On the evening of November 29th, Bilibili (NASDAQ: BILI, HKEX: 9626; hereinafter referred to as "Bilibili") released its performance report for the third quarter of 2023.
The report shows that the total revenue of Bilibili in the third quarter reached 5.81 billion yuan, and the daily active users increased by 14% year-on-year, exceeding the milestone of 100 million. The monthly active users also reached a new high of 341 million, and the daily usage time of users exceeded 100 minutes for the first time.
Over the past two years, the operational efficiency of Bilibili has been continuously improving, driven by the two major engines of advertising and value-added service revenue. In the third quarter, Bilibili's advertising business increased by 21% year-on-year, while its value-added service business increased by 17% year-on-year.
On the other hand, it comes from the optimization of cost structure. The gross profit of Bilibili in the third quarter increased by 38% year-on-year, and the gross profit margin has achieved five consecutive quarter on quarter increases, increasing from 18% in the same period last year to 25%. In terms of reducing losses and increasing profits, Bilibili has achieved significant results, significantly narrowing operational losses. In the third quarter, total operating expenses decreased by 12% year-on-year, while adjusted operating losses and adjusted net losses both significantly narrowed by 51% year-on-year.
It is worth noting that as of this quarter's financial report, Bilibili has achieved positive operating cash flow, showing a steady and positive development trend, enhancing the industry's long-term confidence in Bilibili's future. Recently, several securities firms and investment banks have expressed optimism about the next stage of Bilibili. For example, Mizuho Securities has rated Bilibili as a buy, believing that Bilibili's efforts in pan entertainment and e-commerce live streaming provide opportunities for long-term growth and have an advantageous position in internet platforms.
Healthy growth of user base and strengthening of content community barriers
High value users, high-quality content, and high stickiness communities have always been the most unique values of Bilibili in the field of Chinese internet. The growth and retention of users in the Bilibili community every quarter is also one of the most concerning data in the industry for Bilibili.
When the "dividend" of online internet traffic reaches its peak, major social and video platforms are facing anxiety about the growth of user traffic, while Bilibili users, as core participants in content communities, are still demonstrating strong creative vitality and community interaction enthusiasm.
The financial report for the third quarter of 2023 shows that Bilibili has achieved impressive results in user base operations. The daily active user count for the quarter increased by 14% year-on-year, reaching 103 million, and the monthly active user count reached a new high of 341 million.
The third quarter is also the summer season. In terms of user data, Bilibili's daily active users exceeded 100 million for the first time, and the average daily usage time of users exceeded 100 minutes for the first time. The growth of daily active users and usage time is an important prerequisite and foundation for Bilibili to achieve profitability, and it is also a source of confidence in the industry for Bilibili to achieve its breakeven goal by 2024.
While the user base and activity are increasing, the content creation of Bilibili UP owners is also growing in high quality. According to the data from the third quarter, the daily active UP creators on Bilibili increased by 21% year-on-year, the monthly average submission volume increased by 37% year-on-year, reaching 21 million, and the number of UP creators with over 10000 followers increased by 36% year-on-year. The daily average video playback reached 4.7 billion, a year-on-year increase of 26%, and the monthly average interaction reached 17 billion, a year-on-year increase of 18%.
In this quarter, anime content and self-made works such as the internationally acclaimed Guochuang IP "Time Agent Season 2" and the police documentary program "Guarding the Liberation West 4" also continued to emerge. The acceleration of high-quality content production further enhances user engagement both online and offline, enhancing attractiveness to core users. According to the financial report, the number of official members of Bilibili in the third quarter has reached 224 million, a year-on-year increase of 23%. The retention rate of official members in the 12th month has remained stable at around 80%, with the number of paying users being 21.1 million, of which more than 80% are annual subscription or automatic renewal users.
It can be seen that under stricter control of market costs, Bilibili is still continuously strengthening content community barriers and building a solid and stable foundation for "efficiency enhancement".
Advertising revenue is eye-catching, creating a new blue ocean of e-commerce traffic
In recent years, Bilibili has continuously optimized its revenue structure and has achieved significant results.
At present, the two businesses that contribute the most to Bilibili's revenue are value-added services and advertising. According to the third quarter financial report, out of the total revenue of 5.81 billion yuan, advertising revenue reached 1.64 billion yuan, accounting for 28%, a year-on-year increase of 21%; The value-added service revenue reached 2.6 billion, accounting for 45%, with a year-on-year increase of 17%.
In terms of advertising business, Bilibili integrates content ecology and commercial ecology, integrating "transaction" scenarios into advertising products, further improving advertising efficiency, and promoting sustainable revenue growth. The top five advertising industries are gaming, digital home appliances, e-commerce, food and beverage, and automotive. During the Double 11 period, the advertising revenue from top e-commerce platforms increased by over 80% year-on-year.
Bilibili has adopted a "one horizontal and one vertical" strategy in its advertising business, enhancing its technical and data capabilities to optimize advertising efficiency, and increasing the construction of key vertical industries to accurately match models. Currently, it has achieved initial results. Overall, the advertising revenue growth rate of Bilibili has continued to increase in multiple quarters, indicating the recognition of advertisers for the effectiveness and efficiency improvement of Bilibili's community advertising communication.
"Selling" is an important pivot for Bilibili to leverage its overall commercial layout. With UP owners joining the wave of live streaming and video sales, data shows that 1.68 million UP owners earned revenue on Bilibili this quarter, a year-on-year increase of 34%. Among them, the number of UP owners who earned revenue through video and live streaming sales increased by over 160% year-on-year. The important step taken by UP owners in commercialization has improved the endogenous logic of Bilibili's commercial layout, greatly accelerating the commercialization process of Bilibili.
From the results of this year's Double 11 promotion, Bilibili has gained a lot, with a rapid increase of 233% in the number of live streaming videos, 105% in the number of live streaming sessions, and 251% in the GMV of live streaming products. On Bilibili, UP owners who have been deeply cultivating high-quality content for a long time can deeply influence the consumption mentality of young users; Brands that have accumulated long-term recognition and exposure can accumulate brand assets through daily content operations and UP influencers, and experience explosive growth during major promotional events like Double 11.
A noteworthy phenomenon is that although Double 11 has entered its 15th year and its overall popularity on major e-commerce platforms is decreasing, the number of independent users searching for keywords related to Double 11 on Bilibili has still increased by 25% year-on-year compared to last year.
Data shows that in terms of video sales, UP owners focus on product evaluations in multiple home scenarios, driving a certain domestic home appliance brand to achieve a ROI of nearly 15 on Bilibili; In the beauty circle, discussions are also taking place. Some top domestic beauty brands have invested millions in Bilibili, driving single store sales to over 100 million during the Double 11 pre-sale period, surprising the consumer power of female users on Bilibili in the industry.
From the perspective of attracting new customers, as the consumption and transaction atmosphere within the Bilibili community becomes increasingly strong, more and more brands and merchants are running the full chain marketing path including fireworks platform, brand advertising, effect advertising, and sales promotion on Bilibili. Based on the "big open loop" strategy, Bilibili has become a "new blue ocean" of e-commerce traffic.
Data shows that compared to other content e-commerce platforms, Bilibili has a 47% exclusive audience and a 75% overlap with traditional shelf e-commerce. The results of this Double 11 promotion fully prove this point: Bilibili has brought in new customer rates of over 50% for businesses in eight vertical industries, including maternal and child care, food and beverage, among which the new customer rate in the maternal and child care industry is as high as 89%.
Based on high user stickiness, strong growth in advertising and live streaming business, as well as continuous narrowing of losses and stable profit improvement trends, Bilibili has submitted a good phased answer sheet with the theme of "increasing profits and reducing losses". As content and commerce form a positive cycle within the Bilibili community, the development path of Bilibili is expected to become smoother and achieve the goal of achieving a break even point.