From Games to Ads: Analyst Highlights Bilibili's Profitable FY24 Strategy

Benchmark analyst Jason English reiterates Bilibili Inc BILI with a Buy and a $35 price target.
BILI reported essentially on par 1Q results and reconfirmed its FY23 guidance.
The 2Q guidance came in on the disappointing side, mainly attributable to the legacy games declines.
The company has 13 games in the pipeline – eight domestic with license approved and five overseas.
In light of a healthy launch schedule with three new titles (including the highly anticipated Pretty Derby) slated to roll out in the summer, he expects an improving game growth outlook in the second half.
With the launching of new games to pick up in the summer, he anticipates an improving growth outlook on games but acknowledges that it remains a critical moving part for FY23.
Advertising showed a solid recovery and notably above-industry growth in 1Q thanks to its robust performance ads.
The analyst foresees ad growth at mid-20% Y/Y in FY23.
Net net, considering a slower start in games in the first half, he lowered his FY23 revenue estimates closer to the low end of revenue guidance.
Cost control has been effective, and the company reconfirmed to achieve profitability in FY24.
The analyst views that game remains the most significant variable for Bilibili in FY23.
Management highlighted its strategic focus on strengthening its advertising ecosystem via improving algorithms and offering effective measurement ads solutions.
In addition, the company aims to deepen ad conversion among its top verticals, including games, e-commerce, FMCG, 3C, beauty and cosmetics, and auto.
Price Action: BILI shares traded lower by 2.93% at $15.41 on the last check Friday.

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