REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Title of each class |
Trading symbol(s) |
Name of each exchange on which registered | ||
representing one Class A ordinary share, par value US$0.0001 per share |
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par value US$0.0001 per share* |
(1) * | t for trading, but only in connection with the listing on the New York Stock Exchange of our American depositary shares, each representing one Class A ordinary share. |
Large accelerated filer ☒ |
Accelerated filer ☐ |
Non-accelerated filer |
Emerging growth company |
International Financial Reporting Standards as issued by the International Accounting Standards Board ☐ | Other ☐ |
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ITEM 1. |
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ITEM 2. |
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ITEM 3. |
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ITEM 4. |
54 |
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ITEM 4.A. |
84 |
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ITEM 5. |
84 |
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ITEM 6. |
105 |
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ITEM 7. |
115 |
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ITEM 8. |
118 |
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ITEM 9. |
119 |
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ITEM 10. |
119 |
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ITEM 11. |
136 |
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ITEM 12. |
137 |
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139 |
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ITEM 13. |
139 |
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ITEM 14. |
139 |
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ITEM 15. |
140 |
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ITEM 16.A. |
141 |
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ITEM 16.B. |
141 |
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ITEM 16.C. |
141 |
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ITEM 16.D. |
141 |
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ITEM 16.E. |
141 |
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ITEM 16.F. |
142 |
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ITEM 16.G. |
142 |
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ITEM 16.H. |
142 |
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142 |
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ITEM 17. |
142 |
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ITEM 18. |
142 |
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ITEM 19. |
142 |
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146 |
• | “ADSs” refers to our American depositary shares, each of which represents one Class A ordinary share; |
• | “China” or “PRC” refers to the People’s Republic of China, excluding, for the purpose of this annual report only, Hong Kong, Macau and Taiwan; |
• | “Class A ordinary shares” refers to our Class A ordinary shares of par value US$0.0001 per share; |
• | “Class B ordinary shares” refers to our Class B ordinary shares of par value US$0.0001 per share; |
• | “DouYu” refers to DouYu International Holdings Limited (Nasdaq: DOYU); |
• | “JOYY” refers to JOYY Inc. (Nasdaq: YY), formerly known as YY Inc.; |
• | “MAUs”, or “monthly active users” for any period refers to the sum of users who accessed our platform through our mobile apps, our websites, our PC clients, or YY Client, a PC client offered by JOYY (before early January 2021 when we ceased offering content through YY Client), at least once during such relevant period. The calculations of our MAUs may not reflect the actual number of people who accessed our platform, such as it is possible that some people may use more than one device, or some people may share one device, or some people may access our platform through multiple channels. Average MAUs for any period is calculated by dividing (i) the sum of MAUs for each month during such relevant period, by (ii) the number of months during such relevant period; |
• | “Merger” refers to the proposed merger with DouYu pursuant to the Merger Agreement; |
• | “Merger Agreement” refers to the agreement and plan of merger, dated October 12, 2020, entered into among us, DouYu, Tiger Company Ltd. and, solely for the limited purposes set forth therein, Nectarine Investment Limited; |
• | “mobile MAUs” for any period refers to the sum of users who accessed our platform through our mobile apps at least once during such relevant period. The calculations of our mobile MAUs may not reflect the actual number of people who accessed our platform, such as it is possible that some people may use more than one device, or some people may share one device, or some people may access our platform through multiple channels. Average mobile MAUs for any period is calculated by dividing (i) the sum of our mobile MAUs for each month during such relevant period, by (ii) the number of months during such relevant period; |
• | “paying users” for any period refers to the sum of user accounts that purchased various products and services on our platform at least once during such relevant period. A paying user is not necessarily a unique user, however, as a unique user may set up multiple paying user accounts on our platform; |
• | “RMB” and “Renminbi” refer to the legal currency of China; |
• | “shares” or “ordinary shares” refers to our Class A and Class B ordinary shares, par value $0.0001 per share; |
• | “Tencent” refers to Tencent Holdings Limited and its subsidiaries; |
• | “US$,” “U.S. dollars,” “$,” and “dollars” refer to the legal currency of the United States; and |
• | “we,” “us,” “our company,” “our” and “Huya” refer to HUYA Inc., a Cayman Islands company, and its subsidiaries, and, in the context of describing our operations and combined and consolidated financial information, also include its variable interest entity and its subsidiaries in the PRC. |
• | our goals and strategies; |
• | our future business development, financial conditions and results of operations; |
• | the expected growth of the live streaming market in China; |
• | our expectations regarding demand for and market acceptance of our products and services; |
• | our ability to retain and increase the number of users, broadcasters, talent agencies and advertisers, and expand our product and service offerings; |
• | competition in our industry; |
• | general economic and business condition in China and elsewhere; |
• | our ability to monetize the user base; |
• | relevant laws, government policies, regulations, rules and guidelines relating to our industry; |
• | the impact of the COVID-19 pandemic to our business operations and the economy in China and elsewhere generally; |
• | the occurrence of any event, change or other circumstances that could give rise to the right of one or both of us and DouYu to terminate the Merger Agreement; |
• | the outcome of any legal proceedings that may be instituted against us, DouYu or our respective shareholders or directors in connection with the Merger; |
• | the ability to obtain regulatory approvals and meet other closing conditions to the Merger, including the risk that regulatory approvals required for the Merger are not obtained or are obtained subject to conditions that are not anticipated or that are material and adverse to our or DouYu’s business; |
• | a delay in closing the Merger; |
• | the ability to obtain approval by DouYu’s shareholders on the expected terms and schedule; |
• | business disruptions from the Merger that will harm our or DouYu’s business, including current plans and operations; |
• | potential adverse reactions or changes to business relationships resulting from the announcement or completion of the Merger; |
• | certain restrictions during the pendency of the Merger that may impact our or DouYu’s ability to pursue certain business opportunities or strategic transactions; |
• | the ability of DouYu or us to retain and hire key personnel; |
• | uncertainty as to the long-term value of our Class A ordinary shares following the Merger; |
• | the continued availability of capital and financing following the Merger; |
• | our ability to realize the intended synergies from the Merger; and |
• | assumptions underlying or related to any of the foregoing. |
ITEM 1. IDENTITY |
OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS |
ITEM 2. OFFER |
STATISTICS AND EXPECTED TIMETABLE |
ITEM 3. |
KEY INFORMATION |
For the year ended December 31, |
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2016 |
2017 |
2018 |
2019 |
2020 |
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RMB |
RMB |
RMB |
RMB |
RMB |
US$ |
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(in thousands, except for share, ADS, per share and per ADS data) |
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Selected Consolidated Statements of Comprehensive (Loss) Income: |
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Net revenues: |
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Live streaming |
791,978 | 2,069,536 | 4,442,845 | 7,976,214 | 10,311,624 | 1,580,326 | ||||||||||||||||||
Advertising and others |
4,926 | 115,280 | 220,595 | 398,287 | 602,750 | 92,375 | ||||||||||||||||||
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Total net revenues |
796,904 | 2,184,816 | 4,663,440 | 8,374,501 | 10,914,374 | 1,672,701 | ||||||||||||||||||
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Cost of revenues (1) |
(1,094,644 | ) | (1,929,864 | ) | (3,933,647 | ) | (6,892,579 | ) | (8,646,308 | ) | (1,325,105 | ) | ||||||||||||
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Gross (loss) profit |
(297,740 | ) | 254,952 | 729,793 | 1,481,922 | 2,268,066 | 347,596 | |||||||||||||||||
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Operating expenses: |
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Research and development expenses (1) |
(188,334 | ) | (170,160 | ) | (265,152 | ) | (508,714 | ) | (734,261 | ) | (112,530 | ) | ||||||||||||
Sales and marketing expenses (1) |
(68,746 | ) | (87,292 | ) | (189,207 | ) | (438,396 | ) | (558,012 | ) | (85,519 | ) | ||||||||||||
General and administrative expenses (1) |
(71,325 | ) | (101,995 | ) | (287,710 | ) | (352,824 | ) | (445,006 | ) | (68,200 | ) | ||||||||||||
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Total operating expenses |
(328,405 | ) | (359,447 | ) | (742,069 | ) | (1,299,934 | ) | (1,737,279 | ) | (266,249 | ) | ||||||||||||
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Other income |
— | 9,629 | 38,938 | 79,390 | 194,169 | 29,758 | ||||||||||||||||||
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Operating (loss) income |
(626,145 | ) | (94,866 | ) | 26,662 | 261,378 | 724,956 | 111,105 | ||||||||||||||||
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Interest and short-term investments income |
518 | 14,049 | 156,549 | 304,491 | 313,366 | 48,025 | ||||||||||||||||||
Fair value loss on derivative liabilities |
— | — | (2,285,223 | ) | — | — | — | |||||||||||||||||
Gain on fair value change of investment |
— | — | — | — | 2,160 | 331 | ||||||||||||||||||
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Other non-operating expenses |
— | — | — | — | (10,010 | ) | (1,534 | ) | ||||||||||||||||
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Foreign currency exchange gains, net |
— | — | 51 | 1,157 | 2,056 | 315 | ||||||||||||||||||
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(Loss) income before income tax benefits (expenses) |
(625,627 | ) | (80,817 | ) | (2,101,961 | ) | 567,026 | 1,032,528 | 158,242 | |||||||||||||||
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Income tax benefits (expenses) |
— | — | 50,943 | (96,078 | ) | (176,784 | ) | (27,093 | ) | |||||||||||||||
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(Loss) income before share of (loss) income in equity method investments, net of income taxes |
(625,627 | ) | (80,817 | ) | (2,051,018 | ) | 470,948 | 855,744 | 131,149 | |||||||||||||||
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Share of (loss) income in equity method investments, net of income taxes |
— | (151 | ) | 113,329 | (2,775 | ) | 28,414 | 4,355 | ||||||||||||||||
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Net (loss) income attributable to HUYA Inc. |
(625,627 | ) | (80,968 | ) | (1,937,689 | ) | 468,173 | 884,158 | 135,504 | |||||||||||||||
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Accretion to Series A redeemable convertible preferred shares |
— | (19,842 | ) | (71,628 | ) | — | — | — | ||||||||||||||||
Deemed dividend to series A preferred shareholders |
— | — | (496,995 | ) | — | — | — | |||||||||||||||||
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Net (loss) income attributable to ordinary shareholders |
(625,627 | ) | (100,810 | ) | (2,506,312 | ) | 468,173 | 884,158 | 135,504 | |||||||||||||||
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Net (loss) income |
(625,627 | ) | (80,968 | ) | (1,937,689 | ) | 468,173 | 884,158 | 135,504 | |||||||||||||||
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For the year ended December 31, |
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2016 |
2017 |
2018 |
2019 |
2020 |
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RMB |
RMB |
RMB |
RMB |
RMB |
US$ |
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(in thousands, except for share, ADS, per share and per ADS data) |
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Foreign currency translation adjustments, net of nil tax |
— | 308 | 366,259 | 157,568 | (451,873 | ) | (69,253 | ) | ||||||||||||||||
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Total comprehensive (loss) income attributable to HUYA Inc. |
(625,627 | ) | (80,660 | ) | (1,571,430 | ) | 625,741 | 432,285 | 66,251 | |||||||||||||||
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Net (loss) income per ADS (2) |
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Basic |
(6.26 | ) | (1.01 | ) | (15.02 | ) | 2.18 | 3.89 | 0.60 | |||||||||||||||
Diluted |
(6.26 | ) | (1.01 | ) | (15.02 | ) | 2.02 | 3.71 | 0.57 | |||||||||||||||
Weighted average number of ADSs used in calculating net (loss) income per ADS |
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Basic |
100,000,000 | 100,000,000 | 166,828,435 | 214,811,862 | 227,081,238 | 227,081,238 | ||||||||||||||||||
Diluted |
100,000,000 | 100,000,000 | 166,828,435 | 232,024,961 | 238,631,613 | 238,631,613 | ||||||||||||||||||
Net (loss) income per ordinary share |
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Basic |
(6.26 | ) | (1.01 | ) | (15.02 | ) | 2.18 | 3.89 | 0.60 | |||||||||||||||
Diluted |
(6.26 | ) | (1.01 | ) | (15.02 | ) | 2.02 | 3.71 | 0.57 | |||||||||||||||
Weighted average number of ordinary shares used in calculating net (loss) income per ordinary share |
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Basic |
100,000,000 | 100,000,000 | 166,828,435 | 214,811,862 | 227,081,238 | 227,081,238 | ||||||||||||||||||
Diluted |
100,000,000 | 100,000,000 | 166,828,435 | 232,024,961 | 238,631,613 | 238,631,613 |
Notes: |
(1) | Share-based compensation expenses were allocated in cost of revenues and operating expenses as follows: |
For the year ended December 31, |
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2016 |
2017 |
2018 |
2019 |
2020 |
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RMB |
RMB |
RMB |
RMB |
RMB |
US$ |
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(in thousands) |
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Cost of revenues |
5,677 | 2,877 | 10,472 | 31,593 | 64,942 | 9,953 | ||||||||||||||||||
Research and development expenses |
19,538 | 9,174 | 30,643 | 86,296 | 150,723 | 23,099 | ||||||||||||||||||
Sales and marketing expenses |
326 | 791 | 1,832 | 5,919 | 9,879 | 1,514 | ||||||||||||||||||
General and administrative expenses |
26,557 | 27,266 | 183,748 | 157,936 | 182,664 | 27,994 |
(2) | Each ADS represents one Class A ordinary share |
As of December 31, |
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2016 |
2017 |
2018 |
2019 |
2020 |
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RMB |
RMB |
RMB |
RMB |
RMB |
US$ |
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(in thousands) |
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Selected Consolidated Balance Sheet Data: |
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Cash and cash equivalents |
6,187 | 442,532 | 709,019 | 1,113,193 | 3,293,573 | 504,762 | ||||||||||||||||||
Short-term deposits |
95,000 | 593,241 | 4,983,825 | 6,743,445 | 5,974,790 | 915,677 | ||||||||||||||||||
Short-term investments |
— | — | 300,162 | 2,219,531 | 1,206,539 | 184,910 | ||||||||||||||||||
Total current assets |
156,101 | 1,250,307 | 6,595,187 | 10,591,820 | 11,270,938 | 1,727,347 | ||||||||||||||||||
Investments |
— | 10,299 | 219,827 | 379,424 | 467,206 | 71,602 | ||||||||||||||||||
Total assets |
167,234 | 1,300,541 | 7,106,187 | 11,366,550 | 12,410,687 | 1,902,020 | ||||||||||||||||||
Total current liabilities |
319,928 | 685,650 | 1,380,446 | 2,446,677 | 2,384,795 | 365,485 | ||||||||||||||||||
Total liabilities |
331,621 | 730,674 | 1,461,180 | 2,681,700 | 2,633,909 | 403,664 | ||||||||||||||||||
Class A ordinary shares |
— | 1 | 29 | 44 | 55 | 8 | ||||||||||||||||||
Class B ordinary shares |
— | 66 | 104 | 100 | 100 | 15 | ||||||||||||||||||
Total shareholders’ (deficit) equity |
(164,387 | ) | 60,199 | 5,645,007 | 8,684,850 | 9,776,778 | 1,498,356 | |||||||||||||||||
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For the year ended December 31, |
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2016 |
2017 |
2018 |
2019 |
2020 |
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RMB |
RMB |
RMB |
RMB |
RMB |
US$ |
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(in thousands) |
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Selected Consolidated Cash Flows Data |
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Net cash (used in)/provided by operating activities |
(420,451 | ) | 242,444 | 717,461 | 1,945,414 | 1,239,874 | 190,019 | |||||||||||||||||
Net cash (used in)/provided by investing activities |
(96,135 | ) | (559,561 | ) | (4,567,452 | ) | (3,684,971 | ) | 1,004,780 | 153,990 | ||||||||||||||
Net cash provided by financing activities |
522,773 | 774,448 | 4,126,861 | 2,133,651 | 265,294 | 40,658 | ||||||||||||||||||
Net increase in cash and cash equivalents and restricted cash |
6,187 | 457,331 | 276,870 | 394,094 | 2,509,948 | 384,667 | ||||||||||||||||||
Cash and cash equivalents and restricted cash at the beginning of the year |
— | 6,187 | 442,532 | 709,019 | 1,114,585 | 170,818 | ||||||||||||||||||
Effect of exchange rate changes on cash and cash equivalents and restricted cash |
— | (20,986 | ) | (10,383 | ) | 11,472 | (166,071 | ) | (25,453 | ) | ||||||||||||||
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Cash and cash equivalents and restricted cash at the end of the year |
6,187 | 442,532 | 709,019 | 1,114,585 | 3,458,462 | 530,032 | ||||||||||||||||||
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B. |
Capitalization and Indebtedness |
C. |
Reasons for the Offer and Use of Proceeds |
D. |
Risk Factors |
• | challenges in formulating effective local sales and marketing strategies targeting internet and mobile users from various jurisdictions and cultures, who have a diverse range of preferences and demands; |
• | challenges in identifying appropriate local third-party business partners such as game developers and publishers, e-sports tournament and game event organizers, broadcasters and talent agencies, and establishing and maintaining good working relationships with them; |
• | challenges in recruiting quality local broadcasters to attract and engage local users; |
• | challenges in effectively managing overseas operations from our headquarters and establishing overseas IT systems and infrastructure; |
• | challenges in selecting suitable geographical regions for global expansion and the general economic condition of various regions we operate; |
• | challenges in increasing and diversifying revenues, controlling costs and expenses, and making profits; |
• | fluctuations in currency exchange rates; |
• | compliance with applicable foreign laws and regulations, including but not limited to internet content requirements, foreign exchange controls, cash repatriation restrictions, intellectual property protection rules, data privacy requirements, tax regulations and rules; and |
• | competition situations in various regions we operate. |
• | our technology, system, networks and our users’ devices have been subject to, and may continue to be the target of, cyber-attacks, computer viruses, malicious code, phishing attacks or information security breaches that could result in an unauthorized release, gathering, monitoring, misuse, loss or destruction of confidential, proprietary and other information of ours, our employees or sensitive information provided by our users, or otherwise disrupt our, our users’ or other third parties’ business operations; |
• | we periodically encounter attempts to create false accounts or use our platform to send targeted and untargeted spam messages to our users, or take other actions on our platform for purposes such as spamming or spreading misinformation, and we may not be able to repel spamming attacks; |
• | the use of encryption and other security measures intended to protect our systems and confidential data may not provide absolute security, and losses or unauthorized access to or releases of confidential information may still occur; |
• | our security measures may be breached due to employee error, malfeasance or unauthorized access to sensitive information by our employees, who may be induced by outside third parties, and we may not be able to anticipate any breach of our security or to implement adequate preventative measures; and |
• | we may be subject to information technology system failures or network disruptions caused by natural disasters, accidents, power disruptions, telecommunications failures, acts of terrorism or war, computer viruses, physical or electronic break-ins, or other events or disruptions. |
• | our market position and competitiveness in the live streaming service, in particular, game live streaming; |
• | our future profitability, overall financial condition, results of operations and cash flows; |
• | general market conditions for capital raising activities by live streaming and other internet companies in China; |
• | foreign currency restrictions; and |
• | economic, political and other conditions in China and internationally, including the continuous impact of the COVID-19 outbreak. |
• | Agreements with Tencent |
• | Developing business relationships with Tencent’s competitors |
• | Employee recruiting and retention |
• | Allocation of business opportunities |
• | Our directors may have conflicts of interest |
• | Sales of shares in our company |
• | revoke our business and operating licenses; |
• | levy fines on us; |
• | confiscate any of our income that they deem to be obtained through illegal operations; |
• | require us to discontinue or restrict operations; |
• | restrict our right to collect revenues; |
• | block our mobile apps, websites, or PC clients; |
• | require us to restructure the operations in such a way as to compel us to establish a new enterprise, re-apply for the necessary licenses or relocate our businesses, staff and assets; |
• | impose additional conditions or requirements with which we may not be able to comply; or |
• | take other regulatory or enforcement actions against us that could be harmful to our business. |
• | We only have contractual control over our platform. Guangzhou Huya, our PRC variable interest entity, owns our platform due to the restriction of foreign investment in businesses providing value-added telecommunication services in China, including internet content provision services. If Guangzhou Huya breaches its contractual arrangements with us and no longer remains under our control, this may significantly disrupt our business, subject us to sanctions, compromise enforceability of related contractual arrangements, or have other harmful effects on us. |
• | There are uncertainties relating to the regulation of the internet business in China, including evolving licensing practices and the requirement for real-name registrations and its implementation in actual practice. Permits, licenses or operations at some of our subsidiaries and PRC variable interest entity levels may be subject to challenge, or we may fail to obtain permits or licenses that may be deemed necessary for our operations or we may not be able to obtain or renew certain permits or licenses. See “Risks Related to Our Business and Our Industry-If we fail to obtain and maintain the licenses and approvals required under the complex regulatory environment for internet-based businesses in China, our business, financial condition and results of operations may be materially and adversely affected,” “Item 4. Information on the Company—B. Business Overview—Government Regulations—Internet Information Services,” “Item 4. Information on the Company—B. Business Overview—Government Regulations—Internet Publication and Cultural Products,” “Item 4. Information on the Company—B. Business Overview—Government Regulations—Online Music and Entertainment” and “Item 4. Information on the Company—B. Business Overview—Government Regulations—Online Transmission of Audio-Visual Programs.” In addition, if we were required to implement real-name registration system on our platform with stricter and higher standards, we may lose large numbers of registered user accounts for various reasons, because users may no longer maintain multiple accounts and users who dislike giving out their private information may cease to use our products and services altogether. |
• | The evolving PRC regulatory system for the internet industry may lead to the establishment of new regulatory agencies. For example, in May 2011, the State Council announced the establishment of a new department, the State Internet Information Office (now known as the Cyberspace Administration of China or Office of the Central Cyberspace Affairs Commission). The primary role of this new agency is to facilitate the policy-making and legislative development in this field to direct and coordinate with the relevant departments in connection with online content administration and to deal with cross-ministry regulatory matters in relation to the internet industry. We are unable to determine what policies this new agency or any new agencies to be established in the future may have or how they may interpret existing laws, regulations and policies and how they may affect us. Further, new laws, regulations or policies may be promulgated or announced that will regulate internet activities, including online video and online advertising businesses. If these new laws, regulations or policies are promulgated, additional licenses may be required for our operations. If our operations do not comply with these new regulations after they become effective, or if we fail to obtain any licenses required under these new laws and regulations, we could be subject to penalties. |
• | variations in our revenues, earnings, cash flow and data related to our user base or user engagement; |
• | announcements of new investments, acquisitions, strategic partnerships or joint ventures by us or our competitors; |
• | announcements of new product and service offerings, solutions and expansions by us or our competitors; |
• | changes in financial estimates by securities analysts; |
• | detrimental adverse publicity about us, our services or our industry; |
• | additions or departures of key personnel; and |
• | potential litigation or regulatory investigations. |
• | we have failed to timely provide the depositary with notice of meeting and related voting materials; |
• | we have instructed the depositary that we do not wish a discretionary proxy to be given; |
• | we have informed the depositary that there is substantial opposition as to a matter to be voted on at the meeting; |
• | a matter to be voted on at the meeting would have a material adverse impact on shareholders; or |
• | the voting at the meeting is to be made on a show of hands. |
• | the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q or current reports on Form 8-K; |
• | the sections of the Exchange Act regulating the solicitation of proxies, consents, or authorizations in respect of a security registered under the Exchange Act; |
• | the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and |
• | the selective disclosure rules by issuers of material nonpublic information under Regulation FD. |
(1) | The shareholder of Guangzhou Huya is Linzhi Tencent Technology Co., Ltd., an affiliate of Tencent, holding 100% of Guangzhou Huya’s equity interest. |
• | exercise effective control over Guangzhou Huya and its subsidiaries; |
• | receive substantially all of the economic benefits of Guangzhou Huya and its subsidiaries; and |
• | have an exclusive option to purchase all or part of the equity interests in Guangzhou Huya when and to the extent permitted by PRC law. |
• | the ownership structures of Huya Technology and Guangzhou Huya are in compliance with PRC laws or regulations currently in effect; and |
• | the contractual arrangements among Huya Technology, Guangzhou Huya and Linzhi Tencent governed by PRC law, are valid, binding and enforceable under PRC law, and do not and will not result in any violation of applicable PRC laws or regulations currently in effect. |
E. |
Property, Plants and Equipment |
ITEM 4.A. |
UNRESOLVED STAFF COMMENTS |
ITEM 5. |
OPERATING AND FINANCIAL REVIEW AND PROSPECTS |
A. |
Operating Results |
For the year ended December 31, |
||||||||||||||||||||||||||||
2018 |
2019 |
2020 |
||||||||||||||||||||||||||
RMB |
% |
RMB |
% |
RMB |
US$ |
% |
||||||||||||||||||||||
(in thousands, except for percentages) |
||||||||||||||||||||||||||||
Net revenues |
||||||||||||||||||||||||||||
Live streaming |
4,442,845 | 95.3 | 7,976,214 | 95.2 | 10,311,624 | 1,580,326 | 94.5 | |||||||||||||||||||||
Advertising and others |
220,595 | 4.7 | 398,287 | 4.8 | 602,750 | 92,375 | 5.5 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total net revenues |
4,663,440 | 100.0 | 8,374,501 | 100.0 | 10,914,374 | 1,672,701 | 100.0 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Cost of revenues (1) |
(3,933,647 | ) | (84.4 | ) | (6,892,579 | ) | (82.3 | ) | (8,646,308 | ) | (1,325,105 | ) | (79.2 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Gross profit |
729,793 | 15.6 | 1,481,922 | 17.7 | 2,268,066 | 347,596 | 20.8 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Operating expenses |
||||||||||||||||||||||||||||
Research and development expenses (1) |
(265,152 | ) | (5.7 | ) | (508,714 | ) | (6.1 | ) | (734,261 | ) | (112,530 | ) | (6.7 | ) | ||||||||||||||
Sales and marketing expenses (1) |
(189,207 | ) | (4.1 | ) | (438,396 | ) | (5.2 | ) | (558,012 | ) | (85,519 | ) | (5.1 | ) | ||||||||||||||
General and administrative expenses (1) |
(287,710 | ) | (6.1 | ) | (352,824 | ) | (4.2 | ) | (445,006 | ) | (68,200 | ) | (4.1 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total operating expenses |
(742,069 | ) | (15.9 | ) | (1,299,934 | ) | (15.5 | ) | (1,737,279 | ) | (266,249 | ) | (15.9 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Other income |
38,938 | 0.8 | 79,390 | 0.9 | 194,169 | 29,758 | 1.8 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Operating income |
26,662 | 0.5 | 261,378 | 3.1 | 724,956 | 111,105 | 6.7 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the year ended December 31, |
||||||||||||||||||||||||||||
2018 |
2019 |
2020 |
||||||||||||||||||||||||||
RMB |
% |
RMB |
% |
RMB |
US$ |
% |
||||||||||||||||||||||
(in thousands, except for percentages) |
||||||||||||||||||||||||||||
Interest and short-term investments income |
156,549 | 3.4 | 304,491 | 3.6 | 313,366 | 48,025 | 2.9 | |||||||||||||||||||||
Fair value loss on derivative liabilities |
(2,285,223 | ) | (49.0 | ) | — | — | — | — | — | |||||||||||||||||||
Gain on fair value change of investment |
— | — | — | — | 2,160 | 331 | 0.0 | |||||||||||||||||||||
Other non-operating expenses |
— | — | — | — | (10,010 | ) | (1,534 | ) | (0.1 | ) | ||||||||||||||||||
Foreign currency exchange gains, net |
51 | 0.0 | 1,157 | 0.0 | 2,056 | 315 | 0.0 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
(Loss) income before income tax benefits (expenses) |
(2,101,961 | ) | (45.1 | ) | 567,026 | 6.7 | 1,032,528 | 158,242 | 9.5 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Income tax benefits (expenses) |
50,943 | 1.1 | (96,078 | ) | (1.1 | ) | (176,784 | ) | (27,093 | ) | (1.6 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
(Loss) income before share of income (loss) in equity method investments, net of income taxes |
(2,051,018 | ) | (44.0 | ) | 470,948 | 5.6 | 855,744 | 131,149 | 7.9 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Share of income (loss) in equity method investments, net of income taxes |
113,329 | 2.4 | (2,775 | ) | (0.0 | ) | 28,414 | 4,355 | 0.3 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Net (loss) income |
(1,937,689 | ) | (41.6 | ) | 468,173 | 5.6 | 884,158 | 135,504 | 8.2 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) | Share-based compensation was allocated in cost of revenues and operating expenses as follows: |
For the year ended December 31, |
||||||||||||||||
2018 |
2019 |
2020 |
||||||||||||||
RMB |
RMB |
RMB |
US$ |
|||||||||||||
(in thousands) |
||||||||||||||||
Cost of revenues |
10,472 | 31,593 | 64,942 | 9,953 | ||||||||||||
Research and development expenses |
30,643 | 86,296 | 150,723 | 23,099 | ||||||||||||
Sales and marketing expenses |
1,832 | 5,919 | 9,879 | 1,514 | ||||||||||||
General and administrative expenses |
183,748 | 157,936 | 182,664 | 27,994 |
For the year ended December 31, |
||||||||||||||||||||||||||||
2018 |
2019 |
2020 |
||||||||||||||||||||||||||
RMB |
% |
RMB |
% |
RMB |
US$ |
% |
||||||||||||||||||||||
(in thousands, except for percentages) |
||||||||||||||||||||||||||||
Cost of revenues: |
||||||||||||||||||||||||||||
Revenue sharing fees and content costs |
3,060,836 | 77.8 | 5,552,712 | 80.6 | 7,086,832 | 1,086,105 | 82.0 | |||||||||||||||||||||
Bandwidth costs |
652,758 | 16.6 | 800,827 | 11.6 | 879,172 | 134,739 | 10.2 | |||||||||||||||||||||
Salaries and welfare |
101,939 | 2.6 | 255,258 | 3.7 | 306,805 | 47,020 | 3.5 | |||||||||||||||||||||
Payment handling costs |
22,780 | 0.6 | 120,429 | 1.7 | 154,538 | 23,684 | 1.8 | |||||||||||||||||||||
Share-based compensation |
10,472 | 0.3 | 31,593 | 0.5 | 64,942 | 9,953 | 0.8 | |||||||||||||||||||||
Others |
84,862 | 2.1 | 131,760 | 1.9 | 154,019 | 23,604 | 1.7 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total cost of revenues |
3,933,647 | 100.0 | 6,892,579 | 100.0 | 8,646,308 | 1,325,105 | 100.0 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
• | Huya Technology was qualified as a Software Enterprise, and enjoyed the zero preferential tax rate starting from 2017 and 12.5% preferential tax rate starting from 2019. In 2020, Huya Technology was qualified as a KNSE and was eligible for the income tax rate of 10% for the year of 2020 pursuant to SAT Public Notice [2018] No.23 (“Circular 23”), subject to review by applicable tax authorities. |
• | Guangzhou Huya applied for the HNTE qualification and obtained approval in November 2018. It entitled to enjoy the preferential tax rate of 15% as an HNTE for three years starting from 2018, and should apply for HNTE qualification renewal in 2021. |
|
• | Hainan Huya Entertainment Information Technology Co., Ltd., who enterprises in encouraged industries registered in the Hainan Free Trade Port and engaging in substantive operations, entitled to enjoy the preferential tax rate of 15% pursuant to Cai Shui [2020] No. 31. |
• | Most of the remaining PRC subsidiaries and VIEs were subject to 25% EIT for the years reported. |
Date of valuation |
Fair Value Per Share (US$) |
Discount of Lack of Marketability (DLOM) |
Discount Rate | |||||
March 15, 2018 |
7.16 | 10% | 19% | |||||
March 31, 2018 |
7.16 | 10% | 19% |
Valuation Date |
||||
2018 |
||||
Weighted average fair value per option granted |
US$ | 5.2130 | ||
Weighted average exercise price |
US$ | 2.47 | ||
Risk-free interest rate (1) |
2.83% | |||
Expected term (in year) (2) |
10 | |||
Expected volatility (3) |
55% | |||
Dividend yield (4) |
— |
(1) | The risk-free interest rate of periods within the contractual life of the share option is based on the China Government Bond yield as at the valuation dates. |
(2) | The expected term is the contract life of the option. |
(3) | Expected volatility is estimated based on the average of historical volatilities of the comparable companies in the same industry as at the valuation dates. |
(4) | We have no history or expectation of paying dividend on our ordinary shares. The expected dividend yield was estimated based on our expected dividend policy over the expected term of the option. |
Valuation Date |
March 8, 2018 |
May 10, 2018 |
||||||
Volatility |
50% | 50% | ||||||
Risk-free rate (3 months) |
1.66% | 1.58% | ||||||
Risk-free rate (4 years) |
2.52% | 2.46% | ||||||
Dividend yield |
0% | 0% |
B. |
Liquidity and Capital Resources |
For the year ended December 31, |
||||||||||||||||
2018 |
2019 |
2020 |
||||||||||||||
RMB |
RMB |
RMB |
US$ |
|||||||||||||
(in thousands) |
||||||||||||||||
Summary Consolidated Cash Flows Data |
||||||||||||||||
Net cash provided by operating activities |
717,461 | 1,945,414 | 1,239,874 | 190,019 | ||||||||||||
Net cash (used in) /provided by investing activities |
(4,567,452 | ) | (3,684,971 | ) | 1,004,780 | 153,990 | ||||||||||
Net cash provided by financing activities |
4,126,861 | 2,133,651 | 265,294 | 40,658 | ||||||||||||
Net increase in cash and cash equivalents and restricted cash |
276,870 | 394,094 | 2,509,948 | 384,667 | ||||||||||||
Cash and cash equivalents and restricted cash at the beginning of the year |
442,532 | 709,019 | 1,114,585 | 170,818 | ||||||||||||
Effect of exchange rate changes on cash and cash equivalents and restricted cash |
(10,383 | ) | 11,472 | (166,071 | ) | (25,453 | ) | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Cash and cash equivalents and restricted cash at the end of the year |
709,019 | 1,114,585 | 3,458,462 | 530,032 | ||||||||||||
|
|
|
|
|
|
|
|
Net revenues (1) |
Total assets (1) |
|||||||||||||||||||
For the year ended December 31, |
As of December 31, |
|||||||||||||||||||
2018 |
2019 |
2020 |
2019 |
2020 |
||||||||||||||||
HUYA Inc. and its wholly-owned subsidiaries |
0.1 | % | 1.0 | % | 1.6 | % | 76.5 | % | 91.1 | % | ||||||||||
Variable interest entity and its subsidiaries |
99.9 | % | 99.0 | % | 98.4 | % | 23.5 | % | 8.9 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total |
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
(1) | The percentages exclude the inter-company transactions and balances between HUYA Inc. and its wholly-owned subsidiaries and variable interest entity and its subsidiaries. |
C. |
Research and Development, Patents and Licenses, etc. |
• | AI and big data analytics |
• | Live streaming technologies state-of-the low-latency and low-loss rates in delivering voice and video data on our platform, even with weak internet connection, which provides our users with superior viewing experience. Audio and video technologies have been our main focus since our inception. For instance, we offer stable 8-12M pixels blue-ray quality live streaming. |
• | Servers and other infrastructure back-end architecture that enables smooth and expedient upgrades of our platform software infrastructure. Our advanced peer-to-peer |
D. |
Trend Information |
E. |
Off-Balance Sheet Arrangements |
F. |
Tabular Disclosure of Contractual Obligations |
Payment due by period |
||||||||||||||||||||
Total |
Less than 1 year |
1 - 3 years |
4 - 5 years |
More than 5 years |
||||||||||||||||
(in RMB thousands) |
||||||||||||||||||||
Operating Lease Obligations (1) |
133,919 | 42,945 | 76,997 | 13,977 | — | |||||||||||||||
Capital Commitments |
10,000 | 10,000 | — | — | — |
(1) | Represents our non-cancellable operating leases and property management fees for offices expiring on different dates. |
G. |
Safe Harbor |
ITEM 6. |
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES |
A. |
Directors and Executive Officers |
Directors and Executive Officers |
Age |
Position/Title | ||||
Lingdong Huang |
44 | Chairman of Board of Directors | ||||
Rongjie Dong |
44 | Director, Chief Executive Officer | ||||
David Xueling Li |
46 | Director | ||||
Cheng Yun Ming Matthew |
51 | Director | ||||
Hai Tao Pu |
50 | Director | ||||
Guang Xu |
38 | Director | ||||
Lei Zheng |
44 | Director | ||||
Hongqiang Zhao |
44 | Independent Director | ||||
Tsang Wah Kwong |
68 | Independent Director | ||||
Catherine Xiaozheng Liu |
44 | Chief Financial Officer | ||||
Ligao Lai |
42 | Chief Technology Officer |
B. |
Compensation of Directors and Executive Officers |
Name |
Class A Ordinary Shares Underlying Options Awarded |
Exercise Price (US$/Share) |
Date of Grant |
Date of Expiration | ||||||
Rongjie Dong |
— | US$2.55 |
August 9, 2017 | August 8, 2027 | ||||||
David Xueling Li |
— | US$2.55 |
March 15, 2018 | March 14, 2028 | ||||||
Ligao Lai |
* | US$2.55 |
August 9, 2017 | August 8, 2027 | ||||||
Other individuals as a group |
* | US$2.55 |
August 9, 2017, March 15, 2018 and July 1, 2018 |
August 8, 2027, March 14, 2028 and June 30, 2028 |
* | Less than 1% of our total outstanding shares. |
Name |
Class A Ordinary Shares Underlying Restricted Share Units Awarded |
Date of Grant |
Date of Expiration | |||
Rongjie Dong | * | March 31, 2018, and September 13, 2020 |
March 30, 2028, and September 12, 2030 | |||
Catherine Xiaozheng Liu | * | December 9, 2019 | December 8, 2029 | |||
Other individuals as a group | 5,938,784 | March 31, 2018 to March 15, 2021 | March 30, 2028 to March 14, 2031 |
* | Less than 1% of our total outstanding shares . |
C. |
Board Practices |
• | appointing the independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by the independent auditors; |
• | reviewing with the independent auditors any audit problems or difficulties and management’s response; |
• | discussing the annual audited financial statements with management and the independent auditors; |
• | reviewing the adequacy and effectiveness of our accounting and internal control policies and procedures and any steps taken to monitor and control major financial risk exposures; |
• | reviewing and approving all proposed related party transactions; |
• | meeting separately and periodically with management and the independent auditors; and |
• | monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance. |
• | reviewing and approving, or recommending to the board for its approval, the compensation for our chief executive officer and other executive officers; |
• | reviewing and recommending to the board for determination with respect to the compensation of our non-employee directors; |
• | reviewing periodically and approving any incentive compensation or equity plans, programs or similar arrangements, and |
• | selecting compensation consultant, legal counsel or other adviser only after taking into consideration all factors relevant to that person’s independence from management. |
• | selecting and recommending nominees for election by the shareholders or appointment by the board; |
• | reviewing annually with the board the current composition of the board with regards to characteristics such as independence, knowledge, skills, experience and diversity; |
• | making recommendations on the frequency and structure of board meetings and monitoring the functioning of the committees of the board; |
• | advising the board periodically with regards to significant developments in the law and practice of corporate governance as well as our compliance with applicable laws and regulations; and |
• | making recommendations to the board on all matters of corporate governance and on any remedial action to be taken. |
• | convening shareholders’ annual general meetings and reporting its work to shareholders at such meetings; |
• | declaring dividends and distributions; |
• | appointing officers and determining the term of office and its responsibilities of the officers; |
• | exercising the borrowing powers of our company and mortgaging the property of our company; and |
• | approving the transfer of shares in our company, including the registration of such shares in our share register. |
D. |
Employees |
As of December 31, 2020 |
||||||||
Number |
% |
|||||||
Customer services and operations |
669 | 32.2 | ||||||
Research and development |
1,015 | 48.9 | ||||||
Sales and marketing |
176 | 8.5 | ||||||
General and administrative |
215 | 10.4 | ||||||
|
|
|
|
|||||
Total |
2,075 | 100.0 | ||||||
|
|
|
|
E. |
Share Ownership |
• | each of our directors and executive officers; and |
• | each person known to us to own beneficially 5% or more of our total outstanding ordinary shares. |
Ordinary Shares Beneficially Owned |
||||||||||||||||||||
Class A ordinary Shares(†) |
Class B ordinary Shares(††) |
Total ordinary shares on an as-converted basis |
% of total ordinary shares on an as converted basis |
% of aggregate voting power (†††) |
||||||||||||||||
Directors and Executive Officers:** |
||||||||||||||||||||
Lingdong Huang |
— | — | — | — | — | |||||||||||||||
Rongjie Dong (1) |
1,392,199 | 1,970,804 | 3,363,003 | 1.4 | 1.3 | |||||||||||||||
David Xueling Li (2) |
* | — | * | * | * | |||||||||||||||
Cheng Yun Ming Matthew (3) |
— | — | — | — | — | |||||||||||||||
Hai Tao Pu (4) |
— | — | — | — | — | |||||||||||||||
Guang Xu |
— | — | — | — | — | |||||||||||||||
Lei Zheng |
— | — | — | — | — | |||||||||||||||
Hongqiang Zhao (5) |
— | — | — | — | — | |||||||||||||||
Tsang Wah Kwong (6) |
— | — | — | — | — | |||||||||||||||
Catherine Xiaozheng Liu |
* | — | * | * | * | |||||||||||||||
Ligao Lai |
* | — | * | * | * | |||||||||||||||
All directors and executive officers as a group |
3,678,525 | 1,970,804 | 5,649,329 | 2.4 | 1.4 | |||||||||||||||
Principal Shareholders: |
||||||||||||||||||||
Tencent Holdings Limited (7) |
— | 112,012,054 | 112,012,054 | 47.4 | 69.7 | |||||||||||||||
JOYY (8) |
— | 38,374,463 | 38,374,463 | 16.2 | 23.9 | |||||||||||||||
Morgan Stanley (9) |
26,777,866 | — | 26,777,866 | 11.3 | 1.7 |
* | Less than 1% of total outstanding ordinary shares. |
** | Except for Mr. Lingdong Huang, Mr. Guang Xu and Mr. Lei Zheng, and as indicated otherwise below, the business address for our directors and executive officers listed in the table is Building A3, E-Park, 280 Hanxi Road, Panyu District, Guangzhou 511446, the People’s Republic of China. The business address of Mr. Lingdong Huang, Mr. Guang Xu and Mr. Lei Zheng is Building C, Kexing Science Park, Nanshan District, Shenzhen, the People’s Republic of China. |
† | For each person and group included in this column, percentage ownership is calculated by dividing the number of Class A ordinary shares beneficially owned by such person or group, including Class A ordinary shares that such person or group has the right to acquire within 60 days of March 31, 2021, by the sum of the total number of Class A ordinary shares outstanding as of March 31, 2021 and the number of Class A ordinary shares underlying the options held by such person or group that are exercisable within 60 days of March 31, 2021. |
†† | For each person and group included in this column, percentage ownership is calculated by dividing the number of Class B ordinary shares beneficially owned by such person or group, including Class B ordinary shares that such person or group has the right to acquire within 60 days of March 31, 2021, by the sum of the total number of Class B ordinary shares outstanding as of March 31, 2021 and the number of Class B ordinary shares underlying the options held by such person or group that are exercisable within 60 days of March 31, 2021. |
††† | For each person or group included in this column, percentage of total voting power represents voting power based on both Class A and Class B ordinary shares held by such person or group, including Class A and Class B ordinary shares that such person or group has the right to acquire within 60 days of March 31, 2021, with respect to all outstanding shares of our Class A and Class B ordinary shares as a single class. Each holder of Class A ordinary shares is entitled to one vote per Class A ordinary share. Each holder of our Class B ordinary shares is entitled to ten votes per Class B ordinary share. Our Class B ordinary shares are convertible at any time by the holder into Class A ordinary shares on a share-for-share |
(1) | Represents (i) 1,220,804 Class B ordinary shares directly held by All Worth Limited, a British Virgin Islands company owned by a family trust controlled by Mr. Rongjie Dong, and (ii) 750,000 Class B ordinary shares directly held by Oriental Luck International Limited, a British Virgin Islands company wholly owned by a family trust controlled by Mr. Rongjie Dong, and (iii) 357,980 Class A ordinary shares issuable upon the vesting of the restricted shares units within 60 days after March 31, 2021 held by Mr. Rongjie Dong, and (iv) 1,034,219 Class A ordinary shares in the form of ADSs held by All Worth Limited. The registered offices of All Worth Limited and Oriental Luck International Limited are both Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, VG1110, British Virgin Islands. |
(2) | The business address of Mr. David Xueling Li is Building B-1, North Block of Wanda Plaza, No. 79 Wanbo 2nd Road, Panyu District, Guangzhou, 511442, the People’s Republic of China. |
(3) | The business address of Mr. Cheng Yun Ming Matthew is 29/F, Three Pacific Place, 1 Queen’s Road East, Wanchai, Hong Kong. |
(4) | The business address of Mr. Hai Tao Pu is 29/F, Three Pacific Place, 1 Queen’s Road East, Wanchai, Hong Kong. |
(5) | The business address of Mr. Hongqiang Zhao is No. 10 Furong Street, Chaoyang District, Beijing, the People’s Republic of China. |
(6) | The business address of Mr. Tsang Wah Kwong is Flat B, 11/F., Block 9, Vista Paradiso, 2 Hang Ming Street, Ma On Shan, New Territories, Hong Kong. |
(7) | Represents 112,012,054 Class B ordinary shares directly held by Linen Investment Limited, based on our register of members. Tencent Holdings Limited is a Cayman Islands company. Linen Investment Limited is a British Virgin Islands company and a direct wholly owned subsidiary of Tencent Holdings Limited. The principal business address of each of Tencent Holdings Limited and Linen Investment Limited is Level 29, Three Pacific Place, No. 1 Queen’s Road East, Wanchai, Hong Kong. |
(8) | Represents 38,374,463 Class B ordinary shares directly held by JOYY Inc., based on our register of members. JOYY Inc. is a Cayman Islands company. The principal business address of JOYY Inc. is Building B-1, North Block of Wanda Plaza, No. 79 Wanbo 2nd Road, Nancun Town, Panyu District, Guangzhou 511442, the People’s Republic of China. |
(9) | Represents 26,777,866 Class A ordinary shares in the form of ADSs held by Morgan Stanley and its affiliates as of March 31, 2021, as reported in a Schedule 13G amendment filed by Morgan Stanley and its affiliates on April 12, 2021. The principal business address of Morgan Stanley is 1585 Broadway New York, NY 10036. |
ITEM 7. |
MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS |
A. |
Major Shareholders |
B. |
Related Party Transactions |
For the year ended December 31, |
||||||||||||||||
2018 |
2019 |
2020 |
||||||||||||||
RMB |
RMB |
RMB |
US$ |
|||||||||||||
Operation support services provided by Tencent |
106,547 | 219,403 | 342,487 | 52,488 | ||||||||||||
Content cost charged by Tencent |
88,075 | 123,204 | 127,224 | 19,498 | ||||||||||||
Payment on behalf of Tencent |
— | 16,127 | 16,449 | 2,521 | ||||||||||||
Advertising and other revenues from Tencent |
14,345 | 8,028 | 14,349 | 2,199 | ||||||||||||
Market promotion expenses charged by Tencent |
2,174 | 12,777 | 11,208 | 1,718 | ||||||||||||
Others |
— | 2,835 | 2,883 | 442 |
For the year ended December 31, |
||||||||||||||||
2018 |
2019 |
2020 |
||||||||||||||
RMB |
RMB |
RMB |
US$ |
|||||||||||||
Purchase of services by JOYY on behalf of Huya |
37,408 | 22,622 | 18,945 | 2,903 | ||||||||||||
Operation support services provided by JOYY |
44,523 | 17,455 | 4,187 | 642 | ||||||||||||
Deemed distribution to JOYY |
— | 10,119 | 1,013 | 155 | ||||||||||||
Cash collected by JOYY as a payment platform for Huya |
4,081,696 | 1,362,489 | — | — | ||||||||||||
Repayment from JOYY in relation to the payment on behalf of Huya’s employees |
1,229 | 15,306 | — | — | ||||||||||||
Share-based compensation expenses related to JOYY’s Share-based Awards |
5,833 | 1,996 | — | — | ||||||||||||
Purchase of property and equipment and intangible assets from JOYY |
6,422 | 294 | — | — | ||||||||||||
Others |
9,245 | 228 | 41 | 6 |
• | Demand registration rights. |
• | Form F-3 registration rights.F-3, JOYY may request us to file a registration statement on Form F-3. We are not obligated to effect more than six registration statements on Form F-3 that have been declared and ordered effective. |
• | Piggyback registration rights. |
For the year ended December 31, |
||||||||
2020 |
||||||||
RMB |
US$ |
|||||||
Content cost charged by Tencent’s related parties |
79,784 | 12,227 | ||||||
Operation support services provided by Tencent’s related parties |
12,326 | 1,889 | ||||||
Market promotion expenses charged by Tencent’s related parties |
11,417 | 1,750 | ||||||
Advertising and other revenues from Tencent’s related parties |
8,197 | 1,256 | ||||||
Others |
10,301 | 1,579 |
C. |
Interests of Experts and Counsel Not applicable. |
ITEM 8. |
FINANCIAL INFORMATION |
A. |
Consolidated Statements and Other Financial Information |
B. |
Significant Changes |
ITEM 9. |
THE OFFER AND LISTING |
A. |
Offering and Listing Details. |
B. |
Plan of Distribution |
C. |
Markets |
D. |
Selling Shareholders |
E. |
Dilution |
F. |
Expenses of the Issue |
ITEM 10. |
ADDITIONAL INFORMATION |
A. |
Share Capital |
B. |
Memorandum and Articles of Association |
• | the instrument of transfer is lodged with us, accompanied by the certificate for the ordinary shares to which it relates and such other evidence as our board of directors may reasonably require to show the right of the transferor to make the transfer; |
• | the instrument of transfer is in respect of only one class of shares; |
• | the instrument of transfer is properly stamped, if required; |
• | in the case of a transfer to joint holders, the number of joint holders to whom the ordinary share is to be transferred does not exceed four; and |
• | a fee of such maximum sum as the NYSE may determine to be payable or such lesser sum as our directors may from time to time require is paid to us in respect thereof. |
• | the designation of the series; |
• | the number of shares of the series and the subscription price thereof if different from the par value thereof; |
• | the dividend rights, dividend rates, conversion rights, voting rights; and |
• | the rights and terms of redemption and liquidation preferences. |
• | authorize our board of directors to issue preferred shares in one or more series and to designate the price, rights, preferences, privileges and restrictions of such preferred shares without any further vote or action by our shareholders; and |
• | limit the ability of shareholders to requisition and convene general meetings of shareholders However, under Cayman Islands law, our directors may only exercise the rights and powers granted to them under our fourth amended and restated memorandum and articles of association for a proper purpose and for what they believe in good faith to be in the best interests of our company. |
• | increase our share capital by such sum, to be divided into shares of such classes and amount, as the resolution shall prescribe; |
• | consolidate and divide all or any of our share capital into shares of a larger amount than our existing shares; |
• | sub-divide our existing shares, or any of them into shares of a smaller amount, provided that in the subdivision the proportion between the amount paid and the amount, if any, unpaid on each reduced share shall be the same as it was in case of the share from which the reduced share is derived; or |
• | cancel any shares which, at the date of the passing of the resolution, have not been taken or agreed to be taken by any person and diminish the amount of our share capital by the amount of the shares so canceled. Our shareholders may by special resolution, subject to confirmation by the Grand Court of the Cayman Islands on an application by our company for an order confirming such reduction, reduce our share capital or any capital redemption reserve in any manner permitted by law. |
• | does not have to file an annual return of its shareholders with the Registrar of Companies; |
• | is not required to open its register of members for inspection; |
• | does not have to hold an annual general meeting; |
• | may issue negotiable or bearer shares or shares with no par value; |
• | may obtain an undertaking against the imposition of any future taxation (such undertakings are usually given for 20 years in the first instance); |
• | may register by way of continuation in another jurisdiction and be deregistered in the Cayman Islands; |
• | may register as a limited duration company; and |
• | may register as a segregated portfolio company. |
• | the names and addresses of the members, together with a statement of the shares held by each member, and such statement shall confirm (i) the amount paid or agreed to be considered as paid, on the shares of each member, (ii) the number and category of shares held by each member, and (iii) whether each relevant category of shares held by a member carries voting rights under the articles of association of the company, and if so, whether such voting rights are conditional; |
• | the date on which the name of any person was entered on the register as a member; and |
• | the date on which any person ceased to be a member. |
• | the statutory provisions as to the required majority vote have been met; |
• | the shareholders have been fairly represented at the meeting in question and the statutory majority are acting bona fide without coercion of the minority to promote interests adverse to those of the class; |
• | the arrangement is such that may be reasonably approved by an intelligent and honest man of that class acting in respect of his interest; and |
• | the arrangement is not one that would more properly be sanctioned under some other provision of the Companies Act. |
• | an act which is ultra vires or illegal and is therefore incapable of ratification by the shareholders, |
• | an act which constitutes a fraud against the minority where the wrongdoers are themselves in control of the company, and |
• | an act which requires a resolution with a qualified (or special) majority (i.e. more than a simple majority) which has not been obtained. |
• | an exempted company does not have to file an annual return of its shareholders with the Registrar of Companies; |
• | an exempted company’s register of members is not required to be open to inspection; |
• | an exempted company does not have to hold an annual general meeting; |
• | an exempted company may issue no par value shares; |
• | an exempted company may obtain an undertaking against the imposition of any future taxation (such undertakings are usually given for 30 years in the first instance); |
• | an exempted company may register by way of continuation in another jurisdiction and be deregistered in the Cayman Islands; |
• | an exempted company may register as a limited duration company; and |
• | an exempted company may register as a segregated portfolio company. |
C. |
Material Contracts |
D. |
Exchange Controls |
E. |
Taxation |
• | such excess distribution and/or gain will be allocated ratably over the U.S. holder’s holding period for the ADSs or ordinary shares; |
• | such amount allocated to the current taxable year and any taxable years in the U.S. holder’s holding period prior to the first taxable year in which we are a PFIC, or pre-PFIC year, will be taxable as ordinary income; |
• | such amount allocated to each prior taxable year, other than a pre-PFIC year, will be subject to tax at the highest tax rate in effect for that year; and |
• | an interest charge generally applicable to underpayments of tax will be imposed on the tax attributable to each prior taxable year, other than a pre-PFIC year. |
F. |
Dividends and Paying Agents |
G. |
Statement by Experts |
H. |
Documents on Display |
I. |
Subsidiary Information |
ITEM 11. |
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
A. |
Debt Securities |
B. |
Warrants and Rights |
C. |
Other Securities |
D. |
American Depositary Shares |
Service |
Fees | |
• To any person to which ADSs are issued or to any person to which a distribution is made in respect of ADS distributions pursuant to stock dividends or other free distributions of stock, bonus distributions, stock splits or other distributions (except where converted to cash) |
Up to US$0.05 per ADS issued | |
• Cancelation of ADSs, including the case of termination of the deposit agreement |
Up to US$0.05 per ADS canceled | |
• Distribution of cash dividends |
Up to US$0.05 per ADS held | |
• Distribution of cash entitlements (other than cash dividends) and/or cash proceeds from the sale of rights, securities and other entitlements |
Up to US$0.05 per ADS held | |
• Distribution of ADSs pursuant to exercise of rights |
Up to US$0.05 per ADS held | |
• Distribution of securities other than ADSs or rights to purchase additional ADSs |
Up to US$0.05 per ADS held | |
• Depositary services |
Up to US$0.05 per ADS held on the applicable record date(s) established by the depositary bank |
• | Fees for the transfer and registration of ordinary shares charged by the registrar and transfer agent for the ordinary shares in the Cayman Islands (i.e., upon deposit and withdrawal of ordinary shares). |
• | Expenses incurred for converting foreign currency into U.S. dollars. |
• | Expenses for cable, telex and fax transmissions and for delivery of securities. |
• | Taxes and duties upon the transfer of securities, including any applicable stamp duties, any stock transfer charges or withholding taxes (i.e., when ordinary shares are deposited or withdrawn from deposit). |
• | Fees and expenses incurred in connection with the delivery or servicing of ordinary shares on deposit. |
• | Fees and expenses incurred in connection with complying with exchange control regulations and other regulatory requirements applicable to ordinary shares, deposited securities, ADSs and ADRs. |
• | Any applicable fees and penalties thereon. |
ITEM 13. |
DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES |
ITEM 14. |
MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS |
ITEM 15. |
CONTROLS AND PROCEDURES |
ITEM 16.A. |
AUDIT COMMITTEE FINANCIAL EXPERT |
ITEM 16.B. |
CODE OF ETHICS |
ITEM 16.C. |
PRINCIPAL ACCOUNTANT FEES AND SERVICES |
2019 |
2020 |
|||||||
RMB |
RMB |
|||||||
(in thousands) |
||||||||
Audit fees (1) |
8,797 | 12,500 | ||||||
Audit-related fees (2) |
— | 1,050 | ||||||
Tax fees (3) |
— | 987 |
(1) | “Audit fees” represent the aggregate fees billed for each of the fiscal years listed for professional services rendered by our principal auditor for the audit or review of our annual or quarterly financial statements and other SEC filings. |
(2) | “Audit-related fees” mean the aggregate fees billed for professional services rendered by our principal accounting firm for the assurance and related services. |
(3) | “Tax fees” mean the aggregate fees billed in each of the fiscal years listed for the professional tax services rendered by our principal auditors. |
ITEM 16.D. |
EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES |
ITEM 16.E. |
PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS |
ITEM 16.F. |
CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT |
ITEM 16.G. |
CORPORATE GOVERNANCE |
• | an exemption from the rule that a majority of our board of directors must be independent directors; |
• | the requirement that the compensation committee be composed entirely of independent directors; and |
• | the requirement that the nominating committee be composed entirely of independent directors. |
ITEM 16.H. |
MINE SAFETY DISCLOSURE |
ITEM 17. |
FINANCIAL STATEMENTS |
ITEM 18. |
FINANCIAL STATEMENTS |
ITEM 19. |
EXHIBITS |
Exhibit Number |
Description of Document | |
101.SCH* | Inline XBRL Taxonomy Extension Schema Document | |
101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
104* | Cover Page Interactive Data File — the cover page XBRL tags are embedded within the Exhibit 101 Inline XBRL document set |
* | Filed herewith. |
** | Furnished herewith. |
† | Portions of this exhibit have been omitted pursuant to Rule 406 under the Securities Act. |
HUYA Inc. | ||
By: |
/s/ Rongjie Dong | |
Name: |
Rongjie Dong | |
Title: |
Chief Executive Officer |
Contents |
Page |
|||
F-2 |
||||
Consolidated Financial Statements: |
||||
F-5 |
||||
F-7 |
||||
F-9 |
||||
F-12 | ||||
F-14 |
As of December 31, |
||||||||||||
2019 |
2020 |
2020 |
||||||||||
RMB | RMB | US$ | ||||||||||
(Note 2(e)) | ||||||||||||
Assets |
||||||||||||
Current assets |
||||||||||||
Cash and cash equivalents |
||||||||||||
Restricted cash |
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Short-term deposits |
||||||||||||
Short-term investments |
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Accounts receivable, net of allowance of RMB |
||||||||||||
Amounts due from related parties, net of allowance of |
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Prepayments and other current assets, net of allowance of |
||||||||||||
Total current assets |
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Non-current assets |
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Deferred tax assets |
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Investments |
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Property and equipment, net |
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Intangible assets, net |
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Right-of-use |
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Prepayments and other non-current assets |
||||||||||||
Total non-current assets |
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Total assets |
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Liabilities and shareholders’ equity |
||||||||||||
Current liabilities |
||||||||||||
Accounts payable (including amounts of the consolidated variable interest entity and its subsidiaries (“VIEs”) without recourse to the Company of RMB |
||||||||||||
Advances from customers and deferred revenue (including amounts of the consolidated VIEs without recourse to the Company of RMB |
||||||||||||
Income taxes payable (including amounts of the consolidated VIEs without recourse to the Company of RMB |
||||||||||||
Accrued liabilities and other current liabilities (including amounts of the consolidated VIEs without recourse to the Company of RMB |
||||||||||||
Amounts due to related parties (including amounts of the consolidated VIEs without recourse to the Company of RMB |
||||||||||||
Lease liabilities due within one year (including amounts of the consolidated VIEs without recourse to the Company of RMB |
||||||||||||
Total current liabilities |
||||||||||||
Non-current liabilities |
||||||||||||
Lease liabilities (including amounts of the consolidated VIEs without recourse to the Company of RMB |
||||||||||||
Deferred tax liabilities (including amounts of the consolidated VIEs without recourse to the Company of |
— | |||||||||||
Deferred revenue (including amounts of the consolidated VIEs without recourse to the Company of RMB |
||||||||||||
Total non-current liabilities |
||||||||||||
Total liabilities |
||||||||||||
Commitments and contingencies |
As of December 31, |
||||||||||||
2019 |
2020 |
2020 |
||||||||||
RMB | RMB | US$ | ||||||||||
(Note 2(e)) | ||||||||||||
Shareholders’ equity |
||||||||||||
Class A ordinary shares (US$ |
||||||||||||
Class B ordinary shares (US$ |
||||||||||||
Additional paid-in capital |
||||||||||||
Statutory reserves |
||||||||||||
Accumulated deficit |
( |
) | ( |
) | ( |
) | ||||||
Accumulated other comprehensive income |
||||||||||||
Total shareholders’ equity |
||||||||||||
Total liabilities and shareholders’ equity |
||||||||||||
For the year ended December 31, |
||||||||||||||||
2018 |
2019 |
2020 |
2020 |
|||||||||||||
RMB | RMB | RMB | US$ | |||||||||||||
(Note 2(e)) | ||||||||||||||||
Net revenues |
||||||||||||||||
Live streaming |
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Advertising and others (including transactions with related parties of RMB |
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|
|
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|
|
|
|||||||||
Total net revenues |
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Cost of revenues (1) (including transactions with related parties of RMB |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Gross Profit |
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Operating expenses (1) |
||||||||||||||||
Research and development expenses (including transactions with related parties of RMB |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Sales and marketing expenses (including transactions with related parties of RMB |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
General and administrative expenses (including transactions with related parties of RMB |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Total operating expenses |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
|
|
|
|
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|
|
|
|||||||||
Other income |
||||||||||||||||
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|||||||||
Operating income |
||||||||||||||||
|
|
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|
|
|
|
|
|||||||||
Interest and short-term investments income |
||||||||||||||||
Fair value loss on derivative liabilities |
( |
) | — | — | — | |||||||||||
Gain on fair value change of investment |
— | — | ||||||||||||||
Other non-operating expenses |
— | — | ( |
) | ( |
) | ||||||||||
Foreign currency exchange gains, net |
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
(Loss) income before income tax benefits (expenses) |
( |
) | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Income tax benefits (expenses) |
( |
) | ( |
) | ( |
) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
(Loss) income before share of income (loss) in equity method investments, net of income taxes |
( |
) | ||||||||||||||
Share of income (loss) in equity method investments, net of income taxes |
( |
) | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net (loss) income attributable to HUYA Inc. |
( |
) | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Accretion to Series A redeemable convertible preferred shares (“Preferred Shares”) |
( |
) | — | — | — | |||||||||||
Deemed dividend to Series A Preferred Shareholders |
( |
) | — | — | — | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net (loss) income attributable to ordinary shareholders |
( |
) | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net (loss) income |
( |
) | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Other comprehensive income (loss): |
||||||||||||||||
Foreign currency translation adjustments, net of nil tax |
( |
) | ( |
) | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total comprehensive (loss) income attributable to HUYA Inc. |
( |
) | ||||||||||||||
|
|
|
|
|
|
|
|
For the year ended December 31, |
||||||||||||||||
2018 |
2019 |
2020 |
2020 |
|||||||||||||
RMB | RMB | RMB | US$ | |||||||||||||
(Note 2(e)) | ||||||||||||||||
Net (loss) income per ADS* |
||||||||||||||||
—Basic |
( |
) | ||||||||||||||
—Diluted |
( |
) | ||||||||||||||
Weighted average number of ADSs used in calculating net (loss) income per ADS |
||||||||||||||||
—Basic |
||||||||||||||||
—Diluted |
||||||||||||||||
Net (loss) income per ordinary share* |
||||||||||||||||
—Basic |
( |
) | ||||||||||||||
—Diluted |
( |
) | ||||||||||||||
Weighted average number of ordinary shares used in calculating net (loss) income per ordinary share |
||||||||||||||||
—Basic |
||||||||||||||||
—Diluted |
* | Each ADS represents one Class A ordinary share. |
For the year ended December 31, |
||||||||||||||||
2018 |
2019 |
2020 |
2020 |
|||||||||||||
RMB | RMB | RMB | US$ | |||||||||||||
(Note 2(e)) | ||||||||||||||||
Cost of revenues |
||||||||||||||||
Research and development expenses |
||||||||||||||||
Sales and marketing expenses |
||||||||||||||||
General and administrative expenses |
Class A ordinary shares |
Class B ordinary shares |
Additional paid-in |
Statutory |
Accumulated |
Accumulated other comprehensive |
Total shareholders’ |
||||||||||||||||||||||||||||||
Shares |
Amount |
Shares |
Amount |
capital |
reserves |
deficit |
income |
equity |
||||||||||||||||||||||||||||
RMB | RMB | RMB | RMB | RMB | RMB | RMB | ||||||||||||||||||||||||||||||
Balance at December 31, 2017 |
— | ( |
) | |||||||||||||||||||||||||||||||||
Share-based compensation related to JOYY’s Share-based Awards |
— | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Share-based compensation related to Huya Share-based Awards |
— | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Class B ordinary shares converted to Class A ordinary shares resulted from the transfer of such shares from JOYY to other investors |
( |
) | ( |
) | — | — | — | — | ||||||||||||||||||||||||||||
Accretion to Series A Preferred Shares redemption value prior to the extinguishment |
— | — | — | — | ( |
) | — | — | — | ( |
) | |||||||||||||||||||||||||
Accretion to Series A Preferred Shares redemption value post the extinguishment |
— | — | — | — | ( |
) | — | ( |
) | — | ( |
) | ||||||||||||||||||||||||
Accretion to Series B-2 Preferred Shares redemption value |
— | — | — | — | ( |
) | — | ( |
) | — | ( |
) | ||||||||||||||||||||||||
Deemed dividend to Series A Preferred Shareholders |
— | — | — | — | ( |
) | — | ( |
) | — | ( |
) | ||||||||||||||||||||||||
Issuance of Class A ordinary shares upon the completion of the initial public offering (“IPO”) |
— | — | — | — | — | |||||||||||||||||||||||||||||||
Conversion of Series A Preferred Shares to ordinary shares upon the completion of the IPO |
— | — | — | |||||||||||||||||||||||||||||||||
Conversion of Series B-2 Preferred Shares to ordinary shares upon the completion of the IPO |
— | — | — | — | — | |||||||||||||||||||||||||||||||
Derecognition of derivative liabilities upon conversion |
— | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Appropriation to statutory reserves |
— | — | — | — | — | ( |
) | — | ||||||||||||||||||||||||||||
Net loss |
— | — | — | — | — | — | ( |
) | — | ( |
) | |||||||||||||||||||||||||
Foreign currency translation adjustment, net of nil tax |
— | — | — | — | — | — | — | |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Balance at December 31, 2018 |
( |
) | ||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A ordinary shares |
Class B ordinary shares |
Additional paid-in |
Statutory |
Accumulated |
Accumulated other comprehensive |
Total shareholders’ |
||||||||||||||||||||||||||||||
Shares |
Amount |
Shares |
Amount |
capital |
reserves |
deficit |
income |
equity |
||||||||||||||||||||||||||||
RMB | RMB | RMB | RMB | RMB | RMB | RMB | ||||||||||||||||||||||||||||||
Balance at December 31, 2018 |
( |
) | ||||||||||||||||||||||||||||||||||
Share-based compensation related to JOYY’s Share-based Awards |
— | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Share-based compensation related to Huya Share-based Awards |
— | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Class B ordinary shares converted to Class A ordinary shares |
( |
) | ( |
) | — | — | — | — | ||||||||||||||||||||||||||||
Issuance of Class A ordinary shares upon the completion of the follow-on public offering |
— | — | — | — | — | |||||||||||||||||||||||||||||||
Issuance of ordinary shares for exercised share options |
— | — | — | — | — | |||||||||||||||||||||||||||||||
Issuance of ordinary shares for restricted share units |
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Deemed distribution to JOYY |
— | — | — | — | ( |
) | — | — | — | ( |
) | |||||||||||||||||||||||||
Appropriation to statutory reserves |
— | — | — | — | — | ( |
) | — | ||||||||||||||||||||||||||||
Net income |
— | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Foreign currency translation adjustment, net of nil tax |
— | — | — | — | — | — | — | |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Balance at December 31, 2019 |
( |
) | ||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A ordinary shares |
Class B ordinary shares |
Additional paid-in |
Statutory |
Accumulated |
Accumulated other comprehensive |
Total shareholders’ |
||||||||||||||||||||||||||||||
Shares |
Amount |
Shares |
Amount |
capital |
reserves |
deficit |
income |
equity |
||||||||||||||||||||||||||||
RMB | RMB | RMB | RMB | RMB | RMB | RMB | ||||||||||||||||||||||||||||||
Balance at December 31, 2019 |
( |
) | ||||||||||||||||||||||||||||||||||
Cumulative effect of initial adoption of ASC 326 |
— | — | — | — | — | — | ( |
) | — | ( |
) | |||||||||||||||||||||||||
Balance at January 1, 2020 |
( |
) | ||||||||||||||||||||||||||||||||||
Share-based compensation related to Huya Share-based Awards |
— | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Issuance of ordinary shares for exercised share options |
— | — | — | — | — | |||||||||||||||||||||||||||||||
Issuance of ordinary shares for restricted share units |
— | — | ( |
) | — | — | — | — | ||||||||||||||||||||||||||||
Deemed distribution to JOYY |
— | — | — | — | ( |
) | — | — |
— | ( |
) | |||||||||||||||||||||||||
Appropriation to statutory reserves |
— | — | — | — | — | ( |
) | — | — |
|||||||||||||||||||||||||||
Increase in VIE’s share capital by transferring VIE’s retain earnings |
— | — | — | — | — | ( |
) | — | — | |||||||||||||||||||||||||||
Net income |
— | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Foreign currency translation adjustment, net of nil tax |
— | — | — | — | — | — | — | ( |
) | ( |
) | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Balance at December 31, 2020 |
( |
) | ||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the year ended December 31, |
||||||||||||||||
2018 |
2019 |
2020 |
2020 |
|||||||||||||
RMB | RMB | RMB | US$ (Note 2(e)) |
|||||||||||||
Cash flows from operating activities |
||||||||||||||||
Net (loss) income attributable to HUYA Inc. |
( |
) | ||||||||||||||
Adjustments to reconcile net (loss) income to net cash provided by operating activities |
||||||||||||||||
Depreciation of property and equipment |
||||||||||||||||
Amortization of acquired intangible assets |
||||||||||||||||
Amortization of right-of-use |
— | |||||||||||||||
Expected credit loss expenses |
— | |||||||||||||||
Loss (gain) on disposal of property and equipment and other long-term assets |
( |
) | ( |
) | ( |
) | ||||||||||
Share-based compensation |
||||||||||||||||
Share of(income) loss in equity method investments, net of income taxes |
( |
) | ( |
) | ( |
) | ||||||||||
Other non-cash income |
— | ( |
) | ( |
) | ( |
) | |||||||||
Deferred income tax (benefits)expenses |
( |
) | ( |
) | ||||||||||||
Fair value loss of derivative liabilities |
— | — | — | |||||||||||||
Gain on fair value changes of investments |
— | — | ( |
) | ( |
) | ||||||||||
Short-term investments income |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Foreign currency exchange gains |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Changes in operating assets and liabilities: |
||||||||||||||||
Accounts receivable |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Prepayments and other assets |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Amounts due from related parties |
( |
) | ( |
) | ( |
) | ||||||||||
Accounts payable |
( |
) | ||||||||||||||
Amounts due to related parties |
||||||||||||||||
Advances from customers and deferred revenue |
( |
) | ( |
) | ||||||||||||
Lease liabilities |
— | ( |
) | ( |
) | ( |
) | |||||||||
Accrued liabilities and other current liabilities |
||||||||||||||||
Income tax payable |
— | |||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net cash provided by operating activitie s |
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Cash flows from investing activities |
||||||||||||||||
Placements of short-term deposits |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Maturities of short-term deposits |
||||||||||||||||
Cash received in connection with purchasing short-term deposits together with JOYY |
— | — | — | |||||||||||||
Placement of short-term investments |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Maturities of short-term investments |
||||||||||||||||
Purchase of property and equipment |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Purchase of intangible assets |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Prepayment for purchase of land use right |
— | — | ( |
) | ( |
) | ||||||||||
Cash paid for long-term investments |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Cash received from an investee due to withdrawal of investment |
— | — | ||||||||||||||
Prepayment for long-term investments |
( |
) | — | — | — | |||||||||||
Cash received from an investee for its partial disposal of an investment |
— | — | ||||||||||||||
Cash received from disposal of equity investments |
— | — | — | |||||||||||||
Proceeds from disposal of property and equipment |
||||||||||||||||
Loan to a third party |
— | ( |
) | — | — | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net cash (used in)/provided by investing activities |
( |
) | ( |
) | ||||||||||||
|
|
|
|
|
|
|
|
For the year ended December 31, |
||||||||||||||||
2018 |
2019 |
2020 |
2020 |
|||||||||||||
RMB | RMB | RMB | US$ (Note 2(e)) |
|||||||||||||
Cash flows from financing activities |
||||||||||||||||
Proceeds from issuance of Series B-2 Preferred Shares |
— | — | — | |||||||||||||
Net proceeds from issuance of ordinary shares upon IPO |
— | — | — | |||||||||||||
Net proceeds from issuance of ordinary shares upon follow-on public offering |
— | — | — | |||||||||||||
Proceeds from exercise of vested share options |
— | |||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net cash provided by financing activities |
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net increase in cash and cash equivalents and restricted cash |
||||||||||||||||
Cash and cash equivalents and restricted cash at the beginning of the year |
||||||||||||||||
Effect of exchange rate changes on cash and cash equivalents and restricted cash |
( |
) | ( |
) | ( |
) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Cash and cash equivalents and restricted cash at the end of the year |
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
For the year ended December 31, |
||||||||||||||||
2018 |
2019 |
2020 |
2020 |
|||||||||||||
RMB | RMB | RMB | US$ (Note 2(e)) |
|||||||||||||
Supplemental disclosure of cash flows information: |
||||||||||||||||
- Income tax paid |
— | |||||||||||||||
- Acquisition of property and equipment in form of accounts payable and amounts due to a related party |
||||||||||||||||
- Non-cash transaction for acquiring an equity investment |
— | — | — |
1. |
Organization and principal activities |
(a) |
Organization and principal activities |
(b) |
Public offering |
1. |
Organization and principal activities (continued) |
(c) |
Principal subsidiaries and VIEs |
Name |
Place of incorporation |
Date of incorporation |
% of direct or indirect economic ownership |
Principal activities | ||||||||||
Wholly foreign-owned enterprise (“WFOE”) |
||||||||||||||
Huya Limited |
% | Investment holding | ||||||||||||
Guangzhou Huya Technology Co., Ltd. (“Huya Technology”) |
% | |||||||||||||
HUYA PTE. LTD. |
% | |||||||||||||
Hainan Huya Entertainment Information Technology Co., Ltd. (“Hain a n Huya”) |
% | |||||||||||||
VIE |
||||||||||||||
Guangzhou Huya Information Technology Co., Ltd. (“Guangzhou Huya”) |
% |
1. |
Organization and principal activities (continued) |
(d) |
Variable interest entities |
• |
exercise effective control over Guangzhou Huya and its subsidiaries; |
• |
receive substantially all of the economic benefits of Guangzhou Huya and its subsidiaries; and |
• |
have an exclusive option to purchase all or part of the equity interests in Guangzhou Huya when and to the extent permitted by PRC law. |
(i) |
VIE agreements amongst Huya Technology, Guangzhou Huya and Guangzhou Huaduo and Guangzhou Qinlv |
• |
Exclusive Business Cooperation Agreement |
1. |
Organization and principal activities (continued) |
(d) |
Variable interest entities (continued) |
• |
Exclusive Purchase Option Agreement |
• |
Equity Pledge Agreement |
• |
Power of Attorney |
(ii) |
VIE agreements amongst Huya Technology, Guangzhou Huya and Linzhi Tencent |
• |
Exclusive Business Cooperation Agreement |
1. |
Organization and principal activities (continued) |
(d) |
Variable interest entities (continued) |
• | Exclusive Option Agreement |
• | Equity Interest Pledge Agreement |
• | Shareholder Voting Rights Proxy Agreement |
1. |
Organization and principal activities (continued) |
(d) |
Variable interest entities (continued) |
• | revoke or refuse to grant or renew the Group’s business and operating licenses; |
• | restrict or prohibit related party transactions between the wholly owned subsidiary of the Group and the VIE; |
• | impose fines, confiscate income or other requirements which the Group may find difficult or impossible to comply with; |
• | require the Group to alter, discontinue or restrict its operations; |
• | restrict or prohibit the Group’s ability to finance its operations, and; |
• | take other regulatory or enforcement actions against the Group that could be harmful to the Group’s business. |
1. |
Organization and principal activities (continued) |
(d) |
Variable interest entities (continued) |
As of December 31, |
||||||||
2019 |
2020 |
|||||||
RMB | RMB | |||||||
Total current assets |
||||||||
Total non-current assets |
||||||||
Total assets |
||||||||
|
|
|
|
|||||
Total current liabilities |
||||||||
Total non-current liabilities |
||||||||
Total liabilities |
||||||||
|
|
|
|
For the year ended December 31, |
||||||||||||
2018 |
2019 |
2020 |
||||||||||
RMB | RMB | RMB | ||||||||||
Net revenues |
||||||||||||
Net incom e |
For the year ended December 31, |
||||||||||||
2018 |
2019 |
2020 |
||||||||||
RMB | RMB | RMB | ||||||||||
Net cash provided by operating activities |
||||||||||||
Net cash (used in)/provided by investing activities |
( |
) | ( |
) | ||||||||
Net cash used in financing activities |
( |
) | ( |
) |
2. |
Principal accounting policies |
(a) |
Basis of presentation |
(b) |
Consolidation |
(c) |
Use of estimates |
(d) |
Foreign currency translation |
2. |
Principal accounting policies (continued) |
(e) |
Convenience translation |
(f) |
Cash and cash equivalents |
i) | Readily convertible to known amounts of cash throughout the maturity period; |
ii) | So near their maturity that they present insignificant risk of changes in value because of changes in interest rates. |
(g) |
Short-term deposits |
(h) |
Short-term investments |
(i) |
Receivables |
2. |
Principal accounting policies (continued) |
(j) |
Investments |
(k) |
Property and equipment |
Estimated useful lives |
Residual rate |
|||||||
Servers, computers and equipment |
% |
|||||||
Leasehold improvement s |
% |
|||||||
Others |
% |
2. |
Principal accounting policies (continued) |
(l) |
Intangible assets |
Estimated useful lives |
||||
Copyrights of video content |
||||
License |
|
|
|
|
Softwar e |
|
|
|
|
Domain names |
||||
Trademar k |
(m) |
Impairment of long-lived assets |
(n) |
Mezzanine equity |
2. |
Principal accounting policies (continued) |
(o) |
Revenue |
For the year ended December 31, |
||||||||||||
2018 |
2019 |
2020 |
||||||||||
RMB | RMB | RMB | ||||||||||
Live streaming |
||||||||||||
Other revenues (i) |
||||||||||||
|
|
|
|
|
|
|||||||
Total |
||||||||||||
|
|
|
|
|
|
(i) | Other revenues mainly include advertising and online games revenues. |
(i) |
Live streaming |
2. |
Principal accounting policies (continued) |
(o) |
Revenue (continued) |
(i) |
Live streaming (continued) |
2. |
Principal accounting policies (continued) |
(o) |
Revenue (continued) |
(ii) |
Advertising |
2. |
Principal accounting policies (continued) |
(o) |
Revenue (continued) |
(iii) |
Online games revenues |
2. |
Principal accounting policies (continued) |
(o) |
Revenue (continued) |
2. |
Principal accounting policies (continued) |
(o) |
Revenue (continued) |
2021 |
2022 and after |
Total |
||||||||||
RMB | RMB | RMB | ||||||||||
Revenue expected to be recognized |
(p) |
Cost of revenues |
(q) |
Research and development expenses |
(r) |
Sales and marketing expenses |
(s) |
General and administrative expenses |
(t) |
Employee social security and welfare benefits |
2. |
Principal accounting policies (continued) |
(u) |
Share-based compensation |
2. |
Principal accounting policies (continued) |
(u) |
Share-based compensation (continued) |
2. |
Principal accounting policies (continued) |
(v) |
Leases |
(w) |
Income taxes |
2. |
Principal accounting policies (continued) |
(x) |
Statutory reserves |
(y) |
Related parties |
(z) |
Dividends |
2. |
Principal accounting policies (continued) |
(aa) |
(Loss) income per share |
(bb) |
Segment reporting |
2. |
Principal accounting policies (continued) |
(cc) |
Recently issued accounting pronouncements |
3. |
Certain risks |
(a) |
Foreign exchange risk |
(b) |
Credit risk |
4. |
Cash and cash equivalents |
December 31, 2019 |
December 31, 2020 |
|||||||||||||||
Amount |
RMB equivalent |
Amount |
RMB equivalent |
|||||||||||||
RMB |
||||||||||||||||
US$ |
||||||||||||||||
SGD |
||||||||||||||||
Others(i) |
N/A | N/A | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
||||||||||||||||
|
|
|
|
(i) |
As of December 31, 2020, the other currencies consist of Hong Kong Dollar, Brazilian Real and Thai Baht. |
5. |
Restricted cash |
6. |
Short-term deposits |
December 31, 2019 |
December 31, 2020 |
|||||||||||||||
Amount |
RMB equivalent |
Amount |
RMB equivalent |
|||||||||||||
RMB |
||||||||||||||||
US$ |
||||||||||||||||
Total |
||||||||||||||||
7. |
Short-term investments |
December 31, 2019 |
December 31, 2020 |
|||||||||||||||
Amount |
RMB equivalent |
Amount |
RMB equivalent |
|||||||||||||
RMB |
||||||||||||||||
US$ |
— | — | ||||||||||||||
Total |
||||||||||||||||
8. |
Accounts receivable, net |
December 31, |
||||||||
2019 |
2020 |
|||||||
RMB | RMB | |||||||
Accounts receivable, gross |
||||||||
Less: expected credit loss provision |
( |
) | ( |
) | ||||
Accounts receivable, net |
||||||||
8. |
Accounts receivable, net (continued) |
For the years ended December 31, |
||||||||||||
2018 |
2019 |
2020 |
||||||||||
RMB | RMB | RMB | ||||||||||
Beginning balance prior to ASC 32 6 |
— |
— |
( |
) | ||||||||
Impact of adoption to ASC |
— |
— |
( |
) | ||||||||
Balance at beginning of the year |
( |
) | ( |
) | ( |
) | ||||||
Current year provision |
( |
) | ( |
) | ||||||||
Current year reversa l |
||||||||||||
Balance at end of the yea r |
( |
) | ( |
) | ( |
) | ||||||
9. |
Prepayments and other current assets |
December 31, |
||||||||
2019 |
2020 |
|||||||
RMB | RMB | |||||||
Prepayments to vendors and content providers |
||||||||
Interests receivable |
||||||||
Input value-added tax to be deducted |
||||||||
Prepayment of income tax |
— | |||||||
Receivables from exercise of vested share options |
||||||||
Loan to a third party |
||||||||
Prepayments to third-party payment platform |
||||||||
Other s |
||||||||
Less: expected credit loss provision |
— | ( |
) | |||||
Total |
||||||||
For the years ended December 31, |
||||||||||||
2018 |
2019 |
2020 |
||||||||||
RMB |
RMB |
RMB |
||||||||||
Beginning balance prior to ASC 326 |
||||||||||||
Impact of adoption to ASC |
— |
— |
( |
) | ||||||||
Balance at beginning of the year |
( |
) | ||||||||||
Current year provision |
— |
— |
( |
) | ||||||||
Current year reversal |
— |
— |
||||||||||
Balance at end of the year |
( |
) | ||||||||||
10. |
Investments |
December 31, |
||||||||
2019 |
2020 |
|||||||
RMB | RMB | |||||||
Equity method investments (i) |
||||||||
Equity investments without readily determinable fair values (ii) |
||||||||
(i) | In 2019 and 2020, the Company’s equity method investment in an investment fund which owns equity interest of a privately held entity. The privately held entity engages primarily in developing and operating mobile games. For the year ended December 31, 2019 and 2020, the Company recognized the share of cumulative income of this equity method investment with amount of |
(ii) | In 2019 and 2020, the Company acquired equity interests of |
11. |
Property and equipment, net |
December 31, |
||||||||
2019 |
2020 |
|||||||
RMB | RMB | |||||||
Gross carrying amount |
||||||||
Servers, computers and equipment |
||||||||
Leasehold improvements |
||||||||
Others |
||||||||
Tota l |
||||||||
Less: accumulated depreciation |
( |
) | ( |
) | ||||
Property and equipment, net |
||||||||
12. |
Intangible assets, net |
December 31, |
||||||||
2019 |
2020 |
|||||||
RMB | RMB | |||||||
Gross carrying amount |
||||||||
Copyrights of video content |
||||||||
License |
||||||||
Software |
||||||||
Domain name s |
||||||||
Trademark |
||||||||
Total of gross carrying amount |
||||||||
Less: accumulated amortization |
||||||||
Copyrights of video content |
( |
) | ( |
) | ||||
License |
( |
) | ( |
) | ||||
Software |
( |
) | ( |
) | ||||
Domain names |
( |
) | ( |
) | ||||
Trademark |
( |
) | ( |
) | ||||
Total accumulated amortization |
( |
) | ( |
) | ||||
Intangible assets, net |
||||||||
Year ended December 31, | Amortization expense of intangible assets |
|||
RMB | ||||
2021 |
||||
2022 |
||||
2023 |
||||
2024 |
||||
2025 |
December 31, |
||||||||
2019 |
2020 |
|||||||
Copyrights of video content |
||||||||
License |
||||||||
Software |
||||||||
Domain names |
||||||||
Trademark |
13. |
Prepayments and other non-current assets |
December 31, |
||||||||
2019 |
2020 |
|||||||
RMB | RMB | |||||||
Prepayments for purchase of land use right (i) |
||||||||
Prepayments to vendors and content providers |
||||||||
Refundable lease deposits |
||||||||
Prepayments for equity investments |
||||||||
Others |
||||||||
|
|
|
|
|||||
Total |
||||||||
|
|
|
|
(i) |
In November 2020, the Company entered into an agreement for acquisition of land use rights for operations. As of December 31, 2020, the prepayment amounted to RMB |
14. |
Advances from customers and deferred revenue |
December 31, |
||||||||
2019 |
2020 |
|||||||
RMB | RMB | |||||||
|
||||||||
Deferred revenue, current |
||||||||
Advances from customers |
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total current advances from customers and deferred revenue |
||||||||
|
|
|
|
|||||
Deferred revenue, non-current |
||||||||
|
|
|
|
|||||
Total non-current deferred revenue |
||||||||
|
|
|
|
15. |
Accrued liabilities and other current liabilities |
December 31, |
||||||||
2019 |
2020 |
|||||||
RMB | RMB | |||||||
Revenue sharing fees |
||||||||
Salaries and welfare |
||||||||
Marketing and promotion expenses |
||||||||
Bandwidth costs |
||||||||
Deposits from content providers, suppliers and advertising customers |
||||||||
License fees |
||||||||
Other taxes payable |
||||||||
Others |
||||||||
|
|
|
|
|||||
Total |
||||||||
|
|
|
|
16. |
Cost of revenues |
For the year ended December 31, |
||||||||||||
2018 |
2019 |
2020 |
||||||||||
RMB | RMB | RMB | ||||||||||
Revenue sharing fees and content costs |
||||||||||||
Bandwidth costs |
||||||||||||
Salaries and welfare |
||||||||||||
Payment handling costs |
||||||||||||
Share-based compensation |
||||||||||||
Others |
||||||||||||
|
|
|
|
|
|
|||||||
Total |
||||||||||||
|
|
|
|
|
|
17. |
Other income |
18. |
Taxation |
(a) |
PRC value-added tax and related surcharges |
(b) |
Income taxes |
18. |
Taxation (continued) |
(b) |
Income taxes (continued) |
• | Huya Technology was qualified as a Software Enterprise, and enjoyed the zero preferential tax rate starting from 2017 and 12.5% preferential tax rate starting from 2019. In 2019 and 2020, Huya Technology is qualified as a KNSE and applied the income tax rate of 10% for the years of 2019 and 2020 pursuant to SAT Public Notice [2018] No.23 (“Circular 23”). |
• | Guangzhou Huya applied for the HNTE qualification and obtained approval in November 2018. It is entitled to enjoy the preferential tax rate of 15% as an HNTE for three years starting from 2018, and should apply for HNTE qualification renewal in 2021. |
• | Hainan Huya was qualified as an EIE in Hainan free trade port, and enjoyed the preferential tax rate of 15% for five years starting from 2020. |
• | Most of the remaining PRC subsidiaries and VIEs were subject to |
18. |
Taxation (continued) |
(b) |
Income taxes (continued) |
18. |
Taxation (continued) |
(b) |
Income taxes (continued) |
For the year ended December 31, |
||||||||||||
2018 |
2019 |
2020 |
||||||||||
RMB | RMB | RMB | ||||||||||
PRC entitie s |
||||||||||||
Non-PRC entities (i) |
( |
) | ( |
) | ||||||||
|
|
|
|
|
|
|||||||
Total |
( |
) | ||||||||||
|
|
|
|
|
|
(i) | The loss before tax incurred by non-PRC entities for the year ended December 31, 2018 was mainly due to the fair value loss on derivative liabilities amounting to RMB |
For the year ended December 31, |
||||||||||||
2018 |
2019 |
2020 |
||||||||||
RMB | RMB | RMB | ||||||||||
Income tax benefits (expenses) applicable to China operations |
||||||||||||
Current income tax expense s |
— | ( |
) | ( |
) | |||||||
Deferred income tax benefits (expenses) |
( |
) | ||||||||||
|
|
|
|
|
|
|||||||
Subtotal income tax benefits (expenses) applicable to China operations |
( |
) | ( |
) | ||||||||
|
|
|
|
|
|
|||||||
Income tax expenses applicable to Non-PRC operations |
||||||||||||
Current income tax expenses |
— | ( |
) | ( |
) | |||||||
Deferred income tax benefits |
— | — | ||||||||||
Subtotal income tax benefits (expenses) applicable to Non-PRC operations |
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|||||||
Total income tax benefits (expenses) |
( |
) | ( |
) | ||||||||
|
|
|
|
|
|
18. |
Taxation (continued) |
(b) |
Income taxes (continued) |
For the year ended December 31, |
||||||||||||
2018 |
2019 |
2020 |
||||||||||
PRC Statutory income tax rate |
( |
)% | ( |
)% | ( |
)% | ||||||
Effect of tax holiday and preferential tax benefit |
( |
)% | % | % | ||||||||
Effect of different tax rates available to different jurisdictions (i) |
% | % | % | |||||||||
Permanent differences (ii) |
% | ( |
)% | ( |
)% | |||||||
Change in valuation allowance |
( |
)% | ( |
)% | ( |
)% | ||||||
Effect of Super Deduction available to the Group |
( |
)% | % | % | ||||||||
|
|
|
|
|
|
|||||||
Effective income tax rate |
( |
)% | ( |
)% | ( |
)% | ||||||
|
|
|
|
|
|
|||||||
Effect of tax holidays inside the PRC on basic earnings per share/ADS (RMB) |
||||||||||||
|
|
|
|
|
|
(i) | For the year ended December 31, 2018, effect of different tax rates available to different jurisdictions is mainly driven by the fair value loss of derivatives liabilities recognized in relation to the conversion features of the Pre-IPO Preferred Shares (Note 20) in HUYA which is subject to an income tax rate of |
(ii) |
Permanent differences mainly arise from expenses not deductible for tax purposes including primarily share-based compensation costs and expenses incurred by subsidiaries and VIEs. |
18. |
Taxation (continued) |
(b) |
Income taxes (continued) |
December 31, |
||||||||
2019 |
2020 |
|||||||
RMB | RMB | |||||||
Deferred tax assets |
||||||||
Tax loss carried forward |
||||||||
Deferred revenu e |
||||||||
Unrealized profit arising from elimination of inter-company transactions |
|
|
|
|
|
|
|
|
Others |
||||||||
|
|
|
|
|||||
|
|
|
|
|||||
Less: Valuation allowance (i) |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Total deferred tax assets |
||||||||
|
|
|
|
|||||
Deferred tax liabilities |
||||||||
Equity investee |
— | |||||||
|
|
|
|
|||||
Total deferred tax liabilities |
— | |||||||
|
|
|
|
|||||
Net deferred tax assets |
||||||||
|
|
|
|
|||||
Deferred tax liabilities |
|
|
|
|
|
|
|
|
Equity investee |
|
|
— |
|
|
|
|
|
Total deferred tax liabilitie s |
|
|
— |
|
|
|
|
|
(i) | Valuation allowance is provided against deferred tax assets when the Group determines that it is more likely than not that the deferred tax assets will not be utilized in the future. In making such determination, the Group considered factors including future taxable income exclusive of reversing temporary differences and tax loss carry forwards. Valuation allowance as of December 31, 2019 and 2020 were provided for net operating loss carry forward, which was mainly incurred by the overseas subsidiaries, because such deferred tax assets are not more likely than not to be realized based on the Group’s estimate of its future taxable income. If events occur in the future that allow the Group to realize more of its deferred income tax than the presently recorded amounts, an adjustment to the valuation allowances will result in a decrease in tax expense when those events occur . |
18. |
Taxation (continued) |
(b) |
Income taxes (continued) |
For the year ended December 31, |
||||||||||||
2018 |
2019 |
2020 |
||||||||||
RMB | RMB | RMB | ||||||||||
Balance at beginning of the year |
||||||||||||
Addition s |
||||||||||||
Reversals/write-off |
( |
) | ( |
) | ( |
) | ||||||
|
|
|
|
|
|
|||||||
Balance at end of the year |
||||||||||||
|
|
|
|
|
|
19. |
Ordinary shares |
20. |
Redeemable convertible preferred shares |
20. |
Redeemable convertible preferred shares (continued) |
20. |
Redeemable convertible preferred shares (continued) |
20. |
Redeemable convertible preferred shares (continued) |
20. |
Redeemable convertible preferred shares (continued) |
20. |
Redeemable convertible preferred shares (continued) |
20. |
Redeemable convertible preferred shares (continued) |
20. |
Redeemable convertible preferred shares (continued) |
Prior to the extinguishment |
Number of shares |
Amount |
||||||
RMB |
||||||||
Mezzanine equity balance as of January 1, 2018 |
||||||||
Accretion to Series A Preferred Shares redemption value prior to the extinguishment |
— | |||||||
Foreign exchange |
— | ( |
) | |||||
|
|
|
|
|||||
Mezzanine equity balance as of March 8, 2018 |
||||||||
|
|
|
|
Post extinguishment |
Number of shares |
Amount |
||||||
RMB |
||||||||
Mezzanine equity balance as of the extinguishment date |
||||||||
Revaluation of fair value of the whole instrument upon the extinguishment as of March 8, 2018, recognized as deemed dividend to Series A Preferred Shareholders |
— | |||||||
Bifurcation of conversion feature as of March 8, 2018 |
— | ( |
) | |||||
Accretion to Series A Preferred Shares redemption value from March 9, 2018 to May 10, 201 8 |
— | |||||||
Foreign exchange |
— | |||||||
Conversion of Preferred Shares to ordinary shares upon the completion of the IPO |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Mezzanine equity balance as of December 31, 2018 |
||||||||
|
|
|
|
20. |
Redeemable convertible preferred shares (continued) |
21. |
Share-based compensation |
For the year ended December 31, |
||||||||||||
2018 |
2019 |
2020 |
||||||||||
RMB | RMB | RMB | ||||||||||
Share-based compensation expenses |
||||||||||||
- Related to Huya Share-based Awards |
||||||||||||
- Related to JOYY’s Share-based Awards |
— | |||||||||||
|
|
|
|
|
|
|||||||
Total |
||||||||||||
|
|
|
|
|
|
(a) |
Huya Share-based Awards |
21. |
Share-based compensation (continued) |
(a) |
Huya Share-based Awards (continued) |
Number of options |
Weighted average exercise price (US$) |
Weighted average remaining contractual life (years) |
Aggregate intrinsic value (US$) |
|||||||||||||
As of December 31, 2018 |
||||||||||||||||
Forfeited |
( |
) | 00 | |||||||||||||
Exercised |
( |
) | ||||||||||||||
|
|
|||||||||||||||
As of December 31, 2019 |
||||||||||||||||
|
|
|||||||||||||||
Forfeite d |
( |
) | ||||||||||||||
Exercised |
( |
) | ||||||||||||||
|
|
|||||||||||||||
As of December 31, 2020 |
||||||||||||||||
|
|
|||||||||||||||
Expected to vest at December 31, 2020 |
— | |||||||||||||||
|
|
|||||||||||||||
Exercisable as of December 31, 2020 |
||||||||||||||||
|
|
2018 |
||||
Weighted average fair value per option granted |
US$ | |||
Weighted average exercise price |
US$ | |||
Risk-free interest rate (1) |
% | |||
Expected term (in year) (2) |
||||
Expected volatility (3) |
% | |||
Dividend yield (4) |
(1) | The risk-free interest rate of periods within the contractual life of the share option is based on the China Government Bond yield as at the valuation dates. |
(2) | The expected term is the contract life of the option. |
(3) | Expected volatility is estimated based on the average of historical volatilities of the comparable companies in the same industry as at the valuation dates. |
(4) | The Company has no history or expectation of paying dividend on its ordinary shares. The expected dividend yield was estimated based on the Company’s expected dividend policy over the expected term of the option. |
21. |
Share-based compensation (continued) |
( a ) |
Huya Share-based Awards (continued) |
21. |
Share-based compensation (continued) |
( a ) |
Huya Share-based Awards (continued) |
Number of restricted share units |
Weighted average grant-date fair value (US$) |
|||||||
Outstanding, December 31, 2018 |
||||||||
Granted |
||||||||
Forfeited |
( |
) | ||||||
Vested |
( |
) | ||||||
|
|
|||||||
Outstanding, December 31, 2019 |
||||||||
|
|
|||||||
Granted |
||||||||
Forfeited |
( |
) | ||||||
Veste d |
( |
) | ||||||
|
|
|||||||
Outstanding, December 31, 2020 |
||||||||
|
|
|||||||
Expected to vest at December 31, 2020 |
||||||||
|
|
(b) |
JOYY’s Share-based Awards |
22. |
Net (loss) income per share |
For the year ended December 31, |
||||||||||||
2018 |
2019 |
2020 |
||||||||||
RMB | RMB | RMB | ||||||||||
Numerator: |
||||||||||||
Net (loss) income |
( |
) | ||||||||||
Accretion to Preferred Shares redemption value |
( |
) | ||||||||||
Deemed dividend to Series A Preferred Shareholders |
( |
) | ||||||||||
Numerator for basic and diluted net (loss) income per share |
( |
) | ||||||||||
Denominator: |
||||||||||||
Denominator for basic calculation—weighted average number of Class A and Class B ordinary shares outstanding |
||||||||||||
—Diluted effect of share option |
||||||||||||
—Diluted effect of restricted share units |
||||||||||||
Denominator for diluted calculation |
||||||||||||
Net (loss) income per ordinary share |
||||||||||||
—Basic |
( |
) | ||||||||||
—Diluted |
( |
) | ||||||||||
Net (loss) income per ADS* |
||||||||||||
—Basic |
( |
) | ||||||||||
—Diluted |
( |
) |
* | Each ADS represents one Class A ordinary share. |
23. |
Related party transactions |
For the year ended December 31, |
||||||||||||
2018 |
2019 |
2020 |
||||||||||
RMB | RMB | RMB | ||||||||||
Operation support services provided by Tencent |
||||||||||||
Content cost charged by Tencent |
||||||||||||
Payment on behalf of Tencent |
— | |||||||||||
Advertising and other revenues from Tencent |
||||||||||||
Market promotion expenses charged by Tencent |
||||||||||||
Others |
— |
For the year ended December 31, |
||||||||||||
2018 |
2019 |
2020 |
||||||||||
RMB |
RMB |
RMB |
||||||||||
Purchase of services by JOYY on behalf of Huya |
||||||||||||
Operation support services provided by JOYY |
||||||||||||
Deemed distribution to JOYY |
— |
|||||||||||
Cash collected by JOYY as a payment platform for Huya |
— |
|||||||||||
Repayment from JOYY in relation to the payment on behalf of Huya’s employees |
— |
|||||||||||
Share-based compensation expenses related to JOYY’s Share-based Awards ( Note21(b)) |
— |
|||||||||||
Purchase of property and equipment and intangible assets from JOYY |
— |
|||||||||||
Others |
23. |
Related party transactions (continued) |
For the year ended December 31, |
||||||||||||
2018 |
2019 |
2020 |
||||||||||
RMB | RMB | RMB | ||||||||||
Content cost charged by Tencent’s related parties |
— | — | ||||||||||
Operation support services provided by Tencent’s related parties |
— | — | ||||||||||
Market promotion expenses charged by Tencent’s related parties |
— | — | ||||||||||
Advertising and other revenues from Tencent’s related parties |
— | — | ||||||||||
Others |
— | — |
For the year ended December 31, |
||||||||||||
2018 |
2019 |
2020 |
||||||||||
RMB | RMB | RMB | ||||||||||
Content cost |
— | — |
23. |
Related party transactions (continued) |
December 31, |
||||||||
2019 |
2020 |
|||||||
RMB | RMB | |||||||
Amounts due from related parties |
||||||||
Tencent |
||||||||
JOYY |
||||||||
Others |
||||||||
Less: expected credit loss provision |
— | ( |
) | |||||
Total |
||||||||
Amounts due to related parties |
||||||||
Tencent |
||||||||
Others |
||||||||
Tota l |
||||||||
For the years ended December 31, |
||||||||||||
2018 |
2019 |
2020 |
||||||||||
RMB |
RMB |
RMB |
||||||||||
Beginning balance prior to ASC 326 |
— |
— |
— |
|||||||||
Impact of adoption to ASC |
— |
— |
( |
) | ||||||||
Balance at beginning of the year |
— |
— |
( |
) | ||||||||
Current year provision |
— |
— |
( |
) | ||||||||
Current year reversal |
— |
— |
||||||||||
Balance at end of the year |
— |
— |
( |
) | ||||||||
24. |
Fair value measurements |
24. |
Fair value measurements (continued) |
As of December 31, 2019 |
||||||||||||||||
Level 1 |
Level 2 |
Level 3 |
Total |
|||||||||||||
RMB | RMB | RMB | RMB | |||||||||||||
Assets |
||||||||||||||||
Cash equivalents (i) |
— | — | — | — | ||||||||||||
Short-term investments (ii) |
||||||||||||||||
As of December 31, 2020 |
||||||||||||||||
Level 1 |
Level 2 |
Level 3 |
Total |
|||||||||||||
RMB | RMB | RMB | RMB | |||||||||||||
Assets |
||||||||||||||||
Cash equivalents (i) |
||||||||||||||||
Short-term investments (ii) |
||||||||||||||||
(i) | Cash equivalents mainly consist of time deposits with original maturities of three months or less and highly liquid investments that are readily convertible to known amounts of cash. The fair values of cash equivalents are determined based on the pervasive interest rates in the market. The Company classifies the valuation techniques that use the pervasive interest rates input as Level 1 of fair value measurements. |
(ii) | Short-term investments represented the investments issued by commercial banks and financial institution with a variable interest rate indexed to the performance of underlying assets within one year. For the instruments whose fair value is provided by banks at the end of each period, the Company classifies the valuation techniques that use these inputs as Level 1 of fair value measurements. For the instruments whose fair values are estimated based on quoted prices of similar products provided by banks at the end of each period, the Company classifies the valuation techniques that use these inputs as Level 2 of fair value measurements. |
25. |
Leases |
For the year ended December 31, 2020 |
||||
RMB | ||||
Operating lease expense |
||||
Short-term lease expense |
||||
|
|
|||
Total lease expense |
||||
|
|
|||
Weighted-average remaining lease term (in years) – operating leases |
||||
Weighted-average discount rate – operating leases |
% |
For the year ended December 31, |
Future minimum payments |
|||
RMB | ||||
2021 |
||||
2022 |
||||
2023 |
||||
2024 |
||||
2025 and thereafter |
||||
|
|
|||
Total undiscounted cash flows |
||||
|
|
|||
Less: imputed interest |
( |
) | ||
|
|
|||
Total |
||||
|
|
December 31, |
||||||||
2019 |
2020 |
|||||||
RMB | RMB | |||||||
Cash paid for operating leases |
||||||||
Lease liabilities arising from obtaining right-of-use |
26. |
Commitments and contingencies |
(a) |
Operating commitments |
Operating commitments |
||||
RMB | ||||
2021 |
||||
2022 |
||||
2023 |
||||
2024 and thereafter |
||||
|
|
|||
|
|
(b) |
Capital and other commitments |
(c) |
Legal proceedings |
27. |
Subsequent events |
28. |
Restricted net assets |