Bilibili Shares Plunge over Wider-than-Expected Q3 Loss and Weak Sales Guidance

Bilibili expects total net revenues this year to be at the low-end after cutting the revenue guidance by up to RMB3.5 billion three months ago. Both of its Hong Kong-listed and US-listed share plunged more than 10% following financial results.

BEIJING, November 30 (TMTPost)— Shares of Bilibili Inc.plunged after the leading video sharing platform in China posted wider-than-expect loss in the past quarter and showed little signs of turnround in the near term. Bilibili’s Hong Kong-listed shares settled 11.6% lower to HK$89.25, ending Thursday with their lowest close since November 2022. The American Depositary Receipts (ADRs) crashed 11.1% after its third-quarter results were released a day earlier.

Credit:Visual China

Credit:Visual China

Bilibili reported net revenue for the quarter ended September 30 was RMB5.8 billion (US$795.7 million) , flat with the same period of 2022 and roughly in line with the Wall Street expectation. Net loss attributable to shareholders that quarter narrowed 21% year-over-year (YoY) to RMB1.35 billion, missing the analysts’ estimated RMB1.01 billion. Adjusted and diluted net loss per share of 2.12 was also worse than the expected loss of RMB1.88, though halving from the loss of RMB4.46 a year ago.

Bilibili’s businesses delivered mixed results in the third quarter. Value-added services (VAS), including live broadcasting,  generated RMB2.6 billion with a 17% YoY increase, and advertising revenue jumped 21% YoY to RMB1.6 billion, mainly led by improved advertising product offerings and enhanced advertising efficiency. Revenue from mobile games dropped 33% YoY to RMB991.8 million, mainly due to the high base from the release of Space Hunter 3 in June 2022 and lower-than-expected revenues from certain new games. Sales of IP derivatives and others, formerly known as E-commerce and others, were RMB580 million with a 23% YoY decrease, primarily due to a decline in revenue from IP derivative sales.

In its updated outlook,Bilibili expects total net revenues for the year 2023 to be at the low-end of the RMB22.5 billion to RMB23.5 billion range after cutting the revenue guidance by RMB2.5 billion to RMB3.5 billion in August, when the company reported results for the second quarter.It said the latest outlook is based on the current market conditions and reflects the Company’s preliminary estimates, which are all subject to various uncertainties.

Bilibili attributed VAS segment’s robust growth to ongoing interaction of live broadcasting into its video universe. More content creators are stepping into live broadcasting as host. By the end of September, the premium members grew to 21.1 million with more than 18% on annual subscription or auto renewal packages. As to advertising, Bilibili futher integrated sales conversion tolls in its ad products across scenarios. Performance-based ads, as a driver of total ad revenue, surged over 40% YoY in the third quarter. Bilibili further strengthened data collaboration with e-commerce platforms and upgraded video and live commerce and products in the annual shopping festival Singles Day, or the Double 11, in the fourth quarter, and gross merchandise value (GMV)  from these products increased over 250% YoY for the shopping season in November, the chairman and CEO Chen Rui told analyst at an earnings conference.

CEO Chen Rui highlighted user growth and engagement in the September quarter. “Our community growth and commercialization efforts have formed a virtuous cycle in the third quarter,”said Chen. He noted that daily active users (DAUs) grew 14% YoY to 103 million in the third quarter, surpassing the 100 million milestone, and monthly active users (MAUs) also hit a record high of 341 million. Additionally, users’ average daily time spent on Bilibili platform reach a historical high of 100 minutes, boosting total user time spent 19% YoY. The ky metics suggested its community continued to upgrade. The number of daily active content creators on its platform increased 21% YoY in the quarter, and the monthly new content submissions were 21 million, up 37% YoY.

However, Bilibili is still lack of traction from new game titles. The video and gaming platform suddenly announced removal of  Uma Musume Pretty Derby from Apple’s App Store and Android stores on September 7, only a week after it launched the Chinese version of the hit Japanese game. The game, created by Cygames,  was debuted in 2021 in Japan and raked in about US$1 billion that year. Bilibili said over one million domestic players had pre-registered before the official launch. It left no specific reason for the removal but the need for technical upgrades. Bilibili executives didn’t disclose when the title can be relaunched at the earnings call and said they will conduct minor content refinement and technical upgrade as soon as possible and bring the game back to the App store. The company has changed its criteria for a successful new game and focus on long-term operations, the highest rank in the market and the return on investment (ROI), so it has been reviewing and adjusting in-house development projects to follow the new key criteria, according to the management.

Bilibili received two downgrades following Q3 report. Nomura downgraded the company’s ADRs to neutral from buy and lowered its target price to US$13.00 from US$18.00. Barclays  to downgraded the company to underweight from equalweight and cut price target to US$10 from US$15.“We feel Bilibili management did not prepare the company well for tough times and therefore appears to be caught off-guard by worsening macro and industry environment,” Nomura analyst Jialong Shi said in a note.

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