Huya (HUYA 18.85, +0.35, +1.89%), which was spun off from YY Inc. (YY 61.00, -0.07, -0.11%) in an IPO this past May, was trading higher after reporting Q3 results late last night. This was HUYA's third report as a public company.
HUYA is a game live streaming platform in China that serves a large and active game live streaming community. The company has cooperated with e-sports event organizers, as well as major game developers and publishers, to foster an online space for gaming and e-sports players and their audiences. Live streaming of e-sports, now a mainstream entertainment option in China, has developed into one of the most popular content genres on its platform. HUYA has the largest and most active game live streaming community in terms of average MAUs and average daily time spent on mobile app per mobile active user. Its live streaming content covers more than 2,600 different games, including mobile, PC, and console games.
With game streaming strength providing a sturdy foundation, HUYA has also branched into broadcasting other entertainment genres, such as talent shows, anime, style tips presented by popular anchors, and outdoor activities, from fitness content to videos of street interactions.
Turning to the Q3 results, non-GAAP income per ADS rose to US$0.08 from a loss last year. Revenue jumped 118.1% year/year to US$185.9 mln. Live streaming revenue makes up the bulk of its revenue, and that increased 120.2% year/year to US$177.1 mln, primarily due to the increase in spending per paying user and the increase in the number of paying users on Huya's platform. Advertising and other revenue increased by 92.9% to US$8.8 mln.
In terms of operating metrics, average mobile MAUs in Q3 reached 49.4 mln, up 28.2% year/year. Average MAUs reached 99.0 mln, up 14.6% year/year. Total number of paying users reached 4.2 mln, up 37.8% year/year. In particular, HUYA's focus on mobile MAUs is paying off. Also, HUYA has decided focus aggressively on e-sports, and it's going well as the company broadcasted a larger number of major tournaments and self-organized e-sports events. Also, HUYA achieved record high viewership driven by the popularity of e-sports.
It's understandably difficult for US investors to be familiar with Chinese gaming platforms. All of them seem to have big growth numbers, so you have to treat them carefully. The stock has been on a pretty hefty downtrend since briefly trading above $50 in mid-June. It's now in the $19 area, although it's up around 5% today on the Q3 results. We view a lot of these Chinese gaming stocks as more on the speculative side and would be cautious about buying them if you're a longer term investor. They can be quite volatile, and while e-sports is popular now, gaming trends in China can change pretty rapidly.