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Bilibili continues to move towards its goal of reducing losses.

On August 22, Bilibili (Nasdaq: BILI, 09626.HK, hereinafter referred to as "Bilibili") announced its unaudited financial report for the second quarter ending June 30. In the second quarter, Bilibili's total revenue increased by 16% year-on-year to 6.13 billion yuan. Its net loss was 608 million yuan, a year-on-year decrease of 61%; its adjusted net loss was 271 million yuan, a year-on-year decrease of 72%.

Bilibili's total revenue in the first half of the year was 11.79 billion yuan, an increase of 14% year-on-year; its net loss was 1.37 billion yuan, a decrease of 37% year-on-year; and its adjusted net loss was 720 million yuan, a decrease of 64% year-on-year.

"More than 70% of young people in China are using Bilibili. The average age of our users has reached 25. This age group is in a stage of rapid growth and release of consumer demand and spending power." Bilibili CEO Chen Rui said in a conference call after the financial report.

Regarding the profit target that the outside world is concerned about, senior executives of Bilibili said that with the growth of advertising and gaming businesses, there is still room for a significant increase in gross profit margin. The company expects to achieve the goal of breaking even in the third quarter, and will also achieve "meaningful profits" under non-U.S. generally accepted accounting principles.

The most noteworthy highlight of Bilibili this quarter is the recovery of its gaming business. The financial report shows that gaming revenue in the second quarter increased by 13% year-on-year to 1.01 billion yuan. However, the total revenue of mobile gaming business in the first half of the year was 1.99 billion yuan, a year-on-year decrease of 2%.

Bilibili said that driven by the outstanding performance of the recently launched new game "Three Kingdoms: Conquering the World", mobile game revenue resumed year-on-year growth in the second quarter, demonstrating its operational capabilities beyond the ACG game category.

"Gaming is no longer an industry that makes quick money, but an industry that values ​​long-term operations and optimizes user experience." Chen Rui emphasized, "Our goal is to make it a high-quality game that can continue to operate for more than five years. Bilibili hopes to become the company that respects players the most in the industry, so that this game can continue to operate in the long term."

In terms of value-added services (live streaming), the second quarter achieved a year-on-year growth of 11% to 2.57 billion yuan.

Live streaming sales has become another growth point for Bilibili.Chen Rui revealed that during this year's 618 promotion, e-commerce clients' advertising on Bilibili increased by 300% year-on-year, and sales generated by bringing goods increased by more than 140% year-on-year. This year's 618 also brought 50% new customers to industry merchants, among which the maternal and child industry brought more than 70% new customers.

Data shows that nearly 40 million users watched content on Bilibili with goods in the second quarter, a year-on-year increase of 70%. The average number of UP hosts with goods increased by more than 130% year-on-year, the number of articles with goods increased by more than 330% year-on-year, and the number of live broadcasts with goods increased by 270% year-on-year.

The profitability of Bilibili has always been the focus of the outside world. The financial report shows that Bilibili's operations have indeed improved. In the second quarter, Bilibili's gross profit increased by 49% year-on-year to 1.8 billion yuan. The gross profit margin increased from 23.1% in the same period last year to 29.9%, achieving a sequential increase for the eighth consecutive quarter. In addition, Bilibili achieved a positive operating cash flow of 1.75 billion yuan in the second quarter, and a total of 2.4 billion positive operating cash flow in the first half of the year.

However, the growth rate of daily active users of Bilibili has shown a clear slowdown trend. In the second quarter, Bilibili's average daily active users reached 102 million, a year-on-year increase of 6%, and the average monthly active users reached 336 million, which was lower than market expectations.

In terms of advertising business, revenue in the second quarter increased by 30% year-on-year to 2.04 billion yuan. Chen Rui said that looking forward to the second half of this year, he is confident that the growth rate will be higher than the industry in the second half of the year. B station users have a stronger desire to pay for content and pay UP hosts to express their love for the platform. In the future, it will still maintain a revenue model that combines game membership live broadcast and advertising revenue.

According to the financial report, in the first half of the year, the number of advertisers on Bilibili increased by 50% year-on-year, and the coverage rate of AI manufacturers exceeded 90%. Chen Rui said that Bilibili has the richest AI materials on the entire network, and more than 80 million people watch AI videos every month, making Bilibili the community with the highest density of AI practitioners in China. 90% of AI manufacturers choose to establish accounts on Bilibili and communicate with users.

As of the close of the market on the 22nd, Bilibili's Hong Kong stocks fell 1.3% to HK$106.3, and its US stocks fell 7.49% to US$12.97.