Bilibili's (NASDAQ:BILI) stock rose more than 20% over the past 12 months as the Chinese digital media company withstood the economic downturn and novel coronavirus outbreak in its home market. And its recent fourth-quarter report strongly suggests its rally could continue throughout 2020.

Its revenue surged 74% annually to 2.01 billion yuan ($288.4 million), beating estimates by $9.2 million and marking its strongest growth in six quarters. Its net loss widened from 190.8 million to 387.2 million yuan ($55.6 million), or $0.17 per ADS, but still matched analysts' expectations.

Bilibili's logo and banner.

Image source: Bilibili.

Bilibili is still burning a lot of cash, but it remains one of the few coronavirus-resistant growth stocks in this volatile market, for four simple reasons.

1. A sticky audience filled with hardcore users

Bilibili's platform provides ACG (anime, comics, and gaming) content to China's Gen Z users, who account for over 80% of its audience.

Its average monthly active users (MAUs) rose 40% annually to 130.3 million during the quarter. Within that total, its mobile MAUs climbed 46% to 116.1 million. Its average daily active users (DAUs) grew 41% to 37.9 million.

Its average revenue per MAU rose 24% to 15.4 yuan ($2.17). Excluding mobile games, its average revenue per MAU surged 83% to 8.7 yuan ($1.23), which indicates Bilibili's original plan -- to expand beyond mobile games into a diversified platform for anime, comics, e-commerce, and other digital content -- is paying off. Its number of average monthly paying users doubled to 8.8 million.

Bilibili promotes its basic users to "official" members with exclusive perks if they pass a 100-question "entrance exam" on ACG content within two hours. It ended the quarter with 68 million official members, up 50% from a year ago. It's generally easier to convert these official members into paid ones.

2. Strong growth across all four businesses

Bilibili splits its business into four segments: mobile games (43% of its revenue), live broadcasting and value added services (28%), online advertising (14%), and e-commerce and others (14%). All four businesses generated robust growth over the past year.

Revenue Growth (YOY)

Q4 2018

Q1 2019

Q2 2019

Q3 2019

Q4 2019

Mobile games

15%

27%

16%

25%

22%

Live broadcasting & VAS

276%

205%

175%

167%

183%

Online advertising

302%

60%

75%

80%

81%

E-commerce and others

254%

621%

489%

703%

241%

Total

57%

58%

50%

72%

74%

YOY = Year-over-year. Source: Bilibili quarterly reports.

The gaming business benefited from the ongoing popularity of Fate/Grand Order in China, as well as new games like Girl Cafe Gun 2 and Furious Yama. Its live video business generated accelerating revenue growth as it monetized user streams with virtual gifts and subscriptions.

Fate/Grand Order.

Image source: Aniplex/Bilibili.

Its online ad business bucked the broader slowdown in ad spending, which has hurt bigger platforms like Baidu (NASDAQ:BIDU) and Weibo (NASDAQ:WB) -- which posted 2% and 3% annual declines in ad revenue, respectively, in their latest quarters.

Bilibili's e-commerce business, which is integrated into Alibaba's (NYSE:BABA) Taobao and sells ACG merchandise, also remained resilient. During the conference call, Bilibili's IR director Juliet Yang claimed its partnership with Alibaba "met or even exceeded" its own expectations, and that it would "deepen" that relationship throughout 2020.

3. A limited impact from COVID-19

Bilibili expects its revenue in the first quarter of 2020, which bore the full impact of the coronavirus outbreak in China, to rise 57%-60% annually.

Yang declared Bilibili didn't "see much of an impact" to its overall business from COVID-19, and claimed certain businesses -- like video games and live streaming -- benefited from the citywide lockdowns and quarantines. The strength of those businesses, which generate the lion's share of Bilibili's revenue, could offset the softness of macro-sensitive businesses like ads and e-commerce throughout the rest of the year.

4. Improving gross margins

Bilibili remains deeply unprofitable due to high operating expenses related to the expansion of its digital ecosystem. Yet its gross margin, which hit 19.8% in the fourth quarter, still expanded over the past three quarters.

That expansion suggests that Bilibili has pricing power in its niche market, and could turn a profit once it stops expanding. Until then, it still has plenty of support from top investors like Alibaba and Tencent, as well as a comfortable cushion of 4.96 billion yuan ($700 million) in cash and equivalents -- which rose 40% annually after a debt offering last April.

A great growth stock with a defensible niche

Bilibili generates strong growth, has a clear view of its post-coronavirus future, and serves a loyal audience that is willing to take pop culture tests to boost their status on the platform. Those qualities will all help it remain resilient as the pandemic batters the broader markets.