DouYu International Holdings Limited (NASDAQ:DOYU) delivered better-than-expected second-quarter results on Thursday, although the game-focused livestreaming platform returned to a loss as weaker consumer spending and higher marketing costs weighed on performance.
The shares were broadly unchanged in after-hours trading following the announcement.
DouYu reported an adjusted loss of $0.45 per ADS, considerably narrower than the consensus forecast for a $1.12 loss. Revenue reached RMB981.1 million ($144.6 million), also ahead of analyst expectations of $946.6 million.
However, revenue declined 6.9% from RMB1.05 billion in the second quarter of the previous year.
DouYu swings to adjusted net loss
Despite beating market forecasts, profitability deteriorated compared with the prior-year period.
DouYu recorded an adjusted net loss of RMB13.5 million ($2.0 million), reversing adjusted net income of RMB25.3 million a year earlier.
Management pointed to a challenging external environment and weaker consumer spending, which placed pressure on the number of paying users across the platform.
Livestreaming revenue declined 13.0% year on year to RMB503.0 million, remaining the principal drag on overall sales.
In contrast, revenue from innovative businesses, advertising and other activities edged 0.4% higher to RMB478.1 million, providing some diversification from the weaker core livestreaming business.
Gross margin improves despite falling sales
DouYu nevertheless achieved a notable improvement in gross profitability.
Gross profit increased 12.0% year on year to RMB159.0 million, while gross margin expanded to 16.2% from 13.5% in the corresponding period last year.
The improvement reflected reductions in revenue-sharing fees, content expenditure and bandwidth costs, helping the company generate stronger gross economics despite the decline in total revenue.
However, those gains were offset further down the income statement by substantially higher promotional expenditure.
Sales and marketing expenses surged 102.6% year on year to RMB124.8 million as DouYu increased spending on branding and major content initiatives, including the DouYu Carnival.
Livestreaming engagement shows sequential improvement
While annual livestreaming revenue remained under pressure, management highlighted signs of improvement compared with the first quarter.
“In the second quarter, despite a challenging external environment, we made steady progress across several fronts,” said CEO Simin Ren. “Livestreaming revenues returned to sequential growth, while user engagement improved, underscoring the resilience of our core livestreaming ecosystem.”
Average monthly active users on DouYu’s livestreaming platform reached 45.4 million, representing sequential growth of 2.6%.
Quarterly average paying users stood at 2.3 million, while average revenue per paying user reached RMB283.
The figures suggest engagement is beginning to stabilise even as weaker consumer spending continues to constrain monetisation.
Overall, DouYu’s narrower-than-expected adjusted loss and revenue beat provided some reassurance, while higher gross margins demonstrated progress on cost efficiency. However, declining annual revenue, the return to an adjusted net loss and sharply higher marketing expenditure remain important challenges as the company seeks to translate improving user engagement into stronger financial performance.
DouYu International Holdings stock price
