Incident: Bilibili's net revenue for the first half of 2024 was 11.79 billion yuan, up 14% year on year; adjusted net loss was 0.727 billion yuan, a decrease of 64% year on year.

User activity reached a new high, and value-added business continued to develop. In terms of users, in the first half of 2024, the company's DAU increased 8% year on year to 0.102 billion, the average daily usage time of a single user increased 7.4% year on year to 102 minutes, and the average monthly interaction volume of platform users increased 13% year on year to 16.46 billion. By the end of June 2024, the number of regular members increased 13% year on year, and the number of paid conference members exceeded 22.3 million, an increase of 9% year on year. Increased user traffic combined with increased willingness to pay, 24H1 achieved value-added service revenue of 5.09 billion yuan, an increase of 14% over the previous year.

Ad revenue continues to rise. The company achieved advertising revenue of 3.71 billion yuan in the first half of the year, an increase of 30% over the previous year. It mainly relied on strong growth in performance advertising, and achieved considerable growth in brand advertising and fireworks advertising revenue. From the perspective of advertisers, the top five industries are games, e-commerce, digital products and appliances, automobiles, food and beverages, and emerging industries such as Internet services, AI, and education, which have achieved high revenue growth.

In the first half of 2024, the number of advertisers on the platform increased by more than 50% year over year.

New games performed well, and Q2 game revenue resumed year-on-year growth. The company's mobile game revenue in the first half of the year was 1.99 billion yuan, a decrease of 2% year over year. Evergreen Gaming's “Fate - Crown Designation” and “Blue Line” contributed relatively stable in revenue. The new game “Wuhua Mi Xin” (ACG category) and “Three Kingdoms: Designing the World” (strategy category) were successful. Among them, the company's first strategy game “Three Kingdoms: Designing the World” ranked third in the iOS game bestseller list on the first day of its launch. Subsequent sales performance was impressive. Considering the long operating cycle of strategy games, it is expected that the company will continue to increase revenue.

Profit forecast and investment advice: Station B's user and creator ecosystem maintains healthy development. The penetration rate of live streaming, content payment, advertising, e-commerce, etc. on the B platform is increasing in an orderly manner, and operating efficiency is expected to improve further. The company's 2024/2025/2026 revenue is expected to be 26.8/30.6/33.8 billion yuan, +19%/+14%/+10% compared to the same period; adjusted net profit - 0.1/1.8/2.6 billion yuan, maintaining the “buy” rating.

Risk warning: User ecosystem development falls short of expectations, commercialization falls short of expectations, policy risks.