Description of the event
On March 7, Station B announced its 23Q4 quarterly report and fiscal year 23. Station B achieved revenue of 6.3 billion yuan, an increase of 3% year on year; gross profit of 1.7 billion yuan, up 33% year on year; and non-GAAP net profit was a loss of 556 million yuan, a decrease of 58% year on year. Revenue for the full year of '23 was 225 billion yuan, up 3% year on year; gross profit was 5.4 billion yuan, up 41% year on year; non-GAAP net profit was a loss of 3.4 billion yuan, a decrease of 49% year over year.
Incident comments
Revenue side. 1) Station B's 23Q4 advertising revenue was 1.9 billion yuan, an increase of 28% over the previous year. Ad revenue for the full year of '23 was 6.4 billion yuan, up 27% year-on-year, and the share increased to 28% /+5pct. In January 2024, Station B released a marketing plan for the four major scenarios of “new product launch, rejuvenation, transaction transformation, and big nodes” to promote continuous rapid growth in advertising revenue. 2) Station B's 23Q4 value-added service revenue was 2.9 billion yuan, an increase of 22% over the previous year. Live streaming revenue drove an increase in value-added service revenue. During the “Double Eleven” period, video and live streaming delivery GMV increased 250% + year over year. Revenue from value-added services reached 9.9 billion yuan for the full year of '23, an increase of 14% over the previous year. The number of regular members of Station B reached 230 million, an increase of 18% over the previous year, and the number of members reached 21.9 million, of which over 80% were annual subscription or automatic renewal users. 3) Station B's 23Q4 game revenue reached 1 billion yuan, a year-on-year decrease of 12%.
Game revenue for the full year of '23 reached 4 billion, a year-on-year decrease of 20%, mainly due to a decrease in the number of new games launched and a decrease in the turnover of several games.
Operating data. Station B's 23Q4 DAU/MAU was 100 million/336 million respectively. The average number of daily video views in '23 was 4.3 billion, an increase of 25% over the previous year, and the total usage time of users increased 17%. Community ecological health and prosperity promoted the flourishing development of the creator ecosystem. In 23Q4, the number of active daily UP owners increased 16% year over year, of which the number of UP owners with 10,000 fans or more increased 30% year over year.
Profit side. 1) Station B's 23Q4 gross profit increased 33% year-on-year, driving gross margin to 26.1%, increasing for 6 consecutive quarters, mainly due to reduced costs related to platform operation due to improved monetization efficiency. Sales and marketing expenses, general and administrative expenses, and R&D expenses decreased by 11%, 37%, and 11% year-on-year, respectively, due to the reduction in the number of general and administrative staff, the reduction in the number of general and administrative staff, and the partial termination of game projects. 2) Station B's 23Q4 non-GAAP net loss was 556 million yuan, 58% narrower than the same period last year; 23Q4 achieved operating cash flow inflow of 640 million yuan, and achieved positive operating cash flow for the full year of '23. Station B promoted cost reduction and efficiency. In 23Q4, non-GAAP operating expenses were reduced by 12% year on year, and non-GAAP operating losses narrowed by 53% year on year.
Profit forecast: Station B optimizes its business structure, maintains high growth in advertising and value-added services, and promotes healthy community ecology and prosperity to release the commercial value of users. We expect revenue of 2024-2025 to reach 252/28.2 billion yuan respectively, maintaining a “buy” rating.
Risk warning
1. The market competition pattern intensifies risks;
2. Short-term profits and medium- to long-term growth cannot balance risk.