Bilibili (BILI) Q4 Loss Lower Than Expected, Revenues Beat

Bilibili Inc. (NASDAQ:BILI) incurred adjusted loss of 7 cents per share in fourth-quarter 2018, comparing favorably with the Zacks Consensus Estimate of a loss of 10 cents.

Moreover, the loss narrowed to RMB0.46 per share from the year-ago quarter’s loss of RMB1.34 per share.

Revenues in the quarter totaled $168.1 million, up 57% year over year. Notably, the Zacks Consensus Estimate for revenues was pegged at $152.7 million.

Addition of premium and diverse content through partnerships helped Bilibili attract new users and drive overall business growth. Moreover, strong momentum in the company’s brand advertising and performance-based advertising fueled top-line growth.

Quarter Details

Segment wise, Mobile game revenues (61.7% of total revenues) increased 15% year over year to $103.7 million, primarily owing to increase in number of paying users for mobile games. Moreover, average monthly paying users for mobile games rose 36% year over year to 0.9 million and mobile MAUs jumped 37% year over year to 79.5 million.

Live broadcasting and Value-added services (VAS) revenues (17.5% of total revenues) surged 276% year over year to $29.4 million. This upside was primarily driven by increase in number of paying users for live broadcasting services and premium membership program.

Advertising revenues (13.9% of total revenues) also soared 302% year over year to $23.3 million, attributable to increase in revenues from performance-based advertising and brand advertising launched in the reported quarter.

E-commerce & others revenues (7% of total revenues) were up a whopping 254%, year over year, to $11.8 million, primarily due to increase in sales of products through the company’s e-commerce platform.

Average monthly paying users surged 298% year over year to 4.4 million. Also, average monthly active users (MAUs) increased 29% year over year to 92.8 million.

The company generated high-quality content shows in the reported quarter through its professional user generated video (PUGV) ecosystem and OGV outlets. On average, 570,000 active content creators uploaded 1.7 million video monthly, up 143% and 148%, year over year.

Bilibili also rolled out its first self-produced variety show Storyman 2. To cater to Generation Z’s diverse entertainment needs, the company also expanded its presence in e-sports and comics space. Notably, live broadcasting paying users grew more than 200% year over year.

Remarkably, Bilibili also strengthened its anime and mobile game content by establishing robust relationships with Alibaba (NYSE:BABA) and Tencent (OTC:TCEHY) in the reported quarter.

Under its agreement with Tencent, the companies will exchange, co-produce and jointly invest in anime content, as well as expand partnership in mobile games operations. Moreover, Bilibili’s partnership with Alibaba’s Taobao will be leveraged for content driven e-commerce and the commercialization of Bilibili's IP assets.

The company also released various games in the quarter under review, including Son of the Time, Naruto Online and Night Falls: Survival, among others.

The company boasts a loyal user base, which is evident from users’ participation levels. Notably, Bilibili witnessed 476 million daily views and 1 billion monthly interactions through bullet charts, comments, likes and Bilibili Moments posts, up 107% and 298% year over year, respectively

Operating Details

Gross profit increased 12% year over year to $28.7 million.

Selling and marketing expenses flared up 181% year over year to $26.5 million. The improvement was primarily backed by rise in channel and marketing expenses associated with the app and the brand, and promotional expenses for Bilibili’s mobile games.

General and administrative expenses were up 75% year over year to $21.8 million, chiefly attributable to rise in personnel-related expenses and other miscellaneous expenses.

Research and development expenses were up 76% year over year to $22.3 million, primarily due to increase in headcount and share-based compensation expenses.

Operating expenses surged 104% year over year to $70.7 million.

Outlook

For the first quarter of 2019, Bilibili currently expects net revenues to be between RMB1.27 billion and RMB1.29 billion.

In 2019, the company projects to reach MAU around 110 million to 120 million and 140 million to 150 million in 2020.

Zacks Rank & Stocks to Consider

Currently, Bilibili carries a Zacks Rank #3 (Hold).

A better-ranked stock in the broader computer and technology sector includes Gogo Inc. (NASDAQ:GOGO) , sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.

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