Game livestreaming leader’s growth normalizes in Q2 as China returns to work

Wuhan-based video game livestreaming platform Douyu (NASDAQ: DOYU) generated total revenues of RMB 2.5 billion (USD 354.4 million) in the second quarter, surpassing analyst expectations of RMB 2.44 billion (USD 349.93 million), the company reported in its latest earnings report on Monday.

Despite a 33.9% year-on-year (YoY) increase in total revenues during the June quarter, Douyu’s share price dropped 8.51% to USD 13.97 in Monday trading after the earnings release.

Douyu’s core livestreaming business experienced decelerating growth in the quarter, increasing by only 35.8% YoY in the second quarter compared to a 56% YoY jump in the first quarter of 2020. Many Chinese have resumed their normal daily lives as the COVID-19 outbreak continues to subside since its peak in February and March.

Douyu’s chief executive officer (CEO) Chen Shaojie addressed the proposed Tencent-orchestrated merger between Douyu and Huya (NASDAQ: HUYA), explaining that the board was still considering the deal without providing any further details or updates.

However, he did mention that game livestreaming is crucial to Tencent’s gaming ecosystem, commenting on the earnings call, “We can see game live streaming is an important part of Tencent’s strategy. This is good for our development going forward.”

The company’s average revenue per paying user (ARPPU) grew by 19.7% YoY and 9.5% sequentially to RMB 300 (USD 43.09) during the second quarter, while Douyu’s paying users ratio reached 4.6% from 4.1% in the same period last year.

In addition to focusing on Esports initiatives with hit titles including League of Legends and PUBG, Douyu intends to continue expanding into other markets, as Chen highlighted the success of the company’s Japanese livestreaming platform Mildom.

Chen underscored the importance of Japan to the company, as the country is the world’s third-largest gaming market after China and North America, with a mature gaming ecosystem and a high willingness to pay.

Looking towards the third quarter, Douyu expects strong revenue growth of between 42.1% and 44.2%.