Q1 2024 Bilibili Inc Earnings Call
Okay.
Speaker Change: Good day and welcome to really believe first quarter 2024 financial results and business update conference call.
Speaker Change: Today's conference is being recorded at.
Speaker Change: At this time I would like to turn the conference over to Joseph.
Speaker Change: Executive Director of Investor Relations. Please go ahead.
Operator: Thank you, operator. During this call, we'll discuss our business outlook and make forward-looking statements. These comments are based on our predictions and expectations as of today. However, actual events or results could differ materially from those mentioned in today's news release and in this discussion due to a number of risks and uncertainties, including those mentioned in our most recent filing with the SEC and the Hong Kong Stock Exchange. The non-GAAP financial measure we'll provide is for comparison purposes only.
Joseph: Thank you operator.
Speaker Change: During this call well discuss our business outlook and make forward looking statements. These comments are based on our predictions and expectations as of today.
Speaker Change: Actual events or results could differ materially from those mentioned in today's news release and in this discussion did do a number of risks and uncertainties, including those mentioned in our most recent filing with the SEC and the Hong Kong stock exchange.
Speaker Change: non-GAAP financial measure will provide our for comparison purpose only the definition of these measures and I recall affiliation table are available in the news release, we issued earlier today.
Operator: The definition of these measures and our reconciliation table are available in the news release we issued earlier today. As a reminder, this conference is being recorded. In addition, an investor presentation and a webcast replay of this conference call will be available on the Bilibili IR website at ir.bilibili.com. Joining us today from Bilibili Senior Management are Mr. Rui Chen, Chairman of the Board and Chief Executive Officer. Ms. Kali Lee, Vice Chairperson of the Board and Chief Operating Officer, and Mr. Sam Tan, Chief Financial Officer. I will now turn the call over to Mr. Fan, who will read the prepared remarks on behalf of Mr. Fan
Speaker Change: As a reminder, this conference is being recorded in addition, an investor presentation and a webcast replay of this conference call will be available on the visibility IR website at IR adult visibility dotcom.
Speaker Change: Joining us today from pillar billing senior management are Mr. Wei Chen Chairman of the Board and Chief Executive Officer, Mr. Colley, Lee Vice chairwoman of the board and Chief operating Officer, and that's true sounds bad Chief Financial Officer.
Speaker Change: I'll now turn the call over to Mr Fan, who will read the prepared remarks on behalf of Mr. Chen. Thank.
Xin Fan: Thank you, Juliet, and thank you everyone for participating in our first quarter 2024 conference call to discuss our financial and operating results. I'm pleased to deliver today's opening remarks on behalf of MIT. 2024 will be a turning point in our journey toward profitability. We are already steadily on this path, advancing both our financial profile and community growth in the first quarter. Total revenues for the quarter can mean RMB 5.7 billion.
Speaker Change: Thank you Juliet and thank.
Speaker Change: Thank you everyone for participating in your first quarter of 2024 conference call to discuss our financial and operating results.
Xin Fan: I'm pleased to deliver today's opening remarks on behalf of Mr. Chen.
Mr Fan: 2024, well be at 20 point.
Speaker Change: Jamie towards profitability.
Debbie: We are already dead, Debbie I'll get Pos advancing both our financial profile and a committed growth in the first quarter.
Debbie: Total revenues for the quarter can be at RMB, five 7 billion up 12% year over year.
Xin Fan: Up 12% year-over-year. Growth in Advertising and Advanced Revenue, in particular, accelerated at 31% and 17% year-over-year, respectively, with increasing revenue contribution from the higher-margin ad business and our continued efficient operation. We achieved a notable 45% year-over-year increase in our growth portfolio, and our gross profit margin reached 28.3% in the first quarter, compared with 21.8% in the same period last year, marking the seventh consecutive quarter of marketing improvement. As a result, in the first quarter, our adjusted operating loss and adjusted net loss meaningfully narrowed by 52% and 56%, respectively.
Debbie: Growth in our tightening advanced revenue in particular.
Debbie: Celebrated at 31% and 17% year over year, respectively.
Debbie: With increasing revenue contribution from the higher margin business and our continued efficient operations, we achieved a notable 45% year over year increase.
Debbie: Growth pocket.
Debbie: And our gross profit margin reached trying to eight 3% in the first quarter compared with 21, 8% in the same period last year.
Debbie: Marking the seventh consecutive quarter of margin improvement.
Debbie: As a result in the first quarter, our adjusted operating loss and adjusted net loss meaningfully narrow by 52% and 56% year over year, respectively.
Xin Fan: Meanwhile, we generated RMB 638 million in operating capital flow in the first quarter. The solid progress we have made is placing us firmly on track to reach our profitability goal, while we focus on improving our commercialization capability, continue to attract more users, and foster a vibrant community. Our DAUs increased by 9% year-over-year to 102 million, and our MAUs grew by 8% year-over-year to a new high of 341.5 million.
Debbie: Meanwhile, we generated RMB 638 billion in operating cash flow in the first quarter.
Debbie: The solid progress we have made at placing us firmly on track to reach our profitability goals. This year.
Debbie: While we focus on improving our commercialization capabilities.
Debbie: Continued to attract more users and foster evaporates community.
Debbie: In the first quarter.
Debbie: Or do you use increased by 9% year over year to $102 million and our <unk> grew by 8% year over year to a new high of $341 5 million.
Xin Fan: User engagement in the first quarter was also strong. Users are spending more time with us than ever, bringing our DAU's average daily time spent to a record 105 minutes. As a result, user total time spent on our platform increased by 19% over a year.
Debbie: User engagement in the first quarter was also strong.
Debbie: Users are spending more time with us and ever bringing.
Debbie: Bringing our da use average daily time spent to a record 105 minutes.
Debbie: As a result.
Debbie: The total time spend our platform increased by 19% year over year.
Xin Fan: As we advance through the year, we will continue to dedicate our resources to enhancing our commercialization capability, particularly in our high-margin revenue. First, we are working to advance our advertising infrastructure and efficiency to sustain the positive momentum of our ad bid. Second, we will bring more high-quality games to our users. Our highly anticipated licensed game, San Guo's Mou Ding Tian Xia, is scheduled for launch on June 13. This is the first SLG cam that caters to our expanding camera base.
Debbie: As we advance through the year, we will continue to dedicate our resources to enhancing our commercialization capabilities.
Debbie: Particularly in our high margin revenue stream.
Debbie: First we are working to advance our advertising infrastructure and efficiency to assist and the positive momentum of our AD business.
Debbie: Second we will bring more high quality games to our users.
Speaker Change: Our highly anticipated license again, Sam Walsh Morgan Chase Yeah, Yeah.
Speaker Change: Scheduled for launch on June 13th.
Speaker Change: This is the first S. LG Chem, that's catered to our expanding camera base.
Xin Fan: In addition, we will continue to increase and diversify our vast content offering to convert more paying users and improve margin. We believe these initiatives, together with our ongoing efficient operating leverage, will naturally lead to improved financial results, and we Uphold Possibility. We remain committed to our core mission.
Speaker Change: In addition, we will continue to increase and diversify our vast content offering to calvert more paying users and improve margins.
Speaker Change: Believe these initiatives together with our ongoing efficient operating leverage will naturally lead to improved financial results.
Speaker Change: As we approach profitability.
Speaker Change: We remain committed to our KOL mission.
Xin Fan: Building a stage for content creators to shine, fostering a healthy, vibrant community for users to enjoy, and bringing value to our shareholders and partners over the long term. With that overview, let's discuss in detail our core pillars of content, community, and commercialization, beginning with content and community.
Speaker Change: Beauty has stayed for content creators to shy fostering a healthy lab rates community for users to enjoy.
Speaker Change: And to bring value to our shareholders and partners over the long term.
With that overview, let's discuss in details our core pillars of content community and commercialization.
Speaker Change: Beginning with content and community.
Xin Fan: In the first quarter, our leading top content kept thriving, with video views in games, entertainment, and tech and knowledge categories increasing by over 20% year by year. We have emerged as a go-to platform for AI-related content and discussion in China. In the first quarter, daily active content creators and the video views of AI-related content grew by over 60% and over 80% year over year, respectively. Driving a surge in AI-related ads and making it one of our fastest-growing advertisers.
Speaker Change: In the first quarter, our leading top content keeps driving.
Speaker Change: With video views and games entertainment and attack and knowledge category or increasing by over 20% year over year.
Speaker Change: Among the leading verticals.
Speaker Change: We have emerged as the go to platform for AI related content and the discussion in China in.
Speaker Change: In the first quarter daily active content creators and the video views of AI related content grew by over 60% and over 80% year over year, respectively, driving our search AI related ads and the making it one of our fastest growing ad budget.
Xin Fan: Also, we continuously boasted our support to emerging content categories, providing customized operational and traffic for high-quality content creation during the course. Video views in automotive, home appliance, and decoration, fashion, and baby and maternity grow rapidly, or up by over 40% year-over-year. These categories meet our users' evolving content needs as they enter new life stages while also inherently possessing strong consumer appeal, in many cases.
Speaker Change: Co.
Speaker Change: Also we continuously boasted our support to emerging content categories.
Providing customized operation no and the traffic assistance for high quality content equation.
Speaker Change: During the quarter video views in automotive home appliance and the declaration fashion and the baby and maternity grow rapidly are up by over 40% year over year.
Speaker Change: These categories meet our users evolving content needs.
Speaker Change: Enter new life stages, while also in her right leg protecting strong consumer appeal.
Xin Fan: Good content can also be a good commercial, attracting more advertisers and incentivizing more creators to join our platform. Ad revenues from home appliance and decoration increased notably by over 70% year-over-year in Q1, and the daily active content creators in this category grew by 30% year-over-year. As such, our community matrix in the first quarter is encouraged. Our average daily video views increased by 22% over a year to nearly 5 billion. Our users spent a record-setting 105 minutes on the platform daily in the first quarter, compared with 96 minutes in the same period last year.
Speaker Change: In many cases good content can also be a good commercial attracting more advertisers and incentivising walkway tourists to join our platform.
Speaker Change: For instance added revenues for home appliance and the decoration increased notably by over 70% year over year in Q1, and the daily active content creators in this category grew by 30% year over year.
Speaker Change: As such our community matrix in the first quarter are encouraging.
Speaker Change: Our average daily video views increased by 22% year over year to nearly <unk> 5 billion.
Speaker Change: Our users spend a record setting 105 minutes on our platform daily in the first quarter comp.
Speaker Change: Compared with $96 million in the same period last year.
Xin Fan: Meanwhile, Monthly Interaction. Sponsored ADR Class Z. At the end of the quarter, we had over 236 million official members, which increased by 15% year by year, and their 12-month retention rate remained around 80%. In terms of recent community events, our sponsored eSports team, BLG, won their first championship in the League of Legends Pro League 2024 Spring Season and second place in the Mid-Season Invitational 2024, joining more eSports enthusiasts to our platform.
Speaker Change: Meanwhile, monthly <unk> exceeded 16, 4 billion up 15% year over year.
Speaker Change: At the end of the quarter, we had over 236 million official members, which increased by 15% year over year.
Speaker Change: And the 12 month retention rate remains around 80%.
Speaker Change: In terms of our reseller community events, our sponsored esport team BRG Wanda FERC Championship of League of legend part D 2020 for spring season in the second place mid season in <unk>.
Speaker Change: <unk> no 2020 for joining more esports enthusiasm to our platform.
Xin Fan: What's more, our extensive content library and user base give us a natural advantage to pioneer AI exploration; we are launching various AI-related applications to benefit all stakeholders in our community, including our users, content creators, and advertisers, with our AI assistant in searching and video watching scenarios. Users can gather information more efficiently and receive more personalized content recommendations in Equator font. We launched the AI content creation tool, BKStudio, to enable content creators to customize their digital human and voice, improving creative, and for advertisers, we are launching a creative platform, which will enable advertisers to easily generate hand lines and added materials for their ads. More important, with our AI-enabled accuracy, our content and ads can be more effectively matched with our users' consumption.
Speaker Change: What's more our extensive content library and the user base.
Speaker Change: Natural advantaged pioneer AI exploration, we're launching various AI related applications to benefit all stakeholders in our community, including our users content creators and advertisers.
Speaker Change: With our AI assistance in searching and the video watching scenarios.
Users can gather information more efficiently and they receive more personalized content recommendation.
Speaker Change: On the equator found we launched our AI content equation too because to do.
Speaker Change: It enables content creators to customize their digital human and the voice <unk>.
Speaker Change: Improving creative efficiency.
Speaker Change: And for advertisers, we are launching our creative center.
Speaker Change: Which will enable advertisers.
Speaker Change: To easily generated headlines.
Speaker Change: Added materials for their app.
Speaker Change: More importantly, with our AI enabled algorithms, our content and ads can be more effectively match with our users' consumption needs.
Xin Fan: Now I would like to talk about our commercialization progress and how we achieve margin expansion and reach profitability. For the first quarter, our total revenues increased by 12% over a year to RMB 5.7 billion. This is our biggest top-line growth driver. Revenues from our advertising business were up by 31% year-over-year to RMB 1.7 billion. Performance-based ads continue to be the primary growth contributor, with over 50% yield per year in the. We are encouraged by the result we achieved in Q1 and the expected growth momentum.
Speaker Change: Now our like to talk about our commercialization progress and the <unk>.
Speaker Change: How we achieved margin expansion and the reach profitability.
Speaker Change: For the first quarter, our total revenues increased by 12% year over year to RMB five 7 billion.
Speaker Change: Our biggest topline growth driver revenues for our advertising business was up by 31% year over year to RMB, one 7 billion.
Speaker Change: Performance based ads continue to be the primary growth contributor.
Speaker Change: Over 50% year over year in the first quarter.
Speaker Change: We are encouraged by the results we achieved in Q1 and expected to growth momentum to continue.
Xin Fan: For the first quarter, our top five are tidying verticals or mobile games. Digital Products and Home Appliance, e-commerce, [inaudible] skincare, and of course. As I mentioned in our last call to us earnings call, we are allocating more resources to integrate ad products within our content. You know, more native, natural.
Speaker Change: For the first quarter, our top five hour tightening verticals, while mobile games digital product and home appliance.
Speaker Change: Combos.
Speaker Change: Motive and skincare and cosmetics.
Speaker Change: As I mentioned in our last quarters earnings call. We are allocating more resources to integrate had products within our content ecosystem.
Xin Fan: Sponsored ADR Class Z, We have made some remarkable progress in the first. We integrated and upgraded our ad platforms with visualized data analysis and more user-friendly tools, empowering advertisers to bid more. Additionally, as we deepen our understanding of user consumption profiles, we are further improving our ad matching algorithm to be more accurate and attractive. Collectively.
Speaker Change: Native natural in a seamless way.
Speaker Change: We have made some remarkable progress in the first quarter.
Speaker Change: We integrated and upgraded our AD platforms with visualize data analysis, and a more user friendly tooth empowering advertisers to bit more efficiently.
Speaker Change: In addition, as we deepen our understanding of user consumption profiles. We are further improving our AD matching algorithm to be more accurate and targeted.
Xin Fan: These enhancements in efficiency, as well as our increasing trust, enabled us to secure more of a tighter budget from our ad customers. In addition, our video and live cameras as products with direct sales conversion tools continue to yield results. These transaction-based ads enable advertisers to effectively transition users from product viewing to making purchases. As of last week, our total video and live commerce GMV in women's fashion and clothing has exceeded the corresponding total GMV for the entire year of 2023.
Speaker Change: Collectively these enhancements in efficiency as well as our increasing traffic.
Speaker Change: Enabled us to secure more advertising budget from our AD customers.
Speaker Change: Yes addition, our video and live combos AD products with direct sales conversion tools continue to yield results.
Speaker Change: This transaction base as enable advertisers to effectively transition of users from product viewing to making purchases.
Speaker Change: As of last week.
Speaker Change: Our total redo, our live commerce, TMV and womens fashion and clothing has exceeded the occurred responding total GMB for the entire year of 2023.
Xin Fan: In addition, our video and live commerce products provide a great way to unleash commercial value for our content. The number of content creators who earned income via video and live commerce more than doubled year-over-year in the first quarter. On top of the progress we made in the first quarter.
Speaker Change: In addition, our we do a lot commerce products provide a great way to unleash commercial value for our content creators.
Speaker Change: The number of content creators, who and the income that we do a live commerce more than doubled year over year in the first quarter.
Speaker Change: On top of the progress we made in the first quarter, we are working on more product upgrades.
Xin Fan: We are working on more product upgrades. Some of which are ready to be applied in the upcoming 618 shopping festival will unveil better in-place, and the analysis, too, will allow more flexible ad formats and expand additional ad scenarios. This empowers advertisers to achieve smarter, more creative, and integrated advertisements across our content, leading to better branding and conversion results, turning to our Batman. driven by the growth of a live broadcast. Revenues from our VAT payments increased by 17% over a year to RMB 2.5 billion in the first quarter.
Speaker Change: All of which are ready to be applied in the upcoming six when a shopping festival.
Speaker Change: We will unveil better AD placement and relative tooth allow.
Speaker Change: Allow more flexible ad format.
Speaker Change: Expand additional add scenario.
Speaker Change: This empowers advertisers to achieve monitor more creative and the integrity of the advertisement across our content ecosystem.
Speaker Change: Leading to better branding and conversion results.
Speaker Change: Turning to our Bath business.
Speaker Change: Driven by the growth of our LIBOR accounting.
Speaker Change: Revenue from our <unk> increased by 17% year over year to RMB, two 5 billion in the first quarter.
Xin Fan: We continue to strengthen the synergies between our live broadcasting content offerings and our PUGV ecosystem, especially in our advantage content categories like games, vlogs, and entertainment. We are also improving our growth margin while increasing the supply of high-quality live broadcasting. The number of premium membership remains steady at 21.9 million as of the end of, with over 80% of premium members on annual subscription or auto-renewal packages.
Speaker Change: We continue to strengthen the synergies between our LIBOR cutting content offerings, and our <unk> TV ecosystem.
Specially our advantages content categories like games read to birth and entertainment.
Speaker Change: Moreover, through refined operational measures. We are also improving our gross margin, while increasing the supply of high quality LIBOR costume content.
Speaker Change: The number of premium membership remains steady at $21 9 million as of the end of quarter with over 80% of premium members and new subscription auto renewal packages.
Xin Fan: Users are also showing a growing propensity for spending on our other vast products, including our premium online courses, exclusive fan-charging video products, and the virtual community accessory. We will continue to actively explore these unique community features to provide users with products and experiences they love. Turning to our Gambian users, our revenues were RMB983 million for the first quarter; we launched an exclusive license game, Artifact.
Speaker Change: Users are also showing a growing propensity for spending on our other advanced products, including our premium alloy Cortez exclusive fantastic video product and the virtual commodity accessories.
Speaker Change: We will continue to actively explore these unique community features to provide users with products and the experiences they love.
Speaker Change: Turning to our Gan business.
Speaker Change: Our revenues were RMB $983 million for the fourth quarter.
Speaker Change: In April we launched an exclusive license again.
Speaker Change: Other factors.
Xin Fan: [inaudible] This creative card game was well received by game lovers. Looking at our game pipeline, we expect to release our highly anticipated SLG game, San Guo Mou Jing Tian Xia, on June 13. Over 2 million players have already pre-registered as of today.
Speaker Change: Hi, Lucy.
Speaker Change: This creative card game was well received by game lovers looking.
Speaker Change: Looking at our game pipeline, we expect to release, our highly anticipated S. LG Chem Suncor Morgan Tasha on June 13th over 2 million players had already approved rejected as of today. We also plan to launch our Japanese RPG title haven't been grad tree in here.
Xin Fan: We also plan to launch a Japanese RPG title, Haven Burned Red, Zhi Yantian Qiong, in the third quarter. Last but not least, as we make progress on the commercialization front, we are actively shouldering our social responsibilities as a cultural entity.
Speaker Change: So in the third quarter.
Speaker Change: Last but not least as we make progress on commercialization front. We are actively show during our social responsibilities as a couch how enterprise.
Xin Fan: We published our 2023 annual EFG report last month, outlining our efforts in creating and bringing value to young generations in China. Collaborating with content creators, employees, and industry partners, we strive to explore more technological innovation and engage in social welfare activities to positively impact society at large. This concludes Mr. Chen's remarks.
We published our 2023 annual ESG report last month.
Speaker Change: Outlining our outgrowth in creating and bring value to young generations in China.
Collaborating with content creators employees and industry partners, we strive to explore more technological innovation and engage in social welfare activities to positively impact society at large.
Xin Fan: I will now provide a brief overview of our financial results for the first quarter of 2024. I'd now like to review our first quarter financial highlights. For a closer look at our financial results, we encourage you to refer to our press release issued earlier today. Our commercialization and operational efficiency enhancement initiatives continue to yield great results. First, we improved the quality of our RAM. Sponsored ADR Class Z, based largely on our revenue growth and platform.
This concludes Mr. Chen's remarks, I will now provide a brief overview of our financial results for the first quarter of 2024.
Speaker Change: I'd now like to review, our first quarter financial highlights.
Speaker Change: For a closer look our financial results. We encourage you to refer to our press release issued early today.
Speaker Change: Our commercialization and operational efficiency enhancement initiatives continue to yield good results in the first quarter.
Speaker Change: We improved the quality of our revenues.
Speaker Change: <unk> expanded our margin for the seventh consecutive quarter and significantly narrowed our losses.
Speaker Change: Based largely on our revenue growth and platform efficiency.
Xin Fan: Total revenues for the first quarter were RMB 5.7 billion, up 12% year over year. Our total revenue breakdown by revenue stream for Q1 was approximately 45% VAT, 29% advertising, 17% mobile games, and 9% for our IP directives and others. Our cost of revenues increased by 2% year-over-year to RMB 4.1 billion in the first quarter, while our gross profit rose 45% year-over-year to RMB 1.6 billion. Our gross profit margin reached 28.3% in Q1, up from 21.8% in the same period last year. Our total operating expenses were down 2% year-over-year to RMB 2.4 billion in the first quarter.
Speaker Change: Total revenues for the first quarter was RMB, five 7 billion up 12% year over year.
Speaker Change: Our total revenues breakdown by revenue stream for Q1 was pushing me today, 45% Vas.
Speaker Change: 9% of advertising, 17% mobile games, and 9% of our IP derivatives and other business.
Speaker Change: Our cost of revenues increased by 2% year over year to RMB four 1 billion in the first quarter.
Speaker Change: Our gross profit rose, 45% year over year to RMB, one 6 billion.
Speaker Change: Our gross profit margin reached 28, 3% in Q1 upfront 21, 8% in the same period last year.
Speaker Change: Our total operating expenses were down 2% year over year to RMB two four billing in the first quarter.
Xin Fan: Sales and marketing expenses increased by 5% year-over-year to RMB927 million, mainly due to early promotion expenses related to the release of our upcoming SLG game. GNA expenses were RMB 532 million, down 7% year over year, and the expenses will be RMB 965 million, down 6% year over year. We cut our adjusted operating loss and adjusted net loss to RMB512 million and RMB456 million in the first quarter, narrowing these losses by 52% and 56% year over year respectively. Our adjusted net loss ratio in the first quarter improved to 8% from 20% in the same period a year ago.
Speaker Change: Sales and marketing expenses increased by 5% year over year to RMB 927 million.
Speaker Change: Mainly due to early promotional expenses related to the release, our upcoming <unk> LG Chem <unk>.
Speaker Change: G&A expenses was RMB $532 million down 7% year over year.
Speaker Change: <unk> expenses were RMB $965 million down 6% year over year.
Speaker Change: We cut our adjusted operating loss and adjusted net loss to RMB 512 million and RMB $456 million in the first quarter.
Speaker Change: During these losses by 52% and 56% year over year, respectively.
Speaker Change: Our adjusted net loss ratio in the first quarter improved to 8% from 20% in the same period a year ago.
Xin Fan: We also generated RMB 638 million in positive operating capital, demonstrating our business' ongoing healthy path for sustainable development. We expect to reach positive net operating profit in the third quarter of 2024 through our sustained top line growth as gross profit margin improves. As of March 31, 2024, we had cash and cash equivalents. Time Deposit, Short-term Investments of RMB 12.9 Billion or 1.8 Billion USD In March this year, we completed the repurchase ride offer for our April 2026 notes.
For the first quarter, we also generated RMB $638 million in positive operating cash flow.
Speaker Change: Demonstrating our business ongoing healthy path for sustainable development.
Speaker Change: We expect to reach positive non-GAAP operating profit in the third quarter of 2024 through our sustained top line growth as gross profit margin improvement.
Speaker Change: March 31, 2024, we had cash and cash equivalents.
Time deposits and short term investments of RMB, 12, 9 billion or $1 8 billion U S dollar.
Speaker Change: In March this year, we completed the repurchase rights offer for our April 2026 notes.
Speaker Change: After completion of this transaction.
Xin Fan: The aggregate outstanding principal amount of the April 2026 notes, 2027 notes, and December 2026 notes was $433 million. We believe our cash position is sufficient to cover all of our remaining convertible bonds. Thank you for that. We will now like to open the call to, Preacher, please go ahead.
Speaker Change: Aggregate outstanding principal amount of the April 2000, and 2006 notes.
Speaker Change: 2007 nodes and the December 'twenty 'twenty six notes was 433 million U S dollar.
Speaker Change: We believe our cash position is sufficient to cover all of our remaining convertible bonds.
Speaker Change: Thank you for your attention we would now like to open the call to all questions.
Peter Please go ahead.
Operator: Thank you. We will now begin the question and answer session. To ask questions on the phone, please press star 11 and wait for your name to be announced.
Speaker Change: Thank you we will now begin the question and answer session to ask questions on the phone. Please press star one one brand name to be announced.
Operator: For the benefit of all participants on today's call, if you wish to ask your questions to management in Chinese, please immediately repeat your questions in English. The company will provide consecutive interpretations for management statements during the Q&A session. Please note that the English interpretation is for convenience purposes only. In the case of any discrepancy, management statements in their original language will be presented.
Speaker Change: The benefits of whole participants on today's call. If you wish to ask questions to management in Chinese. Please see immediately repeat your question is in English.
Speaker Change: Company will provide consecutive interpretation for management statements during the Q&A session. Please note that the English interpretation is for convenience purposes only.
Speaker Change: The pace of any of this competency management statement Cynthia original language premium.
Operator: One moment for the first question. Our first question comes from the line of Thomas Chong of Jefferies. Please go ahead.
Speaker Change: One moment for the first question.
Speaker Change: Our first question comes from the line of Thomas Chong of Jefferies. Please go ahead.
Thomas Chong: Sponsored ADR Class Z, Good evening, thank you for accepting my question. We can see the growth of the advertising business... Can you share the main driving force and from which aspect the company has made some improvements in advertising products and algorithms? Can you share in the second quarter, how you see the trend of advertising during the 618 launch? My question is about our online advertising business.
Speaker Change: Yes.
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Speaker Change: Third season.
Speaker Change: Thank you Lisa.
Andrew: Andrew with CGM.
Andrew: Sure.
Andrew: Thank you.
Speaker Change: Thank you management for taking my question My question is about <unk>.
Thomas Chong: Given advertising growth exceeded our expectations, can management comment about the key growth driver? What are the areas that we have strengthened in our ad product offerings and our ad technology upgrade? On the other hand, if we look into Q2, in particular for June 18th, can management comment about the advertising trend and how we should think about 2024 advertising outlook? Thank you.
Speaker Change: Tyson business.
Speaker Change: Advertising will exceed.
Speaker Change: Can management comment about the key growth driver.
Speaker Change: Another area that we have strength in.
Speaker Change: Our ad product offerings and technology upgrades.
Speaker Change: If we look into the Q2.
Speaker Change: Paul.
Speaker Change: Okay management comments about the advertising trends and how we should think about trying to turn this advertising outlook. Thank you.
Xin Fan: Thank you for this question. In terms of QE, Bilibili's overall advertising revenue actually exceeds 1.6 billion yuan, which is 1.67 billion yuan. The growth rate is also up to 31%. It will grow faster at the level of effective advertising revenue, which is 50%. We have made a few core drives.
Speaker Change: So the QE, though copies under Jonathan Bock also Youll judge how long until you that notion.
Speaker Change: She told me Josh.
Speaker Change: And essentially we've got a solution that sounds like all right.
Speaker Change: <unk>.
Speaker Change: Sure.
Xin Fan: The first level is mainly users. Our Bilibili community cares a lot about the user experience. Based on the user experience, we have achieved an increase in advertising inventory. In terms of QE, we have expanded to advertising scenes such as dynamic search. But more importantly, we are still based on a mix of natural and commercial traffic, so that high-quality advertising content can get more traffic and achieve an increase in inventory.
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Don: Although these assets.
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Speaker Change: Okay quarter come towards us.
Xin Fan: Even if we achieve an increase in inventory, we still have a lot of room for other platforms to upload. [inaudible] Our ad revenue in Q1 reached $1.67 billion, up 31% year-over-year. Among them, performance-based advertising saw strong growth, exceeding 50% year-over-year. Speaking of the key driver, one of the drivers is that while maintaining a good user experience, which we care a lot about, we increased our overall advertising inventory. We further expanded our ad scenarios, such as moment and search. And, in addition, by mixing natural and commercial traffic, high quality advertising content can gain more organic traffic, resulting in an increase in effective ad inventory.
Speaker Change: A question that doesn't yeah.
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Speaker Change: So D.
Speaker Change: <unk>.
Speaker Change: Power revenue in Q1 reached 167 billion up 31% here over here.
Speaker Change: And then performance based advertising saw a strong growth exceeding 50% year over year speaking of the key driver one of the driver as that while maintaining a good either crs, which we care a lot.
We increased our overall advertising inventory, we further expand our AD scenarios such as momentum search and addition by mixing the natural and commercial traffic high quality advertising content can gain more organic traffic, resulting in the increase.
Speaker Change: <unk> effective AD inventory, having said that as we increase our effective AD inventory our AD load is still low and have significant room to expand compared to other platforms.
Xin Fan: Having said that, as we increase our effective ad inventory, our ad load is still low and has significant room to expand compared to other platforms. Secondly, we have integrated and strengthened the customer's overall placement tool for the fireworks system and advertising system. In fact, we have also realized smart placement, where placement in different venues can only be completed by flexibly switching.
Speaker Change: The idea of Alpine high.
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Xin Fan: So in Q1, the fireworks penetration rate of our launch increased by more than 50%. At the same time, we also launched a creative center. In the future, when our customers are making materials, they can achieve batch processing. With the application of AIGC, this efficiency will be higher.
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Speaker Change: Lasalle required Jonathan on the call.
Xin Fan: The second growth driver is that we have integrated our Sparkle ads and our advertising system, as well as improved our ad placement tools. We have enabled and achieved Spark ad placement in different ad scenarios. In Q1, over 50% of the Sparkle ads also purchased our content promotional service, aka Project Takeoff. We also launched a creative center to enable bulk processing of ad materials. And we also believe that continuous exploration of AIGC-related functions can help us to improve our ad efficiency.
Speaker Change: Our second growth driver is that we have integrated our spark sparkle ads and our advertising system as well as to improve our AD placement tool, we have enabled and achieve smart app placement indefinitely as scenarios.
Speaker Change: In Q1.
50% of the Sparkle App also purchased our content promotional service.
Speaker Change: A project takeoff.
Speaker Change: We also launched a creative center to enable bulk processing of App materials and also we believe they continue with the exploration of Aig's related function can help us to improve our ad efficiency.
Xin Fan: ????,???????????up???????? ???up????????,???????????????, ???????up????,?B???????????, ????????????????,?????????????? ???????????????????,????190%, ??????????????? And secondly, on our content creator site, we've launched our content promotional tools for content creator. Project Takeoff now has been officially upgraded to a new product called Bihuo, which was made available to all content creators in Q1.
Speaker Change: Okay.
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Speaker Change: And secondly on our content creator side, we've launched our content promotional tools for content Greater project takeoff now has officially upgraded to a new product called <unk>.
Speaker Change: Which was made available to all content creators in Q1, the function allows content creator with one stop service to promote their content to pay top athlete vacation. They can also increase fans and improve their monetization capability.
Xin Fan: The function allows content creators with a one-stop service to promote their content through paid traffic amplification. They can also increase fans and improve their monetization capabilities. The number of clients who purchased our content promotional service in Q1 increased by 190% year-over-year, while the repurchase rate and the satisfaction rate continue to improve. Thirdly, we have improved the foundation of marketing data and improved the efficiency of our algorithm. By deepening all kinds of commercial labels, we can provide advertisers with more comprehensive promotion guidance, including data quality. Recently, in QE, we implemented our system for game and mobile phone manufacturers, as well as customers in cosmetics. For example, we have introduced a new system called Big Data, which is an application of the Z-index.
Speaker Change: The number of clients, who purchased our content promotional service in Q1 increased by 190% year over year, while the repurchase rate and the satisfaction rate continues to improve.
Speaker Change: Sure no problem.
Jonathan: Sure Jonathan.
Speaker Change: Yeah, Yeah T cell, so that sounds like a sofa.
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Speaker Change: Ghansham Lauder Shanda hitching, a bulk what how should we be totally out just as you think <unk> gate, though you'll.
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Speaker Change: By all means a job like data or is that just still the CEO.
Xin Fan: I believe that in Q2 and Q3, we will be more comprehensively disseminating these quantitative data. And thirdly, we have optimized our marketing data infrastructure and improved our algorithm efficiency. We refined various commercial tags to provide advertisers with more comprehensive measurement and guidance on branding and marketing outcomes.
Speaker Change: I, certainly think that cure I'll just add one more way to go check me on the <unk>, that's a good tool Alice Shaw.
Speaker Change: And thirdly, we have optimized our marketing data infrastructure and improved our algorithm efficiency, we refine various commercial tax to provide advertisers with more comprehensive measurement and guidance on branding and marketing outcome currently.
Xin Fan: Currently, we have already launched a trial version of our B-data and Z-index for advertiser in-game mobile phones and cosmetics. We expect Q3 and Q2 will push it out to more industry verticals. The fourth point is that our vertical industrialization solution is actually further deepening.
Speaker Change: We have already launched the trial version of our data and the index for Advertiser in game mobile phones and cosmetics.
Speaker Change: That Q3, and Q2 will push it out to more industrial verticals.
Speaker Change: Yes.
Speaker Change:
Speaker Change: Just so I'm not sure it's a high quality I guess on that.
Xin Fan: Still in our top three industries are our games, digital home appliances, and platform electrification. The number of competitors is large, in the large double digits. In terms of games, we are still stable at the advantage of high-end games. We provide full-chain services.
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Speaker Change: So those who thought they pass on issue.
Speaker Change: Youll see the hot season, when the high silver zinc and Youll see that Youll ship going on.
Xin Fan: Recently, we have also increased the volume of small games. Our daily number has also increased by more than 50%. This is a game.
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Xin Fan: In terms of digital home appliances, the occupancy rate of our mobile phone industry has already exceeded 10%. I believe that in the future, there will be more room for competition in digital home appliances. In the end, we can also pay more attention to platform e-commerce. We have also realized the original structural reconstruction.
Speaker Change: I'll just you don't know that there's so much ideas Michelle Michelle Yeah, Yeah. It does really change how about now about.
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Speaker Change: I think that'd be helpful. Angela that European Ibs, Armstrong, our Michigan right Yeah.
Xin Fan: In addition to JD, Taobao, Tmall, and Pinduoduo, we have also expanded our cooperation with Vipin Hui, Dewu, Xianyu, etc. The upgrade of non-e-commerce nodes is still very good. Another point is that we are still actively introducing business budgets with e-commerce platforms. This will be a big increase and volume in the future. So I also believe that, in terms of some methods applied to these three industries, we can also reproduce the growth of cars, Internet services, medical education, etc., in Q2.
Speaker Change: <unk> seen two major triangle.
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Xin Fan: These four points are the core drivers of Q1. And the fourth growth driver is that we have deepened our vertical industry solutions. In Q1, games, digital products, and home appliances, and e-commerce platform are our top three growth factors with growth rates around high double digits year over year. In the gaming sector, we have focused on high quality games, covering all stages in their game operation from pre-launch to long-term operations. Notably, we have captured incremental shares in the mini games market, resulting in a 50% increase in daily ad spending. And on digital and home appliances, we've already taken over about 10% of the market share in the smartphone ad market.
Speaker Change: She came to alcohol show that shows up.
Speaker Change: She is just show them I'm, sorry of QE that you're seeing that driver.
Speaker Change: And the fourth growth driver as that we have depend our vertical industry solutions in Q1, our games digital product in home appliances, and e-commerce platform or our top growth factors.
Speaker Change: With grocery exceed.
Speaker Change: Round high double digit year over year, and the gaming sector, we have focused on high quality games covering all stages in their in their team operation from prelaunch too long turn operations, notably you would have captured incremental shares many games market.
Speaker Change: Resulting in a 50% increase in daily AD spending.
Speaker Change: And on digital and home appliances, we've already took over about 10% of the market share in smartphone app markets and in the future. We believe there is still significant growth potential for either get your products and home appliances as.
Xin Fan: And in the future, we believe there's still significant growth potential for other digital products and home appliances. As we move on to the e-commerce platforms, for this quarter, we have achieved a diversified customer structure. Besides the traditional partners, Taobao, Jingdong, Tianmao, and Pinduoduo, we have expanded our collaboration with VIP Shop, Douwu, and Xiao, and Xiaoyu, Xianyu.
Speaker Change: We move on to the e-commerce platforms for this quarter, we have achieved diverse diversified customer structure.
Speaker Change: Besides the traditional partner Taobao Kingdom.
Speaker Change: <unk> and pingo duo we have expanded our collaboration with VIP shop.
Speaker Change: <unk>.
Xin Fan: We improved our ARPU during our non-shopping festival period and introduced additional budget with other key active merchants. And we do expect that advertising budget from merchants will continue to drive our advertising growth. As to sum up, we do expect we can replicate that solution and apply it to more additional verticals, including automotive, internet services, healthcare, and education industries. Meanwhile, we will continue to expand to more clients with more industries. We just mentioned 618.
Speaker Change: And capital.
Speaker Change: And Michele.
Speaker Change: Shane.
Speaker Change: We improved our <unk> doing are now shopping fast from all periods and introduced additional budget with a key other key active merchants and we do expect there is advertising budget from March and will continue to drive our app.
Speaker Change: Advertising rose.
Speaker Change: To sum up.
Speaker Change: We do expect we can replicate that as solution and apply to more additional verticals, including automotive Internet services healthcare and education industries.
Speaker Change: Meanwhile.
Speaker Change: We will continue to expand to.
Speaker Change: More clients with more industry.
Xin Fan: Compared to last year's 618, the growth rate is still more than 30%. Bilibili also saw that the occupancy rate of all e-commerce nodes is increasing, which is also in the early stages. So we still stick to the previous open-source strategy, and we have established a more in-depth cooperation with Alibaba, JD, Pinduoduo, and WeChat. But there are two things that are different and deepened from before
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Speaker Change: So can you draw on the highest against this agenda, Taiwan, It's Andrea you can hardly kingdom, although away from any of the agenda. That's all that's rolled out and go against US yet we young close show pilots or the shipping schedule.
Xin Fan: In the past, we upgraded from a pure traffic type of cooperation. We will cooperate with both traffic and content. For example, our brand Yingguang has increased by 40%. This can actually prove the value of Bilibili's crowd.
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Xin Fan: But this year, Taobao and Tmall have also added a new way of playing with us, which is to cooperate with us and invest. JD is still very active in all our meeting activities, and it has also formed a new model and pattern with the gameplay of traffic and content. The second point is that we changed from a platform-to-platform cooperation model to a platform-to-business cooperation model. So in 618, our overall platform budget is more than 30%, but our business budget is still more than 250%.
Speaker Change: Thank you no problem.
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Xin Fan: So in the future, we will strengthen this kind of vertical industry cooperation that will lead to heavy speculation on Bilibili and, at the same time, transform the entire chain of transaction consumption. And you asked about our June 18th performances; we do expect, we estimate the growth during the June 18th shopping festival this year will be around, will be over 30% year over year.
Speaker Change: Sri went home with Georgetown don't trade. So we changed that these songs.
Speaker Change: Yeah, Josh Paulson us just yet.
Speaker Change: Yourself.
Speaker Change: Gotcha.
Speaker Change: And you asked about our June 18th.
Speaker Change: Performance US we do expect we estimate the growth during June 18th shopping festival. This year will be around will be over 30% year over year and we have further increased our shares of advertising budget.
Speaker Change: This significant shopping festivals this year and will continue to execute our open loop strategy, establishing deep deep partnership with Alibaba JD P. No Dolby IPC shopping and others.
Xin Fan: And we have further increased our shares of the advertising budget at this significant shopping festival. This year, we'll continue to execute our open loop strategy, establishing deep partnerships with Alibaba, JD, Pinduoduo, VIP Shop, and others. Additionally, we also have two upgrades in our strategy. First, we will upgrade our partnership from pure traffic collaboration to traffic plus content collaboration. Brand advertising revenue is expected to increase by 40% year over year during this period.
Speaker Change: Additionally, we also have two upgrades in our strategy first is that we will upgrade our partnership from pure profit collaboration too.
Speaker Change: Profit plus content collaboration.
Speaker Change: <unk> advertising revenue is expected to increase by 40% year over year during this period.
Xin Fan: This year, Taobao also introduced A New Budgeting Targeting Total GMB from Purchasing Sparkle Plus Content Promotion, and JD is also actively engaging in our integrated marketing activities, combining both traffic and content value strategies. Secondly, we will transition from platform to platform collaboration to platform plus merchant collaboration. The platform budget for 618 will be expected to increase by 30% year-over-year, while the merchant budget is expected to increase significantly over 250% year-over-year.
Speaker Change: This year Taobao also introduced a.
A new budgeting targeting additional targeting total GMB from purchasing sparkle plus content promotion.
Speaker Change: And J D is also actively engaging in our integrated marketing activities combining both topic in content value strategies. Secondly is that we will transition from platform to platform cooperation to platform plus merchant collaboration platform.
Speaker Change: Yes.
Speaker Change: Six one H, well well will be expected to increase by 30% year over year, while the mush them by Jed.
Speaker Change: As expected to increase significantly over 250% year over year.
Speaker Change: Strengthened our collaboration with more vertical industries encourage more consumption related behavior from product seeding to purchasing transitions during the.
Speaker Change: For the period.
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Speaker Change #101: Kill humans that Guang Shen Joey later, mainly young for tissue, you'll essentially see by ocelot or Toby itself. We are told by the buyer.
Speaker Change #100: So curious actually on casual.
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Speaker Change #102: So just running through those Jeremy.
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Speaker Change #102: It's actually about that though that you get you all you should you change at all.
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Xin Fan: We will strengthen the collaboration with more vertical industries and encourage more consumption-related behavior from product seeding to purchasing transitions during the period. ??618?????B????????????????,??618?????B????????????????, ???????????????????????????????????????? ?????????????????????????????????? ???QE?????????????????3720?,???QE?????????????????3720?, ????????100%??????????100%?? ?????????????????????????????? ???????????????up?????????100%? ????????????????????????????????? ?????????,???????3C????,?????????????? ??618???????????? ????????,???????????????????????????? ????? Speaking of the June 18th shopping festival, let me briefly touch on some of the data points that reflects the current situation on Bilibili.
Speaker Change #102: Yeah.
Speaker Change #102: Speaking of the June 18th shopping Festival, let.
Speaker Change #103: Let me briefly touch on some of the data points that reflect the current situation on visibility. So first of all our staff, we've noticed that consumption willingness among deliberately users have further improved in Q1 the number.
Xin Fan: So first of all, we've noticed that the consumption willingness among Bilibili users has further improved. In Q1, the number of users who watched transaction-related content reached over 37 million, nearly doubling year over year. And we believe our users have a more mindset and perception towards watching commercial or e-commerce related content on our platform. At the same time, our content creators are benefiting from this improvement. Content creators have received income or generated revenue through live and video comments also increased over 100% year over year.
Speaker Change #103: Users.
Speaker Change #103: Have you watched transaction related content has reached over $37 million nearly doubling year over here and we believe our users has more mindset and perception towards watching commercial are all e-commerce related content on that.
Speaker Change #103: At the same time, our content creator are benefiting from this improvement content creator has received an income or generate revenue through life and video Commerce also increased over 100% year over year and we believe there is.
Xin Fan: And we believe there's a lot more potential for us to further get into. And for the transaction-related advertising sectors, the top four industries in terms of transaction volumes are digital products and home appliances, food and beverage, apparel, and beauty and cosmetics.
Speaker Change #103: A lot more potential for us to further get into and for.
Speaker Change #103: The transaction related advertising sectors. The top four industries in terms of transaction volumes are.
Speaker Change #103: No products at home appliances put them beverage apparel and beauty and cosmetics.
Xin Fan: And to sum up, we remain very confident of maintaining a high growth rate for our advertising for the full year. Thank you. Operator, next question, please.
Speaker Change #103: And to sum up.
Speaker Change #103: We remain very confident to maintain a high growth rate for our advertising for the full year.
Operator: Thank you. The next question comes from the line of Lei Zhang from Bank of America. Please go ahead.
Speaker Change #104: Operator next question. Please. Thank you next question comes from the line of Holiday Chung from Bank of America. Please go ahead.
Lei Zhang: Hi, good evening, management team. Thank you for accepting my question. Congratulations on your strong advertising revenue. My question is actually about the game. Can you help us analyze the overall trend of the game this year? Also, can you share your preliminary outlook on the new generation of SLC games, Three Kingdoms? Thank you.
Speaker Change #105: Hi, Glenn it's all I saw this all this.
Speaker Change #107: I'll go to the same time talking about golf. So all of the one teaches this you're glad he or she got songs in Guatemala.
Speaker Change #106: Exactly yeah.
Speaker Change #108: Got you got you.
Speaker Change #109: Okay. Thank God, it's outrageous Oh on maxing that out.
Speaker Change #109: So savi.
Speaker Change #109: To put us at Walnut Hill.
Lei Zhang: Thank you, Madison, for taking my question. Congratulations on the strong advertising growth. My question is mainly about the game business. Can you give us some updates on the overall game outlook for this year? And also, your expectation about the upcoming new game, Three Kingdoms? Bilibili has always been the most high-quality and rich platform for domestic gaming videos.
Thanks for taking my question and congrats on that score at the attacking golf on my question about the bankers life.
Speaker Change #110: Can you give us an update.
Speaker Change #110: On the overall outlook for this year and also your expectation about autonomy.
Speaker Change #110: Yeah.
Speaker Change #111: So with that thank you.
Glenn: P. J this is Glenn.
Speaker Change #113: <unk> got a phone for the Fintech, Yeah circle and they also want to thank all the listeners.
Xin Fan: It is also a community with the highest concentration of gamers in China. Therefore, this advantageous condition allows Bilibili to have a leading role in the game industry. So Bilibili has always had the largest and the most high-quality game-related content library. At the same time, we have the highest density in terms of high-quality gamers.
Speaker Change #114: But what are you towards their entire on Toyota you, so you'll be able to run the ocean. So.
Speaker Change #114: <unk> has always had the largest send the most high quality game.
Speaker Change #114: Game related content library at the same time, we have the highest density in terms of high quality gamers. This gave us.
Xin Fan: This gives us a great advantage in the gaming business. This year, our overall guidance for the game industry, especially the agent development industry, is two words: one is stable, and the other is new.
Speaker Change #114: A great advantage and the gaming business.
Speaker Change #115: So jinan woman three Youll see you suddenly go from good to you. Good should also do it to her.
Speaker Change #115: If I can give you what it took a little harsher.
Speaker Change #115: So you guys or what you guys are seeing.
Xin Fan: For the full year, when we think about the game business, there are two words to sum up our direction. One is stable, and two is that we're looking for new things. We value the long-term operation of our classic old games more. We value the maintenance of their users and their continuous innovation in content. So we can see that our classic old games have improved the player's age this year, and it also shows the vitality of youth.
Speaker Change #115: For the full year, when we think about our game business. There are two words, just some other our direction one as stable.
Speaker Change #115: And two as we're looking for new things.
Speaker Change #116: She says a woman quite well Michel so on the G&A and LOE you always see the challenge to her closer to come in the June quarter, you go away, who yeah, it's almost a month anyway.
Speaker Change #116: So as long as you saw at Ohio.
Speaker Change #117: Okay, you kind of just a woman.
Speaker Change #118: So if you didn't get along with his idea one Jonathan Yeah, sure Piazzolla arches, a hot per year.
Speaker Change #118: So it would have to say you could shoot when are you assuming lever.
Xin Fan: Stable refers to Bilibili paying a lot of attention to our legacy classic games. We expect to achieve a very long-term operation, maintaining the stickiness of our gamers, and also to see continuous innovation in terms of content. We have witnessed that for the gamers in our legacy games, their retention level and engagement level have increased continuously, at the same time showing a very robust longevity. For example, FGO has been operating in China for the eighth year this year, and we can see that it successfully entered the top ten of the IOS sales list in April. This year is the 7th year of the Bilibili airline.
Speaker Change #118: Stable as referring to that availability is paying a lot of attention to our legacy classic games.
Speaker Change #118: We expect to achieve a very long term observation maintaining the stickiness of our gamers and also to see continuous innovation in terms of content.
Speaker Change #118: We have the weightiness that.
Speaker Change #118: Gamers in our legacy games their retention level and engagement level type housing increase are continuously at the same time, showing a very robust.
Speaker Change #118: Jeopardy.
Speaker Change #119: Tubular steel Ching answer.
Speaker Change #120: When they are in the Dupont yellow at home could you kind of clear that.
Speaker Change #120: Tushar chunk, although you would see in rule of I O assets until about the test for me.
Speaker Change #120: The whole feel of how sienna.
Xin Fan: In May, during the 7th anniversary celebration, it also entered the top 10 of the IOS sales ranking. FGO, one of our most popular legacy games, has entered, has already been launched for, been launched for eight years, and this year, during its April Content Upgrade, this game has returned to the top of the IOS grossing chart. As for Azure Lane, it's also a seven-year-old game.
Speaker Change #120: We will continue as a team and reducing it towards that.
Speaker Change #120: The woman she's only inching higher.
Sure.
The touch up on the testing.
Speaker Change #121: F G L. One of our most popular let's games have entered has already launched.
Speaker Change #120: Sure.
Speaker Change #120: Launched for eight years and for this year during.
Speaker Change #120: A pro content upgrade this game has returned to the top iOS grossing chart as far as your Lang that's also.
Speaker Change #120: Even yourself game and for the seventh year anniversary just happened just now in May this gain once again returning to the top 10 grossing chart file S as well.
Xin Fan: And for the seventh-year anniversary, which happened just now in May, this game, once again, returned to the top ten grossing chart on IOS as well. In fact, for these old games that have been tested over time, I think it is more efficient to make them better than us to look for a new game. So we will definitely make the operation more detailed. Because I am an FGO player, I think the game like FGO has become a part of your life after you have played it for 8 years, and a lot of your friends and topics are on it.
Speaker Change #122: She says there is a hidden gem legal Cynthia analog, let's see what's coming toward us.
Speaker Change #122: The Saudis are sisters of how you want to say just seems all you got scenarios, either so either hardware or WOMAC a leeway to her.
Speaker Change #122: We even saw the confusion.
Speaker Change #122: Yeah.
Speaker Change #122: So that's what you'll see you know what you'll have to you'll think it runs out what is the tenure water companions tightens, how many of the so called <unk> the whole thing.
Speaker Change #122: He doesn't go out you can point out, though that helped me so I'm not sure what that really sounds Jay on the Chilean along you'll see what I mean.
Speaker Change #122: So clear, perhaps England marine dock fishing, yeah Central Oklahoma.
Speaker Change #122: And for.
Speaker Change #122: From a liquidity perspective to operate this tough said games by.
Xin Fan: So we think that such classic old games should be able to operate steadily until the 10th year or even longer, and from Bilibili's perspective, to operate this class Z games for a longer period of time. Its return, for us, is even better than sinking new games. So what we plan to do is continue to refine our operation, and maintain a long life cycle. As an FGO player myself, I can see that FGO has become part of my life, and I will continue to play it if the game is there.
Speaker Change #122: Longer period of time.
Speaker Change #122: Return for us, it's even better that thinking new games. So while we were planning to do is continue to do our refine our operation maintained a long lifecycle Alpha and F. G. O player myself I can see that <unk> has become part of my life and I would.
Speaker Change #122: Continuous to play if the game is.
Xin Fan: So we're confident we can continue to operate this game towards its 10th year anniversary or even longer. Let me give you two examples of new games. If we want to make progress on an old game, we have to invent new games. In April, we launched a Chinese-style 2D game called Wu Hua Mi Xin. This game has a 2D style in terms of aesthetics, but in terms of themes and cultural connotations, it is a very typical Chinese-style work.
Speaker Change #122: This call is there. So we're confident we can continue to operate.
Speaker Change #122: Operators game towards its 10th year anniversary or even longer.
Speaker Change #123: Oh I'm sorry.
So that leaves about a woman that I saw.
Speaker Change #123: Well see those equal shot when the rule of thumb is out in the hall.
Speaker Change #124: She was either Jerome.
All of them and that's at home because it sounds getting equal goals are clear and you'll see it's all while meeting the hotel.
Speaker Change #124: Some yes, tushar, Austria and Hungary.
Speaker Change #125: <unk> has a well finally, it sounds like you've got pretty healthy as you know.
Xin Fan: It is a game based on Chinese cultural relics as a world view of women. In fact, the number of users of this game is increasing. It is the number of users that we did not cover in the past. It is the culmination of traditional Chinese culture, but it also accepts the aesthetics of the second dimension. The results of this game in the second quarter are actually in line with our expectations.
Speaker Change #125: So you go talk to your customer you took on some and some water well hopefully even neither should you a glass that's sort of something you're glad you always see sensitivity, you'll see the hot talent pool.
Speaker Change #125: How do you think it's a little.
Speaker Change #125: So they say all of them of course they were full.
Speaker Change #125: Although there were a couple of social point hydrocodone, that's titled Seattle, Obviously that somebody that people from the south.
Speaker Change #126: Yeah on this house.
Speaker Change #126: Yeah, as you know with a talented team.
Xin Fan: It brought a significant increase to our second quarter. In the future, we will actively try to combine our second-dimensional taste with the taste of new players. And speaking of new games, we actually launched a new game in April called Arctic Crafter. It's a Chinese-style ACG game. The artistic style can be classified as an ACG title, but the story and the plot, and the gameplay are actually very traditional Chinese. It was based on cultural relics as its own persona, very creative.
Speaker Change #126: You see that particularly on the PRT there with that out of your company in Canada.
Speaker Change #126: Also I'll tell this house woman, which you said that you thought just a woman a sudden it was ours to MPLX could you just sundar.
Speaker Change #127: Thank you.
Speaker Change #127: So that you could do.
Speaker Change #128: And speaking of new games, we actually launched a new game in April card Rd, Crafter, and so Chinese style ACG game. This the artistic style as a.
Speaker Change #128: As can be classified as ACG title, but the story in the plants and the game play is actually very traditional Chinese it was based on cultural rally as its own persona very creative we've noticed this type of game has one.
Xin Fan: We've noticed this type of game has opened a new demographic to us, traditional Chinese cultural lovers. So we'll continue to look for new opportunities with the ACG plus new categories to help us to expand to more gamer demographics. As for this game Arctic Crafter, we think this game's performance so far has met our expectations, and it will contribute to our game revenue in the second quarter. For the example of the second new game, I would like to mention the game you mentioned just now, Three Kingdoms.
Speaker Change #128: And a new demographic to us.
Speaker Change #128: The traditional Chinese cultural Lockups. So we'll continue to look for new opportunities with the ACG plus new categories to help us to expand to more game, our demographics as far as this game RV crafter.
Speaker Change #128: We think this game is performing so far it hasn't in the past our met our expectation and it will contribute to our game revenue in the second quarter.
Speaker Change #129: Regardless you know also the reason that was it sounds good.
Speaker Change #130: She thought of as a cloud you'll see central Imodium catch up relative on you'll see especially your car T O.
Xin Fan: This game is an SLG game, and we have set the release date to June 13th. Now, this game has more than 2 million users. As for another game, I would like to make an example of this, San Guo Mo Ding Tian Xia. For this game, we have already set the release date to June 13th.
Speaker Change #131: Uh huh.
Speaker Change #131: So amazing particle control, they're suggesting that Lewis with alcohol. She was then absolutely you'll see deals go down my mother.
Speaker Change #131: Sure.
Speaker Change #132: As for another game I would like to make any sample size, what Morgan Tasha you were asking for in this game. We are already starting the launch date at June 13th.
Xin Fan: We did a lot of reviews on this game, and we got a lot of good results and we got a lot of good feedback from the users. And for this game, it already has over 2 million pre-registration users. And we have done multiple rounds of paid and non-paid beta testing, and it received very good feedback from gamers. Let me use this game as an example to tell you how we do innovation exploration in the game industry. We signed this game a year ago.
Speaker Change #131: Yes.
Speaker Change #131: So you'll see that it's just tell him I said you can go taller phone call about Yahoo.
Speaker Change #131: Personally I would anticipate other photos from our tier yoga King.
Speaker Change #131: King of all of the Colgate.
Speaker Change #131: And for this game already has over 2 million pre registration I users and we have done multiple rounds of paid down paid battle testing as has received very good feedback from the gamers through about two years ago. She saw illegally assembly houses all of them.
Here with US who are trying it in time for some adult swim he or she is sure that Shanghai enjoys in Shanghai that I'll touch on the trading Kantar does.
Xin Fan: We decided to cooperate with its developer. This is not because we are conscious, but because we found that Bilibili has a large number of users who are interested in history, culture, military, politics, and economy. Because Bilibili's knowledge is very strong. The common feature of this type of user is that they like this kind of grand narrative. Sponsored ADR Class Z, I will elaborate a little bit on how we plan to explore new fields. For this, SLG San Guobo Ding Tian Xiang game. Actually, we signed this; we had signed this game the year before last year.
Speaker Change #131: We also took a pin border solar it seems you are sure one five years with a P value of <unk>.
Speaker Change #133: Just a theoretical Lisa.
Speaker Change #131: And two should.
Speaker Change #131: Some of the things you're seeing should I think we're going to be.
Speaker Change #131: You tend to think that European looser fit hotel should Oh.
Speaker Change #135: Could you pass the peninsula.
Speaker Change #134: Sure sure.
Speaker Change #134: So you don't have had I think youll see a slowing of the hydro make a woman to la Liga.
Speaker Change #134: He or she thought he was harsher relative to partially a corridor like you go to sell them a color based on some of the sounds like you got some quick.
Speaker Change #134: I will elaborate a little bit of how we plan to explore into new fields.
Speaker Change #134: For this.
Speaker Change #134: Oh Geez Onboarding cancer game actually we signed this we have signed this gain the year before last year.
Xin Fan: The reason behind that it's not, it's not a splurge of the moment is that we discovered on Bilibili that there's a big demographic who are interested in topics in history, military, and political knowledge. As you know, that knowledge has been a very big content category on Bilibili. So to satisfy this group of users or gain potential gamers' needs, we have signed this SLG game. So far, the feedback has been very positive and shows that the strategy is working. After we confirmed the Three Kingdoms S.A.R.G.
Speaker Change #134: Reason behind that it's not it's not a spot splurge of moment Istar. We have discovered visibility there is a big demographic who are interested in topics and test her history, our military political knowledge as you know that knowledge.
Speaker Change #134: It has been a very big content categories. Some deliberately so to satisfy this group of users or gain potential gamers needs. We have signed this S. L. T game. So far the feedback has been very positive.
Speaker Change #134: So in that the strategy is working.
Speaker Change #136: Well I'm not sure the analytical sandbox or do you.
Xin Fan: Themes, we made a lot of innovations in terms of the game. Because Bilibili's users are basically post-90s, post-95s, post-00s. So their aesthetics, including their preferences for games, are definitely different from the mainstream S.A.R.G.
Speaker Change #138: Seems like you've had a hold on just a woman sure take a failure.
Speaker Change #138: With salt was promising.
Speaker Change #137: He's on the call.
Speaker Change #137: ZIP around dosing children Hotel gaming Hall soy the hydro common suddenly all core commentary Youll see though is you can do.
Speaker Change #137: Sure sure absolutely.
Speaker Change #139: That's fair.
Xin Fan: games. For example, they value fun more than competition. We pay more attention to the degree of harshness and dryness of this game.
Speaker Change #139: So it's a pretty young beautiful publicly.
Lewis Who's in a person does it feel beautiful pamuk Hello.
Speaker Change #139: So to say.
Xin Fan: For these points, we also optimized and improved this for young users on Bilibili. This is also the reason why this game has a good reputation. As we set up the target in the SOG strategy, we have worked together with the game developer to conduct many innovations in the games. As you know, we have a massive number of Gen Z users. For this group of users, their preferences towards SOG have evolved compared to the older generation.
Speaker Change #139: Youll see the code who can't do that.
Speaker Change #139: At the end of her Romania. So it's another to her piece at a time or does it hinder it seemed to go poorly.
Speaker Change #139: Amongst all of your portfolio relatively you so it's likely you'll see in Angola quarter, Peter how Colgate everything.
Speaker Change #139: So as we set up the target.
Speaker Change #140: <unk> strategy and we have worked together with the game developers to contact many.
Speaker Change #140: Ovation and the games as you know that we have a massive gen Z.
Speaker Change #140: Users for this group of users their preferences towards peso Chi has evolved compared to the older generation they value a lot of the gameplay.
Xin Fan: They value a lot the gameplay, the fun in the gameplay over the competition, the battle itself. And they also care about whether it requires them to spend a lot of money and spend a lot of time on the game.
Speaker Change #140: And the game play.
Speaker Change #140: <unk> the competition Battle itself and also they care about whether it requires to top up a lot of money and spend a lot of time on the game. So on this field. So we have increased we have targeted solutions and to improve this gameplay, so far that they deserve.
Xin Fan: So in this field, we have targeted solutions to improve this gameplay. So far, the user feedback has been very positive. I am using these two games as an example.
Speaker Change #140: Feedback has been positive.
Speaker Change #141: Yeah, that's it either just a woman that you'll see you saw me until realized sort of transient transalta.
Xin Fan: In terms of the game industry, we have made innovations and explorations towards the future. Bilibili is now the largest game content community in China. So we will definitely continue to expand in this area and continue to bring better game content to our platform users. And those two examples show our strategy and thinking in terms of game business innovation and long-term strategy. As a matter of fact, Bilibili is the biggest game content community and has the largest game-related video library. So we'll continue to focus on this and aim to bring more high-quality games to our users. Operator, next question, please.
These are systems and their children from quarterly data, you'll see naval ship, so a little harder for a woman. So I'd say your car condemn question Sakai with Wonder woman.
Speaker Change #141: Tyler Hollywood films.
Speaker Change #141: And those two example shoots our strategy and thinking in terms of the game business.
Speaker Change #141: And in the long term strategy as a matter of fact visibility is the biggest game content community has the largest scheme really that'd be a library. So we'll continue to focus on this track and aim to bring more high quality games to our.
Speaker Change #141: Users.
Speaker Change #141: Yes.
Speaker Change #142: Operator next question please.
Speaker Change #143: One moment for the next question.
Operator: Thank you. One moment for the next question. Our next question comes from the line of Xueqing Zhang from CICC. Please go ahead.
Speaker Change #144: Our next question comes show underlying switching Chung from CIC. Please go ahead.
Speaker Change #145: And you see it going deeper.
Speaker Change #146: Got you and you say Oh, it doesn't teach outgoing young cord that goes to Institute, a young who she Charles Charles Cingal Eugene V coffee, that's definitely Oh gosh I'm.
Speaker Change #147: That's one of the things that you are that you're the only issues, but oh I'm sorry.
Speaker Change #148: <unk> latest projects should be child should be.
Xueqing Zhang: ????????????,????????????,????????????????,????VV??????????,???????????????,????????????????????????,??? Sponsored ADR Class Z ????????????,????????????,????????????????,????VV??????????,?????????????,????????????????????????,??? I think the first thing is that we still maintain this obvious growth in the original category of advantages. Because Bilibili is actually on some of the new categories, including some of the competitive advantages of some of the categories, such as knowledge, such as, For example, digital technology is very obvious, and these are also users' needs, so if we keep our competitiveness in these categories, it will bring growth.
Speaker Change #149: Thanks management for taking my question My question about the user engagement.
Speaker Change #149: Companies, such as Coca comes down a sequential high.
Speaker Change #150: The average daily maybe all such in the Gulf Coast.
Speaker Change #151: So what's the main driver behind that and which content categories are expected to have great potential in the future. Thank you.
Speaker Change #151: Yeah.
Speaker Change #152: Oh, yes.
Speaker Change #153: Yes, a woman.
Speaker Change #152: Yes.
Speaker Change #154: Certainly sounds really gotten bulge until you go maintain where you got some jamba. Even if these are just a shirt that you shipped him later sensors a bulk.
Speaker Change #154: Alcohol that make our Egypt and later you should layer on days, yeah $2 million.
Speaker Change #154: Some people call centers.
Speaker Change #154: Hum.
Speaker Change #154: Now, you'll see socal format cause you to hit tougher coming together.
Speaker Change #155: Okay to ship, let's say you should go for that.
Speaker Change #155: So you know how does a woman sorry, two shipping days to report show them that it was only published in Quebec.
Xueqing Zhang: From last year to this year, the number of times the number of videos played in the technology knowledge game increased by 37%, 28%, and 24%. I am using this example to say that if we continue to do our original advantage categories well, it will bring new growth. So, as a matter of fact, Bilibili has its own content categories that's very advantageous compared to other platforms, and users have a strong mindset of looking for that type of content on Bilibili.
Speaker Change #155: With that I was talking about women Shunyata Ptolemy Virginia.
Could you just say you'll ship to the shipping portfolio and I think it won't be its own dolphin theatre central sleep apnea arthropods your backyard.
Speaker Change #155: Does it even until enrollment yes you.
Speaker Change #157: You should have in there.
Speaker Change #156: We'll see how Q1 of them goes Tyler maybe sooner than that.
Speaker Change #158: So as a matter of fact, Billy Billy has its own content categories, that's very advantageous compared to other platforms and use or have a strong mindset of looking for that type of content until they believe this includes.
Xin Fan: This includes knowledge, ACG, tech, and digital products, and et cetera. And users, and for this type of content category, users have hardcore needs. They naturally want to watch this type of content.
Speaker Change #158: No image AC Chi Tak, and digital products, and etcetera and users and for this type of content categories to use have hardcore needs. They they.
Xin Fan: As long as we stay competitive, continue to enhance our leadership in this category, we will experience natural traffic growth. For example, this year that we're looking at the technology, tech, knowledge, and game sector. For this sector, VV has increased 37%, 28%, and 24% respectively. ?????????????????,???????????????????????????? ?????????????B???????????24??,24???,??????????,????????????? ?????????????????????????????????????????? ????????????????????????,?????????????????????????,??????????????????????? As we enhance our leadership counting categories, we are also actively exploring new categories. For example, the average age of a Bilibili user is already 24 years, so for some of the demographics, By theory, their, their children could be around one year old.
Speaker Change #158: Naturally want to watch this type of content as long as we stay competitive stay.
Speaker Change #158: I mean and to enhance our leadership in this category, we will experience natural traffic growth for example.
Speaker Change #158: This year.
Speaker Change #158: We are looking at the technology now.
Speaker Change #158: Tech knowledge and game sector.
Speaker Change #158: This sectors BV has increased 37%, 28% and 24% respectively.
Speaker Change #159: Roche one of the things a woman.
Speaker Change #159: I think you also carriers on tissue, So why July though will need.
Speaker Change #160: Yeah, well machines that are hitting one quarter Sundar fuse holder you go watch it to be.
Speaker Change #160: It was all of them are vulnerable and it sounds that these annual quota conveniently.
Speaker Change #160: Susan.
And I'll tell you I'm glad to welcome Bill.
Speaker Change #160: So a little harder for almost a year or so.
Speaker Change #161: Josh Joshua She's huh.
Speaker Change #161: That woman tenure, some doctors being down quite a bit when you were talking about with your battery pack.
Speaker Change #161: But you should see so called Joshua.
Speaker Change #161: About noon sharp I'm just social.
Speaker Change #161: Women's actually shipping lays out sure clean adult daughter.
Speaker Change #161: No.
Speaker Change #161: Honestly.
Speaker Change #161: He has our leadership counting categories also access.
Speaker Change #161: In new categories. For example, our average age the average age of buildup of user is already a 24 year or so out for some of the demographics.
Xin Fan: So we've naturally seen those content consumption needs rise, including baby maternity, automotive, and home appliances, etc. For example, in Q1, video views for baby and maternity grew by over 100%. And we're also seeing strong growth for automotive and home appliances, and home decoration.
Speaker Change #161: By theory, there their children to be around one yourself. So we've seen naturally see those content consumption needs right says, including baby and maternity automotive and home appliances, etc. For at some point Q1 video views in baby and maternity grew by over one.
Speaker Change #161: 100% and we're also seeing strong growth for automotive and home appliances home decoration.
Xin Fan: And the rapid development of these new products can also bring more content creators to join and realize a more benign cycle of our ecology. At the same time, for these emerging content categories, we are naturally attracting more content creators to join our platform, forming a virtuous cycle. Yes, because of the two strategies I mentioned just now.
Speaker Change #162: Pardon me if that's all it is Simpson led the legal question.
Speaker Change #163: Pedro Pelican, daughter.
Those are the childhood also tell them that some type of yugo going down it seems though you got.
Speaker Change #163: At the same time for us.
Speaker Change #163: For this emerging content categories.
Speaker Change #163: Actually attracting more content creators to join our platform, forming a virtuous cycle.
Speaker Change #165: So are you able to convert yeah, Nico conveniently whatsoever women kill you either do hear you that won't be done Josh but video switching.
Xin Fan: Our Q1 DAU has increased by 9%, and the video VV has increased by 22%. In addition, the daily usage of our users has also set a new record of 105 minutes. I think this fully proves that the whole Bilibili ecosystem is developing in a healthy way. We will also continue this healthy growth. So in the first quarter, our overall community has delivered strong growth. Our DAU grew by 9%, and our video views grew by 22%. The daily average user time spent has reached a historical high of 105 minutes.
Speaker Change #163: We've either do the comps.
Speaker Change #164: Please I'm not sure but Josh.
Speaker Change #164: At the heart of a woman.
Speaker Change #166: She wishes.
Speaker Change #167: You bet.
Speaker Change #168: The company showed me some good fees under you got some higher touches that Jim shooter Thunder, we'll make it cheaper Tim country here that summed up to yourself.
Speaker Change #168: So in the first quarter are up.
Speaker Change #169: Our overall community has delivered a strong growth RTA you grew by 9% and our video views grew by 22%. The daily average user time spend has reached a historical high of 105 minutes. This all demonstrate our.
Xin Fan: This all demonstrates that our strategy of content development and community operation is very effective. We will continue to execute this strategy and achieve sustainable growth going forward. Operator, next question, please.
Speaker Change #169: Our strategy of content development and community operation is very expensive.
Speaker Change #169: We will continue to execute our strategy and to achieve sustainable growth going forward.
Speaker Change #171: Operator next question please.
Operator: Thank you. One moment for the next question. Our next question comes from Felix Liu from UPS. Please go ahead.
Speaker Change #170: Thank you one moment for the next question.
Speaker Change #172: Our next question comes from Felix Liu from UBS. Please go ahead.
Felix Liu: Thank you, Management, for taking my question, and congratulations on the good GP margin performance in the first quarter. My question is also about the interest rate, and I would like to see which aspect of the interest rate is better. In addition, how do you view the company's long-term profit margin and whether the profit target for this third quarter has changed? Thank you, Management, for taking my question, and congratulations on the good GP margin performance in the first quarter.
Speaker Change #170: Yes.
Speaker Change #173: Says they want anytime tissue over the two and you can see a conflict in Kenya and use it towards the bigger the multitude of dose yet.
Speaker Change #174: When he is you want them all you do yourself kind of catches a woman cheeky shouldnt come in sort of the multifamily and so would it be all.
Speaker Change #174: They wanted to comeback concert drunk antidote.
Speaker Change #174: You see a woman genius and you do that you're that you leave more valuable it will be a lot.
Speaker Change #175: Thank you management for taking my question and congratulations on the good GP margin performance in the first quarter, but I check and you know what.
Felix Liu: May I check what specific areas you did well in cost control? How do you see the mid-long-term margin outlook as well as the third quarter profitability target? Is there any update on that? Thank you.
Speaker Change #176: What specific areas are.
Speaker Change #177: You did well in cost control, how do you see them in the long term margin outlook as well as the.
Speaker Change #177: The third quarter profitability target, if any update to that thank you.
Sam Tan: I will take this question. In Q1, our total revenue grew by 12% when cost of revenue only increased by 2% year-over-year. Hence, our gross profit increased by 45%. Thanks to improved operational efficiency, our non-GAAP operating expenses decreased by 2% year-over-year and 8% quarter-over-quarter, which led to further loss reduction.
Speaker Change #177: Okay.
Speaker Change #178: That's fair.
Speaker Change #179: Our take this question in Q1, our total revenue grew by 12% when cost of revenue only increased by 2% year over year. So our gross profit increased by 45%.
Speaker Change #178: <unk>.
Speaker Change #178: Thanks for the improved operational efficiency, our non-GAAP operating expenses decreased by 2% year over year, and 8% quarter over quarter, which lead to a further loss reduction.
Sam Tan: Our path to profitability is mainly driven by revenue growth and the continuous growth of improvement, which we believe is more sustainable. Specifically, the gross profit margin has increased, reaching around 28% in Q1. The main reason for this improvement is the high-margin business, such as our asset revenue, which increased by 31% over a year, and now the sales mix has come to around 29%. Based on the current business development trends, we expect that in Q2 and Q3, with the continuous rapid growth of the advertising business and the recovery of our game business, will resume the year-over-year growth. Our gross profit margin will further improve quarter-over-quarter and reach 30% in Q3, and we will achieve a non-gap operating break-even in Q3. We are quite confident that we can achieve that.
Speaker Change #178: Our path to profitability is mainly driven by the revenue growth and the continuous growth profit improvement, which we believe is more sustainable.
Speaker Change #178: Specifically the gross profit margin has increased.
Speaker Change #178: Reaching like 28% in Q1, the main reason for this improvement.
Speaker Change #178: Youll be able to buy the high margin business, such kind of or our other revenue, which increased by 31% increase year over year.
Speaker Change #178: And now the South Smith had come to like 29%.
Speaker Change #178: Based on the current business development trends, we expect that in Q2 and Q3 with the continuous rapid growth of the advertising business and the recovery of our derm business well.
Speaker Change #178: Resume the year over year growth, our gross profit margin will further improve quarter over quarter and to reach 30% gross profit margin in Q3, and we were achieving non-GAAP operating.
Speaker Change #178: non-GAAP operating.
Speaker Change #178: Breakeven in Q3.
Speaker Change #178: We are quite confident to achieve that.
Sam Tan: In the longer term, the gross profit margin will depend on the scale of revenue and the mix of each business line. We still believe there is great potential there. Meanwhile, achieving break-even is just our first step. We will allocate more resources to enhancing our commercialization efficiency while continuing to refine the operational strategies to achieve sustained improvements in both the gross profit margin and the net profit margin. Thanks for the question. Thank you. Our last question comes from the line of Lincoln Kong from Goldman Sachs. Please go ahead.
Speaker Change #178: The longer term the gross profit margin well it depends on the scale of the revenue.
Speaker Change #178: The mix of the each business line.
Speaker Change #178: We still believe the upgrade potential there. Meanwhile, the attributing pushed even just our first step we will allocate more resources.
Speaker Change #178: Hosting our commercialization efficiency, while continuing to refine the operation those strategies to achieve sustained improvements in both of the gross profit margin and net profit margin.
Speaker Change #180: Thanks for your question.
Speaker Change #181: Thank you next question comes from the line of Lincoln, calling from Goldman Sachs. Please go ahead.
Lincoln Kong: Thank you, Dr. Guan, for answering my question. I would like to ask about the payment business. I see that the company now has nearly 30 million payment users. In addition to the traditional membership, we have also launched some new services such as upzoo charging, payment courses, and social creation. How does the company think about the future development of our community-based content payment business? My question is about the paying users business. We see that the company now has close to 30 million paying users.
Speaker Change #180: Sure.
Speaker Change #180: Okay.
Speaker Change #183: So when you start in particular for year one.
Speaker Change #182: So youre kind of concessionary with shifting of Sunshine Windows for you I'm not.
Speaker Change #184: I'm not sure what you were trying to what you are hearing.
Speaker Change #185: Trace really share baccarat, after which went down off of a cushion so very transparent.
Speaker Change #185: Correct.
Speaker Change #186: Jim would you consider requests for color around potential George you should shoot a chicken Merrill for you where that you prefer to have attention.
Speaker Change #187: So thank you management for taking my question.
Speaker Change #187: So my question is about the.
Speaker Change #187: <unk>.
Speaker Change #187: Paying users.
Speaker Change #188: So we see the company is now close to a 30 minute paying users. So on top of the traditional subscription membership. We have also successfully launched our value added service such as.
Lincoln Kong: On top of the traditional subscription membership, we have also successfully launched value-added services such as content creator charging, payment courses, and community decoration. How does the company think about the prospects of this community-based content payment business? Thank you.
Speaker Change #189: Come from credit or charging the pay causes cell death.
Speaker Change #190: Declaration, So how does the company think about it.
Speaker Change #191: The prospects of this.
Speaker Change #192: Community based content payment business. Thank you.
Xin Fan: First of all, Bilibili is actually a video community based on interest as a point of reference. So Bilibili's users always have three characteristics, which are high flow rate, high activity, and high upvote value. So users' sense of community recognition and sense of belonging will become a mode of wiretapping that allows Bilibili to operate at any time by paying for content or rights in the entire community. Thus, Bilibili has always been an interest-based video community. And Bilibili user has three key characters.
Speaker Change #193: Oh sure Cynthia and tissue that you think should go live miles yeah that you're shifting search I'm not sure you'd be than we do.
Speaker Change #194: Sandra to Libya, and she'll go looser in golf ball, he hasn't gone out yet.
Speaker Change #195: Going forward, though you should choose only young guy He's equation will get Joe would be and that's what I said should be met and they often say about Chinese full face should be that sort of show me that you don't get a Jim Walsh.
Speaker Change #196: So deliberately has always been the interest based video community and delivery of a user has three all key characters one a high retention level high engagement level and high ARPA.
Xin Fan: One, high retention level, high engagement level, and high ARPU. And because all the users have a strong sense of belonging towards our community and also have a sense of belonging towards the community, it all makes content, pay for content, is a natural monetization method for Bilibili. Sponsored ADR Class Z, And on our premium membership business, at the end of the first quarter, we had close to 22 million premium paid members. And an interesting number is that 80% of them chose a long-term commitment payment, aka the monthly automated subscription or yearly subscription.
Speaker Change #196: And because all the users has strong sense of drawing towards our community and also have a sense of blind torn for community. It all makes a content content pay for our content is a natural monetization math therefore building.
Speaker Change #197: But that would be that you would see just yesterday easy to memorial probably you know getting turned down but definitely you know Sanjay you won't go without even though Easter show tissue well wishes for pneumonia in the hardship policy shown that actually I shouldn't say letting me until exactly unfold Changzhou Cheetah don't feel they follow ship feeling you should you should shake she did she actually no.
Speaker Change #198: How do you go about it.
Speaker Change #198: And.
Speaker Change #199: On our premium membership business at the end of first quarter, we have close to 22 million premium paid members and this I interesting number as that 80% of them chose a long term commitment payment AK.
Speaker Change #199: The mountie automate automate at a subscription or a yearly subscription. This is what sets us apart from the regular content platforms.
Xin Fan: This is what sets us apart from the regular content platform. In addition to live streaming and the large member business, we have been continuously exploring and digging for some commercial models that combine community and content for the past one or two years. These include paid classes, charging, community decoration, and so on. In fact, these are all for users to get a better sense of achievement and a better experience after paying. At the same time, they can also express their support for their favorite app group or favorite IP address.
Speaker Change #200: G. HN boy is exactly right you show a major.
Speaker Change #201: Sure the torrential don't watch it should shoot their name with you. So they just show you more <expletive> about Joe Bob Corker down $19, if somebody could tangshan did she sometimes I don't know if the juncture yet, but she's just yeah. Those you don't pull whaler I'm just you felt they just.
Speaker Change #201: Just going on quarter to holiday usual W. E T. A quality, yes, toshi I'll keep you at that time and do it when the object quite a shock when the IP the CIT shifts onto a tone or just yes, finishing the follow suit, yes should come on these don't seem to have shown that she adult young something I said sugar.
Xin Fan: In fact, the app group, through these new ways, is also a new income channel for them, allowing the entire community to enter a healthier political cycle. So, on top of traditional live broadcasting and premium membership, we have continuously explored more business models to better combine our community and content. This includes the premium courses, the charging station for our content creators, as well as the cosmetic custom business. And users generally will gain more experience and feel better after paying for this type of service.
Speaker Change #201: You don't don't kick in Congo, Egypt Junction one.
Speaker Change #202: So on top of traditional eye Brockhaus, Dan premium membership, we have continuously explore more business model to come better combine our community and content. This includes the premium courses charging.
Speaker Change #202: Charging station for our content creators as well as the cosmetic cost him a fitness and users generally will gain more experience and feel better after paying for this type of service at the same time. They can also expressed their my keen appreciation towards there.
Xin Fan: At the same time, they can also express their liking and appreciation for their favorite content creator or their favorite IP. At the same time, content creators can gain a new avenue of monetization. This is forming a virtuous growth cycle for our community. In Q1, the total income of members, paid classes, charging, and other competitive services was close to 100 million yuan. So here you can see that the paid classes, in addition to the professional courses we are more familiar with, also cover diverse courses such as life skills, interest knowledge, and emotions.
Speaker Change #202: Favorite content creator or their favorite IP at the same time, our content creator can gain a new avenue of monetization. This is forming a virtuous growth cycle for our community.
Speaker Change #204: Is that Q E power quickly then so if I could Tom told in.
Speaker Change #203: Don't know.
Speaker Change #206: Joe just that don't show really Dizzy should are you sure you say Tony could come down so they could tie tullo of MP they'll try and don't see at all the Jai Alai the Cushing eat why yes, well Guy let's show, but she knows she can sheet, usually the Qingdao Adobe uncontrolled.
Xin Fan: This class has also become one of the main ways for the Bilibili Knowledge Zone app group to develop. In Q1, the total income of members, paid classes, and other competitive services was more than 450%, and the total income was more than 45%. In Q1, the premium membership, premium courses, and charging, as well as the Community Costumes, combined together, their total revenue was already close to RMB 1 billion. First, on top of the traditional professional courses, our courses cover a wider category, including life skills, interest-based knowledge, and even relationships. It's more diverse.
Speaker Change #205: Julia Chung Millipedes and she said she aren't European agenda.
Speaker Change #205: Switching to meet a QE either for a quote unquote the onto the junk. He showed you Tony Jones toggle up at this time I will share a solar plenty Jones aren't yet told about this issue.
Speaker Change #207: In Q1, the premium membership premium courses charging as well as the.
Speaker Change #207: Community costumes combine together their total revenue is already close to RMB 1 billion.
Speaker Change #207: First is on the premium courses on top of the traditional professional courses are of course as covers a wider category, including including life skills that interest base knowledge.
Speaker Change #207: And then relationships, it's more of a diversified and the premium courses as already become a primary and important avenues for our content creator in the knowledge sector to monetize.
Xin Fan: And the premium courses have already become a primary and important avenues for our content creators in the knowledge sector to monetize. In Q1, the number of content creators that gained revenue from the premium courses grew by over 450%, and their overall revenue also increased by 45% year over year. Now, let's take a look at the charging mode, which has been upgraded.
Speaker Change #207: And in Q1, the number of content creator in that game.
Speaker Change #207: Revenue from the premium courses has grew by over 450%.
Speaker Change #207: And there the overall revenue also increased by 45% year over year.
Speaker Change #208: Like for like in Washington.
Xin Fan: In fact, QE has participated in more than 47% of the total upvotes for August. In the past, there was a case that everyone paid more attention to, which is our upvote called Ten Channels. In the past six months, they only uploaded four high-quality documentaries. So far, they have received more than 10 million charging income. It's all fans' support for them and their content.
Speaker Change #209: Marshall when facing a chunky he's a QE tiny chunk sheet says about your children up to Tony is how water that is she of course, you had a peak.
Speaker Change #210: P J.
Speaker Change #211: Just one sort of Andy just show them the object just shifting though what's your pardon me and tell me how much it shouldn't.
Speaker Change #211: So let's go down the tubes in the nail let's yeah. It just shows that tied you showed a chart where you can run the Changi and show you those should essentially at the time that the CIT should do it on the nail.
Xin Fan: So, here you can see that in the future, there is a lot of room for imagination in the very popular short films, short documentaries, and short animations on Bilibili. And secondly, we have upgraded our charging program recently to extend it to exclusive fan charging videos. In Q1, the number of content creators that received income from the charging project increased 47% year over year, and the total GMV of the charging program increased 125% year over year.
Speaker Change #211: Oh sure Yeah, that's what it takes the long hauls that sounds like all the time.
Speaker Change #211: I'm sure you don't see sugar in a time that don't have hints at these actually transact that assessment called agenda.
Speaker Change #211: And secondly is that we have upgraded our charging program recently to extend it to exclusive fantod doing videos.
Speaker Change #212: In Q1, the number of content creator that received income from the charging project has increased 47%.
Speaker Change #212: Year over year, and the total G. N V of the charging program has increased 125% year over year. An example would be one of our content creator named shipping it all over the past six months.
Xin Fan: An example would be one of our content creators named Xu Pingdao. Over the past six months, he released four episodes of high-quality documentaries, and at the end of the first half of May, his GMV exceeded RMB 10 million.
Speaker Change #212: He released four episodes of high quality documentaries and at the end of the first half of May.
Speaker Change #212: He's GMB has exceeded RMB 10 million and from this case, we do think that in many new areas such as the shore play short documentaries and short movies are actual has great potential and we are quite excited about.
Xin Fan: And from this case, we do think that many new areas, such as the short play, short documentaries, and short movies, actually have great potential, and we are quite excited about Bilibili. Sponsored ADR Class Z, In the second half of this year, we plan to systematically review and upgrade our value-added services, including those content services. We are quite confident that this part of the business will continue to bring additional revenue and help our content creators to gain more revenue.
Speaker Change #212: Visibility.
Speaker Change #212: Yeah.
Speaker Change #213: Southern yellow, which one do you think that they should shouldn't need that you said challenges. Luigi May also say you would just you don't see a shooting Ashanti Hudson. She thinks she said they crank it up to be done at that I go into the trunk show kind of show you guys show you about tissue.
Speaker Change #214: And the second half of this year, we plan to systematically review and upgrade our value added services, including those content services. We are quite confident for this part of the business will continue to bring additional revenue and help.
Speaker Change #214: Our content creator to gain more revenue thank.
Xin Fan: Thank you. Operator, that concludes this question. Thank you. And that concludes the question and answer session. Thank you once again for joining Bilibili's First Quarter 2024 Financial Results and Business Update Conference call. If you have any further questions, please contact Juliet Yang, Bilibili's Executive IR Director at Biasante Financial Communications. Contact information for IR in both China and the U.S. can be found in today's press release. Thank you, and have a good day. [inaudible]
Speaker Change #215: Thank you operator that concludes our question.
Speaker Change #216: Thank you and that concludes the question and answer session. Thank you once again for joining Gilead released first quarter 2024 financial results and business update conference call today.
Speaker Change #217: If you have any further questions. Please contact Juliet Yang.
Speaker Change #218: With respect to the IR director of <unk>.
<unk> financial communications.
Speaker Change #218: Contact information for IR in both China, and the U S can be found on today's press release, Thank you and have a great day.
Speaker Change #218:
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Speaker Change #218: Okay.
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