GlobeNewswire Inc | Nov 18, 2020 06:00PM EST

November 18, 2020

SHANGHAI, China, Nov. 18, 2020 (GLOBE NEWSWIRE) -- Bilibili Inc. (Bilibili or the Company) (NASDAQ: BILI), a leading online entertainment platform for young generations in China, today announced its unaudited financial results for the third quarter ended September 30, 2020.

Third Quarter 2020 Highlights:

-- Total net revenues reached RMB3,225.7 million (US$475.1 million), a 74% increase from the same period in 2019. -- Average monthly active users (MAUs) reached 197.2 million, and mobile MAUs reached 183.5 million, representing increases of 54% and 61%, respectively, from the same period in 2019. -- Average daily active users (DAUs) reached 53.3 million, a 42% increase from the same period in 2019. -- Average monthly paying users (MPUs1) reached 15.0 million, an 89% increase from the same period in 2019.

We are excited to announce another great quarter with exceptional growth in both user numbers and our top line, said Mr. Rui Chen, Chairman of the Board and Chief Executive Officer of Bilibili. Our effective user growth strategy and expanding content library helped us to reach an even broader audience. In August, our MAUs exceeded 200 million, marking a new monthly record. This milestone is just the beginning. We envision that the inevitable video-lization trend will lead to great opportunities for Bilibili to grow and expand as the go-to platform for online content in China. As we leverage our core capabilities in providing engaging content and community experience, we are committed to further improving our brand equity and capturing this market opportunity. We believe the investments we are making now to increase our stronghold in Chinas entertainment market will yield considerable and sustainable return in the long run.

Mr. Sam Fan, Chief Financial Officer of Bilibili, said, Our strong user growth continues fueling our top line expansion. In the third quarter, we achieved another quarter of record high revenue, which reached RMB3.2 billion, up 74% year-over-year, once again beating the top end of our guidance. As we rolled out more premium content and services, more trafficwas converted to paying users and our overall paying ratio improved. MPUs were 15.0 million in the third quarter, demonstrating an 89% increase year-over-year. We are also glad to have achieved gross margin improvement for the sixth-consecutive quarter, reaching 23.6%. Looking ahead, we are committed to executing our growth strategy and investing in our future growth, which we believe will bring long-term value to all of our stakeholders.

Third Quarter 2020 Financial ResultsTotal net revenues. Total net revenues were RMB3,225.7 million (US$475.1 million), representing an increase of 74% from the same period of 2019.Mobile games. Revenues from mobile games were RMB1,275.1 million (US$187.8 million), representing an increase of 37% from the same period of 2019. The increase was primarily due to the successful newly launched mobile games.

Value-added services (VAS) (formerly known as Live broadcasting and VAS). Revenues from VAS were RMB979.6 million (US$144.3 million), representing an increase of 116% from the same period of 2019, mainly attributable to the Companys enhanced monetization efforts, led by increases in the number of paying users for the Companys premium membership program, live broadcasting services and other value-added services. Advertising. Revenues from advertising were RMB557.5 million (US$82.1 million), representing an increase of 126% from the same period of 2019. This increase was primarily attributable to the increasing number of advertisers, which was driven by further recognition of Bilibilis brand name in Chinas online advertising market.E-commerce and others. Revenues from e-commerce and others were RMB413.4 million (US$60.9 million), representing an increase of 83% from the same period of 2019, primarily attributable to the increase in sales of products through the Companys e-commerce platform.Cost of revenues. Cost of revenues was RMB2,464.1 million (US$362.9 million), representing an increase of 63% compared to the same period of 2019. Revenue-sharing cost, a key component of cost of revenues, was RMB1,179.5 million (US$173.7 million), representing an increase of 77% from the same period in 2019.Gross profit. Gross profit was RMB761.6 million (US$112.2 million), representing an increase of 117% from the same period in 2019, which was primarily due to increased net revenues.Total operating expenses. Total operating expenses were RMB1,844.9 million (US$271.7 million), representing an increase of 138% from the same period of 2019.

Sales and marketing expenses. Sales and marketing expenses were RMB1,190.4 million (US$175.3 million), representing a 227% increase year-over-year. The increase was primarily attributable to increased channel and marketing expenses associated with Bilibilis app and brand, as well as promotional expenses for the Companys mobile games. The increase was also attributable to the increase in headcount in sales and marketing personnel.

General and administrative expenses. General and administrative expenses were RMB253.5 million (US$37.3 million), representing a 55% increase year-over-year. The increase was primarily due to the increased headcount in general and administrative personnel, increased share-based compensation expenses, increased allowance for doubtful accounts, higher rental expenses and other general and administrative expenses.

Research and development expenses. Research and development expenses were RMB401.0 million (US$59.1 million), representing a 62% increase year-over-year. The increase was primarily due to increased headcount in research and development personnel and increased share-based compensation expenses.Loss from operations. Loss from operations was RMB1,083.3 million (US$159.6 million), compared to RMB423.1 million in the same period of 2019.Income tax expense. Income tax expense was RMB17.3 million (US$2.5 million), compared to RMB8.1 million in the same period of 2019. Net loss. Net loss was RMB1,100.9 million (US$162.1 million), compared to RMB405.7 million in the same period of 2019. Adjusted net loss2. Adjusted net loss, which is a non-GAAP measure that excludes share-based compensation expenses, amortization expense related to intangible assets acquired through business acquisitions and income tax related to intangible assets acquired through business acquisitions, was RMB990.0 million (US$145.8 million), compared to RMB343.1 million in the same period of 2019.Basic and diluted EPS and adjustedbasic and diluted EPS2. Basic and diluted net loss per share were RMB3.08 (US$0.45), compared to RMB1.24 in the same period of 2019. Adjusted basic and diluted net loss per share were RMB2.76 (US$0.41), compared to RMB1.05 in the same period of 2019.Cash and cash equivalents, time deposits and short-term investments. As of September 30, 2020, the Company had cash and cash equivalents, time deposits, as well as short-term investments of RMB14.1 billion (US$2.1 billion), compared to RMB8.1 billion as of December 31, 2019.Recent DevelopmentIn August 2020, the Company entered into a Subscription Agreement with Huanxi Media Group Limited (Huanxi Media) (HKEX: 1003) for 346,626,954 newly issued ordinary shares of Huanxi Media for an aggregate consideration of approximately HK$513.0 million (US$66.2 million). Upon the completion of this transaction, the Company will beneficially own approximately 9.90% of Huanxi Medias total issued shares.

Simultaneous with the execution of the Subscription Agreement, two wholly-owned subsidiaries of the Company entered into a five-year business cooperation agreement with a wholly-owned operating subsidiary of Huanxi Media, pursuant to which Bilibili and Huanxi Media will pursue collaboration opportunities in online entertainment for the Chinese market, including films and TV drama series, and developing derivative intellectual property rights of the films and other TV programs owned by Huanxi Media.Outlook

For the fourth quarter of 2020, the Company currently expects net revenues to be between RMB3.60 billion and RMB3.70 billion.

The above outlook is based on the current market conditions and reflects the Companys preliminary estimates, which are all subject to various uncertainties, including those related to the ongoing COVID-19 pandemic.

1 The paying users are calculated by number of users who paid for games, live broadcasting, premium membership, Bilibili Comic and Maoer, after eliminating duplicates of users paid for multiple services other than users of Maoer. The Company adds the number of paying users of Maoer toward its total paying users without eliminating duplicates.

2 Adjusted net loss and adjustedbasic 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 set forth at the end of this press release.

Conference Call

The Companys management will host an earnings conference call at 8:00 PM U.S. Eastern Time on November 18, 2020 (9:00 AM Beijing/Hong Kong time on November 19, 2020).

Details for the conference call are as follows:

Event Title: Bilibili Inc. Third Quarter 2020 Earnings Conference CallConference ID: 4395658Registration Link: http://apac.directeventreg.com/registration/event/4395658

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, an event passcode, and a unique registrant ID, which will be used to join the conference call.

Additionally, a live and archived webcast of the conference call will be available on the Companys investor relations website at http://ir.bilibili.com.

A replay of the conference call will be accessible by phone two hours after the conclusion of the live call at the following numbers, until November 25, 2020:

United States: +1-855-452-5696International: +61-2-8199-0299Hong Kong: 800-963-117China: 400-632-2162Replay Access Code: 4395658

About Bilibili Inc.Bilibili represents an iconic brand of online entertainment with a mission to enrich the everyday life of young generations in China. Bilibili is a full-spectrum online entertainment world covering a wide array of genres and media formats, including videos, live broadcasting and mobile games. Bilibili provides an immersive entertainment experience and high-quality content that caters to the evolving and diversified interests of its users and communities, and has built its platform based on the strong emotional connections of Bilibilis users to its content and communities.

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 and income tax related to intangible assets acquired through business acquisitions, which are non-cash charges. The Company believes that the non-GAAP financial measures provide useful information about the Companys results of operations, enhance the overall understanding of the Companys past performance and future prospects and allow for greater visibility with respect to key metrics used by the Companys 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 Companys 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 Companys performance.

For more information on the non-GAAP financial measures, please see the table captioned Unaudited Reconciliations of GAAP and Non-GAAP Results set forth at the end of this press release.

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 RMB6.7896 to US$1.00, the exchange rate on September 30, 2020 set forth in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB or US$ amounts referred 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 Bilibilis 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 annual report to shareholders, 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 Bilibilis 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: the impact of the COVID-19 pandemic on the Bilibilis business, results of operations, financial condition, and stock price; Bilibilis strategies; Bilibilis future business development, financial condition and results of operations; Bilibilis 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; Bilibilis ability to maintain its culture and brand image within its addressable user communities; Bilibilis 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 Companys filings with the Securities and Exchange Commission. All information provided in this press release and in the attachments is as of the date of the press release, and the Company undertakes no duty to update such information, except as required under applicable law.

For investor and media inquiries, please contact:

In China:Bilibili Inc.Juliet YangTel: +86-21-2509 9255 Ext. 8523E-mail: ir@bilibili.com

The Piacente Group, Inc.Emilie WuTel: +86-21-6039-8363E-mail: bilibili@tpg-ir.com

In the United States:

The Piacente Group, Inc.Brandi PiacenteTel: +1-212-481-2050E-mail: bilibili@tpg-ir.com

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 Nine Months Ended September 30, June 30, September 30, September 30, September 30, 2019 2020 2020 2019 2020 RMB RMB RMB RMB RMB Net revenues: Mobile games 933,133 1,247,977 1,275,136 2,726,444 3,673,726 Value-addedservices(formerly 452,518 825,251 979,633 1,070,183 2,598,437 known as Livebroadcastingand VAS)Advertising 247,186 348,572 557,510 527,421 1,120,348 E-commerce and 226,126 195,801 413,434 446,105 766,338 othersTotal net 1,858,963 2,617,601 3,225,713 4,770,153 8,158,849 revenuesCost of (1,507,684 ) (2,013,588 ) (2,464,138 ) (3,977,819 ) (6,262,797 )revenuesGross profit 351,279 604,013 761,575 792,334 1,896,052 Operating expenses:Sales andmarketing (363,859 ) (675,092 ) (1,190,354 ) (785,350 ) (2,471,403 )expensesGeneral andadministrative (163,217 ) (208,411 ) (253,475 ) (432,973 ) (633,263 )expensesResearch anddevelopment (247,308 ) (330,628 ) (401,030 ) (649,243 ) (1,028,993 )expensesTotaloperating (774,384 ) (1,214,131 ) (1,844,859 ) (1,867,566 ) (4,133,659 )expensesLoss from (423,105 ) (610,118 ) (1,083,284 ) (1,075,232 ) (2,237,607 )operations Other income/ (expenses):Investment 513 31,423 14,245 97,028 19,187 income, netInterest 52,018 23,504 18,150 126,396 68,306 incomeInterest (16,047 ) (22,671 ) (35,961 ) (31,685 ) (73,804 )expenseExchange (5,640 ) 4,213 11,406 (8,588 ) 28,329 (losses)/gainsOthers, net (5,362 ) 14,734 (8,176 ) 4,663 23,891 Total otherincome/ 25,482 51,203 (336 ) 187,814 65,909 (expenses),netLoss before (397,623 ) (558,915 ) (1,083,620 ) (887,418 ) (2,171,698 )income taxIncome tax (8,082 ) (11,939 ) (17,277 ) (28,941 ) (38,608 )Net loss (405,705 ) (570,854 ) (1,100,897 ) (916,359 ) (2,210,306 )Accretion toredeemable - (1,760 ) (1,262 ) - (4,292 )noncontrollinginterestsNet (gain)/lossattributable (1,652 ) 5,966 20,143 10,227 30,693 tononcontrollinginterestsNet lossattributableto the (407,357 ) (566,648 ) (1,082,016 ) (906,132 ) (2,183,905 )BilibiliInc.'sshareholders Net loss per (1.24 ) (1.63 ) (3.08 ) (2.82 ) (6.36 )share, basicNet loss per (1.24 ) (1.63 ) (3.08 ) (2.82 ) (6.36 )ADS, basicNet loss per (1.24 ) (1.63 ) (3.08 ) (2.82 ) (6.36 )share, dilutedNet loss per (1.24 ) (1.63 ) (3.08 ) (2.82 ) (6.36 )ADS, dilutedWeightedaverage number 327,231,439 348,634,400 351,301,703 321,634,678 343,156,614 of ordinaryshares, basicWeightedaverage number 327,231,439 348,634,400 351,301,703 321,634,678 343,156,614 of ADS, basicWeightedaverage numberof ordinary 327,231,439 348,634,400 351,301,703 321,634,678 343,156,614 shares,dilutedWeightedaverage number 327,231,439 348,634,400 351,301,703 321,634,678 343,156,614 of ADS,diluted

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

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 Nine Months Ended September June September September September 30, 30, 30, 30, 30, 2019 2020 2020 2019 2020 RMB RMB RMB RMB RMB Share-based compensation expenses included in:Cost of revenues 6,381 7,256 10,296 17,566 24,427Sales and marketing expenses 3,424 11,212 10,757 10,324 28,728General and administrative 21,855 41,421 41,509 52,210 109,346expensesResearch and development 19,688 26,758 33,804 50,896 76,036expensesTotal 51,348 86,647 96,366 130,996 238,537

BILIBILI INC.

Unaudited Condensed Consolidated Balance Sheets

(All amounts in thousands, except for share and per share data) December 31, September 30, 2019 2020 RMB RMB Assets Current assets: Cash and cash equivalents 4,962,660 5,927,471Time deposits 1,844,558 4,910,762Accounts receivable, net 744,845 1,186,171Prepayments and other current assets 1,511,191 1,810,870Short?term investments 1,260,810 3,260,895Total current assets 10,324,064 17,096,169Non?current assets: Property and equipment, net 516,087 787,701Production cost, net 443,533 666,281Intangible assets, net 1,657,333 2,368,253Goodwill 1,012,026 1,295,786Long?term investments, net 1,251,129 1,548,769Other long-term assets 312,395 583,488Total non?current assets 5,192,503 7,250,278Total assets 15,516,567 24,346,447Liabilities Current liabilities: Accounts payable 1,904,042 2,932,801Salary and welfare payables 355,936 530,305Taxes payable 67,856 111,132Short-term loan - 100,000Deferred revenue 1,369,000 2,117,864Accrued liabilities and other payables 575,763 1,217,655Total current liabilities 4,272,597 7,009,757Non-current liabilities: Long-term debt 3,414,628 8,699,504Other long-term liabilities 192,882 226,949Total non-current liabilities 3,607,510 8,926,453Total liabilities 7,880,107 15,936,210 Total BilibiliInc.?s shareholders? equity 7,052,484 8,212,321Noncontrolling interests 583,976 197,916Total shareholders? equity 7,636,460 8,410,237 Total liabilities and shareholders? equity 15,516,567 24,346,447

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 Nine Months Ended September 30, June 30, September 30, September 30, September 30, 2019 2020 2020 2019 2020 RMB RMB RMB RMB RMB Net loss (405,705 ) (570,854 ) (1,100,897 ) (916,359 ) (2,210,306 )Add: Share-basedcompensation 51,348 86,647 96,366 130,996 238,537 expensesAmortizationexpenserelated tointangibleassets 11,305 8,472 16,007 40,795 32,951 acquiredthroughbusinessacquisitionsIncome taxrelated tointangibleassets - - (1,514 ) - (1,514 )acquired throughbusinessacquisitionsAdjusted net (343,052 ) (475,735 ) (990,038 ) (744,568 ) (1,940,332 )loss Net lossattributableto the (407,357 ) (566,648 ) (1,082,016 ) (906,132 ) (2,183,905 )BilibiliInc.'sshareholdersAdd: Share-basedcompensation 51,348 86,647 96,366 130,996 238,537 expensesAmortizationexpenserelated tointangibleassets 11,305 8,472 16,007 40,795 32,951 acquiredthroughbusinessacquisitionsIncome taxrelated tointangibleassets - - (1,514 ) - (1,514 )acquired throughbusinessacquisitionsAdjusted netlossattributableto the (344,704 ) (471,529 ) (971,157 ) (734,341 ) (1,913,931 )BilibiliInc.'sshareholdersAdjusted netloss per (1.05 ) (1.35 ) (2.76 ) (2.28 ) (5.58 )share, basicAdjusted netloss per (1.05 ) (1.35 ) (2.76 ) (2.28 ) (5.58 )ADS, basicAdjusted netloss per (1.05 ) (1.35 ) (2.76 ) (2.28 ) (5.58 )share,dilutedAdjusted netloss per (1.05 ) (1.35 ) (2.76 ) (2.28 ) (5.58 )ADS, dilutedWeightedaveragenumber of 327,231,439 348,634,400 351,301,703 321,634,678 343,156,614 ordinaryshares,basicWeightedaverage 327,231,439 348,634,400 351,301,703 321,634,678 343,156,614 number ofADS, basicWeightedaveragenumber of 327,231,439 348,634,400 351,301,703 321,634,678 343,156,614 ordinaryshares,dilutedWeightedaverage 327,231,439 348,634,400 351,301,703 321,634,678 343,156,614 number ofADS, diluted