Financial Performance - Total net revenues for the second quarter of 2024 were RMB6.13 billion (US$843.1 million), representing a 16% increase year over year [2][4] - Advertising revenues increased by 30% year over year to RMB2.04 billion (US$280.4 million) [2][4] - Mobile games revenues grew by 13% year over year to RMB1.01 billion (US$138.6 million) [2][4] - Gross profit reached RMB1.83 billion (US$252.3 million), a 49% increase year over year, with a gross profit margin of 29.9%, up from 23.1% in the same period last year [2][4][5] - Net loss narrowed by 61% year over year to RMB608.1 million (US$83.7 million) [2][8] - Adjusted net loss was RMB271.0 million (US$37.3 million), narrowing by 72% year over year [2][8] User Engagement - Average daily active users (DAUs) increased by 6% year over year to 102.3 million [2][3] - Monthly active users (MAUs) grew to 336 million, with daily average time spent per user increasing to 99 minutes from 94 minutes in the same period last year [3] Operational Efficiency - Operating cash flow was RMB1.75 billion (US$240.9 million), compared to negative RMB21.2 million for the same period last year [2][8] - Total operating expenses decreased by 3% year over year to RMB2.42 billion (US$332.8 million) [6] - Sales and marketing expenses increased by 13% year over year to RMB1.04 billion (US$142.5 million), primarily due to marketing for new game launches [6] Strategic Developments - The successful launch of the strategy game "San Guo: Mou Ding Tian Xia" attracted millions of players, showcasing the company's operational capabilities beyond ACG (Anime, Comic, and Games) [3] - The company aims to enhance its commercialization capabilities to unlock community value and position itself for future profitability and growth [3]

[Performance Highlights and Management Commentary](index=3&type=section&id=Q2%202024%20Highlights) The company achieved strong Q2 2024 results with 16% revenue growth, significant advertising and gaming increases, improved gross margin, and a 61% reduction in net loss, alongside healthy user growth Q2 2024 Key Financial and Operational Metrics | Metric | Q2 2024 | YoY Change | | :--- | :--- | :--- | | **Total Net Revenue** | RMB 6.127 billion | +16% | | **Advertising Revenue** | RMB 2.037 billion | +30% | | **Mobile Game Revenue** | RMB 1.007 billion | +13% | | **Gross Profit** | RMB 1.833 billion | +49% | | **Gross Margin** | 29.9% | vs. 23.1% (prior period) | | **Net Loss** | RMB 608 million | Narrowed 61% | | **Adjusted Net Loss** | RMB 271 million | Narrowed 72% | | **Operating Cash Flow** | RMB 1.751 billion | vs. outflow in prior period | | **Daily Active Users (DAU)** | 102.3 million | +6% | | **Average Daily User Time Spent** | 99 minutes | vs. 94 minutes (prior period) | - Management attributes improved monetization efficiency to community development and commercial product integration, maintaining strong advertising momentum. The successful launch of the new strategy game 'Three Kingdoms: The World Settled' demonstrates the company's operational capabilities beyond ACG games, with enhanced monetization driving profitability[13](index=13&type=chunk) - The CFO highlighted the eighth consecutive quarter of gross margin improvement, significant year-over-year narrowing of adjusted operating and net losses, and positive operating cash flow this quarter, laying a strong foundation for profitability and sustainable growth[14](index=14&type=chunk) [Detailed Financial Performance](index=4&type=section&id=Q2%202024%20Financial%20Performance) Total revenue reached **RMB 6.127 billion**, up 16% year-over-year, with advertising as the strongest segment at 30% growth, while effective cost and expense control led to a 49% increase in gross profit and a 54% reduction in operating loss [Revenue Analysis](index=4&type=section&id=Revenue%20Analysis) Total revenue grew 16% year-over-year to **RMB 6.127 billion**, driven by 30% growth in advertising, 11% in value-added services, and 13% in mobile games, while IP derivatives and other businesses saw a slight 4% decline Q2 2024 Revenue Composition | Business Segment | Amount (RMB) | YoY Change | | :--- | :--- | :--- | | Value-Added Services | RMB 2.566 billion | +11% | | Advertising | RMB 2.037 billion | +30% | | Mobile Games | RMB 1.007 billion | +13% | | IP Derivatives and Others | RMB 516 million | -4% | | **Total Net Revenue** | **RMB 6.127 billion** | **+16%** | [Cost and Expense Analysis](index=4&type=section&id=Cost%20and%20Expense%20Analysis) Operating costs increased 5% due to higher revenue-sharing, while total operating expenses decreased 3%, with R&D and G&A expenses down 15% and 10% respectively due to reduced headcount, offset by a 13% rise in sales and marketing expenses for new game promotion - **Operating Costs**: Increased **5%** year-over-year to **RMB 4.294 billion**, primarily due to higher revenue-sharing costs[15](index=15&type=chunk) - **Sales and Marketing Expenses**: Increased **13%** year-over-year to **RMB 1.036 billion**, mainly due to increased marketing for new game launches[16](index=16&type=chunk) - **General and Administrative Expenses**: Decreased **10%** year-over-year to **RMB 488 million**, primarily due to reduced headcount[18](index=18&type=chunk) - **Research and Development Expenses**: Decreased **15%** year-over-year to **RMB 895 million**, primarily due to reduced headcount[18](index=18&type=chunk) [Profit and Loss Analysis](index=4&type=section&id=Profit%20and%20Loss%20Analysis) Gross profit increased **49%** to **RMB 1.833 billion** due to strong revenue growth and effective cost control, leading to significant narrowing of both operating and net losses, with net loss down 61% to **RMB 608 million** and adjusted net loss down 72% to **RMB 271 million** Q2 2024 Profit and Loss Overview | Metric | Amount (RMB) | YoY Change | | :--- | :--- | :--- | | Gross Profit | RMB 1.833 billion | +49% | | Operating Loss | RMB 585 million | Narrowed 54% | | Adjusted Operating Loss | RMB 284 million | Narrowed 69% | | Net Loss | RMB 608 million | Narrowed 61% | | Adjusted Net Loss | RMB 271 million | Narrowed 72% | [Assets and Cash Flow](index=5&type=section&id=Assets%20and%20Cash%20Flow) As of June 30, 2024, the company held **RMB 13.912 billion** in cash, cash equivalents, time deposits, and short-term investments, with operating cash flow turning positive at **RMB 1.751 billion** for the quarter, a significant improvement from an outflow - **Cash Position**: As of June 30, 2024, cash and cash equivalents, time deposits, and short-term investments totaled **RMB 13.912 billion**[20](index=20&type=chunk) - **Operating Cash Flow**: Net cash provided by operating activities was **RMB 1.751 billion** in Q2 2024, a significant improvement from a net outflow of **RMB 21.2 million** in the same period of 2023[20](index=20&type=chunk) [Financial Statements](index=9&type=section&id=Financial%20Statements) This section presents the unaudited condensed consolidated financial statements, including statements of operations, balance sheets, cash flow statements, and GAAP to Non-GAAP reconciliations, providing a comprehensive overview of the company's Q2 2024 financial position and results [Unaudited Condensed Consolidated Statements of Operations](index=9&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) The statement of operations shows total net revenue of **RMB 6.127 billion** in Q2 2024, a 16% increase from **RMB 5.304 billion** in the prior year, with gross profit up 49% to **RMB 1.833 billion**, and net loss significantly narrowed by 61% to **RMB 608 million** from **RMB 1.548 billion** Statements of Operations Summary (For the Three Months Ended June 30, RMB thousands) | Item | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | Total Net Revenue | 6,127,144 | 5,304,199 | | Gross Profit | 1,833,201 | 1,227,534 | | Operating Loss | (585,135) | (1,277,683) | | Net Loss | (608,149) | (1,548,132) | [Unaudited Condensed Consolidated Balance Sheets](index=11&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) The balance sheet shows total assets of **RMB 31.318 billion** and total liabilities of **RMB 17.737 billion** as of June 30, 2024, with cash, cash equivalents, time deposits, and short-term investments totaling **RMB 13.912 billion**, indicating a stable financial position Balance Sheets Summary (RMB thousands) | Item | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Cash, Time Deposits, and Short-Term Investments | 13,911,929 | 15,039,777 | | Total Assets | 31,318,493 | 33,159,067 | | Total Liabilities | 17,736,790 | 18,754,800 | | Total Shareholders' Equity | 13,581,703 | 14,404,267 | [Unaudited Condensed Consolidated Cash Flow Data Summary](index=12&type=section&id=Unaudited%20Condensed%20Consolidated%20Cash%20Flow%20Data%20Summary) The cash flow statement summary indicates net cash provided by operating activities of **RMB 1.751 billion** in Q2 2024, a significant improvement from a net outflow of **RMB 21.18 million** in the prior year, demonstrating enhanced operational cash generation - Net cash provided by operating activities in Q2 2024 was **RMB 1,750,540 thousand**, a significant improvement compared to a net outflow of **RMB 21,181 thousand** in the same period of 2023[41](index=41&type=chunk) [Unaudited Reconciliations of GAAP and Non-GAAP Results](index=13&type=section&id=Unaudited%20Reconciliations%20of%20GAAP%20and%20Non-GAAP%20Results) This table details the reconciliation from GAAP metrics (e.g., operating loss, net loss) to Non-GAAP metrics, primarily excluding the impact of share-based compensation, intangible asset amortization, and fair value changes of investments, with adjusted net loss for Q2 2024 at **RMB 271 million** Net Loss to Adjusted Net Loss Reconciliation (Q2 2024, RMB thousands) | Item | Amount | | :--- | :--- | | Net Loss (GAAP) | (608,149) | | Add: Share-based compensation expenses | 259,479 | | Add: Amortization of intangible assets | 41,776 | | Add: Income tax impact | (5,407) | | Add: Loss from fair value change of investments | 41,311 | | **Adjusted Net Loss (Non-GAAP)** | **(270,990)** | [Other Information](index=6&type=section&id=Other%20Information) This section includes details on the earnings conference call, company overview, explanation of Non-GAAP financial measures, exchange rate basis, and safe harbor statement for forward-looking statements - Company management will host an earnings conference call on August 22, 2024, at 8:00 AM U.S. Eastern Time[23](index=23&type=chunk) - The company explained its use of Non-GAAP measures like adjusted operating loss and adjusted net loss, stating that excluding items such as share-based compensation helps identify underlying business trends[27](index=27&type=chunk)

Core Viewpoint - Bilibili (BILI) is experiencing a potential stock bounce, with support around the $13 region, ahead of its second-quarter earnings report [1] Group 1: Stock Performance and Analysis - BILI is currently within one standard deviation of its 126-day moving average, having remained above it 80% of the time over the past two months and within the last 10 trading days [1] - Historical data shows that after similar signals in the past three years, BILI was higher one month later once, with a gain of 11.1% [1] - The stock has had mixed post-earnings reactions over the last two years, averaging a 9.3% swing regardless of direction, while the current options market is pricing in a 14.6% move [1] Group 2: Short Interest and Market Dynamics - Short interest represents 5.1% of BILI's available float, indicating potential for an unwinding that could support the stock [2] - It would take shorts nearly three days to cover their positions based on BILI's average trading pace [2]

Investment Rating - The report assigns a "Buy" rating for the company, with a target price of $24.71 per ADS and HKD 192.56 per share [1][5][9]. Core Insights - The company is expected to achieve total revenue of RMB 61.31 billion in Q2 2024, representing a year-over-year growth of 16% and a quarter-over-quarter growth of 8%. This growth is driven by strong performance in advertising and gaming sectors [1][5]. - The gross margin is projected to reach 29.6% in Q2 2024, an increase of 6 percentage points year-over-year and 1 percentage point quarter-over-quarter [1][5]. - The launch of the game "Three Kingdoms: Strategy" has positively impacted gaming performance, with expectations for significant contributions to revenue in the second half of 2024 and into 2025 [3][5][9]. Revenue Forecast - The company anticipates total revenue growth of 20% in 2024 and 16% in 2025, reaching RMB 270 billion and RMB 312 billion, respectively [5][9]. - Advertising revenue is expected to grow by 30% in 2024 and 23% in 2025, while live streaming and value-added services (VAS) are projected to grow by 15% in both years [6][9]. - Gaming revenue is forecasted to increase by 33% in 2024 and 9% in 2025, driven by new game launches and sustained user engagement [6][9]. Profitability Outlook - The adjusted net loss for Q2 2024 is expected to be RMB 3.4 billion, with a continuous narrowing of losses compared to previous quarters [1][5]. - The report predicts that the company's gross margin will improve to 31% in 2024 and 33% in 2025, reflecting a shift towards higher-margin revenue streams [9]. - Non-GAAP net profit is projected to reach RMB -622 million in 2024 and RMB 1.549 billion in 2025, indicating a path towards profitability [9].

Investment Rating - The report maintains a "Buy" rating for the company, indicating an expected investment return exceeding 15% over the next 6-12 months [7]. Core Views - The company's fundamentals are showing marginal improvement in 2024, primarily driven by better-than-expected performance in gaming and expectations of turning profitable in Q3 [1]. - The advertising business is anticipated to become a significant growth engine, with a projected 28% year-over-year increase in revenue for Q2 2024 [1]. - The new game "Three Kingdoms: Strategizing the World" is expected to contribute significantly to revenue, with initial month revenue estimates around 7.6 billion RMB [1]. Summary by Sections Revenue Forecast - Estimated Q2 2024 revenue is projected at 6.11 billion RMB, representing a 15% year-over-year increase. Revenue breakdown includes gaming at 960 million RMB (up 8%), VAS at 2.65 billion RMB (up 15%), advertising at 2.01 billion RMB (up 28%), and e-commerce at 480 million RMB (down 11%) [1]. Profitability Outlook - Expected gross profit for Q2 2024 is 1.8 billion RMB, with a gross margin of 29.5%. The adjusted net loss is anticipated to be 340 million RMB [1]. Gaming Performance - The new game "Three Kingdoms: Strategizing the World" has shown strong initial performance, ranking in the top 5 of iOS game sales shortly after its launch. The first month revenue is estimated at approximately 0.36 million USD, translating to about 7.6 billion RMB across all channels [1]. Advertising Business - The advertising revenue is expected to grow by 28% year-over-year to 2.01 billion RMB, accounting for 33% of total revenue. The number of advertisers has increased by 50% in the first half of 2024 [1]. Financial Projections - Revenue forecasts for 2024-2026 have been slightly adjusted upwards to 26.7 billion RMB, 29.7 billion RMB, and 31.9 billion RMB respectively, reflecting a 2% increase from previous estimates [1].

Core Viewpoint - Bilibili Inc. is set to report its second quarter 2024 unaudited financial results on August 22, 2024, before U.S. market opening, highlighting its ongoing commitment to transparency and communication with investors [1]. Group 1: Financial Reporting - The earnings conference call will take place at 8:00 AM U.S. Eastern Time on August 22, 2024, allowing stakeholders to engage directly with the company's management [1]. - A live webcast of the conference call will be available on the company's investor relations website, ensuring accessibility for a wider audience [2]. Group 2: Company Overview - Bilibili is recognized as a leading video community in China, focusing on enriching the lives of young generations through diverse video content [3]. - The company has established a unique community by fostering high-quality content and emotional connections among users, which enhances the overall viewing experience [3]. - Bilibili's innovative "bullet chatting" feature allows real-time audience interaction, significantly transforming user engagement during video consumption [3].

Core Viewpoint - Bilibili Inc. is set to report its second quarter 2024 unaudited financial results on August 22, 2024, before U.S. market opening, with a conference call scheduled for the same day [1]. Group 1: Financial Reporting - The second quarter 2024 unaudited financial results will be announced on August 22, 2024 [1]. - An earnings conference call will take place at 8:00 AM U.S. Eastern Time on August 22, 2024 [1]. - Participants must register online to receive dial-in numbers and a personal PIN for the conference call [1]. Group 2: Company Overview - Bilibili is a leading video community in China, focusing on enriching the lives of young generations [3]. - The platform offers a diverse range of video content and emphasizes community engagement through features like "bullet chatting" [3]. - Bilibili aims to promote Chinese culture globally while fostering strong emotional connections among its users [3].

Investment Rating - The report assigns a "Buy" rating for the company with a target price of $20.00 or HKD 156.23, indicating a potential upside of 28.80% from the current stock price [2][6][3]. Core Insights - The company's revenue for Q1 reached RMB 5.66 billion, representing a year-on-year increase of 11.7%, slightly above market expectations. The gross margin improved to 28.3%, up 6.5 percentage points, primarily due to a higher proportion of high-margin advertising business and cost optimization [2]. - The company is expected to achieve double-digit revenue growth in the next quarter, with a slight increase in gross margin, and aims to reach breakeven in Non-GAAP operating profit by Q3 [2]. - The gaming business is anticipated to recover in the second half of the year, driven by the launch of the game "Three Kingdoms: Strategy" [2]. Financial Summary - Revenue projections for 2024-2026 are estimated at RMB 264 billion, RMB 291 billion, and RMB 309 billion, respectively, with a three-year CAGR of 11.2% [4][6]. - The company is expected to report net losses of RMB -18 million in 2024, narrowing to RMB -2 million in 2025, and achieving a profit of RMB 5 million in 2026, with net profit margins improving from -6.7% in 2024 to 1.4% in 2026 [4][6]. - The gross margin is projected to increase from 29.8% in 2024 to 32.8% in 2026, reflecting operational efficiency improvements [8]. Revenue Breakdown - The total revenue for 2022 was RMB 21.9 billion, with projections of RMB 22.5 billion in 2023, RMB 26.4 billion in 2024, RMB 29.2 billion in 2025, and RMB 30.9 billion in 2026 [5][8]. - The revenue from gaming is expected to recover, with estimates of RMB 5.2 billion in 2024 and RMB 5.6 billion in 2025 [5]. - Advertising revenue is projected to grow significantly, reaching RMB 7.96 billion in 2024 and RMB 9.29 billion in 2025 [5]. User Growth and Engagement - The company reported a 9.0% year-on-year increase in Daily Active Users (DAU) to 100 million and an 8.3% increase in Monthly Active Users (MAU) to 340 million [2]. - The number of official members grew by 15.1% year-on-year to 240 million, with paid members reaching 21.9 million [2].

证券研究报告 | 公司深度报告 2024 年 07 月 16 日 哔哩哔哩-W(09626.HK) 哔哩哔哩-W(09626.HK)首次覆盖报告:内容及用户生态繁荣带 动商业化提速,盈利可见性显著提升 | --- | --- | --- | --- | --- | --- | |--------------------|--------|--------|--------|--------|--------| | 财务指标 | 2022A | 2023A | 2024E | 2025E | 2026E | | 营业收入(百万元) | 21,899 | 22,528 | 26,993 | 30,891 | 33,992 | | 增长率 yoy(%) | 13.0 | 2.9 | 19.8 | 14.4 | 10.0 | | 归母净利润(百万元) | -7,497 | -4,822 | -1,600 | 814 | 2,828 | | 增长率 yoy(%) | | | | | | | ROE(%) | | | | | | | EPS 最新摊薄(元) | | | | | | | P/E(倍) | | | | | | ...

Investment Rating - The report initiates coverage on Bilibili-W (09626 HK) with a "Buy" rating [2] Core Views - Bilibili's content and user ecosystem are thriving, driving accelerated commercialization and significantly improved profitability visibility [2] - The company is expected to achieve adjusted operating profit breakeven by Q3 2024 and start generating profits [4][6] - Revenue is projected to grow from RMB 26 993 million in 2024E to RMB 33 992 million in 2026E, with adjusted net profit turning positive in 2025 [3][4] Financial Performance - Revenue grew 2 9% YoY in 2023 to RMB 22 528 million, with 19 8% growth expected in 2024 [3] - Net loss narrowed from RMB 7 497 million in 2022 to RMB 4 822 million in 2023, with further improvement expected [3] - ROE improved from -49 2% in 2022 to -33 5% in 2023, projected to turn positive in 2025 [3] Content Ecosystem - Bilibili has built a robust content ecosystem through its "OGV+PUGV" dual-strategy, achieving high user retention [3] - The platform has expanded from ACG content to broader entertainment and knowledge categories, with 41% of content being knowledge-related as of March 2023 [11] - Daily active UP creators increased 24% YoY in 2023, with monthly submissions reaching 21 5 million [36] Commercialization Progress - Value-added services (including live streaming and membership) grew 17% YoY in Q1 2024, becoming the largest revenue contributor [21] - Advertising revenue increased 26 56% YoY in 2023, driven by effective ad infrastructure optimization [22] - Game business is expected to rebound in 2024 with new product cycles, including "Three Kingdoms: Strategic World" [4][22] User Growth - DAU reached 102 million in Q1 2024, with DAU/MAU ratio improving to 30% [57] - User retention remains strong at over 80% for 12 months [58] - The platform continues to expand beyond its core Z-generation user base, attracting older demographics [59] Cost Efficiency - Sales and marketing expenses decreased 20% YoY in 2023, while maintaining user growth [25] - Gross margin improved from 15 04% in Q2 2022 to 28 33% in Q1 2024 [24] - Operating cash flow turned positive in 2023, reaching RMB 267 million [27] Future Outlook - The company aims to double its mobile DAU from current levels [57] - Story Mode is expected to drive further user engagement and advertising revenue growth [44][52] - Game business is projected to return to growth in Q3 2024 with new product launches [22]