Core Viewpoint - Bilibili Inc. is upgraded from a Hold to a Buy rating due to expected positive earnings in Q3 2024 and significant revenue growth acceleration for the full year [1] Financial Performance - Bilibili's Q2 2024 revenue grew by +16% YoY, reaching RMB6,127 million, which was +1% higher than the consensus estimate of RMB6,090 million [3] - The mobile games business revenue increased by +13% YoY to RMB1,007 million in Q2 2024, a significant turnaround from a -13.1% YoY contraction in Q1 2024 [3] - The normalized net loss per share improved from -RMB2.33 in Q2 2023 and -RMB1.06 in Q1 2024 to -RMB0.65 in Q2 2024, better than the consensus forecast of -RMB0.75 [3] - Advertising revenue grew by +30% YoY to RMB2,038 million, increasing its proportion of total revenue from 30% in Q2 2023 to 33% in Q2 2024 [3] - Gross margin expanded by +6.8 percentage points YoY to 29.9% in Q2 2024, while operating expenses as a percentage of sales improved from 47% in Q2 2023 to 39% [3] Growth Prospects - Bilibili's deferred revenue balance increased by +25% QoQ to RMB3,725 million as of end-Q2 2024, indicating strong future top-line performance [4] - The new game "San Guo: Mou Ding Tian Xia" (San Mou) has returned to the Top 3 on the iOS game grossing chart, suggesting positive momentum for the mobile games business [4] - The number of advertisers expanded by over +50% YoY for 1H 2024, with expectations for above-industry average advertising growth in 2H 2024 [5] - Revenue growth in RMB terms is projected to improve from +3% in the previous year to +18% for the current year [5] Valuation - Bilibili's PEG (Price-to-Earnings Growth) valuation metric is attractive at 0.43 times, based on a consensus FY 2025-2028 normalized EPS CAGR forecast of +61% and a consensus FY 2025 normalized P/E multiple of 26 times [7]

Investment Rating - The investment rating for the company is "Buy" (maintained) [1] Core Insights - The company reported Q2 2024 revenue of 6.127 billion yuan, a year-over-year increase of 16% and a quarter-over-quarter increase of 8%, exceeding Bloomberg consensus expectations of 6.093 billion yuan [3] - Non-GAAP net loss for Q2 2024 was 271 million yuan, better than the expected loss of 329 million yuan, and significantly improved from losses of 964 million yuan and 456 million yuan in Q2 2023 and Q1 2024 respectively [3] - The advertising business showed strong growth, with Q2 2024 revenue of 2.037 billion yuan, up 30% year-over-year and 22% quarter-over-quarter, benefiting from strong e-commerce platform spending during the 618 shopping festival [3] - The gaming business also exceeded expectations, with Q2 2024 revenue of 1.007 billion yuan, a 13% year-over-year increase, driven by the successful launch of the game "Three Kingdoms: Strategy" [3] - The company expects to turn adjusted operating profit positive in Q3 2024, supported by improved gross margin and effective cost control [3] Summary by Sections Revenue and Profit Forecast - Total revenue forecast for 2024-2026 is adjusted to 26.3 billion, 30.2 billion, and 32.1 billion yuan respectively, with Non-GAAP net profit forecasted at -1.07 billion, 1.899 billion, and 2.785 billion yuan [3] - The company anticipates a Non-GAAP PE of 24 and 16 times for 2025 and 2026 respectively based on current stock price [3] Financial Metrics - Q2 2024 gross margin was 29.9%, an increase of 6.8 percentage points year-over-year, marking the eighth consecutive quarter of improvement [3] - The company’s operating expenses as a percentage of revenue showed a decrease in management and R&D costs, while sales expenses increased due to promotional activities for new game launches [3] Market Data - The closing price of the stock is $14.94, with a market capitalization of approximately $6.294 billion [4] - The stock has a price-to-book ratio of 3.30 and a one-year price range of $8.80 to $18.19 [4]

Investment Rating - The investment rating for the company is "Buy" and is maintained [4]. Core Insights - The company reported Q2 2024 revenue of 6.127 billion yuan, a year-on-year increase of 16%. Gross profit reached 1.833 billion yuan, up 49% year-on-year, with a gross margin increase of 6.8 percentage points to 29.9%, marking the eighth consecutive quarter of sequential improvement. The Non-GAAP net loss was 271 million yuan, narrowing by 72% year-on-year, also achieving eight consecutive quarters of continuous narrowing. The operating cash flow net amount was 1.751 billion yuan, achieving positive operating cash flow for four consecutive quarters [5][6]. Revenue Breakdown - In Q2 2024, advertising revenue was 2.04 billion yuan, a year-on-year increase of 30%. The number of advertisers on the platform grew by over 50% year-on-year in H1 2024. The e-commerce GMV during the 618 shopping festival increased by 146% year-on-year, with the number of advertisers growing by 313% [5][6]. - The value-added services revenue was 2.57 billion yuan, up 11% year-on-year, with an increase in paid users for premium memberships and live streaming services. The number of official members reached 243 million, a 13% year-on-year increase [5][6]. - Mobile gaming revenue was 1.01 billion yuan, a 13% year-on-year increase, with stable performance from long-term products [5][6]. User Engagement Metrics - Daily active users grew by 6% year-on-year to 102 million, while monthly active users increased by 3.7% to 336 million. The average daily usage time rose from 94 minutes in the same period last year to 99 minutes [5][6]. Profitability Analysis - The gross profit increased by 49% year-on-year to 1.833 billion yuan, with a gross margin increase of 6.8 percentage points to 29.9%. General and administrative expenses, as well as research and development expenses, decreased by 10% and 15% year-on-year, respectively [6]. - The Non-GAAP net loss narrowed to 271 million yuan, with positive operating cash flow indicating a healthy business cycle. Deferred revenue increased by 738 million yuan compared to the end of March 2024 [6]. Earnings Forecast - The company is expected to optimize its commercialization capabilities and operational efficiency, with revenue projections of 26.6 billion yuan and 30 billion yuan for 2024 and 2025, respectively, maintaining the "Buy" rating [6].

上 市 公 司 传媒 2024 年 08 月 25 日 哔哩哔哩-W (09626) 公 司 点 评 / 公 司 点 评 ——24Q2 游戏、广告、扭亏超预期，商业化有望继续加 速 报告原因：有业绩公布需要点评 | --- | --- | |------------------------|---------------------| | 市场数据： | 2024 年 08 月 23 日 | | 收盘价（港币） | 107.10 | | 恒生中国企业指数 | 6219.24 | | 52 周最高/最低（港币） | 145.60/67.80 | | H 股市值（亿港币） | 451.17 | | 流通 H 股（百万股） | 337.55 | | 汇率（人民币/港币） | 1.0926 | 一年内股价与基准指数对比走势： -41% 9% 59% HSCEI 哔哩哔哩-W 资料来源：Bloomberg 证券分析师 林起贤 A0230519060002 linqx@swsresearch.com 夏嘉励 A0230522090001 xiajl@swsresearch.com 联系人 夏嘉励 (8621)232978 ...

Investment Rating - The investment rating for the company is "Buy" (maintained) [2] Core Views - The company is expected to achieve accelerated revenue growth driven by advertising and gaming, with a potential for profitability in a single quarter [5] - The company reported a significant reduction in net losses, with a projected path to profitability in the coming years [5] - The report maintains profit forecasts for 2024-2026, with expected net profits of -1.38 billion, 0.29 billion, and 7.43 billion respectively [5] Revenue and Profitability - For Q2 2024, the company reported revenue of 6.127 billion (up 15.5% year-on-year) and a gross margin of 29.9% (up 6.8 percentage points) [5] - The adjusted net loss for Q2 2024 was 271 million (a 71.9% year-on-year reduction) [5] - Operating cash flow turned positive at 1.751 billion for Q2 2024, compared to a negative 21.2 million in Q2 2023 [5] Business Segments Performance - Value-added services revenue reached 2.566 billion (up 11.5% year-on-year), driven by an increase in membership and payment [6] - Advertising revenue was 2.037 billion (up 29.5% year-on-year), attributed to optimized advertising products and a significant increase in the number of advertisers [6] - Mobile gaming revenue was 1.007 billion (up 13.1% year-on-year), primarily due to contributions from popular games [6] User Engagement and Growth - The platform's daily active users (DAU) reached 102.3 million (up 8% year-on-year), with a monthly active user (MAU) count of 339 million (up 6% year-on-year) [7] - The average user engagement time was 102 minutes per day (up 7.4% year-on-year), indicating increased user stickiness [7] - The retention rate for members over 12 months was 80%, with a significant increase in users engaging in consumption behaviors [7] Financial Projections - Revenue projections for the upcoming years are as follows: 26.813 billion for 2024, 30.474 billion for 2025, and 34.227 billion for 2026 [8] - The company is expected to improve its net profit margin significantly by 2026, with a projected net profit of 743 million [8] - The projected earnings per share (EPS) for 2024, 2025, and 2026 are -3.3, 0.1, and 1.8 respectively [8]

Investment Rating - The report maintains a "Buy" rating for the company, expecting a price increase of over 15% in the next 6-12 months [7]. Core Views - The company reported a revenue of 6.127 billion yuan in Q2 2024, representing a year-on-year increase of 16%, with a Non-GAAP net loss of 271 million yuan, narrowing by 72% year-on-year [2]. - The company experienced healthy growth in daily active users and video views, with an average of 102.3 million daily active users, up 6% year-on-year, and daily video views reaching 4.8 billion, up 18% year-on-year [2]. - The gaming segment is expected to see strong growth in the upcoming quarters, driven by the launch of new games, particularly the SLG game "Three Kingdoms: Strategizing the World," which ranked in the top 5 of the iOS game sales chart for 21 consecutive days after its launch [2]. - The company’s gross margin improved to 29.9%, up 6.78 percentage points year-on-year, indicating a positive operational cash flow [2]. Financial Summary - Revenue projections for 2024, 2025, and 2026 are 26.6 billion, 30.4 billion, and 33.8 billion yuan, respectively, with Non-GAAP net profits expected to be -15 million, 203 million, and 328.5 million yuan [2][5]. - The company’s P/E ratios for 2025 and 2026 are projected to be 20.20 and 12.49, respectively [2][5].

Financial Data and Key Metrics - Total revenues increased by 16% year-over-year to RMB 6.13 billion in Q2 2024 [5] - Gross profit rose by 49% year-over-year to RMB 1.8 billion, with gross profit margin reaching 29.9%, up from 23.1% in Q2 2023 [6] - Adjusted operating loss and adjusted net loss narrowed by 69% and 72% year-over-year, respectively [6] - Operating cash flow reached a record RMB 1.75 billion in Q2 2024 [6] - Deferred revenue balance increased by RMB 738 million from Q1 2024 [6] Business Line Data and Key Metrics - Advertising revenue grew by 30% year-over-year, contributing 33% of total revenue [5][20] - Games revenue increased by 13% year-over-year to RMB 1.01 billion, driven by new launches and legacy titles [15][20] - Value-added services (VAS) revenue grew by 11% year-over-year to RMB 2.57 billion, with premium members reaching 22.3 million [18][20] Market Data and Key Metrics - DAUs increased by 6% year-over-year to 102 million, while MAUs grew to 336 million [7] - Users spent an average of 99 minutes daily on the platform, up from 94 minutes in Q2 2023 [11] - Video views increased by 18% year-over-year to over 4.8 billion daily [9] Company Strategy and Industry Competition - The company focuses on content, community, and commercialization, with a strategy to attract high-quality creators and expand monetization channels [9][10] - The success of the strategy game "San Guo: Mou Ding Tian Xia" marks a breakthrough in genre diversification and long-term game operation [16][17] - The company aims to achieve non-GAAP breakeven in Q3 2024 and improve profitability thereafter [6][21] Management Commentary on Operating Environment and Future Outlook - Management highlighted the strong growth in advertising and games businesses, driven by improved infrastructure and user engagement [12][15] - The company is confident in maintaining above-industry average advertising growth in the second half of 2024 [31] - Management emphasized the potential of AI applications in content creation and user experience enhancement [53][57] Other Important Information - The company celebrated its 15th anniversary, with nearly 70% of China's Gen Z+ population using the platform [8] - Bilibili held offline events "Bilibili World" and "Bilibili Macro Link," attracting over 250,000 participants [11] Q&A Session Summary Question: Drivers behind robust advertising growth and outlook for H2 2024 - Advertising growth was driven by healthy traffic growth and unlocking the commercial value of users, with a focus on infrastructure and vertical industry solutions [25][27][31] Question: Drivers for the successful launch of "San Guo: Mou Ding Tian Xia" and future game genres - The game's success was attributed to the company's strategy of reinventing games for younger audiences, with a focus on long-term operation and addressing user pain points [35][37][39] Question: Content strategy and consumption trends as user demographics evolve - The company is expanding content categories to cater to evolving user needs, with significant growth in consumption-related content such as home decor, automotive, and fashion [43][44][46] Question: Financial outlook for H2 2024 and mid-to-long term profitability - The company expects strong revenue growth in Q3 2024, driven by games and advertising, and aims to achieve meaningful operating profit on a non-GAAP basis [51] Question: AI applications and future potential - AI is being used to enhance content creation and user experience, with significant user engagement in AI-related content and partnerships with leading AI companies [53][57][59]

Investor Presentation August 2024 1 Safe Harbor Statement This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "aims," "future," "intends," "plans," "believes," "estimates," "confident," "potential," "continue," or other similar expressions. Among other things, quotations from m ...

Company Performance - Bilibili reported a quarterly loss of $0.09 per share, better than the Zacks Consensus Estimate of a loss of $0.10, and an improvement from a loss of $0.33 per share a year ago, indicating a 72.73% year-over-year improvement [1] - The company achieved revenues of $846.21 million for the quarter ended June 2024, surpassing the Zacks Consensus Estimate by 0.51% and showing a 11.76% increase from $757.02 million in the same quarter last year [1] - Over the last four quarters, Bilibili has exceeded consensus EPS estimates two times and revenue estimates three times [1] Market Performance - Bilibili shares have increased approximately 15.2% since the beginning of the year, while the S&P 500 has gained 17.8% during the same period [2] - The current Zacks Rank for Bilibili is 3 (Hold), indicating that the shares are expected to perform in line with the market in the near future [4] Future Outlook - The consensus EPS estimate for the upcoming quarter is $0.04 on revenues of $1.01 billion, while for the current fiscal year, the estimate is -$0.07 on revenues of $3.72 billion [4] - The estimate revisions trend for Bilibili is mixed, and future earnings expectations will depend on management's commentary during the earnings call [2][3] Industry Context - The Internet - Services industry, to which Bilibili belongs, is currently ranked in the bottom 44% of over 250 Zacks industries, which may impact the stock's performance [5] - Another company in the same industry, Zscaler, is expected to report quarterly earnings of $0.69 per share, reflecting a year-over-year change of +7.8%, with revenues projected at $567.62 million, up 24.8% from the previous year [5][6]

Financial Performance - For the six months ended June 30, 2024, total net revenue was RMB 11.79 billion, an increase of 14% compared to RMB 10.37 billion for the same period in 2023[2]. - Advertising revenue for the same period was RMB 3.71 billion, up 30% from RMB 2.84 billion year-over-year[2]. - Gross profit for the six months ended June 30, 2024, was RMB 3.44 billion, a 47% increase from RMB 2.33 billion in the prior year, resulting in a gross margin of 29.2% compared to 22.5%[2]. - Net loss narrowed to RMB 1.37 billion for the six months ended June 30, 2024, a 37% improvement from RMB 2.18 billion in the same period of 2023[2]. - Adjusted net loss for the same period was RMB 726.9 million, a 64% reduction from RMB 1.99 billion year-over-year[2]. - Total net revenue for the first half of the year reached RMB 11.79 billion, a year-on-year increase of 14%[6]. - Advertising and value-added service revenues grew by 30% and 14% respectively, indicating effective monetization of user traffic[6]. - Gross profit increased by 47% year-on-year, with gross margin rising from 22.5% to 29.2%[6]. - Adjusted operating loss and net loss narrowed significantly by 60% and 64% respectively[6]. - Revenue from value-added services reached RMB 5.09 billion, a year-on-year increase of 14%[10]. - The operating loss for the six months ended June 30, 2024, was RMB 1.40 billion, narrowing by 47% from RMB 2.65 billion in the same period of 2023[24]. User Metrics - Daily active users (DAUs) averaged 102.3 million, an 8% increase from 95.1 million in the prior year[2]. - Daily average video views increased by 20% to over 4.9 billion, reflecting a vibrant content ecosystem[7]. - The number of official members increased to 243.1 million, a year-on-year growth of 13%[8]. - Monthly active users averaged 338.6 million, representing year-on-year growth of 6%[6]. Cash Flow and Liquidity - Operating cash flow for the six months ended June 30, 2024, was RMB 2.39 billion, compared to an outflow of RMB 651.2 million in the same period of 2023[2]. - As of June 30, 2024, the company's cash and cash equivalents, time deposits, and short-term investments totaled RMB 13.91 billion, down from RMB 15.04 billion as of December 31, 2023[28]. - The net cash used in operating activities for the six months ended June 30, 2023, was RMB (651,158) thousand, while for the same period in 2024, it was RMB 2,388,237 thousand, indicating a significant turnaround[44]. - Cash and cash equivalents decreased to RMB 3,732,504 thousand as of June 30, 2024, from RMB 7,191,821 thousand as of December 31, 2023, indicating a liquidity contraction[41]. Assets and Liabilities - Total assets as of June 30, 2024, were RMB 31.32 billion, a decrease of 5.6% from RMB 33.16 billion at the end of 2023[3]. - Total liabilities decreased by 5.4% to RMB 17.74 billion as of June 30, 2024, from RMB 18.75 billion at the end of 2023[3]. - Shareholders' equity totaled RMB 13.58 billion, down 5.7% from RMB 14.40 billion at the end of 2023[3]. - The total accounts payable increased to RMB 4,566,128 thousand as of June 30, 2024, from RMB 4,333,730 thousand as of December 31, 2023[50]. Operational Efficiency - Operating costs for the six months ended June 30, 2024, were RMB 8.35 billion, a 4% increase from RMB 8.04 billion in the same period of 2023, mainly due to increased revenue-sharing costs[21]. - Operating expenses for the six months ended June 30, 2024, totaled RMB 4.84 billion, a decrease of 3% from RMB 4.98 billion in the same period of 2023[23]. - The company reported a significant decrease in other income, netting only RMB 26,359 thousand for the six months ended June 30, 2024, compared to RMB 530,157 thousand for the same period in 2023[39]. Future Outlook and Strategy - The company plans to enhance commercialization capabilities and integrate various value-added services to unlock more monetization potential from its content library[15]. - The company has transitioned its secondary listing on the Hong Kong Stock Exchange to a primary listing, effective October 3, 2022, enhancing its market presence[45]. Shareholder Information - The company has not established a dividend policy and does not plan to pay any cash dividends in the foreseeable future[32]. - The board of directors did not recommend any dividends for the six months ended June 30, 2023, and 2024[55]. - The company did not declare any interim dividend for the six months ended June 30, 2024[38].