Bilibili Inc.

Good day and welcome to the Bilibili Third Quarter 2024 Financial Results and Business Updates Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Juliette Yang, Executive Director of Investor Relations. Please go ahead.

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. 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 SEC and Hong Kong Stock Exchange. The non-GAAP financial measures we provide are for comparison purposes only. The definition of this measure and the 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. 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 Fan, Chief Financial Officer. I will now turn the call to Mr. Chen.

Thank you, Juliette, and thank you everyone for participating in our third quarter 2024 conference call to discuss our financial and operating results. I'm pleased to deliver today's opening remarks. The third quarter of 2024 was a landmark quarter for Bilibili. We are excited to share that we achieved our first quarterly adjusted net profit while setting new records across our community metrics. These milestones are a strong testament to our ability to deliver profitable growth and the unique community value that we continue to unlock. Looking at our financials in more detail, total revenues in the third quarter accelerated, rising by 26% year over year, reaching RMB 7.3 billion. Driven by our successful diversification into the strategy game genre, games revenue led our growth, surging by 84% year-over-year. Meanwhile, our advertising business maintained its strong performance in the third quarter, recording a 28% year-over-year increase. The increasing top-line contribution from our high-margin games and advertising business propelled our gross profit up by 76% year-over-year, driving our gross profit margin jumped to 34.9% from 25.0% in the same period last year. As a result, we successfully exceeded our commitment to reaching breakeven in the third quarter, achieving an adjusted operating profit of RMB 272 million and an adjusted net profit of RMB 236 million. While making remarkable financial progress, We continue to grow and cultivate our community. Both DAUs and MAUs reached record highs in the third quarter, hitting 107 million and 348 million, respectively. Meanwhile, the average daily time spent per user rose to a new high of 106 minutes. With robust user retention and engagement, our users have stayed with us and grown with the platform. the average age of Bidibidi users is now 25. As these users enter new life stages with increasing spending power, we will continue to curate more diverse content and services that cater to their evolving needs. Moving ahead, we remain committed to building a welcoming and inspiring video community with all the videos you like. Our return to profitability marks a new starting point in our journey. we will continue to invest in key infrastructure that supports content creation and distribution, reinforcing our leading position in the high-quality video content space and creating value for all our stakeholders. With that overview, let's look at our core content, community, and commercialization pillars in more detail, beginning with content and community. In the third quarter, our average daily video views exceeded 5.7 billion. up 23% year-over-year. The growth reflects the effectiveness of our strategy to broaden content categories and encourage high-quality content creation. While our leading categories maintained their popularity, consumption-related categories continued rising. This is being driven by increasing user demand as the young generation becomes the mainstream of consumer society. Video views in fashion and home appliances and decoration grew by over 25% year over year, while views in automotive, baby and maternity, sports and fitness categories surged by more than 40% compared with the same period last year. The diverse commercialization channels we offer continue to empower our content creators to realize their commercial value while pursuing what they love. For the first nine months of 2024, nearly 2.7 million content creators received income through various channels on our platform. Content creators' total income through our various advertising and vast products grew by 24% during this period. Notably, content creators' total income through our fan-charging product saw an over 400% increase year-over-year in the same period. Turning to our community metrics, In the third quarter, our DIU spent nearly 106 minutes on our platform every day, compared with 100 minutes in the same period last year. Our monthly interactions surpassed 19.3 billion, marking a 14% year-over-year increase. By the end of Q3, our official members grew to 251 million, with our 12-month retention rate remaining around 80%. Additionally, Our sponsored esports team, Bilibili Game, BLG, fought their way to second place in the League of Legends S14 World Championship, marking a new record in the team's history. We are proud of their achievement and look forward to their continued success in the upcoming year. Events like these continue to support our leadership in the game community and make Bilibili the top choice for young generations. Last but not least, We are excited to share that our MSCI ESG rating was upgraded to an A this year, a testament to our steady ESG improvements over the past few years. This achievement underscores our dedication to advancing our ESG practices, where we use our influence to impact communities and society positively. Now, I'd like to talk about the progress of our commercialization in each of our business lines. First, on our game's business. In the third quarter, our game's revenues increased by 84% year-over-year to RMB 1.8 billion, driven by the outstanding performance of our strategy game San Guo, Mou Ding Tian Xia, San Mo. The game's initial performance reinforces our confidence in the longevity of San Mo. We will continue to roll out new content updates and gameplay to deliver better gaming experiences to users. Sunmo's success shows the vast potential that lies within our game community. We plan to leverage our unique game industry advantage to further explore other game opportunities in different genres. Meanwhile, we remain committed to bringing the best ACG titles to our users. Our legacy titles, FGO and Azure Lane, maintained their popularity as they celebrated their 8th and 7th year anniversaries, respectively. In addition, we launched the Japanese RPG game, Jujutsu Kaisen Phantom Parade. Welcome to the overseas markets in November, which was well received. Turning to our advertising business. Our advertising business continued to outperform the industry in the third quarter. Advertising revenues increased by 28% year over year to RMB 2.1 billion. Robust revenue growth in our performance-based ads was the largest contributor. increasing nearly 50% year-over-year in the third quarter. We also achieved decent year-on-year growth in brand and native ad revenues, reinforcing our strength in integrated marketing capabilities. Our top five advertising industry verticals in the third quarter were games, e-commerce, digital products and home appliances, internet services and automotive. As more and more e-commerce platforms recognized the commercial value of our unique young user base, they allocated larger advertising budgets to our platform. We saw a particular uptick over the summer vacation and back-to-school season, resulting in an 80% year-over-year surge in e-commerce advertising revenues. Meanwhile, we are also attracting more advertisers from emerging verticals in the third quarter ad revenues from education. baby and maternity, and travel and lodging all grew by over 100% year over year. In addition, we continue to enhance our ad infrastructure to improve efficiency, and we have seen early benefits from these efforts. For example, as we roll out a more user-friendly and effective ad placement system, the number of performance-based advertisers increased by over 40% year over year in the third quarter. We plan to further incorporate AI technologies into our smart ad delivery system and launch a series of tools for ad material creation with higher efficiency and lower costs. These initiatives are expected to attract and retain more advertisers on our platform. Turning to our vast business, revenues from our vast business increased by 9% year over year to RMB 2.8 billion in the third quarter. This quarter, we welcome the more users to join and enjoy our live broadcasting universe as we continued expanding our content offerings to meet their diverse interests. Simultaneously, we remain focused on refining our operations to ensure sustainable business growth while improving margins. Our premium membership program grew steadily year-over-year, reaching nearly 22 million members in the third quarter. Over 80 percent of these members are on annual subscription or auto renewal packages. Additionally, Other VAST products experienced rapid growth, then charging revenues surged by over 500% year over year during the quarter, demonstrating our users' strong willingness to pay for good content. As we celebrate our first quarter of profitability, I want to thank our dedicated team, our loyal user community, and our supportive partners and shareholders. Looking back over the past 15 years, we've made significant breakthroughs in our content offerings, expanded our user base, and developed diverse commercialization products. These efforts have helped us build a unique video community with a one-of-a-kind user experience in a competitive industry landscape. Turning profitable is just a new beginning. Building on this milestone, we will continue to reinforce our business's positive growth cycle to drive sustainable profits in the future. With that, I will turn the call over to Sam to share more financial details.