BILIBILI(09626)2023-04-27 10:23Financial Performance - Net revenue increased by 13.0% to RMB 21,899,167 thousand in 2022 compared to RMB 19,383,684 thousand in 2021[5] - Gross profit decreased by 4.8% to RMB 3,849,295 thousand in 2022 from RMB 4,043,147 thousand in 2021[5] - Net loss increased by 10.3% to RMB 7,507,653 thousand in 2022 from RMB 6,808,739 thousand in 2021[5] - Adjusted net loss increased by 21.9% to RMB 6,702,373 thousand in 2022 from RMB 5,497,573 thousand in 2021[5] - Total assets decreased by 19.6% to RMB 41,830,570 thousand in 2022 from RMB 52,053,151 thousand in 2021[6] - Total liabilities decreased by 12.3% to RMB 26,590,983 thousand in 2022 from RMB 30,337,085 thousand in 2021[6] - Total equity decreased by 29.8% to RMB 15,239,587 thousand in 2022 from RMB 21,716,066 thousand in 2021[6] - Net revenue for 2022 was RMB 21.9 billion, a 13.0% increase compared to RMB 19.4 billion in 2021[11] - Gross margin improved to 20.3% in Q4 2022, up from 19.0% in Q4 2021[11] - Net revenue increased by 13.0% to RMB 21.9 billion in 2022 compared to RMB 19.4 billion in 2021[23] - Gross profit decreased to RMB 3.8 billion in 2022 from RMB 4.0 billion in 2021[27] - Net loss widened to RMB 7.5 billion in 2022 from RMB 6.8 billion in 2021[29] - Cash and cash equivalents decreased by 35.2% to RMB 19.6 billion at the end of 2022, mainly due to the repurchase of convertible bonds and ADS[30] - Total revenue from the top five customers accounted for less than 10% of the company's total revenue in the fiscal year ending December 31, 2022[76] - Total procurement from the top five suppliers accounted for less than 15% of the company's total operating costs and expenses in the fiscal year ending December 31, 2022[76] - Cash and cash equivalents increased to RMB 10,172,584,000 (USD 1,474,886,000) in 2022 from RMB 7,523,108,000 in 2021[198] - Short-term investments decreased significantly to RMB 4,623,452,000 (USD 670,338,000) in 2022 from RMB 15,060,722,000 in 2021[198] - Total current assets decreased to RMB 24,452,888,000 (USD 3,545,336,000) in 2022 from RMB 36,446,856,000 in 2021[198] - Total non-current assets increased to RMB 17,377,682,000 (USD 2,519,527,000) in 2022 from RMB 15,606,295,000 in 2021[198] - Total assets decreased to RMB 41,830,570,000 (USD 6,064,863,000) in 2022 from RMB 52,053,151,000 in 2021[198] - Total liabilities decreased from RMB 30,337.1 million in 2021 to RMB 26,590.98 million in 2022, a decrease of 12.3%[199] - Current liabilities increased from RMB 12,071.01 million in 2021 to RMB 17,093.4 million in 2022, an increase of 41.6%[199] - Non-current liabilities decreased from RMB 18,266.07 million in 2021 to RMB 9,497.58 million in 2022, a decrease of 48%[199] - Total equity decreased from RMB 21,716.07 million in 2021 to RMB 15,239.59 million in 2022, a decrease of 29.8%[200] - Accumulated losses increased from RMB (13,971.3) million in 2021 to RMB (21,479.87) million in 2022, an increase of 53.7%[200] - Capital reserve increased from RMB 35,929.96 million in 2021 to RMB 36,623.16 million in 2022, an increase of 1.9%[200] - Total liabilities and equity decreased from RMB 52,053.15 million in 2021 to RMB 41,830.57 million in 2022, a decrease of 19.6%[200] User Metrics and Engagement - Monthly active users (MAU) increased by 25.9% year-over-year to 314.5 million in 2022[11] - Daily active users (DAU) grew by 29.6% year-over-year to 86.5 million in 2022[11] - Average daily time spent per user on the mobile app reached 94 minutes, driving a 46.7% year-over-year increase in total user time spent on the platform[11] - Story Mode daily video views increased by over 300% year-over-year in 2022[12] - Monthly active content creators grew by 45.2% year-over-year to 3.7 million in 2022[13] Revenue Breakdown - Advertising revenue reached RMB 5.1 billion in 2022, a 12.0% increase compared to 2021[17] - Mobile game revenue was RMB 5.0 billion in 2022, slightly down from RMB 5.1 billion in 2021[18] - Mobile game revenue decreased by 1.4% to RMB 5.0 billion in 2022 due to the lack of new popular exclusive games[23] - Value-added service revenue increased by 25.7% to RMB 8.7 billion in 2022, driven by increased monetization efforts and growth in paying users[24] - Advertising revenue increased by 12.0% to RMB 5.1 billion in 2022, attributed to improved brand recognition and advertising efficiency[25] - E-commerce and other revenue increased by 9.2% to RMB 3.1 billion in 2022, mainly due to increased revenue from sublicensed e-sports rights[25] - The company's mobile game service revenue for the year ended December 31, 2022, was RMB 5,021.3 million, with revenue recognized over the estimated average play period of paying players, typically ranging from 2 to 9 months[192] Operating Costs and Expenses - Operating costs increased by 17.7% to RMB 18.0 billion in 2022, primarily due to higher revenue-sharing and content costs[26] - Operating expenses increased by 16.6% to RMB 12.2 billion in 2022, with R&D expenses surging by 67.8% to RMB 4.8 billion[27][28] - Share-based compensation expenses increased to RMB 1,040,683 thousand in 2022 from RMB 999,817 thousand in 2021[9] - Amortization expenses related to intangible assets acquired through business acquisitions increased to RMB 192,637 thousand in 2022 from RMB 113,405 thousand in 2021[9] - Expenses related to the termination of certain game projects amounted to RMB 525,762 thousand in 2022[9] Corporate Governance and Structure - The company is dually listed on NASDAQ and the Hong Kong Stock Exchange[37] - The company's main business is investment holding, with subsidiaries primarily engaged in providing online entertainment services to users in China[38] - The company operates through a Cayman Islands holding company with Chinese subsidiaries and variable interest entities (VIEs), but does not hold equity in the VIEs or their subsidiaries. This structure may face legal risks if deemed non-compliant with Chinese regulations, potentially leading to severe penalties or loss of business interests[43] - Chinese government regulations and interpretations could significantly impact the company's ability to issue securities or attract foreign investment, potentially causing a substantial decline in the value of its securities[44] - The company faces uncertainties related to antitrust regulations, including the "Platform Economy Anti-Monopoly Guidelines," which may affect its business operations[45] - PCAOB's inability to inspect the company's auditors in China could lead to the delisting of its American Depositary Shares (ADS) under the HFCAA, negatively impacting investor value[45] - The company's overseas securities issuance may require approval from Chinese regulatory authorities, with no guarantee of obtaining such approvals or the timeline for completion[45] - Content regulation and censorship in China could adversely affect the company's business and expose it to legal liabilities for content published on its platform[45] - The company's securities are subject to significant price volatility, regardless of operational performance, which may result in substantial losses for investors[45] - Foreign investors are prohibited from holding equity in entities engaged in internet audio-visual program services, broadcasting, and related businesses, as per China's Negative List (2021)[48] - The company's subsidiaries, such as Shanghai Kuanyu, hold licenses for internet audio-visual and broadcasting services, which are restricted from foreign investment under Chinese regulations[49] - Variable Interest Entities (VIEs) revenue reached RMB 16,074.7 million, accounting for approximately 73.4% of the group's total revenue[51] - The VIEs structure is designed to minimize potential conflicts with Chinese laws and regulations regarding foreign investment in internet and related industries[51] - The company relies on contractual arrangements with VIEs and their shareholders to conduct business in China, which may not be as effective as direct equity ownership[51] - The VIEs also operate auxiliary businesses, including e-commerce platform operations through "Member Purchase" and ACG-related product development and sales[51] - The company faces risks related to potential changes in Chinese laws or interpretations that could impact the VIEs structure and operations[51] - The VIEs' revenue increased from RMB 14,442.4 million in 2021 to RMB 16,074.7 million in 2022, with a slight decrease in the percentage of total group revenue from 74.5% to 73.4%[51] - The company's contractual arrangements with VIEs may be subject to scrutiny by Chinese tax authorities, potentially impacting financial conditions[52] - The VIEs' shareholders and the company may have potential conflicts of interest, which could adversely affect the business[53] - The company may depend on dividends from Chinese subsidiaries to meet cash and financing needs, which could be restricted[53] - The impact of the Foreign Investment Law on the company's current corporate structure and operational feasibility remains uncertain[53] - Bilibili's exclusive business cooperation agreement with Shanghai Kuanyu ensures that all intellectual property developed by consolidated affiliated entities is exclusively owned by Shanghai HuanDian, securing economic benefits for the group[56] - The service fee under the exclusive business cooperation agreement is adjusted based on factors such as service complexity, time required, content, commercial value, and market prices of similar services[55] - Shanghai Kuanyu is restricted from making significant transactions, including asset sales, mergers, acquisitions, or reorganizations, without prior written approval from Shanghai HuanDian[55] - The exclusive purchase right agreement grants Shanghai HuanDian the right to acquire Shanghai Kuanyu's equity or assets at the minimum price allowed by Chinese laws, potentially at no cost or nominal price[57] - Shanghai Kuanyu is required to maintain its asset value and notify Shanghai HuanDian immediately in case of any disputes, litigation, or administrative proceedings affecting its assets or business[58] - The exclusive purchase right agreement is effective indefinitely from December 23, 2020, and can only be terminated by Shanghai HuanDian under specific conditions[59] - Shanghai Kuanyu must obtain prior written consent from Shanghai HuanDian for any significant contracts exceeding RMB 1 million, except those in the normal course of business[58] - The exclusive business cooperation agreement and exclusive purchase right agreement are designed to ensure that economic benefits from Shanghai Kuanyu's operations flow into Shanghai HuanDian and ultimately the group[56][57] - Chen Rui pledged all his equity in Shanghai Kuanyu to Shanghai HuanDian as collateral to secure contractual obligations and unpaid debts[60] - The equity pledge agreement ensures Shanghai HuanDian's rights to dividends and other income from the pledged equity, and allows Shanghai HuanDian to take custody of the equity in case of default[61] - Chen Rui granted Shanghai HuanDian an irrevocable power of attorney to exercise his shareholder rights in Shanghai Kuanyu, including voting and appointing directors[62] Shareholder and Voting Rights - The company's different voting rights beneficiaries collectively held 83,715,114 Class Y ordinary shares, representing 72.9% of the voting rights for non-reserved matters as of December 31, 2022[73] - Chen Rui, through Vanship Limited, held 49,299,006 Class Y ordinary shares and 525,525 Class Z ordinary shares, representing 43.0% of the company's voting rights as of December 31, 2022[73] - Li Ni, through Saber Lily Limited, held 7,200,000 Class Y ordinary shares and 908,300 Class Z ordinary shares, representing 6.4% of the company's voting rights as of December 31, 2022[73] - Xu Yi, through Kami Sama Limited, held 27,216,108 Class Y ordinary shares and 151,000 Class Z ordinary shares, representing 23.7% of the company's voting rights as of December 31, 2022[73] - Chen Rui holds 58.89% of Y-class ordinary shares and 1.61% of Z-class ordinary shares through Vanship Limited[145] - Li Ni holds 8.60% of Y-class ordinary shares and 0.64% of Z-class ordinary shares through Saber Lily Limited[145] - Xu Yi holds 32.51% of Y-class ordinary shares and 0.05% of Z-class ordinary shares through Kami Sama Limited[145] - As of December 31, 2022, the company had issued a total of 83,715,114 Y-class ordinary shares and 310,864,471 Z-class ordinary shares[146] - Chen Rui holds a 25.04% beneficial interest in Shanghai Bilibili E-Sports Information Technology Co., Ltd[147] - Li Ni holds a 6.87% beneficial interest in Shanghai Bilibili E-Sports Information Technology Co., Ltd[147] - Xu Yi holds a 3.44% beneficial interest in Shanghai Bilibili E-Sports Information Technology Co., Ltd[147] - Vanship Limited holds 49,299,006 Y-class shares, representing 58.89% of the total Y-class shares[149] - Kami Sama Limited holds 27,216,108 Y-class shares, representing 32.51% of the total Y-class shares[149] - Saber Lily Limited holds 7,200,000 Y-class shares, representing 8.60% of the total Y-class shares[149] - Tencent Holdings Limited holds 43,749,518 Z-class shares, representing 13.84% of the total Z-class shares[149] - Tencent Mobility Limited holds 32,795,161 Z-class shares, representing 10.37% of the total Z-class shares[149] - Alibaba Group Holding Limited holds 30,845,657 Z-class shares, representing 9.92% of the total Z-class shares[149] - JPMorgan Chase & Co. holds 14,312,129 Z-class shares (long position), representing 4.53% of the total Z-class shares[152] - JPMorgan Chase & Co. holds 13,154,062 Z-class shares (short position), representing 4.16% of the total Z-class shares[152] - Brown Brothers Harriman & Co. holds 21,754,203 Z-class shares (long position), representing 7.00% of the total Z-class shares[152] - Brown Brothers Harriman & Co. holds 21,754,203 Z-class shares (available for lending), representing 7.00% of the total Z-class shares[152] Share Incentive Plans - The company issued 7,796,003 Class Z ordinary shares under the 2018 Share Incentive Plan, representing approximately 2.0% of the weighted average number of issued shares[156] - The maximum number of Class Z ordinary shares that can be issued under the Global Share Plan is 19,880,315 shares[158] - As of January 1, 2022, 810,905 Class Z ordinary shares were available for grant under the Global Share Plan, but no shares were granted during the reporting period[158] - As of December 31, 2022, 1,071,650 Class Z ordinary shares were available for issuance under the Global Share Plan, representing approximately 0.2% of the total issued Class Z ordinary shares[159] - Under the 2018 Share Incentive Plan, the maximum number of Class Z ordinary shares that can be issued is 30,673,710 shares, representing 10% of the total issued Class Z ordinary shares as of the effective date of the primary listing conversion[169] - As of January 1, 2022, 1,775,313 Class Z ordinary shares were available for grant under the 2018 Share Incentive Plan, and 7,796,003 shares were granted during the reporting period[169] - As of December 31, 2022, 28,706,326 Class Z ordinary shares were available for grant under the 2018 Share Incentive Plan[169] - During the reporting period, 1,821,824 Class Z ordinary share options were exercised by employee participants under the Global Share Plan[166] - As of December 31, 2022, 1,059,150 Class Z ordinary share options remained unexercised by employee participants under the Global Share Plan[166] - The Global Share Plan was terminated on the effective date of the primary listing conversion, and no further options will be granted under the plan[166] - The number of Z-class ordinary shares available for issuance under the 2018 Share Incentive Plan increased from 19,295,213 shares on January 1, 2022, to 22,806,162 shares on December 31, 2022, and further to 26,235,609 shares as of the latest practicable date, representing approximately 8.0% of the total issued Z-class ordinary shares[170] - During the reporting