Summary of Bilibili Inc. (BILI) Conference Call Company Overview - **Company**: Bilibili Inc. (BILI) - **Market Cap**: $10.0 billion - **Enterprise Value**: $7.3 billion - **Industry**: Games, Entertainment & Healthcare Tech Key Points Advertising Outlook - Bilibili's advertising growth is expected to be robust, with a projected **20% year-over-year growth** for 2H25, driven by: - Increased ad inventory and higher ad load due to growing user traffic [2][25] - An upward trajectory in effective cost per mille (eCPM) supported by improved algorithms and a broader client base [2][25] - The company is refining its ad infrastructure, indicating ample room for improvement in monetization [2] Game Pipeline and Approvals - The near-term game outlook is cautious, with guidance for 2H25 indicating a potential **15% to high-teens percent decline** in game revenue year-over-year due to a tough comparison base from the previous year [3][22] - Bilibili received approvals for two games, **Trickcal RE:VIVE** and **Escape from Duckov**, which are expected to enhance visibility for its game pipeline [3][24] - The casual game **Sanguo: Ncard** is anticipated to launch by the end of 2025 or early 2026, contributing to future growth [3][27] Financial Estimates and Adjustments - Revenue estimates for 2025-2027 have been fine-tuned downwards by **-2% to -1%** due to a lighter game pipeline, although advertising performance is stronger than expected [4][18] - The revised revenue estimates are as follows: - **2025E**: Rmb 29,959.9 million (down from Rmb 30,376.6 million) - **2026E**: Rmb 32,992.4 million (down from Rmb 33,460.3 million) - **2027E**: Rmb 35,790.2 million (down from Rmb 36,608.4 million) [5][19] Margins and Profitability - The company aims to achieve a **10% adjusted operating profit margin** by the end of 2025, benefiting from operating leverage [26] - Gross profit margin is expected to improve sequentially, reaching approximately **37%** in Q4 [26] User Engagement and Growth Metrics - Monthly Active Users (MAU) are projected to grow from **341 million in 2024** to **373 million by 2027**, indicating a steady increase in user engagement [28] - Daily Active Users (DAU) are expected to rise from **104 million in 2024** to **120 million by 2027** [28] Competitive Landscape - Bilibili's advertising revenue is projected to grow significantly, with a focus on young users, which may help brands gain exposure beyond traditional circles [2] - The top verticals contributing to advertising growth include games, 3C digital products, e-commerce, internet services (including AI), and automotive sectors [27] Conclusion - Bilibili Inc. maintains a **Buy rating** with a 12-month price target of **$26.30**, reflecting a **9.7% upside** from the current price of **$23.98** [1] - The company is positioned to leverage its advertising growth while navigating challenges in the gaming segment, with a focus on improving margins and user engagement metrics [1][3][25]

Investment Rating - The report assigns a "Buy" rating for Bilibili Inc. (BILI) with a 12-month price target of $23.60, indicating a potential upside of 10.0% from the current price of $21.46 [1][17]. Core Insights - The management of Bilibili expressed confidence in delivering above-industry advertising growth in the coming years, supported by advancements in advertising technology and enhanced industry solutions [9][18]. - The gaming segment is expected to improve visibility with a new pipeline of games, including titles aimed at younger audiences and a long-term operational strategy for each game [9][22]. - The overall financial outlook shows significant revenue growth projections, with total revenue expected to increase from RMB 26,831.5 million in 2024 to RMB 36,608.4 million by 2027 [4][15]. Advertising Trends - Management highlighted a strong advertising growth trend, with key industries showing robust performance in 1H25, including a notable 82% year-over-year increase in related ad revenue [9][18]. - Specific advertising formats, such as splash screen ads and search performance ads, saw increases of 16% and 76% year-over-year, respectively, in 1H25 [18]. - The content-consumption industry experienced a 90% year-over-year increase in ad revenue, driven by significant growth in internet services and education sectors [18][19]. Gaming Strategy - Bilibili's gaming strategy focuses on developing games that resonate with young people's values and ensuring a long lifecycle of over five years for each title [9][22]. - Upcoming game releases include "Trickcal RE:VIVE" and "Escape from Duckov," with global launches planned for 2H25 [22][23]. - The company is shifting its monetization strategy towards cosmetic items, which has shown promising results in user engagement and revenue generation [23]. Financial Projections - Revenue is projected to grow at a compound annual growth rate (CAGR) of 19.1% from 2024 to 2025, with EBITDA expected to increase significantly from RMB 2,356.4 million in 2024 to RMB 4,531.7 million in 2025 [4][12]. - The earnings per share (EPS) is forecasted to turn positive by 2025, reaching RMB 5.63, with further growth anticipated in subsequent years [4][15]. - The report indicates a strong free cash flow yield, expected to rise from 2.3% in 2024 to 8.3% by 2027 [4][11]. Market Position - Bilibili's market capitalization is currently at $9.0 billion, with an enterprise value of $6.7 billion, positioning it favorably within the China Games, Entertainment, and Healthcare Tech sectors [4][11]. - The company has a strong advertising wallet share gain in the gaming sector, indicating a competitive edge against major players like Tencent and NetEase [18][19].