Bilibili Q2 2024 Earnings Call Transcript

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August 22, 2024

There are 5 speakers on the call.

Operator

Good day, and welcome to the Bilibili Second Quarter 2024 Financial Results and Business Update Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Juliet Yang, Executive Director of Investor Relations. Please go ahead.

Speaker 1

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 SEC and the Hong Kong Stock Exchange. The non GAAP financial measures we'll provide are for comparison purpose only.

Speaker 1

The definition of these measures and our 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's senior management are Mr.

Speaker 1

Ray 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 over to Mr. Fan, who will read the prepared remarks on behalf of Mr.

Speaker 1

Chen.

Speaker 2

Thank you, Juliet. Thank you everyone for participating in our Q2 2024 conference call to discuss our financial and operating results. I'm pleased to deliver today's opening remarks on behalf of Mr. Chen. We delivered solid second quarter results with accelerated top line growth, improved margins and healthy community development.

Speaker 2

In the Q2, our total revenues increased by 16% year over year to RMB6.13 billion. Our advertising business led this growth With ad revenue growing by 30% year over year, revenue from our games and the value added services also increased by 13% and 11% year over year respectively. The momentum across our billion lives is a strong testament to our execution in increasing our commercialization efficiency and unlocking the value of our community. Increased revenues from our higher margin advertising and games business boosted our gross profit by 49% year over year. Gross profit margin rose to 29.9% in the 2nd quarter, up from 23.1% in the same period last year, marking the 8th consecutive quarter of margin improvement.

Speaker 2

Consequently, we significantly narrowed our adjusted operating loss and adjusted net loss by 69% 72% respectively year over year. Moreover, we generated a record RMB1.75 billion in operating cash flow in the Q2. Our deferred revenue balance at the end of Q2 also increased by RMB738 million from the end of Q1. With this progress, we are confident that we can achieve our non GAAP breakeven target in the Q3 of this year and continue to improve our profitability thereafter. While we have been accelerating our financial performance, our community continued to strive.

Speaker 2

In the second quarter, our DAUs increased by 6% year over year, reaching 102,000,000 and the MAUs grew to 336,000,000. Our community remains highly engaged with user spending a daily average of 99 minutes on our platform. As we move into the summer season, we continue to see strong seasonality in terms of user engagement and retention. On June 26, we celebrated Bilibili's 15th anniversary. Over the past 15 years, our platform has become a regular destination for nearly 70% of China Gen Z plus population.

Speaker 2

This journey has brought us tremendous opportunities as these users have become a major consumer force in society. We have seen it in our advertising growth as we enhance our infrastructure to facilitate the evolving consumption needs. We have seen it in our game business as we reinvent strategy game to resonate more deeply with the preference of younger audience. As we continue to unlock the value of our community, we remain committed to our founding mission to build a welcoming home for talented creators and like minded individuals to connect over shared interests and to certify their evolving needs for good content and service. With that overview, I would like to discuss our core pillars of content, community and commercialization in more detail.

Speaker 2

Beginning with content and community, our strategy to encourage more high quality creators to generate content continue to prove beneficial. In the Q2, average daily video views increased by 18% year over year to over 4,800,000,000. Our leading content categories such as games, knowledge and technology continue to show solid growth in video views, all increasing by over 20% year over year. Meanwhile, users demand in consumption related categories also continued to surge in the Q2. Video views in home appliance and decoration, automotive and fashion and cosmetics all grew by more than 30% compared with the same period a year ago.

Speaker 2

We continue to provide effective and diversified monetization channels to incentivize our content creators. In the first half of twenty twenty four, about 2,100,000 content creators received income on Bilibili. Content creators' total income through our ads and VAS products increased by 30% year over year. Notably, our innovative content based products such as premium courses and the fan charging programs have been well received by our users. In the first half of twenty twenty four, content creators' total income from these two products increased by over 40% and over 4 30% respectively year over year.

Speaker 2

Looking at our community matrix in the Q2, our DAUs spend an average of 99 minutes with us compared with 94 minutes in the same period last year, driving up user total time spent by 11% year over year. Monthly interactions increased by 11% year over year, exceeding RMB16.5 billion in the Q2. By the end of Q2, the number of our official members increased by 13% year over year to 243,000,000 and their 12 month retention rate remained strong at around 80%. Moreover, in this line, we heard our signature offline events Bilibili World and Bilibili Micro Link once again bring our community together in Shanghai. More than 250,000 people traveled across the country to participate in events, leading to a surge in Shanghai travel related consumption.

Speaker 2

The growing enthusiasm as it bends showed our unparalleled influence among the young generation. Now, I'd like to talk about our commercialization progress in each of our business lines. First, our advertising business, as our users mature with more disposable income, their commercial value unfolds and they seek more consumption related content on Bilibili. The demand is there and all we need to do is to match the right ads with the right user. In the Q2, we further improved our ad products and infrastructure to increase our ad efficiency.

Speaker 2

Specifically, we upgraded our ad placement system, featuring user friendly placement tools and enhanced conversion capabilities, attracting and retaining more advertisers on Bilibili. In the first half of the year, the number of advertisers on our platform increased by over 50% year over year. Moreover, we continue to invest and improve our ad monitoring capabilities to better understand our users' consumption behaviors and the preferences, which enabled us to further enhance our ad matching efficiency. Meanwhile, we incorporated more native video style ad content, allowing us to expand ad load while maintaining user experience. We plan to further advance this initiative in the following quarters and help our advertisers create ad materials more easily and place advertisements more automatically.

Speaker 2

Industry wide, our top 5 advertising verticals were mobile games, e commerce, digital products and home appliance, food and privilege and automotive in the Q2. Our anchor verticals continue to deliver strong performance. During the 618 shopping festival, we not only secured more ad budgets from e commerce platforms, but also directly from online merchants in different verticals. Total GMV from video and live commerce increased by over 140% year over year during the period. Besides our leading verticals, we also saw incremental ad revenues from emerging verticals in the Q2.

Speaker 2

Ad revenue from Internet services, AI and education all increased meaningfully. Turning to our game business. Game revenues resumed growth by 13% year over year in the Q2 to RMB1.01 billion led by the excellent performance of our recently launched strategy game, and the ACG game, Arctic Quarters. Our legacy titles also contributed steady game revenues and demonstrated remarkable longevity. As FGO celebrated its 8th anniversary, it returned to the top 10 on the iOS game grossing chart in July.

Speaker 2

As for Azulian line, monthly active users reached a new peak in June with the celebration of its 7 years anniversary. This trend strengthened our commitment to the long term operation of high quality games. We were delighted to see our 1st strategy game, Sammo, become an immediately blockbuster. On the 1st day of its launch, it ranked in the top 3 on the iOS game growth in chart, attracting millions of gamers to the 3 kingdoms battlefields. Sammo also set a new record in our operating history being the fastest title that hit RMB 1,000,000,000 game grossing mark.

Speaker 2

With the launch of the 2nd game season on August 3, Sammo returned to the top 3 on the iOS game growth in chart. The decent size of the SLG market, the early success of Sammo and the long lifecycle nature of SLG games give us confidence that it will become one of our flagship games within enduring longevity. Over the years, our community has expanded exponentially and so as our gamer base. San Mo's success marks our breakthrough in our genre diversification strategy and shows the vast potential of our game business. We will continue leveraging our leading role at the top gaming community and the capitalization of our significant opportunities to reinvent games for the new generation of gamers.

Speaker 2

Turning to our VAS business, revenues from VAS business increased by 11% year over year to RMB2.57 billion. We continue to add more live broadcasting content offerings, reinforcing the synergies between our live broadcasting and the PUGV ecosystem to better cater to user diverse interests. We will also further explore opportunities in our other VAS business as our Gen Z plus users have demonstrated an increasing willingness to directly pay for the content they love. Our premium members continue to increase, reaching 22,300,000 by the end of Q2 with over 80% of them subscribing annually or under auto renew packages showing their continued royalty and trusting our platform. User spending our other best products also grow rapidly in the Q2, particularly in premium courses, our fan charging program and avatar decoration.

Speaker 2

We expect these products to open more monetization potential across our massive POGV content universe in the future. We believe good content and community can bring people together and the value of our users are just starting to show its potential. Our community is thriving and our solid second quarter results place us just one step away from profitability. We are excited to move forward and take Bilibili to the next level. This concludes Mr.

Speaker 2

Chen's remarks. I will now provide a brief overview of our financial results for the Q2 of 2024. For a closer look at our financial results, we encourage you to refer our press release issued earlier today. As a reminder, all amounts are in RMB unless otherwise noted. In the Q2, we further advanced our commercialization capabilities, delivering accelerated year over year revenue growth across our core business.

Speaker 2

At the same time, we continue to expand our margins and considerably narrowed our losses. All of these financial improvements were funded in our top line growth with increased efficiency. Total revenues for the Q2 were RMB6.13 billion, up 16% year over year. Our total revenue breakdown by revenue stream for Q2 was approximately 42% VAS, 33% advertising, 17% mobile games and 8% of our IP directives and other business. Our cost of revenues increased by 5% year over year to RMB4.3 billion in the 2nd quarter, while our gross profit rose 49% year over year to RMB1.8 billion.

Speaker 2

Our gross profit margin reached 29.9 percent in Q2, up from 23.1% in the same period last year. Our total operating expenses were down 3% year over year to RMB2.4 billion in the 2nd quarter. Sales and marketing expenses increased by 13% year over year to RMB1 1,000,000,000, mainly due to increased marketing expenses for the new game launch. G and A expenses were RMB488 1,000,000 down 10% year over year. R and D expenses were RMB895 1,000,000 down 15% year over year, both related to reduced headcount expenses.

Speaker 2

We narrowed our adjusted operating loss and adjusted net loss to RMB284 1,000,000 and RMB271 1,000,000 in the 2nd quarter, reducing our losses by 69% and 72% year over year, respectively. Our adjusted net loss ratio in the 2nd quarter come down to 4% from 18% in the same period a year ago. Cash flow wise, we generated a record RMB1.75 billion in positive operating cash flow in the 2nd quarter and a total of RMB2.4 billion in positive operating cash flow in the first half of the year. As I mentioned earlier, driven by the strong performances from our games and ad business, our deferred revenue balance at the end of Q2 also increased by RMB738 million from the end of Q1, proving a solid path to achieve our non GAAP breakeven target next quarter and the sustainable profitability thereafter. As of June 30, 2024, we had a cash and cash equivalents, time deposits and short term investments of RMB13.9 billion or US1.9 billion dollars Thank you for your attention.

Speaker 2

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

Operator

Thank you. We will now begin the question and answer session. The company will provide consecutive interpretation for management's statements during the Q and A session. Please note that English interpretation is for convenience purposes only. In the case of any discrepancy, management's statements in their original language will prevail.

Operator

One moment for the first question. First question comes from the line of Daniel Chen of JPMorgan. Please ask your question.

Speaker 3

Thank you for the opportunity to ask question. So my question is on the advertising. We see that the advertising growth in the Q2 was very robust, growing about 30% year over year, which is very strong. So could you maybe share the key driver behind? And also how should we expect the advertising growth for the second half?

Speaker 3

Thank you.

Speaker 1

In a challenging macro environment, Bilibili's 2nd quarter advertising business achieved a 30% year on year growth with quarterly revenue exceeded RMB 2,000,000,000 for the very first time and contributing about onethree of the company's total revenue. As you can see that our advertising revenue has grown for several consecutive quarters and the fundamental reason behind that is, one, that Bilibili's traffic is growing very healthily and secondly is that we are continuously unlocking the commercial value of our users. Bilibili's DAU grew by 6% year over year in the 2nd quarter, while our video views increased by 18% year over year, showing a continued growth in our commercial traffic. Over 70% of China's young generations are using Bilibili and the average age of our user has reached 25. This is a stage where their consumption needs and spending power are rapidly growing and being released.

Speaker 1

This is evident from the booming growth in our consumption related content categories in Q2, video views in the categories such as home decor and real estate, automotive, fashion and beauty all increased by over 30% year over year, while daily video views in baby and Maternities experienced a year over year growth of over 80%. On top of that fundamental reason, what we need to do is to match the demand between advertiser and users with better infrastructure and industry based marketing solutions. And the one horizontal refers to the enhancement of platform infrastructure and the multiple verticals refers to the vertical industry based app solutions. In the first half of this year, we implemented comprehensive upgrades to several of our advertising infrastructure modules. For example, we upgraded the placement platform on our PC and provide one stop placement tools for K accounts.

Speaker 1

And as such, in the first half of this year, the number of performance based KA advertisers increased by 50% year over year. In terms of, app materials, our newly launched creative center and active application of AIGC technologies helps our advertisers to diagnose and improve their ad materials. After optimization, the CBR achieved over 30% year over year improvement. Now let's take a look at our industry verticals. In Q2, our top 5 advertisers came from mobile games, e commerce, digital products and home appliances, food and beverage and automotive

Operator

sectors.

Speaker 1

I'll take a closer look at the e commerce and transaction based sectors. With our consistent open loop strategy during this year's June 18 Shopping Festival, we have deepened the integrated marketing and advertising collaborations with e commerce platforms as well as secured a larger share of e commerce merchants' budgets. During the June 18 period, the number of advertisers on Bilibili increased by over 300% year over year and our GMV from live and video commerce increased by over 140% year over year. 50% of the customers that we brought to the merchants in different verticals were new customers. And specifically for baby and maternity sector, we bought over 60% of the new users to them.

Speaker 1

On our transaction based advertising, in the first in the second quarter, that nearly 40,000,000 users have watched our live and video e commerce related content. And this number increased by 70% year over year. In Q2, the average daily content creator engaged in live and video e commerce increased by over 130% year over year and the number of commerce related videos grew by over 3 30% year over year. And the number of live e commerce sessions rose by 2 70% year over year. The consumption potential of Bilibili's female users, which constitutes near half of our communities, is also gradually unlocked.

Speaker 1

GMVs in apparels increased over 4x year over year in the second quarter. We've talked about the Q2 and its driver behind. And if we take a look into the second half of this year, we're quite confident in maintaining an above industry average advertising growth rate. On one hand, the outcome of product infrastructure optimization is being proved and will continue to show its effects. And on other hand, by enhancing our vertical industry solutions, we not only expand our market share in key industries, but we are also looking to achieve incremental growth in emerging industry verticals such as online services, education, healthcare and baby and maternity.

Speaker 1

Lastly, I wanted to emphasize that because we have our unique community aspect, Bilibili's revenue growth was never just being relied on advertisement growth. We can pursue 2B and 2C parallel strategy in our commercialization efforts, meaning that we can not only we can also earn money directly from our consumers. Because we are a community, our users are more inclined to spend on content or spend on content creators that they love to show their support and appreciation. To sum up, we will be pursuing a B2B and 2C parallel strategy. On the one hand, we'll continue to reinforce our advertising platforms to drive the advertising growth.

Speaker 1

At the same time, we still believe there's great potential in our 2C business, meaning on mobile games, premium membership, live broadcasting, combining together will support our sustainable revenue growth. Operator, next question please.

Operator

Thank you. One moment for the next questions. Next question comes from Felix Liu of UBS. Please ask your question.

Speaker 3

Let me translate myself. Thank you management for taking my question. Congratulations on the strong quarter and your successful launch of Angou Mogin Tianxia. Could management share more drivers for the game's successful launch? And what are your expectation of the game's lifetime cycle?

Speaker 3

And looking ahead, what are the future genres that you plan to further expand or invest in the future? Thank you.

Speaker 1

The San Mo game indeed is a blockbuster in the first half of this year. We not only attracted millions of new players, we've also accumulated a very good user feedback and also have large influence among the game industry. The game Sanmo broke several records in our game operation history. Shortly after its launch, it quickly ranked among the top 3 on the IOS game top grossing chart and maintained in top 10 for the entire month afterwards. And SAML also become the fastest game in Bilibili operation history to reach RMB 1,000,000,000 in revenue.

Speaker 1

Since last year, we've been emphasizing the importance of operating one game in an extended time for a longer period of time. And for Sanmo, especially the FFG genre, is a perfect game genre for long term operation. And starting from August 3rd, we launched the game's 2nd season. As of now, the performance of season 2 reflects gamers' sustained enthusiasm and good retention rate and this has given us very strong confidence to make this as an evergreen title. Many people have asked me why San Mo would work, how we have picked this game.

Speaker 1

I think this is a result of our continuous effort in the strategy of making new games, reinventing games to cater into the younger generation. We actually saw this game back in 2022, and we also invested in the development team in 2022. This the success of the game is not by accident. It's under long period of time of thinking and strategy and decision making. Starting from 2019, our MAU grew by over 200%.

Speaker 1

And as we expand, our gamer circle also continue to expand. They included more than ACG gamers. They are gamers. They love multiple different categories. 5 years ago, when we only have 100,000,000 MAUs, the most condensed gamer profile would be ACG lovers.

Speaker 1

But as we evolve into a bigger community with 340,000,000 MAUs, what we cover of our gamer community goes way beyond just an ACG. They love SLG and many other content categories. There are large number of potential FLG players within the community who are generally interested in content categories such as history, militaries, social and science and arts and knowledge, those are very like those demographics fits perfectly with the SLG potential audiences. SLG is a very large market based on our observation of the existing products in the market. We estimate that there were tens of millions of users who have tried SLG games.

Speaker 1

And for this group of people, they're mostly well or active on Bilibili. As we discover those factors, we have established this project. We named this project code name as NSLG, meaning New SLG. We've discovered that in the current market, there are many players' pain points haven't been addressed. At the same time, the current SLG game offerings in the market does not fully satisfy the young generation's needs in SLG.

Speaker 1

So we believe as we're making more innovations and addressing their pain points, addressing singular involving needs, we could be successful and the success launch of this game has proven our strategy has been right. The success behind SAML, we will credit to the overall trend of the immersive, in maze opportunity that lays behind reinventing games to catering the young generation's needs. This not only adjusts to the SoC categories, it could apply to multiple categories, and we will continue to explore in that direction. As for the estimation on its life cycle, we believe that SOG by its nature has longer life circles. We've noticed that our they are SLG games in the market has been operating for 8 years 5 years.

Speaker 1

We have set the internal target of making Sunmo at least a 5 years more than 5 years game. And it all boils down to whether the company focused on making a game into its, a longer life cycle, longer operation. We have to focus on the longevity of the games. The industry has evolved rapidly. This is no longer a time where everybody can make fast money.

Speaker 1

We are committed to be the top game who respect our users the most, who listen to our users the most. And we hope to make this game an evergreen title. Okay. Thank you. Next question please.

Operator

Thank you. One moment for the next question. Next question comes from Thomas Chong of Jefferies. Please ask your question. My question is related to the trend in our content offerings.

Operator

As average age for BD Ecosystem already reached 25 years old, can management share about the development of our content strategies and our content categories outlook as well as the consumption trend going forward? Thank you.

Speaker 1

Last quarter, I've mentioned that the average age of Bilibili users have reached 25 years old and that brought a lot of change in terms of the wealth and depth of our content offerings. As the users' needs evolve, we've noticed that in our community, there emerged many new content categories. And for Bilibili, we are not only a hub for young people's interest and hobbies, but also a common place for their lifestyle consumption. This is evident in the evolve of our content consumption data as young generation enter into new stages of life, content category related to their consumptions are growing rapidly on Bilibili. For example, in the Q2, video views in the categories such as home decor and real estate, automotive, fashion beauty increased by 39%, 43% and 30% year over year, respectively.

Speaker 1

As I mentioned in the advertising question, the daily video views for baby and maternity category experienced a year over year increase of 80%. And this is a natural outcome for our users' average age to evolve into 25. The average age of 25, meaning about half of our users above 25. And those generations or those demographics naturally have wider interest and consumption needs and they seek out on Bilibili. And because that Bilibili has authentic and professional videos and most of our videos are in mid to longer form, it makes Bilibili the go to destination for young generation before they make big purchases.

Speaker 1

And the reason why behind or the reason behind people looking to Bilibili for larger ticket items is because, 1st of all, the user have to trust the platform, trust the content creator in their view and professional judgment. And secondly is that you can hardly make the decision to purchase a vehicle over 50 seconds of videos. Speaking of automotive content, in the first half of this year, on average, every month, there are 73,000,000 of users are looking into automotive related content. We can say that Bilibili has the best quality new car reviews among all platforms. I personally look at the all new car reviews.

Speaker 1

They're extremely professional and well made and we think video as a content format is perfect for this type of reviews and walk throughs. We've talked about the emerging content category. Now let's take a look at our traditional leading content categories and young generation's interest. In the Q2, video views in the games, knowledge and tech categories also over 20% year over year growth, which are 21%, 29%, 29% year over year growth rate, respectively. This means we have established a very strong mindset among young generations where they seek out interest based

Speaker 3

content.

Speaker 1

And speaking of games, 2 days ago, on the day of Black Mist Wukong was released, there are tens of thousands of users are live streaming their game experience on Bilibili. This is quite spectacular across the game history. And on that day, we saw over 2,000,000 peak concurrent users watching the dark blackness Wukong's related content. This number shows that we have continuously led the interest based content verticals.

Speaker 2

We've

Speaker 1

always said that the evidence to show our community's competitiveness is the ability to continuously produce good and new content. And we think we have already proved that over the past 15 years. Bilibili has the ability and the power to continuously expand its content offerings horizon and content categories. Thank you. Operator, next question please.

Operator

Next question comes from the line of Xueqing Zhang from CICC. Please ask your

Speaker 4

Thanks management for taking my question. My question regards on financial outlook. The company delivered a continued margin expansion and a robust cash flow this quarter. And could management share with us the outlook for the financials in the second half of twenty twenty four? Looking at the Q3, will we breakeven or make a profit?

Speaker 4

And what's the mid to long term profitability outlook? Thank you.

Speaker 2

This is Sam. Let me take your question. Our financial performance in the Q2 demonstrate our business model has great potential for increasing the gross profit margin. In Q2, our overall revenue grew by 16%, while gross profit increased significantly by 49% year over year. The gross profit margin increased nearly 7% points year over year from 23% to nearly 30% in the 8th consecutive quarter of margin improvement.

Speaker 2

This was primarily due to our ability to control costs, which are rapidly revenue growth. With the continued growth, our high margin advertising and the game business has still substantial room or further improvement for our gross margin. Additionally, it is worth noting that our operating cash flow for the first half of the year reached RMB2.4 billion and our free cash flow reached RMB1.5 billion. This indicates that our business has entered into a positive cycle. Looking ahead to our financial performance in Q3, we see that the deferred revenue balance increased by over RMB 770 1,000,000 quarter over quarter, laying a good foundation for the Q3 revenue growth.

Speaker 2

We expect the revenue from our games and advertising business to maintain strong growth momentum, along with a significant quarter over quarter growth in gross margin. At the same time, in addition to achieving our initial growth of breakeven in Q3, we now aim to achieve meaningful operating profit on a non GAAP basis. Meanwhile, we are delighted to see solid growth across our core business lines. Our growth momentum along with the prudent cost and expense management will lead us to continue expanding our revenue scale and profitability in 2025 as a result in ongoing improvement in our operating margins.

Speaker 1

Thank you. Next question please.

Operator

Thank you. The next question comes from Yi Wen Zhang from China Renaissance. Please go ahead.

Speaker 2

So thanks for taking my question. My question regarding AI application, can management discuss about how can we apply AI in our multiple user scenario ability and its future potential? Thank you.

Speaker 1

It is known that Bilibili has the most extensive and highest quality AI content across the Internet. I think the reason behind that is most of our users receive higher education background and they are based in a first and second tier city. We are curious. And based on our internal data that for the first half of this year, on average on monthly average, over 80,000,000 of users are watching AI related content on Bilibili. And for those AI related content, not just a one word or 15 second headlines, many of those content has extensive professional content, in-depth discussion in AI.

Speaker 1

That results in 3 the most AI platform for Bilibili. First most is that we believe we have the most user who are genuinely interested in AI content. And second most is we have the most AI professionals active on Bilibili. Lastly is over 90% of the domestic AI companies have set up accounts and get in touch with Bilibili users on Bilibili. Because the high concentration and density of AI content and user give us natural advantage and explore AI application.

Speaker 1

And as a platform, generally, we see many of the users initiate their attempt in connecting AI with their content creation. Back in 2023, there was a user who used the AI tools to mimic a famous singer's voice singing songs in their in her original voice. And that actually triggered the original singer to come out and say this, did she support this type of creation and welcome user to use it? And for this year, we've noticed many AI powered music creation, AI powered animation, AI short plays were being released on Bilibili. Our operation team has even made an AI short play competition and attracting a lot of users to participate.

Speaker 1

And in terms of our own content creation tools, we have leveraged and implemented AI and our AI creation tools. We believe essentially the application will help to improve the content creation efficiencies for our existing content creators and also allowing regular users to leverage this tool to become a content creator themselves. And this is very beneficial from a content supply perspective. And we also use AI directly to enhance our user experiences. As of now, we have opened that AI assistant and AI search to all of our users.

Speaker 1

Because we have a large amount of knowledge based, review based content, you can ask our AI assistant or AI search to summarize the keywords and key messaging of videos. And this is very helpful and efficient for a user who wants to get a quick summary of our content. And there are 2 more examples of our AI tools. One is AI translations. Our AI translation tools can help to translate many different languages, such as the Tibet content a content creator from Tibet.

Speaker 1

He's spoken local language and our AI assistant can help him to translate into Mandarin. And we also have a tool called AI Assistant. While playing a video, if you don't have time to watch the whole thing, you call upon the AI Assistant. The AI Assistant will summarize into a short article to tell you what this video is about and the overlay, the outline, the key points of that video, all of which we believe will effectively help our user to improve their user experience. We always believe that AI should be a technology that benefits everyone, including users and platforms.

Speaker 1

And I believe that development of AI requires a joint effort of multiple numerous companies to reach its full potential rather than a company doing the researching AI within itself in a closed loop. So as a platform, we will always take a very proactive and open attitude. We are already working with several leading domestic AI company on various fronts. And we believe that with our joint efforts, we can bring user better experience. And for those partners, they can also unleash their full potential and value with Bilibili and our users.

Speaker 1

And as many of you might notice that our AI generated video capabilities is through our partnership with a leading AI company. We expect to continue collaboration with various partners. And through this partnership, we aim to bring better and more efficient and more creative experience to our users. Thank you. That concludes today's answering session.

Operator

Thank you. Thank you once again for joining Bilibili's Q2 2024 Financial Results and Business Update Conference Call today. If you have any further questions, please contact Juliet Yang, Bilibili's Executive IR Director or Piacente Financial Communications. Contact information for IR in both China and the U. S.

Operator

Can be found on today's press release. Thank you and have a great day.

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