Station B's revenue in the fourth quarter was 6.1 billion yuan, with 92.8 million daily active users, a year-on-year increase of 29%;

Focus

• Station 1B's total net revenue in the fourth quarter was 6.1 billion yuan, an increase of 6% over the same period in 2021.
• Station 2B's net loss in the fourth quarter was RMB1.5 billion, 29% narrower than the same period in 2021.
• Station 3B's total net income for the whole year of 2022 was 21.9 billion yuan, compared with 19.4 billion yuan in the previous year.
• Station 4B had a net loss of 7.5 billion yuan in 2022, compared with 6.8 billion yuan in the previous year.
• The average daily active users of 5B station reached 92.8 million in the fourth quarter, an increase of 29% over the same period in 2021. Average monthly active users reached 326.0 million, up 20% from the same period in 2021.

Tencent Technology News Beijing time on March 2, Bilibili (hereinafter referred to as "Station B") announced its unaudited financial results for the fourth quarter and full year ended December 31, 2022 before market hours on Thursday. According to the financial report, the total net revenue of Station B in fiscal year 2022 was 21.9 billion yuan, a year-on-year increase of 13%, of which the net revenue in the fourth quarter was 6.1 billion yuan, a year-on-year increase of 6%, and the market expected 6.168 billion yuan, compared with 5.781 billion yuan in the same period last year.

The net loss for the whole year was 7.5 billion yuan, an expansion from 6.8 billion yuan in the previous year, of which the net loss in the fourth quarter was 1.5 billion yuan, and the market expected a loss of 1.533 billion yuan, compared with a loss of 2.088 billion yuan in the same period last year, 29% narrower than the same period last year.

After the earnings report, Station B fell more than 5% in premarket trading on the Nasdaq stock market.

First, fourth quarter and full year financial results

1. Fourth quarter performance highlights  

--Station B's total net revenue for the fourth quarter of 2022 was 6.1 billion yuan (approximately 890.6 million US dollars), an increase of 6% over the same period in 2021.

--Station B's gross profit for the fourth quarter of 2022 was 1.2 billion yuan (approximately US$181.2 million), an increase of 14% over the same period in 2021.

-Station B had an operating loss of CNY 2.3 billion (approximately USD 337.4 million) in the fourth quarter of 2022, compared to CNY 2 billion in the same period in 2021.

-Station B's net loss for the fourth quarter of 2022 was $1.5 billion (approximately US$217.1 million), down 29% from RMB2.1 billion in the same period of 2021.

--In non-GAAP, Station B's net loss for the fourth quarter after adjustments (i.e., excluding stock-based incentive expenses, amortization expenses related to intangible assets acquired through business acquisitions, income tax related to intangible assets obtained through business acquisitions, and changes in fair value of investments in listed companies) was 1.3 billion yuan (approximately US$190.6 million), a decrease of 21% from 1.7 billion yuan in the same period in 2021.

--Station B's basic and diluted loss per share was $3.77 (approximately $0.55) in the fourth quarter, compared to $5.34 for the same period in 2021. Non-GAAP adjusted basic and diluted loss per share for the fourth quarter was $3.31 (approximately $0.48), compared to $4.22 for the same period in 2021.

--The average daily active users of site B reached 92.8 million in the fourth quarter, an increase of 29% over the same period in 2021. Average monthly active users reached 326.0 million, up 20% from the same period in 2021.

--Station B's average monthly paying users reached 28.1 million in the fourth quarter, an increase of 15% over the same period in 2021.

2. Key points of performance in 2022

--Station B's total net revenue in 2022 was 21.9 billion yuan (approximately US$3.2 billion), an increase of 13% over 2021.

--Station B's gross profit in 2022 was 3.8 billion yuan (about 558.1 million US dollars), compared to 4 billion yuan in 2021.

--Station B's operating loss was CNY 8.4 billion (approximately USD 1.2 billion) in 2022, compared to CNY 6.4 billion in 2021.

--Station B had a net loss of 7.5 billion yuan (about US$1.1 billion) in 2022, compared to 6.8 billion yuan in 2021.

--In accordance with GAAP, Station B's adjusted net loss in 2022 was 6.7 billion yuan (approximately $971.8 million), compared to a net loss of 5.5 billion yuan in 2021.

--Station B's basic and diluted loss per share was $18.99 (approximately $2.75) in 2022, compared to $17.87 in 2021. Non-GAAP adjusted basic and diluted loss per share for Station B was $16.95 (approximately $2.46) in 2022, compared to $14.42 in 2021.

3. Executive comments

Chen Rui, Chairman and CEO of Station B, said: "We achieved stable daily active user growth at the end of 2022, gross margin also improved, and the loss in the fourth quarter narrowed. As we shifted our focus to target daily active user growth, our daily active user count grew 29% year-over-year to 92.8 million in the fourth quarter, increasing our daily active user ratio to 28.5% from 26.6% in the same period last year. Our community remains highly engaged, with an average of 96 minutes spent per user per day in the fourth quarter, driving a 51% increase in total time spent on our platform compared to the same period last year. Today's changing market environment requires companies to be more adaptable. As a result, we have taken steps to tighten spending and streamline our organization to further increase our focus on commercialization. Going into 2023, we will enhance our execution in these core areas, fostering a friendly, inclusive community for our users while also ensuring that our financial goals are met. ”

Fan Xin, Chief Financial Officer of Station B, said: "Total net income in the fourth quarter reached 6.1 billion yuan, gross margin increased to 20.3%, and we further narrowed our adjusted net loss, which narrowed by 21% year-on-year and 26% quarter-on-quarter, respectively. Notably, while continuing to drive daily active user growth, we reduced sales and marketing expenses by 28% year-over-year. Since October 2022, we have managed our balance sheet more aggressively in the form of four repurchases of convertible senior bonds. As a result, between October 2022 and January 2023, we reduced the total principal amount of our outstanding convertible senior bonds by $932 million. Going forward, we will maintain strict cost control measures while continuing to improve our margins and further reduce our losses. ”

4. Cash and cash equivalents

Cash and cash equivalents, term deposits and short-term investments. As of December 31, 2022, Station B had cash and cash equivalents, time deposits and short-term investments of RMB19.6 billion (approximately US$2.8 billion).

5. Share repurchase

Station B announced Thursday that the company's board of directors has approved a share repurchase program under which Station B could buy back up to $500 million worth of American depositary shares over the next 24 months. As of December 31, 2022, the company repurchased a total of 2.6 million ADSs at a total cost of $53.6 million.

In the fourth quarter of 2022, Station B repurchased $54 million of the 2027 Notes and $493 million of the December 2026 Notes in the aggregate principal amount of $420 million for a total cash consideration of $420 million. As of December 31, 2022, the Company has repurchased $54 million aggregate principal amount of 2027 Notes and $768 million aggregate principal amount of December 2026 Notes for total cash consideration of $618 million.

The repurchase program of American Depositary Shares or Convertible Senior Notes at Station B will depend on a variety of factors, including market conditions. These programs may be suspended or discontinued at any time.

Second, the fourth quarter and full year financial report analysis

1. Fourth quarter performance analysis

1) Total net revenue

Station B's total net revenue in the fourth quarter was 6.1 billion yuan (about 890.6 million US dollars), an increase of 6% over the same period in 2021. thereinto

Mobile games revenue was $1.1 billion (US$166.1 million), down 12% from the same period in 2021, primarily due to the absence of new games released in the fourth quarter of 2022.

Revenue from value-added services business was $2.3 billion (US$340.7 million), up 24% from the same period in 2021, mainly driven by the increased monetization efforts of Station B and the increase in the number of paying users, including live streaming services, premium membership programs and other value-added services.

Advertising revenue was $1.5 billion (US$219.3 million), compared to $1.6 billion for the same period in 2021.

- E-commerce and other revenue was $1.1 billion (US$164.5 million), an increase of 13% from the same period in 2021, primarily due to increased revenue from esports copyright sublicensing. 

2) Cost of revenue

Station B's cost of revenue in the fourth quarter was 4.9 billion yuan (about $709.4 million), an increase of 4% over the same period in 2021. The increase was mainly due to increased revenue-sharing costs and content costs. Among them, the revenue sharing cost is a key component of the revenue cost of Station B, which was 2.5 billion yuan (about 365 million US dollars), an increase of 4% over the same period in 2021.

3) Gross profit

Station B's fourth-quarter gross profit was $1.2 billion (approximately US$181.2 million), an increase of 14% from the same period in 2021, mainly due to the increase in total net income.

4) Total operating expenses

Station B's total operating expenses were $3.6 billion (US$518.6 million) in the fourth quarter, up 15% from the same period in 2021. thereinto

Sales and marketing expenses were $1.3 billion ($183.6 million), down 28% from the year-ago quarter. Station B's sales and marketing expenses decreased year-over-year in the fourth quarter, mainly due to the decrease in promotional expenses.

General and administrative expenses were $816.8 million (US$118.4 million), up 52% from the same period last year. The year-on-year increase in general affairs and administrative expenses of Station B in the fourth quarter was mainly related to the 251.7 million yuan of severance pay allocated for organizational optimization.

-- R&D expenditure was RMB1.5 billion (US$216.6 million), up 87% year-over-year. The year-over-year increase in R&D expenses for Station B in the fourth quarter was mainly due to expenses related to the termination of certain game projects ($416.7 million) and increased depreciation expense for servers and equipment.

5) Operating losses

Station B had an operating loss of $2.3 billion (US$337.4 million) in the fourth quarter, compared to $2 billion in the same period in 2021.

Other income was $850.6 million (approximately US$123.3 million), compared to $63.4 million in the same period in 2021. The change was mainly due to a gain of $842.8 million from the repurchase of convertible senior notes, partially offset by investment loss charges from certain investment companies.

6) Income tax expenditure

Station B income tax expense for the fourth quarter was $20.5 million (approximately $3 million), compared to $32.8 million for the same period in 2021.

7) Net loss

Station B's net loss in the fourth quarter was 1.5 billion yuan (about 217.1 million US dollars), a decrease of 29% from 2.1 billion yuan in the same period of 2021. Non-GAAP adjusted net loss for the fourth quarter was $1.3 billion (approximately US$190.6 million), down 21% from RMB1.7 billion in the same period in 2021.

Station B's basic and diluted loss per share was $3.77 (approximately $0.55) in the fourth quarter, compared to $5.34 in the same period in 2021; non-GAAP, the basic and diluted loss per share in the fourth quarter of Station B was $3.31 (approximately $0.48), compared to $4.22 in the same period in 2021.

2. Analysis of 2022 annual results

1) Total net revenue

Station B's total net revenue in 2022 was RMB21.9 billion (approximately US$3.2 billion), an increase of 13% over 2021. thereinto

Mobile game revenue was $5 billion (US$728 million), down 1% from 2021.

Value-added services revenue was RMB8.7 billion (US$1.3 billion), an increase of 26% over 2021, mainly due to the increased monetization efforts of Station B and the increase in the number of paying users, including live streaming services, premium membership programs and other value-added services.

Advertising revenue was $5.1 billion (US$734.5 million), up 12% from 2021. This increase was mainly driven by the further visibility of the B site brand in the Chinese online advertising market and the company's improved advertising efficiency.

-- E-commerce and other revenue was $3.1 billion (US$448.9 million), an increase of 9% from 2021, primarily due to increased revenue from esports copyright sublicensing.

2) Cost of revenue

Station B's revenue cost in 2022 was 18 billion yuan (about US$2.6 billion), an increase of 18% over 2021. This increase was primarily due to increased revenue-sharing costs and content costs. Revenue-sharing costs, a key component of cost of revenue, were $9.1 billion (US$1.3 billion), up 18% from 2021.

3) Gross profit

Station B's gross profit in 2022 was 3.8 billion yuan (about 558.1 million US dollars), compared to 4 billion yuan in 2021.

4) Total operating expenses

Station B's total operating expenditure in 2022 was RMB12.2 billion (approximately US$1.8 billion), an increase of 17% over 2021. thereinto

Sales and marketing expenses decreased 15% year-over-year to $4.9 billion (US$713.4 million). Station B's year-on-year decrease in sales and marketing expenditure in 2022 was mainly due to a decrease in concept promotion expenditure.

General and administrative expenses of $2.5 billion (US$365.5 million), an increase of 37% over 2021. The year-on-year increase in general affairs and administrative expenses of Station B in 2022 was mainly due to the severance pay related to organizational optimization of 341.4 million yuan in 2022.

-- R&D expenditure was RMB4.8 billion (US$690.9 million), up 68% year-over-year. The year-over-year increase in R&D expenditure of Station B in 2022 was mainly due to expenses related to the termination of certain game projects of $525.8 million and increased depreciation expense for servers and equipment.

5) Operating losses

Station B's operating loss in 2022 was 8.4 billion yuan (about 1.2 billion US dollars), compared to 6.4 billion yuan in 2021.

Station B's other income in 2022 was 954.4 million yuan (about 138.4 million US dollars), while other expenses in 2021 were 284.4 million yuan. The change was mainly due to a gain of $1.3 billion on the repurchase of convertible senior notes, partially offset by investment loss charges from certain investment companies.

6) Income tax expenditure

Station B's income tax expense in 2022 was 104.1 million yuan (about 15.1 million US dollars), compared to 95.3 million yuan in 2021.

7) Net loss

Station B had a net loss of RMB7.5 billion (US$1.1 billion) in 2022, compared to RMB6.8 billion in 2021. Non-GAAP, Station B's adjusted net loss in 2022 was 6.7 billion yuan (approximately US$971.8 million), compared to an adjusted net loss of 5.5 billion yuan in 2021.

Station B's basic and diluted loss per share in 2022 was 18.99 yuan (about $2.75), compared to 17.87 yuan in 2021. Non-GAAP, Station B's basic and diluted loss per share was $16.95 (approximately $2.46) in 2022 and $14.42 in 2021.

3. Market expectations and performance outlook

For the fourth quarter of 2022, Station B expects net income between 6 billion yuan and 6.2 billion yuan. Analysts widely expected $887.9 million, down 1.79% compared to the same period last year. Analysts are widely expecting a loss of $0.53 per share in the fourth quarter, down 19.7% year-over-year.

Station B expects the company's net revenue for the full year of 2023 to be between 24 billion yuan and 26 billion yuan. The above outlook is based only on current market conditions and reflects the Company's preliminary estimates, all of which are subject to a variety of uncertainties, including those related to the pandemic.

4. Stock price performance

On Wednesday, local time in the United States, Station B rose $0.37, or 1.92%, to close at $19.67 per share in regular trading on the Nasdaq stock market. At press time, Station B shares were down 5.69% in premarket trading on Thursday and are currently trading at $18.55 per share.

In the past 52 weeks, the lowest share price of Station B was $8.23 and the highest was $35. Based on Wednesday's closing price, Station B has a market capitalization of about $7.532 billion. (Golden Deer)