Event: 2023Q4 Bilibili achieved operating income of 6.35 billion yuan, yoy +3%, qoq +9.4%, and achieved adjusted net profit of 556 million yuan, yoy -58%, and qoq -36%, corresponding adjusted net profit margin of -8.8%, yoy+12.6pcts. For the full year of 2023, the company achieved operating income of 225 billion yuan, yoy +3%, and adjusted net profit of 3.4 billion yuan, yoy -49%.
Comment:
Operating losses have narrowed, and operating cash flow has been positive throughout the year. 2023Q4's gross margin reached 26.1%, yoy+5.8pcts, qoq+1.2pcts, and the gross margin increased for 6 consecutive quarters, mainly due to optimization of content costs, server bandwidth costs, employee costs, etc., and the cost side was further optimized. The sales cost rate/management fee rate/R&D expense ratio reached 17.7%/8.1%/20.9% respectively, compared to -2.9%/-5.2%/-3.4%, mainly due to reduced promotion expenses, optimization of the number of employees, and termination of some game projects in 2023. The game business has been reorganized and core key products have been retained. Games such as “Three Kingdoms Seek the World” and “Something New” will be launched one after another this year. Furthermore, thanks to the growth of advertising, live streaming and other businesses, the company's operating cash flow was positive throughout the year, with single Q4 reaching 640 million yuan, and the financial situation continued to improve.
The community's ecology is healthy and prosperous, and the main monetization capacity continues to improve. 2023Q4 Bilibili MAU and DAU reached 336 million/100 million, yoy +3%/8% respectively. The average daily usage time exceeded 95 minutes. User stickiness continued to increase, and the number of regular members reached 230 million and yoy +18%. The company continues to strengthen the monetization capacity of UPs to ensure the retention of high-quality content providers. In 2023, more than 3 million UPowners earned revenue on Station B. Monetization models include live streaming, advertising, delivery, classrooms, charging, etc. Of these, more than 1.8 million UPs earned revenue through live streaming, and the number of UPs that earned revenue through advertising also increased 94% year-on-year.
Advertising revenue is growing rapidly, and live streaming has achieved impressive results. 2023Q4 Bilibili's advertising revenue reached 1.929 billion yuan, YOY +28%, exceeding previous expectations. Mainly due to the continuous optimization of advertising products and the improvement of advertising efficiency, the company proposed four major scenario marketing solutions of “new product release, rejuvenation, transaction transformation, and large nodes” in January 2024 to further meet the marketing needs of advertisers.
On the other hand, the outstanding performance of the company's live streaming results has also led to high growth in performance advertisements. In 2023, the GMV of merchants delivering goods at Station B increased by 260% year-on-year, and the GMV for a single live broadcast of up to 50 million. With the continuous improvement of related product functions and the gradual maturity of user habits, the trading performance of subsequent platforms is worth looking forward to.
Investment advice: The company is expected to achieve operating income of 254.92/284.41/31.175 billion yuan in 2024-2026, an increase of 13%/12%/10% year-on-year, and achieve net profit to mother of -21.16/ -0.64/ 1,351 billion yuan, corresponding EPS of -5.02/-0.15/3.21 yuan.
Risk warning: policy risk, user growth falls short of expectations, commercialization process falls short of expectations