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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 20-F

(Mark One)

REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2023.

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report                     

For the transition period from                       to                     

Commission file number: 001-38967

DouYu International Holdings Limited

(Exact name of Registrant as specified in its charter)

N/A

(Translation of Registrant’s name into English)

Cayman Islands

(Jurisdiction of incorporation or organization)

20/F, Building A, New Development International Center,

No. 473 Guanshan Avenue,

Hongshan DistrictWuhan, Hubei Province, 430073,

People’s Republic of China

(Address of principal executive offices)

Shaojie Chen

Chief Executive Officer

Tel: +86 27 8787 8301

E-mail: ir@douyu.tv

20/F, Building A, New Development International Center,

No. 473 Guanshan Avenue,

Hongshan DistrictWuhan, Hubei Province, 430073,

People’s Republic of China

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act.

Title of each class

    

Trading

Symbol

    

Name of each exchange
on which registered

American depositary shares, every one American
depositary share represents one ordinary share,
par value US$0.0001 per share

 

DOYU

 

The Nasdaq Global Select Market

Ordinary shares, par value US$0.0001
per share*

 

N/A

 

The Nasdaq Global Select Market

*

Not for trading, but only in connection with the listing of the American depositary shares on the Nasdaq Global Select Market.

Securities registered or to be registered pursuant to Section 12(g) of the Act.

None

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

None

(Title of Class)

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

31,977,665 ordinary shares issued and outstanding, par value $0.0001 per share as of December 31, 2023.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes      No  

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.    Yes      No  

Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

 

Accelerated filer

 

Non-accelerated filer

 

 

 

 

 

 

Emerging growth company

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards † provided pursuant to Section 13(a) of the Exchange Act.  

† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the eff ectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to § 240.10D-1(b).

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP  

 

International Financial Reporting Standards as issued

 

  

Other 

 

 

by the International Accounting Standards Board

  

 

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.      Item 17      Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.    Yes      No  

TABLE OF CONTENTS

Page 

INTRODUCTION

ii

FORWARD-LOOKING INFORMATION

iv

PART I

1

ITEM 1.

IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

1

ITEM 2.

OFFER STATISTICS AND EXPECTED TIMETABLE

1

ITEM 3.

KEY INFORMATION

1

ITEM 4.

INFORMATION ON THE COMPANY

81

ITEM 4A.

UNRESOLVED STAFF COMMENTS

131

ITEM 5.

OPERATING AND FINANCIAL REVIEW AND PROSPECTS

131

ITEM 6.

DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

147

ITEM 7.

MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

156

ITEM 8.

FINANCIAL INFORMATION

158

ITEM 9.

THE OFFER AND LISTING

159

ITEM 10.

ADDITIONAL INFORMATION

159

ITEM 11.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

170

ITEM 12.

DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

171

PART II

174

ITEM 13.

ITEM DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

174

ITEM 14.

MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

174

ITEM 15.

CONTROLS AND PROCEDURES

174

ITEM 16.

[RESERVED]

175

ITEM 16.A.

AUDIT COMMITTEE FINANCIAL EXPERT

175

ITEM 16.B.

CODE OF ETHICS

176

ITEM 16.C.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

176

ITEM 16.D.

EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

176

ITEM 16.E.

PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

176

ITEM 16.F.

CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT

177

ITEM 16.G.

CORPORATE GOVERNANCE

177

ITEM 16.H.

MINE SAFETY DISCLOSURE

178

ITEM 16.I.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

178

ITEM 16.J.

INSIDER TRADING POLICIES

178

ITEM 16.K.

CYBERSECURITY

178

PART III

180

ITEM 17.

FINANCIAL STATEMENTS

180

ITEM 18.

FINANCIAL STATEMENTS

180

ITEM 19.

EXHIBITS

180

i

INTRODUCTION

Except where the context otherwise indicates and for the purpose of this annual report only:

“active users” refers to users who visited our platform through a PC or mobile app including its associated mini programs at least once in a given period. The number of active PC users is measured as the number of independent cookies generated by our website when users visited our platform through a PC in a given period. The number of active mobile users is measured by the number of users who access our platform through mobile apps in a given period. The number of active mobile users may not entirely represent the actual number of individual users who access our platform through our mobile apps as some users may access our platform using more than one mobile devices, multiple users may access our services using the same mobile device and some users may access our platform through multiple channels;
“ADSs” refers to the American Depositary Shares, every one ADS represents one ordinary share, par value US$0.0001 per share, as of the date hereof*
“annual paying users” refer to the total paying users for a given year after removing double-counting because of multiple payments;
“ARPPU” refers to average livestreaming revenue per paying user in a given period;
“average mobile MAUs” for a given period of time is calculated by dividing (i) the sum of active mobile users for each month of such period by (ii) the number of months in such period;
“average next-month active mobile user retention rate” for any period is calculated by dividing (i) the sum of next-month mobile active user retention rate for each month of such period by (ii) the total number of months in such period;
“average next-month active PC user retention rate” for any period is calculated by dividing (i) the sum of next-month PC user retention rate for each month of such period by (ii) the total number of months in such period;
“average PC MAUs” for a given period of time is calculated by dividing (i) the sum of active PC users for each month of such period by (ii) the number of months in such period;
“average total mobile eSports MAU” refers to the average total eSports MAUs during a given period of time calculated by dividing (i) the sum of active mobile users who accessed game-themed channels on our platform in each month of such period by (ii) the number of months in such period;
“Beijing Fengye” refers to Beijing Fengye Equity Investment Center (Limited Partnership);
“Beijing Phoenix” refers to Beijing Phoenix Rich Investment Management Center (Limited Partnership);
“CDN” refers to content delivery network;
“China” or “PRC” refer to the People’s Republic of China and only in the context of describing PRC rules, laws, regulations, regulatory authority, and any PRC entities or citizens under such rules, laws and regulations and other legal or tax matters in this annual report, excludes Taiwan, Hong Kong, and Macau;
“Douyu Yule” refers to Wuhan Douyu Culture Network Technology Co., Ltd.;
“Gogo Glocal” refers to Gogo Glocal Holding Limited, an exempted company incorporated under the laws of the Cayman Islands;
“Guangzhou Douyu” refers to Guangzhou Douyu Internet Technology Co., Ltd.;

* Effective from March 28, 2024, we changed the ratio of our ADSs to the ordinary shares from ten (10) ADSs representing one (1) ordinary share to one (1) ADS representing one (1) ordinary share. For details, please see "Item 9. The Offer and Listing -- 9.A. Offering and Listing Details." For the purpose of calculating loss or earnings per ADS, such ADS ratio change has been retroactively reflected for all periods presented herein.

ii

“Linzhi Lichuang” refers to Linzhi Lichuang Information Technology Co., Ltd., an entity controlled by Tencent Holdings Limited;
“MAUs” refers to the number of active mobile users in a given month;
“Nectarine” refers to Nectarine Investment Limited, a wholly-owned subsidiary of Tencent Holdings Limited;
“next-month active mobile user retention rate” is calculated by dividing (i) the sum of active users who visited our platform through a mobile app at least once in the next month after a given month by (ii) the sum of all mobile active users in that given month;
“next-month active PC user retention rate” is calculated by dividing (i) the sum of active users who visited our platform through a PC at least once in the next month after a given month by (ii) the sum of all mobile active users in that given month;
“ordinary shares” refers to our ordinary shares of par value US$0.0001 per share;
“P2P” refers to peer-to-peer;
“paying user” for any period in the context of our operating data refers to a registered user that has purchased virtual gifts on our platform at least once during the relevant period. A paying user is not necessarily a unique user, however, as a unique user may set up multiple paying user accounts on our platform, and consequently, the number of paying users we present in this annual report may not equal to the number of unique individuals who made purchases on our platform for any given period of time;
“quarterly average paying users” refers to the average paying users for each quarter during a given period of time calculated by dividing (i) the sum of paying users for each quarter of such period by (ii) the number of quarters in such period;
“registered streamer” refers to a user that has been registered on our platform as a streamer;
“registered user” refers to a user that has registered and logged onto our platform at least once since registration. We calculate registered users as the cumulative number of user accounts at the end of the relevant period that have logged onto our platform at least once after registration. Each individual user may have more than one registered user account, and consequently, the number of registered users we present in this annual report may not equal to the number of unique individuals who are our registered users;
“retention rate” refers to the percentage of users who make at least one repeat use after a certain duration;
“RMB” or “Renminbi” refers to the legal currency of the People’s Republic of China;
“RSU” refers to restricted share unit;
“Tencent” refers to Tencent Holdings Limited;
“US$,” “dollars” or “U.S. dollars” refers to the legal currency of the United States;
“We,” “Us,” “Our company,” “the Group,” “Our,” or “Douyu” refers to DouYu International Holdings Limited, a Cayman Islands exempted company and its subsidiaries, and, in the context of describing our consolidated financial information, business operations and operating data, including but not limited to, business locations, employees, intellectual properties, trademarks, product and service offerings, the variable interest entities (“VIEs”) and their subsidiaries. As described elsewhere in this annual report, we do not own the VIEs, and the results of the VIEs’ operations only accrue to us through contractual arrangements between the VIEs, and the VIEs’ nominee shareholders, and certain of our subsidiaries. Accordingly, in appropriate contexts we will describe the VIEs’ activities separately from those of our direct and indirect owned subsidiaries and our use of the terms “we,” “us,” and “our” may not include the VIEs in those contexts;
“Wuhan Douyu” refers to Wuhan Douyu Internet Technology Co., Ltd.;
“Wuhan Ouyue” refers to Wuhan Ouyue Online TV Co., Ltd.;
“Yuxing Tianxia” refers to Wuhan Yuxing Tianxia Culture Media Co., Ltd.;
“Yuyin Raoliang” refers to Wuhan Yuyin Raoliang Culture Media Co., Ltd.; and

iii

“Zhejiang Ouyue” refers to Zhejiang Ouyue Online TV Co., Ltd., which was subsequently renamed Wuhan Ouyue.

Unless the context otherwise requires, the operating data presented for our company in this annual report excludes Gogo Glocal, an exempted company incorporated under the laws of the Cayman Islands, or any other platform we incorporated to conduct our business overseas. We acquired a controlling stake of Gogo Glocal in October 2018 and all of its shares in February 2020.

We have made rounding adjustments to some of the figures included in this annual report. Accordingly, numerical figures shown as totals or percentages may not be an arithmetic calculation of the figures that preceded them.

Unless otherwise noted, all translations from Renminbi to U.S. dollars and from U.S. dollars to Renminbi in this annual report are made at RMB7.0999 to US$1.00, the exchange rate set forth in the H.10 statistical release of the Federal Reserve Board on December 29, 2023. We make no representation that any Renminbi or U.S. dollar amounts could have been, or could be, converted into U.S. dollars or Renminbi, as the case may be, at any particular rate, the rates stated below, or at all.

FORWARD-LOOKING INFORMATION

This annual report contains statements that constitute forward-looking statements. Many of the forward-looking statements contained in this annual report can be identified by the use of forward-looking words such as “anticipate,” “believe,” “could,” “expect,” “should,” “plan,” “intend,” “estimate” and “potential,” among others.

Forward-looking statements appear in a number of places in this annual report and include, but are not limited to, statements regarding our intent, belief or current expectations. Forward-looking statements are based on our management’s beliefs and assumptions and on information currently available to our management. Such statements are subject to risks and uncertainties, and actual results may differ materially from those expressed or implied in the forward-looking statements due to various factors, including, but not limited to, those identified under the section entitled “Item 3. Key Information—3.D. Risk Factors” in this annual report. These risks and uncertainties include factors relating to:

evolution and competition of our industry;
our goals and growth strategies;
our future business development, results of operations and financial condition;
relevant government policies and regulations relating to our business and industry;
general economic and business condition in China;
assumptions underlying or related to any of the foregoing;
other factors that may affect our financial condition, liquidity and results of operations; and
other risk factors discussed under “Item 3. Key Information—3.D. Risk Factors.”

Forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update them in light of new information or future developments or to release publicly any revisions to these statements in order to reflect later events or circumstances or to reflect the occurrence of unanticipated events.

iv

PART I

ITEM 1.IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

ITEM 2.OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3.KEY INFORMATION

Our Contractual Arrangements and Corporate Structure

We are a Cayman Islands holding company instead of an operating company in China. We conduct our operations in China through our PRC subsidiaries and consolidated variable interest entities (the “VIEs”). Currently we conduct substantially all of our business operations in the PRC through Douyu Yule, our subsidiary incorporated in the PRC, and the VIEs. Douyu Yule controls Wuhan Ouyue and Wuhan Douyu, and other subsidiaries in the PRC, through a series of contractual arrangements. We conduct a significant portion of our businesses in China through Wuhan Ouyue and Wuhan Douyu. It is the VIEs that hold our key operating licenses, provide services to our customers, and enter into contracts with our suppliers. In 2021, 2022 and 2023, the amount of revenues generated by the VIEs accounted for 98%, 99% and 99%, respectively, of our total net revenues. As of December 31, 2022 and 2023, total assets of the VIEs, excluding amounts due from other companies in the Group, equaled 24% and 22% of our consolidated total assets as of the same dates, respectively. As used in this annual report, “we,” “us,” “our company,” “the Group,” “our,” or “Douyu” refers to DouYu International Holdings Limited and its subsidiaries, and, in the context of describing our consolidated financial information, business operations and operating data, the consolidated VIEs. “Douyu Yule” refers to Wuhan Douyu Culture Network Technology Co., Ltd., “Wuhan Ouyue” refers to Wuhan Ouyue Online TV Co., Ltd., and “Wuhan Douyu” refers to Wuhan Douyu Internet Technology Co., Ltd. We refer to Wuhan Yuxing Tianxia Culture Media Co., Ltd., Wuhan Yuyin Raoliang Culture Media Co., Ltd., and Wuhan Yule as the PRC subsidiaries in the context of describing of their activities. We refer to Wuhan Ouyue and Wuhan Douyu as the VIEs in the context of describing their activities and contractual arrangements with us. The VIEs primarily conduct operations in China, and the VIEs are consolidated for accounting purposes but are not entities in which we own equity, and our Company does not conduct operations by itself. Investors in our ADSs are purchasing equity securities of a Cayman Islands holding company rather than equity securities issued by our subsidiaries and the VIEs. Investors who are non-PRC residents may never directly hold equity interests in the VIEs under current PRC laws and regulations.

We and our direct and indirect subsidiaries do not, and it is virtually impossible us to, have any equity interests in the VIEs in practice because current PRC laws and regulations restrict foreign investment in companies that engage in value-added telecommunication services. As a result, we depend on certain contractual arrangements with the VIEs to operate a significant portion of our business. These contractual arrangements entered into with the VIEs allow us to (i) be considered as the primary beneficiary of the VIEs, (ii) receive substantially all of the economic benefits of the VIEs, and (iii) have an exclusive option to purchase all or part of the equity interests in the VIEs when and to the extent permitted by PRC law. These contractual arrangements include the operating agreement, equity pledge agreement, exclusive purchase option agreement, shareholder voting right trust agreement, loan agreement and cooperation agreement, as the case may be. As a result of these contractual arrangements, we are considered the primary beneficiary of, the VIEs and consolidate their operating results in our financial statements under U.S. GAAP, to the extent the conditions for consolidation of the VIE under U.S. GAAP are satisfied. Nonetheless, the VIEs are owned by certain nominee shareholders, and not by us. All of these nominee shareholders are also beneficial owners of the Company. For more details of these contractual arrangements, see “Item 4. Information on the Company—4.C. Organizational Structure—Contractual Arrangements with the VIEs and the VIEs’ Respective Shareholders.”

1

However, the contractual arrangements may not be as effective as direct ownership in providing us with control over the VIEs and we may incur substantial costs to enforce the terms of the arrangements. If the VIEs or the nominee shareholders fail to perform their respective obligations under the contractual arrangements, we could be limited in our ability to enforce the contractual arrangements in the PRC. We and our investors face significant uncertainty about potential future actions by the PRC government that could affect the legality and enforceability of the contractual arrangements with the VIEs and, consequently, significantly affect our ability to continue to consolidate the financial results of these entities in our financial statements. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure—Any failure by the VIEs or their shareholders to perform their obligations under our contractual arrangements with them would have a material adverse effect on our business” and “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure—We rely on contractual arrangements with the VIEs and their shareholders for our operations in China, which may not be as effective in providing operational control as direct ownership.”

Our corporate structure involves unique risks to investors in the ADSs. Our contractual arrangements with the VIEs have not been tested in PRC court. If the PRC government deems that our contractual arrangements with the VIEs do not comply with PRC regulatory restrictions on foreign investment in the relevant industries, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to material penalties or be forced to relinquish our interests in those operations or otherwise significantly change our corporate structure. We and our investors face significant uncertainty about potential future actions by the PRC government that could affect the legality and enforceability of the contractual arrangements with the VIEs and, consequently, significantly affect our ability to consolidate the financial results of the VIEs and the financial performance of our company as a whole. The PRC regulatory authorities could further disallow the VIE structure, which would likely result in a material change in our operations and the value of our securities or could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or be worthless. For a detailed discussion of the risk and uncertainties associated with the VIE structure, see “Item 3. Key Information—3.D. Risk Factor—Risks Related to Our Corporate Structure—There are substantial uncertainties regarding the interpretation and application of current and future PRC laws, regulations, and rules relating to the agreements that establish the VIE structure for our operations in China, including potential future actions by the PRC government, which could affect the enforceability of our contractual arrangements with the VIEs and, consequently, significantly affect the financial condition and results of operations performance of Douyu. If the PRC government finds such agreements non-compliant with relevant PRC laws, regulations, and rules, or if these laws, regulations, and rules or the interpretation thereof change in the future, we could be subject to severe penalties or be forced to relinquish our interests in the VIEs” and other risk factors discussed under “Item 3. Key Information—3.D. Risk Factor—Risks Related to Our Corporate Structure”.

We face significant regulatory, liquidity and enforcement risks and uncertainties as a company based in and primarily operating in China. including risks and uncertainties regarding that the rules and regulations in China may evolve quickly with any public consultation and advanced notice period being relatively short in terms of the time that we may need to fully adapt to such changes, all of which could result in a material change in our operations and value of our ADSs. The PRC government may also influence our operations by adopting new laws and regulations as the government deems appropriate to further regulatory, political and societal goals, or may exert more control over offerings conducted overseas and/or foreign investment in China-based issuers, which could result in a material change in our operations and the value of our ADSs. We also face risks associated with recent statements and regulatory actions by the PRC government, including those related to the use of variable interest entities, anti-monopoly regulatory actions, as well as cybersecurity and data privacy.

2

Corporate Structure

The following diagram illustrates our corporate structure as of the date of this annual report, including our significant subsidiaries and VIEs.

Graphic

Notes:

(1)The sole shareholder of Wuhan Ouyue is Mr. Shaojie Chen, our founder, CEO and director.
(2)The shareholders of Wuhan Douyu and their relationship with our company are as follows: (i) Mr. Chen (50.23%), our founder, CEO and director; (ii) Linzhi Lichuang (18.98%), an affiliate of Nectarine, one of our shareholders; (iii) Beijing Fengye (13.16%), with 99.99% of its interests owned by Wuhan Ouyue; (iv) Beijing Phoenix (8.08%), an affiliate of Phoenix Fuju Limited, one of our shareholders; (v) Mr. Wenming Zhang (3.92%), our co-founder, former co-CEO and former director, and (vi) Wuhan Chaosai Business Information Consulting Partnership (Limited Partnership) (5.63%), with 99.99% of its interests owned by Wuhan Ouyue.

3

Contractual Arrangements with the VIEs and the VIEs’ Respective Shareholders

Currently, our business in China are operated primarily through Wuhan Douyu and Wuhan Ouyue, the VIEs, due to PRC legal restrictions on foreign ownership in value-added telecommunication services and other Internet related business. The Special Administrative Measures for Entrance of Foreign Investment (Negative List) (2021 Version) provides that foreign investors are generally not allowed to own more than 50% of the equity interests in a value-added telecommunication service provider other than certain exceptions. In addition, foreign investors are prohibited from investing in companies engaged in certain online and culture related businesses. See “Item 4. Information on the Company—4.B. Business Overview—Regulation—Regulations Relating to Telecommunications Services,” “Item 4. Information on the Company—4.B. Business Overview—Regulation—Regulations Relating to Online Transmission of Audio-Visual Programs,” and “Item 4. Information on the Company—4.B. Business Overview—Regulation—Regulations Relating to Online Game Operation.” We are a company incorporated in the Cayman Islands. Douyu Yule, our PRC subsidiary, is considered as a foreign-invested enterprise. To comply with the foregoing PRC laws and regulations, we primarily conduct our business in China through the VIEs and their subsidiaries in the PRC, based on a series of contractual arrangements. As a result of these contractual arrangements, we consolidate the operating results of the VIEs in our consolidated financial statements under U.S. GAAP. These contractual arrangements may not be as effective as direct ownership in providing us with control over the VIEs. If the VIEs or their respective shareholders fail to perform their respective obligations under the contractual arrangements, we could be limited in our ability to enforce the contractual arrangements entered into with the VIEs in the PRC and may have to incur substantial costs and expend additional resources to enforce such arrangements. We may also have to rely on legal remedies under PRC law, including seeking specific performance or injunctive relief, and claiming damages, which we cannot assure will be effective under PRC law. For details, please refer to “Item 3. Key Information—3.D. Risk Factors—Risks Related to Our Corporate Structure.”

In the opinion of Han Kun Law Offices, our PRC counsel:

the ownership structures of the VIEs and Douyu Yule as of the date of this annual report do not and will not contravene any PRC laws or regulations currently in effect; and
each of the agreements under the contractual arrangements among Douyu Yule, the VIEs and their respective shareholders governed by PRC laws is valid and binding upon each party to such agreements and enforceable against each party thereto in accordance with their terms and applicable PRC laws and regulations currently in effect.

However, our PRC counsel advised that there are substantial uncertainties regarding the interpretation and application of current and future PRC laws, regulations and rules. In particular, in March 2019, the National People’s Congress of the PRC adopted the PRC Foreign Investment Law, which became effective on January 1, 2020. Among other things, the PRC Foreign Investment Law defines “foreign investment” as investment activity in China by foreign investors in a direct or indirect manner, including those circumstances explicitly listed thereunder as establishing new projects or foreign invested enterprises or acquiring shares of enterprises in China, and other approaches of investment as stipulated by laws, administrative regulations or otherwise regulated by the State Council. The PRC Foreign Investment Law leaves uncertainty as to whether foreign investors’ controlling PRC onshore variable interest entities via contractual arrangements will be recognized as “foreign investment” and thus be subject to the restrictions/prohibitions on foreign investments. Accordingly, the PRC regulatory authorities may in the future take a view that is contrary to the above opinion of our PRC counsel. If the PRC government finds that the agreements that establish the structure for operating our livestreaming business and other Internet related business do not comply with PRC government restrictions on foreign investment in certain industries, such as value-added telecommunications services business, we could be subject to severe penalties, including being prohibited from continuing operations. See “Item 3. Key Information—3.D. Risk Factors—Risks Related to Our Corporate Structure.” The following is a summary of the contractual arrangements by and among Douyu Yule, Wuhan Douyu and the shareholders of Wuhan Douyu, and Wuhan Ouyue and Mr. Shaojie Chen, the sole shareholder of Wuhan Ouyue.

4

Wuhan Douyu

Share Pledge Agreement

Pursuant to a series of share pledge agreements entered into in May 2018 by and among Douyu Yule, Wuhan Douyu and the shareholders of Wuhan Douyu, the shareholders of Wuhan Douyu pledged all of their equity interests in Wuhan Douyu to Douyu Yule, to guarantee Wuhan Douyu’s performance of its obligations under the exclusive business cooperation agreement. If Wuhan Douyu breaches its contractual obligations under the exclusive business cooperation agreement, Douyu Yule will be entitled to certain rights, including but not limited to the rights to auction or sell the pledged equity interests. The pledges under the share pledge agreements have been registered with the relevant PRC legal authority pursuant to PRC laws and regulations. In January 2019, the existing share pledge agreement to which Mr. Chen is a party was replaced with an amended and restated share pledge agreement on substantially similar terms due to equity transfers. In April 2020 and July 2020, Douyu Yule, Wuhan Douyu and Mr. Chen entered into two additional share pledge agreements on substantially similar terms due to equity transfers. In October 2021, Douyu Yule, Wuhan Douyu and Wuhan Chaosai Business Information Consulting Partnership (Limited Partnership) entered into a share pledge agreement on substantially similar terms due to transfers of equity interest in Wuhan Douyu.

Exclusive Option Agreement

Pursuant to a series of exclusive option agreements entered into in May 2018 by and among Douyu Yule, Wuhan Douyu and the shareholders of Wuhan Douyu, the shareholders of Wuhan Douyu irrevocably granted Douyu Yule or its designated person an exclusive option to purchase at its discretion all or part of the equity interests in Wuhan Douyu held by the shareholders of Wuhan Douyu at the price of RMB1.0 or at the lowest price permitted by PRC law, whichever is lower. In addition, Wuhan Douyu irrevocably granted Douyu Yule or its designated person an exclusive option to purchase at its discretion, all or part of the assets held or entitled to be used by Wuhan Douyu, to the extent permitted under PRC law and at the lowest price permitted by PRC law. In January 2019, the existing exclusive option agreement to which Mr. Chen is a party was replaced with an amended and restated exclusive option agreement on substantially similar terms due to equity transfers, and the amended and restated exclusive option agreement was further replaced with two exclusive option agreements on substantially similar terms in April 2020 and July 2020 due to equity transfers. In October 2021, Douyu Yule, Wuhan Douyu and Wuhan Chaosai Business Information Consulting Partnership (Limited Partnership) entered into an exclusive option agreement on substantially similar terms due to transfers of equity interest in Wuhan Douyu.

Exclusive Business Cooperation Agreement

Pursuant to the exclusive business cooperation agreement entered into in May 2018 by and between Douyu Yule and Wuhan Douyu, Wuhan Douyu agreed to engage Douyu Yule as its exclusive provider of business support, technical and consulting services, including technical services, network support, business consultation, intellectual property licensing, equipment leasing, market consultancy, system integration, product research and development and system maintenance, in exchange for service fees. Under these arrangements, the service fees, subject to adjustment at Douyu Yule’s sole discretion, are equal to all of the net profit of Wuhan Douyu. Therefore, Douyu Yule enjoys all the economic benefits derived from the businesses of Wuhan Douyu.

Power of Attorney

Pursuant to a series of powers of attorney issued by each shareholder of Wuhan Douyu in May 2018, the shareholders of Wuhan Douyu irrevocably appointed Douyu Yule or a director authorized by Douyu Yule as their attorney-in-fact to act on their behalf on all matters of Wuhan Douyu and to exercise all of their rights as registered shareholders of Wuhan Douyu. In January 2019, the existing power of attorney issued by Mr. Chen was replaced with a new power of attorney on substantially similar terms due to equity transfers, and such new power of attorney was further replaced with two powers of attorney on substantially similar terms in April 2020 and July 2020 due to equity transfers. In October 2021, Wuhan Chaosai Business Information Consulting Partnership (Limited Partnership) signed a power of attorney on substantially similar terms due to transfers of equity interest in Wuhan Douyu.

5

Spousal Consent Letters

Pursuant to a series of spousal consent letters executed by the spouses of the individual shareholders of Wuhan Douyu, Mr. Chen, and Mr. Wenming Zhang in May 2018, the signing spouses confirmed and agreed that the equity interests of Wuhan Douyu are the own property of their spouses and shall not constitute the community property of the couples. The spouses also irrevocably waived any potential right or interest that may be granted by operation of applicable law in connection with the equity interests of Wuhan Douyu held by their spouses. In January 2019, the existing spousal consent letter executed by Mr. Chen’s spouse was replaced with a new spousal consent letter on substantially similar terms due to equity transfers. In April 2020 and July 2020, the spouse of Mr. Chen issued two additional spousal consent letters on substantially similar terms due to equity transfers.

Wuhan Ouyue

Share Pledge Agreement

Pursuant to the share pledge agreement dated May 29, 2018 by and among Douyu Yule, Wuhan Ouyue and Mr. Chen, the sole shareholder of Wuhan Ouyue, Mr. Chen pledged all of his equity interests in Wuhan Ouyue to Douyu Yule, to guarantee Wuhan Ouyue’s performance of its obligations under the exclusive business cooperation agreement. If Wuhan Ouyue breaches its contractual obligations under the exclusive business cooperation agreement, Douyu Yule will be entitled to certain rights, including but not limited to the rights to auction or sell the pledged equity interests. The pledge under the share pledge agreement has been registered with the relevant PRC legal authority pursuant to PRC laws and regulations.

Exclusive Option Agreement

Pursuant to the exclusive option agreement dated May 29, 2018 by and among Douyu Yule, Wuhan Ouyue and Mr. Chen, the sole shareholder of Wuhan Ouyue, Mr. Chen irrevocably granted Douyu Yule or its designated person an exclusive option to purchase at its discretion, all or part of the equity interests in Wuhan Ouyue held by Mr. Chen at the price of RMB1.0 or at the lowest price permitted by PRC law, whichever is lower. In addition, Wuhan Ouyue irrevocably granted Douyu Yule or its designated person an exclusive option to purchase at its discretion all or part of the assets held or entitled to be used by Wuhan Ouyue, to the extent permitted under PRC law. Subject to relevant PRC laws and regulations, Wuhan Ouyue and Mr. Chen shall return any amount of purchase price they have received to Douyu Yule.

Exclusive Business Cooperation Agreement

Pursuant to the exclusive business operation agreement dated May 29, 2018 by and between Douyu Yule and Wuhan Ouyue, Wuhan Ouyue agreed to engage Douyu Yule as its exclusive provider of business support, technical and consulting services, including technical services, network support, business consultation, intellectual property licensing, equipment leasing, market consultancy, system integration, product research and development and system maintenance, in exchange for service fees. Under these arrangements, the service fees, subject to Douyu Yule’s adjustment, are equal to all of the net profit of Wuhan Ouyue. Douyu Yule may adjust the service fees at its sole discretion. Douyu Yule enjoys all the economic benefits derived from the businesses of Wuhan Ouyue.

Power of Attorney

Pursuant to the power of attorney dated May 29, 2018 issued by Mr. Chen, the sole shareholder of Wuhan Ouyue, Mr. Chen irrevocably appointed Douyu Yule or a director authorized by Douyu Yule as his attorney-in-fact to act on his behalf on all matters of Wuhan Ouyue and to exercise all of his rights as a registered shareholder of Wuhan Ouyue.

Spousal Consent Letter

Pursuant to the spousal consent letter dated May 29, 2018 executed by the spouse of Mr. Chen, the sole shareholder of Wuhan Ouyue, the signing spouse confirmed and agreed that the equity interests of Wuhan Ouyue are the own property of Mr. Chen and shall not constitute the community property of the couple. The signing spouse also irrevocably waived any potential right or interest that may be granted by operation of applicable law in connection with the equity interests of Wuhan Ouyue held by Mr. Chen.

6

Recent Regulatory Development

Cybersecurity

On June 10, 2021, the Standing Committee of the National People’s Congress of China promulgated the Data Security Law, which took effect on September 1, 2021. The Data Security Law introduces a data classification and hierarchical protection system based on the importance of data in economic and social development, and the degree of harm it may cause to national security, public interests, or legitimate rights and interests of individuals or organizations if such data are tampered with, destroyed, leaked, illegally acquired or illegally used. The appropriate level of protection measures is required to be taken for each respective category of data. The Data Security Law also requires data processing operators to establish a sound data security management system throughout the whole process, organize data security education and training, and take corresponding technical measures and other necessary measures to ensure data security.

On December 28, 2021, the Cyberspace Administration of China, or the CAC, the National Development and Reform Commission, or the NDRC, the Ministry of Industry and Information Technology, or the MIIT and several other PRC governmental authorities jointly issued the Cybersecurity Review Measures, which became effective on February 15, 2022. Pursuant to Cybersecurity Review Measures, critical information infrastructure operators that procure internet products and services and network platform operators engaging in data processing activities are subject to cybersecurity review under the Cybersecurity Review Measures if their activities affect or may affect national security. The relevant competent governmental authorities may initiate the cybersecurity review against the relevant operators if the authorities believe that the network product or service or data processing activities of such operators affect or may affect national security. In addition, network platform operators who possess personal information of more than one million users, and intend to be listed on a foreign stock exchange, must be subject to the cybersecurity review.

On November 14, 2021, the CAC published the Draft Measures for Internet Data Security, which provide that data processors conducting certain activities must apply for cybersecurity review, including, among others, merger, reorganization or separation of Internet platform operators that have acquired a large number of data resources related to national security, economic development or public interests that affects or may affect national security and the listing abroad of data processors processing over one million users’ personal information. The Draft Measures for Internet Data Security also require data processors processing over one million users’ personal information to comply with the regulations on important data processors, including, among others, appointing a person in charge of data security and establishing a data security management organization, filing with the competent authority within 15 working days after identifying its important data, formulating data security training plans, and organizing data security education and training for all staff every year, and that the education and training time of data-security-related technical and management personnel shall not be less than 20 hours per year. The Draft Measures for Internet Data Security also provides that data processors processing important data or going public overseas shall conduct an annual data security assessment by themselves or entrust a data security service institution to do so, and submit the data security assessment report of the previous year to the local branch of CAC before January 31 of each year. As advised by our PRC counsel, the Draft Measures for Internet Data Security have not been adopted and it remains unclear whether the formal version adopted in the future will have any further material changes, it is uncertain how the measures will be enacted, interpreted or implemented and how they will affect us. We cannot predict the impact of the draft measures, if any, at this stage, and we will closely monitor and assess any development in the rule-making process. If a final version of the Draft Measures for Internet Data Security is adopted, we may be subject to review when conducting data processing activities and annual data security assessment, and may face challenges in addressing its requirements and make necessary changes to our internal policies and practices in data processing. In addition, if the enacted version of the Draft Measures for Internet Data Security mandates clearance of cybersecurity review and other specific actions to be completed by China-based companies, such as us, that have been listed on overseas stock exchange, we face uncertainties as to whether we could obtain such clearance in a timely manner, or at all. During such review, we may be required to suspend providing any existing or new services to our customers and/or experience other disruptions of our operations, and such review could also result in negative publicity with respect to our company and diversion of our managerial and financial resources.

7

On July 7, 2022, the CAC issued the Measures for Security Assessment of Cross-border Data Transfer, which became effective on September 1, 2022. These measures require the data processor providing data overseas to apply for the security assessment of cross-border transfer of data with the local provincial-level counterparts of the national cybersecurity authority under any of the following circumstances: (i) where the data processor intends to provide important data overseas; (ii) where a critical information infrastructure operator and a data processor who has processed personal information of more than 1,000,000 individuals intends to provide personal information overseas; (iii) where a data processor who has provided personal information of 100,000 individuals or sensitive personal information of 10,000 individuals to overseas recipients, in each case as calculated cumulatively since January 1 of the preceding year, intends to provide personal information overseas; or (iv) other circumstances where the security assessment of data cross-border transfer is required by the CAC. In addition, the data processor shall conduct a self-assessment on the risk of data cross-border transfer prior to applying for the foregoing security assessment. The data processors that in violation of such measures are required to rectify such non-compliance incidents within six months of the effectiveness date thereof. Given that the above measures are relatively new, their interpretation, application and enforcement and how they will affect our business operation are subject to substantial uncertainties.

As of the date of this annual report, we have not been involved in any investigations or become subject to a cybersecurity review initiated by the CAC based on the Cybersecurity Review Measures, and we have not received any inquiry, notice, warning or sanctions in such respect or any regulatory objections to our listing status from the CAC. We have not been subjected to any penalties or sanctions imposed by relevant regulatory authorities based on the preceding cybersecurity laws and regulations.

CSRC Filings Required for Securities Offerings

In recent years, the PRC government has indicated an intent to exert more oversight over overseas securities offerings and published a series of laws and regulations to regulate such transactions. On February 17, 2023, the China Securities Regulatory Commission, or the CSRC, promulgated the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies, or the Overseas Listing Trial Measures, and five supporting guidelines, which became effective on March 31, 2023. The Overseas Listing Trial Measures will comprehensively improve and reform the existing regulatory regime for overseas offering and listing of PRC domestic companies’ securities and will regulate both direct and indirect overseas offering and listing of PRC domestic companies’ securities by adopting a filing-based regulatory regime. According to the Overseas Listing Trial Measures, PRC domestic companies that seek to offer and list securities in overseas markets, either in direct or indirect means, are required to fulfill the filing procedure with the CSRC and report relevant information. If a company fails to complete the filing procedure or conceals any material fact or falsifies any major content in its filing documents, it may be subject to administrative penalties, such as order to rectify, warnings, fines, and its controlling shareholders, actual controllers, the person directly in charge and other directly liable persons may also be subject to administrative penalties, such as warnings and fines. The Overseas Listing Trial Measures also provide that a company in mainland China must file with the CSRC within three business days for its follow-on offering of securities after it is listed in an overseas market. On February 17, 2023, the CSRC also issued the Notice on Administration of the Filing of Overseas Offering and Listing by Domestic Companies and held a press conference for the release of the Overseas Listing Trial Measures, which, among others, clarified that the companies in mainland China that have been listed overseas before March 31, 2023 are not required to file with the CSRC immediately, but these companies should complete filing with the CSRC for their refinancing activities in accordance with the Overseas Listing Trial Measures. Based on the foregoing, as an issuer that has been listed overseas before the effective date of the Overseas Listing Trial Measures, we are not required to complete filing with the CSRC for our prior offshore offerings at this stage, but we may be subject to the filing requirements for our future capital raising activities under the Overseas Listing Trial Measures.

As of the date of this annual report, we have not received any inquiry, notice, warning, sanctions or regulatory objection from the CSRC in connection with requirements of obtaining prior approval for the listing of our ADSs. However, since the Overseas Listing Trial Measures was newly promulgated, the interpretation, application and enforcement of the Overseas Listing Trial Measures remain unclear, in particular, for the companies conducting their operations in mainland China through variable interest entities. At the press conference held for the Overseas Listing Trial Measures on the same day, officials from the CSRC clarified that, as for companies seeking overseas listing with VIEs and applying to file with the CSRC, the CSRC will solicit opinions from relevant PRC regulatory authorities and complete the filing of the overseas listing of such companies if such companies duly meet the compliance requirements. We cannot assure you that we will be able to complete such filing in a timely manner and fully comply with such rules to maintain the listing status of our ADSs and/or other securities, or to conduct any securities offerings in the future.

8

There are substantial uncertainties as to how PRC governmental authorities will regulate overseas listings and offerings in general and whether we are required to or are able to complete any filing or obtain any specific regulatory approval from the CSRC, the CAC or any other PRC governmental authorities for our future overseas securities offerings. If we had inadvertently concluded that such approvals were not required, or if applicable laws, regulations or interpretations change in a way that requires us to complete such filings or obtain such approvals in the future, we may be unable to fulfill such requirements in a timely manner, or at all, and such approvals may be rescinded even if obtained. Any such circumstance could subject us to penalties, significantly limit or completely hinder our ability to continue to offer securities to investors and cause the value of such securities to significantly decline or be worthless. For more detailed information, see “Item 3. Key Information—3.D. Risk Factors— Risks Related to Doing Business in China—The PRC government may exert more control over our future overseas offerings or foreign investments in us, which could result in a material change in our operation and the value of our ADSs. In particular, the approval, filing or other requirements of the China Securities Regulatory Commission or other PRC government authorities may be required under PRC law in connection with our issuance of securities overseas.”

Permission Required from the PRC Authorities for Our Operations

We conduct our business primarily through our subsidiaries and the VIEs in China. Our operations in China are governed by PRC laws and regulations. Excepts as disclosed in “Item 3. Key Information—3.D. Risk Factors—Risks Related to Our Business and Industry—If we fail to obtain or maintain the required licenses and approvals or if we fail to comply with laws and regulations applicable to our industry, our business, financial condition and results of operations may be materially and adversely affected”, we believe our PRC subsidiaries and the VIEs have obtained all material licenses and approvals required for our operations in China. We may be subject to additional licensing requirements for our business operation in China due to the uncertainties of interpretation and implementation of relevant laws and regulations and the enforcement practice by relevant government authorities. For risks relating to licenses and approvals required for our operations in China, see “Item 3. Key Information—3.D. Risk Factors—Risks Related to Our Business and Industry—If we fail to obtain or maintain the required licenses and approvals or if we fail to comply with laws and regulations applicable to our industry, our business, financial condition and results of operations may be materially and adversely affected.”

As of the date of this annual report, we, our PRC subsidiaries and the VIEs are not required to obtain approval or permission from the CSRC or the CAC for the securities we offered historically under any currently effective PRC laws, regulations, and regulatory rules However, in connection with any future overseas capital markets activities, we may need to file with the CSRC, undergo a cybersecurity review conducted by the CAC, or meet other regulatory requirements that may be adopted in the future by PRC regulatory authorities. To the extent such requirements are or become applicable, we cannot assure you that we would be able to comply with them in a timely manner, or at all. Any failure to obtain or delay in obtaining such approval or completing such procedures could subject us to restrictions and penalties imposed by the CSRC, the CAC or other PRC regulatory authorities, which could include fines and penalties on our operations in China, delays of or restrictions on the repatriation of the proceeds from our offshore offerings into China, or other actions that could materially and adversely affect our business, financial condition, results of operations, and prospects, as well as the trading price of our ADSs.

Transfer of Funds and Other Assets

DouYu International Holdings Limited, our Cayman Islands holding company, transfers cash to our wholly-owned Hong Kong subsidiary (through intermediate holding companies in the British Virgin Islands), by making capital contributions or providing loans, and our Hong Kong subsidiary transfers cash to our PRC subsidiaries by making capital contributions or providing loans to them.

Because DouYu International Holdings Limited and its subsidiaries control the VIEs through contractual arrangements, they are not able to make direct capital contribution to the VIEs and their subsidiaries. However, under relevant PRC laws and regulations, we are permitted to remit funds to the VIEs through loans rather than capital contributions. In 2021, 2022 and 2023, we did not make any loans to the VIEs. The VIEs fund their operations primarily using cash generated from operating and financing activities. For more information, see “Item 3. Key Information—Condensed Consolidating Schedule,” and our consolidated financial statements included elsewhere in this annual report.

9

As of December 31, 2023, DouYu International Holdings Limited had made cumulative capital contributions of US$250 million to our PRC subsidiaries through our intermediate holding company, and those contributions were accounted as long-term investments of DouYu International Holdings Limited. These funds have been used by our PRC subsidiaries for their operations. As of December 31, 2022 and 2023, the loan balance owed under the VIE agreements was US$41.8 million and US$36.8 million, respectively. In 2021, 2022 and 2023, the VIEs transferred RMB840.4 million, RMB407.7 million and RMB$410.8 million (US$57.9 million), respectively, to our PRC subsidiaries as payment or prepayment of service fees.

The VIEs may transfer cash to Douyu Yule by paying service fees according to the respective exclusive business cooperation agreements. Pursuant to these agreements between each of the VIEs and Douyu Yule, each of the VIEs agrees to pay Douyu Yule for services related to business support, technical and consulting services, including technical services, network support, business consultation, intellectual property licensing, equipment leasing, market consultancy, system integration, product research and development and system maintenance at an amount equal to all of the net profit of each of the VIEs, subject to adjustment at Douyu Yule’s sole discretion. For details of the contractual arrangements with the VIE, see “Item 4. Information on the Company—4.C. Organizational Structure—Contractual Arrangements with The VIEs and The VIEs’ Respective Shareholders.”

As of December 31, 2022 and 2023, the outstanding balance of service fees owed by the VIEs to our PRC subsidiaries were RMB3,346.2 million and RMB$3,311.3 million (US$466.4 million), respectively. There were no other assets transferred between VIEs and non-VIEs in 2021, 2022 and 2023.

Condensed Consolidating Schedule

The following tables set forth the summary condensed consolidated balance sheets data as of December 31, 2022 and 2023 of (i) our Company and our subsidiaries and (ii) the VIEs and VIEs’ subsidiaries, and the summary of the condensed consolidated statements of operations and cash flows for the years ended December 31, 2021, 2022 and 2023. Our consolidated financial statements are prepared and presented in accordance with accounting principles generally accepted in the United States. The historical results of us and the VIEs and VIEs’ subsidiaries are not necessarily indicative of results expected for future periods. You should read this information together with our consolidated financial statements and the related notes and “Item 5. Operating and Financial Review and Prospects” included elsewhere in this annual report.

For the Year Ended December 31, 2021

Eliminating

adjustments between

(i)our Company and

VIEs and

our subsidiaries and

Our

Our

VIEs’

WOFE and (ii)the VIEs and

    

Company

    

subsidiaries

    

WOFE

    

 subsidiaries

    

VIEs’ subsidiaries

    

Consolidated

(RMB in thousands)

Third-party revenues

200,459

(212)

8,965,084

9,165,331

Inter-company services revenues(1)

1,624,749

(1,624,749)

Net revenues

200,459

1,624,537

8,965,084

(1,624,749)

9,165,331

Third-party operating cost and expenses

(110,279)

(2,285,413)

(419,515)

(6,998,785)

(9,813,992)

Inter-company services cost and expenses(1)

(1,624,749)

1,624,749

(Loss) income from equity in subsidiaries

(505,172)

1,602,982

(1,097,810)

Share of income from VIEs

 

 

388,119

(388,119)

 

Total operating cost and expenses

 

(615,451)

 

(682,431)

(31,396)

(8,623,534)

138,820

 

(9,813,992)

(Loss) income from operations

 

(615,451)

 

(481,972)

1,593,141

341,550

(1,485,929)

 

(648,661)

Other expenses, net

 

 

(32,269)

2,128

(3,711)

 

(33,852)

Interest income

 

33,568

 

38,700

7,713

35,777

(38,366)

 

77,392

Share of (loss) income in equity method investments

(29,631)

14,503

(15,128)

Net (loss) income

 

(581,883)

 

(505,172)

1,602,982

388,119

(1,524,295)

 

(620,249)

10

For the Year Ended December 31, 2022

Eliminating

adjustments between

(i)our Company and

our subsidiaries and

Our

Our

VIEs and VIEs’

WOFE and (ii)the VIEs and

    

Company

    

subsidiaries

    

WOFE

    

subsidiaries

    

VIEs’ subsidiaries

    

Consolidated

(RMB in thousands)

Third-party revenues

85,246

913

7,022,079

7,108,238

Inter-company services revenues(1)

448,789

(448,789)

Net revenues

85,246

449,702

7,022,079

(448,789)

7,108,238

Third-party operating income (expense)

3,833

(217,792)

(444,578)

(6,648,581)

(7,307,118)

Inter-company services cost and expenses(1)

(448,789)

448,789

Loss from equity in subsidiaries

(170,956)

(62,402)

233,358

Share of loss from VIEs

(9,847)

9,847

Total operating cost and expenses

(167,123)

(280,194)

(454,425)

(7,097,370)

691,994

(7,307,118)

Income (Loss) from operations

(167,123)

(194,948)

(4,723)

(75,291)

243,205

(198,880)

Other expenses, net

 

(53,840)

(63,998)

 

37,535

 

 

(80,303)

Interest income

91,701

 

14,855

9,904

 

28,393

 

(14,993)

 

129,860

Income tax expenses

 

(3,487)

 

 

 

(3,487)

Share of income (loss) in equity method investments

62,977

(98)

(484)

62,395

Net loss

(75,422)

 

(170,956)

(62,402)

 

(9,847)

 

228,212

 

(90,415)

For the Year Ended December 31, 2023

Eliminating

adjustments between

(i)our Company and

our subsidiaries and

Our

Our

VIEs and VIEs’

WOFE and (ii)the VIEs and

    

Company

    

subsidiaries

    

WOFE

    

subsidiaries

    

VIEs’ subsidiaries

    

Consolidated

(RMB in thousands)

Third-party revenues

94,915

448

5,435,042

5,530,405

Inter-company services revenues(1)

354,632

24,589

(379,221)

Net revenues

94,915

355,080

5,459,631

(379,221)

5,530,405

Third-party operating income (expense)

(23,089)

(174,017)

(343,027)

(5,154,309)

(5,694,442)

Inter-company services cost and expenses(1)

(24,589)

(354,632)

379,221

Loss from equity in subsidiaries

(190,965)

(92,139)

283,104

Share of loss from VIEs

(49,971)

49,971

Total operating cost and expenses

(214,054)

(266,156)

(417,587)

(5,508,941)

712,296

(5,694,442)

Income (Loss) from operations

(214,054)

(171,241)

(62,507)

(49,310)

333,075

(164,037)

Other expenses, net

 

(56,575)

 

3,701

 

 

(52,874)

Interest income

249,449

 

(21)

8,980

 

26,575

 

 

284,983

Income tax expenses

(1,069)

(1,069)

Gain on disposal of subsidiary

 

348

 

(348)

 

 

Foreign exchange gain (loss), net

123

(899)

119

783

126

Share of income (loss) in equity method investments

 

(19,152)

18,913

 

(31,372)

 

 

(31,611)

Net income (loss)

35,518

(190,965)

(92,139)

(49,971)

333,075

35,518

Notes:

(1)The eliminations are related to the service fees charged between WOFE and the VIEs.

11

As of December 31, 2022

Eliminating

adjustments between

(i)our Company and

our subsidiaries and 

Our

Our

VIEs and VIEs’

WOFE and (ii)the VIEs and

    

Company

    

subsidiaries

    

WOFE

    

subsidiaries

    

VIEs’ subsidiaries

    

Consolidated

(RMB in thousands)

Assets

Cash and cash equivalents

3,574,343

 

37,303

14,734

 

415,223

 

 

4,041,603

Restricted cash

 

 

6,057

 

 

6,057

Short term bank deposits

1,741,150

 

200,000

 

570,000

 

 

2,511,150

Accounts receivable, net

 

7,405

461

 

101,314

 

 

109,180

Prepayments

253

 

65

1,015

 

24,731

 

 

26,064

Other current assets

65,929

 

13,832

23,995

 

233,248

 

 

337,004

Investments in subsidiaries(1)

1,222,310

 

1,314,866

 

 

(2,537,176)

 

Amounts due from the VIEs(2)

 

3,346,209

 

 

(3,346,209)

 

Amounts due from Our subsidiaries

 

 

298,964

 

(298,964)

 

Amounts due from related parties

 

29

153

 

45,944

 

 

46,126

Property and equipment, net

 

2,864

9,475

 

4,649

 

 

16,988

Intangible assets, net

 

25,294

6,054

 

75,375

 

 

106,723

Long term bank deposits

 

100,000

 

150,000

 

 

250,000

Investments

 

127,836

158,113

 

245,962

 

 

531,911

Goodwill

 

13,804

 

 

 

13,804

Right-of-use assets

 

1,904

20,284

 

27,723

 

 

49,911

Other non-current assets

 

15,943

8,749

 

74,153

 

 

98,845

Total assets

6,603,985

 

1,561,145

3,889,242

 

2,273,343

 

(6,182,349)

 

8,145,366

Accounts payable

 

21,444

121,026

 

524,515

 

 

666,985

Advances from customers

 

187

 

6,272

 

 

6,459

Deferred revenue

13,141

 

7,076

 

267,935

 

 

288,152

Accrued expenses and other current liabilities

23,376

 

7,586

103,105

 

168,735

 

 

302,802

Amounts due to the WOFE(2)

 

 

3,346,209

 

(3,346,209)

 

Amounts due to the VIEs

338

 

298,626

 

 

(298,964)

 

Amounts due to related parties

 

2,159

6,717

 

257,910

 

 

266,786

Deficit in VIEs(3)

 

2,323,202

 

 

(2,323,202)

 

Lease liabilities due within one year

1,748

7,728

18,003

27,479

Lease liabilities

195

12,411

6,966

19,572

Other liabilities

6,571

6,571

Total liabilities

43,426

 

338,834

2,574,376

 

4,596,545

 

(5,968,375)

 

1,584,806

Total shareholders’ equity(deficit)

6,560,559

 

1,222,311

1,314,866

 

(2,323,202)

 

(213,974)

 

6,560,560

Total liabilities and shareholders’ equity(deficit)

6,603,985

 

1,561,145

3,889,242

 

2,273,343

 

(6,182,349)

 

8,145,366

12

As of December 31, 2023

Eliminating

adjustments between

(i)our Company and

our subsidiaries and 

Our

Our

VIEs and VIEs’

WOFE and (ii)the VIEs and

    

Company

    

subsidiaries

    

WOFE

    

subsidiaries

    

VIEs’ subsidiaries

    

Consolidated

(RMB in thousands)

Assets

Cash and cash equivalents

4,116,401

 

16,129

11,164

 

296,437

 

 

4,440,131

Restricted cash

 

 

 

 

Short term bank deposits

1,416,540

 

 

300,000

 

 

1,716,540

Accounts receivable, net

 

6,056

349

 

67,048

 

 

73,453

Prepayments

198

 

63

821

 

37,099

 

 

38,181

Other current assets

154,904

 

3,062

2,666

 

187,495

 

 

348,127

Investments in subsidiaries(1)

1,048,858

1,144,133

(2,192,991)

Amounts due from the VIEs(2)

3,311,310

6,120

(3,317,430)

Amounts due from Our subsidiaries

19

261,196

(261,215)

Amounts due from related parties

 

117

 

68,877

 

 

68,994

Property and equipment, net

 

125

7,272

 

6,411

 

 

13,808

Intangible assets, net

 

3,161

 

117,533

 

 

120,694

Long term bank deposits

 

300,000

 

330,000

 

 

630,000

Investments

 

179,211

52,212

 

204,774

 

 

436,197

Goodwill

 

 

 

 

Right-of-use assets

 

321

12,128

 

10,344

 

 

22,793

Other non-current assets

 

1,562

11,917

 

149,706

 

 

163,185

Total assets

6,736,901

 

1,350,681

3,713,117

 

2,043,040

 

(5,771,636)

 

8,072,103

Accounts payable

 

27,795

48,206

 

458,427

 

 

534,428

Advances from customers

 

11

 

12,900

 

 

12,911

Deferred revenue

8,128

 

7,847

 

299,994

 

 

315,969

Accrued expenses and other current liabilities

39,096

 

3,492

87,750

 

116,263

 

 

246,601

Amounts due to the WOFE(2)

 

6,120

 

3,311,310

 

(3,317,430)

 

Amounts due to the VIEs

344

 

260,852

 

19

 

(261,215)

 

Amounts due to related parties

 

1,518

586

 

249,288

 

 

251,392

Deficit in VIEs(3)

 

2,413,940

 

 

(2,413,940)

 

Lease liabilities due within one year

 

161

8,978

 

5,629

 

 

14,768

Lease liabilities

 

158

3,393

 

3,150

 

 

6,701

Other liabilities

 

 

 

 

Total liabilities

47,568

 

301,823

2,568,984

 

4,456,980

 

(5,992,585)

 

1,382,770

Total shareholders’ equity(deficit)

6,689,333

 

1,048,858

1,144,133

 

(2,413,940)

 

220,949

 

6,689,333

Total liabilities and shareholders’ equity(deficit)

6,736,901

 

1,350,681

3,713,117

 

2,043,040

 

(5,771,636)

 

8,072,103

Notes:

(1)It represents the eliminations of the investments among our Company, Our subsidiraries and WOFE.
(2)It represents the eliminations of the intercompany balances between WOFE and VIEs.
(3)Deficit in VIEs represents the amounts of accumulated losses from VIEs that exceeding the investment’s carrying amounts.

13

    

For the Year Ended December 31, 2022

Eliminating

adjustments between

(i)our Company and

our subsidiaries,

Our

Our

VIEs and VIEs’

WOFE and (ii)the VIEs and

Company

    

subsidiaries

    

WOLF

    

subsidiaries

    

VIEs’ subsidiaries

    

Consolidated

 

(RMB in thousands)

Proceeds of services fee charges from inter-companies(1)

 

407,682

(407,682)

Payments of services fee charges to inter-companies(1)

(407,682)

407,682

Net cash provided by (used in) transactions with third-parties

16,880

(166,748)

(403,941)

485,976

(67,833)

Net cash provided by (used in) operating activities

16,880

(166,748)

3,741

78,294

(67,833)

Loans to Our subsidiaries(2)

(6,500)

6,500

Proceeds of loans from Our subsidiaries(2)

147,624

(147,624)

Investments in Our subsidiaries(3)

(181,740)

181,740

Other investing activities

(731,005)

126,380

(5,789)

1,797

(608,617)

Net cash (used in) provided by investing activities

(912,745)

126,380

(5,789)

142,921

40,616

(608,617)

Loans from the VIEs(2)

6,500

(6,500)

Repayments of loans to VIEs(2)

(147,624)

147,624

Capital contribution from Our Company(3)

181,740

(181,740)

Repurchase of ordinary shares

 

(108,967)

(108,967)

Net cash (used in) provided by financing activities

 

(108,967)

40,616

(40,616)

(108,967)

14

    

For the Year Ended December 31, 2023

Eliminating

adjustments between

(i)our Company and

our subsidiaries,

Our

Our

VIEs and VIEs’

WOFE and (ii)the VIEs and

Company

    

subsidiaries

    

WOFE

    

subsidiaries

    

VIEs’ subsidiaries

    

Consolidated

 

(RMB in thousands)

Proceeds of services fee charges from inter-companies(1)

 

 

410,764

 

 

(410,764)

 

Payments of services fee charges to inter-companies(1)

(410,764)

410,764

Net cash provided by (used in) transactions with third-parties

141,700

7,596

(427,388)

230,405

(47,687)

Net cash provided by (used in) operating activities

141,700

7,596

(16,624)

(180,359)

(47,687)

Loans to Our subsidiaries(2)

Proceeds of loans from Our subsidiaries(2)

Investments in Our subsidiaries(3)

(16,197)

16,197

Other investing activities

320,075

24,539

14,054

55,517

414,185

Net cash (used in) provided by investing activities

303,878

24,539

14,054

55,517

16,197

414,185

Loans from the VIEs(2)

Repayments of loans to VIEs(2)

Capital contribution from Our Company(3)

16,197

(16,197)

Repurchase of ordinary shares

Other financing activities

 

 

 

(1)

 

 

(1)

Net cash (used in) provided by financing activities

 

 

16,197

 

(1)

 

(16,197)

 

(1)

Notes:

(1)The eliminations are related to the cash payment on service fees between WOFE and the VIEs.
(2)The eliminations are related to loans between VIEs and Our subsidiaries.
(3)The eliminations are related to investments between Our Company and Our subsidiaries.

Restrictions on Foreign Exchange and the Ability to Transfer Cash between Entities, Across Borders and to U.S. Investors

In the future, if or when we become profitable, DouYu International Holdings Limited’s ability to pay dividends, if any, to its shareholders and ADS holders and to service any debt it may incur will depend upon dividends paid by our PRC subsidiaries. Under PRC laws and regulations, our PRC subsidiaries are subject to certain restrictions with respect to paying dividends or otherwise transferring any of their net assets offshore to DouYu International Holdings Limited. In particular, under the current effective PRC laws and regulations, dividends may be paid only out of distributable profits. Distributable profits are the net profit as determined under PRC GAAP, less any recovery of accumulated losses and appropriations to statutory and other reserves required to be made. Each of our PRC subsidiaries is required to set aside at least 10% of its after-tax profits each year, after making up previous years’ accumulated losses, if any, to fund certain statutory reserve funds, until the aggregate amount of such a fund reaches 50% of its registered capital. As a result, our PRC subsidiaries may not have sufficient distributable profits to pay dividends to us in the near future.

15

Furthermore, if certain procedural requirements are satisfied, the payment of current account items, including profit distributions and trade and service related foreign exchange transactions, can be made in foreign currencies without prior approval from SAFE or its local branches. However, where RMB is to be converted into foreign currency and remitted out of China to pay capital expenses, such as the repayment of loans denominated in foreign currencies, approval from or registration with competent government authorities or its authorized banks is required. The PRC government may take measures at its discretion from time to time to restrict access to foreign currencies for current account or capital account transactions. If the foreign exchange control system prevents us from obtaining sufficient foreign currencies to satisfy our foreign currency demands, we may not be able to pay dividends in foreign currencies to our offshore intermediary holding companies or ultimate parent company, and therefore, our shareholders or investors in our ADSs. Further, we cannot assure you that new regulations or policies will not be promulgated in the future, which may further restrict the remittance of RMB into or out of the PRC. We cannot assure you, in light of the restrictions in place, or any amendment to be made from time to time, that our current or future PRC subsidiaries will be able to satisfy their respective payment obligations that are denominated in foreign currencies, including the remittance of dividends outside of the PRC. If any of our subsidiaries incurs debt on its own behalf in the future, the instruments governing such debt may restrict its ability to pay dividends to DouYu International Holdings Limited. In addition, our PRC subsidiaries are required to make appropriations to certain statutory reserve funds, which are not distributable as cash dividends except in the event of a solvent liquidation of the companies.

For PRC and United States federal income tax consideration of an investment in the ADSs, see “Item 10. Additional Information—10.E. Taxation.”

Taxation on Dividends or Distributions

As advised by our PRC counsel, for any amounts owed by the VIEs to our PRC subsidiaries under the VIE agreements, unless otherwise required by PRC tax authorities, we are able to settle such amounts without limitations under the current effective PRC laws and regulations, provided that the VIEs have sufficient funds to do so. DouYu International Holdings Limited has not previously declared or paid any cash dividend or dividend in kind. See “Item 8.—Financial Information—8.A. Consolidated Statements and Other Financial Information—Dividend Policy.” For PRC and United States federal income tax considerations of an investment in our ADSs, see “Item 10. Additional Information—10.E. Taxation.”

Implication of the Holding Foreign Companies Accountable Act

Trading in our securities on U.S. markets, including the Nasdaq, may be prohibited under the Holding Foreign Companies Accountable Act as amended by the Consolidated Appropriations Act, 2023 (the “HFCAA”) if the PCAOB determines that it is unable to inspect or investigate completely our auditor for two consecutive years because of a position taken by authorities in a foreign jurisdiction. On December 16, 2021, the Public Company Accounting Oversight Board (the “PCAOB”) issued the HFCAA Determination Report to notify the SEC of its determinations that the PCAOB was unable to inspect or investigate completely registered public accounting firms headquartered in mainland China and Hong Kong (the “2021 Determinations”), including our auditor. On May 4, 2022, we were conclusively identified by the SEC under the HFCAA as having filed audit reports issued by a registered public accounting firm that cannot be inspected or investigated completely by the PCAOB in connection with the filing of our 2021 Form 20-F. The inability of the PCAOB to conduct inspections in the past also deprived our investors of the benefits of such inspections. On December 15, 2022, the PCAOB announced that it was able to conduct inspections and investigations completely of PCAOB-registered public accounting firms headquartered in mainland China and Hong Kong in 2022. The PCAOB vacated its previous 2021 Determinations accordingly. As a result, we were not at risk of having our securities subject to a trading prohibition under the HFCAA unless a new determination is made by the PCAOB. However, whether the PCAOB will continue to conduct inspections and investigations completely to its satisfaction of PCAOB-registered public accounting firms headquartered in mainland China and Hong Kong is subject to uncertainty and depends on a number of factors out of our, and our auditor’s, control, including positions taken by authorities of the PRC. The PCAOB is expected to continue to demand complete access to inspections and investigations against accounting firms headquartered in mainland China and Hong Kong in the future and states that it has already made plans to resume regular inspections in early 2024 and beyond. The PCAOB is required under the HFCAA to make its determination on an annual basis with regards to its ability to inspect and investigate completely accounting firms based in the mainland China and Hong Kong, among other jurisdictions. The possibility of being a “Commission-Identified Issuer” and risk of delisting could continue to adversely affect the trading price of our securities. If the PCAOB determines in the future that it no longer has full access to inspect and investigate accounting firms headquartered in mainland China and Hong Kong and we continue to use such accounting firm to conduct audit work, we would be identified as a “Commission-Identified Issuer” under the HFCAA following the filing of the annual report for the relevant fiscal year, and if we were so identified for two consecutive years, trading in our securities on U.S. markets would be prohibited. For details, see “Risk Factors—Risks Related to Doing Business in China—Trading in our securities on U.S. markets, including the Nasdaq, may be prohibited under the Holding Foreign Companies Accountable Act , or the HFCAA, if the PCAOB determines that it is unable to inspect or investigate completely our auditor for two consecutive years.”

16

3.A.[Reserved]

3.B.Capitalization and Indebtedness

Not applicable.

3.C.Reason for the Offer and Use of Proceeds

Not applicable.

3.D.Risk Factors

We face significant regulatory, liquidity and enforcement risks and uncertainties as a company based in and primarily operating in China, including risks and uncertainties regarding that the rules and regulations in China may evolve quickly with any public consultation and advanced notice period being relatively short in terms of the time that we may need to fully adapt to such changes, all of which could result in a material change in our operations and value of our ADSs. The PRC government may also influence our operations by adopting new laws and regulations as the government deems appropriate to further regulatory, political and societal goals, or may exert more control over offerings conducted overseas and/or foreign investment in China-based issuers, which could result in a material change in our operations and the value of our ADSs. We also face risks associated with recent statements and regulatory actions by the PRC government, including those related to the use of variable interest entities, anti-monopoly regulatory actions, as well as cybersecurity and data privacy.

You should carefully consider all of the information in this annual report before making an investment in the ADSs. The operational risks associated with being based in and having operations in mainland China also apply to operations in Hong Kong and Macau. While entities and businesses in Hong Kong and Macau operate under different sets of laws from mainland China, the legal risks associated with being based in and having operations in mainland China could apply to a company’s operations in Hong Kong and Macau, if the laws applicable to mainland China become applicable to entities and business in Hong Kong and Macau in the future. As of the date of this annual report, we do not have operations in Hong Kong or Macau. In particular, as we are a China-based company incorporated in the Cayman Islands, you should pay special attention to subsections headed “Item 3. Key Information—3.D. Risk Factors—Risks Related to Doing Business in China” and “Item 3. Key Information—3.D. Risk Factors—Risks Related to Our Corporate Structure.”

Below please find a summary of the principal risks we face, organized under relevant headings.

Risks Related to Doing Business in China

Risks associated with the PRC government exerting more control over our future overseas offerings or foreign investments in us and failure to obtain the approval, filling or other requirements of the China Securities Regulatory Commission or other PRC government authorities in connection with our issuance of securities overseas. For details, see “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—The PRC government may exert more control over our future overseas offerings or foreign investments in us, which could result in a material change in our operation and the value of our ADSs. In particular, the approval, filing or other requirements of the China Securities Regulatory Commission or other PRC government authorities may be required under PRC law in connection with our issuance of securities overseas.” on page 20 of this annual report.
Risks associated with uncertainties in the interpretation and enforcement of PRC laws and regulations. For details, see “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—Uncertainties in the interpretation and enforcement of PRC laws and regulations, including uncertainties regarding the enforcement of laws, and unexpected changes in policies, laws and regulations in China, could negatively impact our operations and limit the legal protections available to you and us” on page 22 of this annual report.

17

Risks associated with the regulation and censorship of information disseminated over mobile devices and Internet in China. For details, see “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—Regulation and censorship of information disseminated over mobile devices and Internet in China may adversely affect our business and subject us to liability for content streamed or posted on our platform” on page 23 of this annual report.
Risks associated with adverse changes in global or China’s economic, political or social conditions or government policies. For details, see “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—Adverse changes in global or China’s economic, political or social conditions or government policies could have a material adverse effect on our business, financial condition and results of operations” on page 24 of this annual report.
Risks associated with the absence of law or regulation specifically governing virtual asset property rights. For details, see “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—Currently there is no law or regulation specifically governing virtual asset property rights and therefore it is not clear what liabilities, if any, online game operators may have for virtual assets” on page 25 of this annual report.
Risks associated with the historical inability of the PCAOB to inspect our auditor and uncertainties about the ability of our auditor to fully cooperate with the PCAOB’s inspection. For details, see “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—The PCAOB had historically been unable to inspect our auditor in relation to their audit work performed for our financial statements included elsewhere in this annual report” on page 36 of this annua