On November 14th Beijing time, Bilibili (hereinafter referred to as "Bilibili") released its financial report for the third quarter of 2024.
The biggest highlight of this financial report is that Bilibili has finally made a profit. During the reporting period, the company's total revenue increased by 26% year-on-year, reaching RMB 7.31 billion. After adjustment, the net profit was 240 million yuan, achieving the first quarterly profit after listing. However, according to feedback from the secondary market of the US stock market, the stock price performance is not optimistic. After the performance was released, the company's stock price plummeted by more than 12 percentage points at the opening of the US stock market, closing at $18.59.
The profitability of Bilibili has already shown signs in previous performance data, and analysts have predicted that it will achieve profitability this quarter. At present, the company's gross profit margin has continued to climb for 9 consecutive quarters.
According to the data, the profitability of Bilibili is indeed strengthening. In Q3 2024, Bilibili's gross profit increased by 76% year-on-year, reaching 2.55 billion yuan. The gross profit margin increased from 25.0% in the same period last year to 34.9% in this quarter.
The core business of Bilibili mainly includes value-added services, advertising, mobile games, IP derivatives, and four other business segments.
Advertising and gaming are the two pillar businesses that support Bilibili's profitability. During a conference call after the release of the financial report, Chen Rui, Chairman and CEO of Bilibili, mentioned, "Advertising and gaming have higher revenue ceilings and higher gross margins, which can make the company's business growth more efficient. The third quarter profit is just the beginning
Among them, the gaming business is the most outstanding part of this performance, achieving a revenue of 1.82 billion yuan in the third quarter, a year-on-year increase of 84%, accounting for 25% of the total revenue, directly driving the company's profit level improvement.
The outstanding performance of the gaming business is mainly due to the game "Three Kingdoms: Conquering the World" released by Bilibili this year, which returned to the second place on the iOS bestseller list on the day of S3 launch, and once reached the top three on the App Store bestseller list during this period, ranking among the top along with popular games such as "Dungeon&Fighter: Origins", "King of Glory" and "Peace Elite". Bank of Communications International predicts that "Three Kingdoms: Conquering the World" is expected to contribute 800 million to 1.3 billion yuan in revenue to Bilibili by 2024.
It is obvious that Bilibili also attaches great importance to this "killer" product. Chen Rui mentioned in the conference call that compared to short-term performance, he values the rhythm of long-term operation of this game more. "I also emphasized to the team internally that the most important goal of 'Three Kingdoms: Conquering the World' is to achieve long-term operation, that is, to achieve stable operation for at least 5 years of life cycle." At the same time, he also revealed that the company is preparing to release the overseas traditional Chinese version of this game in the second half of next year.
The advertising sector also achieved significant growth in revenue in the third quarter, with a year-on-year increase of 28% in revenue during the reporting period, reaching 2.09 billion yuan.
Chen Rui also mentioned that the Double Eleven shopping festival will drive a positive effect on the company's performance in the next quarter. Bilibili is a deep partner of e-commerce platforms such as Alibaba, JD.com, Pinduoduo, and Vipshop. The sales revenue (GMV) of its products has increased by more than 150% year-on-year, and the number of UP owners selling products has also increased by nearly 80% year-on-year. He revealed that the advertising revenue directly brought to Bilibili by Singles' Day increased by nearly 50% year-on-year.
In addition to games and advertising, value-added services still contributed 38% of revenue in the third quarter of 2024, with a specific operating revenue of RMB 2.821 billion, a year-on-year increase of 9%.
Starting from the third quarter of 2023, Bilibili's operating cash flow has been turned positive and continues to expand. At present, the overall cash flow situation of the company is good and has entered a positive cycle. In the third quarter of 2024, the company achieved an operating cash flow of 2.23 billion yuan, an increase from 638 million yuan in the first quarter of 2024 and 1.751 billion yuan in the second quarter of 2024. In addition, as of September 30, 2024, the company held a total of RMB 15.2 billion in cash and cash equivalents, term deposits, and short-term investments.
In terms of user activity, Bilibili's average daily active users (daily active users) reached 107.3 million in the third quarter, compared to 102.8 million in the same period last year. The revenue of value-added services was 2.821 billion yuan, a year-on-year increase of 9%; The revenue of IP derivatives and other products was RMB 567 million, a decrease of 2% year-on-year.