Shulou(Shulou.com)12/24 Report--

On November 29, Beijing time (November 29, US Eastern time), bilibili (NASDAQ:BILI,HKEX:9626; hereinafter referred to as "bilibili") released his unaudited financial results for the third quarter ended September 30, 2023. The financial report shows that bilibili's average daily active users exceeded 100 million milestones in the third quarter, with total revenue reaching 5.81 billion yuan. At the same time, gross profit margin increased for five consecutive quarters, and the adjusted net loss narrowed sharply by 51% compared with the same period last year.

Bilibili's high-quality content and unique community experience continue to drive user growth. The average number of daily active users in the quarter increased by 14% year-on-year to 103 million, and the average monthly active users also reached a new high of 341 million. The average daily use time of users exceeds 100 minutes for the first time. While the high-quality growth of users is accompanied by continuous improvement in operational efficiency, gross profit in the quarter increased by 38% compared with the same period last year.

Chen Rui, chairman and CEO of bilibili, said: "in the third quarter, bilibili's community growth and commercial development achieved a virtuous circle. Our user size and community activity increased significantly in the third quarter, with the average number of daily active users exceeding 100 million milestones and the average daily usage time reaching an all-time high. The improvement of community growth and commercialization efficiency has directly led to a rapid increase in revenue from advertising and value-added services, which increased by 21% and 17% respectively compared with the same period last year. At the same time, the company's gross profit margin rose to 25% from 18% in the same period last year, the fifth consecutive quarter-on-quarter increase. It is worth mentioning that in the challenging market environment, bilibili achieved positive operating cash flow in this quarter. In the future, we are confident that we will continue to promote user growth and high-quality community development, enhance commercialization and operational efficiency, and create more value for users, creators and partners. "

Multi-category and high-quality content is booming, and 1.68 million UP mainly earns income from bilibili

The high-quality video content of multi-category and multi-scene has promoted the activity and overall traffic of bilibili community. In the third quarter, bilibili's average daily video playback reached 4.7 billion, an increase of 26% over the same period last year, and the average number of monthly interactions reached 17 billion, an increase of 18% over the same period last year. The continuous emergence of high-quality content has boosted users' average daily use time to a record high of 100 minutes, and more and more users have chosen to "live" in bilibili. By the end of the third quarter, the number of "full members" that bilibili had passed the exam reached 224 million, an increase of 23% over the same period last year, and the retention rate of full members in the 12th month remained stable at around 80%.

Creator Ecology also achieved high-quality and healthy growth in the third quarter. The average number of daily active UP of bilibili increased by 21% compared with the same period last year, the number of UP with more than 10,000 fans increased by 36% compared with the same period last year, and the average monthly video contribution increased by 37% year-on-year to 21 million.

The existing dominant categories of the community continue to prosper, and emerging categories also show great potential for growth. In the third quarter, the average daily contribution of science and technology categories increased by as much as 80% compared with the same period last year, of which 1 million broadcast contributions increased by nearly 50% compared with the same period last year. AI technology content, which has attracted worldwide attention, is also booming in bilibili, with the average daily broadcast volume growing by more than 300% compared with the same period last year. With the growth of users and UP owners, bilibili continues to emerge more high-quality content categories, such as household appliances, emotions, mother and child, cars and so on. In the third quarter, the average daily contribution of video in the category of household appliances increased by 89% compared with the same period last year, and the number of video broadcasts in the category of mother and child increased by 170% year-on-year.

On the basis of the healthy development of content ecology, bilibili continues to strengthen commercial construction, through a wealth of commercial products, to provide UP owners with more unobstructed cash channels. 1.68 million UP owners earned revenue in bilibili this quarter, up 34 per cent from a year earlier. Among them, the number of UP hosts earning revenue from video and live streaming increased by more than 160% compared with the same period last year.

In OGV (professional organizations to create video) content, bilibili continues to focus on the two core strategies of boutique and IP to create high-quality content. In September, bilibili held a press conference on Guochuang's animation works for the sixth year in a row, announcing 68 national works and announcing the launch of the popular work "the second season of China's fantastic Tan".

In addition, a series of word-of-mouth masterpieces such as Guochuang's "time Agent season 2", the police documentary program "Guardian Liberation West 4" and the Chinese and foreign cultural interview "informal talks season 8" have also returned one after another. By the end of the third quarter, bilibili had 21.1 million big members. More than 80% of them are annual subscribers or automatic renewal users, reflecting users' long-term trust and willingness to pay for high-quality content on the platform.

The online highly active and highly viscous community atmosphere has also extended to offline activities. In July this year, bilibili held two large-scale events of Bilibili World and Bilibili Macro Link (BML) in Shanghai, attracting more than 200000 users, not only highlighting bilibili's strong influence among young people, but also attracting more advertisements from brands for the platform.

The business of advertising and value-added services continues to grow, with remarkable results in increasing profits and reducing losses.

In the third quarter, the total revenue of bilibili reached 5.81 billion yuan. Thanks to the growth of the platform's user scale and community traffic, advertising and value-added services have become the main drivers of bilibili's revenue growth, up 21% and 17% respectively compared with the same period last year.

In the third quarter, the revenue of live broadcast business grew rapidly, driving the revenue of value-added services to 2.6 billion yuan, an increase of 17% over the same period last year. Bilibili continues to promote the integrated operation of live streaming and video ecology, which not only further enriches the ecology of live streaming content, but also opens up multiple income channels for UP owners. In the third quarter, bilibili launched nearly one million monthly anchors, the total broadcasting time increased by 26% over the same period last year, and the number of anchors with daily revenue increased by 39% over the same period last year. On November 19, 2023 League of Legends global finals S13 officially ended, bilibili's BLG e-sports Club advanced to the semi-finals, creating the best record since the founding of the team. During the event, a wealth of live broadcasts and event-related videos were followed by a large number of users, with more than 120 million users watching League of Legends-related content on bilibili.

In the advertising business, bilibili continues to improve the efficiency of commercialization, and continues to turn high-quality traffic into advertising revenue. Bilibili's advertising revenue in the third quarter reached 1.64 billion yuan, an increase of 21% over the same period last year. The top five major advertisers were games, digital home appliances, e-commerce, food and beverage and cars. Although the third quarter is the off-season of traditional e-commerce advertising, bilibili continues to improve advertising solutions in the integrated industry, promoting strong growth in advertising revenue from the e-commerce industry.

During the double 11 period, bilibili adhered to the "big open loop" strategy, further upgraded advertising products, strengthened video and live streaming products, and deepened data cooperation with head e-commerce platform, bringing new increments to e-commerce partners. During the Singles' Day, the advertising pipeline from the head e-commerce platform increased by more than 80% compared with the same period last year. The main video and live GMV of the main video and live broadcast grew by more than 250% year on year. Among them, bilibili UP main "Mr fan stare" made eye-catching achievements in the double 11 Home Decoration Festival, live broadcast with goods all-channel payment amount as high as 1.68 billion yuan, a year-on-year growth rate of more than 400%.

Revenue from the game business reached 990 million yuan in the third quarter, up 11% from the previous quarter. Long-term operation of the "Blue Route", "Destiny-Crown designation" (Fate / GO) and other classic games, still maintain a stable performance. At present, bilibili is still one of the largest and most active game video communities in China, with natural and unique advantages in the game industry. In the future, bilibili will further focus on the core self-research projects to provide users with high-quality game works; at the same time, continue to strengthen the game distribution and operation capabilities to create more value for game partners.

With the optimization of the cost structure, bilibili's gross profit margin rose for the fifth consecutive quarter from 18 per cent to 25 per cent in the same period last year. While maintaining high-quality growth of users, bilibili further promoted measures to reduce costs and increase efficiency, substantially narrowing operating losses. In the third quarter, total operating expenses fell 12 per cent year-on-year, while adjusted operating losses and adjusted net losses both narrowed significantly by 51 per cent year-on-year. This quarter, bilibili achieved a positive operating cash flow, steadily moving towards the profit goal.

As of September 30, 2023, the total amount of cash and cash equivalents, term deposits and short-term investments held by the company was 14.5 billion yuan ($2 billion).

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