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Bilibili Inc. Announces First Quarter 2019 Financial Results

May 13, 2019

SHANGHAI, China, May 13, 2019 (GLOBE NEWSWIRE) -- Bilibili Inc. (“Bilibili” or the “Company”) (NASDAQ: BILI), a leading online entertainment platform for young generations in China, today announced its unaudited financial results for the first quarter ended March 31, 2019.

First Quarter 2019 Financial and Operational Highlights:

-- Total net revenues reached RMB1,373.5 million (US$204.7 million), a 58% increase from the same period in 2018. -- Net loss was RMB195.6 million (US$29.2 million) and net loss margin was 14%, compared to net loss of RMB57.8 million and net loss margin of 7% in the same period in 2018. -- Adjusted net loss1 was RMB145.4 million (US$21.7 million) and adjusted net loss margin1 was 11%, compared to adjusted net loss of RMB3.2 million and adjusted net loss margin of 0.4% in the same period in 2018. -- Average monthly active users (MAUs2)reached 101.3 million, mobile MAUs reached 88.6 million, representing increases of 31% and 39% from the same period in 2018, respectively. -- Average monthly paying users3 reached 5.7 million, a 132% increase from the same period in 2018. Average monthly paying users for mobile games reached 1.0 million, a 23% increase from the same period in 2018.

“We began the year on a strong note with continued growth of both our user base and topline,” said Mr. Rui Chen, Chairman of the Board and Chief Executive Officer of Bilibili. “With an increasing number of talented content creators producing diverse, high quality content, along with our expanding live-broadcasting and comics offerings, we are attracting more users to our platform and gaining substantial traction. For the first quarter, our MAUs grew by 31% to 101.3 million and our mobile MAUs grew by 39% to 88.6 million, both on a year-over-year basis. At the same time, our user engagement is higher than ever, reaching a milestone of 30 million DAUs in the first quarter. Looking ahead, our focus for 2019 remains on continued user growth and enhancing our commercialization capabilities. We have a number of initiatives underway to support this goal, including rolling out new and diversified games titles, further advancing our live broadcasting and value-added service streams, and progressing our new business initiatives for our growing community.”

Mr. Sam Fan, Chief Financial Officer of Bilibili, said, “During the first quarter, our total net revenues increased 58% year-over-year reaching RMB1.37 billion, exceeding the high-end of our guidance. We maintained a healthy revenue mix, with our non-games business lines growing by 179%, year-over-year. As our commercialization strategy progresses, the number of average monthly paying users more than doubled in the first quarter reaching 5.7 million, particularly across our games, premium memberships and comic businesses. We are also pleased to have successfully raised approximately US$734 million of net proceeds in our recent capital raise after deducting the underwriting discounts and commissions and estimated offering expenses payable by the Company. With these funds, we expect to have sufficient cash reserves to support our growth initiatives.”

First Quarter 2019 Financial Results

Total net revenues. Total net revenues were RMB1,373.5 million (US$204.7 million), representing an increase of 58% from the same period of 2018.

Mobile games. Revenues from mobile games were RMB873.5 million (US$130.2 million), representing an increase of 27% from the same period of 2018. The increase was primarily due to the increasing popularity of mobile game Fate/Grand Order (“FGO”), particularly with the major content update Chapter 2.0, which was revealed in early February 2019.

Live broadcasting and Value-added services (VAS). Revenues from live broadcasting and VAS were RMB291.7 million (US$43.5 million), representing an increase of 205% from the same period of 2018, mainly attributable to the Company’s enhanced monetization efforts, led by increases in the number of paying users for the live broadcasting services and the Company’s premium membership program.

Advertising. Revenues from advertising were RMB112.5 million (US$16.8 million), representing an increase of 60% from the same period of 2018. This increase was primarily attributable to the ramp-up of brand advertising and performance-based advertising driven by further recognition of Bilibili’s brand name in China’s online advertising market.

E-commerce and others. Revenues from e-commerce and others were RMB95.9 million (US$14.3 million), representing an increase of 621% from the same period of 2018, primarily attributable to the increase in sales of products through the Company’s e-commerce platform.

Cost of revenues. Cost of revenues increased by 81% to RMB1,184.2 million (US$176.5 million), compared to RMB654.9 million in the same period of 2018. Revenue-sharing cost, a key component of cost of revenues, was RMB551.7 million (US$82.2 million), representing an increase of 65% from the same period in 2018.

Gross profit. Gross profit was RMB189.3 million (US$28.2 million), representing a decrease of 11% from the same period of 2018.

Total operating expenses. Total operating expenses were RMB496.0 million (US$73.9 million), representing an increase of 73% from the same period of 2018.

Sales and marketing expenses. Sales and marketing expenses were RMB181.5 million (US$27.0 million), representing a 130% increase year-over-year. The increase was primarily attributable to the increased channel and marketing expenses associated with Bilibili’s app and brand, including promotional activities for offline events, as well as promotional expenses for the Company’s mobile games, and an increase in headcount in sales and marketing personnel.

General and administrative expenses. General and administrative expenses were RMB128.5 million (US$19.1 million), representing a 25% increase year-over-year. The increase was primarily due to increased general and administrative personnel related expenses and increased amortization expense related to intangible assets acquired through business acquisitions, and partially offset by one-time share-based compensation expense with an IPO condition recorded in the first quarter of 2018.

Research and development expenses. Research and development expenses were RMB186.1 million (US$27.7 million), representing a 76% increase year-over-year. The increase was primarily due to increased headcount in research and development personnel and other increased research and development expenses.

Loss from operations. Loss from operations was RMB306.7 million (US$45.7 million), compared to RMB74.3 million in the same period of 2018.

Investment income, net. Investment income, net was RMB82.0 million (US$12.2 million), representing an increase of 222% from the same period of 2018. The increase was primarily due to the gain arising from the disposal of the Company’s interest in one of its investees during the first quarter of 2019.

Income tax expense. Income tax expense was RMB8.2 million (US$1.2 million), compared to RMB3.2 million in the same period of 2018.

Net loss. Net loss was RMB195.6 million (US$29.2 million), compared to RMB57.8 million in the same period of 2018.

Adjusted net loss.1 Adjusted net loss, which is a non-GAAP measure that excludes share-based compensation expenses and amortization expense related to intangible assets acquired through business acquisitions, was RMB145.4 million (US$21.7 million) compared to RMB3.2 million in the same period of 2018.

Basic and diluted EPS and adjusted basic and diluted EPS. Basic and diluted net loss per share were RMB0.60 (US$0.09), compared to RMB1.73 in the same period of 2018. Adjusted basic and diluted net loss per share were RMB0.44 (US$0.06), compared to RMB0.94 in the same period of 2018.

Cash and cash equivalents and time deposits. As of March 31, 2019, the Company had cash and cash equivalents, as well as time deposits of RMB3.5 billion (US$519.1 million), compared to RMB4.3 billion as of December 31, 2018.

Recent Developments

On April 5, 2019, the Company completed the offering of US$500 million in aggregate principal amount of convertible senior notes due 2026 (the “Notes”), with interest at a rate of 1.375% per year, including US$70 million in aggregate principal amount to cover overallotments.

The Company also closed the concurrent offering of 14,173,813 American depositary shares (the “ADSs”), at US$18.00 per ADS on the same day (the “Primary Offering”). In addition, certain selling shareholders completed the offering of 6,526,187 ADSs of the Company at the same price.

The Company received a total of approximately US$733.9 million of net proceeds from the Primary Offering and the Notes, after deducting the underwriting discounts and commissions and estimated offering expenses payable by the Company.

The Company plans to use the new proceeds from the Primary Offering and the Notes for enriching contents offerings, investing in research and development, and other general corporate purposes.

Outlook

For the second quarter of 2019, the Company currently expects net revenues to be between RMB1.45 billion and RMB1.49 billion.

The above outlook is based on the current market conditions and reflects the Company’s preliminary estimates of market and operating conditions, and customer demand, which are all subject to change.

1 Adjusted net loss, adjusted net loss margin and adjusted basic and diluted EPS are non-GAAP financial measures. For more information on non-GAAP financial measures, please see the section of “Use of Non-GAAP Financial Measures” and the table captioned “Unaudited Reconciliations of GAAP and Non-GAAP Results” set forth at the end of this press release.

2 Starting from the first quarter of 2019, we count mobile MAUs of Bilibili Comic and Maoer towards our MAUs. Bilibili Comic is a mobile application offering comic content the Company launched in November 2018. Maoer is a platform that offers audio drama. In December 2018, Company increased its shareholdings to 80.5% in Maoer Inc., operator of Maoer app. In the first quarter of 2019, Bilibili Comic and Maoer in an aggregate contributed to 3.2 million of our MAUs.

3 The paying users are calculated by number of users who paid for games, live broadcasting, premier membership, Bilibili Comics services and Maoer, after eliminating duplicates of users paid for multiple services other than users of Maoer. We add the number of paying users of Maoer towards our total paying users without eliminating duplicates.

Conference Call

The Company’s management will host an earnings conference call at 9:00 PM U.S. Eastern Time on May 13, 2019 (9:00 AM Beijing/Hong Kong time on May 14, 2019).

Dial-in details for the earnings conference call are as follows:

United States: +1-866-519-4004International: +65-6713-5090Hong Kong: 800-906-601China: 400-620-8038Conference ID: 1966695

Participants should dial-in at least 5 minutes before the scheduled start time and ask to be connected to the call for “Bilibili Inc.”

Additionally, a live and archived webcast of the conference call and investor presentation will be available on the Company’s investor relations website at http://ir.bilibili.com.

A replay of the conference call will be accessible approximately two hours after the conclusion of the live call through May 20, 2019, by dialing the following telephone numbers:

United States: +1-855-452-5696International: +61-2-8199-0299Hong Kong: 800-963-117China: 400-632-2162Replay Access Code: 1966695

About Bilibili Inc.

Bilibili represents the iconic brand of online entertainment with a mission to enrich the everyday life of young generations in China. Bilibili is a full-spectrum online entertainment world covering a wide array of genres and media formats, including videos, live broadcasting and mobile games. Bilibili provides an immersive entertainment experience and high-quality content that caters to the evolving and diversified interests of its users and communities, and has built its platform based on the strong emotional connections of Bilibili’s users to its content and communities.

For more information, please visit: http://ir.bilibili.com.

Use of Non-GAAP Financial Measures

The Company uses non-GAAP measures, such as adjusted net loss, adjusted net loss margin and adjusted net loss per share, basic and diluted, in evaluating its operating results and for financial and operational decision-making purposes. The Company believes that the non-GAAP financial measures help identify underlying trends in its business by excluding the impact of share-based compensation expenses and amortization expense related to intangible assets acquired through business acquisitions, which are non-cash charges. The Company believes that the non-GAAP financial measures provide useful information about the Company’s results of operations, enhance the overall understanding of the Company’s past performance and future prospects and allow for greater visibility with respect to key metrics used by the Company’s management in its financial and operational decision-making.

The non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. The non-GAAP financial measures have limitations as analytical tools, and when assessing the Company’s operating performance, cash flows or liquidity, investors should not consider them in isolation, or as a substitute for net loss, cash flows provided by operating activities or other consolidated statements of operations and cash flows data prepared in accordance with U.S. GAAP.

The Company mitigates these limitations by reconciling the non-GAAP financial measures to the most comparable U.S. GAAP performance measures, all of which should be considered when evaluating the Company’s performance.

For more information on the non-GAAP financial measures, please see the table captioned “Unaudited Reconciliations of GAAP and Non-GAAP Results” set forth at the end of this press release.

Exchange Rate Information

This announcement contains translations of certain RMB amounts into U.S. dollars (“US$”) at specified rates solely for the convenience of the reader. Unless otherwise stated, all translations from RMB to US$ were made at the rate of RMB 6.7112 to US$1.00, the exchange rate on March 29, 2019 set forth in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB or US$ amounts referred could be converted into US$ or RMB, as the case may be, at any particular rate or at all.

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “aims,” “future,” “intends,” “plans,” “believes,” “estimates,” “confident,” “potential,” “continue” or other similar expressions. Among other things, the Outlook and quotations from management in this announcement, as well as Bilibili’s strategic and operational plans, contain forward-looking statements. Bilibili may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including but not limited to statements about Bilibili’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: Bilibili’s strategies; Bilibili’s future business development, financial condition and results of operations; Bilibili’s ability to retain and increase the number of users, members and advertising customers, provide quality content, products and services, and expand its product and service offerings; competition in the online entertainment industry; Bilibili’s ability to maintain its culture and brand image within its addressable user communities; Bilibili’s ability to manage its costs and expenses; PRC governmental policies and regulations relating to the online entertainment industry, general economic and business conditions globally and in China and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in the Company’s filings with the Securities and Exchange Commission. All information provided in this press release and in the attachments is as of the date of the press release, and the Company undertakes no duty to update such information, except as required under applicable law.

For investor and media inquiries, please contact:

In China:

Bilibili Inc.Juliet YangTel: +86-21-2509 9255 Ext. 8523E-mail: ir@bilibili.com

The Piacente Group, Inc.Emilie WuTel: +86-21-6039-8363E-mail: bilibili@tpg-ir.com

In the United States:

The Piacente Group, Inc.Brandi PiacenteTel: +1-212-481-2050E-mail: bilibili@tpg-ir.com

BILIBILI INC. Unaudited Condensed Consolidated Statements of Operations (All amounts in thousands, except for share and per share data) For the Three Months Ended ---------------------------------------- March 31, December 31, March 31, 2018 2018 2019 ------------ ------------- ------------- RMB RMB RMB Net revenues: Mobile games 688,496 712,842 873,455 Live broadcasting and VAS 95,764 201,824 291,652 Advertising 70,444 159,917 112,499 E-commerce and others 13,304 80,962 95,901 ---------- - ----------- - ----------- - Total net revenues 868,008 1,155,545 1,373,507 Cost of revenues (654,927 ) (958,501 ) (1,184,191 ) Gross profit 213,081 197,044 189,316 Operating expenses: Sales and marketing expenses (78,894 ) (182,257 ) (181,487 ) General and administrative expenses (102,557 ) (150,063 ) (128,487 ) Research and development expenses (105,906 ) (153,483 ) (186,075 ) ---------- - ----------- - ----------- - Total operating expenses (287,357 ) (485,803 ) (496,049 ) ---------- - ----------- - ----------- - Loss from operations (74,276 ) (288,759 ) (306,733 ) Other income: Investment income, net 25,460 75,113 82,047 Interest income 842 26,347 24,407 Exchange losses (9,967 ) (4,525 ) (2,101 ) Other, net 3,312 10,046 14,930 ---------- - ----------- - ----------- - Total other income 19,647 106,981 119,283 ---------- - ----------- - ----------- - Loss before income tax (54,629 ) (181,778 ) (187,450 ) Income tax (3,174 ) (9,046 ) (8,188 ) ---------- - ----------- - ----------- - Net loss (57,803 ) (190,824 ) (195,638 ) Accretions to Pre-IPO preferred shares redemption value (63,197 ) - - Net loss attributable to noncontrolling interests 950 10,852 9,678 ---------- - ----------- - ----------- - Net loss attributable to the Bilibili Inc.’s shareholders (120,050 ) (179,972 ) (185,960 ) ---------- - ----------- - ----------- - Net loss per share, basic (1.73 ) (0.59 ) (0.60 ) Net loss per ADS, basic (0.59 ) (0.60 ) Net loss per share, diluted (1.73 ) (0.59 ) (0.60 ) Net loss per ADS, diluted (0.59 ) (0.60 ) Weighted average number of ordinary shares, basic 69,336,926 307,015,929 311,841,813 Weighted average number of ADS, basic 307,015,929 311,841,813 Weighted average number of ordinary shares, diluted 69,336,926 307,015,929 311,841,813 Weighted average number of ADS, diluted 307,015,929 311,841,813

The accompanying notes are an integral part of this press release.

BILIBILI INC. NOTES TO UNAUDITED FINANCIAL INFORMATION (All amounts in thousands, except for share and per share data) For the Three Months Ended ----------------------------------- March 31, December 31, March 31, 2018 2018 2019 --------- ------------ --------- RMB RMB RMB Share-based compensation expenses included in: Cost of revenues 8,680 5,019 5,074 Sales and marketing expenses 3,548 2,890 3,122 General and administrative expenses 33,515 14,939 13,225 Research and development expenses 7,876 12,571 13,827 Total 53,619 35,419 35,248 --------- ------------ ---------

BILIBILI INC. Unaudited Condensed Consolidated Balance Sheets (All amounts in thousands, except for share and per share data) December 31, March 31, 2018 2019 ------------ ---------- RMB RMB Assets Current assets: Cash and cash equivalents 3,540,031 2,714,625 Time deposits 749,385 769,229 Accounts receivable, net 324,392 541,558 Receivables due from related parties - 23,867 Prepayments and other current assets 990,851 1,198,124 Short‑term investments 945,338 1,059,509 Total current assets 6,549,997 6,306,912 ------------ ---------- Non‑current assets: Property and equipment, net 394,898 362,931 Production cost 204,231 218,585 Intangible assets, net 1,419,435 1,363,524 Goodwill 941,488 941,488 Long‑term investments 979,987 1,228,060 Other long-term assets4 - 252,513 Total non‑current assets 3,940,039 4,367,101 ------------ ---------- Total assets 10,490,036 10,674,013 ------------ ---------- Liabilities Current liabilities: Accounts payable 1,307,598 1,424,617 Salary and welfare payables 246,815 148,219 Taxes payable 38,505 40,904 Short‑term loans - 100,000 Deferred revenue 985,143 1,288,893 Accrued liabilities and other payables4 670,442 484,377 Amount due to related parties 50,331 30,180 ------------ ---------- Total current liabilities 3,298,834 3,517,190 ------------ ---------- Non‑current liabilities : Other long-term liabilities4 - 218,083 ------------ ---------- Total non-current liabilities - 218,083 ------------ ---------- Total liabilities 3,298,834 3,735,273 ------------ ---------- Total Bilibili Inc.’s shareholders’ equity 6,950,796 6,703,813 Noncontrolling interests 240,406 234,927 ------------ ---------- Total shareholders’equity 7,191,202 6,938,740 ------------ ---------- Total liabilities and shareholders’ equity0,490,036 10,674,013 ----------- ----------

4. The Company has adopted ASU No. 2016-02, “Leases,” beginning January 1, 2019 on a modified retrospective basis. As a result of adoption of the standard, the Company recognized RMB252.5 million of other long-term assets, RMB47.1 million of short-term leasing liabilities recorded in accrued liabilities and other payables, and RMB218.1 million of other long-term liabilities on its consolidated balance sheet as of March 31, 2019.

BILIBILI INC. Unaudited Reconciliations of GAAP and Non-GAAP Results All amounts in thousands, except for share and per share data For the Three Months Ended ---------------------------------------- March 31, December 31, March 31, 2018 2018 2019 ------------ ------------- ------------- RMB RMB RMB Net loss (57,803 ) (190,824 ) (195,638 ) Add: Share-based compensation expenses 53,619 35,419 35,248 Amortization expense related to intangible assets acquired through 1,022 3,366 15,014 business acquisitions ---------- - ----------- - ----------- - Adjusted net loss (3,162 ) (152,039 ) (145,376 ) ---------- - ----------- - ----------- - Net loss attributable to the Bilibili Inc.‘s shareholders (120,050 ) (179,972 ) (185,960 ) Add: Share-based compensation expenses 53,619 35,419 35,248 Amortization expense related to intangible assets acquired through 1,022 3,366 15,014 business acquisitions ---------- - ----------- - ----------- - Adjusted net loss attributable to the Bilibili Inc.’s shareholders (65,409 ) (141,187 ) (135,698 ) ---------- - ----------- - ----------- - Adjusted net loss per share, basic (0.94 ) (0.46 ) (0.44 ) Adjusted net loss per ADS, basic (0.46 ) (0.44 ) Adjusted net loss per share, diluted (0.94 ) (0.46 ) (0.44 ) Adjusted net loss per ADS, diluted (0.46 ) (0.44 ) Weighted average number of ordinary shares, basic 69,336,926 307,015,929 311,841,813 Weighted average number of ADS, basic - 307,015,929 311,841,813 Weighted average number of ordinary shares, diluted 69,336,926 307,015,929 311,841,813 Weighted average number of ADS, diluted - 307,015,929 311,841,813