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Bilibili Inc. (NASDAQ:BILI)
Q3 2019 Earnings Call
Nov 19, 2019, 8:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day and welcome to the Bilibili 2019 Third Quarter Earnings Conference Call. [Operator Instructions]

At this time, I'd like to turn the conference over to Juliet Yang, Senior Director of Investor Relations. Please go ahead.

Juliet Yang -- Senior Director of Investor Relations

Thank you, operator. Please note the discussion today will contain certain forward-looking statements relating to the Company's future performances and are intended to qualify the safe harbor from liability as established by the US Private Security Litigation Reform Act. Such statements are not guarantees of future performances and are subject to certain risks and uncertainties, assumptions and other factors. Some of these risks are beyond the company's control and could cause actual results to differ materially from those mentioned in today's press release and this discussion. A general discussion of the risk factors that could affect Bilibili's business and financial results is included in certain filings of the Company with Exchange -- Securities and Exchange Commission. The Company does not undertake any obligation to update this forward-looking information except as required by law.

During today's call, management will discuss certain non-GAAP financial measures for comparison purpose only. For a definition of non-GAAP financial measures and a reconciliation of GAAP to non-GAAP financial results, please see the 2019 third quarter financial results news release 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 Investor Relations website at ir.bilibili.com.

Joining us today on the call 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. Sam 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 today's earnings call. I'm pleased to deliver today's opening remarks on behalf of Mr. Chen. Our third quarter was another strong quarter of growth. Our active user acquisition strategy and an increased commercialization efforts are paying off. We secured another quarter to record high MAUs and paying users, while meaningfully improving our top line and gross margin. In the third quarter, we added 17.5 million MAUs to our platform sequentially. This is our highest quarterly net add ever, bringing our total MAUs to 127.9 million, up 38% from the same period last year. The growth rate for our mobile MAU even more accelerated reaching 114.2 million in the third quarter, up 43% year-on-year.

While growing our user base, we are also keeping our community engagement at a high level. Total DAUs were up 40% in the third quarter, reaching 70 -- 37.6 million and on average they spend 83 minutes per day on our platform. Our user stickiness and longevity and the willingness to pay for premium content and the services. In the third quarter, our average monthly paying users once again more than doubled compared to the same period in 2018, reaching 7.9 million. Revenues per MAU was RMB14.5, a 25% increase from the same period in 2018. This set of numbers demonstrate improving monetization of our growing traffic. For the sixth consecutive quarter since our IPO, we exceeded our revenue guidance between the high end of our expectations by nearly RMB100 million. Total net revenues came in at RMB1.86 billion for the quarter, up 72% year-on-year. We think this means we are doing something very right. As our top line expense -- we are realizing more leverage and our gross margin has improved meaningfully each quarter this year from 13.8% in Q1 to 18.9% in Q3.

To give a bit more insight into our strategy, I'd like to walk you through our third quarter performance and provide certain updates on what we consider the backbone strategy of our business, Content, Community and Commercialization. Our full-spectrum entertainment ecosystem is strong and growing. We continue to improve our tools and services to better support and inspire our content creator. The mobile content submission tools has been widely adopted by our content creator which around 50% of the content now being uploaded through mobile devices. We believe the 5G network adoption will soon have a positive impact on video creation and consumption beyond our imagination.

During the third quarter, we had an average of 1.1 million active content creators, up 93% year-over-year, uploading 3.1 million videos monthly, up 83% on year-over-year basis. The top five content categories in third quarter were Lifestyle, Entertainment, Game, Animation and Technology. For Lifestyle, our growth campaign was a great success in summer. By the end of Q3, Vlog has more than 11 billion cumulative views. Our interactive video features continues to be a great outlay while content creators to stretch their imaginations in various verticals, attracting our viewership of more than 300 million in just four months [Phonetic].

In October, we launched a new joint equation program that encouraged our content creators with majoring [Phonetic] talent, to work together, to join teleco produced titles. This initiative have been well received by our community, particularly in the vertical there are more professional skills such as music, dance and animation.

Looking ahead, we aim to further expand our content offerings in entertainment, fashion and technology, with more effective operators, which we believe will help attract mass audience. Notably, as our smart content distribution energy and operational capabilities improve, we are excited to see our content and content creators can traction faster than ever. In the third quarter, the number of new videos that achieved 1 million views more than quadrupled compared to the same period last year. The ability to showcase their talent and again real time trend with heavily populated community is making Bilibili the ideal platform [Technical Issues].

In addition, we continue to expland our OGV Library to supplement our ever-growing PUGV offerings. We remain the dominant leader in animation field with one of the China's largest animated libraries. We recently released updates on dozen of Chinese anime projects, including the [Foreign Speech] and over 20 new titles including, Heaven Official Briefing [Phonetic], [Foreign Speech] and the Legend of Mortal Affection [Phonetic], [Foreign Speech].

In the documentary and variety show department, our signature food documentary series, The Story of Chuan'er Season 2 and our self-produced Animal Reality show, Animal Hospital has been hot topics all summer long. At the same time, we continue to work with leading overseas producers to bring our audience top level titles. These included Chinese version of discoveries, all those survival reality show, First Net Out, [Indecipherable] and Hidden Kingdoms of China [Foreign Speech] documentary that we co-produced with National Geography. This mass appeal titles have not only helped attracting broader audience, but also yield decent advertisement and premium membership revenue.

Looking at our community, we are seeing accelerated user expansion. We are expressing fast growth in numbers as well as the engagement levels. In the third quarter, we have 725 million daily video views up 60% year-on-year. This largely base is deeply in growth in our platform connecting with each other and our content. In Q3, our users generated 2.5 billion monthly interactions through bullet chats, comment, likes and Bilibili Moment posts. This is up 122% compared to the same period last year. Our official membership program is also on the rise. At the end of the quarter, we have 62 million official members who passed our 100 questions exam, up 46% year-over-year. Our 12-month retention rate remain high as well at about 80%. This is an excellent indicator of the high quality of our user growth.

Turning to commercialization. According to the latest iResearch report issued in November this year by 2023 China's online entertainment market will achieve a market size of RMB1.1 trillion as the driving force of this remarkable growth Gen Z will contribute nearly 66% of the overall market and more so than any other generations paying for entertainment is the new norm in China.

Growing down a bit further, the ACG game market is forecast to hit RMB62 billion by 2023. And China's leading online Gen Z entertainment platform and the leader in the ACG field, we are well positioned to capitalize this market bond and grow our position. First, let's take a look at our game business. Our game business is now accounting for 50% of our revenues. As we further diversify and expand our game offerings, we continue to grow our market share in the high quality and ACG game space.

For third quarter, revenues from our mobile games were up 25% year-over-year at RMB933 million. The in-viewing Fate/Grand Order or FGO continued to lead our growth. With growing revenue contribution from our jointly operated ACG-themed mobile game, Arknights, which was released in Q2. FGO had a further growth in Q3, after the release of a major content update, FGO ranked Number 1 on China's iOS top grossing chart three times in September. The games enduing Lifecycle is an excellent showing of our ability to acquire preliminary content and our strong game distribution power.

Our game community continued to be one of the largest in China. We are excited to bring new titles to our massive audience. We released a series of ACG titles including an exciting domestic RPG called Final Gear and two high rated Japanese female based RPG titled, Untouchable Palms and A3. All have been well received. On the jointly operated game front, we launched a number of high-quality domestic titles including Tencent highly anticipated ACG mobile game, Fox Spirit Matchmaker and the paper game, Shining Nikki.

Looking at our content update and new game pipeline, we are excited to release a major content update for FGO planned for New Year update 2020, with a total of 30 high-quality games in our pipeline. We have eight titles that have cloud approval scheduled to be released in the coming months. These include today's release of [Foreign Speech] 2, a highly anticipated domestic RPG that combines the Malaysian and a shooting gameplay. Although one million users have already registered for this title. On top of that the series Yama, [Foreign Speech] and a couple of others have also being approved and will be released in the coming months. Our platform is also slated to bring audience jointly operated game such as Naughty Emoji, the card game, Rezeal [Phonetic] and more.

In addition, we are excited to expand our game distribution outside of Mainland China with dozens of high titles to be released in Japan and Korea, as well as the Great China region. The appeal of the plan international release at this time include title such as The Furious Yama, Final Gear, Girl Cafe Gun 2 and Dark Boom.

Turning to our Live Broadcasting and VAS business. Revenues increased by 167% year-over-year reaching RMB453 million in the third quarter. Also with improved revenue contribution from our live broadcasting, premier membership and the Maoer in the comic business. We continued to reach our game and entertainment content offering Live Broadcasting and attracting new viewers with increasing demand in these areas such as premium E-sports content. During the League of Legend S9 final, our peak concurrent user almost doubled compared with last year S8 final.

In addition, our featured VTuber and audio related content remain our top verticals. With access to additional and open exclusive content, members are highly incentivized to join our premium membership program. Premium membership continue to bring in new subscriptions and by the end of September, we had 6.1 million valid premium members, up 129% year-on-year.

During the third quarter, we initiated a jointly member program with Tencent music, which was -- has been a great win-win collaboration for both parties. As for our advertising business, we are seeing encouraging sign of flattering a macro environment. Revenues from advertising increased by 80% year-over-year to RMB247 million. We continue to improve our performance and efficiency, yielding positive results with better collect rates. The top three industry verticals for brand ads in the third quarter were food and beverage, games and e-commerce and the top three verticals for performance based ads was games, education and e-commerce.

I will now briefly update you on our partnership with Alibaba. During this year's W-11 [Phonetic] event, we launched an integrated marketing program with T-Mobile and Taobao. The campaign include a number of e-commerce advertisement initiative and the combined Bilibili vast content ecosystem with Alibaba the extensive e-commerce ecosystem. To be more specific, the campaign allows e-commerce advertiser to complete one-stop shop marketing on Bilibili. They can first rate brand awareness through various display ads, secondly, increase user purchase addition through native ads. And third, complete the transactions through performance based ads that are linked to the merchandise.

The initial result was very encouraging. We look forward to work closely with Alibaba and bring our partnership to the next level. Finally, I would like to touch on our e-commerce business. For the third quarter, our e-commerce and other business grew by 703% to RMB226 million, largely driven by an increased number of paying users spending more our e-commerce platform. We are pleased to announce that by the end of October, our year-to-date e-commerce GMV has achieved an exciting milestone of RMB1 billion.

In summary, we are excited by the momentum that we are seeing across our business. Our solid Q3 results, a strong testimony of our ability to grow our user base, while maintaining a healthy and engaged community. The abundant profit we generated along the way quickly translated into top line expansion as our monetization power improved. More importantly, as revenue expense, we see growing leverage with our gross margin, which give us more confidence to invest in our future growth.

Looking ahead, we plan to continue our active user growth strategy, while enhancing our commercialization power. At the same time, we are committed to bring our community more exceptional content that help young users engage, connect and entertain. That conclude Mr. Chen's remarks. I will now provide a brief overview of our financial results for the third quarter of 2019.

Our total net revenues increased by 72% year-over-year to RMB1.86 billion exceeding the high end of our guidance by 5%. Our non-game revenue made up nearly 50% of total revenues in third quarter, out grown 31% in the same period of last year, with almost half of our revenues coming from multiple sources, We are pleased with our commercialization progress and [Indecipherable]. We are also converting more and more online traffic to paying users. The aggregate number of monthly paying users increased by 124% year-over-year which is 7.9 million in the third quarter.

Cost of revenues increased by 71% year-over-year to RMB1.5 [Phonetic] billion. Revenue sharing cost, a key component of cost of revenue were RMB655 million, a 49% increase from the same period in 2018. Gross profit increased by 18% year-over-year to RMB351 million. We are also starting to see operating leverage from our diversified revenue streams.

With more revenue contribution for our higher margin brands including advertising and incorporated games, as well as additional income from paying users, our gross profit margin improved to 18.9% compared with 16.4% in the second quarter of 2019. Total operating expenses increased to RMB774 million, up 71% from the same period in 2018. Selling and marketing expenses will RMB364 million, representing an 85% increase year-over-year. This increase were primarily from increased channel and marketing expenses associated with our app and brand during the summer holidays.

We also had additional promotion expenses for our mobile games and then an increase in headcount in sales and marketing personnel, as well as the higher fulfillment cost by e-commerce related products. G&A expenses were RMB163 million, representing a 48% year increase year-over-year. This increase were primarily without from additional G&A personnel related expenses and increased amortization expenses related to the intangible assets acquired through business acquisitions and other increased G&A items.

R&D expenses were RMB247 million, representing 69% increase year-over-year. The increase were primarily due to increased headcount in R&D personnel, increased share-based compensation cost and others. Net loss was RMB400 -- RMB406 million for the third quarter of 2018, compared to RMB246 million in the same period of 2018. Adjusted net loss, which is a non-GAAP measure that excludes share-based compensation expenses and amortization expenses related to the intangible assets acquired through the business acquisitions was RMB343 million compared to RMB203 million in the same period of 2018. Basic and diluted net loss per share were RMB1.24,, adjusted basic and diluted net loss per share were RMB1.05. As of September 2019, we have cash and cash equivalent, time deposits and the short-term investment of RMB8.4 billion.

To further grow our business, we plan to improve our monetization by leveraging our considerable and growing traffic. We are comfortable with a 50-50 split in revenues, between game and non-game business, but the benefit in expanding our diverse revenue stream and improving revenue contribution per MAU even further.

Creating additional operating efficiency also further improve our gross profit margin. Longer-term, we believe our monetization efforts, higher paying user conversion rates and the scale will yield an improved bottom line. With that in mind, we are currently projecting net revenue for the fourth quarter of this year to be between RMB1.93 billion and RMB1.98 billion.

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

Questions and Answers:

Operator

Thank you very much. Ladies and gentlemen we will now begin the question-and-answer session. [Operator Instructions] Your first question today comes from the line of Jialong Shi from Nomura. Please go ahead.

Jialong Shi -- Nomura -- Analyst

Hi, good morning management. [Foreign Speech] First of all, congratulations on a solid quarter and also congratulations on achieving the Company's RMB120 million to RMB130 million MAU target ahead of schedule. So I just wonder if management can provide some colors on the profile of the new users acquired in the current quarter -- in the past quarters. And how are the new users compared to those -- compared to those of old users in term of their profile and engagements? And it seems the company has already achieved this year's MAU target ahead of schedule. So I was just wondering what is your new MAU target for end of this year -- end of this and the next year? And my second question is about the outlook of competition landscape, we heard some of the game live broadcasting platforms are trying to diversify their content offering by adding more and more anime related contents into their library. So I just wonder, what management think of the potential for these new entrants. Thank you.

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

[Foreign Speech]

Juliet Yang -- Senior Director of Investor Relations

Okay. So Mr. Chen will first share his view on user growth and Ni Li will share some colors on this quarter's new user profile. So Mr. Chen feels very optimistic about our future user growth trend. He feels that we can up keep the current speed of user growth or even -- achieve accelerated growth without compromising the quality of our users. That quality translates to the engagement, the time spent, the retentions. And we are quite confident to keep up a very high quality growth while achieving relatively higher growth rate.

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

[Foreign Speech]

Juliet Yang -- Senior Director of Investor Relations

Good. The confidence comes within our one more mature content creator ecosystem. Over the past year, we have developed a very mature and self-sustaining content ecosystem that attracts more and more content creators come to our platform, creating high quality content. At the same time, our improved AI content recommendation is pushing more high quality content to meet with more mass audiences, drive -- are also at the same time our community also help our content to spread faster through word of mouth. And that can be supported by over the past few quarters, we can see our content category expanded to much wider categories at the same time, the new videos that achieved 1 million video views become much much more...

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

[Foreign Speech]

Juliet Yang -- Senior Director of Investor Relations

So in the past few quarters, we've seen reports from different third-party suggesting that the benefit of the growing population of China is diminishing, that more users, they are -- less time spent, less active users in the overall Internet space. On the contrary, Bilibili's very unique content ecosystem and our unique user growth models will definitely helps -- will definitely attracts more and more attention in this field.

Ni Li -- Vice Chairman of the Board of Directors and Chief Operating Officer

[Foreign Speech]

Juliet Yang -- Senior Director of Investor Relations

I will now give a quick update on the method of user acquisition and the new user profiles.

Ni Li -- Vice Chairman of the Board of Directors and Chief Operating Officer

[Foreign Speech]

Juliet Yang -- Senior Director of Investor Relations

So first of all, organic growth still takes a big part of our user growth strategy, given our current content ecosystem, our community environment. This is very beneficial for word of mouth user growth.

Ni Li -- Vice Chairman of the Board of Directors and Chief Operating Officer

[Foreign Speech]

Juliet Yang -- Senior Director of Investor Relations

At the same time, we will also be more proactive in acquiring traffic that includes investments in different app stores and work with larger traffic platforms.

Ni Li -- Vice Chairman of the Board of Directors and Chief Operating Officer

[Foreign Speech]

Juliet Yang -- Senior Director of Investor Relations

For this part of growth -- the acquired traffic, we will be very focused on the core user retention and time spent and engagement. At the same time our AI powered recommendation system will continue to improve that -- in that direction to help to maintain a higher retention rate of that new users.

Ni Li -- Vice Chairman of the Board of Directors and Chief Operating Officer

[Foreign Speech]

Juliet Yang -- Senior Director of Investor Relations

So, we've observed that the new users paying ratio has gradually improved. The new users who are coming in 2017's paying ratio, as to -- I mean 2018's paying ratio is significantly higher compared to 2017. And we've seen the new user who come in the third quarter's paying ratio is also higher than previous quarters.

Ni Li -- Vice Chairman of the Board of Directors and Chief Operating Officer

[Foreign Speech]

Juliet Yang -- Senior Director of Investor Relations

In addition, we'll also to invest in raising the brand awareness at Bilibili. We'll upgrade our overall branding campaign and this is prepared for 2020 user growth.

Ni Li -- Vice Chairman of the Board of Directors and Chief Operating Officer

[Foreign Speech]

Juliet Yang -- Senior Director of Investor Relations

So in terms of new user profile, there is no significant difference between the new users that we attract in the previous quarters, still majority being young generations and first and second-tier city with a further penetration in the lower tier city.

Ni Li -- Vice Chairman of the Board of Directors and Chief Operating Officer

[Foreign Speech]

Juliet Yang -- Senior Director of Investor Relations

So the overall platform's average age -- are still 21.5 years old.

Ni Li -- Vice Chairman of the Board of Directors and Chief Operating Officer

[Foreign Speech]

Juliet Yang -- Senior Director of Investor Relations

So, in terms of their content preferences, it's still relatively the same with the old users. They are into Lifestyle, Chinese animation, PUGV and this is -- I think this is beneficial to our increasing content supply in Lifestyle specifically in Vlog and other high quality content verticals.

Ni Li -- Vice Chairman of the Board of Directors and Chief Operating Officer

[Foreign Speech]

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

[Foreign Speech]

Juliet Yang -- Senior Director of Investor Relations

So first of all in terms of anime content supply, Bilibili was never the first one to do it and we're not the only one who do -- who is providing that type of content. And as a matter of fact, there are number of players, including some of the industry giants supplying this type of content.

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

[Foreign Speech]

Juliet Yang -- Senior Director of Investor Relations

But our results prove our self especially in the past five years, we have proven to be the most influential platform and our partners across the industry also agrees that Bilibili is the most powerful and most influential anime platform in China.

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

[Foreign Speech]

Juliet Yang -- Senior Director of Investor Relations

So our advantage does not only include that we basically have all the anime fans gathering together on Bilibili, but also our pipeline, our preparation in terms of content IP, as well as creation -- content creation teams has also been leading the industry.

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

[Foreign Speech]

Juliet Yang -- Senior Director of Investor Relations

So we are -- we have full confidence to continue to be the leader in the anime field. At the same time, while we see more and more competitors coming to space, we think that is the positive sign showing this industry has very promising growth future. We are also delighted to see that.

Operator

Your next question comes from the line of Alex Poon from Morgan Stanley. Please go ahead.

Alex Poon -- Morgan Stanley -- Analyst

[Foreign Speech] I'll translate myself. My first question is related to advertising and as we know it is very strong year-over-year growth acceleration to 80% in Q3, given you have a lot of Ad inventories. And can you share with us what's your plan of releasing more Ad products in the coming quarters especially any sports on your platform that you have a lot of viewership, but have not monetized properly yet, as some companies have mentioned that macro is bottoming out, do you expect to release more products and also expect this year-over-year trend to continue to accelerate? And my second question is related to live streaming. Can you share a little bit more about the trends about paying users ARPU and in terms of monetization and economics of scale of revenue, are you at a point that you can start negotiating down your revenue share ratio with ton agencies? Thank you.

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

[Foreign Speech]

Juliet Yang -- Senior Director of Investor Relations

Okay. So the ad load for our business this quarter has remained at 5%, this hasn't changed in many quarters. And we do not intend to raise that ad load in the short-terms. And my overview about our advertisement business is to first improve our commercialization efficiency and discovery more advertising format better combines our content ecosystem with our commercialization capabilities.

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

[Foreign Speech]

Juliet Yang -- Senior Director of Investor Relations

And we think our advertising -- advertisement team is growing stronger and they have -- starting to find a way to improve our advertising efficiency without jeopardizing user experience and discovering more effective commercialization target. And we believe without raising our ad load, we can achieve a faster overall advertisement growth rate.

Ni Li -- Vice Chairman of the Board of Directors and Chief Operating Officer

Okay. [Foreign Speech]

Juliet Yang -- Senior Director of Investor Relations

So we do see some at the macro shipment in last year and this year. However, under the unsettling environment, we are still -- we were still able to achieve 80% year-on-year growth on our advertisement growth revenue.

Ni Li -- Vice Chairman of the Board of Directors and Chief Operating Officer

[Foreign Speech]

Juliet Yang -- Senior Director of Investor Relations

So first of all, we have overall improved and optimized our overall brand advertisement, improved our brand awareness and better merge our brand influence with our content ecosystem.

Ni Li -- Vice Chairman of the Board of Directors and Chief Operating Officer

[Foreign Speech]

Juliet Yang -- Senior Director of Investor Relations

So, because that we have further improved our community environment in brand advertisement that we can better help to build brand awareness among our community, hence to further improve our our brand advertisement efficiency.

Ni Li -- Vice Chairman of the Board of Directors and Chief Operating Officer

[Foreign Speech]

Juliet Yang -- Senior Director of Investor Relations

So, we've come to relatively newer method of integrated marketing campaign, that includes raising brand awareness to display ads to brand ads and influence users purchasing decision to make it adds with our content creators. And last, complete the transaction through our various performance ads.

Ni Li -- Vice Chairman of the Board of Directors and Chief Operating Officer

[Foreign Speech]

Juliet Yang -- Senior Director of Investor Relations

So, on the performance-based ads we've done three major improvement to improve the efficiencies. One is in terms of performance ads format, we are creating new formats to better present the advertisement. And second is to improve our overall algorithm to result in better click-through rate. And third is to better further expand our customer base to higher quality customers, higher quality advertisers to improve our overall efficiencies.

Ni Li -- Vice Chairman of the Board of Directors and Chief Operating Officer

[Foreign Speech]

Juliet Yang -- Senior Director of Investor Relations

So looking ahead to 2020, we're still very confident to achieve a higher growth rate of advertisement business. At the same time, we're going to explore better ways to present our advertisement that combines our overall content ecosystem.

Ni Li -- Vice Chairman of the Board of Directors and Chief Operating Officer

[Foreign Speech]

Juliet Yang -- Senior Director of Investor Relations

And up keep at least the current growth rate of Q3's advertisement.

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

[Foreign Speech]

Juliet Yang -- Senior Director of Investor Relations

So our live broadcasting business has up keep -- has been up keeping 100% year-on-year growth rate.

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

[Foreign Speech]

Juliet Yang -- Senior Director of Investor Relations

So in the past, a lot of people have asked Mr. Chen that the China's live broadcasting industry is getting more and more competitive, how we are going to grow our position in this landscape? Mr. Chen's response has always been, we are not in a position to directly compete with other live broadcasting platform. On the contrary, Bilibili's live broadcasting is more of a natural extension of our current video platform, as our user grow into a bigger scale. Our live broadcasting categories has actually naturally expanded that includes the VTuber content categories that we talked about and also games and other pen entertainment live broadcasting categories.

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

[Foreign Speech]

Juliet Yang -- Senior Director of Investor Relations

So in the past we haven't spent a lot of money in poaching big live broadcasting host or spending too much marketing dollars to promote our live broadcasting business. However, we're still being able to achieve our gross view very sustainable by broadcasting growth.

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

[Foreign Speech]

Juliet Yang -- Senior Director of Investor Relations

So in terms of the deal related income in the past, indeed with a portion that has being relatively faster growth.

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

[Foreign Speech]

Juliet Yang -- Senior Director of Investor Relations

So because Blibili has a very healthy user ecosystem, that's the major reason that attracts more and more guilds to come to our platform to work with us.

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

[Foreign Speech]

Juliet Yang -- Senior Director of Investor Relations

So in terms of the revenue sharing with guilds because in the very beginning, the reason that we are introducing or welcoming guilds is to achieve sustainable growth, not to drive our revenue to a spike in shorter-term. So in the first, we set up our revenue split with guilds at a relatively healthy and sustainable level.

Operator

[Operator Instructions] Your next question comes from the line of Daniel Chen from JPMorgan. Please go ahead.

Daniel Chen -- JPMorgan -- Analyst

[Foreign Speech] I will translate myself. My question is on the game business outlook for 2020. So firstly, can management elaborate on what's -- what was our expectation for our key current games in 2020 including such as the FGO. And secondly, what's the key games we have in the pipeline and what's the schedule for launch in 2020? Thank you.

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

Okay. [Foreign Speech]

Juliet Yang -- Senior Director of Investor Relations

So in terms of FGO, we are happy to share that a few still at a very healthy state, as we mentioned during the earnings call that, FGO in the third quarter has reached number one in China's iOS top grossing chart and we're delighted to see the full year 2019 FGO's grossing has maintained, stayed relatively stable level compared to last year.

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

[Foreign Speech]

Juliet Yang -- Senior Director of Investor Relations

So in terms of the future performance of our game business, we remain very confident that is due to number one, the macro environment. First of all, there is still a lot of younger players couldn't find ideal titles that is suitable for their game play and their preferences. And secondly, according to the latest iResearch report, the China's ACG game market is forecast to be reached to be -- to reach RMB62 billion by 2020, that is more than double compared to the market size we have this year. So we have the growth of the market and growth of the demand, that's number one reason.

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

[Foreign Speech]

Juliet Yang -- Senior Director of Investor Relations

And according to our internal research, about half of our existing user will actively search for games that they wanted to play. And as we further expand our user base, we are very likely to get the largest audiences, game lovers in China, that is a very, very ideal user base best positioned for future game growth.

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

[Foreign Speech]

Juliet Yang -- Senior Director of Investor Relations

So, there are two things we're going to focus on. One is to increase our content supply, our game supply. Number two is quickly expand our user base, as long as we are achieving that two steps, we're very confident about our future growth.

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

[Foreign Speech]

Juliet Yang -- Senior Director of Investor Relations

So, as you may notice that we have over 30 exclusive -- exclusive license pipeline. And among those 30, eight of those already have permit to release and that includes Girl Cafe Gun 2 that will be released today. And the Furious Yama that will be released in the next two months.

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

[Foreign Speech]

Juliet Yang -- Senior Director of Investor Relations

So both of the titles has gained a very positive review internally. We believe these two titles will become a milestone of our future game revenue growth.

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

[Foreign Speech]

Juliet Yang -- Senior Director of Investor Relations

And another thing to notice to call out is in terms of domestic game pipeline, we have drastically improved our pipeline in that categories, relatively compared to 2017 where majority of our pipeline are imported games. This is very positive for number one game approval perspective. And the second is very beneficiary to -- for us to further expand our oversea market outside of Mainland China, we can promote these titles in more regions.

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

[Foreign Speech]

Juliet Yang -- Senior Director of Investor Relations

So all above that gives us very good confidence to further grow our game business.

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

Okay.

Operator

And that concludes the question and answer session. I would like to turn the conference back over to management for any additional or closing remarks.

Juliet Yang -- Senior Director of Investor Relations

Thank you once again for joining us today. If you have further questions, please contact myself, Juliet Yang, Bilibili's Senior IR Director or TPG Investor Relations. Our contact information for both IR in China and in the US can be found in today's press release. Have a great day.

Operator

[Operator Closing Remarks]

Duration: 63 minutes

Call participants:

Juliet Yang -- Senior Director of Investor Relations

Xin Fan -- Chief Financial Officer

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

Ni Li -- Vice Chairman of the Board of Directors and Chief Operating Officer

Jialong Shi -- Nomura -- Analyst

Alex Poon -- Morgan Stanley -- Analyst

Daniel Chen -- JPMorgan -- Analyst

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