How Bilibili Turn Profits?

$Bilibili Inc.(BILI)$ posted Q3 earnings before Nov 29. With an unexpected surge before the earning, it's earning only make it more volatile.

Obviously, the market has taken into account some expectations of this report, and market is betting no preference on any lossed.

Let's see the Q3 earning

Active users grow step by step, good sign.

On Revenue, the single-quarter revenue was 5.79 billion yuan, up 11% year-on-year, returning to double digits again, and slightly exceeding the market expectation of 5.71 billion yuan.

Among them, the revenue of value-added service business reached 2.21 billion yuan, a year-on-year increase of 16%, which was basically the same as the market expectation of 2.22 billion yuan; The advertising business revenue was 1.35 billion yuan, a year-on-year increase of 16%, slightly lower than the market expectation of 1.38 billion yuan;The game business revenue was 1.47 billion yuan, a year-on-year increase of 5.7%, and once again returned to positive growth, exceeding the market expectation of 1.41 billion yuan;E-commerce and other income was 757 million yuan, higher than the market expectation of 673 million yuan.

In terms of profit, the gross profit margin of this quarter increased by 3.2 percentage points month-on-month to 18.2%, which also exceeded the market expectation of 17.4%. The restraint in expenses has also reduced the loss of consolidation to a great extent.

The operating loss was 1.85 billion yuan, less than 1.88 billion yuan in the same period last year and narrower than 2.1 billion yuan in the previous quarter.

The net loss was 1.7 billion yuan, down from 2.7 billion yuan in the same period last year.

Some key points,

First, Bilibili is also one of the companies increasing operating efficiency.The whole Internet circle began to reduce costs, increase efficiency and improve profit margins. Although Bilibili took effect a little later, it has been clearly reflected since this quarter. Previously, company executives hoped to focus on the expansion of traffic before 2025, which also scared away investors with insufficient risk appetite. Obviously, the current result is that Bilibili has really followed the big stream.

From Q2 to Q3, the marketing cost, marketing expenses and management expenses have all dropped rapidly, and Bilibili is also more conservative in content revenue sharing. Although some full-time upmasters complain, the long-term pain is not as good as the short-term pain, and it is only a matter of time before the budget is contracted.

Second, Bilibili made some bets on games. The first is games. Q3 has launched several new games at home and abroad, which promotes the revenue of game business to increase by 5.7% year-on-year. In the following Q4 and 2023, it will continue to release a number of self-developed new games with ACG theme. Bilibili game Otawa is related to the content of these secondary cultures, precisely because it has a large number of groups.

In addition, brand games represented by Bilibili, such as League of Legends,It is also the key factor to create traffic for his value-added services (live broadcast), and it is also the key factor to provide greater traffic entrance for game advertisers.

Due to the overall decline of the advertising industry this year, especially the shrinking of the optional consumer industry, games are also allowedThe company has become the main force of advertising growth.

Third, the competition with short video platforms is still fierce.The year-on-year growth rate of advertising revenue dropped to 16%. Although it is still a positive growth, it is difficult to compare with the previous high growth. On the one hand, it is the influence of advertising environment, on the other hand, it is the competition of short video industry. Due to the lack of KOL live streaming and other channels,The advertising realization efficiency of medium and long videos is lower than that of short video platforms.However, the promotion of offline economic activities will be deeper in the implantation of medium and long videos, and the amount is not as good as that of short video platforms. Therefore, on the whole, short videos have an impact on the advertising business in Bilibili.

In fact, Bilibili still has a trump card, that is,Pre-video advertisement.

Just like $Netflix(NFLX)$ has turned to Ad, source of cashflow should be multichannel. If Bili could do lke YouTube, who helps $Alphabet(GOOG)$ generate a lot of money, bilibili will make a lot of extra money.

It only needs an opportunity

Let's wait and see.$BILIBILI-W(09626)$

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