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Bilibili Inc. Announces Third Quarter 2019 Financial Results

November 18, 2019 GMT

SHANGHAI, China, Nov. 18, 2019 (GLOBE NEWSWIRE) -- Bilibili Inc. (“Bilibili” or the “Company”) (NASDAQ: BILI), a leading online entertainment platform for young generations in China, today announced its unaudited financial results for the third quarter ended September 30, 2019.

Third Quarter 2019 Highlights:

-- Total net revenues reached RMB1,859.0 million (US$260.1 million), a 72% increase from the same period in 2018. -- Average monthly active users (MAUs1)reached 127.9 million, mobile MAUs reached 114.2 million, representing increases of 38% and 43% from the same period in 2018, respectively. -- Average daily active users (DAUs)reached 37.6 million, a 40% increase from the same period in 2018. -- Revenue per MAU was RMB14.5, a 25% increase from the same period in 2018. Non-game revenue per MAU was RMB7.2, a 100% increase from the same period in 2018. -- Average monthly paying users (MPUs2)reached 7.9 million, a 124% increase from the same period in 2018. Average monthly paying users for mobile games increased to approximately 1.5 million, compared to 0.9 million for the same period in 2018.

“We are excited to announce another great quarter with exceptional growth to both user numbers and top line,” said Mr. Rui Chen, Chairman of the Board and Chief Executive Officer of Bilibili. “Our growing library of content and efficient user growth strategy continue to pay off. We attracted considerable new traffic in the third quarter, adding 17.5 million MAUs sequentially, the highest number of net-additions in our corporate history. Our average DAUs also reached a new high of 37.6 million, increasing by 40% year-on-year in the third quarter. These exceptional levels of daily user activity demonstrate the high engagement of our community and quality of our growth. We also improved monetization across our non-game business lines, with revenues from our advertising business, and live broadcasting and VAS business growing 80% and 167% year-on-year, respectively. Fueled by strong user growth, exceptional content and improved monetization capabilities, we will continue to increase our top line and enhance the value we bring to all of our constituents.”

Mr. Sam Fan, Chief Financial Officer of Bilibili, said, “We are pleased to exceed the high end of our guidance by 5%, growing our total revenues by 72% year-on-year to RMB1.86 billion. We now have even more diverse revenue streams, with revenues from our non-game business increasing by 176%, and representing 50% of our total net revenues. As our top line expands, we are delighted to see our gross margin also improve from 16.4% to 18.9% sequentially, showing our growing leverage. Along with high quality user growth and increased monetization levels, the number of average MPUs on our platform grew to 7.9 million, an increase of 124% from the same period last year. Looking ahead, we will continue to convert our growing traffic to paying users, further improve our gross margin and continue to work to achieve sustainable growth.”

Third Quarter 2019 Financial ResultsTotal net revenues. Total net revenues were RMB1,859.0 million (US$260.1 million), representing an increase of 72% from the same period of 2018.Mobile games. Revenues from mobile games were RMB933.1 million (US$130.6 million), representing an increase of 25% from the same period of 2018. The increase was primarily due to the increasing popularity of both existing and newly launched mobile games.Live broadcasting and Value-added services (VAS). Revenues from live broadcasting and VAS were RMB452.5 million (US$63.3 million), representing an increase of 167% from the same period of 2018, mainly attributable to the Company’s enhanced monetization efforts, led by increases in the number of paying users for live broadcasting services, the Company’s premium membership program and other VAS. Advertising. Revenues from advertising were RMB247.2 million (US$34.6 million), representing an increase of 80% from the same period of 2018. This increase was primarily attributable to the ramp-up of brand advertising and performance-based advertising, driven by further recognition of Bilibili’s brand name in China’s online advertising market. E-commerce and others. Revenues from e-commerce and others were RMB226.1 million (US$31.6 million), representing an increase of 703% from the same period of 2018, primarily attributable to the increase in sales of products through the Company’s e-commerce platform.Cost of revenues. Cost of revenues was RMB1,507.7 million (US$210.9 million), representing an increase of 71% compared to the same period of 2018. Revenue-sharing cost, a key component of cost of revenues, was RMB664.6 million (US$93.0 million), representing an increase of 49% from the same period in 2018.Gross profit. Gross profit was RMB351.3 million (US$49.1 million), representing an increase of 80% from the same period in 2018.Total operating expenses. Total operating expenses were RMB774.4 million (US$108.3 million), representing an increase of 71% from the same period of 2018.

Sales and marketing expenses. Sales and marketing expenses were RMB363.9 million (US$50.9 million), representing an 85% increase year-over-year. The increase was primarily attributable to the increased channel and marketing expenses associated with Bilibili’s app and brand in the summer holidays, as well as promotional expenses for the Company’s mobile games, increase in headcount in sales and marketing personnel, and an increase in fulfillment costs associated with Bilibili’s e-commerce stream.

General and administrative expenses. General and administrative expenses were RMB163.2 million (US$22.8 million), representing a 48% increase year-over-year. The increase was primarily due to increased personnel-related expenses, increased amortization expense related to intangible assets acquired through business acquisitions and other increased general and administrative expenses.

Research and development expenses. Research and development expenses were RMB247.3 million (US$34.6 million), representing a 69% increase year-over-year. The increase was primarily due to increased headcount in research and development personnel, increased share-based compensation expenses, and other increased research and development expenses.Loss from operations. Loss from operations was RMB423.1 million (US$59.2 million), compared to RMB259.0 million in the same period of 2018.Income tax expense. Income tax expense was RMB8.1 million (US$1.1 million), compared to RMB11.4 million in the same period of 2018. Net loss. Net loss was RMB405.7 million (US$56.8 million), compared to RMB246.1 million in the same period of 2018. Adjusted net loss3. Adjusted net loss, which is a non-GAAP measure that excludes share-based compensation expenses and amortization expense related to intangible assets acquired through business acquisitions, was RMB343.1 million (US$48.0 million), compared to RMB202.7 million in the same period of 2018.Basic and diluted EPS and adjusted basic and diluted EPS3. Basic and diluted net loss per share were RMB1.24 (US$0.17), compared to RMB0.88 in the same period of 2018. Adjusted basic and diluted net loss per share were RMB1.05 (US$0.15), compared to RMB0.72 in the same period of 2018.Cash and cash equivalents, time deposits and short-term investments. As of September 30, 2019, the Company had cash and cash equivalents, time deposits, as well as short-term investments of RMB8.4 billion (US$1,174.4 million), compared to RMB5.2 billion as of December 31, 2018.OutlookFor the fourth quarter of 2019, the Company currently expects net revenues to be between RMB1.93 billion and RMB1.98 billion.

The above outlook is based on the current market conditions and reflects the Company’s preliminary estimates of market and operating conditions, and customer demand, which are all subject to change.

1 Starting from the first quarter of 2019, the Company counts mobile MAUs of Bilibili Comic and Maoer toward its MAUs. Bilibili Comic is a mobile application offering comic content the Company launched in November 2018. Maoer is a platform that offers audio drama. In December 2018, Company increased its shareholdings to 80.5% in Maoer Inc., operator of Maoer app. In the third quarter of 2019, Bilibili Comic and Maoer in aggregate contributed 6.1 million of Bilibili’s MAUs.

2 The paying users are calculated by number of users who paid for games, live broadcasting, premier membership, Bilibili Comics services and Maoer, after eliminating duplicates of users paid for multiple services other than users of Maoer. The Company adds the number of paying users of Maoer toward its total paying users without eliminating duplicates.

3 Adjusted net loss and adjusted basic and diluted EPS are non-GAAP financial measures. For more information on non-GAAP financial measures, please see the section of “Use of Non-GAAP Financial Measures” and the table captioned “Unaudited Reconciliations of GAAP and Non-GAAP Results” set forth at the end of this press release.

Conference Call

The Company’s management will host an earnings conference call at 8:00 PM U.S. Eastern time on November 18, 2019 (9:00 AM Beijing/Hong Kong time on November 19, 2019).

Dial-in details for the earnings conference call are as follows:

United States: +1-866-519-4004International: +65-6713-5090Hong Kong: 800-906-601China: 400-620-8038Conference ID: 1139448

Participants should dial-in approximately 5 minutes before the scheduled start time and ask to be connected to the call for “Bilibili Inc.”

Additionally, a live and archived webcast of the conference call and investor presentation will be available on the Company’s investor relations website at http://ir.bilibili.com.

A replay of the conference call will be accessible by phone two hours after the conclusion of the live call at the following numbers, until November 25, 2019:

United States: +1-855-452-5696International: +61-2-8199-0299Hong Kong: 800-963-117China: 400-632-2162Replay Access Code: 1139448

About Bilibili Inc.

Bilibili represents the iconic brand of online entertainment with a mission to enrich the everyday life of young generations in China. Bilibili is a full-spectrum online entertainment world covering a wide array of genres and media formats, including videos, live broadcasting and mobile games. Bilibili provides an immersive entertainment experience and high-quality content that caters to the evolving and diversified interests of its users and communities, and has built its platform based on the strong emotional connections of Bilibili’s users to its content and communities.

For more information, please visit: http://ir.bilibili.com.

Use of Non-GAAP Financial Measures

The Company uses non-GAAP measures, such as adjusted net loss, adjusted net loss per share and per ADS, basic and diluted, in evaluating its operating results and for financial and operational decision-making purposes. The Company believes that the non-GAAP financial measures help identify underlying trends in its business by excluding the impact of share-based compensation expenses and amortization expense related to intangible assets acquired through business acquisitions, which are non-cash charges. The Company believes that the non-GAAP financial measures provide useful information about the Company’s results of operations, enhance the overall understanding of the Company’s past performance and future prospects and allow for greater visibility with respect to key metrics used by the Company’s management in its financial and operational decision-making.

The non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. The non-GAAP financial measures have limitations as analytical tools, and when assessing the Company’s operating performance, cash flows or liquidity, investors should not consider them in isolation, or as a substitute for net loss, cash flows provided by operating activities or other consolidated statements of operations and cash flows data prepared in accordance with U.S. GAAP.

The Company mitigates these limitations by reconciling the non-GAAP financial measures to the most comparable U.S. GAAP performance measures, all of which should be considered when evaluating the Company’s performance.

For more information on the non-GAAP financial measures, please see the table captioned “Unaudited Reconciliations of GAAP and Non-GAAP Results” set forth at the end of this press release.

Exchange Rate Information

This announcement contains translations of certain RMB amounts into U.S. dollars (“US$”) at specified rates solely for the convenience of the reader. Unless otherwise stated, all translations from RMB to US$ were made at the rate of RMB7.1477 to US$1.00, the exchange rate on September 30, 2019 set forth in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB or US$ amounts referred could be converted into US$ or RMB, as the case may be, at any particular rate or at all.

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “aims,” “future,” “intends,” “plans,” “believes,” “estimates,” “confident,” “potential,” “continue” or other similar expressions. Among other things, the Outlook and quotations from management in this announcement, as well as Bilibili’s strategic and operational plans, contain forward-looking statements. Bilibili may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including but not limited to statements about Bilibili’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: Bilibili’s strategies; Bilibili’s future business development, financial condition and results of operations; Bilibili’s ability to retain and increase the number of users, members and advertising customers, provide quality content, products and services, and expand its product and service offerings; competition in the online entertainment industry; Bilibili’s ability to maintain its culture and brand image within its addressable user communities; Bilibili’s ability to manage its costs and expenses; PRC governmental policies and regulations relating to the online entertainment industry, general economic and business conditions globally and in China and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in the Company’s filings with the Securities and Exchange Commission. All information provided in this press release and in the attachments is as of the date of the press release, and the Company undertakes no duty to update such information, except as required under applicable law.For investor and media inquiries, please contact:In China:Bilibili Inc.Juliet YangTel: +86-21-2509 9255 Ext. 8523E-mail: ir@bilibili.com

The Piacente Group, Inc.Emilie WuTel: +86-21-6039-8363E-mail: bilibili@tpg-ir.com

In the United States:

The Piacente Group, Inc.Brandi PiacenteTel: +1-212-481-2050E-mail: bilibili@tpg-ir.com

BILIBILI INC. Unaudited Condensed Consolidated Statements of Operations (All amounts in thousands, except for share and per share data) For the Three Months Ended For the Nine Months Ended ----------------------------------------- --------------------------- September June September September September 30, 30, 30, 30, 30, 2018 2019 2019 2018 2019 ------------- ------------- ------------- ------------- ------------- RMB RMB RMB RMB RMB Net revenues: Mobile games 743,980 919,856 933,133 2,223,489 2,726,444 Live broadcasting and VAS 169,441 326,013 452,518 383,819 1,070,183 Advertising 137,266 167,736 247,186 303,573 527,421 E-commerce and others 28,149 124,078 226,126 62,505 446,105 ----------- - ----------- - ----------- - ----------- - ----------- - Total net revenues 1,078,836 1,537,683 1,858,963 2,973,386 4,770,153 Cost of revenues (884,207 ) (1,285,944 ) (1,507,684 ) (2,314,992 ) (3,977,819 ) ------------- ------------- ------------- ------------- ------------- Gross profit 194,629 251,739 351,279 658,394 792,334 Operating expenses: Sales and marketing expenses (196,843 ) (240,004 ) (363,859 ) (403,501 ) (785,350 ) General and administrative expenses (110,605 ) (141,269 ) (163,217 ) (311,102 ) (432,973 ) Research and development expenses (146,201 ) (215,860 ) (247,308 ) (384,005 ) (649,243 ) ----------- - ----------- - ----------- - ----------- - ----------- - Total operating expenses (453,649 ) (597,133 ) (774,384 ) (1,098,608 ) (1,867,566 ) ----------- - ----------- - ----------- - ----------- - ----------- - Loss from operations (259,020 ) (345,394 ) (423,105 ) (440,214 ) (1,075,232 ) Other income: Investment (loss)/income, net (4,951 ) 14,468 513 21,327 97,028 Interest income 21,684 49,971 52,018 42,359 126,396 Interest expense - (15,638 ) (16,047 ) - (31,685 ) Exchange gains/(losses) 2,162 (847 ) (5,640 ) 2,864 (8,588 ) Other, net 5,400 (4,905 ) (5,362 ) 16,409 4,663 ----------- - ----------- - ----------- - ----------- - ----------- - Total other income 24,295 43,049 25,482 82,959 187,814 ----------- - ----------- - ----------- - ----------- - ----------- - Loss before income tax (234,725 ) (302,345 ) (397,623 ) (357,255 ) (887,418 ) Income tax (11,363 ) (12,671 ) (8,082 ) (16,942 ) (28,941 ) ----------- - ----------- - ----------- - ----------- - ----------- - Net loss (246,088 ) (315,016 ) (405,705 ) (374,197 ) (916,359 ) Accretions to preferred shares - - - (64,605 ) - redemption value Net loss/(income) attributable to 1,149 2,201 (1,652 ) 2,449 10,227 noncontrolling interests ----------- - ----------- - ----------- - ----------- - ----------- - Net loss attributable to the Bilibili (244,939 ) (312,815 ) (407,357 ) (436,353 ) (906,132 ) Inc.’s shareholders Net loss per share, basic (0.88 ) (0.96 ) (1.24 ) (2.10 ) (2.82 ) Net loss per ADS, basic (0.88 ) (0.96 ) (1.24 ) (2.10 ) (2.82 ) Net loss per share, diluted (0.88 ) (0.96 ) (1.24 ) (2.10 ) (2.82 ) Net loss per ADS, diluted (0.88 ) (0.96 ) (1.24 ) (2.10 ) (2.82 ) Weighted average number of ordinary 278,836,754 325,661,667 327,231,439 208,120,682 321,634,678 shares, basic Weighted average number of ADS, basic 278,836,754 325,661,667 327,231,439 208,120,682 321,634,678 Weighted average number of ordinary 278,836,754 325,661,667 327,231,439 208,120,682 321,634,678 shares, diluted Weighted average number of ADS, diluted 278,836,754 325,661,667 327,231,439 208,120,682 321,634,678

The accompanying notes are an integral part of this press release.

BILIBILI INC. NOTES TO UNAUDITED FINANCIAL INFORMATION (All amounts in thousands, except for share and per share data) For the Three Months Ended For the Nine Months Ended -------------------------- ------------------- September June September September September 30, 30, 30, 30, 30, 2018 2019 2019 2018 2019 --------- ------ --------- --------- --------- RMB RMB RMB RMB RMB Share-based compensation expenses included in: Cost of revenues 6,919 6,111 6,381 23,154 17,566 Sales and marketing expenses 2,588 3,778 3,424 8,609 10,324 General and administrative expenses 23,794 17,130 21,855 87,605 52,210 Research and development expenses 9,040 17,381 19,688 26,406 50,896 Total 42,341 44,400 51,348 145,774 130,996 --------- ------ --------- --------- ---------

BILIBILI INC. Unaudited Condensed Consolidated Balance Sheets (All amounts in thousands, except for share and per share data) December September 31, 30, 2018 2019 ---------- ---------- RMB RMB Assets Current assets: Cash and cash equivalents 3,540,031 4,179,407 Time deposits 749,385 3,155,271 Accounts receivable, net 324,392 716,038 Prepayments and other current assets 990,851 1,629,754 Short‑term investments 945,338 1,059,546 Total current assets 6,549,997 10,740,016 ---------- ---------- Non‑current assets: Property and equipment, net 394,898 472,619 Production cost 204,231 404,336 Intangible assets, net 1,419,435 1,525,031 Goodwill 941,488 1,012,026 Long‑term investments 979,987 1,421,358 Other long-term assets - 275,630 Total non‑current assets 3,940,039 5,111,000 ---------- ---------- Total assets 10,490,036 15,851,016 ---------- ---------- Liabilities Current liabilities: Accounts payable 1,307,598 1,900,290 Salary and welfare payables 246,815 323,471 Taxes payable 38,505 86,289 Deferred revenue 985,143 1,347,684 Accrued liabilities and other payables 720,773 449,697 Total current liabilities 3,298,834 4,107,431 Non-current liabilities: Long-term debt - 3,459,124 Other long-term liabilities - 203,179 ---------- ---------- Total non-current liabilities - 3,662,303 ---------- ---------- Total liabilities 3,298,834 7,769,734 ---------- ---------- Total Bilibili Inc.’s shareholders’ equity 6,950,796 7,544,948 Noncontrolling interests 240,406 536,334 ---------- ---------- Total shareholders’equity 7,191,202 8,081,282 ---------- ---------- Total liabilities and shareholders’ equity 10,490,036 15,851,016 ---------- ----------

BILIBILI INC. Unaudited Reconciliations of GAAP and Non-GAAP Results All amounts in thousands, except for share and per share data For the Three Months Ended For the Nine Months Ended ----------------------------------------- --------------------------- September June September September September 30, 30, 30, 30, 30, 2018 2019 2019 2018 2019 ------------- ------------- ------------- ------------- ------------- RMB RMB RMB RMB RMB Net loss (246,088 ) (315,016 ) (405,705 ) (374,197 ) (916,359 ) Add: Share-based compensation expenses 42,341 44,400 51,348 145,774 130,996 Amortization expense related to intangible assets acquired through 1,022 14,476 11,305 3,066 40,795 business acquisitions ----------- - ----------- - ----------- - ----------- - ----------- - Adjusted net loss (202,725 ) (256,140 ) (343,052 ) (225,357 ) (744,568 ) ----------- - ----------- - ----------- - ----------- - ----------- - Net loss attributable to the Bilibili (244,939 ) (312,815 ) (407,357 ) (436,353 ) (906,132 ) Inc.‘s shareholders Add: Share-based compensation expenses 42,341 44,400 51,348 145,774 130,996 Amortization expense related to intangible assets acquired through 1,022 14,476 11,305 3,066 40,795 business acquisitions ----------- - ----------- - ----------- - ----------- - ----------- - Adjusted net loss attributable to the (201,576 ) (253,939 ) (344,704 ) (287,513 ) (734,341 ) Bilibili Inc.’s shareholders ----------- - ----------- - ----------- - ----------- - ----------- - Adjusted net loss per share, basic (0.72 ) (0.78 ) (1.05 ) (1.38 ) (2.28 ) Adjusted net loss per ADS, basic (0.72 ) (0.78 ) (1.05 ) (1.38 ) (2.28 ) djusted net loss per share, diluted (0.72 ) (0.78 ) (1.05 ) (1.38 ) (2.28 ) Adjusted net loss per ADS, diluted (0.72 ) (0.78 ) (1.05 ) (1.38 ) (2.28 ) Weighted average number of ordinary 278,836,754 325,661,667 327,231,439 208,120,682 321,634,678 shares, basic Weighted average number of ADS, basic 278,836,754 325,661,667 327,231,439 208,120,682 321,634,678 Weighted average number of ordinary 278,836,754 325,661,667 327,231,439 208,120,682 321,634,678 shares, diluted Weighted average number of ADS, diluted 278,836,754 325,661,667 327,231,439 208,120,682 321,634,678