GlobeNewswire Inc | Aug 26, 2020 07:00PM EDT

August 26, 2020

SHANGHAI, China, Aug. 26, 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 second quarter ended June 30, 2020.

Second Quarter 2020 Highlights:

-- Total net revenues reached RMB2,617.6 million (US$370.5 million), a 70% increase from the same period in 2019. -- Average monthly active users (MAUs) reached 171.6 million, and mobile MAUs reached 152.9 million, representing increases of 55% and 59%, respectively, from the same period in 2019. -- Average daily active users (DAUs) reached 50.5 million, a 52% increase from the same period in 2019. -- Average monthly paying users (MPUs1) reached 12.9 million, a 105% increase from the same period in 2019.

Last year, we reaffirmed user growth as our key strategic focus and have been efficiently executing on that goal, said Mr. Rui Chen, Chairman of the Board and Chief Executive Officer of Bilibili. After our stellar first quarter, we continued to strengthen our growth momentum and invested in broadening recognition of the Bilibili brand name. Our confidence in this strategy is built on our self-fulfilling ecosystem. We believe the content pool we offer is deep and diverse enough to host a much wider user base, and our friendly and vibrant community can retain those newcomers. During the second quarter, we launched several successful marketing campaigns to raise brand awareness and improve brand perception, while actively expanding our content offerings, all of which led to our fast and healthy user growth. In the meantime, video-lization has become an inevitable trend as more people look to video as their primary way to consume and express content. Being uniquely positioned as the star platform in the online video space, we expect this trend to put us on the fast track as we continue to expand. Looking ahead, our sights are set on further executing our growth strategy, building an even more dynamic and robust community, and bringing additional value to all of our stakeholders.

Mr. Sam Fan, Chief Financial Officer of Bilibili, said, Our growth strategy continues to pay off as our platform becomes more attractive for users and business partners. During the second quarter, our revenues grew 70% year-over-year, reaching RMB2.6 billion, once again exceeding our guidance. We continued to convert our growing traffic to paying users. MPUs reached 12.9 million, more than double compared to the same period last year. With increased revenues and improved leverage, our gross margin rose to 23.1% in the second quarter from 16.4% in the same period last year. We are also pleased to have completed an offering convertible senior notes in an aggregate principal amount of US$800 million, at a lower interest rate than last year, despite the volatile market. We expect these funds to support our strategic growth initiatives as we continue to invest in our future, while maintaining high quality, sustainable growth.

Second Quarter 2020 Financial ResultsTotal net revenues. Total net revenues were RMB2,617.6 million (US$370.5 million), representing an increase of 70% from the same period of 2019.

Mobile games. Revenues from mobile games were RMB1,248.0 million (US$176.6 million), representing an increase of 36% from the same period of 2019. The increase was primarily due to the successful newly launched mobile game Princess Connect, and the sustained stable performance of existing mobile games.Value-added services (VAS) (formerly known as Live broadcasting and VAS). Revenues from VAS were RMB825.3 million (US$116.8 million), representing an increase of 153% 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 RMB348.6 million (US$49.3 million), representing an increase of 108% 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 RMB195.8 million (US$27.7 million), representing an increase of 58% 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 RMB2,013.6 million (US$285.0 million), representing an increase of 57% compared to the same period of 2019. Revenue-sharing cost, a key component of cost of revenues, was RMB1,027.3 million (US$145.4 million), representing an increase of 79% from the same period in 2019.Gross profit. Gross profit was RMB604.0 million (US$85.5 million), representing an increase of 140% from the same period in 2019.Total operating expenses. Total operating expenses were RMB1,214.1 million (US$171.8 million), representing an increase of 103% from the same period of 2019.

Sales and marketing expenses. Sales and marketing expenses were RMB675.1 million (US$95.6 million), representing a 181% 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 RMB208.4 million (US$29.5 million), representing a 48% increase year-over-year. The increase was primarily due to increased headcount in general and administrative personnel, increased share-based compensation expenses and other general and administrative expenses.

Research and development expenses. Research and development expenses were RMB330.6 million (US$46.8 million), representing a 53% 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 RMB610.1 million (US$86.4 million), compared to RMB345.4 million in the same period of 2019.Income tax expense. Income tax expense was RMB11.9 million (US$1.7 million), compared to RMB12.7 million in the same period of 2019.

Net loss. Net loss was RMB570.9 million (US$80.8 million), compared to RMB315.0 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 and amortization expense related to intangible assets acquired through business acquisitions, was RMB475.7 million (US$67.3 million), compared to RMB256.1 million in the same period of 2019.

Basic and diluted EPS and adjustedbasic and diluted EPS2. Basic and diluted net loss per share were RMB1.63 (US$0.23), compared to RMB0.96 in the same period of 2019. Adjusted basic and diluted net loss per share were RMB1.35 (US$0.19), compared to RMB0.78 in the same period of 2019.

Cash and cash equivalents, time deposits and short-term investments. As of June 30, 2020, the Company had cash and cash equivalents, time deposits, as well as short-term investments of RMB15.6 billion (US$2.2 billion), compared to RMB8.1 billion as of December 31, 2019.

Recent Development

In June 2020, the Company completed an offering of convertible senior notes (the Notes) due 2027 in an aggregate principal amount of US$800 million. The Company plans to use the net proceeds from the Notes for enriching its content offerings, investing in research and development, and other general corporate purposes. Outlook

For the third quarter of 2020, the Company currently expects net revenues to be between RMB3.05 billion and RMB3.10 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 9:00 PM U.S. Eastern time on August 26, 2020 (9:00 AM Beijing/Hong Kong time on August 27, 2020).

Details for the earnings conference call are as follows:

Event Title: Bilibili Inc.Second Quarter 2020 Earnings Conference CallConference ID: 5788824Registration Link: http://apac.directeventreg.com/registration/event/5788824

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 and investor presentation 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 September 2, 2020:

United States: +1-855-452-5696International: +61-2-8199-0299Hong Kong: 800-963-117China: 400-632-2162Replay Access Code: 5788824

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 and amortization expense 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 RMB7.0651 to US$1.00, the exchange rate on June 30, 2020 set forth in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB or US$ 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, the Impact of COVID-19, 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 Six Months Ended June 30, March 31, June 30, June 30, June 30, 2019 2020 2020 2019 2020 RMB RMB RMB RMB RMB Net revenues: Mobile games 919,856 1,150,613 1,247,977 1,793,311 2,398,590 Value-addedservices(formerly 326,013 793,553 825,251 617,665 1,618,804 known as Livebroadcastingand VAS)Advertising 167,736 214,266 348,572 280,235 562,838 E-commerce and 124,078 157,103 195,801 219,979 352,904 othersTotal net 1,537,683 2,315,535 2,617,601 2,911,190 4,933,136 revenuesCost of (1,285,944 ) (1,785,071 ) (2,013,588 ) (2,470,135 ) (3,798,659 )revenuesGross profit 251,739 530,464 604,013 441,055 1,134,477 Operating expenses:Sales andmarketing (240,004 ) (605,957 ) (675,092 ) (421,491 ) (1,281,049 )expensesGeneral andadministrative (141,269 ) (171,377 ) (208,411 ) (269,756 ) (379,788 )expensesResearch anddevelopment (215,860 ) (297,335 ) (330,628 ) (401,935 ) (627,963 )expensesTotaloperating (597,133 ) (1,074,669 ) (1,214,131 ) (1,093,182 ) (2,288,800 )expensesLoss from (345,394 ) (544,205 ) (610,118 ) (652,127 ) (1,154,323 )operations Other income/ (expenses):Investmentincome/(loss), 14,468 (26,481 ) 31,423 96,515 4,942 netInterest 49,971 26,652 23,504 74,378 50,156 incomeInterest (15,638 ) (15,172 ) (22,671 ) (15,638 ) (37,843 )expenseExchange (847 ) 12,710 4,213 (2,948 ) 16,923 (losses)/gainsOthers, net (4,905 ) 17,333 14,734 10,025 32,067 Total other 43,049 15,042 51,203 162,332 66,245 income, netLoss before (302,345 ) (529,163 ) (558,915 ) (489,795 ) (1,088,078 )income taxIncome tax (12,671 ) (9,392 ) (11,939 ) (20,859 ) (21,331 )Net loss (315,016 ) (538,555 ) (570,854 ) (510,654 ) (1,109,409 )Accretion toredeemable - (1,270 ) (1,760 ) - (3,030 )noncontrollinginterestsNet lossattributableto 2,201 4,584 5,966 11,879 10,550 noncontrollinginterestsNet lossattributableto the (312,815 ) (535,241 ) (566,648 ) (498,775 ) (1,101,889 )BilibiliInc.'sshareholders Net loss per (0.96 ) (1.62 ) (1.63 ) (1.56 ) (3.25 )share, basicNet loss per (0.96 ) (1.62 ) (1.63 ) (1.56 ) (3.25 )ADS, basicNet loss per (0.96 ) (1.62 ) (1.63 ) (1.56 ) (3.25 )share, dilutedNet loss per (0.96 ) (1.62 ) (1.63 ) (1.56 ) (3.25 )ADS, dilutedWeightedaverage number 325,661,667 329,443,167 348,634,400 318,789,916 339,039,316 of ordinaryshares, basicWeightedaverage number 325,661,667 329,443,167 348,634,400 318,789,916 339,039,316 of ADS, basicWeightedaverage numberof ordinary 325,661,667 329,443,167 348,634,400 318,789,916 339,039,316 shares,dilutedWeightedaverage number 325,661,667 329,443,167 348,634,400 318,789,916 339,039,316 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 For the Six Ended Months Ended June March June June 30, June 30, 30, 31, 30, 2019 2020 2020 2019 2020 RMB RMB RMB RMB RMB Share-based compensation expenses included in:Cost of revenues 6,111 6,875 7,256 11,185 14,131Sales and marketing expenses 3,778 6,759 11,212 6,900 17,971General and administrative expenses 17,130 26,416 41,421 30,355 67,837Research and development expenses 17,381 15,474 26,758 31,208 42,232Total 44,400 55,524 86,647 79,648 142,171

BILIBILI INC.

Unaudited Condensed Consolidated Balance Sheets

(All amounts in thousands, except for share and per share data) December June 30, 31, 2019 2020 RMB RMB Assets Current assets: Cash and cash equivalents 4,962,660 6,094,270Time deposits 1,844,558 4,822,414Accounts receivable, net 744,845 773,209Prepayments and other current assets 1,511,191 1,935,293Short?term investments 1,260,810 4,639,382Total current assets 10,324,064 18,264,568Non?current assets: Property and equipment, net 516,087 698,959Production cost, net 443,533 556,019Intangible assets, net 1,657,333 1,988,680Goodwill 1,012,026 1,012,026Long?term investments, net 1,251,129 1,622,453Other long-term assets 312,395 329,472Total non?current assets 5,192,503 6,207,609Total assets 15,516,567 24,472,177Liabilities Current liabilities: Accounts payable 1,904,042 2,627,802Salary and welfare payables 355,936 390,275Taxes payable 67,856 50,388Short-term loan - 100,000Deferred revenue 1,369,000 1,621,322Accrued liabilities and other payables 575,763 785,670Total current liabilities 4,272,597 5,575,457Non-current liabilities: Long-term debt 3,414,628 9,037,440Other long-term liabilities 192,882 197,552Total non-current liabilities 3,607,510 9,234,992Total liabilities 7,880,107 14,810,449 Redeemable noncontrolling interests - 128,053 Total BilibiliInc.?s shareholders? equity 7,052,484 8,939,966Noncontrolling interests 583,976 593,709Total shareholders? equity 7,636,460 9,533,675Total liabilities, redeemable noncontrolling interests 15,516,567 24,472,177andshareholders? equity

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, March 31, June 30, June 30, June 30, 2019 2020 2020 2019 2020 RMB RMB RMB RMB RMB Net loss (315,016 ) (538,555 ) (570,854 ) (510,654 ) (1,109,409 )Add: Share-basedcompensation 44,400 55,524 86,647 79,648 142,171 expensesAmortizationexpenserelated tointangibleassets 14,476 8,472 8,472 29,490 16,944 acquiredthroughbusinessacquisitionsAdjusted net (256,140 ) (474,559 ) (475,735 ) (401,516 ) (950,294 )loss Net lossattributableto the (312,815 ) (535,241 ) (566,648 ) (498,775 ) (1,101,889 )BilibiliInc.'sshareholdersAdd: Share-basedcompensation 44,400 55,524 86,647 79,648 142,171 expensesAmortizationexpenserelated tointangibleassets 14,476 8,472 8,472 29,490 16,944 acquiredthroughbusinessacquisitionsAdjusted netlossattributableto the (253,939 ) (471,245 ) (471,529 ) (389,637 ) (942,774 )BilibiliInc.'sshareholdersAdjusted netloss per (0.78 ) (1.43 ) (1.35 ) (1.22 ) (2.78 )share, basicAdjusted netloss per (0.78 ) (1.43 ) (1.35 ) (1.22 ) (2.78 )ADS, basicAdjusted netloss per (0.78 ) (1.43 ) (1.35 ) (1.22 ) (2.78 )share,dilutedAdjusted netloss per (0.78 ) (1.43 ) (1.35 ) (1.22 ) (2.78 )ADS, dilutedWeightedaveragenumber of 325,661,667 329,443,167 348,634,400 318,789,916 339,039,316 ordinaryshares,basicWeightedaverage 325,661,667 329,443,167 348,634,400 318,789,916 339,039,316 number ofADS, basicWeightedaveragenumber of 325,661,667 329,443,167 348,634,400 318,789,916 339,039,316 ordinaryshares,dilutedWeightedaverage 325,661,667 329,443,167 348,634,400 318,789,916 339,039,316 number ofADS, diluted