Bilibili Inc (BILI) Q2 2021 Earnings Call Transcript

Bilibili Inc (NASDAQ: BILI) Q2 2021 earnings call dated Aug. 19, 2021.

Corporate Participants:

Juliet Yang — Executive Director of Investor Relations

Xin Fan — Chief Financial Officer

Rui Chen — Chairman of the Board of Directors and Chief Executive Officer

Ni Li — Vice Chairwoman of the Board of Directors and Chief Operating Officer

Analysts:

Lei Zhang — Bank of America Merrill Lynch — Analyst

Alex Poon — Morgan Stanley — Analyst

Alex Yao — JP Morgan — Analyst

Zhijing Liu — UBS — Analyst

Yiwen Zhang — China Renaissance — Analyst

Presentation:

Operator

Good day and welcome to the Bilibili 2021 Second Financial Quarter Results and Business Update Conference Call. Today’s conference is being recorded. At this time, I would like to turn the conference 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 filings with the SEC and Hong Kong Stock Exchange. The non-GAAP financial measures we provided are for comparison purpose only. Definition of these measures and a reconciliation table are available in today’s news release issued earlier today. As a reminder, this conference is being recorded.

In addition, an investor presentation and webcast replay of this conference call will be available on Bilibili IR website at ir.bilibili.com. Joining us today from Bilibili’s 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. Xin Fan, Chief Financial Officer. And I will now turn the call over to Mr. Fan, who will read the prepared remarks on behalf of Mr. Chen.

Xin Fan — Chief Financial Officer

Thank you. Juliet and thank you everyone for participating in our 2021 second quarter results conference call. I’m pleased to deliver today’s opening remarks on behalf of Mr. Chen. In August, 2019, we announced our addition to further grow our user base. Today, two years later, we found ourselves on the fast track to executing in growth strategies, achieving many great milestone along the way. In the second quarter, we added 14 million MAUs sequentially, bringing our total MAUs to 237 million, up 38% year-over-year. Mobile MAUs also rose by 44% year-over-year reaching 220 million and the DAUs reached 63 million, marking a 24% increase year-over-year.

Importantly, our users became even more engaged spending an average of 81 minutes per day on our platform, marking the highest of second quarter level in our operating history. As we move into the peak summer season, we are pleased with increasing momentum we have seen so far, which places us firmly on track to achieve our growth targets. Our robust user growth also translated to strong topline expansion. In the second quarter, our total revenues reached RMB4.5 billion, up 72% year-on-year, once again, beating the high end of our guidance, driven by improved products and the services.

MPUs were up 52% year-over-year to 21 million and our paying ratio improved to 8.8% versus 7.5% in the same period last year. As the go to destination for young Chinese, our platform had also gained wider recognition among our titles across different industry verticals. In the second quarter, ad revenue grew by an impressive 201% year-over-year. Celebrating our 12-year anniversary on June 26th, we honored the many years we have grown with our users. Over the past 12 years, we have remained true to our original aspirations to create an outstanding community for all of our users and the content creators and to bring Chinese original content to users worldwide.

With this mission in our heart, we continue to uphold our public responsibility to our community. We insist on data authenticity, content positivity, in any event, unique, making China original content. In July of this year, we published our first ESG report. Here we outlined our ESG policies and actions, deepening our commitment to being a responsible public company with a goal of bringing positive social and cultural impact to the work.

Looking ahead, the transformative efforts of visualization is creating an era of massive opportunity for us. Graphics and the text being re-interpreted into video format to deliver information in more lively, vivid and powerful way. And we see it video format of platforms will be the new gateway for people to connect through the Internet and access the world. And Bilibili is on track to be one of that. The momentum from video trends, along with our solid strategic execution to expand our content, community and commercialization, gives us great confidence in our future sustainable growth.

With that overview, I would now like to provide more granularity on our second quarter operation. Beginning with content, our PUGV ecosystem continue to strive, representing 93% of our total video views in the second quarter. Over the past half year, we have accumulated our platform as a destination for young people to showcase their talents and realize their career goals as professional content creator. We continue to improve our services to attract content creators, launch more tools and modify our app to make content creation easier.

In the second quarter, Bilibili was home to 2.4 million content creators, up 25% year-over-year and the mostly video submission grew to 8.4 million in the second quarter, up 41% year-over-year. The increase in our matrix are no small feat given last year’s high base. We continue to improve our track distribution mechanism to let high quality content creators quickly match with the events. In the second quarter, the number of content creators was more than 10,000 followers, increased by 47% year-over-year.

Our live broadcasting platform and Sparkle advertising platform provide means of our content creators to unlock their commercial value, while showcasing their talents. By the end of the second quarter, 409,000 content creators had also joined our ongoing cash incentive program. For the second quarter, our top five most populated verticals were the Lifestyle, Entertainment, Game, Tech & Knowledge and Anime, with many new verticals on the rise, such as relationship, home decoration, fitness, beauty and cosmetics. The emerging popularity of these categories reflect the involving content needs as we expand to wider demographics.

Being a hub for young minds to discover and explore various interests, we firmly believe the content we provide should have positive impact on people’s lives. The activity promotes content that’s informative, engaging, popular and help our users to become their better shape. It could be a small pleasure such as how to cook — bake cookies, while engaging users in deeper thinking through our guidance into the customers. In the past 12 months, over 130 million users accessed pan knowledge content across a variety of subjects I discussed before, such as solidifying the mindshare among users of Bilibili.

Turning to our OGV content, worth mentioning our PUGV and unlocking commercialization potential, our high-quality OGV content continue to attract new users and to convert paying users on our platform. In addition, many of our self introduced titles have become valuable IP assets that we can build up. As we leverage our network to further our IP influence, representing Chinese culture and a part of China’s soft power, Chinese animation has become increasingly popular domestically and internationally. And our investment in this category are paying off. A prime example of our evolving IP creation and self production capability, the Link Click Shiguang Dailiren produced by our own anime studio, this Bilibili original IP assets, become an immediate hit following its release in April, accumulating over 150 million video views. Partnering with Sony Funimation, Link Click was released in multiple countries and regions where it’s continued to be highly rated. Other popular Chinese Anime titles have also helped us to attract many new young users that had been well received by overseas anime lover. These titles further solidify our leading position in ACG space, including the final chapter of Ling Cage [Foreign Speech], Legend of Hei [Foreign Speech], Season 2 of Carp Reborn [Foreign Speech] and Heaven Official’s Blessing [Foreign Speech].

Our self-produced matchmaking variety show 90 Hun Jie Suo was launched last week and the music variety show the The Next Banger [Foreign Speech] will be released in August. With this new OGV offerings, we hope to attract more young minds with relevant interest and simulate even more discussion within our community.

Turning to our community. Our community continues to be a vibrant one. Users are incredibly engaged and are tightly bonded both to our content and with our platform. Over time, we have become a part of many people’s regular daily routines. For the second quarter, our daily video views were up by 48% year-over-year, reaching 1.7 billion. Monthly interactions was also up by 39% year-over-year with users generating 7.3 billion bullet chats, comments, likes, Bilibili moment posts and the virtual gifting. The number of our official members on Bilibili are also increasing with high retention rates. By the end of second quarter, 121 million people were official Bilibili members, an increase of 35% from the end of the second quarter last year and now our 12-month retention rates remained around 80%.

In fact, more than 50% of our legit users in 2011 still remain active to this day, 10 years later. Over the year, we continue to involve our community management system to ensure a friendly and welcoming community environment and inspiring positive social interactions. We strongly believe that our community is a place for people to reach consensus, not to create dispute. In addition to our official member mechanism, we continue to reinforce community member patrol and enhance our designated response team to protect the integrity of the community. With this effort, we hope to create an enjoyable and lovely place for our users and creator to share, learn and shine.

Now, let’s look at our commercialization progress. We continue to provide more products and services and we execute our commercialization strategy by further realizing the deep value of our high quality users. Starting with our games, in the second quarter, revenue for our mobile game business remains relatively flat year-over-year at RMB1.2 billion. Going into the second half of the year, our priorities are to expand our mobile game growth domestically and internationally. For our next stage of growth, we’re committed to building out our internal development capabilities. We currently have six games studios with over 1,000 members working on our dozen projects, leveraging our game operating experience, with PUGV and live broadcasting services, strong distribution power and our deep understanding of user preferences. We are confident we can bring exceptional internal development game to our users.

We welcome the three new titles to our rooster in the second quarter as the exclusively distributed in China. Employing user-centric game promotion techniques, such as clever memes and the PUGV content, players immediately embraced Guardian Tales [Foreign Speech] with the games ranking highly on China’s iOS top grossing and top download charts, a week following its release. Our exclusively licensed indie game Dead Cells [Foreign Speech] was another primary example of Bilibili’s distribution power. By the end of July, over 2 million copies had been sold.

Overseas market present with another growth opportunity. In May, we successfully launched RE: Final Gear [Foreign Speech] in South Korea, praised for its dedicated design and innovative game play. RE: FinalGear quickly won the hearts of like-minded ACG lovers. For three weeks after its release, RE: FinalGear continue to hover on Google Play top 10 grossing charts in South Korea. This success story demonstrate our well established capabilities in game selection and execution in overseas markets. We believe we can build on the success with our other titles in other regions. And for our game pipeline, we currently have 11 titles approved for domestic release and the number of ACG titles slated for international release in the coming quarter.

During our recent Bilibili game press conference, the franchisee world introduced 16 brand new titles including 10 exclusive licensed games and six self driven projects, catching to a new generation of gamers. These titles cover the wide are of genre including sandbox, multi-player puzzle solving, real person interactive RPG, simulation and mobile. Each type of feature unique graphic design in the historic setting, reflecting Bilibili’s understanding of Gen Z+ gamers tastes and preferences.

Looking at our VAS business. Our VAS business remained strong with brand new reaching RMB1.6 billion in the second quarter, up 98% year-over-year. Via natural extension to our video ecosystem, live broadcasting is a vivid way to bring high quality video content to our users. And for our content creator, it is also an important channel to engage with their followers and realize commercial value of the operation. For game lovers, we are a one-stop platform for game related videos eSports terminal in the place to engage with game KOL. For ACG and entertainment enthusiasts, our content continue to expand with our huge anime library and unique live broadcasting entertainment, particularly virtual streamer of VR content. Over 50% of top global VR have now joined our Bilibili live broadcasting network, making us the largest VR community in China.

Turning to our premium member business. Our dominant Gen Z+ users continue to show growing popularity to pay for premium content. By the end of the second quarter, number of premium memberships reached another record high of 17.4 million, an increase of 56% year-over-year. As for our advertising business, we are pleased with another quarter of explosive growth for our ad business. Revenues grew by 201% year-over-year to RMB1.05 billion. More and more advertisers had recognized us as a must invest platform to get visibility from Gen Z+ demographics. For the second quarter, the top five advertising verticals were mobile Games, Digital & 3D products, Skincare & Cosmetics, E-commerce and Food & Beverage. Along with increasing our brand awareness, we continue to improve the efficiency of our ad margin algorithm and strengthened our ad products, giving us confidence in our ability to secure continuous ad revenue growth.

In summary, we are pleased with our business progress so far. We have set the bar high and aim to reach higher. Building our content ecosystem driving model, we will continue to grow our elaborate community and enhance our commercialization capabilities. At the same time, we place great importance on our social responsibility with a goal of spreading productivity to the world around us. Whether it’s been through our Bilibili-sponsored schools disaster relief efforts or pandemic support, it is essential for us to always lead with integrity and give back to society.

This concludes Mr. Chen’s remarks.

I will now provide a brief overview of our financial results for the second quarter of 2021 and outlook for the third quarter. Total net revenue for the second quarter was RMB4.5 billion, up 72% from the same period of 2020. We continue to see a more balanced revenue mix driven by our diversified commercialization channel. Our total net revenues breakdown by revenue streams were approximately 27% mobile games, 26% VAS, 23% advertising and 40% E-commerce and other business. Cost of revenues increased by 74% year-over-year to RMB3.5 billion. Revenue sharing cost, a key component of cost of revenues was RMB1.7 billion, representing a 70% increase on the same period in 2020. Gross profit increased by 64% year-over-year to RMB989 million and our gross margin was 22% in the second quarter.

Total operating expenses was RMB2 5 billion, up 107% from the same period in 2020. Selling and marketing expenses was RMB1.4 billion, representing a 107% increase year-over-year. The increase was primarily attributed to increased channel and marketing expenses to promote our app and brand, as well as promotional expenses for mobile games and an increase in headcount in sales and marketing personnel.

G&A expenses was RMB436 million, representing a 109% increase year-over-year. The increase was primarily due to increased headcount in general and administrative personnel, increased share-based compensation expenses and higher rental expenses, R&D expenses were RMB674 million, representing a 104% increase year-over-year. The increase was primarily due to increased headcount in research and development personnel and increased share-based compensation expenses.

Net loss what RMB1.1 billion for the second quarter of 2021, compared with RMB571 million in the same period of 2020. Adjusted net loss, which is a non-GAAP measure that excludes share-based compensation expenses, amortization expenses, income tax related to intangible assets acquired through business acquisition was RMB858 million compared with RMB476 million in the same period of 2020. Basic and diluted net loss per share were RMB2.91. Adjusted basic and diluted net loss per share was RMB2.23.

As of June 30, 2011, we had cash and cash equivalents, time deposits, as well as short-term investments of RMB27.6 billion, compared with RMB12.8 billion as of December 31, 2020. Our sufficient cash reserve gives us more confidence in our ability to execute our growth strategy, which we believe will yield comfortable returns in the long run.

With that in mind, we are currently projecting net revenues for the third quarter of 2021 to be between RMB5.1 billion and RMB5.2 billion. Thank you for your attention, we would like now to open the call to your question. Operator, please go ahead.

Questions and Answers:

Operator

[Operator Instructions] We have the first question. This is coming from the line of please from Bank of America. Please go ahead.

Lei Zhang — Bank of America Merrill Lynch — Analyst

[Foreign Speech] Thanks management for taking my question and congrats on strong set of results. My question is mainly on the user growth. Can you give us more color on the second quarter’s user growth, which is typically a low season, but our growth number was pretty good. Then secondly, how should we look at the second half user trend and our long-term user target. Thank you.

Rui Chen — Chairman of the Board of Directors and Chief Executive Officer

[Foreign Speech] So the first half performance, we did a pretty good job. I think that all things to our content ecosystem driven business model and this model’s character is the longer term it develops, we think the more competitive it is because this is a truly healthy business model that’s self-driven and sustainable.

[Foreign Speech] So I believe many of the participants for today’s call is Bilibili user itself and I believe you might have the same feeling as I do while using Bilibili that the content on Bilibili is more and more diversified and is more high quality, sometimes for my personal use on Bilibili, I will be surprised to find out the diversity and depth of our content offering. So, I believe the business model that we’re running is very, very healthy and we believe this all can bring our long-term sustainable growth.

[Foreign Speech] So as for our long-term user guidance, currently, we have already experienced half of the Q3 so far what we have observed in Q3 that we see very good progress in terms of future growth for both quality and quantity and earlier this year, we have gave out our user forecast for this year and our MAU will reach 216 million. So far, we think we should be quite on track to deliver — achieve that goal or even surpass that goal.

[Foreign Speech] So as for our long-term goal of 400 million MAU by end of 2023 we — so far, we feel very confident to achieve that goal, well on track. [Foreign Speech] And one thing I want to emphasize that Bilibili’s user growth, the best of it is it’s quality that we have maintained very high quality of user growth. From our perspective, we’re not only just attracting user to join Bilibili, but they actually really recognize the value of the platform and they’re willing to stay with us for long-term even though that we have experienced a very fast healthy user of growth in the past. We’ve noticed that engagement level and the activeness of our user is still growing, that in the second quarter, our daily user time spend reached 81 minutes. That is the best results we’ve seen compared with our previous second quarter time spent.

[Foreign Speech] And additionally, we see the long-term engagement level for our user is also improving. Actually, we’ve seen that the registered user in 2018, 2019 and 2020, their DAU to MAU engagement level in 2021 is actually improving on a year-on-year basis. [Foreign Speech] [Foreign Speech] And every quarter, we have released our daily VV and our monthly user engagement number and that year-on-year growth rate is actually faster in our MAU growth rate. [Foreign Speech] So all of those matrix shows that we are not only be able to attract user to join our platform, they actually stay with us and become more engaged.

Lei Zhang — Bank of America Merrill Lynch — Analyst

[Foreign Speech]

Operator

We have the next question. This is coming from Alex Poon from Morgan Stanley. Please go ahead.

Alex Poon — Morgan Stanley — Analyst

[Foreign Speech] I’ll translate my question. My question is regarding the advertising business. Congrats on very strong growth of over 200% for few quarters. Given that there are recently regulations around data privacy, flash green ads, education, etc. How should we forecast and look at the second half growth and where would the growth drivers come from? Thank you very much.

Ni Li — Vice Chairwoman of the Board of Directors and Chief Operating Officer

[Foreign Speech] So for second quarter, our quarter ad revenue had surpassed RMB1 billion for the first time and achieving 200 — over 200% year-on-year growth and this is the ninth consecutive quarter that we delivered peak advertisement results. [Foreign Speech] As we look into the second half and for the next years, we’ve done several things to continue to improve our ad efficiencies and lay solid foundation for our future ad growth.

[Foreign Speech] So first of all, we have continued to explore multiple scenario for our ad products based on our clients’ needs and we hope to help our clients to precisely reach their target audience multiple times across various scenarios across Bilibili’s product ecosystem and quickly view their brand image through just one campaign investment and we have already achieved that within this quarter.

[Foreign Speech] Secondly, we are also actively exploring new ad formats including add in a video format, as well as connect advertising with content creators’ creativity. The regulatory environment you mentioned, we believe that the foundation or the logic behind is that the regulatory hope our consumer will be notified. It is advertisement and while Bilibili has been practicing it, first of all we — all of our advertisement will not be a blockage type of advertisement. We hope really to embed and connect and combine content with advertisement, make it more interchangeable good content to be a good commercial and good commercial could be a good content and from that perspective, our integrated marketing solution, as well as our content readers own creation, their own production towards native ads is a perfect solution towards our problem.

[Foreign Speech] And secondly, our ad efficiency was also greatly improved in this quarter, thanks to our ad tech and [Indecipherable] team and we’re also investing in frontier ad tech related R&D. [Foreign Speech] And thirdly is that we will be focusing on our leading verticals and provide industry base ad solutions such as Game, Technology, Education, E-commerce and Food & Beverage etc. And as we expand our user base, we hope to further expand our new ad industry verticals and verticals with sufficient ad budget, for example, such as automotive, a new domestic consumer to it and all of that has been reflected in our second quarter’s performances.

[Foreign Speech] And most importantly, we have upgraded our organizational structure of our commercialization team. In the second quarter, we have integrated Bilibili commercialization network platform consists of commercial traffic management, ad system and our Sparkle advertisement system. The purpose of doing so is to further optimize and allocate that we do as commercial resources and improve our commercialization efficiency.

[Foreign Speech] And additionally, we have also regrouped our sales from integrated marketing team and our content creator related sales team forming one centralized sales center. The goal is to provide Bilibili’s featured integrated marketing solutions and help our clients to improve their brand equity and achieve self-reinforcing marketing circulation on Bilibili.

[Foreign Speech] So there is a saying that the platform value equals the user’s value on this platform and as Mr. Chen has repeatedly mentioned the value of the user, our current average age of our user is around 22.8 years old and 86% of our user are under 35 and majority of them are in first and second tier city. And with this group of cohort, they are the main consumption goods in China and they represent the highest value demographics and building on that advantage, we’ll continue to reinforce our infrastructure and continue to improve our ad products. And for the second half of this year and one to three years ahead, we’re still quite confident to maintain a healthy and fast growth for our app business. Thank you.

Operator

The next question comes from the line of Alex Yao from JP Morgan. Please go ahead.

Alex Yao — JP Morgan — Analyst

[Foreign Speech] So my question is about the regulatory impact on streaming and the live streaming operation given the changing regulatory environment in this space and the potentially more policy coming out in the next couple of quarters. How should we think about the impact on our gaming and the live streaming operation? Thank you.

Rui Chen — Chairman of the Board of Directors and Chief Executive Officer

[Foreign Speech] So actually for 2021, what we have observed, there’s no significant change of regulatory environment towards games or towards live broadcasting. The speculation and discussion that’s all over the Internet is just based on the media. It came from the media level and as a company ourselves, we have kept a regular dialog with different government authorities and from the company’s perspective, we actually haven’t heard anything new. And the discussion is generally from the media or the internet users and it’s just based on their own speculations or imaginations and there’s no ground to those discussions and from our perspective, we think that from a global perspective, the regulation towards Internet content game or live broadcasting, it will be more and more standardized and rule based and that hasn’t changed.

[Foreign Speech] From our perspective in the past, Bilibili have always responded very actively towards all kinds of regulations from the government. We believe our industry that’s experiencing fast growth, certain regulation is actually beneficiary for this industry’s long-term and healthy growth. [Foreign Speech] So we think as the industry’s development, as we have more influence and impact towards the society, it’s a very natural process for the regulation to become more rule based and standardized and I believe the video industry will be a multi-billion, trillion RMB worth of industry and games probably will become — very likely to become the mainstream format of entertainment. And in the past, it probably was emerging new verticals and the details of those regulations were not mature, and as you grow bigger, it’s just very natural for the regulatory to form a more standardized and rule based regulatory environment.

[Foreign Speech] So we think that the government’s regulation toward video content and game content has been very clear and in general, they do hope this industry will develop and they encourage the development of this industry and they have been very specific on the things that they hope to regulate. One is on the minor protection, two is the compliance of the content itself and in the past and up to now Bilibili has been very clear on those requirements and has followed and implemented all the regulatory requirements.

[Foreign Speech] So, generally, I think that the gaming industry will definitely move forwards and experience better development and as an Internet company, we’ll be fully compliant with the key areas that the government has specifically required. One is on the minor protection and two is on the compliance of the content itself. My personal view is we’re still very optimistic. I believe this industry will only become better and better under the supervision of the government.

[Foreign Speech] Generally, I think that this industry is quite different from 10 years. It will — probably in 10 years — it’s still at early stage. This not a very precisely regulated, but 10 years later, this industry has become much more mature, the participants in this industry also gain more experience, over 10 years of experience. I think we have already reached a consensus with the industry players and the regulatory is that the industry needs to be regulated towards a healthy development path and from Bilibili’s perspective, we have strictly followed that rules, for example, on the minor protections that the revenue generated from user that’s below 18 years old, the game revenue only takes about one — takes around 1% of our total total gaming revenue. So, we have been implementing restrictions and rules to protect — better protect our minors and follow the regulatory requirements. So, I think overall industry is growing towards a more healthy and positive track and I personally feel quite comfortable with the existing environment.

[Foreign Speech] So to summarize, in the past few months. I personally don’t believe there’s a vast change of regulatory environment towards games or video and we believe the regulatory, the existing practice and requirement from the government is very appropriate and scientific and we believe our peers in this industry also agree with that and already reached a consensus that this industry needs to be moved towards a more healthy and regulated path.

Operator

The next question comes from the line of Zhijing Liu from UBS. Please go ahead.

Zhijing Liu — UBS — Analyst

[Foreign Speech] Let me translate myself. So first, congratulations on the strong set of results. My question is on the GP margin. I noticed that the GP margin in this quarter was — showed some weakness Q-on-Q and year-on-year. So, may I know the reason or any color behind that and what is the management’s thoughts on GP margin trend for rest of this year and for the longer term potential? Thank you.

Xin Fan — Chief Financial Officer

Okay. This is Sam. Let me take your question. You’re right, slightly decrease of the margin in Q2. Actually, it’s mainly due to the change of the sales mix. In Q2, we saw the contribution of our yen revenue, I felt it was decreased as a percentage of whole revenues and there were also lower contributions from our cooperation there. So, and also for our networking [Phonetic] revenue, the gross profit margin also declined a little bit due to — because we launched a campaigning to offer higher revenue sharing ratio, just like performance-based incentive for those new holdings. So, actually if you look at the short-term GP margin trend, we are still in the early stage on the monetization side, so as well be factoring over the quarter. But before we get into the details of our long-term margin trend, I would like to emphasize on the way we — the strategic thinking of our — on the profitability and why we have the opportunity to quickly, you know, expand our user base, operating always for some of the user growth and top line expansion rather than to limit our growth potential for the sake of the breakeven. When we are thinking about the path to the profitability, I tell you, we are thinking what’s the sensible revenue level to achieve a healthy breakeven status and whether it’s sustainable to keep improving the profitability after the breakeven. So, for example, a company we like RMB20 billion revenue and the same many with RMB15 billion revenue, the bigger revenue side is surely know more sustainable for long-term development. Over the path of the margins, I think we successfully achieved a quality revenue growth with especially user base. Our MAUs were up 38% year-over-year and monetization efficiency per MAU was also increasing, affecting [Indecipherable] revenue per MAU actually increased by 72% year-on-year to around RMB13.8 per quarter in Q2. We believe there are plenty of upsides because we grow our user base and improve our monetization efficiency. And also on the cost side, our key relatively fixed operating costs, including the content, server and staff cost decreased from like 34% of the total revenue in 2019 to 28% in Q2 this year. As we grow our top line and improve the efficiency, our revenue mix will also be more diversified and our segment margin, which are live broadcasting in the online game transmission, still have more to improve. That’s just we want look at for the long term on gross profit margin trend.

Zhijing Liu — UBS — Analyst

Thank you. That makes sense. Very clear.

Operator

Thank you. We have the next question from Yiwen Zhang from China Renaissance. People go ahead.

Yiwen Zhang — China Renaissance — Analyst

[Foreign Speech] Translate for my question. So my question is regarding gaming. So, in the first half, our gaming revenue is pretty stable. How should we be looking at the second half? And then also for longer-term can you revenue growth additionally, where we do self developed gaming, what’s key effect has weighed too heavily in mind? Thank you.

Rui Chen — Chairman of the Board of Directors and Chief Executive Officer

[Foreign Speech] Indeed, when we work at our games, definitely, we have experienced some of the slowdown in the first half of this year. The main reason that we see is because lack of supply for both of our exclusively licensed game and jointly operated game, for the revenue to grow, we need to connect to — we need to get more new games and because of the overall permit issue process in the past six months that there has been some of the delay and the supply has been slower than expected. For the same reason, some of our projects has been delayed and that was the main reason for the slowdown for our team.

[Foreign Speech] We also see some positive signs, as we operate our business. Beside the supply issue, we’ve seen on the demand side, there is many, many positive signs. First of all, on the user, the game related user who watch game related live broadcasting and video actually kept growing with our overall MAUs even with the under supply for game titles for all the — for many new titles that we use in the first half of this year, including [Indecipherable] online is new addition, new downloads and new user has constantly break single game record and on the other hand for the old games, we have — we are seeing, it’s long operation cycle. Many of our games continue to grow in terms of revenue and users, for example, our Azur Lane, our exclusively licensed game, Azur Lane, our jointly operated game Genshin Impact, we’re seeing more users joining and it’s growth in our — continuously to grow year-over-year. So, generally, we think, on Bilibili the gamers on growing and their desire and need for high quality games is also growing.

[Foreign Speech] So, as we see it, we think as long as we stop the supply front, we should be able to solve the bottleneck that we didn’t see in the past quarters and the solution towards the supply problems, while we continue to enhance our licensing business, we will continue — we will start to invest in our self developed games and actually from — in last year, we have already seen the trend of lack of supply in the market and we started to invest in the self-developed game business. Currently, we have over 1,000 team members in our self-development team and there’s multiple titles and projects under development and we’ll be expecting to launch our own self developed games in next year and the year after next year. So, from — based on our existing business scale, we think our self developing will be our number one priority and I believe in few years later, our self developing should be contributing over half of our game revenue.

[Foreign Speech] To summarize, we believe, as our user continue to expand, we should have more gamers and more demand for games and to solve the supply problem, we’ll continue to reinforce our licensing in this game business while investing in self developed games. And in the past, we might have one engine for team revenue growth, which is the licensing and in the next few years will be dual engine self development licensing in jointly operation. And we think that should power our team revenue growth.

Operator

Thank you. And that concludes our question and answer session for today. I would like to turn the conference back to the management for any additional or closing comments.

Juliet Yang — Executive Director of Investor Relations

Well, thank you again for joining us today. If you have any further questions, please contact me, Juliet Yang, Bilibili’s IR Director or TPG Investor Relations. Our contact information for IR in both China and the U.S. can be found on today’s press release. Have a great day. Bye, bye.