2q21 earnings teleconference record will realize the growth of game business by increasing self support From Station B

The following is the 2q21 earnings teleconference record will realize the growth of game business by increasing self support From Station B recommended by recordtrend.com. And this article belongs to the classification: Network entertainment, Webcast, Network video.

August 19, 2021, BiliBili (NASDAQ: Bili, HKEx: 9626; Hereinafter referred to as “station B”) published the unaudited financial report for the second quarter ended June 30, 2021. According to the financial report, the revenue of station B in the second quarter reached 4.49 billion yuan, a year-on-year increase of 72%, exceeding market expectations.

After the release of the financial report, senior executives such as Chen Rui, chairman and CEO of BiliBili, Li Ni, vice chairman and coo, and fan Xin, chief financial officer (CFO), attended the financial report teleconference and answered analysts’ questions on the spot.

The following are the main contents of the analyst meeting:

Bank of America analyst: the second quarter of previous years was the off-season for user growth, but this year’s user growth performed well month on month and year-on-year. What are the specific reasons? Whether the user growth target has been updated in the second half of this year and the long-term user growth target. What is the view of the management?

Chen Rui: we did a good job in user growth in the first half of the year. First of all, we benefited from the content ecology driven model. This model is that the more users grow, the more it will reflect its competitiveness, because it is a healthy growth model in line with the essence of the content industry. Many financial analysts and investors are also users of station B. you can see that the content of station B is getting richer and richer. This is our strategy to attract users with high-quality content. We think station B will have a sustained growth in content quality and richness in the future. I think station B will often marvel that the content is getting better and better, I will be amazed that there is such content. Therefore, I think this model itself will be a very healthy model. I am confident that the continuous potential of this model will bring about continuous user growth.

As for the next user growth expectation, now Q3 has passed half. I think from the perspective of Q3, the quantity and quality of our user growth are very good. We predicted at the beginning of the year that we could achieve 260 million users this year. From the current point of view, we must be able to achieve this goal or even exceed it. In the longer term, we have also predicted that we can achieve the monthly living goal of 400 million by 2023. At present, I think we are confident to achieve this goal.

I would also like to emphasize that the biggest advantage of the current user growth of station B is the quality of user growth. We don’t deceive users, but they really recognize this famous platform and are willing to stay. We see that from the trend, although the user growth is faster and faster and the scale is larger and larger, the average daily use time of each user is also increasing, This quarter is 81 minutes.

Moreover, we can see that the long-term activity of users is also increasing. For example, the activity of users registered from 2018 to 2020 in 2021 continues to rise compared with the past. We will also announce the number of video views and user interactions every quarter, which is also higher than the growth of our Mau. This shows that after users are attracted, they can not only remain, but also become more and more active.

Morgan Stanley analyst: my question is about the advertising industry. The advertising revenue increased by more than 200% in the first half of this year. What is the advertising growth trend and main growth point in the second half of this year and in the future? In addition, what impact will regulatory requirements, such as data collection and open screen advertising, have on?

Li Ni: in terms of financial revenue this quarter, we exceeded 1 billion for the first time, with a year-on-year increase of more than 200%. Indeed, we have achieved a higher than expected growth in the whole quarter. In order to improve the commercial realization efficiency and advertising revenue in the second half of the year and the longer term in the next few years, we have done some key things in addition to the historical infrastructure in this quarter.

First, in the business scenario, we focus on customer needs. The multi scenario expansion of station B enables a customer to advertise in station B, which can accurately reach users in different ecological scenes and different ports for many times. This can facilitate our brand to quickly establish some cognition with users, which has been basically promoted and realized in this quarter.

At the same time, the whole advertising mode of station B is the way of integrated marketing. We have actively tried many modes. In fact, the video of advertising and up main creative link will be a general direction. Just now you also mentioned the problem of supervision. In fact, the logic of supervision is more to hope that consumers can see advertising under the condition of being informed, However, the advertising logic of station B has always been that we hope that this advertisement is a non blocking advertisement, which is the first point; Second, all the advertisements we do tend to be content-based, and advertisements can still be good content. In fact, this has been verified and successful in our up main ecology and the whole marketing.

Second, we continue to further strengthen the commercial and technical team of algorithm strategy to achieve a high-speed improvement of liquidity efficiency. In addition to this part, we will also conduct in-depth research and precipitation on the cutting-edge technologies of advertising.

Third, we will still provide complete industry solutions for some original category advantages, such as games, digital, education, e-commerce, food, beverage, etc. Following the rhythm of user growth, we have also actively expanded new big computing industries, such as automobile and new retail, which can see obvious growth in this quarter. This quarter, we upgraded the structure of the commercialization team and built the original business flow management system, advertising system and fireworks system into the commercial pillar of station B, It is mainly to tap the commercial resources of station B, allocate commercial traffic and improve the realization efficiency.

At the same time, we have integrated the marketing team and the up main marketing team to form a large marketing center to provide customers with the whole marketing characteristic scheme with the characteristics of station B. at the same time, we will help the brand realize the precipitation of brand assets in station B and realize the internal circulation of marketing path in station B.

We always believe that the advertising value of the platform comes from user value. Just now, President Chen also repeatedly mentioned the user value of station B. the average user age of station B is 22.8 years old, and 86% are still under the age of 35. Most of them are users in the first and second tier cities. We believe that they are the main force of consumption in the future, and station B is also a platform for people who occupy the highest advertising value. Therefore, under such inherent advantages, we are determined to promote the advertising business well. In the second half of the year and the next 1 ~ 3 years, we are also confident to maintain a healthy and high-speed growth.

JPMorgan analyst: my question is in the digital entertainment industry, such as the change of game and live broadcasting regulatory environment, what impact will it have on station B?

Chen Rui: there has been no change in the regulatory impact of games and videos this year. I think all the recent discussions on game and video changes are actually from the media, because we will also have a dialogue with the government. From the company level, we don’t feel any recent changes in the regulatory policies of games and videos, The most common feeling is that we media and netizens are discussing. The discussion is mainly based on speculation and illusion. In fact, there is no so-called basis. I think for the game and video or the whole Internet industry, the supervision of these aspects in various countries around the world is becoming more and more standardized.

Station B has always had a positive attitude towards policy supervision, because I think it is very necessary for a large and fast-growing industry to promote the healthy development of the industry. With the development of an industry, its impact on society will be different from that in the past. In this case, it is natural for the supervision of the industry to become more standardized and detailed. The video industry must be more than 100 billion in the future, and Games must be the mainstream entertainment in the future, so I think it is different from the past, Therefore, the government may not know how to specify the details. As the industry becomes more and more mature and influential, the requirements for details will be more standardized, which is a natural result.

The government’s regulatory measures for games and videos are very clear. Firstly, it hopes to see the development of the industry and encourage the healthy development of the industry. Secondly, it also has clear requirements for some undesirable points, such as whether there are restrictions on juvenile games and the requirements for content compliance and legitimacy, Station B has been very clear in this aspect in the past.

I think the development trend of video and Games must be moving forward. At the same time, Internet companies like us will also do well in relevant government requirements, such as juvenile games, such as content legitimacy and compliance. Personally, I have always been optimistic about this, because the industry will develop better and healthier.

Moreover, the industry is different from that 10 years ago. For example, 10 years ago, they grew savagely. Now the industry is very mature. Companies in the industry have been companies for at least ten years. Practitioners in the industry can clearly understand the importance of healthy development to the industry. This is a consensus, that is, the industry and the government have formed such a consensus, In fact, we are also limiting the time for minors to play games. According to internal data, those under the age of 18 account for about 1% of our game revenue. In fact, all game companies are also limiting and reducing the impact on unhealthy aspects, so I think the current situation is developing in a rational direction.

To sum up, in the past few months, we have not felt any major changes in the regulatory environment of games and videos. We believe that the government’s regulation in this regard is visual and scientific, and the manufacturers in the industry also recognize the direction of these regulations. This is the industry consensus. I think the industry situation is positive.

UBS analyst: there are some seasonal fluctuations in gross profit margin, month on month and year-on-year in this quarter. Why? What is the trend of gross profit margin in the second half of the year and the medium and long-term gross profit margin target?

Fan Xin: the main reason is that we have changed the sales mix and launched a performance-based incentive measure for new up owners. Due to the short-term gross profit growth trend, we are still in the process of commercialization. Let me talk about our strategic thinking on profitability first.

The focus of our work is to continuously increase the number of users, rather than to achieve revenue and expenditure balance first. When we consider making profits, we need to consider what revenue objectives we need to achieve in order to achieve revenue and expenditure balance? Can we continue to increase profits after achieving balance of payments? In the past year, we have achieved a rapid growth in revenue and users, with a year-on-year growth of 38% in monthly activity and a rapid growth in the liquidity efficiency of the unit Mau. I think these data will continue to grow because we continue to increase the number of users and improve the liquidity efficiency. In terms of cost, we have some related important costs, such as content The cost of servers and personnel decreased from 34% of the total revenue in 2019 to 28% in the second quarter of this year. With our continuous improvement of liquidity efficiency, the composition of revenue is more diversified, and there is more room for growth in some business segments.

Huaxing capital analyst: my question is about the revenue of games in the first half of the year is relatively stable. What is the growth trend of marketing games in the second half of the year and in the long term? What are the factors considered in game self-management?

Chen Rui: in the past quarter, the growth rate of our games has been slowing down, mainly due to the supply side. Because the income of our game agents has increased, it needs to come from the intervention of new games. In the past six months, there are too few games with version numbers in the whole market, resulting in our supply lower than expected; For the same reason, we have delayed the schedule of some games, so the growth rate of game business is also affected and reduced.

In addition to the supply side factors, we also see more other factors. For example, in fact, the number of users watching game videos and the number of users broadcasting games are growing rapidly. This growth rate is year-on-year with our overall Mau growth rate. In addition, we can also see that when the supply of games is insufficient, every time we release a new game, The addition of a single game is higher and higher, which proves that the demand of station B users for games is very urgent, which is the second. Third, the revenue of many games we continue to operate is getting higher and higher. In the past few years, there are more users and higher revenue, so it shows that there are more users who want to play games on the platform of station B, and these users’ love for games has been continuous.

Therefore, we judge that the focus of the current game business is very clear, that is, we only need to solve the problem of supply, and this method is to continue to strengthen our agency distribution business, and we will invest in self-research for a long time. In fact, last year, we clearly saw that the trend of the future game industry is lack of supply, Since last year, we have gradually invested in our self-research team. At present, the scale of our self-research team has exceeded 1000 people, and several are developing in parallel. These projects will be launched next year and the next year. I think from the current point of view of station B, game self-study is the first focus of our work. I predict that in a few years, half of our game business revenue will come from self-study games.

There are more and more audiences for station B games. Everyone has a strong demand for games. At present, the game business is affected by supply, and our solution is to strengthen supply. Enhancing supply is to strengthen self-management under the condition that we continue to do agency and combined transportation business. If our agency and combined transportation were the engine of our game business in the past, Then the future engine is self-supporting. Driven by these two engines, the growth of game business will be faster and faster.

Via Tencent technology read more: station B: 3q20 revenue was 3.23 billion yuan, an increase of 74% year-on-year. Station B: 3q20 financial report teleconference record. The products needed by users in the future must cover the whole scene and multiple categories. BiliBili: 2q20 revenue was 2.62 billion yuan, a record high, an increase of 70% year-on-year. Station B: 237 million live users in 2q21, advertising revenue increased by more than 200% year-on-year. Station B: 1q20 revenue was 2.32 billion yuan, an increase of 69% BiliBili Mile: 1q21 earnings conference call record users are still growing rapidly. Don’t worry about the short-term decline of some indicators. Beep beep beep beep beep beep beep beep beep beep beep beep beep beep beep beep beep beep beep beep beep beep beep beep beep beep beep beep beep beep beep beep beep beep beep beep beep beep beep beep beep beep beep beep beep beep beep beep beep beep beep beep beep beep beep beep beep beep beep beep beep beep beep beep Under the age of 5, the monthly life in 2023 will reach 400 million station B: the growth of recorded users of 1q20 financial report teleconference is still the top priority of this year. Bilibilibili: the revenue of 4q20 is 3.84 billion yuan, with a year-on-year increase of 91%. BiliBili: the growth of the whole business line promotes the net revenue of 4q19 to increase by 74% year-on-year. Station B: the live broadcast business of 3q19 financial report teleconference has maintained a year-on-year increase of about 100%. Betta: the revenue of 4q20 is 2.27 billion yuan, with a year-on-year increase Increase by 10% and monthly life exceeds 170 million

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