Good day and good evening, and thank you for standing bye. Welcome to Huya's Second Quarter 2024 Earnings Webinar. I am Hanyu Liu from Huya's 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 in a few hours. Participants of management on today's call will be Mr. Junhong Huang, Acting Co-CEO and Senior Vice President of Huya; and Ms. Ashley Xin Wu, Acting Co-CEO and Vice President of Finance. 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 US 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 prospectus and other public filings as filed with the US 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 our Co-CEO and SVP, Mr. Huang. Please go ahead.

Okay. Hello, everyone. Thank you for joining our earning conference today, Against the backdrop of persistent uncertainty in the macro environment and industry landscape, we were pleased to resume quarter-over-quarter growth in total net revenues in the second quarter, up 2.5% from the previous quarter to reach RMB1.54 billion, driven by the rapid revenue growth of our game-related services, advertising and other businesses. Notably, game-related services, advertising and other revenues reached a milestone, contributing 20% of our total net revenues for the first time. We also sustained our profitability, with non-GAAP net income of approximately RMB97 million. Solid strategic execution across business and commercialization transformation, content and platform ecology upgrades, and technology and product advancement supported this quarter's positive outcomes. Now, let's take a detailed look at our recent operational and strategic progress. First, some user metrics for the second quarter of 2024. Huya Live's average mobile MAUs reached 82.5 million -- 83.5 million, up from 82.6 million for the previous quarter and 82.9 million for the same period last year. The growth was mainly driven by the success of several self-organized e-sports events. Various recent new game launches and our continuous user experience improvement also contributed to enhanced user engagement. As we mentioned on our last call, we are strengthening our cooperation with various platforms and products to enhance our platform ecology and reach a wider range of users. This includes professionally-generated content co-production, broadcaster across platform streaming and joint promotion in niche initiatives. As a barrier-breaking industry pioneer, we believe we can further increase the Huya platform's influence within this more open content ecosystem. We have already started to selectively bring our live streaming and video content to other content platform as well as various product line within the Tencent ecosystem. In June, Huya content reached a total…

Thank you, Vincent, and hello, everyone. I'll start with an update on our professional content enrichment. In terms of licensed content, we broadcasted over 80 licensed professional esports tournaments in the second quarter of 2024. The LoL Mid-Season Invitational attracted great attention, and the LPL, KPL, and CFPL professional leagues remain among our most popular events. The VALORANT Champions [indiscernible] and ESL Pro League Season 19 for Counter-Strike 2 were also welcomed by our users. In addition to covering extensive leading licensed e-sports events in China, we are expanding the range of international e-sports content available on our platform. For instance, we are broadcasting the inaugural Esports World Cup in Saudi Arabia starting in July, further enriching our high-quality e-sports content library. On the in-house content front, we broadcasted over 20 self-organized e-sports tournaments and entertainment PGC shows during the quarter. In addition to the LoL Legend Cup and the Yijing Daoudi program that we mentioned earlier, we also co-hosted the first Thunder Honor Cup for Honor of Kings with another game live-streaming platform in the second quarter. This event brought together professional teams from KPL to participate, capture massive viewer attention and demonstrated Huya's increased cooperation with other game players, with other industry players in professional content co-creation. For e-sports events targeting community participation, we successfully hosted the Lianghe village game for Honor of Kings, in the Shandong village game for Peacekeeper Elite in the second quarter. By combining these e-sports event with local cultural elements, such as traditional costume and food themes, we brought more immersive cultural experiences to a broader audience, while also promoting e-sports popularity. Furthermore, we held our Annual Gala event, HUYA Boom Night, in April to recognize and reward our broadcasters. The year's event featured on-stage performances by renowned singers and our popular streamers,…

Thank you, Ashley, and hello everyone. [Operator Instructions] Today's first question comes from Thomas Chong from Jefferies. Thomas, your line is open. Please go ahead.

[Foreign Language] [indiscernible] Thanks management for taking my question. My question is, our current user strategies as we saw this quarter year-over-year and sequential growth of mobile MAU and also sequential growth of paying user? Thanks.

[Foreign Language] [Interpreted] Thank you for your question. In the second quarter of this year, Huya's mobile MAU was 83.5 million, mainly due to the excellent performance of many self-made e-sports events this quarter. In addition, the launch of new games and the continuous improvement of user experience are also conducive to enhancing user activity. Therefore, while we continue to adopt a cautious channel promotion strategy, the number of users has increased compared with Q1 and with the same period last year. [Foreign Language] [Interpreted] In terms of user strategy, we plan to continue to attract and consolidate users through high-quality streamer content and professional content, including our pyramid-shaped e-sports event system that is a complete copyright e-sports event with self-organized events and increasing influence, as well as mass participation events. In addition, we will carry the interaction of game users through the games and events communities on our platform to improve the user retention of Huya and corresponding other game projects. Based on the live broadcast and game data that we have, combined with AI capabilities, we can better promote the output of high-quality content and the launch of interactive live broadcast gameplay, so as to improve our user participation as a whole. [Foreign Language] [Interpreted] On this basis, we focus on construction and upgrading of the platform ecology. In an overall more open industry environment, Huya acts as a pioneer in breaking industry barriers and we are strengthening cooperation with multiple platforms and products, including professional content co-creation, cross-platform live broadcasts, and commercialization initiatives, so as to reach a wider range of users and further expand the influence of Huya platform. Right now, we have begun to selectively deliver Huya's live broadcast and video content to other live broadcast and short video platforms, as well as multiple product lines in the Tencent ecosystem. In June this year, the total mobile MAU reached by Huya content ecosystem reached about 120 million, and this volume continues to grow. [Foreign Language] [Interpreted] Therefore, we do not only serve the users on Huya, but also users on more platforms across the entire environment and industry. We can also participate in a larger market. At the same time, we believe that upgrade of content and platform can bring more commercial opportunities, especially in the process of Huya's transformation from a pure game live broadcast platform to providing more game-related services, and the distribution of game content on multiple platforms and, the broadcast content can help to drive distribution and promote -- and promotion of the games and enhance the influence of broadcasters and bring more opportunities for revenue to grow in game distribution, advertising, and prop sales.

Thank you. And our next question comes from Maggie Ye from CLSA. Maggie, please go ahead.

[Foreign Language] Good evening, management. Thanks for the opportunity to ask question. We declared US$250 million special cash dividend this time and also renewed share repurchase program. And meanwhile, we still have cash deposits and short-term investments of RMB8.2 billion as of end of June. Please could you share with us the overall strategy of capital allocation and the use of cash going forward? Thank you.

[Foreign Language] [Interpreted] As of the end of June this year, Huya held cash and cash equivalents and deposits totaling approximately RMB8.2 billion, equivalent to US$1.1 billion, of which more than half were still overseas. The change in this amount of funds compared to the end of March was mainly due to the distribution of US$150 million in dividends, share repurchase expenses and other payments. After we announced and paid the new special cash dividend of US$250 million, this time, it is estimated that the company will continue to have a cash deposits nearly US$900 million with no debt. [Foreign Language] [Interpreted] Regarding the use of cash, we currently have sufficient cash for the company's daily operation and future development. While consolidating the financial fundamentals, we are also expecting operating cash flow to improve. The company will continue to set aside a portion of funds for potential business development and as a reserve fund for -- in the event of uncertainty in the external environment. In addition, we remain open to investment projects related to the industry chain to seize related development opportunities. So, we will also set aside a portion of fund accordingly. [Foreign Language] [Interpreted] At the same time, we will continue to attach importance to shareholder returns, especially cash returns to shareholders. In terms of dividends, in addition to the special dividend of US$400 million announced this year, the company's management also intends to continue to share the company's profits and surpluses with our shareholders who support us in the future. Of course, the specific dividend policy, including the amount of the dividend and the timing of payout, is subject to further review and approval by the company's Board of Directors. In terms of repurchase, our repurchase plan has been extended to the end of March 2025 and there is currently a repurchase quota of approximately US$43 million. The company will continue to consider a variety of factors, including market conditions and stock liquidity, to formulate an implementation strategy for our repurchase.

Okay, thank you. And our next question comes from Ritchie Sun from HSBC. Hi, Ritchie, please go ahead.

[Foreign Language] [Interpreted] Thank you management for taking my questions. I would like to ask about the games-related services business. Can management discuss the latest progress and the expectation in the third quarter for this business? Thank you.

[Foreign Language] [Interpreted] In the second quarter, revenue from our game-related services, advertising and other businesses increased by 152.7% year-over-year or 26.6% quarter-over-quarter, reaching approximately RMB310 million, and also reached a milestone of accounting for 20% of the total revenue for the first time. The rapid development of this part of our business is closely related to our cooperation with more game titles, better utilization of live content and PGC programs, and adoption of innovative operating methods to promote business development. [Foreign Language] [Interpreted] Looking further into this question, in terms of game distribution, we continue to add coverage of evergreen games to promote the return of users of these games. Amongst recent new games, in second quarter, we mainly involved in promoting and distributing the DnF Mobile game. The DnF Mobile game not only ranks among the top in its new -- in this year's new game live broadcast viewing indicator numbers on Huya platform but we also have achieved better-than-expected results in terms of distribution. In particular, according to current data available, the in-game spend per user of Huya distribution channel users is significantly higher than the overall market, reflecting the high business potential of Huya platform's game users on this game. Our current initial results in game distribution are also due to our continuous efforts to create a unique distribution model based on game content. More accurately, we are able to reach users through our broadcaster groups and focus on product design optimization to increase the conversion rate of game downloads and registrations of users. [Foreign Language] [Interpreted] In the second quarter, we also started to selling games of -- to selling items for games such as League of Legends, League of Legends Mobile, and VALORANT. For these e-sport games, we innovatively integrate the sales of props…

Thank you. Now we will take our last question today from Yiwen Zhang from China Renaissance. Yiwen, your line is open.

[Foreign Language] So, thanks for taking my question. My question regarding our margin trend. So, we see some fluctuation in gross margin in Q2 both sequential and YoY. So, we want to understand how -- what are the reasons behind and how should we look about future trend? Thank you.

[Foreign Language] [Interpreted] The non-GAAP gross profit margin in the second quarter of this year was 14.2%, representing a 0.7% lower than the first quarter and 1.8% lower than the same period last year. The slight decline in gross margin in this quarter was mainly due to the decline in live broadcast revenue and the increase in content production costs. Although the trend of live broadcast revenue has stabilized and the quarter-over-quarter decline has further narrowed, its scale is still significantly lower than the same period last year. This is mainly because our adjustment of the live broadcast business started in the second half of last year. The year-on-year pace of live broadcast revenue in the first half of the year was still high. And due to the influence of the macro and industry environment, the recovery of users' consumption willingness to [reward] (ph) is still low. The large investment in a second -- in self-made content in the second quarter has also caused a impact, especially we had Legend Cup and Thunder Honor Cup and other high-quality self-made events with large scale and influence in this quarter. [Foreign Language] [Interpreted] The live broadcast revenue share ratio remained basically stable this quarter, and the amount of broadcasters' contract costs is also being optimized. The proportion of game-related services, advertising and other revenue in total revenue increased from 6.2% in second quarter last year to 16.2% in the first quarter this year to 20% in the second quarter of this year. As it is still the early stage of our business development, we have introduced some platform-specific incentives. These will cause some fluctuations in our gross margin, but the gross margin of this part of business is still significantly higher than that of live broadcast business. So, it has a positive…

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.