BEIJING, August 21 (TMTPost)— China’s leading video community for young generations Bilibili Inc. reconfirmed its  target of breakeven even it missed at the top and bottom line in the second quarter of the year.

Credit：Visual China

Bilibili said its net revenue increased 8.1% year-over-year (YoY) to RMB5.3 billion (US$731.5 million) in the quarter ended June 30, missing the analysts’ estimated RMB5.43 billion, and the net loss that quarter narrowed 23% YoY to RMB1.5 billion, still worse than expectation of RMB2.01 billion. Gross profit that quarter jumped 66% YoY to RMB1.2 billion , with the profit margin of 23.1%, compared with 15.0% a year ago.

Bilibili’s core businesses delivered much stronger growth in the June quarter. Revenue from advertising surged 36% YoY to RMB1.6 billion, mainly attributable to the Company’s improved advertising product offerings and enhanced advertising efficiency. Value-added services brought RMB2.3 billion, representing a YoY 9% increase, led by an increase in the average revenues generated from each paying user for the company’s value-added services, including live broadcasting and other value-added services.

Bilibili chairman and CEO Chen Rui suggested progress in monetization of live broadcasting in the second quarter. He noted the number of monthly active live broadcasting hosts increased 15% YoY that quarter.As Bilibili further integrate live broadcasting within its video operations, it opened up multiple opportunities to expand and diversify our live broadcasting content by converting content creators into live broadcasting hosts, Chen said.

Chen said Bilibili has already discovered an effective way to convert our high-quality traffic into increasing top-line through advertising and live broadcasting. With sales and marketing down 22% YoY in the second quarter, Bilibili’s daily active users (DAUs) grew by 15% to 96.5 million, and daily user time spent reached 96 to 94 minutes, the record high of the sem quarter in the company’s history, Chen told analysts at an earnings call.

Bilibili was still lack of new game titles in the second quarter. But Chen highlighted brand and Sparkle offerings as a key force to drive ad revenue. Specifically by introducing video commerce products, ad revenues from the e-commerce industry increased 144% YoY in the second quarter. Meanwhile, content creators were able to benefit from more ad opportunities. The number of creators who earned income through video commerce grew over 220% YoY.

As to the main driver of ad business, Bilibili chief operating officer Carly Lee said the one horizontal one vertical strategy the management mentioned in the first quarter is beginning to pay off. The one horizontal, actually referring to the technology middle platform and the data capability, includes optimizing the recommendation model, improving the advertising inventory and matching efficiency and the application of artificial intelligence-generated content (AIGC) to improve overall ad efficiency. The one vertical is referring to the six customized industry app models, including games, e-commerce, FMCG, automotive and Internet service; among which, e-commerce and games starting to show very positive results.

In its updated outlook, Bilibili cut its net revenue forecast for the full year 2023 to between RMB22.5 billion and RMB23.5 billion, down from the previous guidance between RMB24.0 billion and RMB26.0 billion. The revised expectation is largely due to the delay of certain game launches, as well as lower than expected revenue contribution from non-core businesses such as IP derivatives and others, Bilibili said.

Chen stressed the key financial goal of this year is to improve gross profit and narrow losses. Bilibiil is committed to further improve our gross profit and control our expenses, and meaningfully cut down losses in the second half of this year, and reach our breakeven target by 2024, the executive said. He told analysts that Bilibili’s core business remains intact and its confidence in the quality of the game and revenue is unchanged since the guidance update is for a temporary phase change. The company expect the advertising and live broadcasting business will sustain a very healthy and solid growth in the next half of the year and throughout 2024.