Text/Gide
Editor/Midnight
In the five years since its launch,
Based on Douyu’s current total share capital of approximately 31.64 million shares, Douyu is expected to pay a total cash dividend of approximately US$300 million, which will be paid to ordinary shareholders and American depositary receipt holders around August 30 this year. .
In response, Douyu said that in view of the company’s ample cash balance, the board of directors decided to pay dividends to return value to shareholders.
The next day, Douyu’s share price soared 42.49%, closing at US$17.94 per share, with a market value of US$568 million.
Generally speaking, companies that pay generous dividends mostly do so after their performance has achieved sustained growth and achieved a certain level of profit, but the situation in Douyu is different.
It is currently paying large dividends, perhaps to strengthen the confidence of shareholders and the capital market in it.
Since CEO Chen Shaojie was arrested at the end of last year, Douyu has been undergoing continuous internal adjustments, and the company's management has been changed to an interim management committee. Since
went public in 2019, Douyu has not been a company that spends generously on dividends. From the company's financial perspective, Douyu has money on its books, but its performance is not good.
After Douyu made some unexpected dividends to the outside world, the outside world became more curious about Douyu: Douyu is at a critical point in business transformation. After the major shareholders cash out, how much "surplus food" will Douyu have? And how will it turn the situation around and achieve better development?
1. Generous dividends, what’s the Douyu picture?
Before discussing dividends, let’s take a look at Douyu’s cash flow.
As of the end of the first quarter of this year, Douyu held a total of approximately US$937 million in cash and cash equivalents, restricted cash, short-term and long-term bank assets. After Douyu paid a one-time dividend of US$300 million, it still had more than US$600 million in cash on hand, which is not a lot.
Douyu also needs to conduct a stock repurchase of US$20 million. As of March 31, 2024, Douyu has repurchased a total of US$2.7 million in ads (American depositary shares) under this plan, and plans to continue repurchases in the second quarter.
In addition, Douyu has released a signal of strategic adjustment. Whether it is adjusting its business model or seeking new growth points, it will require a lot of investment.
It needs to find ways to make more money as soon as possible to support future corporate expenses.
The reason why Douyu is willing to take risks and pay dividends has something to do with its current development situation. As a listed company, Douyu needs to boost investor confidence, increase market activity, and especially stabilize the stock price.
On July 17, 2019, Douyu was listed on Nasdaq , with an issue price of US$11.5. At the end of last year, Douyu's stock price fell to a low of $0.739 per share, and it faced the risk of almost delisting.
In addition, Douyu’s more important goal is to meet the needs of major shareholders to deliver cash dividends.
Regarding this dividend payment, the Douyu Interim Management Committee stated, "Although we continue to face the challenging macroeconomic and operating environment, we remain committed to protecting the interests of shareholders. Based on the company's current cash position, the board of directors has approved approximately 3 100 million US dollars in special cash dividends as part of our continued return of value to shareholders.”
Tencent is the direct beneficiary of this dividend. Currently, Tencent holds approximately 38.2% of Douyu’s shares through its entities affiliated with tencent, making it the company’s largest shareholder. In this dividend, Tencent is expected to receive more than US$110 million in cash dividends, which is a huge benefit.
Picture source Tencent official website
Another major shareholder of Douyu is Douyu founder and CEO Chen Shaojie. As of March 31, 2024, Chen Shaojie holds 5.4419 million shares of Douyu, with a shareholding ratio of 17.2%, and is expected to receive cash. Dividends exceed $50 million.
Overall, the top two shareholders, Tencent and Chen Shaojie, hold a total of 55% of the shares, with a total dividend of approximately US$165 million.
pays this dividend, and Douyu is under considerable pressure. It will need to invest more cash in strategic transformation in the next year. Whether it can achieve a breakthrough is still unknown.
2. After appeasing the old shareholders, we must regain the confidence of investors as soon as possible.
Douyu is no longer the Douyu it used to be.
In 2019, when Douyu was listed on the NASDAQ in the United States, the future was still bright: key performance indicators have been rising year after year, and the industry cake is getting bigger and bigger; players such as Bilibili and Kuaishou have become new variables in the industry, but the number of daily active users is still Can't compete with that.
According to the financial report, from 2021 to 2023, Douyu mobile terminal MAUs were 62.4 million, 57.4 million and 51.7 million respectively; the average number of paying users were 7.3 million, 5.6 million and 3.7 million respectively. In the first quarter of 2024, mobile MAU dropped to 45.3 million, and the number of paid users dropped to 3.4 million.
In order to win back users, Douyu has also launched a series of measures, including increasing cross-platform content cooperation and content sharing, providing users with higher-quality content to meet the diverse needs of users, and at the same time deepening cooperation with game manufacturers to promote Game props are sold to meet the needs of in-depth game users.
Whether it can really attract users through these strategies is crucial, because it is related to Douyu’s future revenue and profit prospects.
According to the financial report, Douyu’s revenue from 2020 to 2023 was 9.6 billion yuan, 9.1 billion yuan, 7.1 billion yuan, and 5.53 billion yuan respectively; in terms of net profit, Douyu began to suffer continuous losses in 2021, and briefly turned around in 2023. After making a profit, it fell into loss again in 2024.
In the first quarter of 2024, Douyu achieved revenue of US$144 million, a year-on-year decrease of 29.9%; during the same period, it recorded a net loss of US$12 million, turning from profit to loss year-on-year.
All this has caused the capital market to become pessimistic about Douyu. After appeasing its major shareholders, Douyu still needs a change across the cycle if it wants to regain the confidence of investors - to carry out commercial transformation as soon as possible and rely on new businesses. development and alleviate the decline in overall performance.
At the beginning of 2024, Douyu adjusted its organizational structure and reorganized the company's important content ecological division into three major divisions: broadcasters, events, and manufacturers, hoping to promote the transformation of its business and model.
In terms of specific business, Douyu is starting from the sales of game props, game advertising and distribution services to promote the diversification of the platform's income.
Although most of the new businesses targeted by Douyu revolve around the gaming industry, Douyu still needs a longer period of accumulation if it wants to cope with industry competition in new areas.
For example, in terms of game props, Douyu cooperates with game manufacturers to launch activities such as limited skins and props, and conducts platform membership business based on game props.
Currently, Douyu has cooperated with more than 10 popular games such as Peace Elite, DNF, Honor of Kings, and LoL mobile games. As a cooperation channel for game manufacturers’ commercial activities, Douyu promotes games through platform anchors, content creation, and operation activities. Props.
However, the sale of game props is not uncommon. Some short video platforms have also launched live broadcast support plans for the sale of game props.
The challenge of this business is that Douyu needs to strengthen cooperation with high-quality game manufacturers, launch more differentiated operational activities, and test Douyu’s basic strength such as user scale, anchor ecology, and platform atmosphere.
In the process of exploring commercialization paths, Douyu also needs to face up to performance issues such as revenue and losses, and change the trend of declining user and anchor scale.
Essentially, this is an extension of the traffic ecology that content platforms must face. How to obtain fresh traffic and revitalize the original traffic through new gameplay requires further thinking by Douyu.
is still on the road to transformation, trying to create a marketing system covering the entire life cycle of games through in-depth cooperation with game manufacturers to promote user payment. At the same time, we hope to increase investment in high-quality content, strengthen linkage with manufacturers, implement refined operations, and explore business diversification.
Douyu was founded in 2014 and this year just celebrated its tenth year. In the future game market, platforms with only a single live broadcast mode cannot resist multiple risks and are destined to be eliminated.
Douyu needs to regain its combat effectiveness and reverse the current situation through more drastic reforms and stronger measures in order to achieve self-rescue and change the capital market's view of itself.
