Good day, and welcome to the Bilibili 2021 First Quarter 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, Senior Director of Investor Relations. Please go ahead.
Thank you, operator. During this call, we will discuss our business outlook and 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 the SEC and Hong Kong Stock Exchange. The non GAAP financial measures we provide are for comparison purpose only.
Definition of these measures and a 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 atir.bilibili.com. Joining us today from Bilibili's senior management are Mr. Ray Chen, Chairman of the Board and Chief Executive Officer Ms.
Carly Li, Vice Chairwoman of the Board and Chief Operating Officer and Ms. To Sam Fan, Chief Financial Officer. And I will now turn the call over to Mr. Fan, We will read the prepared remarks on behalf of Mr. Chen.
Thank you, I'm pleased to deliver today's opening remarks on behalf of mid term. 2021 is off to an excellent start for Bilibili. On March 29, we successfully completed our second listing on Hong 3 years after we listed on NASDAQ, we would like to take this opportunity to thank Our supporting shareholders as well as our talented content creators, loyal users and the dedicated colleges that helped make this With our secondary listing, we see an opportunity to broaden our investor base and attract more high quality shareholders. We also gained more strength in the capital markets, laying a solid foundation to better execute our growth strategy and tap into the massive video based market in China in the coming years. After officially stepping to the 200,000,000 MAU club in 20 We continued the momentum further increasing our influence among China's JND plus co and expanding our user base.
In the Q1 of 2021, our MAUs were up 30% to 223,000,000 and our mobile MAUs grew by 33% to 209,000,000 both on a year over year basis. And our DAUs reached 60,000,000, up 18% year on year. This is particularly impressive given last year's remarkable high base. As a testament to our rich offerings And engaged community, our users spend an average of 82 minutes per day on our platform in the Q1. During this time, we roll out more premium content and services and strengthened our commercialization capabilities by converting more traffic to paying users.
Our NPUs grew to 21,000,000, increasing by 53% versus Q1 2020. And our paying ratio hit a record high of 9.2% compared with 7.8% from same period last year. Our China are widely representing Bilibili as a destination to reach young generations. As a result, Our ad revenue once again achieved accelerated growth, increasing by 2 34% year over year. On the back of this strong momentum, our total revenues reached RMB3.9 billion, up 68% And our gross margin improved to 24% from 23%, both compared with the same period of last year.
Entering their 20s 30s, Gen Z Plus is deeply influencing society and mainstream ideals as well as driving all kinds of consumption in China. By offering diversified content in great brands We aim to further increase our market share among these co genD plus user base, while expanding our We are confident we are on the right track to achieve our 3 year user Thank you. One of the primary drivers for our next wave of growth is anchored by the increasing trend in visualization, where video has become pervasive across many scenarios of daily life. As China's leading video community, we are the Clear from Werner in this transformative opportunity, and we are only at the beginning stages of this rapidly growing trend. According to Iresearch, China's video based market will comprise nearly 1,200,000,000 video users at more than RMB1.8 trillion in revenues by 2025.
Over the next few years, we are committed to capturing this With that overview, I would like To go through our operations for the period in a bit more detail, beginning with our content. Our PUGV community remains the respectively, both year over year. We strive to create an ideal home for all video creators where they can improve their ingenuity, build a fan base and monetize their talent. We continue to invest At the same time, our advertising platform, Sparkle, Continue to connect more content creators with advertisers. Our cash incentive programs supported over 375,000 We also maintain an upbeat and encouraging community atmosphere that provides a As a full spectrum video community, We aim to offer a wider and deeper range of content to meet the growing demand of our users.
In the Q1, the most viewed content verticals on our platform were lifestyle, games, Entertainment, anime and the tech and knowledge. In recent quarters, we have Moving forward, we plan to further explain our content offerings in relationships, Turning to our OGV content. Supplementing our video content For example, our investment in Chinese animation has become a huge bond for ACG categories, successfully attracting old users and new ones, advancing our Chinese animation production In January, we acquired Howling Nurse Animation Lead, Hui Mo Dong Hua, one of the China's top anime studios. Continue to win over followers in the Q1, reaching 370,000,000 video views, Over 6,000,000 lives and collecting around 4,500,000 bullet charts. We also released multiple New original Chinese anime titles in April, including final chapter of Linkage, Lin Long And the link click, which will immediately hit trending on social media for weeks.
Turning to our documentaries, variety shows and TV and Movie To satisfy user diverse needs, we launched several hit productions in Q1, including our highly anticipated New Year Gala, the most beautiful night of 2020 and Bilibili Chinese New Year data. Our self produced documentaries, Cucurla Foods, All of which were welcomed by our GND plus users. In the second half of this year, We have plans to introduce 2 more self produced music and dating themed variety shows. These shows Our scale towards users with relevant interests and supplement the newer music and the relationship series Turning to our community. The bonds that we Work created with Bilibili and the community members remain strong.
Despite the impact in the interactions and use that we saw in 2020, making the comparable base quite high. Our Q1 community activities Daily video views were up 47% to RMB1.6 billion and monthly interactions increased by 35% to RMB6.6 billion, both compared with Q1 20 Up 38% year over year and our 12 months retention rate remained around 80%. We are very proud of this As we demonstrate the strength of our model, bounding our users and community closer. Now let's look at our commercialization progress. Our diversified monetization strategy It's working, growing each of our commercial avenues in the Q1.
We now have a robust line Revenue stream formed out of a solid mobile game business, thriving fast business as well as our rapidly growing Our Taiding business. Starting with our games. Revenues from mobile game business was RMB1.2 billion in the Q1, an increase of 2% year over year. At the end of April, We successfully launched another exclusive distributor of the mobile game, Guardian This driving ACG titles has won over millions of new followers, Topping the iOS game download and the grossing charts for weeks after its release. Other existing games that we operate, including FateGrand Order, Azulna Land and the Pre Test Connect, remained popular among their followers during And for our jointly operated games, Gingshan Impact, Yuan Shen, had another solid run-in the Q1.
Derived from Class 8 Animal IP, we also added Yujing Hou, Youxi Wang, to our jointly operated game library in January. With China's mobile games market Expected to reach over RMB500 1,000,000,000 in 2025, according to Ime Research, We strategically invest in xindong.com and the CMGE Technology Group, further Transferring our position in the game industry. Turning to our game pipeline. 12 of the games We hold exclusive license to have acquired approval for release. This include Artillery Gear, An exciting MMORPG.
Both are slated for launch in the Q2. We continue to work with top developers to bring more jointly operated games to Bilibili users. These highly anticipated titles include Tencent League of Legends in Xunliyama Mobile Games as well as NetEase Harry Potter, Haripoto. Turning to our VAS business. Our VAS services saw it With our premium members reaching a record high and a robust growth in the live broadcasting, revenues from our VAS grew to RMB1.5 billion, an increase of 89% year over year.
At the end of the Q1, we had 16,100,000 premium members, representing a year over year growth 48%. This is particularly impressive, again, given the high base in 2020 As part of our video content ecosystem, we continue to build our game and entertainment content, addressing our user diverse needs. We have won a number of high quality esports content contracts, including live broadcasting rides of League of Legends World Championship and more recently acquired League of Legends Pro League in China. Additionally, our VTuber and other entertainment live broadcasting continue to draw young users' attention As we explore more ways to integrate live broadcasting content with our video platform, We see great potential to expand this business even further. Last but not least, Let's review our advertising business.
Beginning with the success of our 2020 New Year's Eve Gala, A wider variety of advertisers come to Bilibili to reach their design audience of young generation. Revenue from our advertising services was RMB750 1,000,000, up 234 percent year over year, representing our 8th quarter of accelerated growth. For the Q1, The top 5 leading advertising verticals was GAMS, Digital and 3C Products, Food and Privilege, e commerce and skincare and cosmetics, increasing improvements To add distribution algorithms also supported our advertising business growth. As we continue to enhance our brand awareness, Increase our influence among the Gen Z Plus demographic and improve our ad products. We are confident that advertising dollars Building on the momentum of last year, we are off to a great start in 2021.
Our financial and operational accomplishments across our content, community and commercialization in Q1 place us And the go to platform for the Gen Z plus demographic, we have reached a new starting point from which to grow. Riding the visualization wave, we will continue to invest in our content ecosystem and This concludes Mr. Chen's remarks. I will now provide a brief overview of our financial results for the Q1 of RMB3.9 billion, up 68% from the same period of 2020. We continue to see a more balanced and diversify the revenue mix.
Our total net revenues breakdown by revenue stream were Approximate 30% mobile games, 38% VAS, 18% advertising and 14% e Commerce and other business. Cost of revenues increased by 66% year over year to RMB3 1,000,000,000. Revenue sharing costs, a key component of cost of revenues, were RMB1.4 billion, also a 58% increase from the same period in 2020. Gross profit increased by 77% year over year to RMB937.9 million. Our gross margin improved to 24% in the Q1 compared with 23% from the same period last year.
Total operating expenses were RMB1.97 billion, up 83% from the same period in 2020. Selling and marketing expenses were RMB1 1,000,000,000, representing a 65% increase year over year. The increase was primarily attributable to the increased channel and marketing associated with our app and brand as well as increasing sales and marketing personnel. By allocating resources to build our brand And a few of my broader audience, we achieved substantially growth in 2020. We believe the effects that will be even Further reaching, with positive impact to the market over the long run.
This is a continuation of the momentum we achieved in 2020, and we can already see the benefits of strategy through our broadened user base demographics, content and overall industry leadership. We plan to continue building on this track in 2021 to further strengthen and expand our virtuous growth cycle. G and A expenses were RMB389 1,000,000, representing 127% increase year over year. The increase was primarily due to increased headcount In general and administrative personnel, increased share rent based compensation expenses, higher rental expenses and This increase was primarily due to increased headcount in research and development personnel and increased share based Net loss was RMB905 1,000,000 for the Q1 of 2021 compared with RMB RMB 539,000,000 in the same period of 2020. Adjusted net loss, which is a non GAAP measure That exclude share based compensation expenses and amortization expenses and income tax expenses related Basic and diluted net loss per share were RMB2.54.
Adjusted basic and diluted net loss per share As of March 31, 2021, we had cash and cash equivalents, time deposits as well as short term investments of RMB27 1,000,000,000 compared to RMB12.8 billion as of December 31, 2020. With that in mind, we are currently projecting net revenues for Q2 of 2021 to be between RMB4.25 billion and RMB4.35 billion. Thank you for your attention. We would like now to open the call to your questions. Operator, please go ahead.
Please immediately repeat your question in English. Thank you. Your first question comes from the line of Alex Tun of Morgan Stanley, please ask your question.
The question I have is regarding advertising business. We have seen continuous Acceleration in year over year growth for 8 consecutive quarters. Could management share with us the drivers behind this growth? And how should we think about the growth in the next 1 to 3 years? Thank you very much.
Okay. I'll briefly translate for Ms. Carly Li. So we think the So the easiest way is to leverage advertising to quickly Achieve monetization and use the money that they make to buy more content. This is the traditional Internet model.
But for Bilibili, What we are trying to do is to build a city. We are trying to gather the young users with the same similar interest, ask them to become a such as games, live broadcasting, movie and content and derivative products and even offline activities. And they will grow fond of the city and even fall in love with it. And they will inviting more friends to join the And for this process, it might start really probably start really slow. But once the momentum is built, it will So what does the Bilibili's Advertisement potential is, look at the residents.
We have captured near half China's young generation, on our platform, the average age of our user is about 22.8 Years old and 86% of our user is age 35 and below. And our user, about 50% of them are Live in the 1st and second tier city. They are deeply influenced the mainstream ideals, and they are the key driving force for all kinds of So we believe in the next few years, as Bilibili continue to grow its brand awareness and So we are quite confident that pretty much all The brand, they will be looking, turning to Bilibili and become part of our community. And secondly, we think a good advertisement could also be a good content. And for our users, they never repel good content.
So on the customer side, We'll continue to work with high quality brand and potential brand to establish collaboration And to build a very success cases for all the KA accounts. And we'll also continue to improve our product, algorithm efficiencies and launch more creative and interesting integrated marketing solutions across multi scenarios and multi devices. And additionally, we think there's a very big A portion of the creativity that we could leverage our content creators. We are working with content creators to pick their brand, to pick their mind, to ask them to work with our Brand advertisers together. And on the Sparkle advertising platform, currently, we already have over 10 So last but not least, it's also very, very important is that we'll continue to enhance our middle And continue to improve our ad product, including the integrated marketing solutions that combines both brand And our advertising power will not only be reflecting on the increase of our advertising revenue, So for the next 1 to 3 years, as we continue to grow our content ecosystem
Your next question comes from
Thanks management for taking my question. My question is About the user engagement, we noticed that some key indicator like DAU versus MAU interaction and tax bands saw Sequential improvement, so wondering can you share with us what's the trend going forward and what is your plan to further improve your engagement. Thank you.
So indeed, from last year, we see a temporary job From the for the DA to MAU ratio. And we have to look into the reason behind it. And the reasons are not it's Because there's some matrix decline, but for the certain period of time, the growth rate of our MAU exceeded significantly of our DAU. So we think the temporary job It's absolutely normal given that last year we have raised our MAU target and we are Really focusing on growing our overall users. And during that process, I think there's just a It's time for them to become part of the community.
We need time to cultivate user habit And establishing community behavior such as following different content creators, they have to get in For one specific interest point, they also need time to establish and expand their interest points on Bilibili. So all of that So we I think for product like Bilibili, we actually stand a pretty good DAU to MAU ratio in terms of the Community product and because we also have very vast content offering, we think during Fast user growth period, a temporary job of the engagement ratio is absolutely normal. And as long as we see the ratio starting to bounce back and we continue to maintain a very fast user growth pace, And we'll definitely continue to be very focused Elevating the engagement level and there are several ways. One is to whether we can help our users To become part of the community a little bit quicker and the measurement would be help them to Connect with more content creators, allow them to follow more content creators that fits their interest, And secondly is on our to push more relevant content that fits 2 different users' needs. And for that, we'll So this above mentioned points will be our constant
Your next question comes from the line of Zijin Liu of UBS. Please ask your question.
Thank you, management, for taking my question. I have one question. Recently, we see Bilibili has quite a few investment deals on other game related companies. What's the reason behind? Are we going to consider more acquisition or investments in this space for coming quarters?
Thank you.
I've always said that game is one of the most important business for Bilibili because for us, It's not only just a monetization, it's also a very important component of our content. And there's just great synergies between our game offerings as well as our video game based game related video content. And for Bilibili, for this game particular game business, it's just very natural As long as we're starting to offer better content, the monetization just happen very naturally. So second of all, we think for game industry, there's still Plenty of room for growth. I believe that in the next few years, there could be multiple times So I personally take great care and put in a lot of efforts in looking to this And for Bilibili, it's not just game department is Dealing with or facing the game industry, it's across all business departments and it's through our Our whole company, for example, game related video content has always been our top three content verticals.
And for our live broadcasting, game related Broadcasting is our number one content on our platform. And we are also working with majority of the game Content developers in this industry establishing close partnerships. And for the game distribution business, currently, it's playing a very important role in our business and it's also contributing So why Currently working in the game space. So the reason why we invest in this So for example, The investment we made in Xindong is because we see a lot of synergy and collaboration in terms of Gain distribution. So all of the investment that we make has a prior And that goes with the same with our Our investment in other area, the purpose is hoping to achieve business collaboration and achieve business synergies across different part department.
Your next question comes from the line of Daniel Chen of JPMorgan. Please ask your
I will translate myself. My question It's on the I would say more on the product side and also content side. So as we target to reach RMB400 1,000,000,000 by
So Bilibili's growth model is content ecosystem driven. And essentially, it's And what we are what we have been constantly doing is to view such platform to keep attracting more content creators. So what we have been doing is to focus on the Digital products. And step by step, we continue to view more and more diversity of content And more and more high quality content. As we move forward, we'll be focusing on improving the The diversity of that content and continue to select out more high quality content and to attract more wider range of content creators.
And move forward for this year, while we continue to Annual related, fitness and health, those categories that fit the Gen Z plus interest points and also open
Your next question comes from the line of Jialong Shi of Nomura. Please ask your question.
Thanks. Good evening, management. Thanks for taking my question. So my question is about the live broadcasting service. Wonder what is the outlook for your live broadcasting service this year and for the next few years?
So 2 years ago, Forecasted our live broadcasting business will keep a very high growth rate. The reason why I said That is because I believe Bilibili's live broadcasting has always been a part of the PUGV content ecosystem. It's a natural So once again, that live broadcasting is a natural extension of Bilibili's overall content ecosystem. We don't need to deliberately expand the content categories. We don't necessarily Have to pay extra high price to attract live broadcasting host.
All of the content offering It's growing out of our content ecosystem. It's based on our content creators. It's based on the popular content on our So like I mentioned earlier that our video on our video Game is our top three content verticals and it's the number one content verticals on our live broadcasting business. And For the game categories, the live broadcasting host and the video content creator has 40% overlap. And lifestyle and entertainment related content is also very popular And entertainment live broadcasting is also our 2nd most popular live broadcasting content.
In many cases for Bilibili, our content creators is Our live broadcasting host and the video content, it's a mutual beneficial relationship. And their video submission can feed back to their live broadcasting traffic. And on the other hand, we think Live broadcasting is a good revenue avenue for content creators to monetize their traffic. So on Bilibili live broadcasting and video, they are born to get born to be together. They Broadcasting is still at the early stages and has great potential to grow.
Currently, we have over 2,000,000 monthly active content creator. In my view, pretty much everybody could potentially become our live broadcasting post. So there's Great growth route ahead of us. So I think the nature It's also ability of a content creator. For the content creator, they can leverage live broadcasting to connect with their followers to improve their So I believe for this type of Capability should be widely adopted in the future.
It's like how our content creator can write an introduction And our live broadcasting Business is really internally grown. It's growing from our content ecosystem. So the External environment will not really have any impact on our live broadcasting business because we don't need to While your live broadcasting host from other platform, everything is organically grow within our ecosystem.
And that concludes the question and answer session. I would like to turn the conference back over to management for additional or closing comments.
Thank you once again for joining us today. If you have further questions, please contact me, Julie