Bilibili Inc. 2022Q4 performance is in line with expectations. Bilibili Inc. 's 2022Q4 income was 6.14 billion yuan, an increase of 6% over the same period last year, in line with the company's revenue guidelines of 60-6.2 billion yuan. Among them, value-added services, advertising, games, e-commerce and others are 23.5%, 15.1%, 11.5%, 1.13 billion yuan respectively, with a year-on-year change of 24%, 5%, 12%, 13%. The annual income in 2022 was 21.9 billion yuan, an increase of 13% over the same period last year.
Q4 continues to promote cost reduction and increase efficiency, and losses are narrowed. Q4 gross profit margin increased by 2.1 pct to 20.3% month-on-month. The sales expense rate was 20.6%, a sharp drop of 9.9 pct compared with the same period last year. After Q4 adjustment, the net loss of the parent is about 1.31 billion yuan, and the loss rate is-21.4%, which is significantly narrowed compared with the previous month. The net loss in 2022 was 6.7 billion yuan.
The creation is ecologically sound and focuses on user quality. In terms of creative ecology, as of Q4, the number of monthly active users of UP was 3.8 million, with an increase of 25%, with an average monthly contribution of 17.6 million and an increase of 62%. The main number of UP with more than 10,000 fans increased by 51%. Q4 A total of 1.3 million creators earned income in Bilibili Inc., with an increase of 64%. In terms of content composition, Q4 PUGV video accounts for 95%. In terms of OGV, the live broadcast of the fourth "most Beautiful Night" New year's Eve party reached a peak of 330 million, and "China fantastic Tan" jointly produced by Bilibili Inc. and Shangmei Pictures became a popular style with more than 230 million broadcasts.
In terms of user growth, Bilibili Inc. pursues healthy growth, with a DAU/MAU ratio target of 30% this year. Q4 DAU grew 29% year-on-year to 92.8 million, and DAU/MAU ratio rose to 28.5%. Improve the quality of users:
In terms of activity, the average daily video playback was 3.9 billion, with an increase of 77%, the average number of monthly interactions was 13.6 billion, with an increase of 35%, the daily use time of users was 96 minutes, and the total use time increased by 51%. In terms of retention, the retention rate of full members reaches 80% in 12 months. In terms of payment, Q4 MPU reached 28.1 million, an increase of 15%, and the payment rate was 8.6%.
Advertising: Q4 is under pressure, and the effect of advertising is growing rapidly. Q4 advertising revenue fell 5% year-on-year, of which effective advertising revenue increased by more than 50% year-on-year. In terms of Story mode, the vv of Q4 story mode has increased by more than 175% compared with the same period last year, and vertical screen advertising reflects high eCPM and high conversion efficiency.
Bilibili Inc. will upgrade the form and mode of advertising in 2023. 1) full-link upgrade for strong industries such as games and 3C digital. 2) expand its share in e-commerce, automobile, big fast consumer and other large budget industries. For example, in the field of e-commerce, Bilibili Inc. insists on opening the loop. In 2022, more than 1000 new brands and more than 10,000 SKU were successfully launched in Bilibili Inc. with goods. Bilibili Inc. will also integrate the video and live delivery system to optimize Bilibili Inc. 's open-loop trading model.
3) strengthen the algorithm infrastructure, promote efficiency improvement, open up business scenarios, and so on.
Live streaming is growing healthily, and self-developed games are about to be launched. In terms of LVB, Bilibili Inc. promotes the ecological integration of LVB and video. The average number of active anchors in Q4 increases by 70%, and the number of monthly paid users of LVB increases by more than 40%. In the future, the sharing mechanism will be optimized to increase gross profit. In terms of games, Bilibili Inc. plans to release 2 self-developed games and 6 agent games in the first half of the year.
The 2023 revenue guidance is lower than expected, and losses are expected to continue to narrow. Bilibili Inc. will focus on increasing income and reducing losses and healthy growth of users in 2023. On the revenue side, the company's revenue guidance for 2023 is 24-26 billion yuan, an increase of 10 percent over the same period last year, which is lower than Bloomberg and Vander's consistent expectations, mainly because the company plans to cut low-margin e-commerce and other businesses. Combined revenue from games, value-added services and advertising is targeted to grow by more than 20 per cent year-on-year. On the cost side, it is expected that the gross profit margin will continue to rise this year, and marketing expenses will be greatly reduced. On the profit side, the adjusted loss is expected to decrease significantly in 2023, and the break-even target will remain unchanged in 2024.
Investment advice: downgrade to "overweight". We estimate that the company's revenue in 2023-2025 will reach 246 pound 293 / 34.2 billion yuan, a year-on-year increase of 12%, 19%, 17%, non-GAAP, and a net profit of 1.6 billion yuan. Taking into account the month-on-month fluctuation of user indicators and the lower-than-expected revenue guidance, Bilibili Inc. Hong Kong stock (9626.HK) US stock (BILI.O) was given a US $24 target price, corresponding to 2.2 x 2024e Pmax S, downgraded to "overweight".
Risk hint: the growth of users is lower than expected, the realization efficiency is lower than expected, and the change of macro environment is beyond expectation.