With Solid User Growth but Further Loss Expansion, does Bilibili's Q2 Results Indicate a Split Between the Company's User Value and Business Value?
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On September 8, $Bilibili (BILI.US)$ released its 2Q22 earnings report, achieving revenue of 4.91 billion RMB (+9.2% YoY), largely in line with consensus. Net loss widened to 2 billion RMB (loss widened 48.6% YoY ), higher than consensus by 13.2%.
Key takeaways:
1. User and content ecology: steady growth of users and high activity of community
22Q2 Bilibili MAU reached 305.7 million (YoY+28.9%), DAU reached 83.5 million (YoY+33.2%), DAU/MAU was 27.3% (YoY+0.9pct), with solid user growth in Q2.
2. Growth of advertising business slowed down under the impact of the epidemic, and the supply of new games is tight
(1) Advertising business: revenue growth slowed sharply under the impact of the epidemic, but slightly exceeded expectations
Advertising revenue of $1.16 billion (YoY+10.4%) was higher than the consensus of 2.9%. Q2 was affected by the epidemic and macro economy, and Bilibili advertising revenue dropped significantly compared to Q1 (Q1 advertising growth rate was 46%).
(2) Value-added services: Live streaming revenue continues to grow rapidly
Value-added services revenue of $2.103 billion (YoY +28.7%) was 0.8% below consensus. ZHESHANG Securities believes that the growth rate of live streaming revenue is faster than the overall growth rate of VAS revenue.
(3) Game business: lack of new game supply, revenue declined more than expected
Mobile game business revenue of NT$1.05 billion (YoY-15.2%) was lower than the consistent of 3.1% due to the lack of new game supply and the decline of old game flow in Q2
3. Gross profit margin, administrative expenses and R & D expenses were weaker than expected, resulting in losses exceeding expectations
2Q22 Bilibili gross profit of 740 million (YoY-25.4%) and gross margin of 15.0% (YoY-7.0pct). Selling expenses were 1.17 billion (YoY-16.3%), and selling expense ratio was 23.9% (YoY-7.3pct). Administrative expenses were $630 million (YoY+43.5%), higher than the consensus of 15.0%, and R&D expenses were $1.13 billion (YoY+68.0%), higher than the consensus of 13.4%.
Although in the short term, the growth rate of Bilibili is slowed down and profitability is weak, in the medium to long term, ZHESHANG Securities believes that the core value of Bilibili as a scarce video community is still solid and still in the growth period.
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