- Earnings call transcript Q3 2022

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Operator

Good day and welcome to the Bilibili Third Quarter 2022 Financial Results and Business Update Conference Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Juliet Yang, Executive Director of Investor Relations. Please go ahead.

Juliet Yang

Thank you, operator.

will outlook we statements. make call, this discuss and business forward-looking During comments predictions our based expectations These on today. and are as of or of Hong Exchange. most risks recent materially Kong differ uncertainties, including news Stock this results with in mentioned and due events our mentioned discussion number today’s in release the from a to filings those in and Actual those could SEC and for comparison The purpose provide non-GAAP financial measures are we only. news table of issued release these the measures available Definition we reconciliation today. are our earlier in and

As this conference a is reminder, being recorded.

conference a In Bilibili available will investor IR presentation addition, the an webcast and replay on of this call website ir.bilibili.com. at be

Vice Bilibili Mr. remarks Board I Board and Chairwoman Joining from senior to us Mr. the are Chief Operating Chairman and Mr. Officer; Mr. today Fan, Fan, will on And the Officer; behalf Rui Officer. who call and Chief Executive Financial the over of Li, of Chen, Chief prepared Chen. Sam will read the management Carly of turn now Ms.

Sam Fan

you, and behalf I third call. our XXXX Thank deliver quarter you, in participating conference everyone pleased Chen. opening Mr. for remarks results of to today’s on am Juliet thank

all reprioritized to will goals we and help we that grew the said spent the To total that, XX% by success, the our minutes the than is two topics Average XX from the time year-over-year. uncertainties over community, foundation still up focus Our both XX% our period expand. our the million, and was up have MAUs cope and industry. same macro million quarter, that, spent key user in third environment, year-over-year. XX daily With with face year. turn promoted to Bilibili of X the the us challenging headwinds to corner. key long-term quarter, which DAUs and on more per continue In business time third that is reached minutes nearly last Having on XXX

and well our as XXX power revenue our reduced to users represent MAUs base grow and that also inferential our sizable to With of a growth. in nearly our to our VAS shift various particularly continue product DAU marketing as the terms DAU spend. quality focus refined can the First, ratio of platform, DAUs of commercial with improve generation only a primary algorithms, prospects, sustainability base and DAU and think our to MAU advertising linked We as time improving directly our community, but our offerings and for we million. to reached and have it’s our sales business. not

various to total third percentage percentage the X and tighten to up of actions were XX%, X margin Second, percentage the our marketing quarter-over-quarter in our we to improving of and financials challenging margin billion, third up XX% expanding we the year-over-year. and continue points points Sales XX% quarter as year, quarter, our In a After spending. to expenses are narrowing to our down committed sequentially. Gross grew a take XX%, revenues losses. RMBX.X by first improved half sequentially. gross revenues

compared prior non-GAAP are ratio the percentage quarter. Our XX net loss points by narrowed with

Looking our marketing rationalize a potential ahead, of additional implement headcount and we planning. cost measures and expenses will number further

R&D grow projects time, exploring new community with narrowing that, in and we marketing brief update pillars a efficiency be decline when content, with on core net in At I’d this streamlining Bilibili well on mindful further categories. down and Specifically, we generations like their XXXX young new are the expansion content of passion same and interest related These the as improving experience. areas greater content, loss enter R&D up our our as expect are our with our cutting of adjustments years, success expenses year. our extra centralizing to provide investment completed into accordingly. commercialization year on involved, sales, of of user and and to this to chance the and peak to being Accordingly, life, of we opportunities. by resources With and commercialization. lower Starting driving stages end in the over start will

Mode base offer The grew various content XX% XXX% process which content views varied under XX% Particularly distribution creators money on they improving year-over-year, to to So Bilibili. monetization creators, strong for third Story respectively. spreads of creating and decoration video more active XX% multiple over emerging basis, their content quarter, Mode, year-over-year can cultivated The on videos content by creators channels both things and our overall traditional monthly as up easily, million internal their our X.X design the by fan million categories and more have with continuing growth make In platform. X.X automobile, through respectively. drives creators a have on year-over-year. year-over-year Bilibili In opportunities doing we and XX quarter, accommodated content we capabilities needs, on on by monthly build expanding XX% driven near content Story third the contract traffic such million and content top readily income with while content content, library verticals, love. other and baby grew more seen on over new home Total these maternity. XX% the up creators of sharing Bilibili, PUGV

community our our we diverse our engagement and our with content. consistently at featured community, Looking deepen in user

reached earlier, I minutes, user same spend the X the record up high daily mentioned As last minutes from XX time of average a period year.

official Furthermore, up XX% maintaining a to XXX was above million, to the year-over-year year-over-year XX% by stable rate billion. increased retention XX-month XX%. site also interactions of number our monthly members on Our XX.X

prospects at for near and and Now, the let’s our monetization. look long-term commercialization

First, our VAS business.

year-over-year integrating unique year ecosystem, paying RMBX.X the of We than VAS third broadcasting our live in in billion, maintain was users with live same hosts our the period XX.X we third this The broadcasting December, quarter by XX% the title, further quarter. a This year. more to XX% plan third XX% Three-Body advantage. our Our year-over-year to PUGV premium live for attract our sci-fi number is of revenues up the to of wide quarter. range platform. we anticipated third launch memberships enemy In platform The By the number for expected million. The in year-over-year had self-produced XX% lovers Problem. broadcasting highly last Chinese quarter grew increased title to

of an RMBX.X integrated dollars Looking products year-over-year. more Mode revenues strengthened the capture macro at offerings viewing to continue different of quarter. our XX% billion, further video diverse in campaign net part in scenarios. performance-based ad advertising, our offerings marketing and Story modules by environment, ads despite combining conversion ad across softness were third We increase ads as

in launched started domestic and total Revenue third bear Our of generated in core automotive products from the self-developed third quarter. quarter And fruit. titles top skin food we game was globally quarter. appliance, X% the and strategy, driven contributed distribute the our which advertising billion, cosmetics, new against games overseas verticals the Develop games, has in for largely digital game beverage. in-house, our care RMBX.X to third market grew by and and home game X% remains revenues to in revenue the our year-over-year and

year, X early narrowing next games overseas net believe two clear: approved is next are pipeline, for to Facing X titles By commercialization, our top earlier our uncertainties, launch primary in title. the improving our goal domestic community year. margin our catch year gross self-development our markets macro Looking at loss. we profit line expediting up our scale. market’s slated can with and we our including release and this have the

provide fourth XXXX. Chen’s overview our results committed remain a efficient uncertainties and we now remarks. our more actively billion, for of We resilient manage for outlook reaching the of This the quarter operating to believe we were net While for XXXX, Total revenues breakeven liabilities. of and the a stronger, non-GAAP and company. quarter of period Mr. goal position emerge XXXX. concludes financial I quarter a the weather up we the can XX% will cash by and will RMBX.X as XXXX the through from also of same more macro third brief

by increased net XX% XX% to XX% other RMBX.X revenue was and revenue mobile stream billion. total XX% and advertising, approximately by the breakdown e-commerce year-over-year business. revenues Our of XX% from VAS, games, Cost

quarter in and Gross was was X.X sequentially RMBX.X points margin percentage attributable gross third billion XX.X%. our recovered to the growth. line gross margin by Our profit top the

billion, in increase Sales and by quarterly continued first flattish marketing the expenses compared in improvements XX% expenses as the quarter year-over-year. XX% XX%, to Total to operating sales G&A period of due compared marketing period billion. was year-over-year also the year. higher the narrowed expect XX% cut with and was billion primarily down the trend total RMBX.X We sequential year. show last up RMBX.X was third continue The QX XXXX, a a The headcount increased percentage was million, in the was increased to years. R&D and percentage and adjusted mainly of to same XXXX. coming XX% adjusted loss by for expenses. rental and with RMBXXX.X RMBX.X respectively. and expenses personnel increased and loss billion net net narrowing G&A quarter expect to in expenses. in of year-over-year. our was increase fourth ratio XX successfully headcount compensation representing share-based points due was will RMBX.X we We in coming the Net primarily quarter RMBX.X loss and sequentially same We revenues, and billion, expenses expenses R&D the increase

Turning April $XXX of full accessible June management, is to XXXX, bonds and [ph] our among capital accessible $X.X the XXXX accessible which liability $X.X convertible totaling billion, we currently in $XXX million December billion the outstanding is three and allocation is in have XXXX. million in price

bonds cash believe XX, of and cash investments repay losses level or we to and taking to any sufficient actions of of available billion. deposits the short-term September breakeven. resources reaching $X.X respective by us. further we maturity aggregate to convertible Meanwhile, and And is external narrow billion XXXX, RMBXX.X of we term our had without As all balance liquidity outstanding funding their the this considering equivalents, are

and bonds to prudent time, price. price cash evaluate and At be the discounted We them outflow. repurchase the option same to a are traded at retail currently convertible will CapEx will and closely we monitor at will our reasonable continue our we with these

cash As $XXX position. XXXX, of $XX total million these million total of repurchased and generating principal of million, net October $XXX for notes a cash of consideration amount had XX, retailed a we

best opportunistic options the We continuously for capital. will stay of our when use evaluating

Stock for With for becomes of RMBX.X conversation to now a your Finally, is company Bilibili This attention. base for the in effective on be further revenues capital net currently will markets. expand and X, on our from quarter October ahead. call billion in private listed securities your new a you in provide between Hong XXXX. billion. more that liquidity listing and now and primary the fourth RMBX.X to open the our producing to the we Kong investor conversion would States. a our secondary questions. are United Kong Exchange to We the go Operator, Thank like mind, XXXX please Hong

Operator

you. JPMorgan. first ahead. line Thank the of Your [Operator is question from Please Daniel go Chen from Instructions]

Daniel Chen

I myself. will translate

remarks, growth daily that mentioned So the DAU. prepared user, in management the user switch active will into previous focus

maybe you. about So elaborate user could Thank more strategy? future growth you our

Rui Chen

MAU plus model, past raised is few the Xx which to the successfully highly in And the MAU centered past are a and this XXX business able delivered our target impressive XXX in MAU we successful very the ability XXXX’s year-on-year carry lot that for the user Even growth believe growth. also put growth, our XX% of user can room as as a of we the on user terms shows content nowadays few in supported we ecosystem we Starting XXX MA compared And still the Based DAU see sticky the around we which And of present to deliver we strategy we to years, the progress, works in next community and MAU MAU still our and the quite have quality past, the the strategy, excellent million a growth. the Bilibili’s community successful quite on Well, our XXXX. current maintain we of in growth. can while a in if because believe is we quality, XXXX, growth. we expanded by a and million well from work sustainability work that high thesis is showed if DAU of to year. our we million the do grow achieve lot from years. the execution back XQ,

at our goal linked also users. quality the And to In of addition, way of not it linked emphasis resources the purpose. in why the And of increase to we to to our from of putting I growth achieve day, end in It’s commercial our DAU. community. XX% DAU-MAU XXXX. more growth look increase directly And that’s of ratio, the perspective are directly to said, from growth just in is starting the our a DAU. the Like improved over year, already the has XXXX if our the roll this MAU and you it XX%

environment you the expenses it of increase time our MAU, achieve the at one all facing the help to one we of are emphasis as sales revenue for reduce first aware to The at can task macro help us same and from monetization aspect, to often us believe from profitability breakeven to may our to and marketing efficiency possible. the As is instead that DAU multiple we most putting reason why we’re challenges more putting the management. important grow

next We core well And are company be beneficial sustainable for we our MAU hope and our this next believe commercialization and In very will for the to year, year, marketing growth as very expense to outlook the already marketing this as to efforts. year, and year-over-year. we taken as ratio sales our DAU XXXX, to we the already for confident more have our declined be Starting XX% expense. from actions increase sales control to XX%. QX DAU to

to XXXX. please. our of even compared As expense our from focus be decline you. question, DAU, Thank MAU in further the will and the expect we shifting bigger can next sales we’re marketing to and XXXX Operator, we reduce magnitude

Operator

you. Thank

question. from the of from is ahead. next Please Bank of our This line take go now Zhang will Lei We America.

Lei Zhang

for management narrowed taking profitability. loss the our question mainly question. on Thanks, My quarter. our that the noticed is operating I third in

our at which you. our margin margin look Thank we the to control change also as and to we see trend gross and OP target? should how room and breakeven So any for costs

Rui Chen

XXXX, of by been We the and is profitability putting And is across charge. work move raised the the as challenges multiple personally to end taking stick will reach the obviously, to after is And breakeven and reduce we XXXX, and company. for mission I through first goal. something target that of we priority and environment this macro there loss

our to taken already have cost reduce We expense. actions and

move efforts to our take sales for as three and continue we decline. will so And bandwidth expense sales I and G&A expenses. continued and year-on-year earlier, for far, marketing consecutive as the R&D quarters. well decline cost unit server And marketing mentioned and And to our forward, to as more reduce

non-core terms in At improving In take resources to of I allocating also will business improvement, our the efficiencies. intend our same actions on and will efficiency organizational we be year. optimize centralize will such show completed to and from we end as reduce investment time, on increase commercialization areas the and and to by start to expect the this lean, reduce fat next our this quarter adjustment year and the P&L of first starting structure the

Sam Fan

company to reduce expense takes and probability. gross The trend. prioritize will I in more the and costs out regard Yes. the to take question margin actions

Sales we going Chairman further a will cash expect reach peak year. we mentioned has narrow terms XXXX level. to time, In as losses. continue attention marketing to keep expect And gradually breakeven overall very and balance controlled to and future net At expense will We paying flow our next in our year-over-year, as aim the and already target. same decline and and period, CapEx our down year dollar by year-over-year, year. operating narrow healthy decline start loss our cash XXXX tightly our declined expect absolute expenses close to we increase decline this gross in at until investment expenses, our and are margin and will next forward. R&D We will which will the we QX in

Juliet Yang

We you, question. take Thank next operator. can the

Operator

Thank you.

Next question CICC. line go is Please from Zhang ahead. the of from Xueqing

Xueqing Zhang

quarter is in of addition, My regards about launching also the the In Tojo considering should products growth macro the XX, Bilibili management question I strategy in to e-commerce the revenue has Thank you. year? impact next share noticed first advertising it? details and Bilibili to weak advertising and and for present? advertising, your during related could content we that the about And environment, considering want know, what’s at Double more think business COVID-XX how we

Carly Li

particularly over integrated to share continue increased we to environment well weaken we an by increased RMBX.XX will XX% effectively billion, to we through enhance reached multiple multiple to and build capability job Bilibili’s transaction inventory and we welcoming to increase XX% content the – products young year-over-year. help Despite those a our to formats ad business, build momentum for ad plan our is year-over-year, scenarios XXXX, the vertical done the advertisers. revenue And continued And combine generation revenue and to and quarter advertisers macro have drilling of – equity. and and brand their ad in in ad continue scenarios. This market. and environment our our performance-related consider third with we ecosystem a market intend help our further reach ad marketing and in ad them In consumption the to in take our this especially friendly from in accelerate

For products. and top already in the and market verticals among like five game we example, digital XC player are

continue the and stages. into will with enter as over QX, grew within great as and And maternity Another like automotive, which generation of as skin move would necessity such be part we to life year-on-year food XX% different actually, we continue for grow, automotive Bilibili. home as example forward, grow care sector have they appliances to baby are especially and potential expect young young generation ads, beverage, decor and FMCG the and Bilibili cosmetics. in verticals And

the Bilibili the and You ecosystem scenario. mentioned commerce and consumption transaction rather in content would about e-commerce. define content I

of it’s also important with us plan scenario very XXXX, In scenarios community advertising First we to infrastructure and further it for and the transaction one an for commercialization. the connect all, is the Bilibili with of business.

two example, and Pinduoduo Jingdong, with the quarters, other Tmall, brand Taobao, For advertisers. past together in

We we are acquisition hope to already model, and traffic scenario. including the video e-commerce that, well Bilibili, explore starting With Bilibili transaction unique within and commercial to explore live and the transaction as the of consumption seating as broadcasting-based consumption different values community.

about we weakened our a format XX growth future, revenue among XX% over the in revenue, advertising the performance-based further advertiser which value to We looking open us year’s consumption still our environment, we advertising explore And are very be further of the Double to grew this join the year-on-year for to macro and more During expand of brand transaction welcome the scenario. ecosystem. the unique within and despite XX%. recorded commercial

And As for only all along the people to to which to that’s we potential market harm about it rapidly, are X% the about If than will in overall price. them, the try unit we takes adaptive we We give advertising, old but will the to overly income believe with examples it limited add more extremely X pre-roll to very pre-roll only of disruptive some about I’ll content out. X% very not ecosystem. bring will the be minutes generate to experience. how of some more Bilibili’s have been the We might user you will format believe of be ad exploring fashion and it long. Bilibili. – cautious pre-roll, goods, format it’s of X Bilibili most its is an declining of actually with advertising the China, optimistic which

conversion ads a as performance-based such with For or and example, it app explore other within call can module formats ads model innovative partner the player the player CPS, bullet-chat both performance-based a frame, we more carry the very would will combines metaverse, the can we video inventory Story game as we that believe and more the it download explore we And the format within ads, to open grow ad Mode to And example which Mode ads. us. be model. – on Story open continued good traffic to us is another will frame,

within Bilibili plus the Lastly, model. the acquisition content would be e-commerce user

our refine optimize to to ad will performance-based goal We improve and continue those efficiency.

we advertising, will our overall formats well above-mentioned community. as believe more to of of it’s higher generate sustainable as All income

to that continue very very, in take will you. outperform still business on overall will share. We more are we XXXX, app our continue Thank and the industry confident market XXXX to

Juliet Yang

Operator, question next please.

Operator

Thank you.

the We will Lincoln Please Please from of Goldman standby. Kong is ahead. This now next take go from our line question. Sachs.

Lincoln Kong

So, my about gaming question business. the is

and after business the Chen, Mr. you our especially Thank have gaming taken progress? overseas is Given gaming, reduction gaming how you. over? outlook, change are gaming of the business, growth that of And and posture targets company the looking of buildup strategy our the as our personally well control as games and taking sort for of the mostly sales strategy what’s overall

Rui Chen

putting I XXXX. raised and as is game the business video strategy in core of Bilibili’s back

same and fact, we Actually, have great gamer the on lots explore regional of terms Bilibili matter has early broadcasting content platform. concentrated and same days. live offerings the of in very our business game that areas synergies comics, of with game a in to most from platform video the time, is is time, starting As the our that Bilibili animation in the China. and At At we has invested business. condensed

directions multiple spreading that just natural Bilibili were and self-developed on our to and we naturally, planned, it’s end the I reason years, the perform natural a we put multiple as In to is due but just is progress. course to at mainly only by didn’t past which well double X fruit. up the business bear game teams but didn’t exploring in game too core. The for as many, slower-than-expected believe thin in once, at So, extension

As our any business, mean I we original making the it personally strategy. to take game are on doesn’t change

I to core. matter standards. expectations. to patients projects iterate focusing and energy directions increase towards a cycle that the but that two will develop not out investment strengthen on life same the one the projects distribute doing development best the project I our more high-quality the time, will or business on carry intend fact, in putting to the that gaming best resource and and and the only is At meet meet As industry at highest which do strategy, management diligently of of quickly globally game least, in-house focus out we our self our our

requirement to business gaming – for produce the and our our product best my best earth and to increase to forward, very, very the be Moving try down will best to do business. games games, environment whether it’s in can confident the licensing sustainable enhance self-developed am in we have or the Because game sector. to we content, very perfect deliver the I growth be still

Juliet Yang

Operator, Thank you. next question please.

Operator

Thank you.

take We our question. standby. the is line will Please Yiwen This ahead. China Zhang now Renaissance. go next from Please from of

Yiwen Zhang

So, my live is question regarding broadcasting.

between integration while. live streaming broadcasting been on the color the a the So, and expectation the on on media streaming share and for you. our business? you strategy more discuss has live Can Thank

Rui Chen

think broadcasting our year. We expectations meet the live business this has

quarters are revenue year-on-year. The starting live broadcasting to growth our first XX% year live year. broadcasting’s margin three also by this And gross recover grew this

fast the past, is capability to convert have has video for quite working, of strategy our increased content to a content convert supply content year-over-year, content live And impressive mentioned how the those video which the creator/host, in been In and broadcasting our are extension demonstrates side host strategy explore the ecosystem As increasing side, continuously creators And and live among format within we the number XX% content ecosystem our first two. content. creators. this of with believed QX, creators/host the has growth. to as is a ecosystem a combined our supply to this natural the we have platform. always I It’s always content. we broadcasting of synergies generate From our of the

content the it’s in broadcasting they side live same we our increased live impressive And supply. the increase seen user, category a year-on-year the aligning might opening change exploring are virtual kind broadcasting. now paying categories, virtual both believe terms host looking for need content Vtubers to as is certain we that’s in also increase creators. our our significantly team target V-UP and example, live organization also lining operation program broadcasting live same well to the format organizational the fine PUGV. continued team growth. are [ph] of materials demand have well in. host to the same in as interested time operation This of for operation increased user the with We up same interested penetration to as are broadcasting of operation terms at to operation. whether and content the users goals And the MAU – are perspective, – has the it’s up be we DAU of in the PUGV. vertical their content creators the we the live both be very, quarter, quarter, over discover broadcasting from of also live the very live the in video our might content, broadcasting from broadcasting of it’s and really or This the the combined of video vertical growth. live overall of Last which for We format as the for have is an operations. content combining what that’s the watching inventory she that in And it’s recorded video third live content to he of broadcasting overall this life and frequency same XX% And and or also And opening the up broadcasting attention of

sector In that knowledge them be Another would creators, for the difficult the monetize broadcasting. the through it’s think example to live past, we might content knowledge for sector.

just host connect with live for broadcasting – the we milestone participants Q&A services. suitable through broadcasting broadcasting to their area the gain very in to actually, session. However, and gain follower directly law in her host And it’s live seen areas, or million relationship discussed a the the one X do the have live we have

after can So, the of explore inclusion operations, the this example new two opportunities. will be another we

the I within broadcasting PUGV, further the its gross integration to am the confident continue will and as As as margin well very in such, increase live live as broadcasting penetrates XXXX. revenue

Juliet Yang

you, to Back operator.

I think session today. that’s about time for the Q&A

Operator

Thank question-and-answer session. That the conclude you. does

So, the any turn Juliet to conference closing Yang for or to back over I remarks. would additional like

Juliet Yang

you us thank once today. Well, again for joining

Executive Bilibili Yang, Juliet Investor Relations. IR me, contact please questions, further Director have you TPG or If

Our a found release. China on contact in great today’s press can IR U.S. both information be the day. Have Bye-bye. and for

Operator

does participating This now you. Thank disconnect. conclude you today. for for the and Thank you may conference

Bilibili (BILI) 29 Nov 222022 Q3 Earnings call transcript