(BILI) 2022 Q3 法說會逐字稿

Good day, and welcome to the Bilibili Third Quarter 2022 Financial Results and Business Update Conference Call. Today's conference is being recorded.

美好的一天，歡迎來到 Bilibili 2022 年第三季度財務業績和業務更新電話會議。今天的會議正在錄製中。

At this time, I would like to turn the conference over to Juliet Yang, Executive Director of Investor Relations. Please go ahead.

此時，我想將會議轉交給投資者關係執行總監 Juliet Yang。請繼續。

Thank you, operator.

謝謝你，運營商。

During this call, we'll discuss 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 the SEC and Hong Kong Stock Exchange.

在這次電話會議中，我們將討論業務前景並做出前瞻性陳述。這些評論基於我們截至今天的預測和期望。由於存在許多風險和不確定性，包括我們最近向美國證券交易委員會和香港證券交易所提交的文件中提到的風險和不確定性，實際事件或結果可能與今天的新聞稿和本次討論中提到的事件或結果存在重大差異。

The non-GAAP financial measures we provide are for comparison purpose only. Definition of these measures and our reconciliation table are available in the news release we issued earlier today.

我們提供的非 GAAP 財務指標僅供比較之用。這些措施的定義和我們的調節表可在我們今天早些時候發布的新聞稿中找到。

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.

提醒一下，這次會議正在錄製中。此外，Bilibili IR 網站 ir.bilibili.com 還將提供投資者介紹和本次電話會議的網絡直播重播。

Joining us today from Bilibili senior management are Mr. Rui Chen, Chairman of the Board and Chief Executive Officer; Ms. Carly Li, Vice Chairwoman of the Board and Chief Operating Officer; and Mr. Sam Fan, Chief Financial Officer.

今天從 Bilibili 高級管理層加入我們的是董事會主席兼首席執行官陳睿先生；董事會副主席兼首席運營官 Carly Li 女士；以及首席財務官 Sam Fan 先生。

And I will now turn the call over to Mr. Fan, who will read the prepared remarks on behalf of Mr. Chen.

我現在將電話轉給范先生，他將代表陳先生宣讀準備好的發言稿。

Thank you, Juliet, and thank you, everyone, for participating in our third quarter 2022 results conference call. I'm pleased to deliver today's opening remarks on behalf of Mr. Chen.

謝謝朱麗葉，也謝謝大家參加我們 2022 年第三季度的業績電話會議。我很高興代表陳先生髮表今天的開場白。

Our community, which is the foundation of our business and key to our long-term success, continue to expand. In the third quarter, DAUs reached more than 90 million and MAUs nearly 333 million, both up 25% year-over-year. Average daily time spent per user was 96 minutes in the third quarter, up 8 minutes from the same period last year. With that, the total time spent on Bilibili grew by 37% year-over-year.

我們的社區是我們業務的基礎，也是我們取得長期成功的關鍵，它正在不斷擴大。第三季度，DAU 超過 9000 萬，MAU 接近 3.33 億，均同比增長 25%。第三季度每個用戶平均每天花費的時間為 96 分鐘，比去年同期增加了 8 分鐘。因此，在 Bilibili 上花費的總時間同比增長了 37%。

Having said that, we still face macro headwinds and uncertainties that loom over the industry. To cope with the challenging environment, we have reprioritized our goals and promoted to focus on 2 key targets that will help us turn the corner.

話雖如此，我們仍然面臨籠罩著整個行業的宏觀逆風和不確定性。為了應對充滿挑戰的環境，我們重新確定了目標的優先順序，並提倡專注於兩個有助於我們渡過難關的關鍵目標。

First, our users and our MAUs have reached a sizable base of nearly 333 million. We think it is time to shift our primary focus to DAU growth. DAUs not only represent the quality and the sustainability of our community, but also directly linked to our influential power as a platform as well as various commercial products, particularly in terms of revenue generation for our advertising and VAS business. With our improving product offerings and refined algorithms, we can continue to grow our DAU base and improve our DAU-to-MAU ratio with reduced sales and marketing spend.

首先，我們的用戶和 MAU 已達到近 3.33 億的可觀基數。我們認為是時候將我們的主要重點轉移到 DAU 增長上了。 DAU 不僅代表我們社區的質量和可持續性，而且與我們作為平台和各種商業產品的影響力直接相關，特別是在我們的廣告和 VAS 業務的創收方面。通過我們改進的產品供應和改進的算法，我們可以繼續擴大我們的 DAU 基礎，並通過減少銷售和營銷支出來提高我們的 DAU 與 MAU 的比率。

Second, we are committed to improving our financials by expanding our gross margin and narrowing our losses. After a challenging first half of the year, revenues in the third quarter grew to RMB 5.8 billion, up 18% quarter-over-quarter and 11% year-over-year.

其次，我們致力於通過擴大毛利率和縮小虧損來改善我們的財務狀況。在經歷了充滿挑戰的上半年之後，第三季度收入增長至人民幣 58 億元，環比增長 18%，同比增長 11%。

In the third quarter, we continue to take various actions to tighten our spending. Gross margin improved to 18%, up 3 percentage points sequentially. Sales and marketing expenses as a percentage of total revenues were 21%, down 3 percentage points sequentially. Our non-GAAP net loss ratio also narrowed by 10 percentage points compared with the prior quarter.

第三季度，我們繼續採取各種措施來收緊開支。毛利率提高至 18%，環比上升 3 個百分點。銷售和營銷費用佔總收入的百分比為 21%，環比下降 3 個百分點。與上一季度相比，我們的非 GAAP 淨虧損率也收窄了 10 個百分點。

Looking ahead, we will implement a number of additional cost control measures and further rationalize our marketing expenses and headcount planning. Specifically, we are still minimizing our investment in R&D and cutting down our projects with lower chance of success and being extra mindful when exploring new opportunities.

展望未來，我們將實施多項額外的成本控制措施，並進一步理順我們的營銷開支和人手計劃。具體來說，我們仍在盡量減少研發投資，減少成功機會較低的項目，並在探索新機會時格外小心。

At the same time, we are centralizing our resources in areas related to improving commercialization efficiency and user experience. These adjustments will be completed by the end of this year. Accordingly, we expect our sales, marketing and R&D expenses to peak this year and start to decline in 2023 with net loss narrowing further accordingly.

同時，我們正在將資源集中在提高商業化效率和用戶體驗的相關領域。這些調整將於今年年底完成。因此，我們預計我們的銷售、營銷和研發費用將在今年達到頂峰，並在 2023 年開始下降，淨虧損將相應進一步收窄。

With that, I'd like to provide a brief update on our core pillars of content, community and commercialization. Starting with content. Over the years, as the young generations on Bilibili grow up and enter into new stages of life, their interests evolved, driving creative passion as well as expansion of our content categories.

就此，我想簡要介紹一下我們的內容、社區和商業化的核心支柱。從內容開始。多年來，隨著 Bilibili 年輕一代的成長和進入新的人生階段，他們的興趣不斷演變，激發了創作熱情，並擴大了我們的內容類別。

So on top of our traditional strong content verticals, we have seen emerging categories such as automobile, home decoration and internal design and baby and maternity. In the third quarter, 3.8 million monthly active content creators on Bilibili readily accommodated these varied needs, creating near 15 million new videos on a monthly basis, up 14% and 54% year-over-year, respectively.

因此，在我們傳統的強大內容垂直領域之上，我們看到了汽車、家居裝飾和室內設計以及母嬰等新興類別。第三季度，嗶哩嗶哩上有 380 萬月活躍內容創作者滿足了這些不同的需求，每月創作近 1500 萬個新視頻，同比分別增長 14% 和 54%。

The expanding content library drives the overall traffic growth on our platform. Total video views grew by 64% year-over-year, driven by both PUGV and Story Mode content, which grew by 34% and over [470%] year-over-year, respectively. Particularly, with improving content distribution capabilities of Story Mode, content creators can build their fan base more easily, sharing their content with other [contract spreads] on Bilibili.

不斷擴大的內容庫推動了我們平台的整體流量增長。在 PUGV 和故事模式內容的推動下，視頻總觀看量同比增長 64%，分別同比增長 34% 和超過 [470%]。特別是隨著故事模式的內容分發能力的提升，內容創作者可以更輕鬆地建立自己的粉絲群，將自己的內容分享給嗶哩嗶哩上的其他[合約傳播]。

The various monetization process we have cultivated for our content creators continued to offer more creators, more opportunities to make money while doing things they love. In the third quarter, over 1.2 million content creators earned their income through multiple channels on Bilibili, up 74% year-over-year.

我們為內容創作者培養的各種貨幣化流程繼續為更多的創作者提供更多賺錢的機會，同時做他們喜歡的事情。第三季度，超過 120 萬內容創作者在嗶哩嗶哩通過多種渠道獲得收入，同比增長 74%。

Looking at our community. We consistently deepen our user engagement in our community with our featured and diverse content. As I mentioned earlier, the average daily user time spend reached a record high of 96 minutes, up 8 minutes from the same period last year. Our monthly interactions also increased 41% year-over-year to 14.4 billion. Furthermore, the number of official members on our site was up by 37% year-over-year to 183 million, maintaining a stable 12-month retention rate above 80%.

看看我們的社區。我們通過特色多樣的內容不斷加深用戶在社區中的參與度。正如我之前提到的，平均每日用戶時間花費達到了 96 分鐘的歷史新高，比去年同期增加了 8 分鐘。我們每月的互動次數也同比增長 41% 至 144 億次。此外，我們網站的官方會員數量同比增長 37% 至 1.83 億，保持穩定的 12 個月保留率超過 80%。

Now let's look at our commercialization and the prospects for near- and long-term monetization. First, our VAS business. Our VAS revenues was RMB 2.2 billion, up 16% year-over-year in the third quarter. By further integrating live broadcasting with our PUGV ecosystem, we maintain our unique platform advantage. We had 57% more live broadcasting hosts in the third quarter this year than for the same period last year.

現在讓我們看看我們的商業化以及近期和長期貨幣化的前景。首先，我們的增值服務業務。第三季度，我們的增值服務收入為人民幣 22 億元，同比增長 16%。通過將直播與我們的 PUGV 生態系統進一步整合，我們保持了我們獨特的平台優勢。我們今年第三季度的直播主播比去年同期多了57%。

The number of live broadcasting paying users increased by 79% year-over-year in the third quarter. The number of premium memberships for the third quarter grew 12% year-over-year to 20.4 million. In December, we plan to launch our self-produced Chinese anime title, The Three-Body Problem. This highly anticipated title is expected to attract a wide range of sci-fi lovers to our platform.

三季度直播付費用戶規模同比增長79%。第三季度高級會員人數同比增長 12% 至 2040 萬。 12 月，我們計劃推出自製的中國動漫《三體》。這個備受期待的遊戲有望吸引廣大科幻愛好者使用我們的平台。

Looking at our advertising. Despite [softness] in macro environment, net revenues were RMB 1.4 billion, an increase of 16% year-over-year. We further strengthened our integrated marketing campaign offerings by combining diverse ad products and conversion modules across different video viewing scenarios.

看看我們的廣告。儘管宏觀環境[疲軟]，但淨收入為人民幣 14 億元，同比增長 16%。我們通過在不同的視頻觀看場景中結合多樣化的廣告產品和轉換模塊，進一步加強了我們的整合營銷活動產品。

Story Mode ads, as a part of ad offerings, continued to capture more performance-based ad dollars in the third quarter. Our top advertising verticals in the third quarter were again digital products and home appliance, skin care and cosmetics, automotive and food and beverage.

故事模式廣告作為廣告產品的一部分，在第三季度繼續獲得更多基於效果的廣告收入。我們在第三季度的主要廣告垂直領域仍然是數碼產品和家用電器、護膚品和化妝品、汽車以及食品和飲料。

And for games. Our game revenues grew 6% year-over-year to RMB 1.5 billion, largely driven by the new titles we launched in the domestic and overseas market in the third quarter. Develop in-house and distribute globally remains our core game strategy, which has started to bear fruit. Revenue generated from self-developed games contributed 9% of our total game revenue in the third quarter.

對於遊戲。我們的遊戲收入同比增長 6% 至人民幣 15 億元，這主要是由於我們在第三季度在國內和海外市場推出的新遊戲所推動的。內部開發和全球發行仍然是我們的核心遊戲策略，該策略已開始取得成果。自主開發遊戲產生的收入佔第三季度遊戲總收入的 9%。

Looking at our pipeline. We have 2 games approved for domestic release this year and earlier next year, including 1 self-developed title. 5 titles are slated to launch in the overseas markets early next year.

看看我們的管道。今年和明年初，我們有 2 款遊戲獲准在國內發行，其中包括 1 款自主開發的遊戲。明年初將有 5 款遊戲在海外市場推出。

Facing the markets' macro uncertainties, our primary goal is clear: improving our gross profit margin and narrowing our net loss. By expediting our commercialization, we believe our top line can catch up with our community's scale. While we remain committed to a goal of reaching non-GAAP operating breakeven by 2024, we will also actively manage our cash position and liabilities. We believe we can weather through the macro uncertainties and emerge as a stronger, more efficient and more resilient company.

面對市場的宏觀不確定性，我們的首要目標很明確：提高毛利率，縮小淨虧損。通過加快我們的商業化，我們相信我們的收入可以趕上我們社區的規模。雖然我們仍然致力於到 2024 年實現非 GAAP 運營收支平衡的目標，但我們還將積極管理我們的現金頭寸和負債。我們相信我們能夠度過宏觀不確定性，成為一家更強大、更高效、更有彈性的公司。

This concludes Mr. Chen's remarks. I will now provide a brief overview of our financial results for the third quarter of 2022 and the outlook for the fourth quarter of 2022.

陳先生的發言到此結束。我現在將簡要概述我們 2022 年第三季度的財務業績和 2022 年第四季度的展望。

Total net revenues for the third quarter were RMB 5.8 billion, up 11% from the same period of 2021. Our total net revenue breakdown by revenue stream was approximately 25% mobile games, 38% VAS, 23% advertising and 14% from the e-commerce and other business.

第三季度總淨收入為人民幣 58 億元，比 2021 年同期增長 11%。我們按收入流劃分的總淨收入約為 25% 的移動遊戲、38% 的增值服務、23% 的廣告和 14% 來自電子遊戲-商業和其他業務。

Cost of revenues increased by 13% year-over-year to RMB 4.7 billion. Our gross profit in the third quarter was RMB 1.1 billion, and our gross margin was 18.2%. Gross margin recovered by 3.2 percentage points sequentially attributable to the top line growth. We expect to show continued sequential quarterly improvements in the first quarter and the coming year.

收入成本同比增長 13% 至人民幣 47 億元。我們第三季度的毛利為人民幣11億元，毛利率為18.2%。由於營收增長，毛利率環比回升 3.2 個百分點。我們預計第一季度和來年將持續出現連續的季度改善。

Total operating expenses was RMB 2.9 billion, flattish compared with the same period of 2021. We cut sales and marketing expenses by 25% year-over-year to RMB 1.2 billion. Sales and marketing expenses as a percentage of total revenues was also down to 21% compared with 31% in the same period last year.

總運營費用為人民幣 29 億元，與 2021 年同期持平。我們將銷售和營銷費用同比削減 25% 至人民幣 12 億元。銷售和營銷費用佔總收入的百分比也從去年同期的 31% 降至 21%。

G&A expenses was RMB 543.4 million, up 14% year-over-year. The increase was mainly primarily due to increased headcount in G&A personnel and higher rental expenses. R&D expenses was RMB 1.1 billion, representing a 43% increase year-over-year. The increase was primarily due to increased headcount in R&D and increased share-based compensation expenses.

G&A 費用為人民幣 5.434 億元，同比增長 14%。增加的主要原因是 G&A 人員人數增加以及租金支出增加。研發費用為人民幣11億元，同比增長43%。這一增長主要是由於研發人員的增加和股權激勵費用的增加。

Net loss and adjusted net loss was RMB 1.7 billion and RMB 1.8 billion for the third quarter of 2022, respectively. We successfully narrowed our adjusted net loss ratio by 10 percentage points sequentially in Q3, and we expect the narrowing trend will continue in the fourth quarter and the coming years.

2022 年第三季度淨虧損和調整後淨虧損分別為人民幣 17 億元和人民幣 18 億元。我們在第三季度成功地將調整後的淨虧損率連續收窄了 10 個百分點，我們預計收窄趨勢將在第四季度和未來幾年繼續。

Turning to our capital allocation and the liability management. We currently have 3 outstanding convertible bonds totaling USD 2.5 billion, among which the [full price] of USD 746 million is accessible in June 2023, USD 429 million is accessible in April 2024 and USD 1.3 billion is accessible in December 2024.

轉向我們的資本配置和負債管理。我們目前有 3 只未償還的可轉換債券，總額為 25 億美元，其中 [全價] 7.46 億美元可在 2023 年 6 月使用，4.29 億美元可在 2024 年 4 月使用，13 億美元可在 2024 年 12 月使用。

As of September 30, 2022, we had cash and cash equivalents, time deposits and short-term investments of RMB 23.9 billion or USD 3.4 billion. And we believe this level of liquidity is sufficient to repay the aggregate balance of all outstanding convertible bonds by their respective maturity without considering any external funding resources available to us.

截至 2022 年 9 月 30 日，我們擁有現金及現金等價物、定期存款和短期投資 239 億元人民幣或 34 億美元。我們相信，在不考慮我們可用的任何外部資金資源的情況下，這一流動性水平足以在各自到期日償還所有未償還可轉換債券的總餘額。

Meanwhile, we are taking further actions to narrow our losses and reaching breakeven. We will be prudent with our CapEx and will closely monitor our cash outflow. At the same time, these convertible bonds are currently traded at discounted price, and we will continue to evaluate the option to repurchase and retail them at a reasonable price.

同時，我們正在採取進一步行動來縮小虧損並實現盈虧平衡。我們將謹慎對待我們的資本支出，並將密切監控我們的現金流出。同時，這些可轉債目前以折價交易，我們將繼續評估以合理價格回購和零售的選擇權。

As of October 31, 2022, we had repurchased and retailed a total principal amount of USD 329 million of these notes for a total cash consideration of USD 247 million, generating USD 82 million net cash position. We will stay opportunistic when continuously evaluating options for the best use of our capital.

截至 2022 年 10 月 31 日，我們已回購和零售本金總額為 3.29 億美元的這些票據，總現金對價為 2.47 億美元，產生了 8200 萬美元的淨現金頭寸。在不斷評估最佳利用我們資本的方案時，我們將保持機會主義。

Finally, our conversion from a secondary to a primary listing on the Hong Kong Stock Exchange became effective on October 3, 2022. Bilibili is now a dual-primary listed company in Hong Kong and the United States. This conversion will further expand our investor base and provide more liquidity for our securities in the capital markets. With that in mind, we are currently projecting net revenues for the fourth quarter of 2022 to be between RMB 6.0 billion and RMB 6.2 billion.

最後，我們在香港聯交所從第二上市轉為第一上市的轉換於 2022 年 10 月 3 日生效。嗶哩嗶哩現在是香港和美國的雙重主要上市公司。這種轉換將進一步擴大我們的投資者基礎，並為我們在資本市場上的證券提供更多流動性。考慮到這一點，我們目前預計 2022 年第四季度的淨收入將在 60 億元人民幣至 62 億元人民幣之間。

Thank you for your attention. We would now like to open the call to your questions. Operator, please go ahead.

感謝您的關注。我們現在想打開您的問題的電話。接線員，請繼續。

(Operator Instructions) Your first question is from the line of Daniel Chen from JPMorgan.

（操作員說明）您的第一個問題來自摩根大通的 Daniel Chen。

(foreign language) I will translate myself. So in the previous prepared remarks, management mentioned that the user growth focus will switch into daily active user, DAU. So could you maybe elaborate more about our future user growth strategy?

（外語）我會自己翻譯。因此，在之前準備好的評論中，管理層提到用戶增長重點將轉向每日活躍用戶 DAU。那麼您能否詳細說明我們未來的用戶增長戰略？

(foreign language)

（外語）

[Interpreted] We raised the MA -- centered around MAU strategy back in 2019. And in the past, we have successfully expanded our MAU from 110 million to nowadays 330 million. And this is quite successful and showed our excellent execution in the past few years.

[解讀]我們在 2019 年提高了 MA——以 MAU 策略為中心。在過去，我們成功地將 MAU 從 1.1 億擴大到現在的 3.3 億。這是非常成功的，顯示了我們在過去幾年中出色的執行力。

(foreign language)

（外語）

[Interpreted] Well, we were able to grow 3x in the last few years, which supported the deepest stats. The Bilibili business model, which is the community plus the content ecosystem, works and is quite successful and shows our ability to maintain a high-quality, highly sticky community while we deliver a very impressive user base.

[解釋] 好吧，我們在過去幾年中增長了 3 倍，這支持了最深層次的統計數據。 Bilibili 商業模式，即社區加內容生態系統，行之有效並且非常成功，表明我們有能力在提供非常可觀的用戶群的同時維持高質量、高粘性的社區。

(foreign language)

（外語）

[Interpreted] Based on our 2022's work progress, we still see a lot of room for our MAU growth. Even in 3Q, we delivered a 25% year-on-year growth. And if we carry on the current strategy, we believe we can still achieve the 400 million MAU target by next year.

[解讀] 根據我們 2022 年的工作進展，我們仍然看到我們的 MAU 增長空間很大。即使在第三季度，我們也實現了 25% 的同比增長。如果我們繼續目前的策略，我們相信我們仍然可以在明年實現 4 億 MAU 的目標。

(foreign language)

（外語）

[Interpreted] In 20 -- starting from 2022, we also put a lot of work in terms of the DAU growth because we do believe that DAU compared to MAU can present the quality of the user growth as well as the sustainability of the user growth. In addition, it also directly links to the commercial perspective of our community.

【解讀】20年——從2022年開始，我們在DAU增長方面也下了很多功夫，因為我們確實相信DAU與MAU相比能夠呈現用戶增長的質量以及用戶增長的可持續性.此外，它還直接鏈接到我們社區的商業視角。

(foreign language)

（外語）

[Interpreted] Like I said, the growth is not the purpose. It's just a way to achieve our goal of increase the quality of our users. And in the end of the day, the growth of our MAU will directly link to the growth of DAU. And that's why starting from this year, we are putting more emphasis and resources to increase our DAU. And if you look at our DAU-to-MAU ratio, it has already improved from 16 -- 26% in 2021 to 27% in 2022.

[解讀]就像我說的，增長不是目的。這只是實現我們提高用戶質量目標的一種方式。最終，我們 MAU 的增長將直接與 DAU 的增長掛鉤。這就是為什麼從今年開始，我們將更加重視和投入更多資源來增加我們的 DAU。而且，如果您查看我們的 DAU 與 MAU 比率，它已經從 2021 年的 16-26% 提高到 2022 年的 27%。

(foreign language)

（外語）

[Interpreted] As you may all aware that we are facing multiple challenges from the macro environment, and putting profitability at first is one of the most important task for the management. The reason why we're putting more emphasis to DAU instead of MAU, we believe from one aspect, it can help us to increase the monetization efficiency, help us to grow our revenue at the same time to reduce our sales and marketing expenses and to achieve breakeven as soon as possible.

【解讀】大家可能都知道，我們面臨著來自宏觀環境的多重挑戰，把盈利放在首位是管理層最重要的任務之一。我們之所以更強調 DAU 而不是 MAU，我們認為從一個方面來說，它可以幫助我們提高貨幣化效率，幫助我們增加收入，同時減少我們的銷售和營銷費用，並盡快實現盈虧平衡。

(foreign language)

（外語）

[Interpreted] We are very confident to the DAU growth next year, and we believe this will be more sustainable for the core company as well as be very beneficial to our commercialization efforts. And as for the outlook for next year, we hope to increase our DAU-to-MAU ratio to 30%.

[解讀]我們對明年DAU的增長很有信心，我們相信這對核心公司來說更可持續，也對我們的商業化工作非常有利。至於明年的展望，我們希望將 DAU 與 MAU 的比率提高到 30%。

(foreign language)

（外語）

[Interpreted] Starting from 2022, we have already taken actions to control our sales and marketing expense. In Q3 this year, our sales and marketing expense already declined 25% year-over-year. As we're shifting our focus from MAU to DAU, we expect we can further reduce our sales and marketing expense, and the magnitude of the decline will be even bigger in 2023 compared to 2022.

[解讀]從2022年開始，我們已經採取措施控制我們的銷售和營銷費用。今年第三季度，我們的銷售和營銷費用已經同比下降了 25%。隨著我們將重點從 MAU 轉移到 DAU，我們預計我們可以進一步減少銷售和營銷費用，並且與 2022 年相比，2023 年的下降幅度會更大。

We'll now take our next question, this is from the line of Lei Zhang from Bank of America.

我們現在開始下一個問題，這是來自美國銀行的 Lei Zhang 的。

(foreign language) My question is mainly on the profitability. I noticed that our operating loss narrowed in the third quarter. So how should we look at our gross margin and OP margin trend? And which costs as we see further room to control? Also, any change to our breakeven target?

（外語）我的問題主要是盈利能力。我注意到我們的營業虧損在第三季度有所收窄。那麼我們應該如何看待我們的毛利率和營業利潤率趨勢呢？我們認為還有哪些成本可以進一步控制？另外，我們的收支平衡目標有什麼變化嗎？

(foreign language)

（外語）

[Interpreted] We raised the target of reaching breakeven by end of 2024, and we'll stick to that mission and goal. And as we move through 2022, obviously, there's been multiple challenges across the macro environment. To reduce loss and putting profitability first is the priority for the company, and this is something I personally look after and taking charge.

[解讀]我們提出了到 2024 年底實現收支平衡的目標，我們將堅持這一使命和目標。顯然，隨著 2022 年的到來，整個宏觀環境都面臨著多重挑戰。減少虧損，把盈利放在第一位是公司的首要任務，這是我個人負責的事情。

(foreign language)

（外語）

[Interpreted] We have already taken actions to reduce our cost and expense. And so far, the unit cost for our server and bandwidth continue to decline. And as I mentioned earlier, sales and marketing continued to decline year-on-year for 3 consecutive quarters. And...

[解讀]我們已經採取行動來降低我們的成本和費用。到目前為止，我們服務器和帶寬的單位成本繼續下降。正如我之前提到的，銷售和營銷連續三個季度同比下降。和...

(foreign language)

（外語）

[Interpreted] Move forward, we'll take more efforts to reduce our sales and marketing expense as well as G&A and R&D expenses.

[解讀] 展望未來，我們將更加努力地減少我們的銷售和營銷費用以及 G&A 和研發費用。

(foreign language)

（外語）

[Interpreted] In terms of the efficiency improvement, I intend to reduce investment on the noncore business and allocating and centralize our resources in areas such as improving our commercialization efficiencies.

【解讀】在效率提升方面，我打算減少對非核心業務的投資，將資源配置和集中在提高商業化效率等方面。

(foreign language)

（外語）

[Interpreted] At the same time, we'll also take actions to optimize our organizational structure to reduce the fat and increase the lean, and we expect this adjustment will be completed by end of this year and will start to show on P&L starting from first quarter next year.

【解讀】同時，我們還將採取行動優化組織架構，減脂增精，我們預計這一調整將在今年年底完成，並從2018年開始體現在損益表上。明年第一季度。

Yes, I will take the question in regard to the gross margin and expense trend. The company take on more actions to reduce costs and prioritize profitability. We expect our gross margin will gradually increase going forward. Sales and marketing expense in 2022 has already declined year-over-year, as mentioned by our Chairman, and will continue to decline next year. And we expect R&D expenses, which will peak in Q4 this year and start to decline next year.

是的，我會回答有關毛利率和費用趨勢的問題。公司採取更多行動來降低成本並優先考慮盈利能力。我們預計我們的毛利率將在未來逐漸增加。正如我們董事長所說，2022 年的銷售和營銷費用已經同比下降，明年將繼續下降。我們預計研發費用將在今年第四季度達到頂峰，明年開始下降。

In 2023 and the future period, we expect overall operating expenses in absolute dollar terms will decline year-over-year, and net loss will further narrow down until reaching our breakeven target. At the same time, we are paying very close attention to our cash flow and then tightly control CapEx and investment as we narrow our losses. We aim to keep our cash balance at a healthy level.

2023年及未來一段時間，我們預計以絕對美元計算的整體運營費用將同比下降，淨虧損將進一步收窄，直至達到我們的盈虧平衡目標。與此同時，我們非常密切地關注我們的現金流，然後在我們縮小損失的同時嚴格控制資本支出和投資。我們的目標是將現金餘額保持在健康水平。

Next question is from the line of Xueqing Zhang from CICC.

下一個問題來自中金公司的張學慶。

(foreign language) My question regards to advertising. Considering the impact of COVID-19 and the weaker macro environment, what's your strategy for advertising business? And how should we think about revenue growth in the first quarter and the next year? In addition, during the Double 11, we noticed that Bilibili has advertising products related to content e-commerce. Can management share more details about it? And also want to know, is Bilibili considering launching pre-roll ads at the present?

（外語）我的問題是關於廣告的。考慮到 COVID-19 的影響和疲軟的宏觀環境，您的廣告業務策略是什麼？我們應該如何考慮第一季度和明年的收入增長？此外，在雙11期間，我們注意到嗶哩嗶哩有內容電商相關的廣告產品。管理層能否分享更多細節？還有想知道，嗶哩嗶哩目前是否考慮推出前置廣告？

(foreign language)

（外語）

[Interpreted] Despite weakened macro environment, the ad revenue in third quarter reached RMB 1.35 billion and increased 16% year-over-year. This -- we consider this as a job well done. And especially the ad revenue from performance-related formats increased by over 20% year-over-year, and we have continued to take market share in the ad market.

【解讀】儘管宏觀環境疲軟，第三季度廣告收入達到人民幣13.5億元，同比增長16%。這 - 我們認為這是一項做得很好的工作。尤其是效果類廣告收入同比增長超過20%，持續佔據廣告市場份額。

(foreign language)

（外語）

[Interpreted] In 2023, we plan to continue to enhance our integrated marketing capability and to build a friendly and welcoming environment for advertisers. And we will continue to help advertisers to effectively reach our young generation through Bilibili's multiple products and multiple using scenarios and help them to build their brand equity.

【解讀】2023年，我們計劃繼續提升整合營銷能力，為廣告主營造友好、溫馨的環境。我們將繼續幫助廣告主通過嗶哩嗶哩的多產品多場景有效觸達年輕一代，幫助他們建立品牌資產。

(foreign language)

（外語）

[Interpreted] And we intend to further combine our content ecosystem with our ad business, particularly in those -- in our leading verticals, increase our ad inventory and accelerate ad momentum in the consumption and transaction scenarios.

[解釋]我們打算進一步將我們的內容生態系統與我們的廣告業務結合起來，特別是在我們領先的垂直領域，增加我們的廣告庫存並加速消費和交易場景中的廣告勢頭。

(foreign language)

（外語）

[Interpreted] For example, we are already among the top 5 market player in verticals like game and 3C and digital products. Another example would be for FMCG ads, which are part of young generation's necessity, continue to grow such as food and beverage, skin care and cosmetics. And as we move forward, we expect verticals like automotive, baby and maternity and home decor and appliances will have great potential especially as the young generation continue to grow with Bilibili as they enter in different life stages. And in Q3, actually, the automotive sector grew over 80% year-on-year within Bilibili.

【解讀】比如，我們在遊戲、3C、數碼等垂直領域已經躋身前5。另一個例子是作為年輕一代必需品的一部分的快速消費品廣告繼續增長，例如食品和飲料、護膚品和化妝品。隨著我們向前邁進，我們預計汽車、嬰兒和母嬰以及家居裝飾和電器等垂直領域將具有巨大的潛力，尤其是隨著年輕一代在進入不同的人生階段時繼續與嗶哩嗶哩一起成長。實際上，在第三季度，嗶哩嗶哩的汽車行業同比增長超過 80%。

(foreign language)

（外語）

[Interpreted] You mentioned about the content e-commerce. I would rather define the content e-commerce in Bilibili ecosystem as a consumption and transaction scenario. First of all, it's an infrastructure for us, and it is also one of the very important scenarios for commercialization. In 2023, we plan to further connect the transaction scenario with Bilibili community and with advertising business.

【解讀】你提到了內容電商。我寧願把嗶哩嗶哩生態中的內容電商定義為一個消費交易場景。首先它對我們來說是一個基礎設施，也是商業化非常重要的場景之一。 2023年，我們計劃進一步將交易場景與嗶哩嗶哩社區、廣告業務打通。

(foreign language)

（外語）

[Interpreted] For example, in the past 2 quarters, together with Taobao, Tmall, Jingdong, Pinduoduo and other brand advertisers, we are already starting to explore the seating consumption and transaction model, including video and live broadcasting-based e-commerce as well as traffic acquisition within the Bilibili community. With that, we hope to explore the different commercial values of Bilibili's unique consumption and transaction scenario.

【解讀】比如，過去2個季度，我們已經和淘寶、天貓、京東、拼多多等品牌廣告商一起，開始探索坐席消費和交易模式，其中以視頻、直播為主的電商作為以及嗶哩嗶哩社區內的流量獲取。藉此，我們希望挖掘嗶哩嗶哩獨特的消費和交易場景的不同商業價值。

(foreign language)

（外語）

[Interpreted] During this year's Double 11, despite the weakened macro environment, we still recorded a 47% year-on-year growth for our advertising revenue, among which the performance-based format of advertising revenue grew over 80%. And in the future, we are looking to further expand and be very open about the transaction and consumption scenario. We welcome more of the brand advertiser to join us to further explore the commercial value within our unique ecosystem.

【解讀】今年雙11期間，儘管宏觀環境疲軟，但我們的廣告收入仍實現了47%的同比增長，其中效果類廣告收入增長超過80%。在未來，我們希望進一步擴大交易和消費場景，並且非常開放。我們歡迎更多的品牌廣告商加入我們，在我們獨特的生態系統中進一步挖掘商業價值。

(foreign language)

（外語）

[Interpreted] As for the pre-roll, which is an old-fashioned format of advertising, it actually only takes about 3% to 5% of the overall advertising market in China, and it's declining rapidly along with its unit price. We believe some people might have been overly optimistic about the pre-roll's potential within Bilibili. And most of the Bilibili content is about 2 to 5 minutes long. If we add pre-roll to all of them, it will not -- it will only generate very limited income but be extremely disruptive to user experience. We believe it will bring more harm than the good, which we will be very cautious to try out.

【解讀】作為老牌廣告形式的前置廣告，實際上只佔中國整體廣告市場的3%到5%左右，而且隨著單價的下降而迅速下滑。我們認為有些人可能對前貼片在 Bilibili 中的潛力過於樂觀。並且大多數嗶哩嗶哩內容的時長在 2 到 5 分鐘左右。如果我們為所有這些都添加預滾動，它不會 - 它只會產生非常有限的收入，但會對用戶體驗造成極大的破壞。我們認為弊大於利，我們會非常謹慎地嘗試。

(foreign language)

（外語）

[Interpreted] I'll give you some examples of how are we exploring the ad format that's more adaptive to Bilibili's ecosystem. For example, we can explore within the video player frame, such as native ads, bullet-chat ads and other innovative formats within the player frame. Or we can explore the model that combines performance-based ads with both app download conversion module and CPS, we call it a game partner model.

[解讀]我會給大家舉幾個例子，說明我們是如何探索更適應嗶哩嗶哩生態系統的廣告形式的。比如我們可以在視頻播放框內探索，比如原生廣告、彈幕廣告等播放器框內的創新形式。或者我們可以探索將基於效果的廣告與應用下載轉化模塊和CPS相結合的模型，我們稱之為遊戲合作夥伴模型。

And another example would be the Story Mode ads, which we believe is a very good format to carry on the performance-based ads. And as the Story Mode traffic continued to grow, it will open us more -- it will open more ad inventory to us. Lastly would be the content e-commerce plus user acquisition within the Bilibili model. We'll continue to refine and optimize our goal to improve those performance-based ad efficiency. All of above-mentioned format of advertising, we believe, will generate higher income as well as it's more sustainable to our overall community.

另一個例子是故事模式廣告，我們認為這是一種非常適合進行基於效果的廣告的格式。隨著故事模式流量的持續增長，它將為我們打開更多的大門——它將為我們打開更多的廣告庫存。最後是嗶哩嗶哩模式下的內容電商加用戶獲取。我們將繼續完善和優化我們的目標，以提高那些基於性能的廣告效率。我們相信，上述所有廣告形式都將產生更高的收入，並且對我們的整個社區更具可持續性。

(foreign language)

（外語）

[Interpreted] We're still very, very confident that our ad business in 2022, 2023 will continue to outperform the overall industry and will continue to take on more market share. Thank you.

[解讀]我們仍然非常非常有信心我們的廣告業務在 2022 年、2023 年將繼續跑贏整個行業，並將繼續佔據更多的市場份額。謝謝你。

We'll now take our next question, this is from the line of Lincoln Kong from Goldman Sachs.

我們現在開始下一個問題，這是來自高盛的 Lincoln Kong 的話。

(foreign language) So my question is about the gaming business. Given that, Mr. Chen, you have personally taken control of the gaming business, what's our sort of strategy and targets and any change post your taking over? And after the reduction of the -- mostly the game [Banghao], how is the company? Are you looking for our overall gaming business growth outlook, especially our self-developed games as well as the overseas gaming strategy and progress?

（外語）所以我的問題是關於遊戲業務的。鑑於陳先生，您親自掌管了遊戲業務，我們的戰略和目標是什麼，您接手後有什麼變化？在減少了——主要是遊戲[Banghao]之後，公司怎麼樣了？您是否在尋找我們整體遊戲業務的增長前景，特別是我們的自主研發遊戲以及海外遊戲戰略和進展？

(foreign language)

（外語）

[Interpreted] I raised the strategy of putting video and game as Bilibili's core business back in 2019. As a matter of fact, Bilibili is starting to explore game business from very early days. Actually, Bilibili is the platform that has the most condensed and concentrated gamer in China. At the same time, we have lots of content offerings in terms of live broadcasting and video on our platform. At the same time, the areas that we invested in the original animation and comics has great synergies with our game business. So naturally, it's just a natural extension and natural course for Bilibili to put game at our core.

【解讀】我早在2019年就提出了將視頻和遊戲作為嗶哩嗶哩核心業務的戰略。其實嗶哩嗶哩很早就開始探索遊戲業務了。實際上，嗶哩嗶哩是國內玩家最凝聚最集中的平台。同時，我們平台上有很多直播、視頻等內容。同時，我們投資的原創動漫和漫畫領域與我們的遊戲業務有很大的協同效應。那麼順理成章，嗶哩嗶哩以遊戲為核心自然而然的延伸和自然的過程。

(foreign language)

（外語）

[Interpreted] In the past few years, the game business didn't perform as well as we planned, which I believe is mainly due to the slower-than-expected self-developed game progress. And the reason is that we were exploring in multiple directions by multiple teams at once, but end up spreading too thin and only just to double on many, but didn't bear fruit.

【解讀】過去幾年，遊戲業務沒有達到我們的預期，我認為主要是因為自研遊戲進度慢於預期。原因是我們同時由多個團隊向多個方向進行探索，但最終分散得太細，只能在許多方面加倍，但沒有取得成果。

(foreign language)

（外語）

[Interpreted] As I personally take on the game business, it doesn't mean we are making any change to our original strategy. As a matter of fact, we will carry on more diligently to that strategy, which is develop high-quality game in-house and distribute globally and putting gaming business at our core.

【解讀】作為我個人承擔的遊戲業務，並不意味著我們正在對我們原有的戰略做出任何改變。事實上，我們將更加努力地貫徹以遊戲業務為核心的自研精品、全球發行的策略。

(foreign language)

（外語）

[Interpreted] I intend to focus on only 1 or 2 directions, focusing our best resource and our energy on doing the least but the best towards the highest industry standards.

[解讀]我打算只專注於一兩個方向，把我們最好的資源和精力集中在做最少但最好的事情上，以達到最高的行業標準。

(foreign language)

（外語）

[Interpreted] At the same time, I will strengthen the life cycle management of our self-development projects to increase the investment in projects that meet expectations and quickly iterate out projects that do not meet the expectations.

【解讀】同時，加強自主研發項目的生命週期管理，加大符合預期的項目投入，快速迭代不符合預期的項目。

(foreign language)

（外語）

[Interpreted] Moving forward, my requirement for the game business will be to be very, very down to earth and do our best to produce the best product and try our best to increase -- to enhance the business. Because we have the perfect environment in game content, I'm still very confident whether it's self-developed games or licensing games, we can deliver sustainable growth in this sector.

[解讀] 展望未來，我對遊戲業務的要求將是非常非常腳踏實地，盡最大努力生產最好的產品，並儘力增加——提升業務。因為我們在遊戲內容方面有完美的環境，我還是很有信心的，無論是自研遊戲還是授權遊戲，我們都能在這個領域實現可持續增長。

We'll now take our next question, this is from the line of Yiwen Zhang from China Renaissance.

我們現在開始下一個問題，這是來自華興資本的 Yiwen Zhang 的話。

(foreign language) So my question regarding live broadcasting. So the integration between the live broadcasting and the media streaming has been on for a while. Can you share more color on that strategy and then discuss our expectation on live streaming business?

（外語）所以我的問題是關於直播的。所以直播和流媒體的融合已經進行了一段時間。您能否就該戰略分享更多色彩，然後討論我們對直播業務的期望？

(foreign language)

（外語）

[Interpreted] We think the live broadcasting business has met our expectations this year. The first 3 quarters this year, our live broadcasting revenue grew by 30% year-on-year. And our gross -- live broadcasting's gross margin also starting to recover this year.

【解讀】我們認為今年的直播業務達到了我們的預期。今年前三個季度，我們的直播收入同比增長了30%。而我們的毛——直播的毛利率今年也開始回升。

(foreign language)

（外語）

[Interpreted] As I mentioned in the past, we have always believed live broadcasting is a capability for the platform. It's a natural extension of the video format of content. And our strategy has always been combine the live broadcasting ecosystem with our video ecosystem to generate best synergies among these 2.

【解讀】我之前也提到過，我們一直認為直播是平台的一種能力。它是內容視頻格式的自然延伸。我們的戰略一直是將直播生態系統與我們的視頻生態系統相結合，以在這兩者之間產生最佳協同效應。

(foreign language)

（外語）

[Interpreted] From the supply of content side, we have continuously explored within our ecosystem to convert our content creators to a host and convert our hosts to content creators. In Q3, content creator/host, the number of those content creators/hosts has increased 73% year-over-year, which is a quite impressive growth. And this demonstrates how our strategy is working, and we are increasing the supply side of the content.

【解讀】從內容供給端，我們在生態內不斷探索，將我們的內容創作者轉化為主播，將我們的主播轉化為內容創作者。在第三季度，內容創作者/主持人，這些內容創作者/主持人的數量同比增長了 73%，這是一個相當可觀的增長。這表明我們的戰略是如何運作的，我們正在增加內容的供應方。

(foreign language)

（外語）

[Interpreted] We are also exploring from the demand side to find -- to discover the users that they might be both interested in the same vertical of content, whether it's in the format of video or it's in the format of live broadcasting. And in the third quarter, we've seen the DAU penetration of live broadcasting continue to increase, and the MPU for live broadcasting also recorded a 79% year-on-year growth. This is also very, very impressive growth.

【解讀】我們也在從需求端探索——發現可能對同一垂直內容感興趣的用戶，無論是視頻形式還是直播形式。而在第三季度，我們看到直播的DAU滲透率繼續提升，直播的MPU也錄得79%的同比增長。這也是非常非常可觀的增長。

(foreign language)

（外語）

[Interpreted] Last quarter, we have combined the operation of live broadcasting with the PUGV. And from an organizational perspective, it's the same team that's looking over the content creators' operation as well as the live broadcasting host operation. And it's also the same team that's paying attention to user, which user is watching certain content category and what kind of live broadcasting content he or she might be interested in. We believe this change are really lining up and align our goals of our operation target, at the same time, it's to increase our overall organization position.

【解讀】上個季度，我們將直播與PUGV結合起來運營。從組織的角度來看，內容創作者的運營和直播主的運營是同一個團隊。關注用戶的也是同一個團隊，哪個用戶正在觀看某個內容類別以及他或她可能對什麼樣的直播內容感興趣。我們相信這種變化確實在排隊並與我們的運營目標保持一致，同時也是為了提升我們的整體組織地位。

(foreign language)

（外語）

[Interpreted] And we are combining the operation for the same vertical in terms of live broadcasting and PUGV. And for example, in terms of the VUp content categories, now we are opening up the video materials or video inventory to both VTubers as well as the virtual live -- virtual content creators. This has significantly increased the live broadcasting host frequency of opening up their live broadcasting program and increased our overall content supply.

【解讀】而且我們在直播和PUGV這兩個垂直領域結合運營。例如，就 VUp 內容類別而言，現在我們正在向 VTubers 以及虛擬直播 - 虛擬內容創建者開放視頻資料或視頻庫存。這大大增加了直播主打開他們直播節目的頻率，增加了我們整體的內容供應。

(foreign language)

（外語）

[Interpreted] Another example would be the knowledge sector. In the past, we might think that for the knowledge sector content creators, it's difficult for them to monetize through live broadcasting. However, we've discussed in the law area or in the relationship areas, it's very suitable for the live broadcasting host to connect directly with the participants and do a Q&A session. And actually, we have seen one live broadcasting host to gain their -- gain her 1 million follower milestone just through the live broadcasting services. So this will be another example after the execution of the 2 operations, we can explore new opportunities.

[解釋] 另一個例子是知識部門。過去，我們可能會認為對於知識領域的內容創作者來說，他們很難通過直播變現。但是我們在法律區或者關係區討論過，非常適合直播主直接和參會者進行對接，做一個問答環節。實際上，我們已經看到一位直播主持人僅通過直播服務就獲得了他們的 100 萬粉絲里程碑。所以這將是執行2個操作後的另一個例子，我們可以探索新的機會。

(foreign language)

（外語）

[Interpreted] As such, I'm very confident as the integration further penetrates within the live broadcasting and PUGV, the live broadcasting revenue as well as its gross margin will continue to increase in 2023.

[解讀]因此，我非常有信心，隨著直播和PUGV的融合進一步深入，直播收入和毛利率將在2023年繼續增長。

Back to you, operator. I think that's about time for the Q&A session today.

回到你身邊，接線員。我想今天的問答環節到了。

That does conclude the question-and-answer session. So I would like to turn the conference back over to Juliet Yang for any additional or closing remarks.

問答環節到此結束。因此，我想將會議轉回給 Juliet Yang，聽取任何補充或結束語。

Well, thank you once again for joining us today. If you have further questions, please contact me, Juliet Yang, Bilibili Executive 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. Bye-bye.

好吧，再次感謝您今天加入我們。如果您還有其他問題，請聯繫我，Bilibili 執行 IR 總監或 TPG 投資者關係部的 Juliet Yang。我們在中國和美國的 IR 聯繫信息可以在今天的新聞稿中找到。祝你有美好的一天。再見。

Thank you. This does conclude the conference for today. Thank you for participating, and you may now disconnect.

謝謝你。今天的會議到此結束。感謝您的參與，您現在可以斷開連接。

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call]

[此記錄中標記為 [Interpreted] 的部分由現場通話中的口譯員口述]