Group 1 - The global trade order that has supported the last few decades is experiencing significant fractures, particularly highlighted by China's recent decision to increase import restrictions [1] - The ongoing trade conflict between Washington and Beijing is intensifying, with implications for technology companies and the broader market [1] Group 2 - The article features insights from Gary Alexander, who has extensive experience in technology sectors and has contributed to various financial publications since 2017 [1]

Core Viewpoint - Bilibili Inc. is preparing for its annual general meeting (AGM) scheduled for June 20, 2025, to discuss shareholder proposals and resolutions [1]. Group 1: AGM Details - The AGM will take place at Building 3, Guozheng Center, No. 485 Zhengli Road, Yangpu District, Shanghai, at 4:30 p.m. Hong Kong time [1]. - Shareholders of ordinary shares as of May 13, 2025, Hong Kong time, are entitled to attend and vote at the AGM [2]. - Holders of American depositary shares must act through Deutsche Bank Trust Company Americas to exercise their voting rights [2]. Group 2: Financial Reporting - Bilibili has filed its annual report on Form 20-F, including audited financial statements for the fiscal year ended December 31, 2024, with the U.S. Securities and Exchange Commission [3]. Group 3: Company Overview - Bilibili is a leading video community in China, focusing on enriching the lives of young generations through diverse video content [4]. - The company is known for its "bullet chatting" feature, enhancing user engagement by allowing real-time comments during video viewing [4]. - Bilibili aims to promote Chinese culture globally while fostering a strong community among its users and content creators [4].

Core Viewpoint - Bilibili Inc. has published its 2024 Environmental, Social and Governance (ESG) Report, highlighting its commitment to social value and sustainable development for its stakeholders [1][2]. Group 1: ESG Initiatives - The 2024 ESG report provides transparency regarding Bilibili's operations, governance structure, and initiatives aimed at fostering positive social change [2]. - Key areas covered in the report include content ecosystem enhancement, tech innovation, community engagement, minors' protection, cybersecurity, privacy protection, content creator empowerment, talent development, environmental protection, charitable activities, and corporate governance [2]. Group 2: Content Ecosystem & User Community - Bilibili has expanded its content ecosystem and improved cybersecurity measures, ensuring a reliable space for users [3]. - The company is leveraging AI applications to enhance user experience and empower content creators [3]. Group 3: Content Creator Empowerment - Bilibili provides content creators with creative tools, operational support, and monetization opportunities, enabling them to engage with fans and achieve sustainable success [3]. Group 4: Talent Nurturing and Governance - Bilibili invests in employee career growth and development, covering 100% of full-time employees with a comprehensive benefits system [4]. Group 5: User Engagement and Growth Metrics - Daily active users reached approximately 104 million, with an average of 102 minutes spent on the platform daily [5]. - The platform generated over 5.1 billion average daily video views, marking a 19% year-over-year increase [5]. - Approximately 4 million monthly active content creators were reported, with nearly 3.1 million earning income through various channels [5]. Group 6: Industry Cultivation and Social Endeavors - Bilibili promotes openness and inclusivity, supporting original content creators and building a dynamic open-source community [6]. - The company engages in social causes and spreads positive energy through quality content, raising awareness for meaningful change [6]. Group 7: Environmental Commitment - Bilibili integrates "green" principles throughout its operations and uses its content library to educate users on environmental protection [7]. - The company raised public awareness on environmental topics, generating 25.3 billion relevant video views, a 100% increase year-over-year [9].

Investment Rating - The report maintains a "Recommended" rating for Bilibili (BILI) [1] Core Views - The profit exceeded expectations, and the company is expected to see stable revenue growth and advertising growth driving sustained profitability [1] - In Q4 2024, Bilibili achieved revenue of 7.7 billion yuan, a year-over-year increase of 22% and a quarter-over-quarter increase of 6% [1] - The company reported a NON-GAAP operating profit of 460 million yuan, turning profitable year-over-year and increasing by 70% quarter-over-quarter [1] - The total revenue for 2024 is projected to be 26.8 billion yuan, with a year-over-year growth of 19% [1] Financial Performance Summary - **Revenue**: - Q4 2024: 7.7 billion yuan, YOY +22%, QOQ +6% [1] - 2024 Full Year: 26.8 billion yuan, YOY +19% [1] - **Profitability**: - Q4 2024 NON-GAAP net profit: 450 million yuan, YOY turning profitable, QOQ +92% [1] - 2024 Full Year NON-GAAP net profit: -20 million yuan, YOY narrowing by 99% [1] - **Future Projections**: - 2025E Revenue: 29.7 billion yuan, YOY +10.6% [4] - 2026E Revenue: 32.2 billion yuan, YOY +8.4% [4] - 2027E Revenue: 34.4 billion yuan, YOY +6.8% [4] - **Earnings Per Share (EPS)**: - 2025E: 1.47 yuan [4] - 2026E: 5.32 yuan [4] - 2027E: 8.52 yuan [4] Business Segment Performance - **Mobile Game Business**: - Q4 2024 revenue: 1.8 billion yuan, YOY +79%, QOQ -1% [8] - Growth driven by the core SLG product "Three Kingdoms: Strategy" [8] - **Advertising Business**: - Q4 2024 revenue: 2.39 billion yuan, YOY +24%, QOQ +14% [8] - Daily Active Users (DAU) and Monthly Active Users (MAU) reached 103 million and 340 million respectively [8] - **Value-Added Services**: - Q4 2024 revenue: 3.08 billion yuan, YOY +8%, QOQ +9% [8] Valuation and Target Price - The target price for Bilibili is set at $21.38, based on a 20x PE for the 2026 NON-GAAP net profit [8]

Financial Data and Key Metrics Changes - Total revenues for Q4 2024 were RMB 7.7 billion, reflecting a year-over-year increase of 22%, while full-year revenues reached RMB 26.8 billion, up 19% year-over-year [8][37] - The company achieved its first GAAP net profit in Q4, amounting to RMB 89 million, with an adjusted net profit of RMB 452 million [9][40] - Gross profit margin improved to 36.1% in Q4, up from 26.1% in the same period last year, contributing to a 68% year-over-year growth in gross profit [9][38] Business Line Data and Key Metrics Changes - Advertising revenues increased by 24% year-over-year in Q4 to RMB 2.4 billion, and for the full year, it grew by 28% to RMB 8.2 billion [22][64] - Mobile games revenues surged by 79% year-over-year in Q4 to RMB 1.8 billion, and for the full year, it increased by 40% to RMB 5.6 billion [27][38] - VAS revenues rose by 8% in Q4 to RMB 3.1 billion and by 11% for the full year to RMB 11 billion [30][38] Market Data and Key Metrics Changes - Daily Active Users (DAUs) reached 103 million, and Monthly Active Users (MAUs) were 340 million, with users spending an average of 99 minutes daily on the platform [10][18] - The user base represents nearly 70% of China's Gen Z population, with an average age of 25, indicating a strong consumer demographic [10][66] Company Strategy and Development Direction - The company aims to leverage high-quality content and community engagement as core pillars for growth, focusing on expanding its commercialization efforts [13][34] - Bilibili plans to explore AI advancements to enhance its content offerings and improve user engagement, positioning itself to capitalize on emerging technologies [11][58] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the advertising business growth in 2025, expecting to maintain above-industry growth rates [24][74] - The company is committed to enhancing its advertising infrastructure and product offerings to drive efficiency and attract more advertisers [68][74] Other Important Information - The company successfully partnered with CCTV for the Spring Festival Gala, resulting in a 20% increase in DAUs during the event [96][101] - A share repurchase program of up to USD 200 million was announced, reflecting confidence in the company's cash flow generation [42][43] Q&A Session Summary Question: What is the overall strategy for 2025 after reaching breakeven? - Management highlighted the focus on content and community, aiming for sustainable growth and profitability while leveraging high-quality content as a core strategy [47][49] Question: Can you elaborate on the drivers for strong advertisement growth in 2024? - The advertising revenue growth was attributed to a high-quality user base and strong content offerings, with performance-based ads seeing over 40% growth [64][66] Question: What are the expectations for gross and net margins in 2025? - Management expects continued gross margin expansion, targeting a long-term gross margin of 40% to 45% [79][80] Question: How will the company expand its user base and enhance brand awareness? - The partnership with CCTV and similar projects are seen as key strategies to attract new users and improve brand equity [94][102]

Financial Performance - Total revenues for 2024 increased by 19% year over year to RMB 26.8 billion, driven by a 28% growth in advertising revenues and a 40% increase in mobile games revenues[19] - Gross profit for 2024 reached RMB 8.8 billion, representing a 61.2% year-over-year increase, with a gross profit margin expanding to 32.7%[19] - The net loss for 2024 was reduced by 72% to RMB 1.4 billion, marking a significant improvement in financial performance[19] - Total net revenues for 2024 were RMB 26.8 billion, an increase of 19% from RMB 22.5 billion in 2023[39] - Gross profit for 2024 was RMB 8.8 billion, representing an increase of 61% from RMB 5.4 billion in 2023[45] - Loss from operations narrowed to RMB 1.3 billion, a 73% improvement from RMB 5.1 billion in 2023[50] - Net loss for 2024 was RMB 1.4 billion, narrowing by 72% from RMB 4.8 billion in 2023[54] User Engagement - Daily Active Users (DAUs) averaged nearly 104 million in 2024, while Monthly Active Users (MAUs) surpassed 341 million, reflecting year-over-year growth of 6% and 4%, respectively[20] - Average daily video views on the platform reached 4.3 billion, a 19% increase year over year, indicating strong user engagement[21] - The number of monthly active content creators reached approximately 4.0 million, contributing to 20.7 million average monthly video submissions[22] Revenue Breakdown - Revenues from Value-Added Services (VAS) increased by 11% year over year to RMB 11.0 billion, with over 22.7 million premium members by the end of 2024[26] - Total advertising revenues reached RMB 8.2 billion in 2024, reflecting a 28% year-over-year increase, with performance-based advertising growing by over 40%[28] - Revenues from mobile games reached RMB 5.6 billion in 2024, increasing 40% year over year, driven by the successful launch of the strategy game San Guo: Mou Ding Tian Xia[30] - Revenues from value-added services (VAS) were RMB 11.0 billion, representing an increase of 11% from RMB 9.9 billion in 2023[40] - Revenues from advertising were RMB 8.2 billion, representing an increase of 28% from RMB 6.4 billion in 2023[41] - Revenues from mobile games were RMB 5.6 billion, representing an increase of 40% from RMB 4.0 billion in 2023, driven by the success of the game San Mou[42] Corporate Governance - The Company has complied with the Corporate Governance Code set out in Appendix C1 to the Listing Rules during the Reporting Period[148] - The auditor confirmed that the disclosed continuing connected transactions have not exceeded the annual caps set by the Company[140] - The company has confirmed compliance with all applicable code provisions of the Corporate Governance Code during the Reporting Period[201] - The company has a commitment to high corporate governance standards to safeguard shareholder interests and enhance corporate value[200] - The roles of chairman and chief executive officer are held by Mr. Rui Chen, which the board believes ensures consistent leadership and effective strategic planning[201] - The board will reassess the division of roles between chairman and chief executive officer periodically[202] - The company has adopted a securities dealing code that aligns with the Model Code for regulating dealings by directors and relevant employees[204] - The company has received annual confirmations of independence from each independent director, affirming their independence[197] Risks and Challenges - The Company incurred significant losses in the past and may not be able to maintain profitability in the future[75] - The Company operates in a fast-evolving industry and may struggle to implement successful commercialization strategies[75] - The Company is subject to risks related to cybersecurity, which could materially affect its business and reputation[75] - The PRC government's regulations could significantly limit the Company's ability to offer securities to investors[77] - The trading price of the Company's listed securities has been volatile, which could result in substantial losses for investors[79] - The Company generated a large amount of data and must comply with PRC laws regarding privacy and cybersecurity[75] Shareholder Information - As of December 31, 2024, the WVR Beneficiaries held a total of 83,715,114 Class Y Ordinary Shares, representing 71.6% of voting rights in the Company[143] - Mr. Rui Chen controlled 49,299,006 Class Y Ordinary Shares, representing 42.1% of the voting rights in the Company as of December 31, 2024[144] - The Company generated less than 10% of total revenue from its five largest customers combined during the fiscal year ended December 31, 2024[149] Financial Transactions - The Company had cash and cash equivalents of RMB 16.5 billion as of December 31, 2024, compared to RMB 15.0 billion as of December 31, 2023[56] - The company repurchased a total of 839,167 ADSs for an aggregate consideration of US$16.4 million as of December 31, 2024[34] - As of December 31, 2024, an aggregate principal amount of US$13.4 million of convertible senior notes remained outstanding[180] - The Group completed the repurchase of US$429.3 million (RMB3.0 billion) of April 2026 Notes in March 2024[180] - The Group completed the repurchase of US$419.1 million (RMB3.0 billion) of December 2026 Notes in November 2024[180] - The net proceeds from the issuance of the December 2026 Notes were US$1,576.6 million (RMB10.1 billion) after costs[179] - The net proceeds from the issuance of the 2027 Notes were US$786.1 million (RMB5,594.8 million) after costs[178] - The net proceeds from the issuance of the April 2026 Notes were US$488.2 million (RMB3,356.1 million) after costs[177] Social Responsibility - The Company is committed to social responsibility and sustainable growth, as detailed in its Environmental, Social and Governance Report[80] - The Group made charitable donations of RMB25.7 million during the Reporting Period[157] Dividend Policy - The Board did not recommend the distribution of an annual dividend for the fiscal year ended December 31, 2024[160] - The company does not have a dividend policy and intends to retain most of its available funds for business operations and expansion[203] - The company did not have any distributable reserves as of December 31, 2024[164] - No equity-linked agreements were entered into by the Group during the Reporting Period[159]

Core Viewpoint - Bilibili Inc. has filed its annual report on Form 20-F for the fiscal year ended December 31, 2024, with the SEC, highlighting its status as a leading video community for young generations in China [1]. Company Overview - Bilibili is recognized as an iconic brand and a leading video community in China, aiming to enrich the lives of young generations through a diverse array of video-based content [3]. - The company has developed a strong community centered around aspiring users, high-quality content, and talented creators, fostering emotional connections among them [3]. - Bilibili is known for its innovative "bullet chatting" feature, which enhances the viewing experience by allowing real-time comments from viewers [3]. - The platform serves as a hub for diverse interests among young people in China and plays a significant role in promoting Chinese culture globally [3]. Annual Report Availability - The annual report, which includes audited consolidated financial statements, is available in electronic format on the company's investor relations website and the SEC's website [1]. - Hard copies of the annual report can be requested free of charge by shareholders and ADS holders [2].

Financial Performance - Total revenues for the year ended December 31, 2024, reached RMB 26,831,525 thousand, a significant increase from RMB 22,527,987 thousand in 2023, representing a growth of approximately 19.4%[46] - The net loss attributable to Bilibili Inc.'s shareholders for 2024 was RMB 1,346,800 thousand, compared to a net loss of RMB 4,822,321 thousand in 2023, indicating a reduction in losses by approximately 72%[46] - Third-party revenues in 2024 amounted to RMB 17,393,878 thousand, up from RMB 14,642,361 thousand in 2023, reflecting a growth of about 18.9%[46] - Total costs and expenses for 2024 were RMB 28,175,494 thousand, compared to RMB 27,592,174 thousand in 2023, showing an increase of approximately 2.1%[46] - The company reported third-party costs and expenses of RMB 16,539,124 thousand for 2024, which is a decrease from RMB 15,591,936 thousand in 2023, reflecting a cost management improvement[46] - The net loss from subsidiaries and net loss of VIEs for 2024 was RMB 1,400,195 thousand, a decrease from RMB 4,733,008 thousand in 2023, indicating improved operational performance[46] Cash Flow and Liquidity - Cash and cash equivalents as of December 31, 2024, totaled RMB 10,249,382 thousand, compared to RMB 10,249,382 thousand in 2023, indicating stable liquidity[49] - The company reported a net cash provided by operating activities of RMB 6,014,854 thousand for the year ended December 31, 2024[52] - For the year ended December 31, 2023, net cash provided by operating activities was RMB 266,622 thousand, a significant improvement compared to a net cash used of RMB 3,911,370 thousand in 2022[53][54] - Total net cash provided by investing activities for 2023 was RMB 1,762,148 thousand, contrasting with a net cash used of RMB 10,609,218 thousand in 2022, indicating a positive shift in investment cash flow[53][54] - The company reported a net cash used in financing activities of RMB 2,825,383 thousand for the year ended December 31, 2024[52] Revenue Sources and Growth - Revenues contributed by the VIEs accounted for 73.4%, 69.4%, and 68.2% of total revenues for the years 2022, 2023, and 2024, respectively[25] - The company generated revenues from mobile games of RMB4,021.1 million in 2023, which increased by 39.5% to RMB5,610.3 million (US$768.6 million) in 2024, primarily due to the strong performance of the game "San Guo: Mou Ding Tian Xia" launched in June 2024[139] - The company derived 22.9%, 17.8%, and 20.9% of its revenues from mobile games in 2022, 2023, and 2024, respectively, with no single mobile game contributing more than 10% of total net revenues in those years[139] Regulatory Environment - The PRC government has indicated an intent to exert more oversight over overseas offerings, requiring companies to file with the CSRC for overseas securities offerings[31] - The PCAOB has not issued any new determination regarding its ability to inspect audit firms in mainland China and Hong Kong, which may affect future trading of Bilibili's shares in the U.S.[35] - The company may be required to obtain additional licenses or permits for its operations in mainland China, which could materially affect its business[31] - Compliance with evolving PRC data security and privacy regulations may increase operational costs and pose risks to business continuity[80] - The company must comply with new regulations regarding online violence and user identity verification, which could impose additional operational burdens[104] Operational Challenges - The company faces significant legal and financial risks due to potential cybersecurity breaches, which could adversely affect its business and reputation[82] - The company is currently involved in approximately 300 lawsuits related to copyright infringement, which could divert resources and affect financial performance[112] - The company faces intense competition for users and hosts in the live broadcasting business, particularly in areas such as gaming, e-sports, and entertainment[122] - The company must maintain good relationships with third-party game developers to access new popular games, as failure to do so could adversely affect operating results[141] Investment and Growth Strategy - The company is focusing on enhancing its commercialization strategies and developing new technologies, including artificial intelligence, to sustain revenue growth in a fast-evolving industry[66] - The company has invested significantly in developing and protecting its intellectual property, with potential risks from unauthorized use by third parties[119] - The company acquired a game company in February 2022 to enhance its in-house game development capacity[158] - The construction of a new property in Shanghai is expected to complete by approximately 2026, with the company holding a 30.01% stake in the project[165] VIE Structure and Risks - The company relies on contractual arrangements with VIEs for operations in mainland China, which may not provide effective control compared to direct ownership[209] - The VIEs hold essential licenses for operations, including Value-added Telecommunication Business Licenses and Online Culture Operating Permits, which are critical for business continuity[212] - Regulatory scrutiny of the VIE structure could lead to significant operational and financial risks if deemed non-compliant with foreign investment regulations[222] - There are substantial uncertainties regarding the interpretation of PRC laws, which could affect the enforceability of the company's contractual arrangements with VIEs[206] Employee and Talent Management - The company may face challenges in attracting and retaining key employees due to intense competition in the internet and technology industries in mainland China[174] - The company relies on talent agencies to manage hosts, and any failure to balance interests or design agreeable revenue-sharing mechanisms may hinder host retention[125] Future Outlook - Future revenue growth is contingent on user engagement, effective monetization strategies, and the ability to adapt to rapid technological changes[67] - The company anticipates a slowdown in user growth rate as market penetration increases, shifting focus from MAU to DAU growth[91] - A severe downturn in the Chinese or global economy could materially and adversely affect the company's business and financial condition[198]

Investment Rating - The investment rating for Bilibili (BILI) is "Buy" with a maintained rating for the next six months [4]. Core Insights - Bilibili reported Q4 2024 revenue of 7.73 billion yuan, exceeding Bloomberg consensus by 1.2%. Adjusted net profit was 450 million yuan, surpassing expectations by 15.3% [1]. - The mobile gaming segment generated 1.8 billion yuan in revenue, exceeding expectations by 0.6% and showing a year-on-year growth of 79%, driven by the strong performance of the exclusive strategy game "Three Kingdoms: Strategy of the World" [1][3]. - Advertising revenue reached 2.39 billion yuan, also exceeding expectations by 0.6%, with a year-on-year growth of 24%, attributed to product optimization and improved advertising efficiency [1][3]. - Value-Added Services (VAS) revenue was 3.08 billion yuan, surpassing expectations by 2.7%, with an 8% year-on-year increase due to growth in other value-added services and membership subscriptions [1]. - IP and derivative products revenue was 460 million yuan, falling short of expectations by 2.1%, with a year-on-year decrease of 16% [1]. User and Creator Metrics - The company reported a Daily Active User (DAU) count of 103 million and a Monthly Active User (MAU) count of 340 million, with a daily average usage time of 99 minutes [2]. - The number of monetizing creators (UP owners) reached 3.1 million, with total revenue from UP owners growing by 21% year-on-year [2]. - The number of UP owners earning revenue through video and live e-commerce increased by 68% year-on-year [2]. Cost Structure and Profitability - Operating costs were 4.95 billion yuan, a year-on-year increase of 5%, with revenue-sharing costs at 3.17 billion yuan, up 12% due to increased costs associated with mobile gaming [2]. - Gross margin improved significantly to 36.1%, reflecting a year-on-year increase of 10 percentage points [2]. - The adjusted net profit of 450 million yuan marked a turnaround from previous losses [2]. Advertising and Gaming Business Growth - The advertising business showed strong growth, with revenue per DAU increasing by over 20% year-on-year, driven by an expanding user base and enhanced advertising efficiency [3]. - The company plans to further open its ecosystem in 2024, embracing more advertising opportunities and optimizing its advertising infrastructure [3]. - The game "Three Kingdoms" is expected to continue driving revenue growth, with the company focusing on high-quality gameplay and careful commercialization [3]. Future Projections - Revenue forecasts for FY25E-FY27E are projected at 30.2 billion, 33.3 billion, and 36.6 billion yuan respectively, with non-GAAP net profits expected to be 2.05 billion, 3.8 billion, and 5 billion yuan [4].

Investment Rating - The report assigns a "Buy" rating to the company with a target price of $27.8, indicating a potential upside of 36% from the current price of $20.34 [1][7][13] Core Insights - The company achieved a significant revenue growth of 19% year-on-year, reaching 26.83 billion RMB in 2024, with Q4 revenue growing by 22% to 7.73 billion RMB. The growth was driven by high-margin businesses, particularly in advertising and gaming [3][11] - The user engagement metrics remain strong, with daily active users (DAU) at 103 million and monthly active users (MAU) at 340 million, indicating a thriving community ecosystem [7][13] - The gaming segment saw a remarkable 79% year-on-year growth in Q4, primarily due to the success of the game "Three Kingdoms: Strategy of the World," which has become a key revenue driver [5][12] Summary by Sections Financial Performance - Total revenue for 2024 was 26.83 billion RMB, with Q4 revenue at 7.73 billion RMB, reflecting a 22% increase year-on-year. The advertising segment contributed 23.9 billion RMB, growing by 24%, while gaming revenue reached 18.0 billion RMB, up 79% [3][11] - The gross profit margin improved significantly, reaching 36.1%, with a gross profit increase of 68% year-on-year [3][11] User Engagement - The platform's DAU and MAU were reported at 103 million and 340 million, respectively, with an average daily usage time of 99 minutes, showcasing robust user engagement [7][13] - The company has a stable membership retention rate of over 80%, indicating strong user loyalty [11] Future Outlook - The upcoming game "Jujutsu Kaisen: Phantom Night" is expected to boost gaming revenue further once it receives approval for domestic release. The existing game "Three Kingdoms: Strategy of the World" is anticipated to maintain high revenue levels in its new season [5][12][13] - The advertising revenue is projected to benefit from product optimization and the seasonal increase in demand during the Spring Festival [7][13]