On May 23rd, Bilibili (NASDAQ: BILI) HKEX：9626， Bilibili (hereinafter referred to as "Bilibili") has released its unaudited financial report for the first quarter ended March 31, 2024. According to the financial report, The revenue of Bilibili in the first quarter was 5.665 billion yuan, a year-on-year increase of 12%; The net loss was 765 million yuan, an increase of 21.4% from a loss of 630 million yuan in the same period last year; The adjusted net loss was RMB 456 million, a year-on-year decrease of 56%.
On the other hand, in the first quarter, The daily active users on Bilibili increased by 9% year-on-year, reaching 102 million people. The average monthly active users exceeded 341 million, and the daily usage time reached a record high of 105 minutes. "2024 has achieved a good start. While the community has grown healthily, its financial performance has improved." Chen Rui, Chairman and CEO of Bilibili, believes that "the development of advertising business has encouraged us, with advertising revenue increasing by 31% year-on-year in the first quarter."
However, the day after the performance release, The Hong Kong stock market on Bilibili still experienced a significant decline, with a drop of over 12% at one point. Since Chen Rui set the profit schedule for the third quarter of 2024, The distance between Bilibili and profitability has become a more concerning issue in the capital market.
Advertising revenue increased by 31% year-on-year
According to the financial report, The revenue of Bilibili in the first quarter of 2024 was 5.665 billion yuan, an increase of 12% from the same period last year of 5.07 billion yuan.
In terms of revenue structure, advertising business has performed well, value-added services continue to steadily grow, and gaming The IP derivative business has declined.
According to the financial report, during the reporting period, The advertising revenue of Bilibili was 1.669 billion yuan, a year-on-year increase of 31%, due to the optimization of advertising products and the improvement of advertising efficiency; The value-added service revenue was 2.529 billion yuan, a year-on-year increase of 17%, due to the increase in live streaming and value-added service revenue; The mobile game revenue was RMB 983 million, a year-on-year decrease of 13%; The revenue of IP derivatives and other services was RMB 484 million, a decrease of 5% compared to the same period in 2023.
Li Ni, Vice Chairman and Chief Operating Officer of Bilibili, explained the reasons for the significant increase in advertising revenue during a conference call after the financial report was released. In the first quarter, Bilibili continues to integrate and optimize advertising products, upgrade the effectiveness of the advertising platforms "Bihuo" and "Sanlian", and optimize the advertising function of the Huahuo platform. It opens up live streaming and dynamic business orders, reduces the advertising threshold, and provides advertisers with more convenient and intelligent advertising tools.
"The revenue from effective advertising has increased by 50% year-on-year." Li Ni also revealed that the top three industries with high double-digit growth rates are gaming, digital home appliances, and platform e-commerce.
Regarding the cooperation with platform e-commerce, which is of great concern to the outside world, Li Ni stated that in addition to cooperating with platforms such as JD.com, Taobao, Tmall, and Pinduoduo, she has also expanded her cooperation with platforms such as Vipshop, Dewu, and Xianyu. Regarding the ongoing 618 promotion, Li Ni revealed that the platform's budget has increased by over 30%, while the merchant's budget has increased by over 250% year-on-year.
Budget growth is related to Bilibili's active expansion of cooperation models with platforms and merchants. Upgrading from pure traffic cooperation to traffic plus content cooperation. According to their introduction, Taobao and Tmall have added a new gameplay of fireworks and streaming; JD is also exploring a new model of adding traffic and content value with Bilibili.
However, veteran industrial and economic observer Liang Zhenpeng told China Business Daily reporters, The transformation of Bilibili into a new traffic pool for major e-commerce platforms is mainly due to the high overlap between its user base and e-commerce users, and the high user stickiness and activity of Bilibili. But Bilibili's e-commerce and live streaming sales business is just starting, and it takes time to cultivate user habits and establish a brand. In addition, The live delivery business of Station B needs to compete with other platforms such as Tiktok and Kwai.
Commercialization is in a dilemma
While striving to improve the fundamentals of financial reports, The community ecology and user growth that Bilibili values remain stable.
The financial report shows that in the first quarter, The daily active users on Bilibili increased by 9% year-on-year, reaching 102 million people. The average monthly active users exceed 341 million, with a daily usage time of 105 minutes, setting a new historical high.
The number of active users has always been a core indicator valued by Bilibili. However, in the third quarter of 2023, The daily active users (DAU) of Bilibili exceeded 100 million, a year-on-year increase of 14%, reaching 103 million people. At that time, Chen Rui said: "100 million DAUs is just the beginning." In Chen Rui's view, user base is one of the key advantages of Internet products. In the year of "increasing income and reducing losses" in 2023, DAU is one of Chen Rui's most important indicators, and he has repeatedly mentioned that DAU growth and revenue growth will form a positive cycle flywheel.
While Bilibili is actively promoting commercialization, "Bilibili's cancellation of playback duration indicators and external display modification" has become the top trending topic. The reason is that a user roast that "station B has changed its playing time and has not come out for one year". The person in charge of the Bilibili community and product, Fang Fang, posted on his personal Bilibili account stating that it had been decided to cancel the revised version of the external display of the playback duration indicator, stating that it was too idealistic at the time. After the announcement, it was found that feedback from various aspects was not optimistic.
At that time, it was believed that this move was made by Bilibili to accelerate its commercialization, and the playback time was considered a better indicator of Bilibili's commercial value. However, the plan faced opposition from some UP owners during incubation. At that time, some UP owners stated in an interview that replacing "playback volume" with "consumption time" meant an increase in production costs and a greater emphasis on completion rate, which was not a good thing for most small and medium-sized UP owners.
At present, Bilibili has decided to cancel the external display of the playback duration indicator and revise it, indicating that Bilibili still has a swing in commercialization and balancing user experience. The awkwardness of Bilibili lies in the fact that the company has entered the countdown to proving profitability and still needs to obtain the support of users and UP owners. Once there is a decline in user experience, achieving revenue growth and profitability will become more difficult.
"There is a certain contradiction between commercialization and high-quality content that needs to be balanced," said Wu Daiqi, CEO of Shenzhen Siqisheng Company, in analyzing the profitability status of Bilibili. Pursuing high-quality content, maintaining creativity, and having high user stickiness. However, if we want to better commercialize, we will promote more businesses to settle in, publish advertising content and increase the proportion of e-commerce live broadcast. Just like the current Tiktok platform, the content quality has declined significantly, and it is not easy to find a balance between the two.
According to financial reports, over 1.5 million UP owners earned revenue on Bilibili, with the number of UP owners earning revenue through commercial advertising increasing by 51% year-on-year; The number of UPs earning revenue through sales increased by 105% year-on-year. Meanwhile, UP owners also have more diverse ways of income, such as the number of UP owners who rely on workshops to earn income, which has increased by over 40% year-on-year.
Bilibili stated that it will focus on identifying and supporting high-quality creators, and through traffic strategy support, submission tool optimization, intelligent operation tools, and other means, help potential and talented UP owners achieve commercial value on Bilibili.