UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 6-K

 

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of August 2023

 

 

Commission File Number: 001-38429

 

 

Bilibili Inc.

 

 

Building 3, Guozheng Center, No. 485 Zhengli Road

Yangpu District, Shanghai, 200433

People’s Republic of China

(Address of principal executive offices)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F  ☒            Form 40-F  ☐

 

 

 


Exhibit Index

 

Exhibit 99.1   

– Press Release – Bilibili Inc. Announces 2023 Second Quarter Financial Results

Exhibit 99.2   

– Announcement with The Stock Exchange of Hong Kong Limited – Interim Results Announcement for the Six Months Ended June 30, 2023


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

BILIBILI INC.
By   :   /s/ Xin Fan
Name   :   Xin Fan
Title   :   Chief Financial Officer

Date: August 18, 2023

Exhibit 99.1

Bilibili Inc. Announces Second Quarter 2023 Financial Results

SHANGHAI, August 17, 2023 — Bilibili Inc. (“Bilibili” or the “Company”) (NASDAQ: BILI and HKEX: 9626), an iconic brand and a leading video community for young generations in China, today announced its unaudited financial results for the second quarter ended June 30, 2023.

Second Quarter 2023 Highlights:

 

   

Total net revenues were RMB5.3 billion (US$731.5 million), representing an increase of 8% from the same period of 2022.

 

   

Gross profit was RMB1.2 billion (US$169.3 million), representing an increase of 66% from the same period of 2022. Gross profit margin was 23.1%, compared with 15.0% in the same period of 2022.

 

   

Net loss was RMB1.5 billion (US$213.5 million), narrowing by 23% from the same period of 2022.

 

   

Adjusted net loss1 was RMB964.1 million (US$133.0 million), narrowing by 51% from the same period of 2022.

 

   

Average daily active users (DAUs) were 96.5 million, representing an increase of 15% from the same period of 2022.

 

   

2023 full year total net revenues guidance has been updated.

“We accomplished substantial gross profit improvement and notable losses reduction in the second quarter,” said Mr. Rui Chen, chairman and chief executive officer of Bilibili. “We continued enhancing our commercialization efficiency while cultivating a vibrant community. Through the dedicated execution of our strategies, our advertising revenues increased by 36% year-over-year in the second quarter of 2023. Concurrently, our DAUs grew by 15% year-over-year to 96.5 million. Our users remain deeply engaged, with an average daily time spent of 94 minutes on Bilibili in the second quarter, increasing our users’ total time spent2 by 22% year-over-year. 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.”

Mr. Sam Fan, chief financial officer of Bilibili, said, “In the second quarter, we achieved greater leverage through our operational efficiency enhancement. Our gross profit increased significantly by 66% year-over-year, driving our gross profit margin improved to 23% in the second quarter. Meanwhile, our total operating expenses and sales and marketing expenses declined by 14% and 22% respectively, both year-over-year. These approaches effectively led to a 51% year-over-year reduction in our adjusted net loss. Going forward, we will continue to concentrate on these approaches to grow our gross profit and advance towards profitability.”

 

1


Outlook Update

For the full year of 2023, the Company currently expects total net revenues to be between RMB22.5 billion and RMB23.5 billion. This compares with total net revenues expected between RMB24.0 billion and RMB26.0 billion as previously stated, which reflected the best information available at the time. The revised expectation is largely due to the delay of certain game launches, as well as lower than expected revenue contribution from non-core businesses such as IP derivatives and others.

The outlook is based on the current market conditions and reflects the Company’s preliminary estimates, which are all subject to various uncertainties.

Second Quarter 2023 Financial Results

Total net revenues. Total net revenues were RMB5.3 billion (US$731.5 million), representing an increase of 8% from the same period of 2022.

Value-added services (VAS). Revenues from VAS were RMB2.3 billion (US$317.4 million), representing an increase of 9% from the same period of 2022, led by an increase in the average revenues generated from each paying user for the Company’s value-added services, including live broadcasting and other value-added services.

Advertising. Revenues from advertising were RMB1.6 billion (US$216.9 million), representing an increase of 36% from the same period of 2022, mainly attributable to the Company’s improved advertising product offerings and enhanced advertising efficiency.

Mobile games. Revenues from mobile games were RMB890.9 million (US$122.9 million), representing a decrease of 15% from the same period of 2022, mainly attributable to the lack of new game launches as well as revenue declines from certain games in the second quarter of 2023.

IP derivatives and others (formerly known as E-commerce and others). Revenues from IP derivatives and others were RMB538.7 million (US$74.3 million), representing a decrease of 10% from the same period of 2022, mainly attributable to a decrease in revenue from e-sports copyright sub-licensing.

Cost of revenues. Cost of revenues was RMB4.1 billion (US$562.2 million), representing a decrease of 2% from the same period of 2022. The decrease was mainly due to lower server and bandwidth costs and others costs. Revenue-sharing costs, a key component of cost of revenues, were RMB2.2 billion (US$309.1 million), representing an increase of 8% from the same period of 2022. Server and bandwidth costs represented a decrease of 11% from the same period of 2022.

Gross profit. Gross profit was RMB1.2 billion (US$169.3 million), representing an increase of 66% from the same period in 2022, primarily contributed by the Company’s improved operating leverage, as the Company enhanced its monetization efficiency.

Total operating expenses. Total operating expenses were RMB2.5 billion (US$345.5 million), representing a decrease of 14% from the same period of 2022.

 

2


Sales and marketing expenses. Sales and marketing expenses were RMB918.2 million (US$126.6 million), representing a 22% decrease year-over-year. The decrease was primarily attributable to reduced promotional spending related to user acquisition in the second quarter of 2023.

General and administrative expenses. General and administrative expenses were RMB539.7 million (US$74.4 million), representing a 14% decrease year-over-year. The decrease was primarily attributable to a decline in staff related cost in the second quarter of 2023.

Research and development expenses. Research and development expenses were RMB1.0 billion (US$144.4 million), representing a 7% decrease year-over-year.

Loss from operations. Loss from operations was RMB1.3 billion (US$176.2 million), narrowing by 42% from the same period of 2022.

Total other (expenses)/income, net. Total other expenses were RMB246.6 million (US$34.0 million), compared with total other income of RMB207.5 million in the same period of 2022. The change was primarily attributable to a loss of RMB186.7 million on fair value change in investments in publicly traded companies in the second quarter of 2023, compared to a gain of RMB305.2 million on fair value change in investments in publicly traded companies from the same period of 2022.

Income tax expense. Income tax expense was RMB23.9 million (US$3.3 million), compared with RMB26.8 million in the same period of 2022.

Net loss. Net loss was RMB1.5 billion (US$213.5 million), narrowing by 23% from the same period of 2022.

Adjusted net loss1. Adjusted net loss was RMB964.1 million (US$133.0 million), narrowing by 51% from the same period of 2022. Adjusted net loss is a non-GAAP measure that excludes share-based compensation expenses, amortization expense related to intangible assets acquired through business acquisitions, income tax related to intangible assets acquired through business acquisitions, gain/loss on fair value change in investments in publicly traded companies, gain/loss on the repurchase of convertible senior notes, expenses related to organizational optimization and termination expenses of certain game projects.

Basic and diluted EPS and adjusted basic and diluted EPS1. Basic and diluted net loss per share were RMB3.74 (US$0.52) each, compared with RMB5.08 each in the same period of 2022. Adjusted basic and diluted net loss per share were RMB2.33 (US$0.32) each, compared with RMB4.98 each in the same period of 2022.

Repurchase of Convertible Senior Notes

In January 2023, the Company repurchased an aggregate principal amount of US$384.8 million (RMB2.6 billion) December 2026 Notes with an aggregate consideration of US$331.2 million (RMB2.2 billion) that was funded by the Company’s ADS issuance. In June 2023, the Company completed the repurchase right offer for its 2027 Notes. An aggregate principal amount of US$745.9 million (RMB5.3 billion) 2027 Notes was validly surrendered and repurchased with an aggregate cash consideration of US$745.9 million (RMB5.3 billion). The total gain on repurchase of December 2026 Notes and 2027 Notes was RMB282.4 million for the six months ended June 30, 2023.

 

3


As of June 30, 2023, the aggregate outstanding principal amount of April 2026 Notes, 2027 Notes and December 2026 Notes was RMB6.3 billion (US$876.3 million).

Cash and cash equivalents, time deposits and short-term investments. As of June 30, 2023, the Company had cash and cash equivalents, time deposits and short-term investments of RMB14.3 billion (US$2.0 billion).

 

1

Adjusted net loss and adjusted basic and diluted EPS are non-GAAP financial measures. For more information on non- GAAP financial measures, please see the section of “Use of Non-GAAP Financial Measures” and the table captioned “Unaudited Reconciliations of GAAP and Non-GAAP Results.”

2

Total time spent represents the total time users spent on our mobile apps during a given period, which is the result of average daily time spent per active user on our mobile apps multiplied by DAUs and further multiplied by the number of days in such period.

 

4


Conference Call

The Company’s management will host an earnings conference call at 8:00 AM U.S. Eastern Time on August 17, 2023 (8:00 PM Beijing/Hong Kong Time on August 17, 2023). Details for the conference call are as follows:

 

Event Title:    Bilibili Inc. Second Quarter 2023 Earnings Conference Call
Registration Link:    https://register.vevent.com/register/BI904c3b39cdc44890bf1380f649470000

All participants must use the link provided above to complete the online registration process in advance of the conference call. Upon registering, each participant will receive a set of participant dial-in numbers and a personal PIN, which will be used to join the conference call.

Additionally, a live webcast of the conference call will be available on the Company’s investor relations website at http://ir.bilibili.com, and a replay of the webcast will be available following the session.

About Bilibili Inc.

Bilibili is an iconic brand and a leading video community with a mission to enrich the everyday lives of young generations in China. Bilibili offers a wide array of video-based content with All the Videos You Like as its value proposition. Bilibili builds its community around aspiring users, high-quality content, talented content creators and the strong emotional bonds among them. Bilibili pioneered the “bullet chatting” feature, a live comment function that has transformed our users’ viewing experience by displaying the thoughts and feelings of audience members viewing the same video. The Company has now become the welcoming home of diverse interests among young generations in China and the frontier for promoting Chinese culture across the world.

For more information, please visit: http://ir.bilibili.com.

Use of Non-GAAP Financial Measures

The Company uses non-GAAP measures, such as adjusted net loss, adjusted net loss per share and per ADS, basic and diluted, in evaluating its operating results and for financial and operational decision-making purposes. The Company believes that the non-GAAP financial measures help identify underlying trends in its business by excluding the impact of share-based compensation expenses, amortization expense related to intangible assets acquired through business acquisitions, income tax related to intangible assets acquired through business acquisitions, gain/loss on fair value change in investments in publicly traded companies, gain/loss on repurchase of convertible senior notes, expenses related to organizational optimization, and termination expenses of certain game projects. The Company believes that the non-GAAP financial measures provide useful information about the Company’s results of operations, enhance the overall understanding of the Company’s past performance and future prospects and allow for greater visibility with respect to key metrics used by the Company’s management in its financial and operational decision-making.

 

5


The non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. The non-GAAP financial measures have limitations as analytical tools, and when assessing the Company’s operating performance, cash flows or liquidity, investors should not consider them in isolation, or as a substitute for net loss, cash flows provided by operating activities or other consolidated statements of operations and cash flows data prepared in accordance with U.S. GAAP.

The Company mitigates these limitations by reconciling the non-GAAP financial measures to the most comparable U.S. GAAP performance measures, all of which should be considered when evaluating the Company’s performance.

For more information on the non-GAAP financial measures, please see the table captioned “Unaudited Reconciliations of GAAP and Non-GAAP Results.”

Exchange Rate Information

This announcement contains translations of certain RMB amounts into U.S. dollars (“US$”) at specified rates solely for the convenience of the reader. Unless otherwise stated, all translations from RMB to US$ were made at the rate of RMB7.2513 to US$1.00, the exchange rate on June 30, 2023 set forth in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB or US$ amounts referred to could be converted into US$ or RMB, as the case may be, at any particular rate or at all.

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward- looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “aims,” “future,” “intends,” “plans,” “believes,” “estimates,” “confident,” “potential,” “continue,” or other similar expressions. Among other things, outlook and quotations from management in this announcement, as well as Bilibili’s strategic and operational plans, contain forward-looking statements. Bilibili may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission, in its interim and annual reports to shareholders, in announcements, circulars or other publications made on the website of The Stock Exchange of Hong Kong Limited (the “Hong Kong Stock Exchange”), in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including but not limited to statements about Bilibili’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: results of operations, financial condition, and stock price; Bilibili’s strategies; Bilibili’s future business development, financial condition and results of operations; Bilibili’s ability to retain and increase the number of users, members and advertising customers, provide quality content, products and services, and expand its product and service offerings; competition in the online entertainment industry; Bilibili’s ability to maintain its culture and brand image within its addressable user communities; Bilibili’s ability to manage its costs and expenses; PRC governmental policies and regulations relating to the online entertainment industry, general economic and business conditions globally and in China and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in the Company’s filings with the Securities and Exchange Commission and the Hong Kong Stock Exchange. All information provided in this announcement and in the attachments is as of the date of the announcement, and the Company undertakes no duty to update such information, except as required under applicable law.

 

6


For investor and media inquiries, please contact:

In China:

Bilibili Inc.

Juliet Yang

Tel: +86-21-2509-9255 Ext. 8523

E-mail: ir@bilibili.com

Piacente Financial Communications

Helen Wu

Tel: +86-10-6508-0677

E-mail: bilibili@tpg-ir.com

In the United States:

Piacente Financial Communications

Brandi Piacente

Tel: +1-212-481-2050

E-mail: bilibili@tpg-ir.com

 

7


BILIBILI INC.

Unaudited Condensed Consolidated Statements of Operations

(All amounts in thousands, except for share and per share data)

 

     For the Three Months Ended     For the Six Months Ended  
     June 30,
2022
    March 31,
2023
    June 30,
2023
    June 30,
2022
    June 30,
2023
 
     RMB     RMB     RMB     RMB     RMB  

Net revenues:

          

Mobile games

     1,046,236       1,131,619       890,884       2,404,054       2,022,503  

Value-added services (VAS)

     2,103,458       2,156,224       2,301,741       4,155,650       4,457,965  

Advertising

     1,158,252       1,271,804       1,572,840       2,199,022       2,844,644  

IP derivatives and others (formerly known as E-commerce and others)

     600,985       509,964       538,734       1,204,304       1,048,698  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total net revenues

     4,908,931       5,069,611       5,304,199       9,963,030       10,373,810  

Cost of revenues

     (4,170,646     (3,965,679     (4,076,665     (8,417,504     (8,042,344

Gross profit

     738,285       1,103,932       1,227,534       1,545,526       2,331,466  

Operating expenses:

          

Sales and marketing expenses

     (1,171,974     (880,186     (918,197     (2,425,888     (1,798,383

General and administrative expenses

     (625,665     (571,695     (539,699     (1,160,961     (1,111,394

Research and development expenses

     (1,131,708     (1,026,712     (1,047,321     (2,140,551     (2,074,033
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     (2,929,347     (2,478,593     (2,505,217     (5,727,400     (4,983,810
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loss from operations

     (2,191,062     (1,374,661     (1,277,683     (4,181,874     (2,652,344

Other income/(expenses):

          

Investment income/(loss), net (including impairments)

     82,043       286,402       (278,081     (544,273     8,321  

Interest income

     55,968       146,274       152,026       90,268       298,300  

Interest expense

     (61,177     (57,706     (47,976     (123,612     (105,682

Exchange losses

     (15,262     (7,712     (8,840     (21,526     (16,552

Debt extinguishment gain/(loss)

     137,011       336,485       (54,043     475,790       282,442  

Others, net

     8,876       73,005       (9,677     67,251       63,328  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total other income/(expenses), net

     207,459       776,748       (246,591     (56,102     530,157  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loss before income tax

     (1,983,603     (597,913     (1,524,274     (4,237,976     (2,122,187

Income tax

     (26,842     (31,732     (23,858     (56,601     (55,590
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

     (2,010,445     (629,645     (1,548,132     (4,294,577     (2,177,777

Net loss attributable to noncontrolling interests

     3,518       1,959       1,425       5,668       3,384  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loss attributable to the Bilibili Inc.’s shareholders

     (2,006,927     (627,686     (1,546,707     (4,288,909     (2,174,393

Net loss per share, basic

     (5.08     (1.53     (3.74     (10.88     (5.28

Net loss per ADS, basic

     (5.08     (1.53     (3.74     (10.88     (5.28

Net loss per share, diluted

     (5.08     (1.53     (3.74     (10.88     (5.28

Net loss per ADS, diluted

     (5.08     (1.53     (3.74     (10.88     (5.28

Weighted average number of ordinary shares, basic

     394,742,634       410,564,084       413,446,005       394,142,409       412,013,005  

Weighted average number of ADS, basic

     394,742,634       410,564,084       413,446,005       394,142,409       412,013,005  

Weighted average number of ordinary shares, diluted

     394,742,634       410,564,084       413,446,005       394,142,409       412,013,005  

Weighted average number of ADS, diluted

     394,742,634       410,564,084       413,446,005       394,142,409       412,013,005  

The accompanying notes are an integral part of this press release.

 

8


BILIBILI INC.

Notes to Unaudited Financial Information

(All amounts in thousands, except for share and per share data)

 

     For the Three Months Ended      For the Six Months Ended  
     June 30,
2022
     March 31,
2023
     June 30,
2023
     June 30,
2022
     June 30,
2023
 
   RMB      RMB      RMB      RMB      RMB  

Share-based compensation expenses included in:

              

Cost of revenues

     15,079        12,462        17,440        38,112        29,902  

Sales and marketing expenses

     13,339        14,504        14,662        25,931        29,166  

General and administrative expenses

     136,880        137,616        153,597        282,875        291,213  

Research and development expenses

     91,400        96,152        115,115        187,642        211,267  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     256,698        260,734        300,814        534,560        561,548  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

9


BILIBILI INC.

Unaudited Condensed Consolidated Balance Sheets

(All amounts in thousands, except for share and per share data)

 

     December 31,
2022
     June 30,
2023
 
   RMB      RMB  

Assets

     

Current assets:

     

Cash and cash equivalents

     10,172,584        5,686,852  

Time deposits

     4,767,972        5,712,014  

Restricted cash

     14,803        167,810  

Accounts receivable, net

     1,328,584        1,367,815  

Prepayments and other current assets

     3,545,493        2,876,381  

Short-term investments

     4,623,452        2,899,822  
  

 

 

    

 

 

 

Total current assets

     24,452,888        18,710,694  
  

 

 

    

 

 

 

Non-current assets:

     

Property and equipment, net

     1,227,163        929,803  

Production cost, net

     1,929,622        2,014,100  

Intangible assets, net

     4,326,790        3,952,713  

Goodwill

     2,725,130        2,725,130  

Long-term investments, net

     5,651,018        5,223,492  

Other long-term assets

     1,517,959        1,339,425  
  

 

 

    

 

 

 

Total non-current assets

     17,377,682        16,184,663  
  

 

 

    

 

 

 

Total assets

     41,830,570        34,895,357  
  

 

 

    

 

 

 

Liabilities

     

Current liabilities:

     

Accounts payable

     4,291,656        4,171,625  

Salary and welfare payables

     1,401,526        994,074  

Taxes payable

     316,244        300,330  

Short-term loan and current portion of long-term debt

     6,621,386        4,611,656  

Deferred revenue

     2,819,323        2,690,964  

Accrued liabilities and other payables

     1,643,269        1,710,808  
  

 

 

    

 

 

 

Total current liabilities

     17,093,404        14,479,457  
  

 

 

    

 

 

 

Non-current liabilities:

     

Long-term debt

     8,683,150        3,197,625  

Other long-term liabilities

     814,429        685,593  
  

 

 

    

 

 

 

Total non-current liabilities

     9,497,579        3,883,218  
  

 

 

    

 

 

 

Total liabilities

     26,590,983        18,362,675  
  

 

 

    

 

 

 

Total Bilibili Inc.’s shareholders’ equity

     15,237,828        16,534,307  

Noncontrolling interests

     1,759        (1,625
  

 

 

    

 

 

 

Total shareholders’ equity

     15,239,587        16,532,682  
  

 

 

    

 

 

 

Total liabilities and shareholders’ equity

     41,830,570        34,895,357  
  

 

 

    

 

 

 

 

10


BILIBILI INC.

Unaudited Reconciliations of GAAP and Non-GAAP Results

(All amounts in thousands, except for share and per share data)

 

     For the Three Months Ended     For the Six Months Ended  
     June 30,
2022
    March 31,
2023
    June 30,
2023
    June 30,
2022
    June 30,
2023
 
     RMB     RMB     RMB     RMB     RMB  

Net loss

     (2,010,445     (629,645     (1,548,132     (4,294,577     (2,177,777

Add:

          

Share-based compensation expenses

     256,698       260,734       300,814       534,560       561,548  

Amortization expense related to intangible assets acquired through business acquisitions

     39,338       48,151       48,151       96,335       96,302  

Income tax related to intangible assets acquired through business acquisitions

     (10,028     (5,625     (5,625     (18,009     (11,250

(Gain)/Loss on fair value change in investments in publicly traded companies

     (305,185     (367,920     186,687       335,929       (181,233

(Gain)/Loss on repurchase of convertible senior notes

     (137,011     (336,485     54,043       (475,790     (282,442

Expenses related to organizational optimization

     89,650       —         —         89,650       —    

Termination expenses of certain game projects

     109,054       —         —         109,054       —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted net loss

     (1,967,929     (1,030,790     (964,062     (3,622,848     (1,994,852
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loss attributable to the Bilibili Inc.’s shareholders

     (2,006,927     (627,686     (1,546,707     (4,288,909     (2,174,393

Add:

          

Share-based compensation expenses

     256,698       260,734       300,814       534,560       561,548  

Amortization expense related to intangible assets acquired through business acquisitions

     39,338       48,151       48,151       96,335       96,302  

Income tax related to intangible assets acquired through business acquisition

     (10,028     (5,625     (5,625     (18,009     (11,250

(Gain)/Loss on fair value change in investments in publicly traded companies

     (305,185     (367,920     186,687       335,929       (181,233

(Gain)/Loss on repurchase of convertible senior notes

     (137,011     (336,485     54,043       (475,790     (282,442

Expenses related to organizational optimization

     89,650       —         —         89,650       —    

Termination expenses of certain game projects

     109,054       —         —         109,054       —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted net loss attributable to the Bilibili Inc.’s shareholders

     (1,964,411     (1,028,831     (962,637     (3,617,180     (1,991,468
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

11


     For the Three Months Ended     For the Six Months Ended  
     June 30,
2022
    March 31,
2023
    June 30,
2023
    June 30,
2022
    June 30,
2023
 
     RMB     RMB     RMB     RMB     RMB  

Adjusted net loss per share, basic

     (4.98     (2.51     (2.33     (9.18     (4.83

Adjusted net loss per ADS, basic

     (4.98     (2.51     (2.33     (9.18     (4.83

Adjusted net loss per share, diluted

     (4.98     (2.51     (2.33     (9.18     (4.83

Adjusted net loss per ADS, diluted

     (4.98     (2.51     (2.33     (9.18     (4.83

Weighted average number of ordinary shares, basic

     394,742,634       410,564,084       413,446,005       394,142,409       412,013,005  

Weighted average number of ADS, basic

     394,742,634       410,564,084       413,446,005       394,142,409       412,013,005  

Weighted average number of ordinary shares, diluted

     394,742,634       410,564,084       413,446,005       394,142,409       412,013,005  

Weighted average number of ADS, diluted

     394,742,634       410,564,084       413,446,005       394,142,409       412,013,005  

 

12

Exhibit 99.2

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

 

LOGO

Bilibili Inc.

(A company controlled through weighted voting rights and incorporated in the Cayman Islands with limited liability)

(Stock Code: 9626)

INTERIM RESULTS ANNOUNCEMENT FOR THE SIX MONTHS ENDED JUNE 30, 2023

The board (the “Board”) of directors (the “Directors”) of Bilibili Inc. (the “Company”) is pleased to announce the unaudited interim consolidated results of the Company, its subsidiaries and consolidated affiliated entities (the “Group”) for the six months ended June 30, 2023 (the “Reporting Period”), together with the comparative figures for the corresponding period in 2022. These interim results have been prepared under generally accepted accounting principles in the United States (the “U.S. GAAP”) and reviewed by the audit committee (the “Audit Committee”) of the Board. The independent auditor of the Company, PricewaterhouseCoopers, has reviewed our interim financial information for the six months ended June 30, 2023 in accordance with International Standard on review Engagements 2410 “Review of Interim Financial Information Performed by the Independent Auditor of the Entity”.

In this announcement, “we,” “us,” and “our” refer to the Company and where the context otherwise requires, the Group.

FINANCIAL AND OPERATIONAL HIGHLIGHTS FOR THE SIX MONTHS ENDED JUNE 30, 2023

 

 

Total net revenues were RMB10.4 billion for the six months ended June 30, 2023, representing an increase of 4% from RMB10.0 billion for the six months ended June 30, 2022.

 

 

Gross profit was RMB2.3 billion for the six months ended June 30, 2023, representing an increase of 51% from RMB1.5 billion for the six months ended June 30, 2022. Gross profit margin was 22.5% for the six months ended June 30, 2023, compared with 15.5% in the same period last year.

 

 

Net loss was RMB2.2 billion for the six months ended June 30, 2023, narrowing by 49% from RMB4.3 billion for the six months ended June 30, 2022.

 

 

Adjusted net loss was RMB2.0 billion for the six months ended June 30, 2023, narrowing by 45% from RMB3.6 billion for the six months ended June 30, 2022.

 

 

Average daily active users (“DAUs”) reached 95.1 million for the six months ended June 30, 2023, representing an increase of 17% from 81.4 million for the six months ended June 30, 2022.

 

1


FINANCIAL HIGHLIGHTS

 

     For the Six Months Ended
June 30,
       
     2022     2023     Change (%)  
     RMB     RMB        
     (in thousands, except for
percentages)
       

Net revenues

     9,963,030       10,373,810       4.1

Gross profit

     1,545,526       2,331,466       50.9

Loss before income tax

     (4,237,976     (2,122,187     (49.9 %) 

Net loss

     (4,294,577     (2,177,777     (49.3 %) 

Net loss attributable to the Bilibili Inc.’s shareholders

     (4,288,909     (2,174,393     (49.3 %) 

Non-GAAP Financial Measures:

      

Adjusted net loss

     (3,622,848     (1,994,852     (44.9 %) 

Adjusted net loss attributable to the Bilibili Inc.’s shareholders

     (3,617,180     (1,991,468     (44.9 %) 
     2022     2023        
     December 31     June 30     Change (%)  
     RMB     RMB        
     (in thousands, except for
percentages)
       

Total current assets

     24,452,888       18,710,694       (23.5 %) 

Total non-current assets

     17,377,682       16,184,663       (6.9 %) 

Total assets

     41,830,570       34,895,357       (16.6 %) 

Total liabilities

     26,590,983       18,362,675       (30.9 %) 

Total shareholders’ equity

     15,239,587       16,532,682       8.5

Total liabilities and shareholders’ equity

     41,830,570       34,895,357       (16.6 %) 

 

2


Non-GAAP Financial Measures

The Company uses non-GAAP measures, such as adjusted net loss, adjusted net loss attributable to the Bilibili Inc.’s shareholders, in evaluating its operating results and for financial and operational decision-making purposes. The Company believes that the non-GAAP financial measures help identify underlying trends in its business by excluding the impact of share-based compensation expenses, amortization expense related to intangible assets acquired through business acquisitions, income tax related to intangible assets acquired through business acquisitions, loss/gain on fair value change in investments in publicly traded companies, gain on repurchase of convertible senior notes, expenses related to organizational optimization, and termination expenses of certain game projects. The Company believes that the non-GAAP financial measures provide useful information about the Company’s results of operations, enhance the overall understanding of the Company’s past performance and future prospects and allow for greater visibility with respect to key metrics used by the Company’s management in its financial and operational decision-making.

The non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. The non-GAAP financial measures have limitations as analytical tools, and when assessing the Company’s operating performance, cash flows or liquidity, investors should not consider them in isolation, or as a substitute for net loss, cash flows provided by operating activities or other consolidated statements of operations and cash flows data prepared in accordance with U.S. GAAP.

The Company mitigates these limitations by reconciling the non-GAAP financial measures to the most comparable U.S. GAAP performance measures, all of which should be considered when evaluating the Company’s performance.

 

3


The following table sets forth unaudited reconciliation of GAAP and non-GAAP results for the periods indicated.

 

     For the Six Months
Ended June 30,
 
     2022      2023  
     RMB      RMB  
     (in thousands)  

Net loss

     (4,294,577      (2,177,777

Add:

     

Share-based compensation expenses

     534,560        561,548  

Amortization expense related to intangible assets acquired through business acquisitions

     96,335        96,302  

Income tax related to intangible assets acquired through business acquisitions

     (18,009      (11,250

Loss/(gain) on fair value change in investments in publicly traded companies

     335,929        (181,233

Gain on repurchase of convertible senior notes

     (475,790      (282,442

Expenses related to organizational optimization

     89,650        —    

Termination expenses of certain game projects

     109,054        —    
  

 

 

    

 

 

 

Adjusted net loss

     (3,622,848      (1,994,852
  

 

 

    

 

 

 
     For the Six Months
Ended June 30,
 
     2022      2023  
     RMB      RMB  
     (in thousands)  

Net loss attributable to the Bilibili Inc.’s shareholders

     (4,288,909      (2,174,393

Add:

     

Share-based compensation expenses

     534,560        561,548  

Amortization expense related to intangible assets acquired through business acquisitions

     96,335        96,302  

Income tax related to intangible assets acquired through business acquisitions

     (18,009      (11,250

Loss/(gain) on fair value change in investments in publicly traded companies

     335,929        (181,233

Gain on repurchase of convertible senior notes

     (475,790      (282,442

Expenses related to organizational optimization

     89,650        —    

Termination expenses of certain game projects

     109,054        —    
  

 

 

    

 

 

 

Adjusted net loss attributable to the Bilibili Inc.’s shareholders

     (3,617,180      (1,991,468
  

 

 

    

 

 

 

 

4


BUSINESS REVIEW AND OUTLOOK

Our top priority for 2023 is to improve our commercialization efficiency and narrow our losses. In the first half of this year, we have made solid steps toward these goals. We meaningfully improved our gross profit and cut our losses, while continuing to deliver healthy DAU growth and strong community metrics.

In the first half of this year, we further improved our commercialization efficiency, enabling us to convert our growing traffic into quality revenue growth. The momentum we have seen in our advertising and live broadcasting business is encouraging. In the first half of 2023, our advertising revenues increased by 29% while our live broadcasting revenues grew by 23%, both on a year-over-year basis. Moreover, our gross profit increased by 51% year-over-year, driving our gross profit margin to 22.5% from 15.5% in the same period of last year. Meanwhile, we have strengthened our expense controls. Our total operating expenses declined by 13%, including a 26% decrease in sales and marketing expenses, a 4% decrease in general and administrative expenses and a 3% decrease in research and development expenses, all on a year-over-year basis. The advancements we made with our margin and effective cost management contributed to our improved bottom line. As a result, in the first half of 2023, our net loss and adjusted net loss narrowed by 49% and 45% year-over-year, respectively.

While we focused on improving our financial metrics, we continued to attract more users and enhance the engagement levels of our community. In the first half of this year, our DAUs grew by 17% year-over-year to over 95 million, while our monthly active users (“MAUs”) reached 319 million, driving our DAU/MAU ratio to 29.8%, up from 27.2% in the same period last year. Our users continue to value our evolving and diverse content with the average daily time spent on Bilibili reaching 95 minutes in the first half of this year, bringing users’ total time spent1 on our platform increased by 21% year-over-year.

 

5


Content

Our content ecosystem continues to be our most prized asset. In the first half of 2023, we remained steadfast in our commitment to crafting a comprehensive video platform that empowers content creators and users to explore novel interests, earn recognition and forge connections. The diverse tapestry of Bilibili’s content verticals naturally unfurls in response to users’ evolving interests. These encompass domains such as automotive, home decoration and professional pursuits, mirroring the progressive journey of our young users through their various life phases. Furthermore, we have extended our content scenarios to align with users diversified video watching preferences. In addition to professional user-generated videos (“PUGVs”), live broadcasting and Smart TV, our short-form vertical video product, known as Story Mode, caters to our users’ video consumption needs during their fragmented time. In the first half of this year, our total daily video views increased by 34% year-over-year to 4.1 billion. Story Mode’s daily video views grew by 78% year-over-year, while PUGV average daily video views increased by 22% year-over-year. Story Mode has become one of the key video consumption scenarios for our users, contributing to growth in our DAUs and commercialization in areas such as advertising and live broadcasting.

Content creators are an essential component of our content ecosystem. Supporting our talented content creators’ visibility, as well as their ability to earn more money, are among our top tasks. In the first half of 2023, we continued to optimize our algorithms and products to facilitate high-quality content and enable creators to be recognized. The number of daily active content creators on our platform and our monthly content submissions increased by 30% and 61% year-over-year, respectively, in the first half of this year. By further integrating our commercial channels within our ecosystem, we continued to empower content creators to realize their commercial value through diverse avenues. In the first half of this year, over 2.1 million creators earned money through various Bilibili channels, representing a 41% increase year-over-year. In addition to our cash incentive program, more creators are earning income through multiple commercialization channels, such as advertising, live broadcasting, online paid courses and workshops.

We are also exploring the integration of AI applications within our content ecosystem. Utilizing AI-generated content (“AIGC”) can enhance both content creation efficiency and user experience. We believe it holds great promise and tremendous potential for the video industry. Leveraging these evolving technologies, we can further enrich our content supply, empowering our creators to bring their visions to life more easily and effectively. We are also beta testing new features powered by AIGC, including an AI-powered search feature, to further enhance user experience and offer personalized and captivating content that deeply engages our user community.

Community

The inspiring community atmosphere and diverse interactive features we provide are fostering strong connections between our users and our platform. The average daily time spent on our platform was 95 minutes in the first half of this year, the highest level for a first half year period in our operating history. Users’ monthly interactions reached around 14.6 billion in the first half of this year, up 17% year-over-year. As of the end of June 2023, our core group of official members also increased by 26% year-over-year to 214 million with a solid 12-month retention rate of around 80%.

Our signature offline events also bring our community together in person. This July, we hosted two exciting offline events: Bilibili World and Bilibili Macro Link in Shanghai. Over 200,000 tickets were sold out almost immediately. The tremendous response highlights Bilibili’s strong influence and leadership among young generations in China, as well as users’ strong willingness to pay for our unique community experiences.

 

6


Commercialization

In 2023, we focus on enhancing efficiency, improving gross profit and reducing losses. We have intensified the integration of commercial initiatives including advertising and live broadcasting throughout our ecosystem, and streamlined our resources toward our core commercial businesses. We remain steadfast in our commitment to achieving our financial goals, while nurturing a welcoming and inspiring user community.

Value-Added Services

Revenues from value-added services business were RMB4.5 billion in the first half of this year, representing an increase of 7% from the first half of 2022, primarily driven by the revenue growth of our live broadcasting business which increased by 23% year-over-year. We continue to integrate our live broadcasting capabilities within our video ecosystem. As one of the primary ways for creators to monetize their talent, more creators are making the transition to live broadcasting hosts. In the first half of this year, the number of monthly active live broadcasting hosts increased by 24% year-over-year. Meanwhile, we are exploring new live broadcasting products to create more paying channels for our users.

Meanwhile, we continued to enrich our occupationally-generated videos (“OGVs”) library and convert more users to premium memberships. By the end of June, we had around 20.5 million premium members. Over 80% of these were annual or auto-renew package subscribers, which represents users’ strong trust in our brand and content offerings.

Advertising

Revenues from advertising business were RMB2.8 billion in the first half of this year, representing an increase of 29% from the first half of 2022, mainly led by our performance-based advertising revenue growth, which increased by 58% year-over-year. Revenues from brand advertising and Sparkle advertising offerings also grew by double digit percentages year-over-year for the period. In the first half of 2023, we continued to expand and optimize our advertising product offerings. At the same time, we have been continuously building our commercial database and improving our ad algorithm to drive better results for our advertising clients. As we progress our initiative to integrate sales conversion with advertising products, we have found an effective way to convert our high-quality traffic to advertising revenue growth.

Mobile Games Services

Our revenues from mobile games services were RMB2.0 billion in the first half of this year, representing a decrease of 16% from the first half of 2022, mainly due to the lack of new game launches and revenue declines from certain games. The performance of our top two performing games, Azur Lane and Fate Grand Order, remained stable. Particularly, during Azur Lane’s six-year anniversary, the game reached new peaks in paying users and revenues. We remain dedicated to our in-house development of high-quality games. We believe top-tier games built on a deep understanding of user needs can generate profitability over the long run.

 

7


Inclusion of Class Z Ordinary Shares in the Shenzhen-Hong Kong Stock Connect and Shanghai- Hong Kong Stock Connect Programs

Our Class Z ordinary shares traded on the Hong Kong Stock Exchange have been included in the Shenzhen-Hong Kong Stock Connect and Shanghai-Hong Kong Stock Connect programs, both effective March 13, 2023. Following the inclusion, eligible investors in the Chinese Mainland can have direct access to the trading of the Company’s Class Z ordinary shares.

Repurchase of Convertible Senior Notes

In January 2023, the Company repurchased an aggregate principal amount of US$384.8 million (RMB2.6 billion) December 2026 Notes2 with an aggregate consideration of US$331.2 million (RMB2.2 billion) that was funded by the Company’s ADS issuance. In June 2023, the Company completed the repurchase right offer for its 2027 Notes3. An aggregate principal amount of US$745.9 million (RMB5.3 billion) 2027 Notes was validly surrendered and repurchased with an aggregate cash consideration of US$745.9 million (RMB5.3 billion). The total gain on repurchase of December 2026 Notes and 2027 Notes was RMB282.4 million for the six months ended June 30, 2023.

As of June 30, 2023, the aggregate outstanding principal amount of April 2026 Notes4, 2027 Notes and December 2026 Notes was RMB6.3 billion (US$876.3 million).

Recent Development after the Reporting Period

Save as disclosed in this announcement, there were no other significant events that might affect us since the end of the Reporting Period and up to the date of this announcement.

Business Outlook

In the first half of the year, we accelerated our monetization efforts and improved gross profit and narrowed losses, while continuing to foster the healthy growth of our community. As we move into the second half of this year, our main tasks will focus on the following three core areas: First, we aim to further enhance our traffic commercialization efficiency by increasing our advertising revenues and live broadcasting revenues. Additionally, we will bring more high-quality games to our users, including the highly anticipated Pretty Derby. Secondly, we will continue to take a prudent financial approach with strict control of our costs and expenses, and further narrow our losses. Last but not least, we are committed to achieving ongoing healthy DAU growth, and will continue to foster an inspiring video community for young generations in China.

 

1

Total time spent represents the total time users spent on our mobile apps during a given period, which is the result of average daily time spent per active user on our mobile apps multiplied by DAUs and further multiplied by the number of days in such period.

 

2

0.50% convertible senior notes due December 2026, initially in an aggregate principal amount of US$1,600 million, issued by the Company in November 2021.

 

3

1.25% convertible senior notes due 2027, initially in an aggregate principal amount of US$800 million, issued by the Company in June 2020.

 

4

1.375% convertible senior notes due April 2026, initially in an aggregate principal amount of US$500 million, issued by the Company in April 2019.

 

8


MANAGEMENT DISCUSSION AND ANALYSIS

 

     For the Six Months Ended
June 30,
 
     2022     2023  
     (Unaudited)     (Unaudited)  
     (RMB in thousands)  

Net Revenues:

    

Mobile games

     2,404,054       2,022,503  

Value-added services (VAS)

     4,155,650       4,457,965  

Advertising

     2,199,022       2,844,644  

IP derivatives and others (formerly known as E-commerce and others)

     1,204,304       1,048,698  
  

 

 

   

 

 

 

Total net revenues

     9,963,030       10,373,810  
  

 

 

   

 

 

 

Cost of revenues

     (8,417,504     (8,042,344

Gross profit

     1,545,526       2,331,466  
  

 

 

   

 

 

 

Operating expenses:

    

Sales and marketing expenses

     (2,425,888     (1,798,383

General and administrative expenses

     (1,160,961     (1,111,394

Research and development expenses

     (2,140,551     (2,074,033
  

 

 

   

 

 

 

Total operating expenses

     (5,727,400     (4,983,810
  

 

 

   

 

 

 

Loss from operations

     (4,181,874     (2,652,344

Other (expenses)/income:

    

Investment (loss)/income, net (including impairments)

     (544,273     8,321  

Interest income

     90,268       298,300  

Interest expense

     (123,612     (105,682

Exchange losses

     (21,526     (16,552

Debt extinguishment gain

     475,790       282,442  

Others, net

     67,251       63,328  
  

 

 

   

 

 

 

Total other (expenses)/income, net

     (56,102     530,157  
  

 

 

   

 

 

 

Loss before income tax

     (4,237,976     (2,122,187

Income tax

     (56,601     (55,590
  

 

 

   

 

 

 

Net loss

     (4,294,577     (2,177,777
  

 

 

   

 

 

 

Net loss attributable to:

    

Bilibili Inc.’s shareholders

     (4,288,909     (2,174,393

Noncontrolling interests

     (5,668     (3,384
  

 

 

   

 

 

 

Net loss

     (4,294,577     (2,177,777
  

 

 

   

 

 

 

 

9


Net revenues

Total net revenues were RMB10.4 billion for the six months ended June 30, 2023, representing an increase of 4% from RMB10.0 billion for the six months ended June 30, 2022.

Value-added services (VAS)

Revenues from VAS were RMB4.5 billion for the six months ended June 30, 2023, representing an increase of 7% from RMB4.2 billion for the six months ended June 30, 2022. The increase was led by an increased amount of average revenues generated from each paying user for the Company’s value-added services, including live broadcasting and other value-added services.

Advertising

Revenues from advertising were RMB2.8 billion for the six months ended June 30, 2023, representing an increase of 29% from RMB2.2 billion for the six months ended June 30, 2022. This increase was mainly attributable to the Company’s improved advertising product offerings and enhanced advertising efficiency.

Mobile games

Revenues from mobile games were RMB2.0 billion for the six months ended June 30, 2023, representing a decrease of 16% from RMB2.4 billion for the six months ended June 30, 2022, mainly attributable to the lack of new game launches as well as revenues decline from certain games for the six months ended June 30, 2023.

IP derivatives and others (formerly known as E-commerce and others)

Revenues from IP derivatives and others were RMB1.0 billion for the six months ended June 30, 2023, representing a decrease of 13% from RMB1.2 billion for the six months ended June 30, 2022, mainly attributable to decreased revenue from e-sports copyright sub-licensing.

Cost of revenues

Cost of revenues was RMB8.0 billion for the six months ended June 30, 2023, representing a decrease of 4% from RMB8.4 billion for the six months ended June 30, 2022. The decrease was mainly due to lower server and bandwidth costs and others costs. Revenue-sharing costs, a key component of cost of revenues, was RMB4.2 billion, remaining stable from RMB4.2 billion for the six months ended June 30, 2022. Server and bandwidth costs represented a decrease of 14% for the six months ended June 30, 2022.

Gross profit

Gross profit was RMB2.3 billion for the six months ended June 30, 2023, representing an increase of 51% from RMB1.5 billion for the six months ended June 30, 2022, primarily due to the Company’s improved operating leverage, as the Company enhanced its monetization efficiency.

 

10


Operating expenses

Total operating expenses were RMB5.0 billion for the six months ended June 30, 2023, representing a decrease of 13% from RMB5.7 billion for the six months ended June 30, 2022.

Sales and marketing expenses

Sales and marketing expenses were RMB1.8 billion for the six months ended June 30, 2023, representing a 26% decrease from RMB2.4 billion for the six months ended June 30, 2022. The decrease was primarily attributable to reduced promotional spending related to user acquisition for the six months ended June 30, 2023.

General and administrative expenses

General and administrative expenses were RMB1.1 billion for the six months ended June 30, 2023, representing a 4% decrease from RMB1.2 billion for the six months ended June 30, 2022.

Research and development expenses

Research and development expenses were RMB2.07 billion for the six months ended June 30, 2023, representing a 3% decrease from RMB2.14 billion for the six months ended June 30, 2022.

Loss from operations

Loss from operations was RMB2.7 billion for the six months ended June 30, 2023, narrowing by 37% from RMB4.2 billion for the six months ended June 30, 2022.

Total other (expenses)/income, net

Total other income was RMB530.2 million for the six months ended June 30, 2023, compared with total other expenses of RMB56.1 million in the same period of 2022. The change was primarily attributable to a gain of RMB181.2 million on fair value change in investments in publicly traded companies for the six months ended June 30, 2023, compared to a loss of RMB335.9 million on fair value change in investments in publicly traded companies for the same period of 2022.

Income tax

Income tax expense was RMB55.6 million for the six months ended June 30, 2023, compared with RMB56.6 million for the six months ended June 30, 2022.

Net loss

Net loss was RMB2.2 billion for the six months ended June 30, 2023, narrowing by 49% from RMB4.3 billion for the six months ended June 30, 2022.

Liquidity

Our cash and cash equivalents, time deposits and short-term investments decreased by 27% from RMB19.6 billion as of December 31, 2022 to RMB14.3 billion as of June 30, 2023. The decrease was primarily due to the repurchase of 2027 Notes for a total cash consideration of US$745.9 million (RMB5.3 billion) during the six months ended June 30, 2023.

 

11


Significant Investments

The Group did not make or hold any significant investments during the six months ended June 30, 2023.

Material Acquisitions and Disposals

The Group did not have any material acquisitions or disposals of subsidiaries, consolidated affiliated entities or associated companies during the six months ended June 30, 2023.

Foreign Exchange Exposure

A substantial majority of our revenues and costs is denominated in Renminbi. Any significant depreciation of the Renminbi may materially adversely affect the value of, and any dividends payable on, the ADSs in U.S. dollars. For example, when we convert our U.S. dollars denominated funds into Renminbi for our operations, appreciation of the Renminbi against the U.S. dollar would have an adverse effect on the Renminbi amount we would receive from the conversion. Conversely, if we decide to convert our Renminbi into U.S. dollars for the purpose of making payments for dividends on our ordinary shares or ADSs or for other business purposes, appreciation of the U.S. dollar against the Renminbi would have a negative effect on the U.S. dollar amount available to us. In addition, appreciation or depreciation in the value of the Renminbi relative to U.S. dollars would affect our financial results reported in U.S. dollar terms regardless of any underlying change in our business or results of operations. Very limited hedging options are available in China to reduce our exposure to exchange rate fluctuations. To date, we have not entered into any hedging transactions in an effort to reduce our exposure to foreign currency exchange risk. While we may decide to enter into hedging transactions in the future, the availability and effectiveness of these hedges may be limited and we may not be able to adequately hedge our exposure or at all. In addition, our currency exchange losses may be magnified by PRC exchange control regulations that restrict our ability to convert Renminbi into foreign currency.

Contingent Liabilities

The Company had no material contingent liabilities as at June 30, 2023.

Employees and Remuneration

As of June 30, 2023, we had a total of 10,354 employees, compared to 11,092 as of December 31, 2022.

As required under PRC regulations, the Company participates in housing funds and various employee social security plans that are organized by applicable local municipal and provincial governments, including housing funds, pension, maternity, medical, work-related injury and unemployment benefit plans, under which we make contributions at specified percentages of the salaries of its employees. We also purchase commercial health and accidental insurance for our employees. Bonuses are generally discretionary and based in part on employee performance and in part on the overall performance of the Group’s business. The Company has granted and plans to continue to grant share-based incentive awards to its employees in the future to incentivize their contributions to its growth and development.

 

12


CORPORATE GOVERNANCE

Compliance with the Corporate Governance Code

The Board is committed to achieving high corporate governance standards. The Board believes that high corporate governance standards are essential in providing a framework for the Company to safeguard the interests of shareholders and to enhance corporate value and accountability.

During the Reporting Period, we have complied with all the code provisions of the Corporate Governance Code (the “Corporate Governance Code”) set forth in Part 2 of Appendix 14 to the Rules Governing the Listing of Securities on the Hong Kong Stock Exchange (the “Listing Rules”), save for the following.

Code provision C.2.1 of the Corporate Governance Code, recommends, but does not require, that the roles of chairperson and chief executive officer should be separate and should not be performed by the same person. The Company deviates from this code provision because Mr. Rui Chen performs both the roles of the chairman of the Board and the chief executive officer of the Company. Mr. Chen has extensive experience in our business operations and management. The Board believes that vesting the roles of both chairman and chief executive officer to Mr. Chen has the benefit of ensuring consistent leadership within the Company and enables more effective and efficient overall strategic planning. This structure will enable the Company to make and implement decisions promptly and effectively.

The Board considers that the balance of power and authority will not be impaired due to this arrangement. In addition, all major decisions are made in consultation with members of the Board, including the relevant Board committees, and four independent non-executive Directors. The Board will reassess the division of the roles of chairman and the chief executive officer from time to time, and may recommend dividing the two roles between different people in the future, taking into account our circumstances as a whole.

Code provision F.1.1 of the Corporate Governance Code provides that an issuer should have a policy on payment of dividends and should disclose it in the annual report. The Company deviates from this code provision because the Company does not have a dividend policy. The Board has complete discretion on whether to distribute dividends, subject to certain requirements of Cayman Islands law. Even if the Board decides to pay dividends, the form, frequency and amount will depend upon our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors that the board of directors may deem relevant. We do not have any present plan to pay any cash dividends on our ordinary shares in the foreseeable future. We currently intend to retain most, if not all, of our available funds and any future earnings to operate and expand our business.

 

13


Compliance with the Model Code for Securities Transactions by Directors

The Company has adopted the Management Trading of Securities Policy (the “Code”), with terms no less exacting than that of the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 to the Listing Rules, as its own securities dealing code to regulate all dealings by Directors and relevant employees of securities in the Company and other matters covered by the Code.

Specific enquiry has been made of all the Directors and the relevant employees and they have confirmed that they have complied with the Code during the Reporting Period and up to the date of this announcement.

Audit Committee

The audit committee consists of Eric He, JP Gan and Feng Li. Eric He is the chairman of our audit committee. The Company have determined that Eric He, JP Gan and Feng Li each satisfies the “independence” requirements of Rule 5605(c)(2) of the Nasdaq Stock Market Rules and meet the independence standards under Rule 10A-3 under the Exchange Act, as amended. We have determined that Eric He qualifies as an “audit committee financial expert.” The audit committee oversees our accounting and financial reporting processes and the audits of the financial statements of our company. The audit committee is responsible for, among other things:

 

 

appointing the independent registered public accounting firms and pre-approving all auditing and non-auditing services permitted to be performed by the independent registered public accounting firms;

 

 

reviewing with the independent registered public accounting firms any audit problems or difficulties and management’s response;

 

 

discussing the annual audited financial statements with management and the independent registered public accounting firms;

 

 

reviewing the adequacy and effectiveness of our accounting and internal control policies and procedures and any steps taken to monitor and control major financial risk exposures;

 

 

reviewing and approving all proposed related party transactions;

 

 

meeting separately and periodically with management and the independent registered public accounting firms; and

 

 

monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance.

 

14


The Audit Committee has reviewed the unaudited interim results of the Company for the six months ended June 30, 2023 and has met with the independent auditor, PricewaterhouseCoopers. The Audit Committee has also discussed matters with respect to the accounting policies and practices adopted by the Company and internal control and financial reporting matters with senior management members of the Company.

In addition, the independent auditor of the Company, PricewaterhouseCoopers, has reviewed our interim financial information for the six months ended June 30, 2023 in accordance with International Standard on Review Engagements 2410 “Review of Interim Financial Information Performed by the Independent Auditor of the Entity.”

Other Board Committees

In addition to the Audit Committee, the Board has also established the compensation committee and the nominating and corporate governance committee. Each of these committees is established with a defined written charter. The charters of the Board committees are available on the Company’s Investor Relations website and the website of Hong Kong Stock Exchange.

OTHER INFORMATION

Purchase, Sale or Redemption of the Company’s Listed Securities

As disclosed in this announcement, the Company repurchased December 2026 Notes and 2027 Notes during the Reporting Period. Further details of the repurchase of December 2026 Notes are set out in the announcements of the Company dated January 9, 2023 and January 12, 2023. And further details of the repurchase of 2027 Notes are set out in the overseas regulatory announcements dated May 9, 2023 and June 14, 2023, as well as the next day disclosure return dated 16 June 2023 and the monthly return dated 7 July 2023 of the Company.

In addition, the Company announced in March 2022 that its Board of Directors had authorized a share repurchase program, under which the Company may repurchase up to US$500 million of its ADSs for the next 24 months. The Company had repurchased a total of 2.6 million ADSs for a total cost of US$53.6 million as of June 30, 2023. The aforementioned repurchases of ADSs took place between March and May 2022 prior to the Reporting Period.

Save as disclosed in this announcement, neither the Company nor any of its subsidiaries and consolidated affiliated entities had purchased, sold or redeemed any of the Company’s listed securities during the Reporting Period.

Dividend

The Board did not recommend the distribution of an interim dividend for the six months ended June 30, 2023.

 

15


UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS

(All amounts in thousands, except for share and per share data)

 

     For the Six Months Ended
June 30,
 
     2022     2023  
     RMB     RMB  

Net revenues

     9,963,030       10,373,810  
  

 

 

   

 

 

 

Cost of revenues

     (8,417,504     (8,042,344
  

 

 

   

 

 

 

Gross profit

     1,545,526       2,331,466  

Operating expenses:

    

Sales and marketing expenses

     (2,425,888     (1,798,383

General and administrative expenses

     (1,160,961     (1,111,394

Research and development expenses

     (2,140,551     (2,074,033
  

 

 

   

 

 

 

Total operating expenses

     (5,727,400     (4,983,810
  

 

 

   

 

 

 

Loss from operations

     (4,181,874     (2,652,344

Other (expense)/income:

    

Investment (loss)/income, net (including impairments)

     (544,273     8,321  

Interest income

     90,268       298,300  

Interest expense

     (123,612     (105,682

Exchange losses

     (21,526     (16,552

Debt extinguishment gain

     475,790       282,442  

Others, net

     67,251       63,328  
  

 

 

   

 

 

 

Total other (expense)/income, net

     (56,102     530,157  
  

 

 

   

 

 

 

Loss before income tax

     (4,237,976     (2,122,187

Income tax

     (56,601     (55,590
  

 

 

   

 

 

 

Net loss

     (4,294,577     (2,177,777

Net loss attributable to:

    

Bilibili Inc.’s shareholders

     (4,288,909     (2,174,393

Noncontrolling interests

     (5,668     (3,384
  

 

 

   

 

 

 

Net loss

     (4,294,577     (2,177,777
  

 

 

   

 

 

 

Other comprehensive income:

    

Foreign currency translation adjustments

     334,244       219,942  

Total other comprehensive income

     334,244       219,942  
  

 

 

   

 

 

 

Total comprehensive loss

     (3,960,333     (1,957,835
  

 

 

   

 

 

 

 

16


UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS (Continued)

 

     For the Six Months Ended
June 30,
 
     2022     2023  
     RMB     RMB  

Total comprehensive loss attributable to:

    

Bilibili Inc.’s shareholders

     (3,954,665     (1,954,451

Noncontrolling interests

     (5,668     (3,384
  

 

 

   

 

 

 

Total comprehensive loss

     (3,960,333     (1,957,835
  

 

 

   

 

 

 

Net loss per share, basic

     (10.88     (5.28

Net loss per share, diluted

     (10.88     (5.28

Net loss per ADS, basic

     (10.88     (5.28

Net loss per ADS, diluted

     (10.88     (5.28

Weighted average number of ordinary shares, basic

     394,142,409       412,013,005  

Weighted average number of ordinary shares, diluted

     394,142,409       412,013,005  

Weighted average number of ADS, basic

     394,142,409       412,013,005  

Weighted average number of ADS, diluted

     394,142,409       412,013,005  

 

17


UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEET

(All amounts in thousands, except for share and per share data)

 

     December 31,
2022
     June 30,
2023
 
     RMB      RMB  

Assets

     

Current assets:

     

Cash and cash equivalents

     10,172,584        5,686,852  

Time deposits

     4,767,972        5,712,014  

Restricted cash

     14,803        167,810  

Accounts receivable, net

     1,328,584        1,367,815  

Amount due from related parties

     1,594,920        1,207,285  

Prepayments and other current assets

     1,950,573        1,669,096  

Short-term investments

     4,623,452        2,899,822  
  

 

 

    

 

 

 

Total current assets

     24,452,888        18,710,694  
  

 

 

    

 

 

 

Non-current assets:

     

Property and equipment, net

     1,227,163        929,803  

Production cost, net

     1,929,622        2,014,100  

Intangible assets, net

     4,326,790        3,952,713  

Deferred tax assets

     43,591        43,591  

Goodwill

     2,725,130        2,725,130  

Long-term investments, net

     5,651,018        5,223,492  

Other long-term assets

     1,474,368        1,295,834  
  

 

 

    

 

 

 

Total non-current assets

     17,377,682        16,184,663  
  

 

 

    

 

 

 

Total assets

     41,830,570        34,895,357  
  

 

 

    

 

 

 

Liabilities

     

Current liabilities:

     

Accounts payable

     4,291,656        4,171,625  

Salary and welfare payable

     1,401,526        994,074  

Taxes payable

     316,244        300,330  

Short-term loan and current portion of long-term debt

     6,621,386        4,611,656  

Deferred revenue

     2,819,323        2,690,964  

Accrued liabilities and other payables

     1,534,962        1,609,350  

Amount due to related parties

     108,307        101,458  
  

 

 

    

 

 

 

Total current liabilities

     17,093,404        14,479,457  
  

 

 

    

 

 

 

Non-current liabilities:

     

Long-term debt

     8,683,150        3,197,625  

Other long-term liabilities

     814,429        685,593  
  

 

 

    

 

 

 

Total non-current liabilities

     9,497,579        3,883,218  
  

 

 

    

 

 

 

Total liabilities

     26,590,983        18,362,675  
  

 

 

    

 

 

 

 

18


UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEET (Continued)

 

(All amounts in thousands, except for share and per share data)

 

     December 31,
2022
    June 30,
2023
 
     RMB     RMB  

Shareholders’ equity

    

Ordinary shares:

    

Class Y Ordinary Shares (US$0.0001 par value; 100,000,000 shares authorized, 83,715,114 shares issued and outstanding as of December 31, 2022; US$0.0001 par value; 100,000,000 shares authorized, 83,715,114 shares issued and outstanding as of June 30, 2023)

     52       52  

Class Z Ordinary Shares (US$0.0001 par value; 9,800,000,000 shares authorized, 316,202,303 shares issued, 310,864,471 shares outstanding as of December 31, 2022; US$0.0001 par value; 9,800,000,000 shares authorized, 331,546,303 shares issued, 327,376,931 shares outstanding as of June 30, 2023)

     201       213  

Additional paid-in capital

     36,623,161       39,874,079  

Statutory reserves

     36,173       36,173  

Accumulated other comprehensive income

     58,110       278,052  

Accumulated deficit

     (21,479,869     (23,654,262
  

 

 

   

 

 

 

Total Bilibili Inc.’s shareholders’ equity

     15,237,828       16,534,307  
  

 

 

   

 

 

 

Noncontrolling interests

     1,759       (1,625
  

 

 

   

 

 

 

Total shareholders’ equity

     15,239,587       16,532,682  
  

 

 

   

 

 

 

Total liabilities and shareholders’ equity

     41,830,570       34,895,357  
  

 

 

   

 

 

 

 

 

19


UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW

(All amounts in thousands, except for share and per share data)

 

     For the Six Months Ended
June 30,
 
     2022     2023  
     RMB     RMB  

Net cash used in operating activities

     (2,104,516     (651,158
  

 

 

   

 

 

 

Net cash (used in)/provided by investing activities

     (647,890     1,010,143  
  

 

 

   

 

 

 

Net cash used in financing activities

     (1,456,007     (4,837,680
  

 

 

   

 

 

 

Effect of exchange rate changes on cash and cash equivalents and restricted cash held in foreign currencies

     176,776       145,970  

Net increase in cash, cash equivalents and restricted cash

     (4,031,637     (4,332,725

Cash, cash equivalents and restricted cash at beginning of the period

     7,523,108       10,187,387  
  

 

 

   

 

 

 

Cash, cash equivalents and restricted cash at end of the period

     3,491,471       5,854,662  
  

 

 

   

 

 

 

 

20


NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION

 

1.

Operations

Bilibili Inc. (the “Company”) is an iconic brand and a leading video community for young generations in China. Incorporated as a limited liability company in the Cayman Islands in December 2013, the Company, through its consolidated subsidiaries, variable interest entities (“VIEs”) and subsidiaries of the VIEs (collectively referred to as the “Group”), is primarily engaged in the operation of providing online entertainment services to users in the People’s Republic of China (the “PRC” or “China”).

In April 2018, the Company completed its initial public offerings on the NASDAQ Global Select Market. In March 2021, the Company successfully listed its Class Z ordinary shares on the main board of the Hong Kong Stock Exchange. The Company issued a total 28,750,000 Class Z ordinary shares in the global offering, including the fully exercised over-allotment option of 3,750,000 Class Z ordinary shares. Net proceeds from the global offering, including the over-allotment option, after deducting underwriting fees and other offering expenses, were approximately HKD22.9 billion (RMB19.3 billion).

On October 3, 2022, the Company’s voluntary conversion of its secondary listing status to primary listing on the main board of the Hong Kong Stock Exchange became effective. The Company became a dual-primary listed company on the main board of Hong Kong Stock Exchange in Hong Kong and the Nasdaq Global Select Market in the United States.

In January 2023, the Company completed the offering of 15,344,000 ADSs at US$26.65 per ADS. The amount of net proceeds from such offering (after deducting all applicable costs and expenses including but not limited to selling commission) is approximately US$396.9 million (RMB2,689.4 million). Shortly thereafter, the Company completed repurchase of an aggregate principal amount of US$384.8 million of its December 2026 Notes with an aggregate purchase price of US$331.2 million (RMB2,243.8 million), which was funded by the net proceeds from the ADS Offering.

 

2.

Significant Accounting Policies

Basis of presentation

The accompanying unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and the disclosure requirements of the Rules Governing the Listing of Securities on The HKEx, as amended, supplemented or otherwise modified from time to time (the “HK Listing Rules”). The unaudited interim condensed consolidated financial information and related disclosures have been prepared with the presumption that users of the unaudited condensed interim consolidated financial information should be read in conjunction with the audited consolidated financial statements as of December 31, 2022 and for the year ended December 31, 2022. The condensed consolidated balance sheet at December 31, 2022 has been derived from the audited financial statements at that date but does not include all the information and footnotes required by U.S. GAAP.

 

21


NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION (Continued)

 

2.

Significant Accounting Policies (Continued)

 

Use of estimates

The preparation of the Group’s consolidated financial statements in conformity with the U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities at the balance sheet date and reported revenues and expenses during the reported periods in the consolidated financial statements and accompanying notes. Significant accounting estimates include, but are not limited to, determination of the average playing period for paying players, and assessment for the impairment of long-term investments accounted for using the measurement alternative.

 

3.

Accounts receivable, net

An aging analysis of the accounts receivable as of December 31, 2022 and June 30, 2023, based on the recognition date before provisions, is as follows:

 

     As of
December 31,
2022
     As of
June 30,
2023
 
         
     RMB in thousands  

Within 3 months

     897,411        990,486  

Between 3 months and 6 months

     248,274        268,720  

Between 6 months and 1 year

     223,878        180,121  

More than 1 year

     180,895        141,636  

Less: Provisions

     (221,874      (213,148
  

 

 

    

 

 

 

Total

     1,328,584        1,367,815  
  

 

 

    

 

 

 

 

22


NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION (Continued)

 

4.

Accounts payable

An aging analysis of the accounts payable as of December 31, 2022 and June 30, 2023, based on the recognition date, after credit period, is as follows:

 

     As of
December 31,
2022
     As of
June 30,
2023
 
         
     RMB in thousands  

Within 3 months

     2,977,735        2,825,745  

Between 3 months and 6 months

     623,799        605,578  

Between 6 months and 1 year

     392,474        342,844  

More than 1 year

     297,648        397,458  
  

 

 

    

 

 

 

Total

     4,291,656        4,171,625  
  

 

 

    

 

 

 

The accounts payable is non-interest-bearing.

 

5.

Revenue recognition

The following table presents the Group’s net revenues disaggregated by revenue sources:

 

     For the Six Months Ended
June 30,
 
     2022      2023  
         
     RMB in thousands  

Mobile games

     2,404,054        2,022,503  

Value-added services (VAS)

     4,155,650        4,457,965  

Advertising

     2,199,022        2,844,644  

IP derivatives and others (formerly known as E-commerce and others)

     1,204,304        1,048,698  
  

 

 

    

 

 

 

Total net revenues

     9,963,030        10,373,810  
  

 

 

    

 

 

 

 

23


NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION (Continued)

 

6.

Taxation

Composition of income tax

The following table presents the composition of income tax expenses for the six months ended June 30, 2022 and 2023:

 

     For the Six Months Ended
June 30,
 
     2022      2023  
         
     RMB in thousands  

Current income tax expenses

     68,394        57,719  

Withholding income tax expenses

     6,216        9,121  

Deferred tax benefits

     (18,009      (11,250
  

 

 

    

 

 

 

Total

     56,601        55,590  
  

 

 

    

 

 

 

 

7.

Net Loss per Share

For the six months ended June 30, 2022 and 2023, the Company had potential ordinary shares, including share options and restricted share units (“RSUs”) granted and ordinary shares issuable upon the conversion of the April 2026 Notes, 2027 Notes and December 2026 Notes, where applicable. As the Group incurred losses for the six months ended June 30, 2022 and 2023, these potential ordinary shares were anti-dilutive and excluded from the calculation of diluted net loss per share.

For the six months ended June 30, 2022, the numbers of share options and the number of ordinary shares issuable upon the conversion of the April 2026 Notes, 2027 Notes and December 2026 Notes, which were anti-dilutive and excluded from the computation of diluted net loss per share, were 3,168,717 shares, 17,347,747 shares, 19,641,256 shares and 15,480,130 shares, respectively.

For the six months ended June 30, 2023, the numbers of share options, RSUs and the number of ordinary shares issuable upon the conversion of the April 2026 Notes, 2027 Notes and December 2026 Notes, which were anti-dilutive and excluded from the computation of diluted net loss per share, were 1,987,963 shares, 29,875 shares, 17,347,182 shares, 16,696,622 shares and 5,004,820 shares, respectively.

 

24


NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION (Continued)

 

7.

Net Loss per Share (Continued)

 

The following table sets forth the computation of basic and diluted net loss per share for the six months ended June 30, 2022 and 2023:

 

     For the Six Months Ended
June 30,
 
     2022      2023  
         
     RMB in thousands, except for share
and per share data
 

Numerator:

     

Net loss

     (4,294,577      (2,177,777

Net loss attributable to noncontrolling interests

     5,668        3,384  
  

 

 

    

 

 

 

Net loss attributable to Bilibili Inc.’s shareholders for basic/dilutive net loss per share calculation

     (4,288,909      (2,174,393
  

 

 

    

 

 

 

Denominator:

     

Weighted average number of ordinary shares outstanding, basic

     394,142,409        412,013,005  

Weighted average number of ordinary shares outstanding, diluted

     394,142,409        412,013,005  

Net loss per share, basic

     (10.88      (5.28

Net loss per share, diluted

     (10.88      (5.28

 

8.

Dividend

The Board did not recommend the distribution of any dividend for the six months ended June 30, 2022 and 2023.

 

25


PUBLICATION OF THE INTERIM RESULTS ANNOUNCEMENT AND INTERIM REPORT

This interim results announcement is published on the websites of the Stock Exchange (http://www.hkexnews.hk) and the Company (https://ir.bilibili.com/). The interim report for the six months ended June 30, 2023 will be dispatched to the Company’s shareholders and made available for review on the same websites in due course.

 

 

    By order of the Board    

Bilibili Inc.

Rui Chen

Chairman

Hong Kong, August 17, 2023

As at the date of this announcement, the Board comprises Mr. Rui CHEN as the chairman, Ms. Ni LI and Mr. Yi XU as directors, Mr. JP GAN, Mr. Eric HE, Mr. Feng LI and Mr. Guoqi DING as independent directors.

 

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