Under the stock competition in the domestic game market, Bilibili-W's game business is still weak.
Investment Times researcher Wang Zixi.
Bilibili-W (9626.)HK) is still working towards its break-even target.
A few days ago, Bilibili-W announced its third-quarter results. In the third quarter of 2023, the company achieved revenue of 580.5 billion yuan, a slight increase of 020%；Adjusted net loss was 86.3 billion yuan, the loss narrowed by 51 year-on-year1%。Overall, in the first three quarters of this year, the company's revenue increased by 2% year-on-year7% to 1617.9 billion yuan, adjusted net loss narrowed year-on-year to 285.8 billion yuan. In fact, Bilibili-W's loss has narrowed year-on-year for several consecutive quarters, and its gross profit margin has continued to improve. In the third quarter of 2023, the company's gross margin increased to 250%, the loss reduction effect is obvious.
Driven by performance advertising, Bilibili-W's ad revenue increased to 16 percent in the third quarter of 20233.8 billion yuan, a year-on-year increase of 209%, and the company's value-added services increased steadily to 259.5 billion yuan, an increase of 174%。The growth of advertising and value-added service revenue is directly related to the growth of the average number of daily active users (hereinafter referred to as the number of daily active users). Data shows that in the third quarter, the number of daily active users of Bilibili-W has exceeded 100 million, and the number of monthly active users has also increased to 34.1 billion, and the amount of time users spend on the platform is increasing.
However, it should be pointed out that under the competition of domestic game market stock, Bilibili-W's game business is still weak. In the third quarter of this year, the company's gaming business contributed 99.2 billion yuan, a year-on-year decrease of 326%；In the first three quarters, the business contributed 301.4 billion yuan, the proportion of revenue has fallen to less than 19%. And the game "Shine!", which has been temporarily removed from the shelvesThere is no clear time for the resumption of the shelves, and other games launched in the second half of the year have not performed outstandingly.
In response to the company's break-even drivers, game business adjustments, whether the road to high-quality self-developed games can be run through, and user growth space, the "Investment Times" researcher emailed the communication outline to the company's relevant departments for communication, but has not received a reply as of press time.
Profitability is still on the way
Under the promotion of the loss reduction strategy, in the third quarter of 2023, Bilibili-W achieved revenue of 580.5 billion yuan, basically the same as the same period last year;The net loss was 133.7 billion yuan, the loss narrowed by 22 year-on-year1%；Adjusted net loss was 86.3 billion yuan, the loss narrowed by 51 year-on-year1%。
Overall, in the first three quarters of 2023, the company achieved revenue of 1617.9 billion yuan, a year-on-year increase of 27%；Net loss and adjusted net loss were 351.5 billion yuan, 285.8 billion yuan, and the loss narrowed by more than 40%. In fact, Bilibili-W has narrowed its losses for many consecutive quarters, showing certain results in reducing losses.
However, some brokerages also pointed out that the company's loss in the third quarter exceeded market expectations. Among them, Zheshang ** believes that the company's adjusted net loss attributable to the parent in the third quarter was 8800 million yuan, exceeding expectations;The adjusted loss margin attributable to the parent was 151%, mainly due to weaker-than-expected R&D expense control.
CICC believes that Bilibili-W may continue to focus on loss reduction in 2024. Considering the optimization of the company's organizational structure in 2023, the loss reduction in 2024 may be reflected in the year-on-year decrease in operating expenses and the increase in gross profit margin driven by the growth of advertising revenue, which means that the company may enter a period of profit improvement. If the user's spending power continues to be verified, with the deepening of consumption scenarios and the effective release of advertising inventory, there is still a lot of room for development of effect advertising. If the growth exceeds expectations, it is expected to drive the valuation and performance recovery of Bilibili-W.
Bilibili-wProfit in the third quarter and first three quarters of 2023(thousand dollars).
Data**: Results announcements
The gaming business continues to be under pressure
It is worth noting that Bilibili-W expects the company's revenue to be in the range of 22.5 billion yuan to 23.5 billion yuan in 2023, mainly due to lower-than-expected game revenue.
Researchers from the Investment Times noted that the game business used to be the main revenue force of Bilibili-W, and in 2019 and 2020, the proportion of revenue from this business was respectively. 0%, but since then, the proportion of revenue from this business has declined year by year, and the relevant indicators have dropped to 26 in 2021 and 20223% and 229%。
In November 2022, Bilibili-W adjusted the game business structure, not only with the company's CEO Chen Rui personally in charge, but also renamed the "Game Publishing Division" to the "Game Distribution Center" and established a game technology middle platform. However, after Chen Rui took charge of games for a year, the performance of the game business did not improve. In the fourth quarter of 2022, the first quarter of 2023, and the second quarter of 2023, the revenue of Bilibili-W game business decreased by more than 10% year-on-year. In the first half of 2023, the scale of game business revenue will drop to 2 billion yuan. Among them, the largest revenue contributors are "Blue Route" and "Fate Grand Order" (hereinafter referred to as "FGO"). These two games, which have been online for many years, have been classic products of Bilibili-W's long-term operation. Does this mean that the company's game business may have fallen into a situation of "eating the old money"?
And in the second half of 2023, Bilibili-W will launch "Shine!" one after another"Handsome Girl", "Shake the Light: Princess of the Troubled Times", "Millennium Journey", "Slud", "Light Gap Interpretation", "King of Nasalik" and other products. Among them, "Shine!"Youjun Girl" is the company's exclusive ** two-dimensional game, but it was temporarily removed from the shelves due to content adjustments shortly after it was launched;"King of Nasalik" was the first in the ISO free list on the day of its release, and by the beginning of December, the ranking had fallen out of the top 100. The rest of the games didn't stand out either.
According to the financial report data, in the third quarter of 2023, Bilibili-W's game revenue will be 99.2 billion yuan, a year-on-year decrease of 326%。In the first three quarters of this year, the company's gaming business revenue was 301.4 billion yuan, and the proportion of revenue has fallen to 186%, the business is under significant pressure.
The company explained that the year-on-year decline in the game business in the third quarter was mainly due to the high base of Time Hunter 3, which was launched in the summer of 2022, and the weaker-than-expected performance of several new games in the third quarter of 2023. The company's traditional games "Blue Route" and "FGO" remained stable during this period. In addition, "Shine!", which will be temporarily removed from the shelves in early September 2023Handsome Girl also had an impact on the revenue of the game business.
At the Bilibili-W public performance conference, Chen Rui said that the game market in 2023 will not only be more competitive, but the market has entered the standard stock competition stage due to the fading of the new user dividend. At this stage, for a new game to break the circle, it must either be the best or do something different. At the same time, the current game project establishment standards have also changed, and three standards must be met in the new stage: first, adhere to long-term operation;Second, at least a vertical head or superhead;Third, keep costs reasonable. In the past, the way of following the trend of initiating projects and differentiating them from competing products through volume art effects is no longer feasible.
Bilibili-w2023 third quarter and the first three quarters of 2023 revenue by business (thousand yuan).
Data**: Results announcements
Pursue high-quality user growth
In addition to the gaming business, value-added services continue to contribute the most revenue to Bilibili-W. In the third quarter of 2023, Bilibili-W value-added services achieved revenue of 259.5 billion yuan, a year-on-year increase of 174%, accounting for about 45% of total revenue;In the first three quarters, the business contributed more than 7 billion yuan in revenue, a year-on-year increase of more than 10%.
In the advertising business, the company's revenue in the third quarter was 163.8 billion yuan, a year-on-year increase of 209%, and the proportion of income rose to 28%;The cumulative contribution of revenue in the first three quarters was 448.3 billion yuan, an increase of 26%.
According to Bilibili-W's public results meeting, in the third quarter, the main driving force for the growth of the company's advertising business came from performance advertising, which increased by more than 40% year-on-year. And during the "Double 11" period, the company's "big open loop" strategy performed well, and the advertising flow from the head e-commerce platform increased by 80% year-on-yearThe GMV of UP masters** and live streaming also increased by more than 250% year-on-year.
The revenue growth of advertising and value-added services is inseparable from the growth of users and the creation of high-quality communities. Data shows that in the third quarter of 2023, the average number of daily active users of Bilibili-w exceeded the 100 million mark, reaching 10.3 billion, a year-on-year increase of 14%, and the number of monthly active users also increased to 34.1 billion.
Not only is the number of users growing strongly, but so is the amount of time users spend on the platform. In the third quarter, users spent a record 100 minutes per day on Bilibili-W, which in turn drove a 19% year-over-year increase in total user time.
Regarding the user growth strategy and whether it is necessary to increase investment in customer acquisition, Chen Rui said at the public results conference that the company has been emphasizing the return on investment of the user acquisition strategy since the second quarter of 2022, and mainly pursues the growth of high-quality daily active users by improving operational efficiency and product capabilities. In the future, the company will continue to rely on product improvements and content expansion to drive user growth.