Bilibili’s user acquisition efforts drive wider losses in Q2

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Anime and game-centric video streaming platform Bilibili reported substantially wider losses in its second quarter as user acquisition costs took its toll, though a jump in paying users boosted its non-game revenue growth.

Why it matters: Bilibili has been pushing to accelerate its growth to reach a market capitalization of $10 billion, which CEO Chen Rui estimated to be the minimum size for platforms three years from now to survive in China’s cut-throat content landscape, according to a report from Chinese media LatePost.

“Looking ahead, our strategic initiatives are designed to accelerate our targeted user acquisition efforts, enlarge our user base, enhance our content, and enrich our community to fuel our monetization.”

—Chen Rui, Bilibili chairman and CEO

Details: Bilibili recorded a 50% year-on-year increase in total net revenues, which reached RMB 1.54 billion ($224 million) during the quarter ended June 30.

  • Monthly active users (MAU) reached 110.4 million, increasing 30% year over year. Daily active users (DAU) grew more quickly, increasing 41% year on year to 33.2 million.
  • Gross profit stayed flat at RMB 251.7 million compared with the same period a year ago, whereas net loss widened  to RMB 315.0 million or $0.14 per share from RMB 70.3 million in Q2 2018.
  • Mobile game revenue contributed close to 60% of Bilibili’s total net revenues for the quarter, rising 16% compared with the same period a year earlier.
  • Non-gaming businesses saw the fastest growth. Revenue from live broadcasting and value-added services jumped 175% year-on-year to RMB 326 million, driven primarily by increases in the number of paying users, which more than doubled year-on-year to 6.3 million.
  • Bilibili expects net revenues of between RMB 1.74 billion and RMB 1.77 billion for the third quarter of 2019.

Context: In April, Bilibili raised more than $824 million from a convertible bond sale and new share offering as it seeks to diversify the selection of content it offers. The size of the offering was increased due to the “overwhelming demand” of investors.

  • In February, Alibaba acquired an 8% stake in Bilibili to boost content-driven e-commerce business on both platforms.