Earnings Labs

Bilibili Inc. (BILI)

Q4 2020 Earnings Call· Thu, Feb 25, 2021

$21.44

-1.27%

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Transcript

Operator

Operator

Good day, and welcome to the Bilibili 2020 Fourth Quarter and Full-Year Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Juliet Yang, Senior Director of Investor Relations. Please go ahead.

Juliet Yang

Management

Thank you, operator. Please note the discussion today will contain forward-looking statements relating to the Company's future performance and are intended to qualify the safe harbor from liability, as established by the U.S. Private Security Litigation Reform Act. Such statements are not guarantees of the future performance and are subject to certain risks and uncertainties, assumptions and other factors. Some of these risks are beyond the Company's control and could cause actual results to differ materially from those mentioned in today's press release and in this discussion. A general discussion of the risk factors that could affect Bilibili's business and financial results is included in certain filings of the Company with the Security and Exchange Commission. The Company does not undertake any obligation to update this forward-looking information except as required by law. During today's call, management will also discuss certain non-GAAP financial measures for comparison purpose only. For a definition of non-GAAP financial measures and a reconciliation of GAAP to non-GAAP financial results, please see the 2020 fourth quarter and full-year financial results news release issued earlier today. As a reminder, this conference is being recorded. In addition, an investor presentation and a webcast replay of this conference call will be available on Bilibili Investor Relations website at ir.bilibili.com. Joining us today on the call from Bilibili's senior management are Mr. Rui Chen, Chairman of the Board and Chief Executive Officer; Ms. Carly Li, Vice Chairwoman of the Board and Chief Operating Officer; and Mr. Xin Fan, Chief Financial Officer. And I will now turn the call over to Mr. Fan who will read prepared remarks on behalf of Mr. Chen.

Xin Fan

Management

Thank you, Juliet, and thank you, everyone for participating in our 2020 fourth quarter and fiscal year end conference call. I am pleased to deliver today's opening remarks on behalf of Mr. Chen. We had an exceptional year in 2020. Through a challenging macro environment, we remained focused on our growth strategies and achieved record results. In the fourth quarter, our MAUs reached 202 million, up 55% year-over-year, marking a new starting point for our growth journey. In addition, mobile MAUs were up 61% year-over-year to 187 million. On the user engagement front, we had 54 million DAUs, up 42% year-over-year. Our users remained highly engaged and spent an average 75 minutes on our platform daily in the fourth quarter, reflecting the strong appeal of Bilibili's content offerings and the stickiness of our growing community. The high quality and rapid growth of our user base laid a solid foundation for our commercialization efforts. In the fourth quarter, our premium content and services continued to drive paying user conversion. MPUs reached 18 million, up 103% year-over-year. Our overall paying ratio increased to 8.9%, compared with 6.8% in the same period last year. At the same time, more business partners are turning to Bilibili to reach and engage our massive audience base of young generations. Our advertising business grew by 149% in the fourth quarter year-over-year, marking the seventh consecutive quarter of accelerated growth on a year-over-year basis. On the back of this momentum, our total revenues reached another record high of RMB3.8 billion in the fourth quarter, and RMB12 billion for the full-year. This represents impressive year-over-year growth of 91% and 77%, respectively. We attribute our success to our broad content library, engaging community experience and rising brand awareness. In 2020, we made some key moves that resulted in a significant…

Operator

Operator

Thank you so much. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] And our first question comes from the line of Alex Poon from Morgan Stanley. Alex, your line is now open.

Alex Poon

Analyst

My first question is related to the user growth in coming years and the strategy and in terms of the product strategy, et cetera. At the same time, how can we maintain the user quality? For example, in fourth quarter, we noticed there is a small decline in terms of DAU-MAU ratio and also the user time spent on a year-over-year basis. Thank you very much.

Rui Chen

Analyst

So user growth has always remained our top priority. And I personally take a great priority in looking after the user growth strategy. So under the rapid trend of videolization, we believe every Internet user could potentially become a video user, and this is creating a massive market opportunity for us. So I believe the user growth for all the content platform really depends on the quality of the content. Whichever platform has the highest quality content, the user will tend to – that will turn to that platform. And for Bilibili, we have always practiced the philosophy that to leverage high-quality content to attract our users. And we are really focused on expanding our content offerings and content categories. So the reason why that Bilibili can continuously produce high-quality content is because we have built ever-growing sustainable content ecosystem, which naturally give birth to many high-quality content. So as we attract our users through our ever-growing high-quality content, at the same time, our highly engaged, sticky community help us to retain those users and providing them unique community experience. And our commercial efforts is also organically combined and merged with our content ecosystem as well as our community. So in many ways, it does not affect our user experience. On the contrary, we think it's becoming part of our content offerings and community experience. So looking at the past two years, we have experienced a very high-quality and rapid user growth. And you may even notice that our reach for broader audiences is beyond the Generation Z. And according to the latest third-party report, about 86% of our users in 2020 are aged below 35. So Bilibili is becoming the primary choice for not only the Gen Z, but also become a lot of users' choice that age below…

Ni Li

Analyst

So Carly would like to supplement one point. One is that, as Mr. Chen mentioned, our growth model is driven by our content ecosystem as well as our community. And you would also say that we made all the right moves in expanding Bilibili brand name in 2020. As we look forward to 2021, we'll continue to build on our – further expand our branding perception and branding awareness through multiple marketing events. So we've done our user perception study on our brand awareness back in 2019, 2020, and the number was – they're over 30% in 2019, and the brand awareness perception rate was improved to over 60% in 2020. We hope with number of our branding initiatives and marketing event, we hope to increase that perception rate above 90% in 2021. Okay. And one more thing is that on the branding initiatives, we are going to launch several campaigns in cooperation with company events and a big content launch to increase our brand perception and brand awareness. At the same time, we'll also work with other leading Internet players to increase our perceptions along with active user acquisition and channel acquisitions. Okay.

Operator

Operator

Thank you so much. And your next question comes from the line of Alex Yao of JPMorgan. Alex, your line is now open.

Alex Yao

Analyst

So my first question is about the advertising business, which has been accelerating almost four quarters in a row in the past several quarters. Can you guys elaborate a bit more on the growth driver behind this rapid-growing advertising business? Also, can you talk about the advertising revenue growth outlook for 2021? A follow-up question on this advertising monetization is that we noticed you guys have recently launched a number of KOL economy monetization models, such as the Huahuo. Can you talk through your latest thinking on the KOL economy monetization on Bilibili. And also, can you talk about the feedback from both advertiser as well as content creators on the introduction of Huahuo? Thank you.

Ni Li

Analyst

So first of all, we have over – near half of active users that's our – that is China's young generation, and Bilibili is the platform that has the most concentrated young generation users. As we believe as the Gen Z become the mainstream of the society, they have more saying and more spending power across various industry verticals. And the next decade will be the new consumer upgrade, new consumer branding upgrade for the China's overall consumption industry. As Bilibili's user has the most influence and most spending power within this vertical, Bilibili is becoming the must-invest advertising platform. So in 2020, as we experience fast and high-quality user growth, our influence over brand advertising is also increasing. Over the years, we have continuously improved our commercial middle platform capabilities, and our advertising revenue has experienced accelerated growth for seven consecutive quarters. In the fourth quarter, our advertising revenue reached RMB120 million and up 149% year-over-year. And for the full year, our advertising revenue also grew by 126% year-over-year. So for 2021, we do not intend to increase our ad load, and we're going to maintain the ad load around 5%. From our perspective, we are still at the Phase II, building our infrastructure. And our advertising business still have a huge potential to grow. So first of all, we will continue to enhance our middle platform capability serving the commercialization progress. As our product – as our advertising product improve and our algorithm improve, our overall advertising efficiency will also improve. And the efficiency is not only reflect on the increase of our advertising revenue, it also reflects on other business. For example, our game – jointly operated games improvement also depends on the improvement of our advertising efficiency. So that goes with our live broadcasting membership and…

Operator

Operator

Thank you so much. And that concludes the question-and-answer session. I would like to turn the conference back over to the management for any additional or closing comments.

Juliet Yang

Management

Well, thank you once again for joining us today. If you have further questions, please contact myself, Juliet Yang, Bilibili's Senior IR Director, or TPG Investor Relations. Our contact information for IR in both China and the U.S. can be found on today's press release. Have a great day. Thank you.

Operator

Operator

And that does conclude our conference for today. Thank you for participating. You may all now disconnect.