On November 29th, Bilibili (hereinafter referred to as "Bilibili") released its financial report for the third quarter of 2023. The report showed that Bilibili's total revenue in the third quarter was 5.81 billion yuan, basically the same as the previous year, with a net loss of 1.3 billion yuan, a year-on-year decrease of 22%. After adjustment, the net loss was 863 million yuan, a year-on-year decrease of 51%.
DAU and MAU are one of the biggest highlights of this financial report, with Bilibili's daily active users exceeding 100 million in the third quarter, reaching 102.8 million. The monthly active users have also reached a new high of 341 million. The average daily usage time of users exceeded 100 minutes for the first time, setting a new historical high.
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. In September of this year, Bilibili held the sixth consecutive year of national creative animation release event, announcing 68 national creative works and announcing the release of major films such as "Chinese Fantasy Tales Season 2" and "Summer of Little Monsters". Recently, "New Year's Fantasy of Immortal Cultivation" and original animated short film series "Capsule Plan Season 2" have been released one after another.
Bilibili COO Li Ni stated at the meeting that in the next three years, Bilibili's investment in original content will not decrease, but will only increase. From upstream comics to downstream derivatives, there is a layout in the industry chain. Currently, Bilibili has implemented over 300 animation authorization projects such as "Time Agent", "Hundred Demons Manual", and "Two No Doubts", and the revenue of domestic creative works has exceeded 2 billion.
Offline activities also demonstrate the high community stickiness of Bilibili. In July this year, Bilibili World and Bilibili Macro Link (BML) held two large-scale events in Shanghai, attracting over 200000 users to participate.
In terms of film and television content layout, due to cost reduction, B-site dramas and variety shows have relatively decreased. Guarding and Liberating the West 4 and Informal Talks Season 8 are back in the third quarter. The exclusive drama still maintains a high reputation, with a high rating of 8.8 points on Douban for the Taiwanese drama "Life" that premiered in September. In addition to last year's "Algorithm of Justice" and the first half of the year's "Imitation Offender", Bilibili is gradually expanding into the vertical category of new Taiwanese dramas.
In terms of creator ecology, the daily active 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.
Chen Rui, Chairman and CEO of Bilibili, stated in a conference call after the release of the third quarter report that in order to achieve user growth, Bilibili places more emphasis on producing good products rather than increasing customer acquisition investment. Reflected in the data, the total marketing cost of Bilibili in the first three quarters of this year was 2.79 billion yuan, a decrease of 24% compared to last year.
"In the process of market launch, we will strictly assess ROI to ensure the efficiency of market launch is positive," Chen Rui emphasized. "Increasing gross profit, reducing losses, and maintaining growth" should be achieved simultaneously, without sacrificing the first two points to ensure user growth.
In the past two years, the market and investors have gradually shifted their expectations for internet platforms from user base to profitability. Chen Rui explained that Bilibili still emphasizes user base, on the one hand, because user base can cultivate a larger group of creators and a richer content ecosystem. On the other hand, user base is the foundation for the commercialization of internet platforms, and the growth of Bilibili's advertising and live streaming revenue sources is synchronized with the growth of Bilibili's user base.
The goal of breaking even for Bilibili in 2024 is urgent. The CFO of the company, Fan Xin, stated that after adjustment, the year-on-year loss in the third quarter decreased by more than 50%, and it is expected to achieve a larger year-on-year loss reduction ratio in the fourth quarter than in the third quarter. This will help Bilibili achieve its goal of narrowing its operational losses by 3 billion yuan after adjustments in 2023.
"At present, the break even point is driven by high gross profit businesses such as advertising, as well as recent structural adjustments that have led to a continuous decrease in research and development and operating expenses," said Fan Xin.
Regarding the sluggish gaming business, Chen Rui explained that the gaming industry has entered a stage of stock competition, and the vast majority of newly released games in the industry this year have fallen short of expectations. Now, the industry rules have changed. He believes that the DAU of Bilibili's game videos is growing, and users are highly concerned about new games. Bilibili remains one of the largest and most active game video communities in China. Long term operation, leading vertical categories, and reasonable costs will become the three major standards for Bilibili game project approval.
After the financial report was released, Bank of America Securities released a research report stating that Bilibili continues to control operating costs and has plans to reduce the overall number of employees by the end of this year. It believes that while the user growth trend remains resilient, there is also room to reduce marketing expenses. Considering the macroeconomic slowdown and the continued weakness of its gaming business, Bank of America has lowered its profit forecast for the 2023-2025 fiscal year of Bilibili by 5% to 12%, and lowered its target price from HKD 155 to HKD 131, reaffirming its "buy" rating.