DouYu International Holdings Limited (NASDAQ: DOYU) saw its shares soar 5.19% in pre-market trading on Tuesday, following the release of its first quarter 2025 financial results. The Chinese game-centric live streaming platform demonstrated improved profitability and strong growth in its innovative business segments, despite a decline in overall revenue.

For the quarter ended March 31, 2025, DouYu reported a significant reduction in its losses. The company's adjusted net loss (non-GAAP) decreased by 75.6% year-over-year to RMB20.9 million (US$2.9 million). This substantial improvement in profitability came even as total net revenues declined by 8.9% to RMB947.1 million (US$130.5 million) compared to the same period in 2024.

Investors were particularly encouraged by the strong performance of DouYu's innovative business segments. Revenues from innovative business, advertising, and others surged by 60.2% year-over-year to RMB382.6 million (US$52.7 million), now accounting for 40.4% of total revenues, up from 23.0% in the same period last year. This growth was primarily driven by the company's voice-based social networking service and game membership service. The success of these higher-margin businesses has helped offset the decline in traditional livestreaming revenues, which fell 29.5% year-over-year.

DouYu's management attributed the improved financial performance to their strategic focus on revenue diversification and cost-efficiency initiatives. The company has been optimizing its cost structure, particularly in content and bandwidth costs, while also scaling back low-ROI operational activities. These efforts have resulted in a significant narrowing of the company's operating loss, which decreased by 84.3% year-over-year to RMB26.1 million (US$3.6 million).

While DouYu continues to face challenges in its core livestreaming business due to macroeconomic softness and strategic adjustments, the market appears optimistic about the company's ability to navigate these headwinds through its diversification strategy and operational efficiency improvements. The pre-market stock surge suggests that investors are encouraged by DouYu's progress in enhancing its financial resilience and potential for long-term growth.