WUHAN, China, May 18, 2022 /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 first quarter ended March 31, 2022.

First Quarter 2022 Financial and Operational Highlights

• Total net revenues in the first quarter of 2022 were RMB1,795.6 million (US$283.3 million), compared with RMB2,152.7 million in the same period of 2021.
• Gross profit in the first quarter of 2022 was RMB243.8 million (US$38.5 million), compared with RMB260.2 million in the same period of 2021.
• Net loss in the first quarter of 2022 was RMB86.9 million (US$13.7 million), compared with RMB101.8 million in the same period of 2021.
• Adjusted net loss^[1] in the first quarter of 2022 was RMB52.5 million (US$8.3 million), compared with RMB70.7 million in the same period of 2021.
• Average mobile MAUs^[2] in the first quarter of 2022 were 55.1 million, compared with 59.1 million in the same period of 2021.
• Quarterly average paying user^[3] count in the first quarter of 2022 was 6.4 million, compared with 7.0 million in the same period of 2021.

Mr. Shaojie Chen, Chief Executive Officer of DouYu, commented, "During the first quarter of 2022, we continued executing on our strategic upgrade to develop our game-centric comprehensive content platform. In conjunction with our adoption of a selective copyright procurement strategy, we increased our investment in self-produced content and tournaments and enhanced our collaboration with game developers and distributors to deliver a stable operational performance through our high-quality game contents and refined operations. Our average mobile MAUs were 55.1 million in the first quarter. Going forward, we will continue to explore new business initiatives by leveraging our competitive advantage in livestreaming, videos, graphics, and interactive communities, while maintaining our leading position in the traditional livestreaming industry."

Mr. Hao Cao, Vice President of DouYu, commented, "In the first quarter of 2022, our total revenues were RMB1.8 billion and our gross profit was RMB243.8 million, representing a gross margin of 13.6%. During the same quarter, we continued to make adjustments to our livestreaming operations and optimized our cost structure while constantly offering our premium content and refining our operations. We focused on operating efficiency improvement through ROI enhancement and cost controls and achieved encouraging results. Our gross margin improved year over year and net loss decreased to 86.9 million, while adjusted net loss narrowed to RMB52.5 million.  Looking ahead, we will continue to improve our operational efficiency and remain focused on exploring new growth drivers and enhancing monetization capabilities to generate sustainable growth and higher shareholder value."

First Quarter 2022 Financial Results

Total net revenues in the first quarter of 2022 decreased by 16.6% to RMB1,795.6 million (US$283.3million), compared with RMB2,152.7 million in the same period of 2021.

Livestreaming revenues in the first quarter of 2022 decreased by 13.6% to RMB1,727.2 million (US$272.5 million) from RMB1,998.6 million in the same period of 2021. The decrease was due to the implementation of prudent operating strategies in anticipation of a tightening regulatory environment. Such strategies primarily include the Company's adjustments to certain interactive features and the related operations in order to promote the long-term development of its platform.

Advertising and other revenues in the first quarter of 2022 were RMB68.4 million (US$10.8 million), compared with RMB154.1 million in the same period of 2021. The decrease was primarily due to the continued exploration of new commercialization models by using a portion of advertising traffic that could have been directly monetized, as well as the challenging macro environment.

Cost of revenues in the first quarter of 2022 was RMB1,551.8million (US$244.8 million), a decrease of 18.0% compared with RMB1,892.5 million in the same period of 2021.

Revenue sharing fees and content costs in the first quarter of 2022 decreased by 19.2% to RMB1,340.6 million (US$211.5 million) from RMB1,659.6 million in the same period of 2021. The decrease was primarily due to the decreased revenue sharing fees which is in line with the Company's decreased livestreaming revenues, as well as a significant decrease in copyright costs.

Bandwidth costs in the first quarter of 2022 decreased by 11.8% to RMB151.9 million (US$24.0 million) from RMB172.1 million in the same period of 2021. The decrease was mainly due to less peak bandwidth usage for fewer purchased eSport tournaments, as well as lower per unit bandwidth costs as a result of improved procurement efficiency.

Gross profit in the first quarter of 2022 was RMB243.8 million (US$38.5 million), compared with RMB260.2 million in the same period of 2021. Gross margin in the first quarter of 2022 improved to 13.6% from 12.1% in the same period of 2021. The increase in gross margin was primarily due to the significant decrease in copyright costs as a percentage of total net revenues.

Sales and marketing expenses in the first quarter of 2022 decreased 11.2% to RMB186.4 million (US$29.4 million) from RMB209.9 million in the same period of 2021. The decrease was mainly attributable to the decreased personnel-related expenses and branding expenses.

Research and development expenses in the first quarter of 2022 increased 4.5% to RMB116.3 million (US$18.3million) from RMB111.3 million in the same period of 2021. The increase was primarily attributable to continued investment in technical personnel as the Company continues to invest in product upgrades to support its game-centric content strategy.

General and administrative expenses in the first quarter of 2022 increased 2.3% to RMB90.1 million (US$14.2 million) from RMB88.1 million in the same period of 2021.

Other operating income, net in the first quarter of 2022 was RMB47.8 million (US$7.5 million), compared with other operating income of RMB23.9 million in the same period of 2021.

Loss from operations in the first quarter of 2022 was RMB101.2 million (US$16.0 million), compared with RMB125.1 million in the same period of 2021.

Adjusted loss from operations in the first quarter of 2022, which adds back share-based compensation expenses, was RMB68.0 million (US$10.7 million), compared with RMB91.8 million in the same period of 2021.

Income tax expenses in the first quarter of 2022 and 2021 were nil due to the Company's cumulative net losses and the resulting tax loss carry forward.

Net loss in the first quarter of 2022 was RMB86.9 million (US$13.7 million), compared with RMB101.8 million in the same period of 2021.

Adjusted net loss in the first quarter of 2022, which excludes share-based compensation expenses, share of loss in equity method investments, and impairment loss of investments, was RMB52.5 million (US$8.3 million), compared with RMB70.7 million in the same period of 2021.

Basic and diluted net loss per ADS^[4] in the first quarter of 2022 were RMB0.27 (US$0.04) and RMB0.27 (US$0.04), respectively. Adjusted basic and diluted net loss per ADS in the first quarter of 2022 were RMB0.16 (US$0.03) and RMB0.16 (US$0.03), respectively.

Cash and cash equivalents, restricted cash and bank deposits

As of March 31, 2022, the Company had cash and cash equivalents, restricted cash, short-term and long-term bank deposits of RMB6,315 million (US$996.2 million), compared with RMB6,643 million as of December 31, 2021.

Share Repurchase Program

On August 30, 2021, the Company announced that its board of directors had authorized a share repurchase program under which the Company may repurchase up to US$100 million of its ordinary shares in the form of ADSs during a period of up to 12 months commencing on August 30, 2021. The Company expects to utilize existing funds to make repurchases under this program. As of March 31, 2022, the Company had repurchased an aggregate of US$33.9 million (RMB215 million) worth of its ADSs under this program.

Recent Developments

Regulatory Update

On May 7, 2022, the competent authorities of the PRC issued the Opinion on Live Streaming Virtual Gifting and Enhancing the Protection of Minors (the "Opinion"). The Opinion stipulates that, for the main purpose of protecting minors, internet platforms shall, among other requirements and restrictions, (i) prohibit minors from engaging in virtual gifting, (ii) cancel all ranking functions that rank livestreamers solely by the volume of virtual gifts that they receive or rank users by the volume of virtual gifts that they send, within one month starting from the publication of the Opinion, and (iii) impose restrictions on certain interaction functions between 8:00 p.m. and 10:00 p.m. every day.

The Company is committed to fully complying with the Opinion and other applicable laws and regulations. Although the interpretation and implementation of the Opinion remain uncertain, the Company is carefully considering the provisions of the Opinion and assessing their implications for the Company's business. While the Company has been proactively monitoring the regulatory trends, and has strategically adjusted its operational strategies in response to the evolving regulatory landscape, the Company expects the Opinion, and the compliance measures to be taken, will have negative impacts on the live streaming service of the industry players, including that of the Company, which may in turn adversely affect the Company's business operations and financial condition. The Company will proactively seek guidance from and cooperate with the regulatory authorities in connection with its efforts to comply with the Opinion and the related implementation rules. There is no assurance that the compliance measures that the Company plans to take will be effective, or the implementation of the Opinion will not have a material adverse impact on the Company's business operations and financial condition in the following quarters.

Conference Call Information

The Company will hold a conference call on May 18, 2022, at 7:00am Eastern Time (or 7:00pm 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 May 25, 2022, 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 https://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 to bring users access to immersive and interactive games and entertainment livestreaming, a wide array of video and graphic contents, as well as opportunities to participate in community events and discussions. By nurturing a sustainable technology-based talent development system and relentlessly producing high-quality content, DouYu consistently delivers premium content through integration of livestreaming, video, graphics, and virtual communities with a primary focus on games, especially on eSports. This enables DouYu to continuously expand its user base and enhance its user experience. For more information, please see https://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 income (loss) adjusted for share-based compensation expenses, share of income (loss) 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 income (loss) in equity method investments, 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) 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 RMB6.3393 to US$1.00, the noon buying rate in effect on March 31, 2022, 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 March 31, 2022, 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, including but not limited to the following: the Company's results of operations and financial condition; the Company's business strategies; general market conditions, in particular the game live streaming market; the ability of the Company to retain and grow active and paying users; changes in general economic and business conditions in China; the impact of the COVID-19 to the Company's business operations and the economy in China and globally; any adverse changes in laws, regulations, rules, policies or guidelines applicable to the Company; and assumptions underlying or related to any of the foregoing. 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

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

Robin Yang
ICR, LLC.
Email: DouYu.IR@icrinc.com
Phone: +1 (646) 224-6934

Media Relations Contact

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

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