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HUYA Gears up to Report Q3 Earnings: Whats's in the Cards?

Zacks Equity Research

HUYA Inc. HUYA is set to report third-quarter 2019 results on Nov 12.

For the quarter, the company expects revenues between RMB2120 million and RMB2200 million, indicating year-over-year growth between 66.1% and 72.3%.

The Zacks Consensus Estimate for revenues currently stands at $309.2 million, which indicates growth of 66.3% from the year-ago quarter’s reported figure.

The consensus mark for earnings has remained unchanged at 10 cents over the past 30 days, implying an increase of 25% from the figure reported in the year-ago quarter.

Notably, the company delivered a positive earnings surprise of 37.5% in the last reported quarter.

In last reported quarter, Huya reported adjusted earnings of 11 cents per share that beat the Zacks Consensus Estimate by 37.5%.

Revenues surged 86.6% year over year to $293 million, which also beat the consensus mark of $255 million.

Let’s see how things have shaped up prior to this announcement.

HUYA Inc. Sponsored ADR Price and EPS Surprise

HUYA Inc. Sponsored ADR Price and EPS Surprise

HUYA Inc. Sponsored ADR price-eps-surprise | HUYA Inc. Sponsored ADR Quote

Factors to Consider

Huya’s third-quarter results are expected to benefit from expansion in paying user base, which was 4.9 million at the end of the last reported quarter. Management expects this to grow to more than 5.2 million in the to-be-reported quarter.

Additionally, management had stated on the second-quarter earnings call that robust product portfolio will aid in rapid monetization of its paying user base. This is likely to have contributed to top-line growth of the company in the to-be-reported quarter.

Notably, in the last reported quarter, the company’s mobile monthly active users (MAUs) had increased to 56 million, reflecting year-over-year increase of 31%. Further, non-mobile MAUs including PC and web users grew 80% from the year-ago quarter. The momentum in user addition most likely continued in the third quarter on the back of deeper penetration into the e-sport market and diversification in non-gaming professional generated content shows.

Further, Huya’s newly launched advertising distribution platform in August is expected to have placed the company well in the fast growing advertisement market in the third quarter. This is likely to have contributed to top-line growth in the to-be-reported quarter.

What Our Model Says

According to the Zacks model, the combination of two key ingredients — a positive Earnings ESP and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — increases the odds of a positive earnings surprise.

Huya has a Zacks Rank #3 and an Earnings ESP of 0.00%, which makes surprise prediction difficult. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are some companies, which, per our model, have the right combination of elements to post an earnings beat this quarter:

Zillow Group, Inc. ZG has an Earnings ESP of +5.09% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Donnelley Financial Solutions DFIN has an Earnings ESP of +7.41% and a Zacks Rank #2.

NIC Inc. EGOV has an Earnings ESP of +6.67% and a Zacks Rank #2.

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