On November 29th, Bilibili (NASDAQ: BILI, HKEX: 9626; hereinafter referred to as "Bilibili") disclosed its unaudited financial report for the third quarter ended September 30, 2023.
The financial report shows that Bilibili's total revenue reached 5.81 billion yuan, of which advertising revenue was 1.6 billion yuan, a year-on-year increase of 21%; Meanwhile, the gross profit was 1.5 billion yuan, a year-on-year increase of 38%; The gross profit margin is 25.0%, achieving continuous growth for five quarters; The adjusted net loss narrowed by 51% year-on-year.
It is worth noting that the daily active users of Bilibili exceeded the milestone of 100 million in the third quarter, reaching 103 million, a year-on-year increase of 14%. The average daily usage time of users exceeded 100 minutes for the first time, and the average monthly active users reached a new high of 341 million.
Regarding this, Chen Rui, Chairman and CEO of Bilibili, stated that, In the third quarter, the community growth and commercialization development of Bilibili achieved a virtuous cycle. Our user base and community activity significantly increased in the third quarter, with the daily active users exceeding the milestone of 100 million and the daily usage time of users reaching a new historical high. The improvement of community growth and commercialization efficiency directly drove the rapid increase in advertising and value-added service business revenue, with year-on-year growth of 21% and 17%, respectively. At the same time, the company's gross profit The rate has also increased from 18% in the same period last year to 25%, with five consecutive quarter on quarter increases. It is worth mentioning that in a challenging market environment, Bilibili achieved positive operating cash flow this quarter. In the future, we are confident in continuously promoting user growth and high-quality community development, enhancing commercialization capabilities and operational efficiency, and creating more value for users, creators, and partners
Fan Xin, Chief Financial Officer of Bilibili, stated that, In the third quarter, Bilibili's gross profit margin increased from 18% year-on-year to 25%, while gross profit increased by 38% year-on-year. While daily active users grew, total operating expenses further decreased by 12% year-on-year, and adjusted net losses decreased by 51% year-on-year. It is worth noting that Bilibili's operating cash flow turned positive in the third quarter, marking that Bilibili's operations have entered a positive cycle. Next, we will continue to strive to further improve our financial situation, And create value for all stakeholders. "
The advertising and value-added services business continues to grow
In the third quarter, advertising and value-added services became the main driving force for Bilibili's revenue growth.
The third quarter financial report shows that Bilibili's total revenue reached 5.81 billion yuan. Among them, the rapid growth of revenue from Bilibili's live streaming services and other value-added services has driven the value-added service business revenue to reach 2.6 billion yuan, a year-on-year increase of 17%.
Bilibili continues to promote the integrated operation of live streaming and video ecology, which not only further enriches the live streaming content ecology, but also opens up multiple income channels for UP owners. In the third quarter, the monthly number of broadcasters on Bilibili reached nearly one million, with a year-on-year increase of 26% in total duration. The number of broadcasters with daily revenue increased by 39% year-on-year. On November 19th, the 2023 League of Legends Global Finals S13 officially came to an end, and BLG Esports Club under Bilibili advanced to the semi-finals, creating the best record since its establishment. During the event, rich live broadcasts and event related videos gained a large number of user attention, with over 120 million users watching League of Legends related content on Bilibili.
In terms of advertising business, Bilibili continuously converts high-quality traffic into advertising revenue by improving advertising products and improving advertising efficiency, driving total advertising revenue to 1.64 billion yuan, a year-on-year increase of 21%. The top five advertising industries are gaming, digital home appliances, e-commerce, food and beverage, and automobiles. Although the third quarter is the traditional off-season for e-commerce advertising, Bilibili continues to improve its comprehensive industry advertising solutions, driving 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 its advertising products, strengthened its video and live streaming sales products, and deepened its data cooperation with top e-commerce platforms, bringing new growth to its e-commerce partners. During the Double 11 period, the advertising revenue from top e-commerce platforms increased by over 80% year-on-year, and the GMV of UP main videos and live streaming sales increased rapidly by over 250% year-on-year. Among them, Bilibili UP host "Mr. Mi Deng" achieved impressive results in the Double 11 Home Decoration Festival, with a cumulative payment amount of 1.68 billion yuan through live streaming sales channels, a year-on-year growth rate of over 400%.
In addition, the revenue of Bilibili's gaming business in the third quarter reached 990 million yuan, a month on month increase of 11%. Classic games such as Blue Line and Fate/GO, which operate for a long time, still maintain stable performance. At present, Bilibili remains one of the largest and most active gaming video communities in China, with a natural and unique advantage in the gaming industry. In the future, Bilibili will further focus on core self-developed projects and provide users with high-quality game works; At the same time, continuously strengthening game distribution and operation capabilities to create more value for game partners.
With the optimization of cost structure, the gross profit margin of Bilibili in the third quarter achieved five consecutive quarter on quarter increases, increasing from 18% in the same period last year to 25%. While maintaining high-quality user growth, Bilibili is further promoting cost reduction and efficiency improvement measures, 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. This quarter, Bilibili achieved positive operating cash flow and steadily moved towards profitability goals.
As of September 30, 2023, the total amount of cash and cash equivalents, fixed deposits, and short-term investments held by the company was 14.5 billion yuan.
The flourishing development of high-quality content across multiple categories
The high-quality video content with multiple categories and scenes has promoted the activity and overall traffic of Bilibili community.
In the third quarter, the daily average video playback on Bilibili 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%. The continuous emergence of high-quality content has helped users reach a historic high of 100 minutes of daily usage time, and more and more users are choosing to "stay" on Bilibili. As of the end of the third quarter, the number of "official members" who passed the exam on Bilibili 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%.
The creator ecosystem also achieved high-quality and healthy growth in the third quarter. The daily active number of UP owners on Bilibili increased by 21% year-on-year, and the number of UP owners with over 10000 followers increased by 36% year-on-year; The average monthly video submission volume increased by 37% year-on-year, reaching 21 million.
The existing advantageous categories in the community continue to prosper, and emerging categories also show great growth potential. In the third quarter, the daily average submission volume of technology categories increased by up to 80% year-on-year, with a nearly 50% year-on-year increase in the number of million views. AI technology content, which has received global attention, is also flourishing on Bilibili, with daily views increasing by over 300% year-on-year. With the growth of users and UP owners, Bilibili has also continuously emerged with more high-quality content categories, such as home appliances, emotions, mother and child, cars, etc. In the third quarter, the daily submission volume of videos in the home appliance category increased by 89% year-on-year, while the video playback volume in the maternal, child and parent-child category increased rapidly by 170% year-on-year.
On the basis of healthy development of content ecology, Bilibili continues to strengthen commercial construction, providing UP owners with more smooth monetization channels through abundant commercial products. This quarter, 1.68 million UP owners earned revenue on Bilibili, 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.
In terms of OGV (Professional Institution Created Video) content, Bilibili continues to focus on two core strategies of boutique and IPization, creating high-quality content. In September, Bilibili held its sixth consecutive year of National Creative Animation Works Release Conference, releasing 68 national creative works and announcing the release of the popular high scoring work "Chinese Fantasy Tales Season 2".
In addition, a series of acclaimed works such as Guochuang's "Time Agent Season 2", the police documentary program "Guarding the Liberation of the West 4", and the Chinese and foreign cultural interview variety show "Informal Talks Season 8" have also returned one after another. As of the end of the third quarter, the number of Bilibili major members reached 21.1 million. More than 80% of them are annual subscription or automatic renewal users, reflecting their long-term trust and willingness to pay for high-quality content on the platform.
The highly active and sticky online community atmosphere has also been extended into offline activities. In July this year, Bilibili World and Bilibili Macro Link (BML) hosted two large-scale events in Shanghai, attracting over 200000 users. This not only highlighted Bilibili's strong influence among young people, but also attracted more brand advertising for the platform.