Bilibili Releases Q4 and Full-Year 2023 Financial Report: Another 4.8 Billion Yuan Loss
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On the evening of March 7th, Bilibili presented a mixed financial report.
Hindered by revenue declines in both mobile gaming and IP derivative businesses, Bilibili's 2023 revenue only grew by 3% year-over-year to 22.5 billion yuan (same unit below). Although revenue fell short of expectations, Bilibili managed to narrow its losses, with a full-year net loss of 4.8 billion yuan, a 36% reduction compared to the previous year.
To achieve its goal of breaking even in 2024, Bilibili urgently needs to accelerate commercialization. Bilibili Chairman Chen Rui stated during the earnings conference call that the company's focus for 2024 remains consistent with 2023, with two key priorities. One of these is achieving profitability. Bilibili will continue to strengthen its commercialization capabilities, further optimize gross margins, and manage expenses reasonably. "We are confident in achieving positive adjusted operating profit and beginning to turn a profit by the third quarter of 2024," Chen said.
The financial report also revealed that in Q3 2023, Bilibili's DAU officially surpassed the 100 million mark, reaching 102.8 million. However, in Q4, Bilibili's DAU declined by 2.7 million quarter-over-quarter, and the year-over-year growth rate of DAU continued to drop across all four quarters. For a community with Bilibili's unique user attributes, balancing profitability goals with user engagement remains a challenging multiple-choice question.
Revenue Falls Short of Expectations, Gaming Business Drags Performance
Since last year, many leading internet companies have shifted their focus to quality growth, and Bilibili is no exception. Increasing revenue while reducing losses was undoubtedly Bilibili's key theme for 2023. However, in terms of revenue, constrained by declines in both mobile games and IP merchandise businesses, Bilibili's 2023 revenue grew only 3% year-over-year to 22.5 billion yuan, falling short of the expected range of 24-26 billion yuan and marking a slower growth rate compared to 2022's 13% increase.
In 2023, Bilibili's mobile game business revenue was 4 billion yuan, a 20% decrease year-over-year. In fact, signs of weakness in Bilibili's game business had already emerged in 2022, with revenue declining 2% to 5 billion yuan. Regarding the 2023 revenue decline, Bilibili explained in its financial report that it was primarily due to a reduction in the number of new game releases and decreased revenue from some existing games.
Prior to 2021, games were Bilibili's largest revenue pillar. Initially, Bilibili entered the gaming industry primarily through joint operations and exclusive distribution, later increasing investments in self-developed games. However, as the gaming industry's operating environment became increasingly challenging, Bilibili faced issues with gaps in its game product pipeline.
As a result, at the end of 2022, Chen Rui personally took over leadership of the gaming business while restructuring Bilibili's gaming operations. The "Game Publishing Division" was renamed the "Game Publishing Center," and a gaming technology platform was established. This move was interpreted by outsiders as Bilibili shifting from "over-emphasizing self-developed games" to "stabilizing exclusive distribution/joint operations while continuing self-development." However, at the end of 2023, market rumors suggested Bilibili was laying off its entire game R&D team, though internal sources later clarified that "only some projects were adjusted."
The reduction in esports copyright licensing also impacted Bilibili's IP merchandise sales to some extent. In 2023, revenue from IP merchandise and other businesses was 2.2 billion yuan, a 29% year-over-year decline. In contrast, this segment generated 3.1 billion yuan in revenue in 2022, representing 9% growth year-over-year. In 2023, Bilibili's revenue stability was primarily maintained by its value-added services (mainly live streaming) and advertising businesses. The advertising sector became the fastest-growing segment, generating 6.4 billion yuan in annual revenue, a 27% year-on-year increase. Value-added services achieved 9.9 billion yuan in revenue, up 14% year-on-year, though this growth rate significantly declined from 26% in 2022.
Losses Narrowed, Daily Active Users Declined After Breaking 100 Million
Despite falling short of revenue expectations, Bilibili managed to narrow its losses in 2023. During the reporting period, the company's operating loss was 5.1 billion yuan, a 39% year-on-year reduction, while its net loss was 4.8 billion yuan, down 36% year-on-year.
The reduction in losses was mainly attributed to lower operating costs and expenses, particularly in sales and marketing expenditures. After decreasing by 15% year-on-year in 2022, these expenses further dropped by 20% to 3.9 billion yuan in 2023.
Notably, Bilibili's revenue-sharing costs (part of operating costs) reached 9.5 billion yuan in 2023, a 4% year-on-year increase, compared to 9.1 billion yuan (18% growth) in 2022. These costs primarily include incentives and revenue shares for UP creators in live streaming and advertising businesses. The comparison shows a clear slowdown in the growth of UP creator incentives in 2023.
Regarding profitability, Bilibili first set its 2024 breakeven target in 2022. To achieve this, the platform—which previously emphasized community culture and "passion-driven creation"—has accelerated its commercialization efforts. In 2022, Bilibili began exploring live-streaming e-commerce, launching features like the shopping cart in live streams and the Up Master product selection plaza. While most content platforms pursue closed-loop e-commerce, Bilibili adopted an 'open-loop' strategy, partnering with major e-commerce platforms like Taobao, Tmall, JD.com, and Pinduoduo for traffic diversion. Additionally, in June 2023, Bilibili established a new first-level department, the Transaction Ecosystem Center, consolidating teams from the e-commerce platform division, the original e-commerce business unit's product and operations teams, and parts of the main site's commercial center/live commerce project group.
Bilibili's chairman Chen Rui emphasized that improving commercialization efficiency is currently one of the company's most important tasks. In his view, driving DAU growth is a crucial foundation for commercialization, as DAU better reflects user engagement levels and the commercial potential derived from Bilibili's user base.
In the third quarter of last year, Bilibili's DAU officially surpassed the 100 million mark, reaching 102.8 million, a 14% year-over-year increase. However, in the fourth quarter, DAU dropped to 100.1 million. While this still represented an 8% year-over-year growth, it marked a quarter-over-quarter decline of 2.7 million. Moreover, the year-over-year DAU growth rate has been consistently decreasing across all four quarters of last year.
It's common for growth rates to slow after reaching a sufficiently large DAU scale. But for Bilibili, a community with unique user characteristics, balancing profitability goals with user retention might remain a challenging multiple-choice question.