China’s Bilibili plunges after video site’s loss soars 79% in second quarter

(Yicai Global) Sep 9 – Shares of Bilibili fell after the Chinese video platform said its net loss worsened 79% in the second quarter from a year ago.

Bilibili shares traded in Hong Kong [HK: 9626] closed down 16.3% at 152.10 HKD (19.40 USD). Stocks are down almost 60% this year.

The Nasdaq-listed shares of the platform [NASDAQ: BILI] was trading down 2.9% in premarket trading at 12:22 p.m. Beijing time, after falling 15% yesterday.

From April to June, Bilibili’s net loss widened to CNY 2 billion (USD 289.9 million) due to the impacts of the Covid-19 pandemic, the Shanghai-based company said yesterday in its report on the results. Revenue rose 9% to 4.9 billion yuan, much slower than the 72% rise recorded a year earlier.

The company offered profit advice. In the third quarter, Bilibili’s revenue is expected to be between CNY 5.6 billion and CNY 5.8 billion (USD 808.9 million and USD 837.8 million).

“As the macroeconomic environment gradually improves, we will continue to execute sound strategies for growth,” Chief Executive Chen Rui said. This means continuing to control costs, increase gross profit margin and reduce losses, while accelerating time to market, he added.

Bilibili made some improvements. For the first time, the number of monthly active users topped 300 million as of June 30, growing 29% year-over-year. The number of daily active users jumped 33% to 83.5 million.

However, the growing number of users has not generated enough revenue to cover the growing expenses. Operating costs totaled CNY 4.2 billion, an increase of 19%, driven by higher revenue sharing and content costs.

The main revenue driver was value-added services, including live streaming and subscriptions, as these revenues reached 2.1 billion yuan, up 29%. The second biggest contributor was advertising, which brought the company 1.2 billion yuan in the quarter, up 10%, which was a modest increase amid the pandemic.

Changes in the macro environment can sway advertising for a year or two, executives said on an earnings call. However, Bilibili is one of the few platforms to achieve year-over-year increases in ad revenue and market share, even as advertisers become cautious and cut budgets, they added.

The No. 3 segment was gaming – once a major revenue stream – with that revenue hitting 1.1 billion yuan in the quarter, down 15%. The reason was the lack of new exclusive games on the platform in the first half.

Editing: Emmi Laine, Xiao Yi