PR Newswire | Aug 16, 2021 04:01AM EDT

Financial Results

08/16 03:00 CDT

DouYu International Holdings Limited Reports Second Quarter 2021 Unaudited Financial Results WUHAN, China, Aug. 16, 2021

WUHAN, China, Aug. 16, 2021 /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 second quarter ended June 30, 2021.

Second Quarter 2021 Financial and Operational Highlights

* Total net revenues in the second quarter of 2021 were RMB2,336.8 million (US$361.9 million), compared with RMB2,508.2 million in the same period of 2020. * Gross profit in the second quarter of 2021 was RMB306.5 million (US$47.5 million), compared with RMB522.9 million in the same period of 2020. * Net loss in the second quarter of 2021 was RMB181.7 million (US$28.1 million), compared with a net income of RMB319.3 million in the same period of 2020. * Adjusted net loss in the second quarter of 2021 was RMB145.1 million (US$22.5 million), compared with an adjusted net income of RMB322.9 million in the same period of 2020. * Average mobile MAUs in the second quarter of 2021 increased by 3.9% to 60.7 million from 58.4 million in the same period of 2020. * Quarterly average paying user count in the second quarter of 2021 was 7.2 million, compared with 7.6 million in the same period of 2020.

Mr. Shaojie Chen, Chief Executive Officer of DouYu, commented, "Our core operating metric continued to grow at a steady pace in the second quarter of 2021, with our quarterly average mobile MAUs increased by 3.9% year over year to 60.7 million. Looking ahead, we plan to continue expanding our content ecosystem both upstream and downstream to cover each link of the game industry value chain. We will also bolster our industry leadership through the continuous execution of our live streaming, video, content, and community strategies."

Mr. Hao Cao, Vice President of DouYu, commented, "In the second quarter of 2021, our total revenues were RMB2.34 billion and gross profit was RMB307 million, representing a gross margin of 13.1%. During the quarter, we continued to increase our investments in proprietary content production while further upgrading the functions and content of our video and community related products. Going forward, we will continue exploring new methods to improve our monetization capabilities and generate long-term shareholder value."

Second Quarter 2021 Financial Results

Total net revenues in the second quarter of 2021 were RMB2,336.8 million (US$361.9 million), compared with RMB2,508.2 million in the same period of 2020.

Live streaming revenues in the second quarter of 2021 were RMB2,178.1 million (US$337.3 million), compared with RMB2,319.9 million in the same period of 2020. The decrease in year-over-year comparison was mostly due to the decrease in user time as a result of the recovery from the COVID-19 pandemic and less stay-at-home time. This decline was partially offset by increased mobile MAU and improvements in user engagement as a result of the Company's increased sales and marketing initiatives.

Advertising and other revenues in the second quarter of 2021 were RMB158.7 million (US$24.6 million), compared with RMB188.3 million in the same period of 2020. The year-over-year decrease was primarily attributable to the trend of game advertisers normalizing their marketing expenditures, which were relatively higher in the same period last year due to the COVID-19 pandemic.

Cost of revenues in the second quarter of 2021 was RMB2,030.2 million (US$314.4 million), compared with RMB1,985.3 million in the same period of 2020. This increase was primarily due to revenue sharing fees and content costs increased by RMB51.9 million, partially offset by bandwidth costs decreased by RMB6.6 million.

Revenue sharing fees and content costs in the second quarter of 2021 increased by 3.0% to RMB1,806.8 million (US$279.8 million) from RMB1,754.9 million in the same period of 2020. This increase was due to the Company's increased investments in the broadcasting rights for eSports tournaments, in-house production of PGC contents, and quality streamers in the overseas market.

Bandwidth costs in the second quarter of 2021 decreased by 3.9% to RMB161.8 million (US$25.1 million) from RMB168.4 million in the same period of 2020. This decrease was mainly due to continuous in-house technology upgrades, which led to higher bandwidth efficiency and lower bandwidth usage costs.

Gross profit in the second quarter of 2021 was RMB306.5 million (US$47.5 million), compared with RMB522.9 million in the same period of 2020. Gross margin in the second quarter of 2021 was 13.1%, compared with 20.8% in the same period of 2020. This decrease was primarily due to the increase in content costs and the decrease in revenues, partially offset by the decrease in bandwidth costs.

Sales and marketing expenses in the second quarter of 2021 were RMB295.0 million (US$45.7 million), compared with RMB142.1 million in the same period of 2020. This increase was mainly attributable to the increased promotional channels for user acquisition and increased promotions and branding activities.

Research and development expenses in the second quarter of 2021 were RMB123.0 million (US$19.1 million), compared with RMB94.9 million in the same period of 2020. This increase was primarily attributable to additional investments in technical personnel due to Company's further overseas expansion and technology infrastructure upgrade to enhance user experience.

General and administrative expenses in the second quarter of 2021 were RMB102.6 million (US$15.9 million), compared with RMB79.5 million in the same period of 2020. This increase was primarily due to the increase in professional service fees during the quarter.

Other operating income, netin the second quarter of 2021 was RMB16.7 million (US$2.6 million), compared with RMB32.5 million in the same period of 2020.

Lossfrom operations in the second quarter of 2021 was RMB197.4 million (US$30.6 million), compared with a profit from operations of RMB238.9 million in the same period of 2020.

Adjusted operating lossin the second quarter of 2021, which adds back share-based compensation expenses, was RMB165.1 million (US$25.6 million), compared with an adjusted operating income of RMB272.7 million in the same period of 2020.

Income tax expensesin the second quarter of 2021 and 2020 were nil due to the Company's cumulative net losses and the resulting tax loss carry forward.

Net loss in the second quarter of 2021 was RMB181.7 million (US$28.1 million), compared with a net income of RMB319.3 million in the same period of 2020.

Adjusted net loss in the second quarter of 2021, which excludes share-based compensation expenses, share of income in equity method investments, and impairment loss of investments, was RMB145.1 million (US$22.5 million), compared with an adjusted net income of RMB322.9 million in the same period of 2020.2

Basic and diluted net loss per ADS[1] in the second quarter of 2021 were RMB0.45 (US$0.07) and RMB0.45 (US$0.07) respectively. Adjusted basic and diluted net loss per ADS in the second quarter of 2021 were RMB0.35 (US$0.05) and RMB0.35(US$0.05) respectively.

^[1] Every ten ADSs represent one ordinary share.

Conference Call Information

The Company will hold a conference call on Monday, Aug 16, 2021, at 7:00 am Eastern Time (or 7:00 pm Beijing Time on the same day) to discuss the financial results. Listeners may access the call by dialing the following numbers:

International: 1-412-317-6061

United States Toll Free: 1-888-317-6003

Mainland China Toll Free:4001-206115

Hong Kong Toll Free: 800-963976

Singapore Toll Free: 800-120-5863

Conference ID: 1268939

The replay will be accessible through Monday, Aug 23, 2021, by dialing the following numbers:

International: 1-412-317-0088

United States Toll Free:1-877-344-7529

Conference ID: 10159457

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 is calculated as net loss adjusted for share-based compensation expenses, share of income (loss) in equity method investments, gain on disposal of investment or subsidiaries and impairment loss on investments. Adjusted net income attributable to DouYu is calculated as net income attributable to DouYu adjusted for share-based compensation expenses, share of income (loss) in equity method investments, gain on disposal of investment or subsidiaries and impairment loss of investments. Adjusted basic and diluted net income per ordinary share 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 ordinary share. The Company adjusted the impact of (i) share-based compensation expenses, (ii) share of income (loss) in equity method investments, (iii) gain on disposal of investment or subsidiaries and (iv) 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 RMB6.4566 to US$1.00, the noon buying rate in effect on June 30, 2021, 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 June 30, 2021, 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

Doris LiDouYu International Holdings LimitedEmail: ir@douyu.tvPhone: +1 (646) 224-6934

Robin YangICR, Inc. Email: DouYu.IR@icrinc.comPhone: +1 (646) 224-6934

Media Relations Contact

Doris LiDouYu International Holdings LimitedEmail: pr_douyu@douyu.tvPhone: +1 (646) 308-1475

Edmond LococoICR, Inc.Email: DouYu.PR@icrinc.comPhone: +1 (646) 308-1475

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

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

As of December 31 As of June 30

2020 2021 2021

ASSETS RMB RMB US$ ^(1)

Current assets:

Cash and cash equivalents 5,279,902 5,372,180 832,045

Restricted cash 11,875 10,703 1,658

Short-term bank deposits 2,230,229 1,260,000 195,149

Accounts receivable, net 199,744 176,970 27,409

Prepayments 66,257 65,826 10,195

Amounts due from related parties 9,045 11,519 1,784

Other current assets 236,704 394,574 61,112

Total current assets 8,033,756 7,291,772 1,129,352

Property and equipment, net 37,792 31,274 4,844

Intangible assets, net 141,672 101,439 15,711

Long-term bank deposits 100,000 746,010 115,542

Investments 500,659 538,955 83,473

Goodwill 12,933 12,804 1,983

Right-of-use assets, net 62,141 41,497 6,427

Other non-current assets 19,004 41,460 6,422

Total non-current assets 874,201 1,513,439 234,402

TOTAL ASSETS 8,907,957 8,805,211 1,363,754



LIABILITIES AND SHAREHOLDERS' EQUITY

LIABILITIES

Current liabilities:

Accounts payable 986,073 922,029 142,804

Advances from customers 10,911 7,956 1,232

Deferred revenue 242,013 201,638 31,230

Accrued expenses and other current liabilities 384,041 483,302 74,854

Amounts due to related parties 223,525 431,019 66,756

Lease liabilities due within one year 36,281 29,112 4,509

Total current liabilities 1,882,844 2,075,056 321,385

Lease liabilities 16,952 10,124 1,568

Deferred revenue 30,779 24,378 3,776

Total non-current liabilities 47,731 34,502 5,344

TOTAL LIABILITIES 1,930,575 2,109,558 326,729

^(1) Translations of certain RMB amounts into U.S. dollars at a specified rateare solely for the convenience of the reader. Unless otherwise noted, alltranslationsfrom RMB to U.S. dollars are made at a rate of RMB6.4566 to US$1.00, the noonbuying rate in effect on June 30, 2021, in the H.10 statistical release of theFederal Reserve Board.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)

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

As of December 31 As of June 30

2020 2021 2021

RMB RMB US$ ^(1)

SHAREHOLDERS' EQUITY

Ordinary shares 23 23 4

Treasury shares (695,098) (695,098) (107,657)

Additional paid-in capital 10,486,398 10,552,003 1,634,297

Accumulated deficit (2,863,219) (3,072,246) (475,830)

Accumulated other comprehensive income 10,911 (52,435) (8,121)

Total DouYu Shareholders' Equity 6,939,015 6,732,247 1,042,693

Noncontrolling interests 38,367 (36,594) (5,668)

Total Shareholders' Equity 6,977,382 6,695,653 1,037,025

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 8,907,957 8,805,211 1,363,754

^(1) Translations of certain RMB amounts into U.S. dollars at a specified rateare solely for the convenience of the reader. Unless otherwise noted, alltranslationsfrom RMB to U.S. dollars are made at a rate of RMB6.4566 to US$1.00, the noonbuying rate in effect on June 30, 2021, in the H.10 statistical release of theFederal Reserve Board.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

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

Three Months Ended Six Months Ended

June 30, March 31, June 30, June 30, June 30, June 30, June 30,

2020 2021 2021 2021 2020 2021 2021

RMB RMB RMB US$ ^(1) RMB RMB US$ ^(1)

Net revenues 2,508,152 2,152,687 2,336,771 361,920 4,786,187 4,489,459 695,329

Cost of revenues (1,985,270) (1,892,499) (2,030,223) (314,442) (3,777,451) (3,922,722) (607,552)

Gross profit 522,882 260,188 306,548 47,478 1,008,736 566,737 87,777

Operating income (expenses)^(2)

Sales and marketing expenses (142,058) (209,877) (294,953) (45,682) (249,414) (504,829) (78,188)

General and administrative expenses (79,470) (88,074) (102,624) (15,894) (164,050) (190,698) (29,535)

Research and development expenses (94,920) (111,264) (123,015) (19,053) (187,808) (234,280) (36,285)

Other operating income, net 32,454 23,924 16,681 2,584 49,032 40,605 6,289

Total operating expenses (283,994) (385,291) (503,911) (78,045) (552,240) (889,202) (137,719)

Income (loss) from operations 238,888 (125,103) (197,363) (30,567) 456,496 (322,465) (49,942)

Other income (expenses), net (8,382) 127 178 28 (18,400) 305 47

Interest income, net 50,106 20,930 19,768 3,062 95,150 40,697 6,303

Gain on disposal of subsidiary 23,526 - - - 23,526 - -

Income (loss) before income taxes and share of 304,138 (104,046) (177,417) (27,477) 556,772 (281,463) (43,592) income (loss) in equity method investments

Income tax expense - - - - - - -

Share of income (loss) in equity method investments 15,132 2,213 (4,243) (657) 17,024 (2,029) (314)

Net income (loss) 319,270 (101,833) (181,660) (28,134) 573,796 (283,492) (43,906)

Less: Net loss attributable to noncontrolling interest (16,775) (39,814) (34,651) (5,367) (22,699) (74,465) (11,533)

Net income (loss) attributable to ordinary 336,045 (62,019) (147,009) (22,767) 596,495 (209,027) (32,373) shareholders of the Company

Net income (loss) per ordinary share

Basic 10.56 (1.92) (4.52) (0.70) 18.73 (6.44) (1.00)

Diluted 10.23 (1.92) (4.52) (0.70) 18.12 (6.44) (1.00)

Net income (loss) per ADS^(3)

Basic 1.06 (0.19) (0.45) (0.07) 1.87 (0.64) (0.10)

Diluted 1.02 (0.19) (0.45) (0.07) 1.81 (0.64) (0.10)

Weighted average number of ordinary shares used in calculating net income(loss) per ordinary share

Basic 31,828,405 32,349,764 32,520,221 32,520,221 31,838,618 32,434,992 32,434,992

Diluted 32,864,145 32,349,764 32,520,221 32,520,221 32,920,090 32,434,992 32,434,992

Weighted average number of ADS used in calculating net income (loss) per ADS^(3)

Basic 318,284,051 323,497,638 325,202,212 325,202,212 318,386,179 324,349,925 324,349,925

Diluted 328,641,453 323,497,638 325,202,212 325,202,212 329,200,897 324,349,925 324,349,925

^(1) Translations of certain RMB amounts into U.S. dollars at a specified rateare solely for the convenience of the reader. Unless otherwise noted, alltranslationsfrom RMB to U.S. dollars are made at a rate of RMB6.4566 to US$1.00, the noonbuying rate in effect on June 30, 2021, in the H.10 statistical release of theFederal Reserve Board.

^(2) Share-based compensation expenses were allocated in cost of revenues andoperating expenses as follows:

Three Months Ended Six Months Ended

June 30, March 31, June 30, June 30, June 30, June 30, June 30,

2020 2021 2021 2021 2020 2021 2021

RMB RMB RMB US$ ^(1) RMB RMB US$ ^(1)

Research and development expenses 5,575 5,468 5,300 821 11,137 10,768 1,668

Sales and marketing expenses 1,148 1,217 1,177 182 2,322 2,395 371

General and administrative expenses 27,130 26,632 25,810 3,997 62,244 52,442 8,122

^(3) Every ten ADSs represent one ordinary share.

RECONCILIATIONS OF GAAP AND NON-GAAP RESULTS

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

Three Months Ended Six Months Ended

June 30, March 31, June 30, June 30, June 30, June 30, June 30,

2020 2021 2021 2021 2020 2021 2021

RMB RMB RMB US$ ^(1) RMB RMB US$ ^(1)

Income (loss) from operations 238,888 (125,103) (197,363) (30,567) 456,496 (322,465) (49,942)

Add:

Share-based compensation expenses 33,853 33,317 32,287 5,000 75,703 65,605 10,161

Adjusted Operating income (loss) 272,741 (91,786) (165,076) (25,567) 532,199 (256,860) (39,781)

Net income (loss) 319,270 (101,833) (181,660) (28,134) 573,796 (283,492) (43,906)

Add:

Share-based compensation expenses 33,853 33,317 32,287 5,000 75,703 65,605 10,161

Share of (income) loss in equity method investments (15,132) (2,213) 4,243 657 (17,024) 2,029 314

Gain on disposal of subsidiary (23,526) - - - (23,526) - -

Impairment loss of investment 8,400 - - - 10,846 - -

Adjusted net income (loss) 322,865 (70,729) (145,130) (22,477) 619,795 (215,858) (33,431)

Net income (loss) attributable to DouYu 336,045 (62,019) (147,009) (22,767) 596,495 (209,027) (32,373)

Add:

Share-based compensation expenses 33,853 33,317 32,287 5,000 75,703 65,605 10,161

Share of (income) loss in equity method investments (15,132) (2,213) 4,243 657 (17,024) 2,029 314

Gain on disposal of subsidiary (23,526) - - - (23,526) - -

Impairment loss of investment 8,400 - - - 10,846 - -

Adjusted net income (loss) attributable to DouYu 339,640 (30,915) (110,479) (17,110) 642,494 (141,393) (21,898)

Adjusted Net income (loss) per ordinary share

Basic 10.67 (0.96) (3.47) (0.54) 20.18 (4.44) (0.69)

Diluted 10.67 (0.96) (3.47) (0.54) 20.18 (4.44) (0.69)

Adjusted net income (loss) per ADS^(2)



Basic 1.07 (0.10) (0.35) (0.05) 2.02 (0.44) (0.07)

Diluted 1.07 (0.10) (0.35) (0.05) 2.02 (0.44) (0.07)

Weighted average number of ordinary shares used in calculating Adjusted netincome per ordinary share

Basic 31,828,405 32,349,764 32,520,221 32,520,221 31,838,618 32,434,992 32,434,992

Diluted 31,828,405 32,349,764 32,520,221 32,520,221 31,838,618 32,434,992 32,434,992

Weighted average number of ADS used in calculating net income per ADS^(2)

Basic 318,284,051 323,497,638 325,202,212 325,202,212 318,386,179 324,349,925 324,349,925

Diluted 318,284,051 323,497,638 325,202,212 325,202,212 318,386,179 324,349,925 324,349,925

^(1) Translations of certain RMB amounts into U.S. dollars at a specified rateare solely for the convenience of the reader. Unless otherwise noted, alltranslationsfrom RMB to U.S. dollars are made at a rate of RMB6.4566 to US$1.00, the noonbuying rate in effect on June 30, 2021, in the H.10 statistical release of theFederal Reserve Board.

^(2) Every ten ADSs represent one ordinary share.

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SOURCE DouYu International Holdings Limited