China’s Bilibili Focuses on Growth as Losses Double

Chinese video entertainment platform Bilibili saw its losses deepen in 2020, but they reflected further investment in growth, as Middle Kingdom consumers become increasingly digitally focused.

Average monthly active users (MAUs) reached 202 million representing an increase of 55%, compared with 2019. Those paying for use reached 17.9 million, a 103% increase.

Bilibili’s total net revenues were RMB3.84 billion ($589 million) in the calendar year, an increase of 91% from the same period of 2019. Net losses extended from RMB1.3 billion in 2019 to RMB3.1 billion ($468 million).

But investors appeared to buy the growth story. The NASDAQ-listed company saw its ADR-shares dip before the results announcement, but the stock gained nearly 4% to $131.88 in after-hours trading. At that price, Bilibili has a market capitalization of $45 billion.

Investors were not given any formal update on Bilibili’s still confidential plans for a secondary share listing in Hong Kong. Chinese short-form video group Kuaishou, which is also loss-making, listed in Hong Kong earlier this month and has seen its shares nearly triple, valuing it at $191 billion.

As is now common for many Chinese companies, Bilibili appears to have moved on and shaken off the effects of the coronavirus outbreak. Chairman and CEO Chen Rui called 2020 “a year of solid execution on our growth strategy.

“With a series of high-quality content and branding efforts, we continue to influence China’s young generations on an increasing scale while gaining wider recognition among mass audiences. Video has become more and more integrated in various facets of everyday life, prompting massive growth in the video-based market. Benefiting from the inevitable trend of ‘videolization,’ a broad audience of young users and China’s strong economic growth projections, we are in the right place at the right time to capture the opportunity and increase our leadership in China’s large video-based market, with a goal of delivering sustainable returns to our partners over the long term,” Chen said in a statement.

The breakdown of Bilibili’s 2020 revenues shows growth was strongest in live broadcasting and value-added services (up 134%) and advertising (up 126%). The company’s smaller e-commerce unit enjoyed a revenue gain of 109%, while mobile games gained only 34%.

Increased sales and marketing costs were the group’s big brake. These nearly tripled to $535 million.

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