bandwidth utilization and continued leverage on economies of scale.

Research and development expenses increased by 75.0% to RMB90.0 million (US$13.4 million) for the first quarter of 2019 from RMB51.5 million for the first quarter of 2018,mainly attributable to the increase in headcount of research and development personnel and share-based compensation expenses related to the share awards granted in 2018.

Sales and marketing expenses increased by 201.3% to RMB78.2 million (US$11.6 million) for the first quarter of 2019 from RMB25.9 million for the first quarter of 2018,mainly attributable to the increase of marketing and promotion expenses due to cooperation with various marketing channels in both domestic and overseas markets,as well as enhanced efforts in promoting Huya's brand awareness and e-sports content,and the increase in headcount of sales and marketing personnel.

General and administrative expenses increased by 139.8% to RMB85.8 million (US$12.8 million) for the first quarter of 2019 from RMB35.8 million for the first quarter of 2018,mainly due to the increase in share-based compensation expenses related to the share awards granted in 2018,as well as the increase in headcount of management personnel.

Operating income was RMB28.2 million (US$4.2 million) for the first quarter of 2019,increasing by 0.2% from RMB28.2 million in the same period of 2018.

Non-GAAP operating income,which excludes share-based compensation expenses,increased by 82.9% to RMB96.0 million (US$14.3 million) for the first quarter of 2019 from RMB52.5 million in the same period of 2018.

Income tax expenses were RMB19.0 million (US$2.8 million) for the first quarter of 2019,compared with income tax benefits of RMB4.5 million in the same period of 2018.

Net income attributable to HUYA Inc. increased by 102.1% to RMB63.5 million (US$9.5 million) for the first quarter of 2019 from RMB31.4 million in the same period of 2018.

Non-GAAP net income attributable to HUYA Inc. in the first quarter of 2019,increased by 94.1% to RMB131.3 million (US$19.6 million),from RMB67.6 million in the same period of 2018.

Diluted net income per American Depositary Share ("ADS") was RMB0.29 (US$0.04) for the first quarter of 2019,compared with diluted net loss per ADS of RMB4.96 for the same period of 2018.

Non-GAAP diluted net income per ADS was RMB0.59 (US$0.09) for the first quarter of 2019,compared with RMB0.35 for the same period of 2018.

Balance Sheets and Cash Flows

As of March 31,2019,the Company had cash and cash equivalents,short-term deposits and short-term investments of RMB6,329.1 million (US$943.1 million). Net cash provided by operating activities was RMB501.7 million (US$74.7 million) for the first quarter of 2019,compared with net cash provided by operating activities of RMB182.4 million in the same period of 2018.

Recent Development

In April 2019,the Company successfully completed a registered follow-on public offering of 13,600,000 ADSs by the Company and of 4,800,000 ADSs by a selling shareholder. The Company raised approximately US$313.8 million in net proceeds after deducting underwriting commissions and the offering expenses payable.

Immediately after the completion of this follow-on public offering,the Company had a total of 218,031,058 ordinary shares (including 63,673,737 Class A ordinary shares and 154,357,321 Class B ordinary shares) issued and outstanding. Each ADS represents one Class A ordinary share.

Business Outlook

For the second quarter of 2019,Huya currently expects total net revenues to be in the range of RMB1,730 million to RMB1,790 million,representing a year-over-year growth of between 66.6% and 72.4%. This forecast reflects our current and preliminary views on the market and operational conditions,which are subject to change.

Conference Call

The Company's management will host an earnings conference call at 9:00 p.m. U.S. Eastern Time on May 16,2019 (9:00 a.m. Beijing/Hong Kong time on May 17,2019).

Dial-in details for the earnings conference call are as follows:

United States:

+1-845-675-0437

International:

+65-6713-5090

Hong Kong:

+852-3018-6771

China:

400-620-8038

Conference ID:

7536389

Participants should dial-in at least 10 minutes before the scheduled start time and ask to be connected to the call for "HUYA Inc" with the Conference ID as set forth above.

Additionally,a live and archived webcast of the conference call will be available on the Company's investor relations website at http://ir.huya.com.

A replay of the conference call will be accessible approximately two hours after the conclusion of the live call until May 23,by dialing the following telephone numbers:

United States:

+1 646-254-3697

International:

+61-2-8199-0299

Hong Kong:

+852-3051-2780

China:

400-632-2162

Replay Access Code:

7536389

About HUYA Inc.

HUYA Inc. is a leading game live streaming platform in China with a large and active game live streaming community. The Company cooperates with e-sports event organizers,as well as major game developers and publishers,and has developed e-sports live streaming as one of the most popular content genres on its platform. The Company has created an engaged,interactive and immersive community for game enthusiasts of China's young generation. Building on its success in game live streaming,Huya has also extended its content to other entertainment content genres. Huya's open platform also functions as a marketplace for broadcasters and talent agencies to congregate and closely collaborate with the Company.

Use of Non-GAAP Financial Measures

The unaudited condensed consolidated financial information is prepared in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP"),except that the consolidated statement of changes in shareholders' equity,consolidated statements of cash flows,and the detailed notes have not been presented. Huya uses non-GAAP gross profit,non-GAAP operating income,non-GAAP net income attributable to HUYA Inc.,non-GAAP net income attributable to ordinary shareholders,and non-GAAP basic and diluted net income per ADS,which are non-GAAP financial measures. Non-GAAP gross profit is gross profit excluding share-based compensation expenses allocated in cost of revenues. Non-GAAP operating income is operating income excluding share-based compensation expenses. Non-GAAP net income attributable to HUYA Inc. is net income attributable to HUYA Inc. excluding share-based compensation expenses,fair value loss on derivative liabilities and loss on fair value change of investments and equity investee's investments. Non-GAAP net income attributable to ordinary shareholders is net income attributable to ordinary shareholders excluding share-based compensation expenses,loss on fair value change of investments and equity investee's investments and deemed dividend to Series A redeemable convertible preferred shareholders. Non-GAAP basic and diluted net income per ADS is non-GAAP net income attributable to ordinary shareholders divided by weighted average number of ordinary shares used in the calculation of non-GAAP basic and diluted net income per ADS. The Company believes that separate analysis and exclusion of the non-cash impact of (i) share-based compensation expenses,(ii) fair value loss on derivative liabilities,(iii) loss on fair value change of investments and equity investee's investments and (iv) deemed dividend to Series A redeemable convertible preferred shareholders adds clarity to the constituent parts of its performance. The Company reviews these non-GAAP financial measures together with GAAP financial measures to obtain a better understanding of its operating performance. It uses the non-GAAP financial measure for planning,forecasting and measuring results against the forecast. The Company believes that non-GAAP financial measure is useful supplemental information for investors and analysts to assess its operating performance without the non-cash effect of (i) share-based compensation expenses,which have been and will continue to be significant recurring expenses in its business,(ii) fair value loss on derivative liabilities and deemed dividend to Series A redeemable convertible preferred shareholders,which may not recur in the future,and (iii) loss on fair value change of investments and equity investee's investments,which may recur when there is observable price change in the future. However,the use of non-GAAP financial measures has material limitations as an analytical tool. One of the limitations of using non-GAAP financial measures is that they do not include all items that impact the Company's net (loss) income for the period. In addition,because non-GAAP financial measures are not measured in the same manner by all companies,they may not be comparable to other similar titled measures used by other companies. In light of the foregoing limitations,you should not consider non-GAAP financial measure in isolation from or as an alternative to the financial measure prepared in accordance with U.S. GAAP.

The presentation of these non-GAAP financial measures is not intended to be considered in isolation from,or as a substitute for,the financial information prepared and presented in accordance with U.S. GAAP. For more information on these non-GAAP financial measures,please see the table captioned "HUYA Inc. Reconciliations of GAAP and Non-GAAP Results" near the end of this release.

Exchange Rate Information

This announcement contains translations of certain RMB amounts into U.S. dollars at a specified rate solely for the convenience of the reader. Unless otherwise noted,all translations from RMB to U.S. dollars are made at a rate of RMB 6.7112 to US$1.00,the rate in effect as of March 29,2019 as certified for customs purposes by the Federal Reserve Bank of New York.

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Among other things,the business outlook and quotations from management in this announcement,as well as Huya's strategic and operational plans,contain forward-looking statements. Huya may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission ("SEC"),in its annual report to shareholders,in press releases and other written materials and in oral statements made by its officers,directors or employees to third parties. Statements that are not historical facts,including statements about Huya's beliefs and expectations,are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement,including but not limited to the following: Huya's goals and strategies; Huya's future business development,results of operations and financial condition; the expected growth of the game live streaming market the expectation regarding the rate at which to gain active users,especially paying users; Huya's ability to monetize the user base; fluctuations in general economic and business conditions in China and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in Huya's filings with the SEC. All information provided in this press release and in the attachments is as of the date of this press release,and Huya does not undertake any obligation to update any forward-looking statement,except as required under applicable law.

For investor and media inquiries,please contact:

In China:

HUYA Inc.

Investor Relations

Tel: +86-20-8212-0509

E-mail: ir@huya.com

The Piacente Group,Inc.

Ross Warner

Tel: +86-10-5730-6202

E-mail: huya@tpg-ir.com

In the United States:

The Piacente Group,Inc.

Brandi Piacente

Tel: +1-212-481-2050

E-mail: huya@tpg-ir.com

HUYA INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(All amounts in thousands,except share,ADS,per share data and per ADS data)

As of

December 31,

As of

March 31,

2018

2019

2019

RMB

RMB

US$

Assets

Current assets

Cash and cash equivalents

709,019

1,983,258

295,515

Short-term deposits

4,825

3,707,121

552,378

Short-term investments

300,162

638,691

95,168

Accounts receivable,net

43,849

70,446

10,497

Amounts due from related parties

238,839

148,894

22,186

Prepayments and other current assets

319,493

232,155

34,592

Total current assets

6,595,187

6,780,565

1,010,336

Non-current assets

Deferred tax assets

30,945

34,710

5,172

Investments

219,827

328,570

48,958

Property and equipment,net

87,419

101,528

15,128

Intangible assets,net

51,979

48,433

7,217

Right-of-use assets,net1

-

87,510

13,039

Prepayments and other non-current assets

120,830

100,444

14,967

Total non-current assets

511,000

701,195

104,481

Total assets

7,106,187

7,481,760

1,114,817

Liabilities and shareholders' equity

Current liabilities

Accounts payable

9,221

19,619

2,923

Deferred revenue

469,378

599,672

89,354

Advances from customers

14,403

8,735

1,302

Income taxes payable

-

22,733

3,387

Accrued liabilities and other current liabilities

852,771

862,404

128,504

Amounts due to related parties

34,673

73,179

10,904

Lease liabilities due within one year[1]

-

20,947

3,121

Total current liabilities

1,380,446

1,607,289

239,495

Non-current liabilities

Lease liabilities[1]

-

66,856

9,962

Deferred revenue

80,734

115,013

17,137

Total non-current liabilities

80,734

181,869

27,099

Total liabilities

1,461,180

1,789,158

266,594

Shareholders' equity

Class A ordinary shares (US$0.0001 par value; 750,000,000 shares authorized as of December 31,2018 and March 31,respectively; 44,639,737 and 45,273,737 shares issued and outstanding as of December 31,respectively)

29

30

4

Class B ordinary shares (US$0.0001 par value; 200,respectively; 159,157,321 shares issued and outstanding as of December 31,respectively)

104

104

15

Additional paid-in capital

7,667,855

7,746,363

1,154,244

Statutory reserves

34,634

34,634

5,161

Accumulated deficit

(2,424,182)

(2,360,722)

(351,759)

Accumulated other comprehensive income

366,567

272,193

40,558

Total shareholders' equity

5,645,007

5,692,602

848,223

Total liabilities and shareholders' equity

7,817

[1] The Company has adopted ASU No. 2016-02 ''Leases" beginning January 1,2019 using the optional transition method. The only major impact of the standard is that assets and liabilities amounting to RMB92.1 million and RMB91.7 million,respectively,are recognized beginning January 1,2019 for leased office space with terms of more than 12 months.

HUYA INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(All amounts in thousands,per share data and per ADS data)

Three Months Ended

March 31,

2018

December 31,

2018

March 31,

2019

March 31,

2019

RMB

RMB

RMB

US$

Net revenues

Live streaming

792,784

1,441,782

1,552,482

231,327

Advertising and others

50,798

63,147

78,996

11,771

Total net revenues

843,582

1,504,929

1,631,478

243,098

Cost of revenues(1)

(712,533)

(1,266,292)

(1,358,105)

(202,364)

Gross profit

131,049

238,637

273,373

40,734

Operating expenses(1)

Research and development expenses

(51,458)

(79,105)

(90,044)

(13,417)

Sales and marketing expenses

(25,940)

(59,883)

(78,164)

(11,647)

General and administrative expenses

(35,783)

(92,253)

(85,811)

(12,786)

Total operating expenses

(113,181)

(231,241)

(254,019)

(37,850)

Other income

10,283

11,124

8,864

1,321

Operating income

28,151

18,520

28,218

4,205

Interest and short-term investments income

10,584

52,703

54,585

8,133

Fair value loss on derivative liabilities

(11,868)

-

-

-

Foreign currency exchange losses,net

-

(47)

(374)

(56)

Income before income tax benefits(expenses)

26,867

71,176

82,429

12,282

Income tax benefits (expenses)

4,464

31,847

(18,968)

(2,826)

Income before share of income (loss) in equity method investments,net of income taxes

31,331

103,023

63,461

9,456

Share of income (loss) in equity method investments,net of income taxes

76

(3,444)

(1)

-

Net income attributable to HUYA Inc.

31,407

99,579

63,460

9,456

Accretion to Preferred Shares redemption value

(30,581)

-

-

-

Deemed dividend to Series A Preferred Shareholders

(496,995)

-

-

-

Net (loss) income attributable to ordinary shareholders

(496,169)

99,456

HUYA INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(All amounts in thousands,per share data and per ADS data)

Three Months Ended

March 31,

December 31,

March 31,

2018

2018

2019

2019

RMB

RMB

RMB

US$

Net (loss) income per ADS*

Basic

(4.96)

0.49

0.31

0.05

Diluted

(4.96)

0.45

0.29

0.04

Net (loss) income per ordinary share

Basic

(4.96)

0.49

0.31

0.05

Diluted

(4.96)

0.45

0.29

0.04

Weighted average number of ADS used in calculating net (loss) income per ADS

—Basic

100,000

203,797,819

203,923,069

203,069

—Diluted

100,000

220,209,738

221,440,050

221,050

* Each ADS represents one Class A ordinary share.

(1) Share-based compensation was allocated in cost of revenues and operating expenses as follows:

Three Months Ended

March 31,

2018

2018

2019

2019

RMB

RMB

RMB

US$

Cost of revenues

255

3,662

4,020

599

Research and development expenses

1,790

11,399

11,824

1,762

Sales and marketing expenses

418

607

904

135

General and administrative expenses

21,904

48,327

51,078

7,611

HUYA INC.

Reconciliations of GAAP And Non-GAAP Results

All amounts in thousands,

2019

RMB

RMB

RMB

US$

Gross profit

131,734

Share-based compensation expenses allocated in cost of revenues

255

3,662

4,020

599

Non-GAAP gross profit

131,304

242,299

277,393

41,333

Operating income

28,205

Share-based compensation expenses

24,367

63,995

67,826

10,107

Non-GAAP operating income

52,518

82,515

96,044

14,312

Net income attributable to HUYA Inc.

31,456

Loss on fair value change of investments and equity investee's investments

-

3,333

-

-

Fair value loss on derivative liabilities

11,868

-

-

-

Share-based compensation expenses

24,107

Non-GAAP net income attributable to HUYA Inc.

67,642

166,907

131,286

19,563

Net (loss) income attributable to ordinary shareholders

(496,107

Deemed dividend to Series A Preferred Shareholders

496,995

-

-

-

Non-GAAP net income attributable to ordinary shareholders

37,061

166,563

Non-GAAP net income per ordinary share

Basic

0.37

0.82

0.64

0.10

Diluted

0.35

0.76

0.59

0.09

Non-GAAP net income per ADS

Basic

0.37

0.82

0.64

0.10

Diluted

0.35

0.76

0.59

0.09

Weighted average number of ADS used in calculating Non-GAAP net income per ADS

—Basic

100,000

203,819

203,069

203,069

—Diluted

105,381,605

220,738

221,050

221,050

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