Bilibili's Q3 Surge: Mobile Gaming and Ads Drive Record Profits, New Era of Profitability Begins

Bilibili Inc. (NASDAQ: BILI) has delivered a landmark quarter, reporting its first-ever non-GAAP net profit while achieving a 26% year-over-year revenue surge. The Chinese multimedia platform’s third-quarter 2024 results highlight a strategic pivot toward profitability, fueled by runaway growth in mobile gaming and advertising. This shift marks a pivotal moment for Bilibili, as it transitions from a content-driven community platform to a financially sustainable tech giant.

Revenue Breakdown: Gaming and Ads Lead the Charge

Total net revenue reached RMB7.31 billion (US$1.04 billion), driven by 84% year-over-year growth in mobile games and a 28% rise in advertising. The success of its exclusive game San Guo: Mou Ding Tian Xia—now in its fourth season—was a key catalyst, demonstrating Bilibili’s ability to monetize its gaming ecosystem. Meanwhile, advertising revenue benefited from improved ad inventory and performance-based ads, which grew nearly 50% in the quarter.

The Value-Added Services (VAS) segment, including live streaming and premium subscriptions, rose modestly by 9%, while IP derivatives and other revenue dipped 2%, reflecting challenges in non-core areas.

Profitability Milestone: From Loss to Profit

Bilibili reported its first non-GAAP net profit of RMB235.9 million (US$33.6 million), a stark turnaround from a RMB863.5 million non-GAAP loss in the same quarter last year. Gross profit surged 76% to RMB2.55 billion, with margins expanding to 34.9%, up from 25% in 2023. This margin improvement was driven by higher contributions from high-margin gaming and advertising.

Even on a GAAP basis, net loss narrowed to RMB79.8 million, a 94% reduction year-over-year. The company’s operating cash flow more than doubled to RMB2.23 billion, signaling robust liquidity.

User Engagement at Record Levels

Bilibili’s user base continues to grow, with 348 million monthly active users (MAUs) and 107.3 million daily active users (DAUs)—both all-time highs. Users now spend an average of 106 minutes per day on the platform, a 6-minute increase year-over-year. This deepening engagement underscores Bilibili’s unique position as a hub for China’s Gen Z and millennial communities, which fuels its ability to monetize through ads and gaming.

Strategic Leverage and Risks

• Cost Discipline: Bilibili reduced R&D expenses by 15% to RMB906 million, while keeping general and administrative costs flat. Sales and marketing spending rose 21% to RMB1.20 billion, reflecting investments in game promotions.
• Share Repurchase: The company announced a US$200 million buyback program, signaling confidence in its stock valuation.
• Macroeconomic Headwinds: Advertisers in sectors like automotive and real estate remain cautious, but Bilibili is mitigating this by expanding into less cyclical verticals such as healthcare and education.

Conclusion: A New Era of Sustainability

Bilibili’s Q3 results mark a transformative milestone. With a 3.2% non-GAAP net profit margin and a 34.9% gross margin, the company has proven its ability to balance growth with profitability. The gaming and advertising engines, paired with its unrivaled user engagement, position Bilibili to capitalize on its 348 million MAU base and 106-minute daily engagement.

While risks like rising marketing costs and macroeconomic uncertainties linger, Bilibili’s strong cash reserves (RMB15.23 billion) and disciplined strategy suggest a path to sustained growth. Investors should watch for continued margin expansion and execution of its share repurchase plan. For now, the platform’s first profit underscores its evolution into a financially resilient tech leader—a compelling story for long-term investors.