Huya Q2 2026 earnings: Game-related revenue drives 11% growth

Huya (NYSE: HUYA) reported Q2 2026 net revenue of RMB1.74 billion, up 11.0% from RMB1.57 billion a year earlier, while diluted earnings per ADS were RMB0.01 versus a loss of RMB0.02. Growth in game-related services, advertising and other revenue offset lower live-streaming revenue, lifting gross margin and narrowing the operating loss. However, lower interest income contributed to a decline in non-GAAP net income.

Core earnings data

Revenue grew faster than cost of revenue, which increased 9.6%, allowing gross profit to rise 20.1% and gross margin to expand by 1.2 percentage points. The resulting gross-profit increase more than offset higher operating expenses, including increased marketing spending on Goose Goose Duck mobile.

GAAP net income turned positive, but adjusted profitability was mixed: non-GAAP operating income improved substantially, while non-GAAP net income and earnings per ADS declined.

Huya’s non-GAAP measures exclude applicable share-based compensation, acquisition-related intangible asset amortization and investment impairment losses.

Business and segment performance

Huya’s revenue mix continued to shift away from live streaming. Game-related services, advertising and other revenue increased by RMB224.0 million, more than offsetting the RMB51.7 million decline in live-streaming revenue.

The newer revenue category represented 36.7% of total net revenue. Huya attributed its growth to higher in-game item sales and advertising revenue, as well as the commercialization of Goose Goose Duck mobile. Live-streaming revenue remained under pressure due to what the company described as the industry’s current environment.

Operating gains did not translate into higher non-GAAP net income

The quarter’s operating performance improved: gross profit increased by RMB42.7 million, while the operating loss narrowed and non-GAAP operating income reached RMB16.2 million. Research and development spending declined 1.4%, and general and administrative expenses fell 8.4%, partly because of lower professional service fees.

Sales and marketing expenses, however, increased 57.7% to RMB91.0 million because of continued promotion of Goose Goose Duck mobile. This spending limited the benefit of higher gross profit but did not prevent the operating loss from narrowing.

Below the operating line, interest income fell 56.6% to RMB25.7 million from RMB59.1 million. Huya attributed the decline to a lower average deposit balance following special cash dividends and to lower interest rates. That reduction helps explain why non-GAAP net income fell even as non-GAAP operating income improved.

GAAP net income nevertheless turned positive. In addition to the narrower operating loss, the investment impairment charge decreased to RMB12.5 million from RMB30.0 million, while income tax expense fell to RMB1.8 million from RMB7.4 million.

Liquidity and capital allocation

Huya held RMB3.21 billion in cash, cash equivalents, and short- and long-term deposits as of June 30, 2026, down approximately 7.0% from RMB3.46 billion at the end of March.

After the quarter ended, the board increased the authorization for Huya’s 2026 share repurchase program from US$50 million to US$100 million. As of June 30, the company had repurchased 3.2 million ADSs for US$7.6 million under the program. Management described the expansion as reflecting confidence in the business outlook and a commitment to long-term shareholder value.

Management’s view

Acting CEO Junhong Huang said the revenue mix demonstrated further progress in Huya’s strategic transformation. Management views game publishing as a priority and cited Goose Goose Duck mobile’s return to the top five free games on Apple’s App Store in mainland China at the end of July as support for its content-led publishing model.

Huya also identified The Legend of Swordman: Reunion and Xiao Xiao Qi Yu as games progressing toward launch. The company did not provide quantitative financial guidance or specific launch dates in the earnings release.

Risks investors should monitor

• Continued live-streaming pressure: Live-streaming revenue declined and still accounted for about 63% of total revenue, leaving overall results exposed to weakness in that market.
• Costs associated with newer businesses: Higher in-game item costs and revenue-sharing fees accompanied the expansion of game-related revenue, while promotional spending increased sharply.
• Game-publishing execution: Recent growth relied partly on the commercialization of Goose Goose Duck mobile. Sustaining the shift depends on continued monetization and execution across Huya’s publishing pipeline.
• Lower interest income: Reduced deposit balances and lower interest rates materially decreased interest income, limiting the extent to which operating improvements reached net earnings.

Summary

Huya’s Q2 2026 results showed meaningful progress in diversifying revenue toward game-related services, advertising and publishing. That shift supported higher revenue, a wider gross margin and a smaller operating loss, despite continued weakness in live streaming and heavier marketing spending. Investors’ next focus is whether game publishing can sustain its growth while improving returns on promotional spending, as well as whether lower interest income continues to weigh on bottom-line profitability.