Bilibili (NASDAQ:BILI,HKEX:9626; referred to as "bilibili") announced his results for the first quarter of this year after the Hong Kong stock market opened on May 23rd. Bilibili's US stock price fluctuated significantly that night.

In fact, bilibili's current financial report is actually not bad-commercialization is advancing steadily, business efficiency continues to improve, and the pace of loss reduction even exceeds market expectations.

According to the financial report, bilibili's total revenue for that quarter was 56.Powerballresultsforyesterdaypayouts60 billion yuan (RMB, the same as below), up 12% from the same period last year; in the same period, gross profit increased 45% year-on-year to 1.605 billion yuan, gross profit margin rose to 28.3%, achieving seven consecutive quarters of month-on-month increase; adjusted net loss narrowed 56% year-on-year to 456 million yuan, slightly better than market expectations of 498 million yuan.

In addition, it is worth mentioning that bilibili's net operating cash flow for the current period is 638 million yuan, which has achieved positive operating cash flow for three consecutive quarters. Cash flow, as the source of real profits, also released a favorable signal for bilibili's self-proof. You know, the reason why Amazon has been losing money for a long time lies in its continuous positive cash flow.

It seems that bilibili got off to a bright start to the year and achieved remarkable results in reducing losses, but he may have to run a little faster if he wants to achieve his profit target in the third quarter.

On the one hand, bilibili has to keep looking for increments and "adding" in business.

Among bilibili's four major businesses, value-added services require high investment in homemade content, and it is a bit unrealistic for bilibili, who is eager to prove his ability to make money to the market, to take the lead; e-commerce business is too small to carry the banner. Therefore, bilibili wants to make a profit in the short term, most likely still have to rely on high gross margin advertising business and game business.

The reason why bilibili's commercial performance is slightly better than expected this quarter is mainly due to the accelerated realization of advertising and value-added business. Although the game has not yet picked up, there are obvious signs of growth.

Advertising business, as the "number one hero" of bilibili's increment in recent years, is still the biggest focus.

Although Q1 is the off-season for the advertising industry, bilibili's advertising revenue still achieved a high growth of 31 per cent to 1.67 billion yuan, further accelerating month-on-month, with the growth rate of effect advertising revenue exceeding 50 per cent. This is mainly due to the improvement of traffic, the efficiency of advertising tools, and the increase of advertising inventory brought about by rich scenes.

According to Li Mi, vice chairman and COO of bilibili, Q1 advertising revenue mainly comes from games, 3C digital home appliances and boutique e-commerce, and Q2 will be further expanded to automobile, network service, medical care, education and other industries. This means that the future growth space of bilibili's advertising business is still considerable.

In addition, another major support of bilibili's advertising revenue lies in its increasingly prosperous trading ecology.

On the one hand, users' awareness of the transaction scenario is getting stronger and stronger. According to the data, the number of Q1 users watching transaction content reached 37.2 million, double that of the same period last year.

On the other hand, there are more and more UP owners who make money by bringing goods. The number of UP owners who earn revenue from carrying goods has doubled compared with the same period last year. As far as the industry is concerned, the transaction volume of 3C home appliances, food and beverage, clothing and cosmetics is the largest. Among them, this quarter 3C digital category, women's clothing category growth is outstanding. Public data show that the volume of 3C digital goods-carrying transactions in Q1 station has increased by more than 230% compared with the same period last year, and the volume of goods-carrying transactions in women's clothing categories has exceeded that of last year.

Bilibili, who is sitting on a piece of "fertile ground" for trading, is naturally regarded as a "guest of honor" by all the major e-commerce platforms.

Considering that bilibili will continue to adhere to the "big open loop" strategy, deepen cooperation with platforms such as Ali, JD.com, pinduoduo and VIPSHOP, and with the help of smarter launch analysis tools, it is expected to accelerate the rise of Q2 advertising and transaction volume. According to Li Mi, during the "618" period this year, bilibili's overall platform budget increased by more than 30%, and the merchant budget increased by more than 250%.

Of course, as more and more UP owners taste the benefits of bringing goods, it will also drive more UP owners to "taste fresh", thus promoting the commercialization process of bilibili, which in turn will lead to the promotion of UP main income. Only when the platform is commercialized can UP owners make more money. Of course, bilibili also provides a more diversified income model for UP owners.

In addition, the value-added service business is still bilibili's "Poseidon needle", Q1 revenue of 2.53 billion yuan, an increase of 17% over the same period last year, also slightly exceeding market expectations. In terms of large membership business, the total number of large members reached 21.9 million in the first quarter, of which more than 80% were annual subscription or automatic renewal members, with steady growth.

At present, bilibili's game shows no sign of recovery, but Q2 will have two single-generation and one intermodal mobile games online, of which the "three Kingdoms"PowerballresultsforyesterdaypayoutsAt present, it is reported that the number of reservations has exceeded 2 million.

(source: public information)

In the long run, bilibili, as the largest game content community in China, has unique game community content and player concentration. The double-digit growth rate of Q1 game advertising is a testament to its unique commercial value in the game field.

In addition to working hard on the business and intensive cultivation, bilibili has to constantly reduce the cost and increase efficiency.

The continued rise in gross margin at Station B indicates that cost control continues to be effective. In addition, bilibili has greatly reduced his losses this quarter, benefiting from a reduction in R & D expenditure. In addition, the sales rates for this quarter are lower than the same period last year.

It should be pointed out that content cost, as the bulk of the cost, is relatively rigid. At the same time, because the bandwidth cost compression of the video platform itself will not be too large, so the space for cost self-reduction is still relatively limited, and the subsequent improvement of gross profit margin may have to rely on improving cash efficiency.

If you want to run fast, the chassis must be stable. In this regard, bilibili's strength is obvious to all.

First, in terms of the number of users, both DAU and MAU,Q1 hit record highs of 102 million and 342 million respectively.

(source: BoCom International)

Second, maintain high viscosity and keep DAU/MAU at 29.9%. The average daily time is 105 minutes, which is also a record high.

In addition, the characteristic section is booming, and the broadcast volume of knowledge, games, movies and entertainment in Q1 station has increased by more than 20% compared with the same period last year. The AI category increased by more than 80% compared with the same period last year, and the related UP daily active users increased by more than 60% year on year. Bilibili has become one of the most intelligent communities in AI content and the core discussion field of new energy vehicles. At the same time, new categories continue to emerge, such as home decoration, travel, fitness, fashion, parents and children, and so on.

In short, bilibili's business value and inherent resilience are still prominent, the current trend is still good, it is worth more patience. From the perspective of the capital market, the short-term market is more of a game between capital and emotion, but in the long run, once it is identified as high-quality stocks, the callback is an opportunity.