By Senad Karaahmetovic
Shares of Bilibili (NASDAQ:BILI) are trading over 10% higher in pre-market Tuesday after the Chinese company reported better-than-expected results for its third quarter.
Bilibili reported a loss per share of RMB4.46 (-$0.62) to beat the consensus that was looking for a loss per share of RMB4.62 (-$0.64). Revenue for the quarter at RMB5.8 billion ($809.41 million), higher than the consensus of RMB5.73B ($799.6M).
For this quarter, Bilibili said it expects revenue to come in between RMB6B ($837.3M) and RMB6.2B ($865.2M), worse than the analyst consensus of RMB6.25B ($872.2M).
The company’s management said it is taking steps to implement strict cost control measures going forward.
“Putting profitability first, we will take additional initiatives to accelerate our monetization and implement cost containment measures including rationalizing headcount planning and cutting sales and marketing expenses, with our goal set to improve our margins and narrow our losses,” says Rui Chen, chairman and chief executive officer of Bilibili.
Despite the earnings beat, CLSA analysts said the results show that Bilibili continues to “face pressure in its gaming and advertising businesses.” The analysts cut the price target to $14.70 from $23.30.
“We expect total revenue to grow 11% YoY to Rmb5.8bn and an adj net loss of Rmb1.7bn, flat QoQ. We estimate game revenue to regrow 5% YoY, supported by new game, Space Hunter 3, but limited new games still depress overall growth. Ad revenue should rebound to 20% YoY, boosted by the new Story Mode and efficient sales conversion tools,” the analysts wrote in a note.
Nomura analysts added:
“As many of the Chinese internet companies provided weaker-than-expected 4Q outlook, citing the worsening pandemic and lockdown situation since September as a drag on their business recovery, we do not think BILI’s lighter 4Q guidance is a big negative surprise.”