Bilibili Inc (BILI) 2021 Q2 法說會逐字稿

Good day and welcome to the Bilibili 2021 Second Quarter -- Second Financial Quarter Results and Business Update Conference Call. Today's conference is being recorded.

At this time, I would like to turn the conference to Juliet 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 filings with the SEC and Hong Kong Stock Exchange.

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

As a reminder, this conference is being recorded. In addition, an investor presentation and webcast replay of this conference call will be available on Bilibili IR website at ir.bilibili.com.

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

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

Thank you, Juliet, and thank you, everyone, for participating in our 2021 second quarter results conference call. I'm pleased to deliver today's opening remarks on behalf of Mr. Chen.

In August 2019, we announced our ambition to further grow our user base. Today, 2 years later, we find ourselves on the fast track to executing that strategy, achieving many great milestones along the way.

In the second quarter, we added 14 million MAUs sequentially, bringing our total MAUs to 237 million, up 38% year-over-year. Mobile MAUs also rose by 44% year-over-year, reaching 220 million. And the DAUs reached 63 million, marking a 24% increase year-over-year. Importantly, our users became even more engaged, spending an average of 81 minutes per day on our platform, marking the highest second quarter level in our operating history. As we move into the peak summer season, we are pleased with the increasing momentum we have seen so far, which places us firmly on track to achieve our growth target.

Our robust user growth also translated to strong top line expansion. In the second quarter, our total revenues reached RMB 4.5 billion, up 72% year-on-year, once again beating the high end of our guidance. Driven by improved products and services, MPUs were up 62% year-over-year to 21 million, and our paying ratio improved to 8.8% versus 7.5% in the same period last year.

As the go-to destination for young Chinese, our platform has also gained wider recognition among advertisers across different industry verticals. In the second quarter, ad revenue grew by an impressive 201% year-over-year.

Celebrating our 12th year anniversary on June 26, we honored the many years we have grown with our users. Over the past 12 years, we have remained true to our original aspirations to create an outstanding community for all of our users and content creators and to bring Chinese original content to users worldwide. With this mission in our hearts, we continue to uphold our public responsibility to our community. We insist on data authenticity, content positivity and investment in Made in China original content.

In July of this year, we published our first ESG report. Here, we outlined our ESG policies and actions, keeping our commitment to being a responsible public company with a goal of bringing positive social and cultural impact to the world.

Looking ahead, the transformative effects of videolization is creating an era of massive opportunities for us. Graphics and the texts are being reinterpreted into video-format to deliver information in more lively, vivid and powerful ways. As we see it, video-format platforms will be the new gateway for people to connect to the Internet and access the world. And Bilibili is on track to be one of them. The momentum from video trends, along with our solid strategic execution to expand our content, community and commercialization, give us great confidence in our future sustainable growth.

With that overview, I would now like to provide more granularity on our second quarter operations, beginning with content.

Our PUGV ecosystem continues to thrive, representing 93% of our total video views in the second quarter. Over the past 12 years, we have cultivated our platform as a destination for young people to showcase their talents and realize their career goals as professional content creators. We continue to improve our services to attract content creators, launch more tools and modify on our apps to make content creation easier.

In the second quarter, Bilibili was home to 2.4 million content creators, up 25% year-over-year. And monthly video submissions grew to 8.4 million in the second quarter, up 41% year-over-year. The increase in our metrics are no small feat given last year's high base.

We continue to improve our traffic distribution mechanism to let high-quality content creators quickly match with their fans. In the second quarter, the number of content creators with more than 10,000 followers increased by 47% year-over-year. Our live broadcasting platform and the Sparkle advertising platform provide means of our content creators to unlock their commercial value while showcasing their talent.

By the end of the second quarter, 409,000 content creators had also joined our ongoing cash incentive program. For the second quarter, our top 5 most populated verticals were the lifestyle, entertainment, games, tech and knowledge and anime. We see many new verticals on the rise, such as relationships, home decorations, fitness, beauty and cosmetics. The emerging popularity of these categories reflects the evolving content needs as we expand to wider demographics.

Being a hub for young minds to discover and explore various interests, we firmly believe the content we provide should have positive impact on people's lives. We actively promote content that's informative, engaging, fulfilling and helps our users to become their better selves. It could be a small pleasure, such as how to bake cookies or engage users in deeper thinking through a glance into the cosmos. In the past 12 months, over 113 million users accessed pan-knowledge content across a variety of subjects on our platform, further solidifying the mindshare among users of Learn on Bilibili.

Turning to our OGV content. Augmenting our PUGVs and unlocking commercialization potential, our high-quality OGV content continues to attract new users and converting paying users on our platform. In addition, many of our self-produced titles have become valuable IP assets that we can build up as we leverage our network to further our IP's influence.

Representing Chinese culture and a part of China's soft power, Chinese animation has become increasingly popular domestically and internationally. And our investments in this category are paying off.

A primary example of our evolving IP creation and self-production capabilities is Link Click, Shíguang Dàilirén. Produced by our own anime studio, this Bilibili original IP asset become an immediate hit following its release in April, accumulating over 160 million video views. Partnering with Sony Funimation, Link Click was released in multiple countries and regions where it continues to be highly rated.

Other popular Chinese anime titles have also helped us to attract many new young users and have been well received by overseas anime lovers. These titles further solidify our leading position in the ACG space, including the final chapter of Ling Cage, Ling Long; Legend of Hei, Luo Xiao Hei Zhan Ji; Season 2 of Carp Reborn, Yuan Long; and Heaven Official's Blessing, Tian Guan Ci Fu.

Our self-produced match-making variety show, 90 Hun Jie Suo, was launched last week. And the music variety show, The Next Banger, Wo De Yin Yue Ni Ting Ma, will be released in August. With these new OGV offerings, we hope to attract more young minds with relevant interests and stimulate even more discussion within our community.

Turning to our community. Our community continues to be a vibrant one. Users are incredibly engaged and tightly bonded both to our content and with our platform. Over time, we have become a part of many people's regular daily routines. For the second quarter, average daily video views were up by 48% year-over-year, reaching 1.7 billion. Monthly interactions were also up by 39% year-over-year, with users generating 7.3 billion bullet-chats, comments, likes, Bilibili Moment posts and virtual gifting.

The number of official members on Bilibili are also increasing with high retention rates. By the end of second quarter, 121 million people were official Bilibili members, an increase of 35% from the end of the second quarter last year. And our 12-month retention rate remained around 80%. In fact, more than 50% of our registered users in 2011 still remain active to this day, 10 years later.

Over the years, we continue to evolve our community management system to ensure a friendly and welcoming community environment and inspiring positive social interactions. We strongly believe that the community is a place for people to reach consensus, not to create disputes. In addition to our official member mechanism, we continue to reinforce community member patrol and enhance our designated response team to protect the integrity of the community. With these efforts, we hope to create an enjoyable and loving place for all users and creators to share, learn and thrive.

Now let's look at our commercialization program. We continue to provide more products and services. As we execute on our commercialization strategy, we are further realizing the deep value of our high-quality users.

Starting with our games. In the second quarter, revenues from mobile games has remained relatively flat year-over-year at RMB 1.2 billion. Going into the second half of the year, our priorities are to expand our mobile game roster domestically and internationally. For our next stage of growth, we are committed to building on our internal development capabilities. We currently have 6 game studios with over 1,000 members working on a dozen projects. Leveraging our game operating experience, rich PUGV and live broadcasting ecosystem, strong distribution power and our deep understanding of users' preferences, we are confident we can bring exceptional internally developed games to our users.

We welcomed 3 new titles to our roster in the second quarter as the exclusive distributor in China. Employing user-centric game promotion techniques, such clever memes and PUGV content, players immediately embraced Guardian Tales, Kan Gong Qi Guan Jian, with the game ranking highly on China's iOS top grossing and top download charts for weeks following its release. Our exclusively licensed indie game, Dead Cells, Chong Sheng Xi Bao, was another primary example of Bilibili's distribution power. By the end of July, over 2 million copies had been sold.

Overseas markets present us with another growth opportunity. In May, we successfully launched RE: Final Gear Zhong Zhuang Zhan Ji in South Korea. Praised for its delicate art design and innovative game play, RE:Final Gear quickly won the hearts of like-minded ACG lovers. For 3 weeks after its release, RE:Final Gear continued to hover on Google Play's top 10 grossing chart in South Korea. This success story demonstrates our established capabilities in game selection and execution in overseas markets. We believe we can build on this success with the other titles in other regions.

And for our games pipeline, we currently have 11 titles approved for domestic release and a number of ACG titles slated for international release in the coming quarters. During our recent Bilibili game press conference, Your Fantasy World, we introduced 16 brand-new titles, including 10 exclusively licensed games and 6 self-developed projects. Catering to a new generation of gamers, these titles cover a wide array of games, including sandbox, multi-player puzzle-solving, real person interactive RPG, simulation and MOBA. Each title features, unique graphic design and story settings, reflecting Bilibili's understanding of Gen Z+ gamers' taste and preferences.

Looking at our VAS business. Our VAS business remained strong with revenues reaching RMB 1.6 billion in the second quarter, up 98% year-over-year. Being a natural extension of our video ecosystem, live broadcasting is a vivid way to bring high-quality video content to our users. And for our content creators, it is also an important channel to engage with their followers and realize commercial value from their creations.

For game lovers, we are a one-stop platform for game-related videos, e-sports tournaments and a place to engage with game KOLs. For ACG and entertainment enthusiasts, our content continues to expand with our huge anime library and our unique live broadcasting entertainment, particularly virtual streamer or VUP content. Over 60% of top global VUPs have now joined our Bilibili live broadcasting network, making us the largest VUP community in China.

Turning to our premium membership business. Our dominant Gen Z+ users continue to show growing propensity to pay for premium content. By the end of the second quarter, the number of premium memberships reached another record high of 17.4 million, an increase of 66% year-over-year.

As for our advertising services, we are pleased with another quarter of explosive growth for our ad business. Revenues grew by 201% year-over-year to RMB 1.05 billion. More and more advertisers have recognized us as the must-invest platform to gain visibility from Gen Z+ demographics. For the second quarter, the top 5 advertising verticals were mobile games, digital and 3C products, skincare and cosmetics, e-commerce and food and beverage.

Along with our increasing brand awareness, we continue to improve the efficiency of our ad-matching algorithm and strengthen our ad products, giving us confidence in our ability to secure continuous ad revenue growth.

In summary, we are pleased with our business progress so far. We have set the bar high and aim to reach higher. Building on our content ecosystem-driven model, we will continue to grow our vibrant community and enhance our commercialization capabilities. At the same time, we place great importance on our social responsibility with a goal of spreading positivity to the world around us. Whether it be through our Bilibili-sponsored schools, disaster relief efforts or pandemic support, it is essential for us to always lead with integrity and give back to society.

This concludes Mr. Chen's remarks. I will now provide a brief overview of our financial results for the second quarter of 2021 and outlook for the third quarter.

Total net revenues for the second quarter were RMB 4.5 billion, up 72% from the same period of 2020. We continue to see a more balanced revenue mix driven by our diversified commercialization channels. Our total net revenues breakdown by revenue streams was approximately 27% mobile games, 36% VAS, 23% advertising and 14% e-commerce and other business.

Cost of revenues increased by 74% year-over-year to RMB 3.5 billion. Revenue sharing cost, a key component of cost of revenues, was RMB 1.7 billion, representing a 70% increase from the same period in 2020.

Gross profit increased by 64% year-over-year to RMB 989 million, and our gross margin was 22% in the second quarter.

Total operating expenses was RMB 2.5 billion, up 107% from the same period in 2020.

Sales and marketing expenses were RMB 1.4 billion, representing a 107% increase year-over-year. The increase was primarily attributable to increased channel and marketing expenses to promote our app and brand as well as promotional expenses for mobile games and an increase in headcount in sales and marketing personnel.

G&A expenses were RMB 436 million, representing a 109% increase year-over-year. The increase was primarily due to increased headcount in general and administrative personnel, increased share-based compensation expenses and higher rental expenses.

R&D expenses were RMB 674 million, representing a 104% 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 1.1 billion for the second quarter of 2021 compared with RMB 571 million in the same period of 2020. Adjusted net loss, which is a non-GAAP measure that excludes share-based compensation expenses, amortization expenses, income tax related to intangible assets acquired through business acquisition, was RMB 858 million compared with RMB 476 million in the same period of 2020.

Basic and diluted net loss per share was RMB 2.91. Adjusted basic and diluted net loss per share was RMB 2.23.

As of June 30, 2021, we had cash and cash equivalents, time deposits as well as short-term investments of RMB 27.6 billion compared with RMB 12.8 billion as of December 31, 2020. Our sufficient cash reserves gives us more confidence in our ability to execute our growth strategy, which we believe will yield considerable return in the long run.

With that in mind, we are currently projecting net revenue for the third quarter of 2021 to be between RMB 5.1 billion and RMB 5.2 billion.

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

(Operator Instructions) We have the first question. This is coming from the line of Lei Zhang from Bank of America.

(foreign language) Congrats on strong set of results. My question is mainly on user growth. Can you give us more color as on the second quarter's user growth, which is typically a low season, but our growth number was pretty good? Then secondly, how should we look at the second half user trend and our long-term user target?

(foreign language)

[Interpreted] So the first half performance, we did a pretty good job. I think that's all thanks to our content ecosystem-driven business model. And this model's character is the longer term it develops, we think the more competitive it is because this is a truly healthy business model that's self driven and sustainable.

(foreign language)

[Interpreted] So I believe many of the participants for today's call is Bilibili users themselves. And I believe you might have the same feeling as I do while using Bilibili that the content on Bilibili is more and more diversified and more high quality. Sometimes, for my personal use on Bilibili, I will be surprised to find out the diversity, the vastness and depth of our content offering. So I believe the business model that we're running is very, very healthy, and we believe this model can bring our long-term, sustainable growth.

(foreign language)

So as for our long-term user guidance, currently we have already experienced half of Q3. So far, what we have observed in Q3, that we see very good progress in terms of user growth for both quality and quantity. And early this year, we have give out a user forecast for this year that our MAU will reach 260 million. So far, we think we should be quite on track to achieve that goal or even surpass that goal.

(foreign language)

[Interpreted] As for our long-term goal of 400 million MAU by end of 2023, so far, we feel very confident to achieve that goal, well on track.

(foreign language)

[Interpreted] And one thing I want to emphasize, that Bilibili's user growth, the best of it is quality, that we have maintained very high quality of user growth. From our perspective, we're not only just attracting users to join Bilibili, but they actually really recognize the value of the platform, and they're willing to stay with us for long term. Even though that we have experienced a very fast, healthy user growth in the past, we've noticed that engagement level and the activeness of our users are still growing that in the second quarter, our daily user time spend reached 81 minutes. That is the best result we've seen compared with our previous second quarter time spend.

(foreign language)

[Interpreted] And additionally, we see the long-term engagement level for our user is also improving. Actually, we've seen that the registered user in 2018, '19 and 2020, their DAU-to-MAU engagement level in 2021 is actually improving on a year-on-year basis.

(foreign language)

[Interpreted] And every quarter, we release our daily VV and our monthly user engagement number, and that year-on-year growth rate is actually faster than our MAU growth rate.

(foreign language)

[Interpreted] So all of those metrics show that we are not only being able to attract users to join our platform, they actually stay with us and become more engaged.

Okay.

(foreign language)

We have the next question. This is coming from Alex Poon from Morgan Stanley.

(foreign language) I'll translate my question. My question is regarding the advertising business. Congrats on very strong growth of over 200% for 2 quarters. Given that there are recently regulations around data privacy, flash screen ads, education, et cetera, how should we forecast and look at the second half growth? Where will the growth drivers come from?

(foreign language)

[Interpreted] So for second quarter, our quarter ad revenue has surpassed CNY 1 billion for the first time and achieving over 200% year-on-year growth. And this is the ninth consecutive quarter that we beat advertisement results.

(foreign language)

[Interpreted] As we look into the second half and for the next few years, we've done several things to continue to improve our ad efficiencies and lay solid foundation for our future ad growth.

(foreign language)

[Interpreted] So first of all, we have continued to explore multiple scenario for our ad products based on our clients' needs. And we hope to help our clients to precisely reach their target audiences multiple times across various scenarios across Bilibili's product ecosystem and quickly build their brand image through just one campaign investment, and we have already achieved that within this quarter.

(foreign language)

[Interpreted] Secondly, we are also actively exploring new ad formats, including ad in a video format as well as connect advertising with content creators' creativity.

The regulatory environment you mentioned, we believe that the foundation or the logic behind it is that the regulators hope our consumer will be notified it is advertisement. And what Bilibili has been practicing is, first of all, all of our advertisements will not be a blockage type of advertisement. We hope really to embed and connect and combine content with advertisement, make it more interchangeable. Good content could be a good commercial, and good commercial could be a good content. And from that perspective, our integrated marketing solution as well as our content creators' own creation, their own production towards native ads is a perfect solution towards our problem.

(foreign language)

[Interpreted] And secondly, our ad efficiency was also greatly improving this quarter, thanks to our ad tech and argo team. And we're also investing in frontier ad tech-related R&D.

(foreign language)

[Interpreted] And thirdly is that we will be focusing on our leading verticals and provide industry-based as solutions such as game, technology, education, e-commerce and food and beverage, et cetera. And as we expand our user base, we hope to further expand our new ad industry verticals and verticals with sufficient ad budgets, for example, such as automotive and new domestic consumer goods. And all of that has been reflected in our second quarter's performances.

(foreign language)

[Interpreted] And most importantly, we have upgraded our organizational structure of our commercialization team. In the second quarter, we have integrated Bilibili commercialization middleware platform consists of commercial traffic management system, ad system and our Sparkle advertisement system. The purpose of doing so is to further optimize and allocate Bilibili's commercial resources and improve our commercialization efficiency.

(foreign language)

[Interpreted] And additionally, we have also regrouped our sales from integrated marketing team and our content creator-related sales team, forming one centralized cell center. The goal is to provide Bilibili featured integrated marketing solutions and help our clients to improve their brand equity and achieve self-reinforcing marketing circulation on Bilibili.

(foreign language)

[Interpreted] So there's a saying that the platform's value equals the users' value on this platform, and Mr. Chen has repeatedly mentioned the value of the user. Our current average age of our user is around 22.8 years old. And 86% of our users are under age 35, and a majority of them are in first- and second-tier cities. And for this group of cohort, they are the main consumption groups in China, and they represent the highest value of demographics.

And building on that advantage, we'll continue to reinforce our infrastructure and continue to improve our ad profit. And for the second half of this year and 1 to 3 years ahead, we're still quite confident to maintain a healthy and fast growth for our ad business.

Thank you.

The next question comes from the line of Alex Yao from JPMorgan.

(foreign language) So my question is about the regulatory impact on gaming and the live streaming operation given the changing regulatory environment in the space and potentially more policies coming out in the next couple of quarters. How should we think about the impact on our gaming and live streaming operation?

(foreign language)

[Interpreted] So actually, for 2021, what we have observed, there's no significant change of the regulatory environment towards games or towards live broadcasting. The speculation and discussion that's all over the Internet is just based on the media. It came from the media level. And as a company ourselves, we have kept a regular dialogue with different government authorities. And from the company's perspective, we actually haven't heard anything new.

And the discussion is generally from the media or the Internet users. And it's just based on their own speculations or imagination, and there's no ground to those discussions. And from our perspective, we think that from a global perspective, the regulation towards Internet content, game or live broadcasting, it will be more and more standardized and rule based. And that hasn't changed.

(foreign language)

[Interpreted] From our perspective, in the past, Bilibili has always responded very actively towards all kinds of regulations from the government. We believe for industry that's experiencing fast growth, certain regulation is actually beneficial for this industry's long-term and healthy growth.

(foreign language)

[Interpreted] So we think as the industry's development, we have more influence and impact towards the society, it's a very natural process for the regulation to become more rule based and standardized. And I believe the video industry, it will be a multitrillion RMB worth of industry. And game will very likely become the mainstream format of entertainment. In the past, it probably is an emerging new vertical, and the details of those regulations were not mature. And as you grow bigger, it's just very natural for the regulator to form up a more standardized and rule-based regulatory environment.

(foreign language)

[Interpreted] So we think that the government's regulation towards video content and game content has been very clear. And in general, they do hope this industry will develop and encourage the development of this industry. And they have been very specific on the things that they hope to regulate. One is on the minor protection. Two is the compliance of the content itself. And in the past and up to now, Bilibili has been very clear on those requirements and has followed and implement all the regulatory requirements.

(foreign language)

[Interpreted] So generally, I think that the game industry will definitely move forward and experience better development. And as an Internet company, we'll be fully compliant with the key areas that the government has specifically required. One is on the minor protection and two is on the compliance of the content in itself. My personal view is we're still very optimistic. I believe that this industry will only become better and better under the supervision of the government.

(foreign language)

[Interpreted] Generally, I think that this industry is quite different from 10 years ago. Probably, 10 years ago, it's still early stage. There's not a very precisely regulated. But 10 years later, this industry has become much more matured. The participants in this industry also gained more experience, over 10 years of experience.

I think we have already reached a consensus with the industry players and the industry needs to be regulated towards a healthy development path. And from Bilibili's perspective, we have strictly followed that rule. For example, on the minor protections, that the revenue generated from user that's below 18 years old, the game revenue only takes around 1% of our total game revenue. So we have seen implementing restrictions and rules to better protect our minors and follow the regulatory requirement. So I think, overall, industry is growing towards a more healthy and positive track. And I personally feel quite comfortable with the existing environment.

(foreign language)

[Interpreted] So to summarize, in the past few months, I personally don't believe there's a vast change of regulatory environment toward games or video. And we believe the existing practice and requirement from the government is very appropriate and scientific. And we believe our peers in this industry also agree with that and already reached the consensus that this industry needs to be moved towards a more healthy and regulated path.

Okay.

The next question comes from the line of Felix Liu from UBS.

(foreign language) Let me translate myself. So first, congratulations on the strong set of results. My question is on the GP margin. I noticed the GP margin of this quarter showed some weakness Q-on-Q and year-on-year. So may I know the reason? Or any color behind that? And what is the management's GP margin trend for rest of this year and for the longer-term potential?

Okay. This is Sam. Let me take your question. You're right, the slight decrease of the margin in Q2, actually it's mainly due to the change of the sales mix. In Q2, we saw the contribution of our game revenue actually was decreased as a percentage of the whole revenue. And there were also lower contribution from our cooperation games. So and also for our network campaign revenue, the gross profit margin also declined a little bit because we launched a campaign in Q2 to offer higher revenue sharing ratio. It's like a performance-based incentive, and it's for those new hosts only.

So actually, if we look at the short-term GP margin trend, we are still in the early stage on the monetization side. So it will be factored over the quarters.

But before we get into the details of our long-term margin trends, I would like to emphasize on the strategic thinking on the profitability. Now while we have the opportunity to quickly expand our user base, our priority is always focused on user growth and top line expansion, rather than to limit our growth potential for the sake of the breakeven.

When we are thinking about the path to the profitability, actually we are thinking what's the sensible revenue level to achieve a healthy break-even status and whether it's sustainable to keep improving the profitability after the breakeven. So for example, a company with like a RMB 20 billion revenue and the same company with RMB 15 billion revenue, the bigger revenue side is surely more sustainable for long-term development.

Over the past 12 months, actually we successfully achieved a quality revenue growth with the expansion of our user base. Our MAUs were up 38% year-over-year, and monetization efficiency per MAU was also increasing. Specifically, the nongame revenue per MAU actually increased by 72% year-on-year to around RMB 13.8 per quarter in Q2. We believe there are plenty of upside because we grew our user base and improved our monetization efficiency.

And also, on the cost side, our key relatively fixed operating costs, including the content, server and staff cost, decreased from like 34% of the total revenue in 2019 to 28% in Q2 this year. As we grow our top line and improve the efficiency, our revenue mix will also be more diversified, and our segment margin, such as live broadcasting and the online games, as I mentioned, still have room to improve. So that's we want to look at for the long term on gross profit margin trend.

We have the next question from Yiwen Zhang from China Renaissance.

(foreign language) So my question is regarding gaming. So in the first half, our gaming revenue is pretty stable. How should we look here as the second half and also the longer-term gaming revenue growth? Additionally, when we do self-developed game, what the key factors we do have in mind?

(foreign language)

[Interpreted] Indeed, when we look at our game revenue, it has experienced some of the slowdown in the first half of this year. The main reason that we see is because lack of supply for both of our exclusively licensed game and jointly operated game. For the revenue to grow, we need to get more new games. And because of the overall planning issue popped to us in the past 6 months, that there has been some of the delay, and the supply has been slower than expected. And for the same reason, some of our projects have been delayed. And that was the main reason for the slowdown for our game revenue.

(foreign language)

[Interpreted] We also see some positive signs as we operate our business. Besides the supply issue, we've seen on the demand side there's many, many positive signs. First of all, on the user. The game-related user who watch game-related live broadcasting and video actually kept growing with our overall MAUs. Even with the undersupply for game titles for many new titles that we released in the first half of this year, including Guardian Tales and Sword Art Online, it's new addition, new downloads and new user has constantly break our single-game record.

And on the other hand, for the old games, we are seeing its long operation cycle. Many of our games continue to grow in terms of revenue and users. For example, our exclusive licensed game, Azur Lane, and our jointly operated game, Genshin Impact, we're seeing more user joining and its grossing are continuously to grow year-over-year. So generally, we think on Bilibili, the gamers are growing, and their desire and need for high-quality games is also growing.

(foreign language)

[Interpreted] So as we see it, we think as long as we solve the supply problem, we should be able to solve the bottleneck that we've been seeing in the past quarters. And the solution towards the supply problem is while we continue to enhance our licensing business, we will start to invest in our self-developed games. And actually, in last year, we have already seen the trend of lack of supply in the market, and we started to invest in our self-developed game business. Currently, we have over 1,000 team members in our self-development team, and there's multiple titles and projects under development. And we'll be expecting to launch our own self-developed games in next year and the year after next year.

Based on our existing business scale, we think our self-developed game will be our #1 priority. And I believe, in a few years later, our self-developed game should be contributing over half of our game revenue.

(foreign language)

[Interpreted] So to summarize, we believe as our users continue to expand, we should have more gamers and more demand for games. And to solve the supply problem, we'll continue to reinforce our licensing game business while investing in self-developed games. And in the past, we might have one engine for game revenue growth, which is the licensing. And in the next few years, we'll be dual-engine: self-development, licensing and joint operations. And we think that should power our game revenue growth.

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

Well, thank you again for joining us today. If you have any further questions, please contact me, Juliet Yang, Bilibili's IR Executive 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.