Bilibili Shares Soar After Q2 Performance, User Base Expands Amid Game Revenue Downturn

Bilibili Inc BILI reported second-quarter FY23 revenue growth of 8% year-on-year to $731.5 million (RMB5.3 billion), beating the consensus of $726.4 million. Adjusted EPS loss of $(0.32) beat the consensus loss of $(0.35).

Drivers: Average daily active users (DAUs) climbed 15% Y/Y to 96.5 million.

Revenues from mobile games were $122.9 million, down 15% Y/Y, attributable to the lack of new game launches. VAS grew 9% Y/Y to $317.4 million, led by increased paying users. 

Advertising increased by 36% Y/Y to $216.9 million. Revenue from IP derivatives and others (formerly known as E-commerce and others) decreased 10% Y/Y to $74.3 million, mainly attributable to the decrease in revenue from e-sports copyright sub-licensing.

Bilibili held $2.0 billion in cash and equivalents.

Rui Chen, chairman and chief executive officer of Bilibili, said, "Looking towards the second half of 2023 and beyond, our priority remains achieving quality growth in our topline and user community. We are committed to reaching our break-even target while continuing to host the welcoming and inspiring video community for young generations in China."

Outlook: Bilibili expects FY23 revenues of RMB22.5 billion - RMB23.5 billion (prior RMB24.0 billion - RMB26.0 billion) vs. the consensus of $3.34 billion. 

The revised expectation is largely due to the delay of certain game launches and lower-than-expected revenue contribution from non-core businesses such as IP derivatives and others.

Price Action: BILI shares traded higher by 6.96% at $16.28 in the premarket session on the last check Thursday.