3 Key Highlights From Bilibili’s Latest Earnings

Here’s how Chinese online entertainment company Bilibili Inc (NASDAQ: BILI) did in its latest quarter. – 5G cloud gaming stocks that will benefit

Bilibili Inc (NASDAQ: BILI) is a Chinese entertainment company providing content in various media formats, including videos, live broadcasting, and mobile games.

It focuses primarily on customers from generation Z – those individuals born after 1990.

In the past week, the company reported its second-quarter results for the year ending 31 December, 2020. Here are three takeaways from the announcement.

Solid growth

Bilibili has been growing at astronomical rates, with revenue up by more than fifty-fold in the last four years alone amid the increase in the monetisation of its users.

Such outstanding performance continued in the latest quarter. Here are some key numbers.

Revenue grew 70% year-on-year to RMB 2.6 billion (US$378.7 million), with all segments – mobile games, value-added services, advertising, and e-commerce – reporting double-digit growth.

Similarly, gross profit improved by 140% year-on-year to RMB 604 million thanks to the strong revenue growth and improvement in gross margin.

Bilibili intends to grow its business further by expanding the quality content available on its platform. An increase in quality content, in turn, should attract more users, as well as improving the monetisation of existing users.

Operational metrics

The strong growth in revenue is a result of the improvement of several metrics such as monthly active users (MAUs), monthly paying users, as well as daily time spent per user.

For the quarter ended 30 June, 2020, MAUs reached 171.6 million, and mobile MAUs reached 152.9 million, up by 55% and 59%, respectively, from the same period last year.

Also, more users spent money on Bilibili’s services this quarter – 7.5% of its MAUs (12.9 million) spent money on its platform, up from 5.7% in the second quarter of 2019.

Continuous loss and balance sheet

Despite the strong growth in revenue, Bilibili has yet to report a profit. In the latest quarter, its operating loss grew by 77% to RMB 610 million amid continued investment in acquiring new users and content.

As Bilibili plans to sustain its growth in the foreseeable future, it will need a lot of capital in acquiring content and new users.

Fortunately, it has quite a decent sum of cash and short-term investments on its balance sheet (about RMB 15.6 billion), after raising US$800 million in debt during the quarter.

Moreover, it has the backing of strategic investors who can write big cheques – such as Tencent Holdings Ltd (SEHK: 700) and Alibaba Group Holding Ltd (NYSE: BABA) (SEHK: 9988).

Hence, the company should have no problem accessing capital, so long as it can continue to deliver strong growth.

Long-term prospects

Overall, Bilibili reported a laudable performance with growth across all segments.

For the third quarter of 2020, it currently expects revenue to be between RMB 3.05 billion and RMB 3.10 billion.

More reading

The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Hong Kong contributor Lawrence Nga doesn’t own shares in any companies mentioned.

The Motley Fool Hong Kong Limited( 2020

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