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Bilibili Announced Financial Results for the Fiscal Year 2021

The Chinese ACG giant is going through a hard time.
By Julius Chen
Mar. 4, 2022 updated 05:12

Bilibili released its 2021 Fourth Quarter and Fiscal Year Financial Results on March 3. The total net revenues of Bilibili in the fourth quarter increased by 51% from the same period of 2020 to 5.78 billion RMB (907.1 million USD), while the total net revenues in the whole year were 19.4 billion RMB (3.0 billion USD), representing an increase of 62% from 2020.

Bilibili launched secondary listing in Hong Kong in March 2021Bilibili launched secondary listing in Hong Kong in March 2021

Gaming business stagnated, value-added services and advertising businesses grew rapidly

The revenue of Bilibili came from four parts: value-added services, mobile games, advertising, e-commerce and others.

Revenues Chart released by BilibiliRevenues Chart released by Bilibili

Value-added services (VAS), including live streaming and the premium membership program, are the cornerstone of Bilibili's revenue and kept stable growth in the last year. Revenues from VAS were 6.9 billion RMB (1.1 billion USD), an increase of 80% from 2020.

At present, 70% of Bilibili's UGC creators whose fans have exceeded one million have become live broadcasters, while the number of premium members also hit a new high, up 39% year-on-year to 20.1 million.

The Mobile games business, a symbol of Bilibili's ACG culture, only grew by 6% to 5.1 billion RMB (798.9 million USD) in 2021. In the domestic market, the stricter regulation on the game industry and the freeze on new game licenses have made it difficult for Bilibili to find new game cash cows. Although Bilibili has begun a Go Global plan for its game division, its expansion into overseas markets is far slower than that of other Chinese game giants such as miHoYo and Lilith Games. In May 2021, Bilibili published games such as Ark Order and Final Gear, achieving certain success in the Japanese and Korean markets, but there have been few new overseas moves from Bilibili since then.

Final Gear once ranked No.1 on the best-seller list of App Store and Google Play in KoreaFinal Gear once ranked No.1 on the best-seller list of App Store and Google Play in Korea

With the decline of the mobile game business, the advertising business may become the next cash cow of Bilibili. In 2021, Bilibili's advertising revenue achieved substantial growth, reaching 4.5 billion RMB (709.8 million USD), a year-on-year increase of 145%. As Bilibili accelerated its commercialization and integration into mainstream culture during the past few years, its commercial value has greatly increased. Over the past two years, Bilibili's revenue from advertising has maintained an astonishing seven consecutive quarters of triple-digit growth.

The growth of the advertising business made Bilibili's revenue structure healthier. In 2017, Bilibili's mobile game business accounted for 83% of its revenue and was the only growth pillar for the entire company. Nowadays, the revenue from advertising and value-added services is gradually replacing that from games, which moves Bilibili away from the ACG community it once advertised, and closer to the mainstream.

However, it should be noted that Rui Chen once promised users that Bilibili would not add any pre-video advertisements, so the growth of Bilibili's advertising business may encounter certain bottlenecks in the future.

A car made through a collaboration between Bilibili and the Chinese automobile manufacturer WulingA car made through a collaboration between Bilibili and the Chinese automobile manufacturer Wuling

Active users continue to increase

As of the fourth quarter of 2021, the average monthly active users (MAUs) of Bilibili reached 271.7 million, and mobile MAUs reached 252.4 million, representing increases of 35% and 35%, respectively, from the same period in 2020.

Rui Chen, Chairman & CEO of Bilibili, said: "Our community also remained highly active and engaged in the fourth quarter, with a 34% year-over-year increase in average daily active users (DAUs) and users spending a daily average of 82 minutes on our platform."

Rui Chen delivering a speech in the 11th Anniversary of BilibiliRui Chen delivering a speech in the 11th Anniversary of Bilibili

The goal of 400 million monthly active users by 2023 proposed by Bilibili appears to be met ahead of schedule since Rui Chen revealed in the earnings conference call that the MAUs in January 2022 have already exceeded 300 million.

Increased costs lead to income deficit

To achieve stable user growth, the cost of revenues of Bilibili increased by 67% to 15.3 billion RMB (2.4 billion USD), compared with 9.2 billion RMB in 2020.

Meanwhile, the total operating expenses reached 10.5 billion RMB (1.6 billion USD), a growth of 75% from 2020. Sales and marketing expenses were 5.8 billion RMB (909.3 million USD), representing a 66% increase year-over-year.

The rapidly growing cost also came from Bilibili's multiple investments. In 2021, Bilibili invested in more than 40 companies, including 15 game developers. But most of the investments did not pay off, resulting in a loss of 194 million RMB (30.7 million USD).

Rapidly increasing costs and radical investments have led to continuing losses. According to the financial reports, Bilibili's adjusted net loss in 2021 was 5.5 billion RMB (862.7 USD million).

On the same day when the financial report was released, Bilibili's board of directors authorized a share repurchase program under which the Company may repurchase up to 500 million USD of its ADSs for the next 24 months. In addition, Rui Chen, Chairman & CEO of Bilibili, will also use his personal funds to purchase up to 10 million USD of the company’s ADSs in the open market for the next 24 months.

Though the board of directors showed their confidence in Bilibili, the market is less optimistic. Bilibili’s stock price fell 11.4% in HKEX after the financial report was published.