Bilibili - Q3 2024

Transcript

Operator (participant)

Good day and welcome to the Bilibili Q3 2024 financial results and business updates conference call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Juliet Yang, Executive Director of Investor Relations. Please go ahead.

Juliet Yang (Executive Director of Investor Relations)

Thank you, Operator. During this call, we'll discuss our business outlook and make forward-looking statements. These comments are based on our predictions and expectations as of today. Actual events or results could differ materially from those mentioned in today's news release and in this discussion due to a number of risks and uncertainties, including those mentioned in our most recent filing with the SEC and Hong Kong Stock Exchange. The non-GAAP financial measure we provide is for comparison purposes only. The definition of this measure and the reconciliation table are available in the news release we issued earlier today. As a reminder, this conference is being recorded. In addition, an investor presentation and a webcast replay of this conference call will be available on the Bilibili IR website at ir.bilibili.com. Joining us today from Bilibili senior management are Mr. 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. I will now turn the call to Mr. Chen.

Rui Chen (Chairman and CEO)

Thank you, Juliet, and thank you, everyone, for participating in our third quarter 2024 conference call to discuss our financial and operating results. I'm pleased to deliver today's opening remarks. The third quarter of 2024 was a landmark quarter for Bilibili. We are excited to share that we achieved our first quarterly adjusted net profit while setting new records across our community metrics. These milestones are a strong testament to our ability to deliver profitable growth and the unique community value that we continue to unlock. Looking at our financials in more detail, total revenues in third quarter accelerated, rising by 26% year over year, reaching RMB 7.3 billion. Driven by our successful diversification into the strategy game genre, games revenue led our growth, surging by 84% year over year. Meanwhile, our advertising business maintained its strong performance in third quarter, recording a 28% year-over-year increase.

The increasing top-line contribution from our high-margin games and advertising business propelled our gross profit, up by 76% year-over-year, driving our gross profit margin jump to 34.9% from 25.0% in the same period last year. As a result, we successfully exceeded our commitment to reaching break-even in third quarter, achieving an adjusted operating profit of RMB 272 million and an adjusted net profit of RMB 236 million. While making remarkable financial progress, we continue to grow and cultivate our community. Both DAUs and MAUs reached record highs in third quarter, hitting RMB 107 million and RMB 348 million, respectively. Meanwhile, the average daily time spent per user rose to a new high of 106 minutes. With robust user retention and engagement, our users have stayed with us and grown with the platform. The average age of Bilibili users is now 25.

As these users enter new life stages with increasing spending power, we will continue to curate more diverse content and services that cater to their evolving needs. Moving ahead, we remain committed to building a welcoming and inspiring video community with all the videos you like. Our turn to profitability marks a new starting point in our journey. We will continue to invest in key infrastructure that supports content creation and distribution, reinforcing our leading position in the high-quality video content space and creating value for all our stakeholders. With that overview, let's look at our core content, community, and commercialization pillars in more detail. Beginning with content and community. In third quarter, our average daily video views exceeded 5.7 billion, up 23% year-over-year. The growth reflects the effectiveness of our strategy to broaden content categories and encourage high-quality content creation.

While our leading categories maintained their popularity, consumption-related categories continued rising. This is being driven by increasing user demand as the young generation becomes the mainstream of consumer society. Video views in fashion and home appliances and decoration grew by over 25% year-over-year, while views in automotive, baby and maternity, sports and fitness categories surged by more than 40% compared with the same period last year. The diverse commercialization channels we offer continue to empower our content creators to realize their commercial value while pursuing what they love. For the first nine months of 2024, nearly 2.7 million content creators received income through various channels on our platform. Content creators' total income through our various advertising and VAS products grew by 24% during this period. Notably, content creators' total income through our fan-charging product saw an over 400% increase year-over-year in the same period.

Turning to our community metrics, in third quarter, our DAU spent nearly 106 minutes on our platform every day, compared with 100 minutes in the same period last year. Our monthly interactions surpassed 19.3 billion, marking a 14% year-over-year increase. By the end of Q3, our official members grew to 251 million, with our 12-month retention rate remaining around 80%. Additionally, our sponsored eSports team, Bilibili Gaming, BLG, fought their way to second place in the League of Legends S14 World Championship, marking a new record in the team's history. We are proud of their achievement and look forward to their continued success in the upcoming year. Events like these continue to support our leadership in the game community and make Bilibili the top choice for young generations.

Last but not least, we are excited to share that our MSCI ESG rating was upgraded to an A this year, a testament to our steady ESG improvements over the past few years. This achievement underscores our dedication to advancing our ESG practices, where we use our influence to impact communities and society positively. Now, I'd like to talk about the progress of our commercialization in each of our business lines. First, on our games business. In third quarter, our games revenues increased by 84% year-over-year to RMB 1.8 billion, driven by the outstanding performance of our strategy game [Foreign language] (Sanmu). The games' initial performance reinforces our confidence in the longevity of Sanmu. We will continue to roll out new content updates and gameplay to deliver better gaming experiences to users. Sanmu's success shows the vast potential that lies within our game community.

We plan to leverage our unique game industry advantage to further explore other game opportunities in different genres. Meanwhile, we remain committed to bringing the best ACG titles to our users. Our legacy titles, FGO and Azur Lane, maintained their popularity as they celebrated their 8th and 7th year anniversaries, respectively. In addition, we launched the Japanese RPG game, Jujutsu Kaisen: Phantom Parade, [Foreign language] in overseas markets in November, which was well received. Turning to our advertising business. Our advertising business continued to outperform the industry in Q3. Advertising revenues increased by 28% year-over-year to RMB 2.1 billion. Robust revenue growth in our performance-based ads was the largest contributor, increasing nearly 50% year-over-year in Q4. We also achieved decent year-on-year growth in brand and native ad revenues, reinforcing our strength in integrated marketing capabilities.

Our top five advertising industry verticals in third quarter were games, e-commerce, digital products and home appliances, internet services, and automotive. As more and more e-commerce platforms recognized the commercial value of our unique young user base, they allocated larger advertising budgets to our platform. We saw a particular uptick over the summer vacation and back-to-school season, resulting in an 80% year-over-year surge in e-commerce advertising revenues. Meanwhile, we are also attracting more advertisers from emerging verticals. In third quarter, ad revenues from education, baby and maternity, and travel and lodging all grew by over 100% year-over-year. In addition, we continue to enhance our ad infrastructure to improve efficiency, and we have seen early benefits from these efforts. For example, as we roll out a more user-friendly and effective ad placement system, the number of performance-based advertisers increased by over 40% year-over-year in third quarter.

We plan to further incorporate AI technologies into our smart ad delivery system and launch a series of tools for ad material creation, with higher efficiency and lower costs. These initiatives are expected to attract and retain more advertisers on our platform. Turning to our VAS business, revenues from our VAS business increased by 9% year-over-year to RMB 2.8 billion in third quarter. This quarter, we welcomed more users to join and enjoy our live broadcasting universe as we continued expanding our content offerings to meet their diverse interests. Simultaneously, we remain focused on refining our operations to ensure sustainable business growth while improving margins. Our premium membership program grew steadily year-over-year, reaching nearly 22 million members in third quarter. Over 80% of these members are on annual subscription or auto-renewal packages. Additionally, other VAS products experienced rapid growth.

Fan-charging revenues surged by over 500% year-over-year during the quarter, demonstrating our users' strong willingness to pay for good content. As we celebrate our first quarter of profitability, I want to thank our dedicated team, our loyal user community, and our supportive partners and shareholders. Looking back over the past 15 years, we've made significant breakthroughs in our content offerings, expanded our user base, and developed diverse commercialization products. These efforts have helped us build a unique video community with a one-of-a-kind user experience in a competitive industry landscape. Turning profitable is just a new beginning. Building on this milestone, we will continue to reinforce our business's positive growth cycle to drive sustainable profits in the future. With that, I will turn the call over to Sam to share more financial details.

Sam Fan (CFO)

Thank you, Mr. Chen. Hello everyone, this is Sam.

I will now provide a brief overview of our financial results for third quarter of 2024. For a closer look at our financial results, we encourage you to refer to our press release issued earlier today. As a reminder, all amounts are in RMB unless otherwise noted. In third quarter, we greatly improved our financial profile. We accelerated our year-over-year revenue growth across our core businesses, continued expanding our margins, and turned profitable on a non-GAAP basis. Total revenues for third quarter were RMB 7.3 billion, up 26% year-over-year. Our total revenue breakdown by revenue stream for Q3 was approximately 38% VAS, 29% advertising, 25% mobile games, and 8% from our IP derivatives and other businesses. Our cost of revenues increased by 9% year-over-year to RMB 4.8 billion in third quarter, while our gross profit rose 76% year-over-year to RMB 2.5 billion.

Our gross profit margin reached 34.9% in Q3, up from 25% in the same period last year. The significant improvement in our gross profit and gross profit margin this quarter indicates the elasticity and potential of our business model. Our total operating expenses were up 2% year-over-year to RMB 2.6 billion in third quarter. Sales and marketing expenses increased by 21% year-over-year to RMB 1.2 billion, mainly due to increased marketing expenses for our exclusively licensed games. G&A expenses were RMB 505 million, which was relatively flat year-over-year. R&D expenses were RMB 906 million, down 15% year-over-year due to a higher base of termination expenses for certain game projects in Q3 last year. Our adjusted operating profit and adjusted net profit turned positive at RMB 272 million and RMB 236 million, respectively, marking significant gains from year-over-year losses.

Our adjusted net profit ratio in third quarter was 3%, compared with an adjusted net loss ratio of 15% in the same period a year ago. Cash flow-wise, we generated RMB 2.2 billion in positive operating cash flow in third quarter and RMB 4.6 billion in positive operating cash flow in the first nine months of the year. As of September 30, 2024, we had cash and cash equivalents, time deposits, and short-term investments of RMB 15.2 billion or $2.2 billion. With a healthy cash balance, we announced a share repurchase program of up to $200 million for our securities for the next 24 months, showcasing our commitment to enhance shareholder returns in the long term. Thank you for your attention. We would now like to open the call to your questions. Operator, please go ahead.

Operator (participant)

Thank you. We will now begin the question and answer session.

To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. For the benefit of all participants on today's call, if you wish to ask your question to management in Chinese, please immediately repeat your question in English. The company will provide consecutive interpretation for management statement during the Q&A session. Please note that English interpretation is for convenience purposes only. In the case of any discrepancy, management statements in the original language will prevail. Once again, that's *11 for question. We will now take our first question from the line of Lei Zhang from Bank of America Securities. Please go ahead, Lei.

Lei Zhang (Analyst)

[Foreign language] Thanks management for taking my question and congrats on the strong results.

Since that, you know, Li don't speak English, in the call for the first time, it's very well and pretty impressive. My question is really high-level and I want to know management's strategic view on Bilibili after trading on breakeven this quarter. What is our key focus in user and commercialization going forward and how to strengthen our positioning in the video industry? Yeah, thank you.

Carly Li (Vice Chairwoman and COO)

[Foreign language] So actually the English prepared remarks that was spoken by me was not really spoken by me, it's generated by AI, it's our self-developed proprietary Index TTS model, that only used 15 seconds of my speech during one of the events and generated that English prepared remark.

I was quite surprised when I first hear it, it was just sounded like me, and that shows the vast potential of the AI application could do for Bilibili, such as helping our content creators to make those narratives or engage better on a real time with their users. We are quite looking forward to further leverage that to our application. [Foreign language] Indeed, this marks our very first quarter of adjusted profitability, and just now I was receiving a lot of congratulations from friends and investors, but as a matter of fact, we do believe this is a natural outcome of the evolvement of our business model and expansion of the industry, and we just made it happen faster.

[Foreign language] Before I get into the future, I would like to look back a little bit on where we stand right now and the logic that's driving our profitability. First of all, the industry that we are in, the video industry, is a very large market, and China itself is the largest standalone market, and video is a large business. And within that industry, Bilibili has built a very unique one-of-a-kind PUGC community in China video market, known for the high-quality video content, and we have secured that user mindset. [Foreign language] When we are thinking about what is the highest where to find highest quality of content or to find talented content creator, what's the go-to destination for mid to longer lengths of videos?

Bilibili is always the number one brand name that pops up, and you can barely think of a number two in this market. Because video is such a large market, and video will serve as the main media platform for this outlet, the brand awareness, the user mindset is as precious as gold. [Foreign language] As the adoption of 4G, 5G network, our market has evolved from lack of supply of video content to enough supply of video content, and from users' perspective, they have evolved from wanting to look at any video to wanting to look at high-quality video, unique video. So to some extent, we are experiencing an upgrade in content consumption in terms of video market, and riding on that trend, Bilibili has a unique advantage because we have that user mindset and the brand awareness about those high-quality, unique content.

[Foreign language] As we know that, Bilibili has the highest density of Gen Z plus cohort, the 90s, the 2000 generation, and because we have very high sticky user cohort and user retention rate over the past 15 years, our user has stayed and grown with us, and the average age of Bilibili now has come to 25 years. So 25 also means their commercial value is increasing every day. That's why we see this as an inevitable trend that our commercialization will accelerate, and it's a natural outcome of reaching profitability. And going forward, we think there's vast potential for our commercialization to be unleashed。[Foreign language] And in the future, in the past we have stated our focus will be focusing on community growth and commercial growth.

After reaching profitability, our focus will remain unchanged. [Foreign language] On commercialization, I'll share one thing, that is, we'll remain even more focused on the core business, such as games and advertising, because for those two business segments, they have higher revenue ceiling, and it has higher gross margin, and that will result in more efficiency in terms of our commercialization growth. [Foreign language] The success of our commercialization will also support the prosperity of our content ecosystem, and we have been pursuing that formation of the positive flywheel effect between content ecosystem and our commercialization growth.

and as a matter of fact, in the first nine months of this year, leveraging our various commercial outlets, 2.7 million content creators have received income on Bilibili platform, and those commercialization in one way is helping our content creators to realize their commercial value and hence motivate their further and more content creation. [Foreign language] One thing I wanted to emphasize is that, for Bilibili's commercialization outlets, it's more than just advertising because we are a comprehensive platform and we provide more tools beyond advertising to help them realize their commercial value, establishing connection between their followers. For example, on top of the native ads, Sparkle advertising platform, we have our fan charging program.

We also have a craft studio encouraging content creators to monetize their skills, such as handcraft and drawing, and also premium courses to help them make money in various ways. [Foreign language] The profitability in Q3 is just a beginning, and we look forward to form a positive flywheel effect formed by our content ecosystem and commercialization growth, and the growth of our commercialization will, in fact, help Bilibili to become an even healthier organization and achieve sustainable, profitable growth. Next question, please, operator.

Operator (participant)

Thank you. Our next question comes from the line of Daniel Chen from JPMorgan. Please ask your question, Daniel.

Daniel Chen (Executive Director of Equity Research)

[Foreign language] So my question is on advertising, which is very strong. We have grow 28% year over year in the third quarter. So what's the key driver behind the third quarter advertising growth?

And also for the fourth quarter, do we see a change in the kind of macro environment for the advertising demand? And also lastly, how is our performance in the 11.11 festival for our e-commerce related business? Thank you.

Carly Li (Vice Chairwoman and COO)

[Foreign language] Bilibili's Q3 advertising revenue indeed was a good performance. It reached close to RMB 2.1 billion and maintained a strong growth rate of 28%. And behind that, performance-based ads grew nearly 50%, and this is helping us drive our gross margin on a group level. In Q3 we continued our horizontal and vertical strategy. To be more specific on horizontal, that was more referring to the platform infrastructure construction.

On the first point, we release more ad inventory while emphasizing on maintaining a good user experience by maintaining a multi-screen, multi-scenario strategy. Commercial inventory grow rapidly on our homepage feed and Story Mode, and also generated increased ad revenue across recommendation search, PC, and even tablet platform in recent one to two quarters. Looking forward, there's more potential for additional revenue from live streaming, video within video players, and also hot topic search. On top of that, through a blend of organic and commercial traffic and native ad integration, more high-quality ads received more distribution, effectively expanding our ad inventory. At the same time, we have achieved content is good commercial, and good commercial is a good content effect. [Foreign language] The second point is that we further optimized our ad placement system.

In the third quarter, the number of clients and mobile smart app placement increased by 700% year on year. We will continue to improve our products and tools to make ad placement easier. Another example would be with the integration of Sparkle and our ad system. The proportion of Sparkle ads that engaged in ad promotion reached nearly 60% in Q3, further demonstrating the effectiveness of our Sparkle Plus Xifei, AKA ad promotion services model. [Foreign language] The third point would be the launch of Creative Center and AIGC auto-generated content has also improved our ad efficiency. We plan to roll out additional AIGC tools to help advertisers automatically create or modify ad materials, further lowering their cost and barriers.

In Q4, we will further. We'll continue to enhance our ad placement experience, improving algorithm efficiency, and we wanted to attract more new advertisers to Bilibili to create content to connect with our users. [Foreign language] The end zone refers to the industry vertical ad solutions and the top five ad verticals in Q3 coming from number one games, number two e-commerce, digital products, and online services, number five is automotive. In these leading verticals that we have clear advantage, we continue to expand our market share. One example on game sectors, apart from our experience genre in the sector, daily app placement for mini games sector increased by 200% quarter over quarter.

In digital products and home appliances, we attract top tech brands like Apple, Huawei, and Vivo to launch their new products on Bilibili. In Q3, we captured more advertising brands during non-shopping festival periods with e-commerce ad revenue up nearly 80% year over year. Traditionally, we see e-commerce platforms to place more ads in the big shopping festival seasons, but in Q3, we were actually attracting more advertising budget during the summer vacation and the back to school seasons, reflecting the high value of our high-quality young audiences, and for those brand advertisers, for those e-commerce players, they saw the value in our platform as well as in our users, and while strengthening our advantageous categories, advertisers from more industries are choosing Bilibili.

In Q3, sectors like education, baby and maternity, travel and lodging, et cetera, have all achieved high growth and will continue to expand to more industry verticals. [Foreign language] For the double 11, we maintained our open loop strategy, become a deep trusted partner for e-commerce platforms like Alibaba, JD.com, Pinduoduo, and Vipshop. GMVs from video and live e-commerce increased over 150% year on year, and participating content creators rose by 80%. Among the customers we bring to those merchant shops, new customer rates exceeded on average 50% across all sectors, including 3C and digital products, home decor, beauty, and baby and maternity, et cetera.

We have become the key source for new customers across all e-commerce platforms, and this also helped us to achieve a close to 50% year on year increase in ad revenue during the double 11th period. [Foreign language] As you mentioned and asked about the macro environment, how that brings changes to the advertising industry. Well, from our perspective, under the current macro environment, there's still some uncertainties in advertisers' budget, but the condition varies by industry, different industries. For example, sectors supported by the national subsidy policies, such as the digital products and home appliances, are seeing a strong recovery. And on food and beverage, healthcare and education are beginning to regain market confidence in a more gradual way.

While the budget remains tight in sectors such as automotive, beauty and fashion, and real estate, even though we expect short-term fluctuations across different industries, we remain optimistic and confident about the domestic economy in the mid to long term. [Foreign language] Going back to Bilibili's advertising revenue, we remain confident that we can maintain a faster than industry average growth rate for our advertising revenue in Q4 and further increasing our shares in this, across all various industry verticals. That concludes Carly's answers. Thank you. And operator, next question, please.

Operator (participant)

Thank you. Next question comes from the line of Yang Liu from Morgan Stanley. Please ask your question, Yang.

Yang Liu (Executive Director)

[Foreign language] Let me translate my question. My question is about the game business, which grows more than 80% in the third quarter.

My question is about the Sanmu's performance and what is the outlook and the operation planning in future for this game. And also would like to hear management thought on user acquisition and also the user acquisition for this game and also the future pipeline in Bilibili's game business and also the potential new generals in future. Thank you.

Carly Li (Vice Chairwoman and COO)

[Foreign language] The game San Guo: Mou Ding Tian Xia now has entered in the stage of game season three, and we're about to enter into game season four. So based on what we've seen so far, we can proudly say that Sanmu is one of the best performing games in the China gaming market this year.[Foreign language] Besides the short-term performances, what I care the most is the longevity and sustainable operation of Sanmu.

When I say longevity and long-term operation, I'm referring to at least five years, five to 10 years. [Foreign language] To achieve the goal of long-term operation, we have made extensive plans and preparation in the initial R&D phases in terms of the game design and operation strategy. Based on the performance of the first three seasons, we can say that the user engagement level and retention rates are among the highest in this genre in the industry. [Foreign language] The day after tomorrow, November 16th, we will be launching the brand new game season four, and in the new game season we'll be featuring a new map, characters, and new storyline gameplay. We are quite confident that the new version content update will provide users with even more engaging and fun gaming experience.

[Foreign language] Many of you might know that the Sanmu has done a lot of innovation and differentiation compared to the similar genres games. The reason behind that is from day one we have collected many, many users' feedback from our close beta testing to the latest season three. We have welcome feedback and actively engaged with our users to listen to their advice and make adjustments based on their feedback. And we also got the reputation of the best game company that listens to the users' feedback. And based on those user feedback, we have proactively adjusted within our new brand, new season four, and going forward the following seasons we will continue to listen to our user and optimize and improve our games to give them best experience.

[Foreign language] So when I say the longevity of this game that is my next year goal is the top priority will be continue to optimize, Sanmu's user experience and users' engagement. And for this particular strategy game genre we'll be very focused on this one single title. And because we also have a team of developers and operators, we will be really focusing our best resources on optimizing this game. And in the second half of this year we will be starting to prepare for the international launch of Sanmu starting with the traditional Chinese version. And we also look forward to bringing this high-quality strategy game to the users worldwide. [Foreign language] And the success of Sanmu is a testament to the strategy of reinventing games for young generations.

We have succeeded in the strategy genre and on top of the strategy and the ACG genre. Next year we'll be looking to explore a new genre and adapting our methodology of reinventing games for young generations to this new genre and hopefully can bring another new pie to Bilibili Game.[Foreign language] In terms of the ACG genre, many of you might notice we have successfully launched the Jujutsu Kaisen international version globally except Japan and China on November 7th. So far we have achieved very good results. The game reached top downloading charts number one in more than 70 countries and regions. So far the user feedback has been very positive. This marks a very successful attempt at our very first global distribution of ACG games.

For this particular game in 2025, it will also be one of our important games to sustain and propel.

Yang Liu (Executive Director)

Okay.

Carly Li (Vice Chairwoman and COO)

Okay. Thank you. Next question please.

Operator (participant)

Thank you. Next question comes from Felix Liu from UBS. Please ask your question, Felix.

Felix Liu (Executive Director)

[Foreign language] Thank you, management, for taking my question. Congratulations on turning profitable this quarter. My question is more on the financial side. So what is your GP margin and the profit margin outlook after you're successfully turning profitable this year, sorry, this quarter? And also we noticed that you announced the new share repurchase program. So how should we think about your shareholder reward scheme going forward? Thank you.

Sam Fan (CFO)

This is Sam. I want to do a question. In Q3, we not only met our previous committed break-even goal, but also exceeded by achieving an adjusted operating profit of RMB 270 million.

This result demonstrated the potential of our business model. Our revenue in Q3 grew by 26% when gross profit saw a significant year-over-year increase of 76%, with the gross profit margin rising nearly 10 points from 25% to close to 35%. This improvement was mainly due to the increase of share of the high-margin game and advertising revenue, along with the effective control of our, you know, fixed cost. We believe that with the continued growth of our advertising and gaming business, there is a further room for long-term improvement in our gross profit margin. Additionally, it's worth mentioning that our operating cash flow reached RMB 2.2 billion in Q3, with the operating cash flow for the first three quarters reaching RMB 4.6 billion. This indicates that our business has entered a healthy positive cycle.

That's also the background that we, why we announced, you know, our financial report, a $200 million repurchase plan to be carried out over the next 24 months to increase our return to our shareholders. Looking ahead to Q4, you know, if we look at our deferred revenue balance, that balance in the end of Q3 increased by RMB 380 million quarter over quarter, laying a solid foundation for Q4. So we expect the revenue from gaming and advertising business to maintain a strong growth momentum with further quarter over quarter improvements in gross profit margin and deliver further improved non-GAAP operating income. That's it.

Operator (participant)

For your next question, please. Thank you. We will now take our last question from the line of Lincoln Kong from Goldman Sachs. Please ask your question, Lincoln.

Lincoln Kong (Executive Director)

[Foreign language] Thank you management for taking my question.

My question is about the macro policies since the end of September. We have seen quite a big shift in terms of those policies and the more stimulus coming. So far on the company's business level, have we seen any incremental better trends in terms of advertising, gaming, live streaming, or user paying propensity? Thank you.

Carly Li (Vice Chairwoman and COO)

[Foreign language] From a business perspective, we are very pleased to see a series of positive economic policies being introduced. We view this policy as highly encouraging signals that reflect the government's commitment to economic growth. And recently, we also felt the government's attention to private sectors and its determination to improve the business environment.

[Foreign language] While some of these policies are still in the pipeline and might take time for their effects to materialize, but we think it's just simply a matter of time as the overall direction has been set and clear. [Foreign language] Well, Bilibili is part of the platform economy, and the platform economy is a key part of the broader economy in China. So when the overall economy improves, Bilibili will undoubtedly benefit from that improvement. [Foreign language] Well, of course, as a company, we will be paying more attention to our own development, specifically on the path, achieve community and profitability growth, commercial growth. And when we are planning for our next year and the year afterwards, we wouldn't factor in the overall economy will improve drastically.

We'll be focusing on how we, what we can do to improve our own business model, to improve our product, to give better content to our users. [Foreign language] Bilibili has always been known for focusing on the long-term sustainable healthy development, and because our users are also young generation, so I'm very much looking forward to the landing of those stimulus policies that can bring the company, the user, and the society to a better future. Thank you. Operator, that concludes today's call. Thank you.

Operator (participant)

Thank you. That concludes the question and answer session. Thank you once again for joining Bilibili's third quarter 2024 financial results and business update conference call today. If you have any further questions, please contact Juliet Yang, Bilibili's Executive Director of Investor Relations at Piacente Financial Communications. Contact information for IR in both China and the U.S. can be found on today's press release.

Thank you and have a great day.