Investment Rating - The report maintains a "Buy" rating for the company [5][3] Core Insights - The company's total revenue for Q1 2024 reached 5.665 billion, representing a year-over-year increase of 11.74% but a quarter-over-quarter decrease of 10.78%. The gross margin for Q1 2024 was 28.3%, up 6.56% year-over-year and 2.20% quarter-over-quarter. Non-GAAP net profit attributable to the parent company was -440 million, a decrease of 57.25% year-over-year and 20.84% quarter-over-quarter, indicating a continued reduction in losses [2][3] - Advertising revenue for Q1 2024 was 1.667 billion, up 31.20% year-over-year but down 13.51% quarter-over-quarter. This segment's revenue share increased from 25% in the same period last year to 29%, driven by user growth and new technology applications [2] - The live streaming and value-added services (VAS) revenue for Q1 2024 was 2.5 billion, reflecting a year-over-year increase of 17.28% but a quarter-over-quarter decrease of 11.49%. The company expects Q2 revenue to reach 2.6 billion, a 15% year-over-year increase and a 5% quarter-over-quarter increase [2][3] Financial Forecasts - The company projects revenues of 25.711 billion, 28.680 billion, and 30.771 billion for the years 2024, 2025, and 2026 respectively. The previous forecasts were slightly adjusted downwards due to lower expectations for derivative products and other business segments [3][9] - The report anticipates that the company's non-GAAP operating profit will turn positive by Q3 2024, with expectations of a significant recovery in profitability in the coming years [3][9] Valuation - The target price for the company's stock is set at 154.08 HKD, based on an adjusted average price-to-sales ratio of 2.3x for comparable companies in 2024 [3][10]

Investment Rating - The report maintains a "Buy" rating for the company [1][4] - The market price is HKD 119.80, with a sector rating of outperforming the market [1] Core Views - The company's revenue for Q1 2024 reached RMB 5.665 billion, a year-on-year increase of 12%, while the adjusted net loss narrowed by 57% to RMB 440 million [4] - Advertising revenue grew significantly, with a 31% year-on-year increase to RMB 1.669 billion, driven by enhanced advertising inventory and algorithm efficiency [4] - The company is set to launch a new mobile game, "Three Kingdoms: Strategize the World," in June, which is expected to boost revenue [4] - Gross margin improved for seven consecutive quarters, reaching 28.3%, up 6.6 percentage points year-on-year [4] Financial Summary - The company’s total market capitalization is approximately HKD 50.47 billion [3] - The average daily trading volume over the past three months is HKD 466.36 million [3] - The number of shares issued is 421.26 million, with 337.55 million shares in circulation [3] Revenue and Profit Forecast - Projected revenue growth rates for the upcoming years are 13% for 2024, 15% for 2025, and 14% for 2026 [5] - Non-GAAP net profit is expected to improve from a loss of RMB 579 million in 2024 to a profit of RMB 1.21 billion in 2025 [5] - The company anticipates achieving profitability in Q3 2024 [4] User Engagement Metrics - Daily active users (DAU) and monthly active users (MAU) reached 102 million and 342 million, respectively, with daily usage time averaging 105 minutes [4] - Video views per day increased by 22% year-on-year, reaching 5 billion [4]

Investment Rating - The report maintains a "Recommended" rating for the company [2] Core Views - The company reported a significant narrowing of losses in Q1 2024, with revenue reaching 5.665 billion yuan, a year-on-year increase of 11.74%. The net profit attributable to shareholders was a loss of 749 million yuan, with an adjusted net loss of 456 million yuan, showing a quarter-on-quarter decrease of 17.98% and a year-on-year decrease of 55.77% [2] - The average daily usage time reached a new high, with active community engagement remaining stable. In Q1 2024, the daily active users reached 102 million (YoY +9%), and monthly active users reached 342 million (YoY +8%), with an average daily usage time of 105 minutes [2] - The value-added services business showed steady operation, while the advertising business continued to grow significantly. In Q1 2024, the revenue from value-added services was 2.529 billion yuan, up 17.28% year-on-year, and advertising revenue was 1.669 billion yuan, up 31.20% year-on-year [2] - The gaming business faced challenges, with mobile game revenue declining by 13.15% year-on-year to 983 million yuan. The company is focusing on the performance of new game launches, with a strategy game set to be released on June 13, 2024 [2] - The company is expected to maintain healthy community growth and diversify its business. Revenue growth rates for 2024-2026 are projected at 11.23%, 13.07%, and 10.35%, reaching 25.059 billion yuan, 28.334 billion yuan, and 31.265 billion yuan respectively [2][3] Financial Summary - For 2024, the company is projected to have a revenue of 25.059 billion yuan, with a growth rate of 11.23%. The net profit is expected to be a loss of 1.925 billion yuan, with a profit growth rate of 60.08% [3][7] - The gross margin is expected to improve from 24.16% in 2023 to 29.77% in 2024, while the net margin is projected to improve from -21.41% to -7.68% [3][7] - The earnings per share (EPS) is projected to improve from -11.67 yuan in 2023 to -4.57 yuan in 2024, with a price-to-earnings (P/E) ratio expected to be 75.13 in 2026 [3][7]

Investment Rating - The report maintains a "Buy" rating for Bilibili (9626.HK) [2] Core Insights - The company reported a significant narrowing of losses in Q1 2024, with total revenue reaching 5.665 billion yuan, a year-on-year increase of 11.74%. The net loss attributable to shareholders was 749 million yuan, with an adjusted net loss of 456 million yuan, showing a quarter-on-quarter decrease of 17.98% and a year-on-year decrease of 55.77% [3] - Daily active users reached a record high of 102 million, with monthly active users at 342 million, reflecting a year-on-year growth of 9% and 8% respectively. The average daily usage time was 105 minutes, indicating strong user engagement and community recognition [3] - The value-added services segment generated revenue of 2.529 billion yuan, up 17.28% year-on-year, while advertising revenue increased by 31.20% to 1.669 billion yuan, driven by new advertising scenarios and the upcoming "618" shopping festival [3] - Mobile gaming revenue declined by 13.15% to 983 million yuan, attributed to the natural decline of older games. A new strategy game is set to launch in June 2024, which is expected to boost mobile gaming revenue [3] - The report suggests that Bilibili is on a growth trajectory, with expected revenue growth rates of 11.23%, 13.07%, and 10.35% for 2024-2026, reaching 25.059 billion yuan, 28.334 billion yuan, and 31.265 billion yuan respectively [3][4] Financial Forecast Summary - Revenue (in million yuan) for 2024E is projected at 25,059, with a growth rate of 11.23% - Net profit (in million yuan) for 2024E is forecasted at -1,925, with a profit growth rate of 60.08% - Gross margin is expected to improve to 29.77% in 2024E, up from 24.16% in 2023A [4][8]

Investment Rating - The report maintains a **Buy** rating for Bilibili (BILI US) with a target price of **$20.50** per ADS, implying a 49.2% upside from the current price [2][5] Core Views - Bilibili reported **Q1 revenue growth of 12% YoY** to RMB 5.67 billion, in line with expectations, while adjusted net loss narrowed by **56% YoY** to RMB 456 million, better than expected due to stronger-than-expected GPM expansion [2] - The company is on track to achieve **non-GAAP operating breakeven in Q3 2024**, supported by robust GPM expansion and efficiency improvements [2][3] - FY24 adjusted net loss forecast has been revised down to **RMB 710 million** from RMB 896 million, reflecting improved operating leverage and efficiency gains [2] Revenue Breakdown - **Advertising revenue** grew **31% YoY** to RMB 1.67 billion in Q1, driven by strong performance-based advertising growth (over 50% YoY). Q2 advertising revenue is expected to grow **27% YoY** [3] - **VAS revenue** increased **17% YoY** to RMB 2.53 billion in Q1, supported by resilient live streaming and innovative VAS services. Q2 VAS revenue is expected to grow **16% YoY** [3] - **Mobile gaming revenue** declined **13% YoY** to RMB 983 million in Q1 but is expected to grow **5% YoY** in Q2, driven by strong performance of legacy games and new game launches [3] User and Ecosystem Growth - Average DAU grew **9% YoY** to 102.4 million in Q1, with average daily time spent increasing **9% YoY** to 105 minutes [3] - Bilibili expanded collaborations with e-commerce platforms, with management expecting **over 30% YoY growth** in total e-commerce advertising budgets during the 618 shopping festival, which is expected to drive Q2 advertising revenue growth [3] Profitability and Margins - Gross margin expanded **6.6 ppts YoY** and **2.2 ppts QoQ** to **28.3%** in Q1, driven by favorable revenue mix shifts and effective cost control. Q2 gross margin is expected to further improve to **29.4%** [3] - Adjusted net loss margin improved **12.5 ppts YoY** to **-7.8%** in Q1, with the company on track to achieve non-GAAP operating breakeven in Q3 2024 [3] Financial Forecasts - FY24 revenue is forecasted at **RMB 25.49 billion**, with gross profit expected to reach **RMB 7.64 billion** (30.0% gross margin). Adjusted net loss is projected at **RMB 710 million** [9] - FY25 revenue is expected to grow to **RMB 27.66 billion**, with gross profit reaching **RMB 8.99 billion** (32.5% gross margin). Adjusted net profit is forecasted at **RMB 1.16 billion** [9] SOTP Valuation - The **SOTP-derived target price of $20.50** includes: - **Advertising business** valued at $8.5 (41.3% of total valuation), based on 15x 2024E PE [11] - **VAS business** valued at $7.5 (36.7% of total valuation), based on 2.0x 2024E PS [11] - **Mobile gaming business** valued at $4.3 (20.8% of total valuation), based on 15x 2024E PE [11] Peer Comparison - Bilibili's valuation multiples are compared to peers in online gaming and advertising, with average PE multiples of **18x** for online gaming and **15x** for online advertising [12] - In the online video segment, Bilibili's PS multiple is compared to peers like iQiyi and Mango Excellent Media, with average PS multiples of **2.0x** for FY24E and **1.8x** for FY25E [13]

Investment Rating - Maintain BUY rating with a target price of US$20.50, implying a 49.2% upside from the current price of US$13.74 [4][2]. Core Insights - Bilibili reported a 12% year-over-year increase in total revenue to RMB5.67 billion in 1Q24, aligning with estimates, while adjusted net loss narrowed by 56% year-over-year to RMB456 million, outperforming expectations [2]. - The company remains on track to achieve non-GAAP operating breakeven in 3Q24, supported by gross margin expansion and operational efficiency improvements [2]. - Advertising revenue surged by 31% year-over-year to RMB1.67 billion, driven by strong performance-based ads, with expectations for continued growth [2]. - Value-added services (VAS) revenue grew by 17% year-over-year to RMB2.53 billion, bolstered by live-streaming and innovative services [2]. - Mobile games revenue declined by 13% year-over-year to RMB983 million, but a recovery of 5% year-over-year is anticipated in 2Q24 due to new game launches [2]. Revenue and Profitability Forecasts - Revenue projections for FY24E are set at RMB25.49 billion, with adjusted net loss expected to narrow to RMB710 million [3][7]. - Gross margin is forecasted to improve to 30.0% in FY24E, with operating margin expected to reach -8.1% [7][12]. - Adjusted net profit is projected to turn positive by FY25E, reaching RMB1.16 billion [3][12]. User and Ecosystem Development - Average daily active users (DAUs) increased by 9% year-over-year to 102.4 million, with average daily time spent on the platform rising to 105 minutes [2]. - The e-commerce ecosystem is expanding, with management expecting a 30% year-over-year increase in total e-commerce ad budgets during the 618 shopping festival [2]. Valuation Breakdown - The target price of US$20.50 is derived from a sum-of-the-parts (SOTP) valuation, with contributions from advertising (US$8.5), VAS (US$7.5), and mobile games (US$4.3) [8][9].

Financial Data and Key Metrics - Total revenues for Q1 2024 reached RMB5.7 billion, up 12% year-over-year [6] - Advertising revenue grew by 31% year-over-year to RMB1.7 billion, while VAS revenue increased by 17% to RMB2.5 billion [6][20] - Gross profit rose 45% year-over-year to RMB1.6 billion, with gross profit margin improving to 28.3% from 21.8% in Q1 2023 [6][24] - Adjusted operating loss and adjusted net loss narrowed by 52% and 56% year-over-year, respectively [7][24] - Operating cash flow for Q1 was RMB638 million, demonstrating strong financial health [7][25] Business Line Performance - Advertising business saw significant growth, driven by performance-based ads, which increased over 50% year-over-year [16][29] - VAS business growth was fueled by live broadcasting, with premium membership remaining steady at 21.9 million [20] - Game business generated RMB983 million in revenue, with new game launches like *San Guo: Mou Ding Tian Xia* expected to drive future growth [21][49] Market and User Engagement - DAUs increased by 9% year-over-year to 102 million, while MAUs grew by 8% to 341.5 million [8] - Average daily time spent on the platform reached a record 105 minutes, up from 96 minutes in Q1 2023 [8][13] - AI-related content saw significant growth, with daily active content creators and video views increasing by over 60% and 80% year-over-year, respectively [11] Strategic Direction and Industry Competition - The company is focusing on enhancing commercialization capabilities, particularly in high-margin revenue streams like advertising and VAS [9][16] - AI-driven tools are being developed to improve user experience, content creation, and ad targeting [14][15] - The company is expanding its game portfolio, with new titles like *San Guo: Mou Ding Tian Xia* and *Heaven Burns Red* expected to attract a broader gamer base [21][49] Management Commentary on Operating Environment and Future Outlook - Management expects to achieve positive non-GAAP operating profit in Q3 2024, driven by sustained revenue growth and margin improvement [25][63] - The company remains confident in maintaining high growth rates for its advertising business, with expectations of over 30% growth during the June 18th shopping festival [36][40] Other Important Information - The company completed a repurchase offer for its April 2026 notes, reducing its outstanding convertible bonds to $433 million [26] - ESG initiatives were highlighted, with the company publishing its 2023 annual ESG report, focusing on technological innovation and social welfare [22] Q&A Session Summary Question: Key drivers of advertising growth and outlook for Q2 2024 - Advertising growth was driven by increased ad inventory, improved ad placement tools, and AI-driven ad efficiency [29][30][31] - The company expects over 30% growth during the June 18th shopping festival, with brand advertising revenue projected to increase by 40% year-over-year [36][37] Question: Game business outlook and expectations for *San Guo: Mou Ding Tian Xia* - The company aims to stabilize legacy games while exploring new opportunities in the gaming market [43][44] - *San Guo: Mou Ding Tian Xia* has over 2 million pre-registrations and is expected to perform well upon its June 13th launch [49][50] Question: User engagement drivers and future content categories - Strong user engagement was driven by content categories like knowledge, ACG, and tech, with emerging categories like baby and maternity showing rapid growth [55][56] - The company plans to continue enhancing its content offerings to sustain user growth and engagement [58] Question: Cost control and margin outlook - Cost control efforts led to a 2% year-over-year increase in cost of revenue, while gross profit margin improved to 28.3% [24][61] - The company expects gross profit margin to reach 30% in Q3 2024, with non-GAAP operating breakeven anticipated [63] Question: Prospects of community-based content payment business - The company has nearly 22 million premium members, with 80% on long-term subscription plans [67] - Value-added services like premium courses and fan charging videos are growing rapidly, contributing close to RMB1 billion in revenue in Q1 [69][70]

Company Performance - Bilibili reported a quarterly loss of $0.15 per share, better than the Zacks Consensus Estimate of a loss of $0.17, and an improvement from a loss of $0.37 per share a year ago, indicating an earnings surprise of 11.76% [1] - The company generated revenues of $791.16 million for the quarter ended March 2024, surpassing the Zacks Consensus Estimate by 2.08% and showing an increase from $740.92 million in the same quarter last year [1] - Over the last four quarters, Bilibili has exceeded consensus EPS estimates two times and topped consensus revenue estimates three times [1] Future Outlook - The current consensus EPS estimate for the upcoming quarter is -$0.09 on revenues of $830 million, while for the current fiscal year, it is -$0.17 on revenues of $3.48 billion [4] - The estimate revisions trend for Bilibili is currently unfavorable, resulting in a Zacks Rank 4 (Sell), suggesting that the shares are expected to underperform the market in the near future [4] - The sustainability of the stock's price movement will largely depend on management's commentary during the earnings call [2] Industry Context - The Internet - Services industry, to which Bilibili belongs, is currently ranked in the top 27% of over 250 Zacks industries, indicating a favorable industry outlook [5] - Empirical research shows that the top 50% of Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1, suggesting potential for growth within the industry [5]

Operational Highlights - Bilibili's DAUs reached 102 million in 24Q1[4], a 2.0x increase compared to 20Q1[6] - Bilibili's MAUs reached 341 million in 24Q1[4] - Average daily time spent per user is 105 minutes[4] Financial Performance - Total net revenues reached RMB 5665 million in 24Q1, a 12% YoY increase[67] - Value-added services revenue was RMB 2529 million in 24Q1, a 17% YoY increase[67] - Advertising revenue was RMB 1669 million in 24Q1, a 31% YoY increase[67] - Mobile game revenue was RMB 983 million in 24Q1, a 13% YoY decrease[67] - Gross profit increased by 45% YoY to RMB 1605 million in 24Q1[67] - Net loss decreased by 21% YoY to RMB 765 million in 24Q1[67] - Adjusted net loss decreased by 56% YoY to RMB 456 million in 24Q1[67]

Financial Performance - Total net revenue reached RMB 5.665 billion (USD 785 million), an increase of 12% year-over-year[6] - Advertising revenue was RMB 1.669 billion (USD 231 million), up 31% year-over-year[6] - Value-added services revenue amounted to RMB 2.529 billion (USD 350 million), a 17% increase year-over-year[6] - Gross profit was RMB 1.605 billion (USD 222 million), representing a 45% year-over-year increase, with a gross margin of 28.3%, up from 21.8% in the same period last year[6] - Net loss was RMB 765 million (USD 106 million), compared to a net loss of RMB 630 million in the same period last year[6] - Adjusted net loss narrowed by 56% to RMB 456 million (USD 63.1 million) year-over-year[6] - Operating cash flow for Q1 2024 was RMB 638 million (USD 88.3 million), compared to an outflow of RMB 630 million in the same period last year[6] - The adjusted operating loss narrowed by 52% year-over-year to RMB 512 million (USD 70.9 million)[9] - The net loss for the three months ended March 31, 2024, was RMB 764,631 thousand, an improvement from a net loss of RMB 1,296,690 thousand for the same period in 2023[21] - Adjusted operating loss for the three months ended March 31, 2024, was RMB 512,234 thousand, compared to RMB 1,065,776 thousand for the same period in 2023, indicating a reduction of approximately 52.1%[21] User Engagement - Daily active users (DAUs) reached 102.4 million, a 9% increase year-over-year[6] - Monthly active users (MAUs) hit a record high of 341.5 million, up 8% year-over-year[6] - Average daily usage time per user reached 105 minutes, marking a historical high[6] Revenue Breakdown - Mobile games revenue decreased by 13% year-over-year to RMB 983 million (USD 136 million), primarily due to declining revenue from several older games[8] - Value-added services revenue reached RMB 2.529 billion (USD 350 million), up 17% year-over-year, driven by growth in live streaming and value-added services[8] - Advertising revenue increased by 31% year-over-year to RMB 1.669 billion (USD 231 million), attributed to improved advertising product optimization and efficiency[8] Operating Expenses and Cash Flow - Operating expenses totaled RMB 2.424 billion (USD 336 million), a decrease of 2% year-over-year[9] - Cash and cash equivalents, along with short-term investments, amounted to RMB 12.922 billion (USD 1.790 billion) as of March 31, 2024[9] - The total current assets increased to RMB 18,727,039 thousand as of March 31, 2024, compared to RMB 16,127,496 thousand as of December 31, 2023, reflecting a growth of about 16.2%[19] - The total liabilities increased to RMB 18,754,800 thousand as of March 31, 2024, from RMB 16,342,539 thousand as of December 31, 2023, marking an increase of about 14.8%[19] - The total assets rose to RMB 33,159,067 thousand as of March 31, 2024, compared to RMB 30,249,258 thousand as of December 31, 2023, representing an increase of approximately 9.9%[19] Shareholder Information - The company repurchased convertible preferred notes totaling USD 429 million (RMB 3.046 billion) in March 2024[10] - Basic net loss per share for the quarter was RMB 1.80, an improvement from RMB 3.13 in the previous quarter[17] - The weighted average number of ordinary shares outstanding for the quarter was 415,274,340, slightly increasing from 414,793,013 in the previous quarter[17] - The weighted average number of ordinary shares (basic) for the three months ended March 31, 2024, was 415,274,340, slightly increasing from 410,564,084 in the same period of 2023[21] Future Outlook - The company plans to hold an earnings conference call on May 23, 2024, to discuss Q1 2024 results[11]