Bilibili Inc.

Good day and welcome to the Bilibili 2020 Fourth Quarter and Full Year Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Juliette Yang, Senior Director of Investor Relations. Please go ahead.

Thank you, Operator. Please note the discussion today will contain forward-looking statements relating to the company's future performance. and are intended to qualify the safe harbor from liability as established by the U.S. Private Security Litigation Reform Act. Such statements are not guarantees of the future performance and are subject to certain risks and uncertainties, assumptions, and other factors. Some of these risks are beyond the company's control and could cause actual results to differ materially from those mentioned in today's press release and in this discussion. A general discussion of the risk factors that could affect Bilibili's business and financial results is included in certain filings of the company with the security and exchange commissions. The company does not undertake any obligation to update this forward-looking information except as required by law. During today's call, management will also discuss certain non-GAAP financial measures for comparison purpose only. For a definition of non-GAAP financial measures and a reconciliation of GAAP to non-GAAP financial results, please see the 2020 fourth quarter and full year financial results news release 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 Bilibili Investor Relations website at ir.bilibili.com. Joining us today on the call from Bilibili Senior Management are Mr. Ray Chen, Chairman of the Board and Chief Executive Officer, Ms. Kali Lee, Vice Chairwoman of the Board and Chief Operating Officer, and Mr. Sam Phan, Chief Financial Officer. And I will now turn the call over to Mr. Phan, who will read prepared remarks on behalf of Mr. Chen.

Thank you, Juliette. And thank you everyone for participating in our 2020 fourth quarter and fiscal year-end conference call. I'm pleased to deliver today's opening remarks on behalf of Mr. Chen. We had an exceptional year in 2020. Through a challenging micro-environment, we remained focused on our growth strategies and achieved record results. In the fourth quarter, our MAUs reached 202 million, up 55% year-over-year, marking a new starting point for our growth journey. In addition, mobile MAUs were up 61% year-over-year to 187 million. On the user engagement front, we had 54 million DAUs of 42% year-over-year. Our users remained highly engaged and spent an average 75 minutes on our platform daily in the first quarter, reflecting the strong appeal of Bilibili content offerings and the thickness of our growing community. The high quality and rapid growth of our user base laid a solid foundation for our commercialization efforts. In the fourth quarter, our premium content services continued to drive premium user conversion. MPUs reached 18 million, up 103% year-over-year. Our overall paying ratio increased to 8.9% compared with 6.8% in the same period last year. At the same time, more business partners are turning to Bilibili to reach and engage our massive audience base of young generations. Our advertising business grew by 149% in the fourth quarter year-over-year, marking the seventh consecutive quarter of accelerated growth on year-over-year basis. On the back of this momentum, our total revenues reached another record high of RMB 3.8 billion in the fourth quarter and RMB 12 billion for the full year. This represents impressive year-over-year growth of 91% and 77% respectively. We attribute our success to our broad content library, engaging community experience, and rising brand awareness. In 2020, we made some key moves that resulted in a significant boost to our brand. We kicked off 2020 with a blockbuster New Year's Eve Gala, followed by our Hou Lang, Ru Hai, Xi Xiang Feng marketing trilogy, and introduced our brand proposition, All the Videos You Like. We carried these efforts into the fourth quarter and across the year with our second New Year's Eve Gala. the most beautiful night of 2020. During the live broadcast night, the popularity index more than tripled compared with our 2019 event, achieving 120 million playbacks within 48 hours. These successful marketing initiatives have allowed us to connect and resonate with more users and reach a more diverse audience, and we believe We can continue with the strong momentum in 2021. Building on the success of our 2020 user growth, one thing is clear. Our appeal is much broader and reaches beyond Gen Z. We are now widely recognized by a larger audience that now includes those born between 1985 to 2009, popularly referred to as the Gen Z plus demographic. This group of users share similar attributes and we have established and parallelized myShare among these Vibrant Gen Z Plus community. According to the iResearch latest report, over 86% of our MAUs were below the age of 35 in 2020. This group is the driving force for all kinds of consumption in China, especially the video-based consumption market. In 2019, GenZ Plus contributed 65% of the video-based market dollars. Video continues to be integrated with more and more aspects of daily lives. It is becoming the primary means of communicating, entertaining, and exchanging information. This visualization trend is creating massive market opportunities in China. The video-based market is expected to reach RMB 1.2 billion. in the revenues generated by nearly 1.2 billion video users by 2025, according to our research. As a full-spectrum video community platform and a go-to platform for the J&D demographics, we are at the forefront of this exciting visualization opportunity. With that, I will walk you through some of our activities during the fourth quarter, beginning with our content. Our content creators are extremely important to us. Their creations represent their vision of the world around them, which reflects an influence in Gen Z plus preferences. For the fourth quarter, we had approximately 1.9 million content creators uploading 5.9 million videos per month, representing increases of 88% and 109% respectively, both year over year. We continue to provide our content creators with support on multiple levels. These include video editing tools and the tutorings that help facilitate new creations, as well as monetary rewards and our advertising platform. Most importantly, we continue to improve our algorithm to make sure the right content is distributed to the right audiences, while promoting high quality original content. These attributes are what make Bilibili the most sought-after platform for content creators to showcase their talents, share their passions, and make a living doing what they love. We continue to enhance our content offerings both in deep and in breadth. In the fourth quarter, our most popular content verticals in terms of video views were lifestyle, game, entertainment, anime, and tech knowledge. Among those leading verticals Knowledge was one of the fastest-growing verticals attracting numerous intellects to our platform to share their knowledge and insights. In the fourth quarter, our tech and knowledge verticals attracted a wider audience and had contributed a significant 10% of total video views. Meanwhile, we continue to invest in areas where we see high potential to build out new strongholds. For 2021, as we grow with our existing users and attract new ones, we have identified several areas with large and growing demand, such as automotive, home furnishing, relationships, and parenting. In January 2021, we launched the Story Mode, our new PUGV content format that allows users to enjoy short videos in vertical formats. With StoryMod, we hope to satisfy users' diverse needs by providing them with their seamless access to our high-quality content, ranging from seconds for their fragment time to minutes and hours for more immersive experiences. We are encouraged by the initial results brought by the new model. Turning to our OGV content, our years of investment in Chinese anime brought fruit in 2020. Chinese anime MAUs have surpassed Japanese anime MAUs and have become our number one category within OGB. Over 160 million users watched Chinese anime on our platform in 2020. During the year, we've released a number of popular Chinese anime titles and hit new records for attracting new users and converting them to paying members. These include Cap Rebound, Yuan Long, Daily Life of Immortal King, Xian Wang De Ri Chang Sheng Huo, Linkage, Ling Long, and the more recently launched Heaven Official's Pleasing, Tian Guan Si Fu, forming valuable API sets. In November, we heard our third annual Chinese anime press conference made by Bilibili. Here, we introduced 33 new titles that we plan to release over the next two years. In addition to market developments in China, we are excited to be a pioneer in promoting Chinese anime worldwide. Some of our international invaders include our cooperation with Sony Foundation and Netflix to steam Bilibili produced Chinese anime series around the world. Our documentary, variety shows and TV series continue to enrich our content library as well. In particular, we have been very successful with our recent endeavors in self-produced TV drama, Room for Young , and the music reality show, Rap for Youth . Not only have we attracted new users, generated sizable memberships, and advertising revenue with these additions, but we have also opened the gateway to new content verticals and formats. Turning to our community, as our user base continues to grow, particularly among the Gen Z Plus audience, we are further nurturing bonds and strengthening our community ties. In the fourth quarter, our daily video views reached 1.2 billion, up 70% year-over-year. Monthly interactions were also up by 94% year-over-year, with users generating 4.7 billion bullet chats. comments, likes, and Bilibili Momento. Our official member numbers reached new heights as well. Until the end of the fourth quarter, we surpassed the milestone of our first 100 million official members, with 103 million official members up 51% year-over-year. Our 12-month retention also remained strong, well above 80%. This consistent matrix is a strong testimony to the success of our platform and growth strategies. Turning to our commercialization progress, we diversified our game offering even further in 2020. Led by existing popular games such as Princess Connect, FGO, and Azula Line, mobile game revenue grew to RMB 1.1 billion in the fourth quarter, up 30% year-over-year. Old and new fans alike continue to find great joy in these games, driving their steady performances. Gingsheng Impact continued to win fans with massive success, and Bilibili is the game's primary Android partner in China. As for our game pipeline, we have 14 titles that have obtained approvals and are scheduled for launch. We are very excited about our new exclusive licensed games. In the upcoming quarters, we plan to bring players Sword Art Online , Artillery Gear , and Guardian Tales . As for jointly operated games, we continue to be a partner of choice for leading game developers. In 2021, we will continue to work with top developers to bring more premium games to Chinese users, such as NetEase Harry Potter and Diablo, as well as Tencent's League of Legends mobile game. Turning to our VAST business, driven by our premium memberships and live broadcasting business, revenue from VAST increased by 118% year-over-year, reaching RMB $1.2 billion in the fourth quarter. Premium memberships are on the rise, gaining viewers exclusive or advanced access to our OGB content. At the end of the fourth quarter, we had engaged 14.5 million premium members, 91% year-over-year. The majority of our members paid for annual memberships or our automated renewal programs. As a natural extension of our medium platform, we continue to build our live broadcasting content ecosystem. While more hosts are attracted to Bilibili, more content creators are leveraging our live broadcasting platform to connect with fans and showcase their talents. Having secured three years of exclusive live broadcasting rights to the League of Legends World Championship in China, we further enhance our esports content offering with the recent S10 event hitting record high viewership. Last but not least, let's review our advertising business. Thanks to our strong user growth and enhanced brand name, advertisers are even more aware of our users' value and coming to Bilibili for increased visibility. At the same time, our ad efficiency and effectiveness further improves, as our algorithm improves. Revenue from our advertising segment reached RMB $722 million, up $160 149% year-over-year in the fourth quarter. Again, food and privilege, e-commerce, skincare and cosmetics, and 3C products were the leading verticals in the fourth quarter. Our New Year Eve Gala proved to be a great job for advertisers as well. This year, we welcome the new customer brand, Yuanqi Senling, and the traditional Appearance giant, Meidi, as our key sponsors of Gala. Our results speak for themselves, and our business continues to gain momentum. Bilibili is decidedly the go-to platform capturing the hearts and minds of Generation Z+, and our audience of young users keeps growing. We have entered a new era where video is becoming the dominant vertical for people to get connected inform and entertain. The trend of visualization is only getting started. At the same time, China's overall economics is on the rise and is expected to continue with vigorous growth. We are not only helping to shape the new visualization paradigm, but also gaining market share in this huge and growing video market. In 2021, we will continue to invest in our content and our brand to expand our reach and further capitalize on this tremendous opportunity. This concludes Mr. Chen's remarks. I will now provide a brief overview of our financial results for the fourth quarter and the full year of 2020. Total net revenues for the fourth quarter will all be 3.8 billion. of 91% from the same period of 2019. In the fourth quarter, we continue to see a more balanced and diversified revenue mix. Our total net revenues breakdown by streams was approximately 29% gains, 33% bets, 19% advertising, and 19% e-commerce and other business. Cost of revenues increases by 80% year-over-year to RMB 2.9 billion. Revenue sharing cost. A key component of cost of revenues was RMB 1.3 billion, also an 80% increase from the same period in 2019. Gross profit increased by 137% year-over-year to RMB 944.1 million. Our gross margin improved to 20.6% in the first quarter, compared with 19.8% from the same period last year. Total operating expenses will only be 1.8 billion, about 126% from the same period in 2019. Selling and marketing expenses will only be 1 billion, representing a 147% increase year-over-year. The increase will primarily attribute to the increased channel and marketing expenses associated with our app and brand, such as our 2020 branding campaigns, as well as expenses for our mobile games and the salary marketing personnel. By allocating resources to build our brand and appeal among a broader audience, we achieved a substantial growth in 2020. We believe that efforts will be further and further reaching with positive impact to the market over the long run. We can already see the benefit of this strategy through our broadened user base, demographics, content, and overall industry leadership. We plan to continue building on this momentum in 2021 to further strengthen and expand our virtuous growth cycle. GNN expenses were RMB 343 million, representing a 115% increase year-over-year. The increase was primarily due to increased headcount in general administrative personnel, increased share-based compensation expenses, increased allowance for double accounts, and higher rental expenses. R&D expenses were RMB 484 million, representing a 97% increase year-over-year. The increase was primarily due to increased headcount in research and development personnel and increased share-based compensation expenses. Net loss was RMB 844 million for the fourth quarter of 2020, compared to RMB 387 million in the same period of 2019. Adjusted net loss, which was a non-GAAP measure that excludes share-based compensation expenses and amortization expenses related to the intangible assets acquired through business acquisitions and the income tax related to the intangible assets acquired through business acquisition was RMB 682 million compared to RMB 337 million in the same period of 2019. Basic diluted net loss per share was RMB 2.34. Adjusted basic diluted net loss per share was RMB 1.88. For the full year of 2020, our total net revenues increased by 77% to RMB 12 billion. Notably, we saw a shift in our revenue streams with 60% of our total revenues in 2020 coming from our non-game business and game accounts for 40%. Gross profit for the 2020 full year increased 139% to RMB 2.8 billion. Net loss for 2020 was RMB 3.1 billion compared to RMB 1.3 billion in 2019. Adjusted net loss for 2020 was RMB 2.6 billion compared with RMB 1.1 billion in 2019. Basic and diluted net loss per share for 2020 was RMB 8.71. This compared with RMB 3.99 in 2019. Adjusted basic diluted net loss per share was RMB 7.46 compared with RMB 3.3 in 2019. As of December 31, 2020, we had cash and cash equivalents, time deposits, as well as short-term investments of RMB 12.8 billion compared to RMB 8.1 billion as of December 31, 2019. With that in mind, We are currently projecting net revenues for the first quarter of 2021 to be between RMB 3.7 billion and RMB 3.8 billion. Thank you for your attention. We would like now to open the call to questions. Operator, please go ahead.

Thank you so much. Ladies and gentlemen, we will now begin the question and answer session. As a reminder, if you wish to ask a question, you will need to press the star and 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press the hash key. Again, it's star and one if you wish to ask a question. And for the benefit of all participants on today's call, if you wish to ask your question to management in Chinese, please immediately repeat your question in English. Thank you so much. And our first question comes from the line of Alex Boone from Morgan Stanley. Alex, your line is now open.

Good morning, New Year's greetings, Ray Zhong, Carly, Sam, Juliette. Congratulations on your good performance. My first question is about the growth of the user and the path and strategy of the product. At the same time, how can we maintain the quality of the user? Because in the fourth quarter, we saw a slight decline in the DUMAU ratio and the market. Thank you. My first question is related to the user growth in coming years and the strategy and in terms of the product strategy, et cetera. At the same time, how can we maintain the user quality? For example, in fourth quarter, we noticed there is a small decline in terms of DAU and MAU ratio and also the user time spent on a year-over-year basis. Thank you very much.

I think user growth has always been one of the most important tasks of Bilibili. I'm still very concerned about Bilibili's user growth in the next few years. Because I think in the next few years, videography will be a very important trend. Every Internet user will become a video user in the future.

So user growth has always remained our top priority. And I personally take a great priority in looking after the user growth strategy. So under the rapid trend of visualization, we believe every internet user could potentially become a video user, and this is creating a massive market opportunity for us.

我一直认为内容平台的用户增长最终是取决于这个平台上的内容的质量。 也就是说哪个平台能够提供更多的好内容,那么用户最终就会去哪个平台。 所以的话就是B站在用户增长方面的策略一直是我们用优质的内容去吸引用户,

So I believe that the user growth for all the content platform really depends on the quality of the content. Whichever platform has the highest quality content, the user will turn to that platform. And for Bilibili, we have always practiced the philosophy that to leverage high quality content to attract our users. And we're really focused on expanding our content offerings and content categories.

为什么B站上面能够源源不断地产生越来越多的好内容? 我觉得是因为我们构建了一套内容生态的一个模型。

So the reason why the availability can continuously produce high-quality content is because we have built an ever-growing sustainable content ecosystem, which naturally gives birth to many high-quality content.

So as we attract our users through our ever-growing high-quality content at the same time,

our highly engaged DT community help us to retain those users and providing them unique community experience.

And our commercialized efforts is also organically combined

and merge with our content ecosystem as well as our community. So in many ways, it does not affect our user experience. On the contrary, we think it's a part, it's becoming part of our content offerings and community experience.

So I believe that in the past two years, we should be able to see a better trend for B站 users to grow. For example, more and more extensive users, more and more extensive user groups, entered our platform and stayed. If three years ago, our group, we said that it was mainly based on users after 90s and 00s, then last year, if we look at the statistics, we can see that a large number of users after 85s have become our platform users. From the third-party statistics, we now have 86% of users who are under 35 years old on our platform. In other words, So looking at the past two years, we have experienced a very high quality and rapid user growth. And you may even notice that our reach for users

for broader audiences is beyond the Generation Z. And according to the latest third party report, about 86% of our users in 2020 are age below 35. So Bilibili is becoming the primary choice for not only the Gen Z, but also become a lot of users choice that age below 35.

And in addition to the number of users, we can also see that B stands in the middle. In terms of the influence of content, we also have a very, very obvious improvement compared to the past. Maybe in the past, everyone thought that Bilibili had more content that young people liked, such as animation, such as games, such as music, such as entertainment, and so on. But if we look at it from last year, there are many more universal, full-length content here. On top of our user number is expanding, we think we are expanding our influential power of multiple content verticals.

In the past, people might have the perception that Bilibili has all the content young generations like, such as anime, games, music, and entertainment. And in 2020, you would notice that there are many verticals that are emerging that have the mass market appeal to all the age groups. For example, knowledge sector was one of the fast-growing sectors last year. and knowledge as itself is the high-quality content for all age groups that's out there.

And with the expansion and growth of our PUGV ecosystem, the content of our OGV also has a very good co-operative effect with PUGV. They are also growing together. In addition to the advantages of our OGV, On top of our further ever-growing PUGB content ecosystem, we've noticed in our OGV department, there has been a great synergy. For example, our traditional strong verticals

Jingyi Jessica Li, Animate and documentary continuously to thrive. And on the other hand, we have seen new emerging content categories such as our New Year's Gala our films and TV productions is also welcoming more and more audiences.

So all the above, we can summarize our user growth can

can at least meet three criterias. One is we will continue to penetrate the young generations. In the past, it might be the Gen Z demographic, people born in between 1990 to 2009, we believe we can further enrich, expand to the age group that's born after 1985 or even 1980.

So on the second point is on the quality of the content, we believe we can become a leading player in more and more content verticals and gaining more mindshare.

of those verticals in the market.

比如过去大家可能认为B站是 拥有全网最好的动画的内容 拥有全网最好的游戏的内容 可能去年大家认为 我们也拥有全网最好的知识类的内容 我认为未来越来越多的 这种品类的质量的高地 会被我们占据 然后我们会越来越多的 因为我们在多个品类的

So, for example, in the past, people may have the perception the best anime and the best game content is on Bilibili. Going forward, we hope to establish more mindshare and higher ground on more and more verticals, for example, in knowledge and many more. and we believe there will be more high-quality content in various content verticals will be emerging on Bilibili, getting more market share.

I think the third point is that we can still maintain our priority in terms of content taste. We can still maintain our priority So by achieving the first two points, we are confident we can continue to take a leading role in terms of the taste of the content and leading users

leading the young generation's preferences over content and over our artistic preferences. We'll continue to maintain a highly engaged and friendly community environment at the same time, increase our commercialization capability.

a goal for future user growth, because we also have to set a clear goal. We have also done a lot of preparation work on this. In fact, every time we set a goal, our attitude is still very strict and serious. I remember the first time we set a goal for user growth was in 2018. At that time, we set a goal for user growth for three years, which is to reach 150 million active users. The second time, So in the past, we have done a lot of work setting up our user growth, and we have done a lot of work, and we are very prudent when it comes to setting up plans and strategies.

And in the past, we have set two user growths. Once is back in 2018. Back then, we set a user target of 150 to achieve 150 in 2020. Then we update that user goal back in 2019, which is to refresh the user target to achieving 220 million by 2021.

From the current point of view, we should be able to complete the target of user growth that we proposed at that time. Therefore, because this financial meeting was also held at the beginning of 2021, we can now propose a target of user growth for the next three years. That is, by 2023, I think our MAU can reach 400 million.

So in the past, the goal that we announced, we believe we have a very good track record in delivering those goals. As for the $220 million by 2021, we are quite confident to achieve that goal in advance. And standing where we are today, early 2021, we are setting up a new three-year user target which we believe we can achieve 400 million MAUs by end of 2023.

I think Internet products will be increasingly competitive with users. So I know this goal is definitely challenging, but As we move forward, we believe that the internet companies

competition over users is only getting more and more fierce. Despite challenging environment, we remain confident about our goals. We will further enhance our advantage in our content ecosystem as well as our engaging community. We are quite confident to achieve that user guidance. Then the second question is about the market and DAU to MAU.

We have also analyzed this question very seriously internally. First of all, I want to say that in fact, in our fourth quarter, our Bilibili app, its DAU to MAU compared to the third quarter, there is a rebound. Therefore, in the third quarter, There is also a preliminary judgment that the ratio of DAU and MAU is in the process of our users' rapid growth. It will cause a fluctuation, but in the long term, I think this number has not changed. This is the ratio of DAU and MAU. The second is As for the DAU to MAU ratio, I would like to emphasize that in the fourth quarter, our main mobile app

the DAU to MAU ratio actually slightly improved quarter over quarter. And we have made the judgment back in the third quarter that as our user has experienced fast growth, the DAU to MAU ratio might fluctuate. Over the long term, it shouldn't have large differences. As for the time spent, for this quarter, our DAU time spent our time span per DAU was 75 minutes. And compared to the same period last year, only a slight decrease, which we believe is a normal case.

And in January this year, we also looked at the data of our user market, which is over 80 minutes. So this also proves from another aspect that our user market is also within the normal range.

So when we look at the time spent per DAU in January this year, it actually improved to above 18 minutes. So this is also in check with our overall judgment on the time spent and DAU to MIU.

So, Kali would like to supplement one point. One is that, as Mr. Chen mentioned,

Our growth model is driven by our content ecosystem as well as our community. And you would also say that we made all the right moves in expanding Bilibili brand name in 2020. As we look forward to 2021, we'll continue to build on our further expand our branding perception and branding awareness through multiple marketing events.

In 2019, Bilibili's brand recognition rate was only 37%. Through the growth strategy in 2020 and the upgrade of the brand, we have increased to 68% in January 2021. Under the premise of this growth potential, we especially hope that this year we can seize this opportunity on the investment in brand growth and user growth, and achieve a recognition rate of 90% in 2020. So we've done a user perception study on our brand awareness back in 2019, 2020, and the number was over 30% in 2019, and the brand awareness perception rate

was improved to over 60% in 2020. We hope with number of our branding initiatives and marketing events, we hope to increase that perception rate above 90% in 2021.

In addition to the growth strategy that POGV just mentioned, we will continue to build brand events in the market in 2021. We will also release high-quality content to strengthen users' awareness of Bilibili's vertical content. More of the videos that we mentioned that you are interested in will be recognized by more people in the Bilibili slogan. Okay, and one more thing is that on the branding initiatives, we are going to launch several campaigns in cooperation with company events and big content launch.

to increase our brand perception and brand awareness. At the same time, we'll also work with other leading internet players to increase our perceptions, along with active user acquisition and channel acquisitions.

Thank you so much. And your next question comes from the line of Alex Yao of J.P. Morgan. Alex, your line is now open.

Thank you, Director. First of all, congratulations on a very strong performance. My first question is about the commercialization of advertising. We also saw that this season was very strong and continued. My second related question is related to advertising. I also noticed that we have some new thoughts and attempts on the internet celebrity economy or the up主 economy transformation, such as the new advertising system launched last year. Can you update us on So my first question is about the advertising business, which has been accelerating almost four quarters in a row in the past several quarters. Can you guys elaborate a bit more on the growth driver behind this rapid-growing advertising business? Also, can you talk about the advertising revenue growth outlook for 2021? A follow-up question on this advertising monetization is that we noticed you guys have recently launched a number of KOL economy monetization models, such as the Huahua, Can you talk through your latest thinking on the KOL economy monetization on Bilibili? And also, can you talk about the feedback from both advertisers as well as content creators on the introduction of Huahua? Thank you.

Thank you. In fact, Bilibili is one of the top content platforms for young people in China. As the post-90s and post-00s become the middle power of society, their right to speak and their ability to consume have actually penetrated into various industries. In our view, in the next 10 years, it will be the 10 years of Chinese consumption that will explode. So first of all, we have over near half of active users that is China's young generation. And Bilibili is the platform that has the most concentrated

young generation users. We believe as the Gen Z become the mainstream of the society, they have more saying and more spending power across various industry verticals. And the next decade will be the new consumer upgrade, new consumer branding upgrade for China's overall consumption industry. As Bilibili's user has the most influence and most spending power within this vertical, Bilibili is becoming the must invest advertising platform.

In 2020, with the growth of Bilibili users and the strengthening of brand penetration, as well as the improvement of our business platform's product and data capabilities, advertising businesses have achieved a rapid growth of seven consecutive seasons. Q4 revenue reached 7.2 billion, and the same rate of growth reached 149%. In fact, the same rate of growth reached 126% throughout the year.

So in 2020, as we experienced fast and high-quality user growth, our influence over brand advertising is also increasing. Over the years, we have continuously improved our commercial middle platform capabilities, and our advertising revenue has experienced accelerated growth for seven consecutive quarters. In the fourth quarter, our advertising revenue reached $120 million and up 149% year-over-year. And for the full year, our advertising revenue also grew by 126% year-over-year. In 2021, we will not increase the advertising revenue by 5%.

So for 2021, we do not intend to increase our outload, and we're going to maintain the outload around 5%. From our perspective, we are still at the phase to building our infrastructure

and our advertising business still have a huge potential to grow.

First of all, we will continue to strengthen our ability to expand our business platform in 2021. Because the improvement of product capability and algorithmic capability can actually directly contribute to the improvement of ad transformation efficiency. So we will continue to strengthen this infrastructure. Business platform capability In addition to being very helpful for advertising revenue transformation, it will also be very helpful for other income businesses. For example, the ability of game streaming is equivalent to the efficiency of game advertising. The same goes for live broadcasts, members, and e-commerce. It will also improve the efficiency due to the improvement of business mediums.

So first of all, we'll continue to enhance our middle platform capability, serving the commercialization progress. As our advertising product improved and our algorithm improved, our overall advertising efficiency will also improve. And the efficiency is not only reflect on the increase of our advertising revenue, It also reflects on other business. For example, our game jointly operated games improvement also depends on the improvement of our advertising efficiency. So that goes with our live broadcasting membership and e-commerce.

So on top of our news feed,

we tend to enhance our commercialization capability across multiple business lines and across multiple platforms. For example, the business line includes live broadcasting, comic, and our audio drama platform. And as for the multi-screen, that goes to our mobile device, on iPad, on PC, and our smart televisions to help the brands to connect even further in multiple ways with the young generations.

So the third point would be to increase our integrated marketing efficiency

and standardize more of the procedures among this overall integrated marketing campaign. In 2020, we have significantly improved the ad efficiencies on single users. And in 2021, we are going to elevate that to a single industry on a single industry basis. to better serve our industry verticals.

最后可以提一下花火系统。 花火系统是在2020年Q3,就第三季度上线的。 它主要是服务于up主跟品牌商的一个撮合的合作平台。 我们还是对花火平台的逻辑是顺势而为。 Up主需要更多的广告跟内容的植入需求,也在B站的平台上产生了大量两性的商业行为,所以我们花火系统更多还是连接Up主的创意跟品牌的需求,做更多的智能化,同时也为Up主跟品牌的需求提供保障, Last but not least, I'll add some points on our Sparkle advertising platforms. This platform was launched in Q3 last year. It is a matchmaking platform between content creator

and various advertisers. So the born of the platform is a natural development of our advertisers' needs and our content creators' needs. As more content creators need commercialization empowerment, And our content, our advertisers also need efficient ways to influence users' decision-making. So the born of the platform is to connect both parties' needs at the same time to ensure a smooth, efficient transaction between two parties. And in 2021, we'll spend more effort in improving this platform, bringing more opportunity for both parties.

So in summary, we are quite confident of our advertising revenue growth. We believe we can still maintain a high growth rate

that's above the overall growth rate of the company.

Thank you so much. And that concludes the question and answer session. I would like to turn the conference back over to the management for any additional or closing comments.

Well, thank you once again for joining us today. If you have further questions, please contact myself, Julie Young, Bilibili Senior IR Director, or TPG, Investor Relations. Our contact information for IR in both China and the U.S. can be found on today's press release. Have a great day. Thank you.

And that does conclude our conference for today. Thank you for participating. You may all now disconnect.