WUHAN, China, Nov. 27, 2019 /PRNewswire/ — DouYu International Holdings Limited (“DouYu” or the “Company”) (Nasdaq: DOYU), a leading game-centric live streaming platform in China and a pioneer in the eSports value chain, today announced its unaudited financial results for the third quarter and nine months ended September 30, 2019.

Third Quarter 2019 Highlights

• Total net revenues for the third quarter of 2019 increased by 81.3% to RMB1,858.5 million (US$261.0 million) from RMB1,024.8 million in the same period of 2018.
• Gross profit increased by 450.5% to RMB316.8 million (US$44.5 million) from RMB57.5 million in the same period of 2018, implying a gross margin of 17.0% in the third quarter of 2019 compared with 5.6% in the same period of 2018.
• Net loss was RMB165.4 million (US$23.2 million) for the third quarter of 2019, compared with RMB220.5 million in the same period of 2018, implying a net loss margin of 8.9% compared with 21.5% in the same period of 2018.
• Adjusted net income^[1] was RMB72.2 million (US$10.1 million) for the third quarter of 2019, implying an adjusted net margin of 3.9%, compared with an adjusted net loss of RMB214.2 million in the same period of 2018.
• Average MAUs^[2] reached 163.6 million in the third quarter of 2019, representing an increase of 14.7% from 142.7 million in the third quarter of 2018.
• Average mobile MAUs reached 52.1 million in the third quarter of 2019, representing an increase of 26.1% from 41.3 million in the third quarter of 2018.
• Quarterly average paying user count reached 7.0 million in the third quarter of 2019, representing an increase of 66.0% from 4.2 million in the third quarter of 2018.

Mr. Shaojie Chen, Chief Executive Officer of DouYu, commented, “Our business maintained a solid growth trajectory in the third quarter of 2019. Moreover, our user base, particularly our mobile MAUs, continued to expand as we took advantage of the continuous gamer and eSports population growth in China, summer holiday season, introduction of several new mobile phone models, and blockbuster game title launches. In addition, we made substantial improvements in both user engagement and monetization efficiency during the quarter by continuously enriching our content, enhancing user-streamer interactions, and upgrading our streamer management system. Such operational improvements in turn contributed to our total revenue growth.”

Mr. Hao Cao, Vice President of DouYu, commented, “We are pleased to achieve continuous revenue growth for the third quarter of 2019. Our gross and adjusted net profit margin expanded due to our effective cost control efforts and improved operating leverage. We will strive to achieve revenue growth, further improve our operational efficiency, and explore additional monetization opportunities going forward.”

Third Quarter 2019 Financial Results

Total net revenues for the third quarter of 2019 increased by 81.3% to RMB1,858.5 million (US$261.0 million) from RMB1,024.8 million in the same period of 2018, primarily due to the increase in live streaming revenues.

Live streaming revenues increased by 83.0% to RMB1,662.4 million (US$233.4 million) in the third quarter of 2019 from RMB908.4 million in the same period of 2018, primarily driven by increases both in the number of paying users and ARPPU^[3] as the Company implemented effective monetization strategies, upgraded product features, diversified its high-quality content offerings, and enhanced user experience.

Advertising and other revenues increased by 68.5% to RMB196.1 million (US$27.5 million) in the third quarter of 2019 from RMB116.4 million in the same period of 2018, as the Company was able to capitalize on the broadening of its brand awareness while increasing the number of integrated promotional activities during live streaming.

Cost of revenues increased by 59.4% to RMB1,541.7 million (US$216.5 million) in the third quarter of 2019 from RMB967.3 million in the same period of 2018, primarily attributable to increased revenue sharing fees and content costs.

Revenue sharing fees and content costs increased by 66.0% to RMB1,308.8 million (US$183.8 million) in the third quarter of 2019 from RMB788.5 million in the same period of 2018, primarily due to: 1) increases in revenue sharing fees which were in line with increases in total net revenues, and 2) increases in content costs attributable to the Company’s investments in eSports-related and self-produced content.

Bandwidth costs increased by 6.1% to RMB150.8 million (US$21.2 million) in the third quarter of 2019 from RMB142.2 million in the same period of 2018, primarily due to the increases in bandwidth usage caused by higher traffic and user engagement on the platform, offset by a lower unit purchase price and improved utilization efficiency as a result of technology upgrades.

Gross profit increased by 450.5% to RMB316.8 million (US$44.5 million) in the third quarter of 2019 from RMB57.5 million in the same period of 2018. Gross margin increased to 17.0% in the third quarter of 2019 from 5.6% in the same period of 2018.

Sales and marketing expenses increased by 18.6% to RMB173.2 million (US$24.3 million) in the third quarter of 2019 from RMB146.0 million in the same period of 2018. The increase was mainly attributable to share-based compensation expenses recognized following the Company’s IPO as well as the increased efforts in promoting eSports content and brand awareness marketing activities.

Research and development expenses increased by 47.2% to RMB119.9 million (US$16.8 million) in the third quarter of 2019 from RMB81.4 million in the same period of 2018, mainly due to share-based compensation expenses recognized following the Company’s IPO as well as enhanced research and development efforts for various business segments.

General and administrative expenses increased by 326.3% to RMB232.9 million (US$32.7 million) in the third quarter of 2019 from RMB54.6 million in the same period of 2018, mainly due to share-based compensation expenses recognized following the Company’s IPO.

Other operating income, net was RMB11.8 million (US$1.7 million) for the third quarter of 2019, compared with RMB16.4 million in the same period of 2018.

Operating loss was RMB197.4million (US$27.7 million) in the third quarter of 2019, compared with RMB208.1 million in the same period of 2018.

Adjusted operating income in the third quarter of 2019, which adds back share-based compensation expenses, was RMB30.8 million (US$4.3 million), compared with an adjusted operating loss of RMB203.7 million in the same period of 2018.

Income tax expenses were nil for the third quarter of 2019 and 2018, due to the Company’s cumulative net losses and the resulting tax loss carryforward.

Net loss was RMB165.4 million (US$23.2 million) in the third quarter of 2019, compared with RMB220.5 million in the same period of 2018.

Adjusted net income, which excludes share-based compensation expenses, share of loss (income) in equity method investments, and impairment loss of investments, was RMB72.2 million (US$10.1 million) in the third quarter of 2019, implying an adjusted net margin of 3.9%, compared with an adjusted net loss of RMB214.2 million in the same period of 2018.

Basic and diluted net loss per ADS^[4] were both RMB0.59 (US$0.08), and adjusted basic and diluted net income per ADS were both RMB0.26 (US$0.04) for the third quarter of 2019.

Business Outlook

The Company expects its total net revenues to be in the range of RMB1,960 million to RMB2,030 million in the fourth quarter of 2019, representing year-over-year growth between 68.9% and 75.0%. This forecast reflects the Company’s current and preliminary views on the market and operational conditions, which are subject to change.

Conference Call Information

The Company will hold a conference call on Wednesday, November 27, 2019, at 8:00 a.m. Eastern Time or 9:00 p.m. Beijing Time on the same day to discuss the financial results. Listeners may access the call by dialing the following numbers:

The replay will be accessible through December 4, 2019, by dialing the following numbers:

A live and archived webcast of the conference call will also be available at the Company’s investor relations website at http://ir.douyu.com/.

About DouYu International Holdings Limited

Headquartered in Wuhan, China, DouYu International Holdings Limited (Nasdaq: DOYU) is a leading game-centric live streaming platform in China and a pioneer in the eSports value chain. DouYu operates its platform on both PC and mobile apps, through which users can enjoy immersive and interactive games and entertainment live streaming. DouYu’s platform brings together a deep pool of top live streamers. By providing a sustainable streamer development system built on advanced technology infrastructure and capabilities, DouYu helps ensure a consistent supply of quality content. Through collaborations with a variety of participants across the eSports value chain, the Company has gained coveted access to a wide variety of premium eSports content, which further attracts viewers and enhances user experience. For more information, please see http://ir.douyu.com/.

Use of Non-GAAP Financial Measures

Adjusted operating income (loss) is calculated as operating income (loss) adjusted for share-based compensation expenses. Adjusted net income(loss) is calculated as net loss adjusted for share-based compensation expenses, share of loss (income) in equity method investments and impairment loss on investments. Adjusted net income (loss) attributable to DouYu is calculated as net income (loss) attributable to DouYu adjusted for share-based compensation expenses, share of loss (income) in equity method investments and impairment loss of investments. Adjusted basic and diluted net income per ordinary share is non-GAAP net income (loss) attributable to ordinary shareholders divided by weighted average number of ordinary shares used in the calculation of non-GAAP basic and diluted net income per ordinary share. The Company adjusted the non-cash impact of (i) share-based compensation expenses, (ii) share of loss (income) in equity method investments and (iii) impairment loss of investments to understand and evaluate the Company’s core operating performance. The non-GAAP financial measures are presented to enhance investors’ overall understanding of the Company’s financial performance and should not be considered a substitute for, or superior to, the financial information prepared and presented in accordance with U.S. GAAP. Investors are encouraged to review the reconciliation of the historical non-GAAP financial measures to its most directly comparable GAAP financial measures. As non-GAAP financial measures have material limitations as analytical metrics and may not be calculated in the same manner by all companies, they may not be comparable to other similarly titled measures used by other companies. In light of the foregoing limitations, you should not consider non-GAAP financial measures as a substitute for, or superior to, such metrics in accordance with U.S. GAAP.

For more information on these non-GAAP financial measures, please see the table captioned “Reconciliations of Non-GAAP Results” near the end of this release.

Exchange Rate Information

This announcement contains translations of certain RMB amounts into U.S. dollars at a specified rate solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to U.S. dollars are made at a rate of RMB7.1218 to US$1.00, the noon buying rate in effect on September 27, 2019, in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB amounts could have been, or could be, converted, realized or settled in U.S. dollars at that rate on September 27, 2019, or at any other rate.

Safe Harbor Statement

This press release contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. Statements that are not historical facts, including statements about the Company’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties, and a number of factors could cause actual results to differ materially from those contained in any forward-looking statement. In some cases, forward-looking statements can be identified by words or phrases such as “may,” “will,” “expect,” “anticipate,” “target,” “aim,” “estimate,” “intend,” “plan,” “believe,” “potential,” “continue,” “is/are likely to” or other similar expressions. Further information regarding these and other risks, uncertainties or factors is included in the Company’s filings with the Securities Exchange Commission. All information provided in this press release is as of the date of this press release, and the Company does not undertake any duty to update such information, except as required under applicable law.

Investor Relations Contact

Mao Mao
DouYu International Holdings Limited
Email: ir@douyu.tv
Phone: +1 (646) 224-6934

Xinran Rao
ICR, Inc.
Email: DouYu.IR@icrinc.com
Phone: +1 (646) 224-6934

Media Relations Contact

Joy Yin
DouYu International Holdings Limited
Email: pr_douyu@douyu.tv
Phone: +1 (646) 308-1475

Edmond Lococo
ICR, Inc.
Email: DouYu.PR@icrinc.com
Phone: +1 (646) 308-1475

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