The new "engine" in the annual report of Station B, the advertising business has the fastest growth rate, sets a breakeven schedule

Bilibili (hereinafter referred to as "Station B"; BILI.US; 09626.HK) handed over its first annual report after returning to Hong Kong on March 3, and disclosed to the outside world the goal of achieving non-GAAP breakeven by 2024.

Before the U.S. stock market on March 3, Station B announced the fourth quarter of 2021 financial report and the unaudited financial report for the whole year. Chen Rui, chairman and CEO of Station B, said, "While expanding the user base and enhancing commercialization capabilities, we will also focus on improving operational efficiency and narrowing losses. ”

After the release of the earnings report, as of the close of the US stock market on March 3, Station B closed up 7.89% at $27.78 per share. On March 4, as of press time, B's stock in Hong Kong was quoted at HK$211 per share, down 11.34%.

Advertising revenue increased significantly

Station B's fourth-quarter revenue was 5.78 billion yuan, an increase of 50.5% year-on-year, exceeding market expectations of 5.74 billion yuan; for the whole year, Station B's annual revenue reached 19.38 billion yuan, an increase of 62% year-on-year. Both revenue growth in the fourth quarter of 2021 and the full year of 2021 was driven by the rapid growth of non-gaming businesses such as advertising and value-added services.

Value-added services bring the most revenue to Station B. Station B's value-added service business revenue in the fourth quarter of 2021 reached 1.895 billion yuan, a rapid increase of 52% year-on-year; the annual value-added service business revenue reached 6.93 billion yuan, an increase of 80% year-on-year, mainly due to the company's monetization work has been strengthened, including premium membership programs, live broadcast services and other value-added services, including the number of paid users of the company's value-added services increased.

Station B said that while healthy user growth has brought revenue growth, the monetization efficiency of Station B will also be further improved in 2021, and the revenue brought by single-month active users will increase by 20% year-on-year. In the future, Station B will continue to improve the efficiency of user monetization and further promote the commercialization process.

According to the reporter's understanding, live broadcasting, as an important part of the community ecology, has formed multiple positive cycles with the community's creative ecology. By 2021, more than 70% of the million fan UP owners of Station B are also live broadcasters. More than 600,000 content creators earn revenue through live streaming throughout the year.

Station B also said that in 2022, the company will continue to deeply integrate the live broadcast ecology, improve the penetration rate of live content in the video community, and enhance the overall product experience.

Advertising has become the highest growing business of Station B. The advertising turnover of Station B in the fourth quarter of 2021 was 1.588 billion yuan, an increase of 120% over the same period in 2020; the annual advertising turnover was 4.5 billion yuan, an increase of 145% over 2020. The increase was mainly due to the further recognition of the Bilibili brand in the Online Advertising Market in China and the improvement of Bilibili's advertising efficiency.

The "China Times" reporter learned from Station B that the core value of Station B as a marketing platform is continuing to help brand owners create brand value in the digital age. In the fourth quarter, games, e-commerce, 3C products, food and beverage, and automobiles became the top five advertiser industries. The content marketing capabilities of Station B are being recognized by advertisers. The "Most Beautiful Night of 2021" bilibili New Year Gala is also favored by many brand advertisers, and the program "Only This Green" appeared on the CCTV Spring Festival Gala in the Year of the Tiger.

In the financial report, Station B has made an outlook for revenue in the first quarter of 2022, which is expected to reach 5.3 billion yuan to 5.5 billion yuan.

Breakeven "timeline"

It is worth noting that from the perspective of the whole year, the net loss of Station B was 6.8 billion yuan, compared with 3.1 billion yuan in 2020. At the same time, the sales and marketing expenditure of Station B is also expanding, reaching 5.8 billion yuan in 2021, an increase of 66% year-on-year. It is reported that this increase is mainly due to the increase in channels and marketing expenses to promote the application and brand of Station B, as well as the publicity expenses of mobile games on Station B, coupled with the increase in sales and marketing personnel.

For the loss of short and medium-sized video companies, Ma Shicong, senior analyst of analysys new media marketing industry center, said in an interview with the "China Times" reporter that at present, station B is still climbing and grabbing the market, and the investment in marketing costs and brand building is still increasing.

Chen Rui said in the financial report, "Under the wave of 'video', we will continue to build a multi-category, multi-scenario content ecology to meet the increasingly diverse content consumption needs of users, and to provide users with useful and valuable video content for daily life." We have always believed that growth is a means, not an end. While expanding the user base and enhancing commercialization capabilities, we will also focus on improving operational efficiency and narrowing losses. ”

In the earnings conference call, Fan Xin, chief financial officer of Station B, also proposed: In 2022, Station B is confident that under the premise of maintaining healthy user growth, by increasing the realization rate of a single MAU and controlling operating expenses, the operating loss ratio of non-GAAP for the whole year will narrow year-on-year in 2022, and the medium-term goal will be to achieve non-GAAP breakeven in 2024.

For Station B, which plans to achieve non-GAAP breakeven in 2024, industry insiders said it can be achieved. "There are many ways to save costs (if you want to make a profit), market expenses and sales expenses can be compressed, but now it is an input window, and if you don't invest, you will be left behind." Some insiders told the "China Times" reporter.

In addition, Station B also announced that the board of directors has approved the share repurchase plan. Station B will repurchase up to $500 million of American Depositary Shares (ADS) over the next 24 months. In addition, The Company's Chairman and Chief Executive Officer, Rui Chen, announced that it intends to use his personal funds to purchase American Depositary Shares (ADS) with a total amount not exceeding $10 million in the open market over the next 24 months. The company's repurchase plan and the purchase plan of the company's chairman show the confidence of the management of Station B in the company's development prospects.

Responsible Editor: Huang Xingli Editor-in-Chief: Han Feng