On August 17, Bilibili released its second quarter earnings for the period ended June 30, 2023.。

Performance data show that in the second quarter, the total net turnover of Bilibili reached 5.3 billion yuan (RMB, the same below), an increase of 8% year-on-year, slightly better than market expectations of 52.7.3 billion yuan。Gross profit was $1.2 billion, up 66% year-on-year。Gross margin of 23.1%, compared to 15 in the same period in 2022.0%, gross margin has improved for four consecutive quarters。Net loss was $1.5 billion, down 23% from the same period last year.。Adjusted net loss of 9.6.4 billion yuan, down 51% from the same period last year。

 

As of June 30, 2023, Bilibili's cash and cash equivalents, time deposits and short-term investments decreased by 27% to $14.3 billion from $19.6 billion at the end of last year.。The decrease was due to the Company's total cash consideration of 7 in the first half of the year..$4.6 billion to repurchase 2027 notes。

       

Bright growth in live streaming business, decline in gaming business

         

Looking at the second quarter results from each business segment.

● Value-added services。In the second quarter, Station B's value-added services turnover was $2.3 billion, up 9% year-on-year and accounting for 43% of the company's revenue.。Among them, live broadcast revenue increased by 32% year-on-year。In the first half of the year, revenue from the value-added services business was $4.5 billion, up 7% from the same period last year, mainly driven by a 23% year-on-year increase in revenue from live streaming.。

In the first half of this year, the number of monthly active live anchors at Station B increased 24% year-on-year。The company says it is exploring new live streaming products to create more paid channels for users。At the same time, the company continues to enrich the professionally generated video (OGV) library, turning more users into large members.。As of the end of June, Station B had about 20.5 million large members, of which more than 80% were annual or auto-renew plan subscribers.。

● 广告。Thanks to the optimization of advertising products provided by the company and the improvement of advertising efficiency, the advertising turnover of Station B in the second quarter was 1.6 billion yuan, up 36% year-on-year.。This business segment accounts for 30% of the company's revenue。

Advertising revenue in the first half of the year was $2.8 billion, up 29% year-on-year, mainly due to a 58% year-on-year increase in performance advertising revenue.。In the first half of the year, revenue from brand advertising and fireworks advertising services also achieved double-digit percentage year-on-year growth.。

Station B plans to further integrate commercial initiatives such as advertising and live streaming into the platform ecosystem this year, and is expected to further improve the efficiency of traffic realization by increasing advertising revenue and live streaming revenue in the future.。

B station's chief operating officer Li Ni revealed that the advertising business "a horizontal and a vertical" strategy is beginning to bear fruit, is expected to continue healthy growth of users driven, this year's annual advertising revenue can achieve a year-on-year growth of 25% to 30%, at the same time, this year is expected to "double eleven" period from the e-commerce industry advertising revenue can grow 50% to 60% year-on-year。

● Mobile games。Mobile game turnover is 8.9.1 billion yuan, down 15% year-on-year, accounting for 17% of total revenue。The decline was mainly due to the lack of new game launches in the second quarter and lower revenue from individual games.。

So far, in the first half of this year, station B's mobile game service revenue was 2 billion yuan, down 16% from the same period last year.。The two games that contributed the most to revenue were "Blue Route" and "Fate Grand Order," both of which remained stable.。In particular, "Blue Route," in its sixth anniversary, the number of paid users and revenue of the game hit a new high。

For the game new hair less, B station is also trying to improve。In July, B station self-research women to the game "Shake Light Record: Princess Gone with the Wind" after the release of the IOS free download list of the first。Exclusive agent game "Shine! Youjun Girl" has more than 2 million reservations, and the public beta opens on August 30.。"Time Agent Season 2" was launched simultaneously in North America and was well received at home and abroad.。It is reported that B station plans to launch 7 new games in domestic and foreign markets in the second half of the year。

● IP derivatives and others (formerly known as e-commerce and others)。In the second quarter, the business segment had a turnover of 5.$400 million, a decrease of 10 per cent from the same period in 2022, mainly due to a decrease in revenue from the transfer of e-sports copyrights.。This business segment accounts for 10% of total revenue。

                

96.5 million daily users, revenue sharing costs increased

          

In the second quarter, the company's average daily active users (daily users) were 96.5 million, an increase of 15% year-on-year.。The average daily usage time was 94 minutes, a record high for the same period, and the total usage time of users increased by 22% year-on-year.。

In the earnings call, Chen Rui, chairman and CEO of Bilibili, said that the growth of the number of daily live users is the premise and basis for the company to achieve profitability, which is expected to form a positive cycle.。

At the same time, he expects that the number of daily active users and average daily usage time will maintain healthy and strong growth during the summer vacation, and the number of daily active users of Station B is expected to exceed the 100 million mark for the first time in the third quarter, while the average daily usage time is also expected to record a new high, confident that under the premise of controlling market costs, through high-quality content and community to attract and retain more users, to achieve healthy growth。

In terms of UP owners, the average daily active UP owners in the second quarter increased by 19% year-on-year, the average monthly contribution volume increased by 43% year-on-year, and the number of UP owners above 10,000 powder increased by 43% year-on-year.。The average daily video playback volume was 4.1 billion, up 31% year-on-year, of which the average daily vertical video playback volume increased by more than 76% year-on-year.。

In the second quarter, Station B's revenue sharing cost (generally considered to refer to the cost of revenue allocated to UP owners) was $2.2 billion, an increase of 8% year-on-year, compared to $2 billion in the previous quarter.。Number of UP owners receiving revenue reached 1.58 million, up 40% year-on-year。

In the first half of this year, more than 2.1 million creators received revenue through multiple channels on the B station, up 41% year-on-year。In addition to creative incentive programs, more creators earn revenue through a variety of commercial channels such as advertising, live streaming, online paid courses and workshops.。

In this regard, Chen Rui believes that "good content, attentive UP owners, and a good community are the three things that Station B focuses on.。"

            

Losses remain, B station CEO: narrow losses this year, break-even next year

           

In the second quarter, the net loss at Station B was $1.5 billion, down 23% from the same period last year and 6% from the previous quarter..$300 million net loss expanded。Adjusted net loss of 9.6.4 billion yuan, down 51% from the same period last year, down slightly from the previous quarter's 1 billion yuan.。From the first half of the year, the company's net loss and adjusted net loss narrowed by 49% and 45%, respectively, year-on-year.。

In order to narrow the loss as soon as possible, the second quarter B station continued to promote cost reduction and efficiency.。

In terms of "cost reduction," in the second quarter, the total operating expenses of Station B were 2.5 billion yuan, unchanged from the previous quarter and 14% less than the same period last year.。

Of these, sales and marketing expenses were 9.$1.8 billion, a decrease of 22 per cent year-on-year, mainly related to lower promotional expenses related to user acquisition。General and administrative expenses of 5.400 million yuan, down 14% year-on-year。The company said the decrease was mainly due to lower employee-related costs.。As of June 30, 2023, Station B had 10,354 employees, compared to 11,092 at the end of last year.。In addition, R & D spending also declined in the second quarter from a year earlier, by 7% to $1 billion, which was unchanged from the previous quarter.。

In terms of "efficiency," B station said that the company is exploring the integration of AI applications into the ecology.。Leverage AI-generated content (AIGC) to improve content creation efficiency and user experience。But AI brings more than just "efficiency gains," and B Station said it believes it will bring broad prospects and great potential to the video industry.。The company said it is beta-testing new AIGC-assisted features, including AI-driven search capabilities, to further enhance the user experience and provide personalized and quality content, further deepening the connection between users and the community.。

Bilibili also made an outlook on the main work in the second half of this year in the financial report.。The company will focus on the following three core areas: First, Station B will further improve the efficiency of traffic realization by increasing advertising revenue and live revenue.。In addition, station B will bring more quality games to users, such as the highly anticipated "Shine! Youjun"。Secondly, the Company will continue to adopt a prudent financial approach and strictly control costs and expenses to further narrow its losses.。Finally, the company will focus on achieving sustained and healthy growth of daily users.。

From the outlook put forward by the beep mile can be seen, the second half of the year "cost reduction and efficiency" will still be the main theme, narrowing losses is still the company's biggest goal。

It's worth noting that Bilibili also unexpectedly lowered its full-year revenue guidance in this earnings report。It is currently expected that the total net operating volume for the full year 2023 will be between 22.5 billion yuan and 23.5 billion yuan.。The previous forecast for total net operating volume was $24 billion to $26 billion.。For the side flag adjustment, Station B explained that due to delays in the launch of several games and lower than expected revenue contributions from non-core businesses (such as IP derivatives and others)。

In the earnings call, CEO Chen Rui said earlier this year has been clear that the company's financial objectives are first of all to increase gross profit and reduce losses, priority to ensure gross profit growth。Chen Rui believes that this year's full-year loss narrowing target can be achieved, next year's break-even target can also be achieved。

In the financial report, Chen Rui said: "Looking ahead to the second half of 2023 and beyond, our top priority remains to achieve high-quality growth in revenue and community.。We remain committed to breaking even while building a popular and imaginative video community for China's younger generation。"