---
title: "Bilibili: Learning from Ecological Community Building to Emphasize Commercialization (2Q22 Conference Call Summary)"
type: "Topics"
locale: "zh-HK"
url: "https://longbridge.com/zh-HK/topics/3427523.md"
description: "Following are the minutes of the Bilibili 2Q22 conference call. A review of the financial report can refer to the key points of the article &#34;Internal Difficulty Plus External Difficulties, B Station Suffers from &#34;Heart Disease&#34; and Difficult to Cure&#34;. 1. Q3 revenue is expected to be between RMB 5.6 billion to 5.8 billion, a year-on-year growth rate of 7.5%-11.4%. 2. Q4 gross profit margin will increase to around 20%, and the net loss rate will decrease from around 40% in Q2 to around 30% in Q4. 3. It is predicted that Q3 advertising revenue will achieve a year-on-year growth of approximately 20%. Management speech 2022Q2 Development Encountered Obstacles..."
datetime: "2022-09-08T16:28:04.000Z"
locales:
  - [en](https://longbridge.com/en/topics/3427523.md)
  - [zh-CN](https://longbridge.com/zh-CN/topics/3427523.md)
  - [zh-HK](https://longbridge.com/zh-HK/topics/3427523.md)
author: "[Dolphin Research](https://longbridge.com/zh-HK/news/dolphin.md)"
---

> 支持的語言: [English](https://longbridge.com/en/topics/3427523.md) | [简体中文](https://longbridge.com/zh-CN/topics/3427523.md)


# Bilibili: Learning from Ecological Community Building to Emphasize Commercialization (2Q22 Conference Call Summary)

Below is the summary of the Bilibili 2Q22 Conference Call. You can review the financial report interpretation in "[**Inner Turmoil Plus External Difficulties, Bilibili Suffers from “Ailment” Hard to Cure**](https://longbridgeapp.com/topics/3426800)".

**Key Takeaways:**

1.  Revenue for Q3 is expected to be between 5.6-5.8 billion, with YoY growth of 7.5%-11.4%.
    
2.  Q4 gross margin is expected to increase to approximately 20%, and net loss rate is expected to decrease from approximately 40% in Q2 to approximately 30% in Q4.
    
3.  Q3 advertising revenue is estimated to increase by approximately 20% year-on-year.
    

**Management Remarks:**

The company overcame development obstacles in 2022Q2 through improved content, enhanced products, and further cost control measures to achieve user growth. With the lifting of the lockdown in Shanghai in June, the company expects to continue achieving user growth and improving business growth rate in 2022H2.

**\[1\] Core Data:**

-   MAU reached 306 million, a YoY increase of 29%; DAU increased 33% YoY, which is equivalent to the MAU growth rate; DAU/MAU ratio increased by 26.4% YoY to 27.3% for the same period last year.
    
-   Average daily user usage time reached 89 minutes, up 9 minutes YoY. On the basis of the increase in user usage time and user activity, total user traffic increased by 48% YoY.
    

**\[2\] Financial Performance:**

-   Revenue increased by 9% YoY to 4.9 billion yuan.
    
-   Monthly average paying users increased by 32% YoY to 27.5 million.
    
-   Advertising service quality continued to improve, with advertising service revenue increasing by 10% YoY.
    
-   Marketing expenses were reduced, and poorly performing projects were canceled and resources were reallocated. Marketing expenses decreased by 16% YoY, and sales expense ratio decreased from 31% for the same period last year to 24%.
    

**\[3\] Content Community:**

Multiple updates were made to online video business.

**1\. Story Mode**

As the latest mode, Story Mode allows video to be distributed in a shorter amount of time to meet users' entertainment needs.

(1) Historical performance in Q2: PUGV video views increased by 53% YoY, and Story Mode views increased by 400% YoY.

(2) Present and future: Starting in July, the company began to fully integrate the live and PUGV ecosystems, and all time was spent on combining the two ecosystems to more efficiently realize a user-centered approach and motivate more content creators to become live hotspots.

**2\. Creators and Users**

**"1" Creator's Side**

(1) Historical Performance in Q2:

Through continuously growing creator technology, the company has accumulated a large amount of high-quality content.

-   An average of 13.2 million video contents were uploaded, a YoY growth of 56%.
    
-   The average monthly number of active content creators was 3.6 million, up 50% YoY.
    
-   The number of creators with 10,000 followers increased by 46% YoY, and the number of creators with 1 million followers increased by 58% YoY. It is worth noting that over 60% of content creators, especially those with 1 million followers, benefited from the rapidly growing story mode traffic in Q2.
    

(2) Now and future: We will continue to expand channels to unlock the profit potential of content creators. In Q2, over 1.1 million content creators received monetization rewards through live streaming, advertising programs, or cash incentive plans.

**「2」User Side**

(1) Q2 historical performance:

Users mainly focused on lifestyle, games, entertainment, ACG, and knowledge-based videos.

-   Daily video views increased by 83% to 3.1 billion.
-   Monthly interactions increased by 73% to 12.5 billion.
-   The average time users spent per day increased by 9 minutes YoY, reaching 89 minutes.

(2) Now and future: We will continue to resonate with users through strong content and a warm community environment.

\*\* \[4\] Business Operation (Value-added "Live Streaming, VIP, Advertising, Gaming") \*\*

**1\. Value-added service revenue reached ¥2.1 billion, an increase of 29% YoY.**

**「1」Live streaming**

Live streaming drives more traffic to convert into paid users. Bilibili has unique advantages in this area, which is a natural extension of the video industry. Despite facing more stringent regulatory challenges, Q2 live streaming conversion rates still performed strongly. By integrating the PUGV ecosystem and live streaming, a win-win solution has been created.

-   The number of active live streamers increased by 107% YoY.
-   Live streaming MAU participation rate continued to grow, increasing by nearly 70% YoY.
-   The gross profit margin of live streaming was improved by optimizing the revenue sharing plan.

**「2」VIP Memberships:** Reached 21 million, an increase of 19% YoY.

**2\. Advertising revenue was ¥1.16 billion, an increase of 10% YoY.**

(1) Q2 historical performance:

-   Popular vertical categories include gaming, digital products, skincare and cosmetics, e-commerce, and food.
-   The Q2 goal is to optimize product supply and conversion rates. We will continue to invest in resources, diversify products, and improve conversion modules to expand advertising solutions.
-   All integrated marketing activities and sales strategies were executed to achieve more core sales opportunities.
-   Story mode was embraced by many advertisers.

(2) Now and future: We will continue to convert paid users, improve advertising efficiency, and gain more market share to maximize high-quality user base.

**3\. Net game revenue was ¥1.05 billion.**

(1) Q2 historical performance:

-   The main challenge for H1 was the insufficient supply of new game content in the domestic market, but the approval process for domestic games has now returned to normal, and we look forward to seeing more games approved.
-   Self-developed games accounted for about 5% of total gaming revenue in Q2, mainly due to the successful launch of "Azur Lane" in many countries and regions.

And that’s it. (2) Now and in the future: The company's game strategy still focuses on independent research and development and bringing high-quality games to the domestic and international markets.

-   Domestically, it is actively applying for game licenses and has had four games approved for release.
-   Overseas, there are six games, including two self-developed games, which are preparing to be released in the second half of this year.

**\[5\] Overall outlook**

-   **Expected revenue of 5.6-5.8 billion in 2022 Q3, a year-on-year growth of 7.5%-11.4%.**
-   In the future, attention and resources will be focused on improving revenue and profit, planning further increases in operational efficiency, cutting expenses, committing to improving gross profit margins, and narrowing operating losses in H2.

**Dolphin Analyst Q&A**

### Q: Cost control measures besides marketing; profit and development expectations for 2022 H2.

**A: \[1\] Reducing costs and increasing efficiency**

The focus of cost reduction and efficiency improvement is on efficiency, or effective spending. In the face of macroeconomic conditions and pandemic challenges, the company has emphasized focusing on the core. The core of B Station's work is first and foremost video, followed by growth (user and revenue growth).

In H1 2022, the company invested money and resources in **video, user growth, and revenue growth**.

1.  Improve user growth efficiency

B Station is a typical platform-based internet economy, whose value comes from user value. In H1, the company focused on user growth while improving user growth efficiency and reducing user acquisition costs. In Q2, marketing costs were down 16% year-on-year, and the proportion of revenue decreased from 31% to 24%, while user retention and activity continued to rise.

1.  Improved technology infrastructure and lowered costs

Q2 DAU increased by 33% year-on-year, and VV increased by 83%. At the same time, B Station's video quality is getting higher. By optimizing technology, the bandwidth cost per VV has decreased by 3%. This year, DAU and user time are rising, but due to technical optimization, IT technology investment (such as bandwidth, servers, etc.) will not be higher than last year.

**\[2\] Profit and development expectations for 2022 H2**

Q2 performance was greatly affected by the pandemic, and growth is expected to recover in H2. In H2, the company will continue to implement strict cost reduction and efficiency improvement measures, and it is expected that **the Q4 gross margin will increase to about 20%, and the net loss rate will decrease from about 40% in Q2 to about 30% in Q4.**

### Q: Driving factors behind DAU growth exceeding MAU; user growth outlook for 2022 H2 and 2023.

**A: \[1\] B Station's continuous growth fundamentals**

1.  Video is a global trend that will last at least 3 years, so B Station's growth will continue to increase in the next three years.
    
2.  B Station can meet the cultural and entertainment needs of the younger generation, and currently, half of its users are young people under 25.
    
3.  Upgrading consumption is a trend in society, and content consumption is an important part of upgrading consumption. The younger generation is more willing to invest in spiritual and cultural consumption. Following the above, B Station is a business with growth potential.
    

**【2】Drive factors for DAU growth surpassing MAU**

**Forming a model of high-quality and healthy growth: Interaction growth exceeds VV, VV exceeds DAU, DAU exceeds MAU.**

(1) Emphasis on growth quality (contributing to cost-reduction and efficiency-increase)

(2) The intrinsic content ecosystem driven model is a healthier growth model. A variety of content categories are developing healthily and expanding into new categories besides traditional popular ones. We believe that there will be many good and even phenomenal creators and works in the future.

(3) A multiple-category development strategy has also promoted healthy growth, with PUGV, live broadcasts, OGV and story mode growing rapidly, filling users' new scenarios.

**【3】User Growth Prospects for 2022H2 and 2023**

We are confident in achieving the goal of 400 million MAU by 2023. Achieving the goal requires ensuring healthy growth, with DAU given more emphasis than MAU.

### **Q: story mode positioning, strategy, and commercial progress**

**A: \[1\] Story Mode Growth**

The growth of 400% is due to the fact that Story Mode started from scratch. In terms of overall growth, total VV increased by 83% YoY, PUGV increased by 53% YoY, and story mode contributed to the remaining 30% growth, which was also considerable.

**\[2\] Story Mode Positioning and Strategy**

Story mode embodies the strategy of multiple scenarios and multiple categories. B Station video is a complete content ecosystem, mainly composed of PUGV, and live broadcasts and story mode are extensions of the PUGV content ecosystem. On the basis of the existing PUGV ecosystem, it occupies new user scenarios or provides new interactive forms for the original up owners and users.

Story mode is an important supplement to the original B Station ecosystem, meeting users' demand for consuming content in fragmented time (watching a 1-2 minute video about 10 times a day).

**\[3\] The role of story mode**

Promoting low activity users to be active and up owners to increase their fans.

\-Low-activity users: Previously, due to long video lengths or high aesthetic thresholds, story mode helps low-activity users enter the B Station ecosystem.

\-New up owners or those with low fans: Previously, increasing fans required a lot of effort in making long videos, but now there is an option to create light videos.

\-Up owners who are good at creating vertical screen videos: More opportunities are provided. Q260% benefited from the addition of millions of fans thanks to story mode, which broadens up owners' upward path.

**\[4\] Story Mode Positioning**

Although it is a vertical screen video, it is a high-quality video with B Station's distinctive features. B Station's cultivation of Story Mode's content ecosystem and algorithm recommendation are completely consistent with PUGV, emphasizing content and user positive feedback. The proportion of likes is higher than the proportion of VVs, indicating users' recognition of the video quality. In the future, there will definitely be popular vertical video content and typical story mode up masters (like Yamashiro Kazutoshi).

### **Q: Measures for advertising to cope with macro environment and the fluctuation of epidemic situations; commercialization progress of story mode advertising**

**A:** The overall environment has a significant short-term impact on advertising and will continue to do so for the next 1-2 years. Advertisers' budgets are shrinking, and their attitude towards advertising is cautious. The development of emerging industries is more difficult. However, during this period, the advantages of platforms with high user value and conversion efficiency will be more obvious, but it will certainly be more difficult than before 2021. In Q2, Bilibili's advertising revenue was 1.16 billion, a year-on-year increase of 10%, making it one of the few platforms with increased market share.

**Countermeasures for advertising business \[Q3 and Future Outlook\]**

1\. **Q3 proposes a core strategy for the next 3 years: centering on growth, upholding community first, and driving both ecology and commerce. This is the first time that commercialization and ecological community have been elevated to the same height.**

(1) Organizationally, the on-demand and live broadcast organizational systems will be completely integrated, realizing the integration of on-demand and live content, and achieving closed-loop penetration of advertising in multiple scenarios.

(2) Connecting the commercial advertising body and the ecological system, establishing two central platforms and two business structures.

-   One is the commercialization central platform, which aims to continuously improve the efficiency of traffic monetization (building the foundation of advertising business) and empower multiple internal businesses.
-   The other is the small central platform, which mainly provides revenue strategies and services for up masters, aiming to assist up masters in monetization and improve their experience.

The above business adjustments ensure that the commercialization team will form a positive cycle of community ecology, user growth, and business growth, truly becoming mutually driving forces in the future.

2\. In the second half of the year, the approach to commercial advertising will be further iterated, with two points remaining unchanged:

-   Emphasis on infrastructure construction, continued strengthening of algorithms and data infrastructure construction, that is, optimization of monetization in different scenarios to improve product efficiency. At the same time, on the basis of data construction, a more scientific marketing system will be established.
-   The industry will continue to adhere to verticalization (such as games, e-commerce, fast-moving consumer goods, automobiles, etc.), aiming to find deep solutions that combine with the ecology, KAs, and industry budgets.

3\. Due to the continuous improvement of advertising efficiency, economic recovery, and iterative integration of marketing programs, **it is estimated that Q3 revenue will achieve a year-on-year growth of about 20%**: Although the brand budgets in the second half of the year will be greatly affected by macroeconomic uncertainty, the integration of story mode and the ecology in multiple scenarios will bring some growth, and conversion-type advertising will also obtain new advertising budgets.

4\. **In Q3, Bilibili's ecology will further open up to industry partners.**

-   Currently, preliminary cooperation with e-commerce platforms such as Taobao, Tmall, JD, and Pinduoduo has been reached, actively exploring native advertising on Bilibili, such as up masters advertising products, and conducting transaction conversions based on Bilibili's product model.
-   We will actively establish ecological partnerships with all brand owners and life/consumption platforms at different levels.

The advantage is that in the short term, we can directly increase advertising revenue by integrating with products like fireworks and story mode, **but we value more the long-term improvement of BiliBili's commercial environment and user consumption concentration in the ecosystem**.

1.  BiliBili has continued to maintain its advantages in industries such as games, 3C digital, food and beverage, beauty, and cosmetics. In the first half of the year, mobile games, automobiles, and digital products performed particularly well, with mobile games increasing by 89% year-on-year and automobiles increasing by more than 110% year-on-year.

Although story mode is a rapidly growing trend that brings new advertising revenues, the ECPM is indeed higher than other similar ads. **However, from a long-term perspective of 2023-2025, BiliBili's revenue growth ceiling depends on whether it can create an integrated marketing solution that is ecological, standardized, and industrialized.**

Risk Disclosure and Statement for this article: [Dolphin Analyst Disclaimer and General Disclosures](https://support.longbridge.global/topics/misc/dolphin-disclaimer)

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