0001193125-22-116261 | 20-F | XBRL Viewer

Print Document View Excel Document

Cover Page	12 Months Ended
Cover Page	Dec. 31, 2021 shares
Document Information [Line Items]
Entity Registrant Name	Bilibili Inc.
Entity Central Index Key	0001723690
Document Type	20-F
Document Period End Date	Dec. 31, 2021
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Emerging Growth Company	false
Entity Shell Company	false
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	FY
Document Annual Report	true
Document Transition Report	false
Entity Interactive Data Current	Yes
Document Accounting Standard	U.S. GAAP
Document Shell Company Report	false
Entity File Number	001-38429
Entity Incorporation, State or Country Code	E9
Document Registration Statement	false
Entity Address, Address Line One	Building 3, Guozheng Center, No. 485 Zhengli Road, Yangpu District
Entity Address, City or Town	Shanghai
Entity Address, Postal Zip Code	200433
Entity Address, Country	CN
ICFR Auditor Attestation Flag	true
Auditor Name	PricewaterhouseCoopers Zhong Tian LLP
Auditor Firm ID	1424
Auditor Location	Beijing, the People’s Republic of China
Business Contact [Member]
Document Information [Line Items]
Contact Personnel Name	Xin Fan
Entity Address, Address Line One	Building 3, Guozheng Center, No. 485 Zhengli Road, Yangpu District
Entity Address, City or Town	Shanghai
Entity Address, Postal Zip Code	200433
Entity Address, Country	CN
Country Region	86
City Area Code	21
Local Phone Number	25099255
Contact Personnel Email Address	sam@bilibili.com
Ordinary Shares
Document Information [Line Items]
Entity Common Stock, Shares Outstanding	390,604,587
Class Z Ordinary Shares
Document Information [Line Items]
Entity Common Stock, Shares Outstanding	306,889,473
Common Stock, Capital Shares Reserved for Future Issuance	2,767,265
Title of 12(b) Security	Class Z ordinary shares, par value US$0.0001 per share
No Trading Symbol Flag	true
Class Y Ordinary Shares
Document Information [Line Items]
Entity Common Stock, Shares Outstanding	83,715,114
American Depositary Shares
Document Information [Line Items]
Title of 12(b) Security	American depositary shares, each representing one Class Z ordinary share
Security Exchange Name	NASDAQ
Trading Symbol	BILI

CONSOLIDATED BALANCE SHEETS
¥ in Thousands, $ in Thousands

Dec. 31, 2021

CNY (¥)

Dec. 31, 2021

USD ($)

Dec. 31, 2020

CNY (¥)

Current assets:

Cash and cash equivalents

¥ 7,523,108

$ 1,180,540

¥ 4,678,109

Time deposits

7,632,334

1,197,680

4,720,089

Accounts receivable, net

1,382,328

216,917

1,053,641

Amount due from related parties

2,041,316

320,327

164,732

Prepayments and other current assets

2,807,048

440,487

1,765,787

Short-term investments

15,060,722

2,363,356

3,357,189

Total current assets

36,446,856

5,719,307

15,739,547

Non-current assets:

Property and equipment, net

1,350,256

211,885

761,941

Production cost, net

1,083,772

170,067

667,876

Intangible assets, net

3,835,600

601,889

2,356,959

Deferred tax assets

36,355

5,705

20,918

Goodwill

2,338,303

366,931

1,295,786

Long-term investments, net

5,502,524

863,466

2,232,938

Other long-term assets

1,459,485

229,025

789,643

Total non-current assets

15,606,295

2,448,968

8,126,061

Total assets

52,053,151

8,168,275

23,865,608

Current liabilities:

Accounts payable

4,360,906

684,321

3,074,298

Salary and welfare payable

995,451

156,208

734,376

Taxes payable

203,770

31,976

127,192

Short-term loans

1,232,106

193,344

100,000

Deferred revenue

2,645,389

415,119

2,118,006

Accrued liabilities and other payables

2,416,955

379,273

1,237,676

Amount due to related parties

216,434

^[1]

33,963

Total current liabilities

12,071,011

1,894,204

7,391,548

Non-current liabilities:

Long-term debt

17,784,092

2,790,712

8,340,922

Other long-term liabilities

481,982

75,634

350,934

Total non-current liabilities

18,266,074

2,866,346

8,691,856

Total liabilities

30,337,085

4,760,550

16,083,404

Commitments and contingencies (Note 19)

Shareholders' equity

Additional paid-in capital

35,929,961

5,638,195

14,616,302

Statutory reserves

24,621

3,864

17,884

Accumulated other comprehensive income/(loss)

(279,862)

(43,916)

141,129

Accumulated deficit

(13,971,300)

(2,192,403)

(7,175,339)

Total Bilibili Inc.'s shareholders' equity

21,703,667

3,405,779

7,600,200

Noncontrolling interests

12,399

1,946

182,004

Total shareholders' equity

21,716,066

3,407,725

7,782,204

Total liabilities and shareholders' equity

52,053,151

8,168,275

23,865,608

Class Y Ordinary Shares

Shareholders' equity

Ordinary shares

Class Z Ordinary Shares

Shareholders' equity

Ordinary shares

¥ 199

$ 31

¥ 172

[1]	Amount due to related parties as of December 31, 2021 are primarily considerations related to long-term investments, which are non-trade in nature.

CONSOLIDATED BALANCE SHEETS (Parenthetical) ¥ in Thousands, $ in Thousands	Dec. 31, 2021 CNY (¥) shares	Dec. 31, 2021 USD ($) $ / shares shares	Dec. 31, 2020 CNY (¥) shares	Dec. 31, 2020 $ / shares
Liabilities	¥ 30,337,085	$ 4,760,550	¥ 16,083,404
Class Y Ordinary Shares
Ordinary shares
Ordinary shares, par value (in dollars per share) \| $ / shares		$ 0.0001		$ 0.0001
Ordinary shares, authorized	100,000,000	100,000,000	100,000,000
Ordinary shares, issued	83,715,114	83,715,114	83,715,114
Ordinary shares, outstanding	83,715,114	83,715,114	83,715,114
Class Z Ordinary Shares
Ordinary shares
Ordinary shares, par value (in dollars per share) \| $ / shares				$ 0.0001
Ordinary shares, authorized	9,800,000,000	9,800,000,000	9,800,000,000
Ordinary shares, issued	309,656,738	309,656,738	271,507,165
Ordinary shares, outstanding	306,889,473	306,889,473	268,204,838
Consolidated VIEs without recourse to the primary beneficiary
Liabilities \| ¥	¥ 14,967,875		¥ 8,819,525

- Definition

Sum of the carrying amounts as of the balance sheet date of all liabilities that are recognized. Liabilities are probable future sacrifices of economic benefits arising from present obligations of an entity to transfer assets or provide services to other entities in the future.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02.19-26)
-URI http://asc.fasb.org/extlink&oid=120391452&loc=d3e13212-122682

Reference 2: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 852
-SubTopic 10
-Section 50
-Paragraph 7
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=124433192&loc=SL2890621-112765

Reference 3: http://www.xbrl.org/2003/role/exampleRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 30
-Subparagraph (d)
-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8906-108599

Reference 4: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 852
-SubTopic 10
-Section 50
-Paragraph 7
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=124433192&loc=SL2890621-112765

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 810
-SubTopic 10
-Section 45
-Paragraph 25
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=116870748&loc=SL6758485-165988

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 10
-Section S99
-Paragraph 1B
-Subparagraph (SX 210.13-02(a)(5))
-URI http://asc.fasb.org/extlink&oid=124359900&loc=SL124442552-122756

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 825
-SubTopic 10
-Section 50
-Paragraph 28
-Subparagraph (f)
-URI http://asc.fasb.org/extlink&oid=123596393&loc=d3e14064-108612

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 10
-Section S99
-Paragraph 1B
-Subparagraph (SX 210.13-02(a)(4)(iv))
-URI http://asc.fasb.org/extlink&oid=124359900&loc=SL124442552-122756

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 810
-SubTopic 10
-Section 50
-Paragraph 3
-Subparagraph (bb)
-URI http://asc.fasb.org/extlink&oid=123419778&loc=d3e5710-111685

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 10
-Section S99
-Paragraph 1B
-Subparagraph (SX 210.13-02(a)(4)(iii)(B))
-URI http://asc.fasb.org/extlink&oid=124359900&loc=SL124442552-122756

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 10
-Section S99
-Paragraph 1A
-Subparagraph (SX 210.13-01(a)(4)(iv))
-URI http://asc.fasb.org/extlink&oid=124359900&loc=SL124442526-122756

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 810
-SubTopic 10
-Section 50
-Paragraph 3
-Subparagraph (c)
-URI http://asc.fasb.org/extlink&oid=123419778&loc=d3e5710-111685

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 323
-SubTopic 10
-Section 50
-Paragraph 3
-Subparagraph (c)
-URI http://asc.fasb.org/extlink&oid=114001798&loc=d3e33918-111571

Reference 14: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 10
-Section S99
-Paragraph 1A
-Subparagraph (SX 210.13-01(a)(5))
-URI http://asc.fasb.org/extlink&oid=124359900&loc=SL124442526-122756

Reference 15: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 10
-Section S99
-Paragraph 1A
-Subparagraph (SX 210.13-01(a)(4)(iii)(A))
-URI http://asc.fasb.org/extlink&oid=124359900&loc=SL124442526-122756

Reference 16: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 10
-Section S99
-Paragraph 1B
-Subparagraph (SX 210.13-02(a)(4)(i))
-URI http://asc.fasb.org/extlink&oid=124359900&loc=SL124442552-122756

Reference 17: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 10
-Section S99
-Paragraph 1A
-Subparagraph (SX 210.13-01(a)(4)(i))
-URI http://asc.fasb.org/extlink&oid=124359900&loc=SL124442526-122756

Reference 18: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(g)(1)(ii))
-URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

Reference 19: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 10
-Section S99
-Paragraph 1B
-Subparagraph (SX 210.13-02(a)(4)(iii)(A))
-URI http://asc.fasb.org/extlink&oid=124359900&loc=SL124442552-122756

Reference 20: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 10
-Section S99
-Paragraph 1A
-Subparagraph (SX 210.13-01(a)(4)(ii))
-URI http://asc.fasb.org/extlink&oid=124359900&loc=SL124442526-122756

+ Details

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS ¥ in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2021 CNY (¥) ¥ / shares shares	Dec. 31, 2021 USD ($) $ / shares shares	Dec. 31, 2020 CNY (¥) ¥ / shares shares	Dec. 31, 2019 CNY (¥) ¥ / shares shares
Net revenues	¥ 19,383,684	$ 3,041,722	¥ 11,998,976	¥ 6,777,922
Cost of revenues	(15,340,537)	(2,407,265)	(9,158,800)	(5,587,673)
Gross profit	4,043,147	634,457	2,840,176	1,190,249
Operating expenses:
Sales and marketing expenses	(5,794,853)	(909,339)	(3,492,091)	(1,198,516)
General and administrative expenses	(1,837,506)	(288,345)	(976,082)	(592,497)
Research and development expenses	(2,839,862)	(445,636)	(1,512,966)	(894,411)
Total operating expenses	(10,472,221)	(1,643,320)	(5,981,139)	(2,685,424)
Loss from operations	(6,429,074)	(1,008,863)	(3,140,963)	(1,495,175)
Other income/(expense):
Investment income/(loss), net (including impairments)	(194,183)	(30,472)	28,203	96,610
Interest income	70,367	11,042	83,301	162,782
Interest expense	(155,467)	(24,396)	(108,547)	(46,543)
Exchange (losses)/gains	(15,504)	(2,433)	41,717	(11,789)
Others, net	10,411	1,634	95,641	26,412
Total other income/(expense), net	(284,376)	(44,625)	140,315	227,472
Loss before tax	(6,713,450)	(1,053,488)	(3,000,648)	(1,267,703)
Income tax	(95,289)	(14,953)	(53,369)	(35,867)
Net loss	(6,808,739)	(1,068,441)	(3,054,017)	(1,303,570)
Accretion to redeemable noncontrolling interests \| ¥			(4,292)
Net loss attributable to noncontrolling interests	19,511	3,062	46,605	14,597
Net loss attributable to the Bilibili Inc.'s shareholders	(6,789,228)	(1,065,379)	(3,011,704)	(1,288,973)
Net loss	(6,808,739)	(1,068,441)	(3,054,017)	(1,303,570)
Other comprehensive income/(loss):
Foreign currency translation adjustments	(420,991)	(66,063)	(325,100)	140,152
Total other comprehensive income/(loss)	(420,991)	(66,063)	(325,100)	140,152
Total comprehensive loss	(7,229,730)	(1,134,504)	(3,379,117)	(1,163,418)
Accretion to redeemable noncontrolling interests \| ¥			(4,292)
Net loss attributable to noncontrolling interests	19,511	3,062	46,605	14,597
Comprehensive loss attributable to the Bilibili Inc.'s shareholders	¥ (7,210,219)	$ (1,131,442)	¥ (3,336,804)	¥ (1,148,821)
Net loss per share/ADS, basic \| (per share)	¥ (17.87)	$ (2.80)	¥ (8.71)	¥ (3.99)
Net loss per share/ADS, diluted \| (per share)	¥ (17.87)	$ (2.80)	¥ (8.71)	¥ (3.99)
Cost of revenues
Share-based compensation expenses included in:
Share-based compensation expenses	¥ 76,232	$ 11,962	¥ 37,087	¥ 23,281
Sales and marketing expenses
Share-based compensation expenses included in:
Share-based compensation expenses	53,452	8,388	40,808	14,269
General and administrative expenses
Share-based compensation expenses included in:
Share-based compensation expenses	553,526	86,860	181,753	68,497
Research and development expenses
Share-based compensation expenses included in:
Share-based compensation expenses	¥ 316,607	$ 49,683	¥ 126,250	¥ 66,503
ADSs
Other comprehensive income/(loss):
Net loss per share/ADS, basic \| (per share)	¥ (17.87)	$ (2.80)	¥ (8.71)	¥ (3.99)
Net loss per share/ADS, diluted \| (per share)	¥ (17.87)	$ (2.80)	¥ (8.71)	¥ (3.99)
Weighted average number of ordinary shares/ADSs, basic \| shares	379,898,121	379,898,121	345,816,023	323,161,680
Weighted average number of ordinary shares/ADSs, diluted \| shares	379,898,121	379,898,121	345,816,023	323,161,680
Ordinary shares
Other comprehensive income/(loss):
Weighted average number of ordinary shares/ADSs, basic \| shares	379,898,121	379,898,121	345,816,023	323,161,680
Weighted average number of ordinary shares/ADSs, diluted \| shares	379,898,121	379,898,121	345,816,023	323,161,680

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY ¥ in Thousands, $ in Thousands	CNY (¥) shares	USD ($) shares	Secondary Public Offering OR HK IPO CNY (¥)	Ordinary shares Class Y Ordinary Shares CNY (¥) shares	Ordinary shares Class Z Ordinary Shares CNY (¥) shares	Ordinary shares Class Z Ordinary Shares Secondary Public Offering OR HK IPO CNY (¥) shares	Additional paid-in capital CNY (¥)	Additional paid-in capital Secondary Public Offering OR HK IPO CNY (¥)	Statutory reserves CNY (¥)	Accumulated other comprehensive income/(loss) CNY (¥)	Accumulated deficit CNY (¥)	Noncontrolling interests CNY (¥)
Balance at the beginning of the year (Shares) at Dec. 31, 2018 \| shares				85,364,814	226,323,075
Balance at the beginning of the year at Dec. 31, 2018	¥ 7,191,202			¥ 53	¥ 144		¥ 9,459,546		¥ 7,666	¥ 326,077	¥ (2,842,690)	¥ 240,406
Net loss	(1,303,570)										(1,288,973)	(14,597)
Share-based compensation	172,550						172,550
Issuance of ordinary shares, net of issuance costs	1,647,711				¥ 10		1,647,701
Issuance of ordinary shares, net of issuance costs (in shares) \| shares					14,173,813
Acquisition of a subsidiary	30,000											30,000
Consolidation of an entity under common control	(70,161)						(488,463)				(8,146)	426,448
Purchase of noncontrolling interests	(175,624)						(73,144)					(102,480)
Share issuance from exercise of share options	¥ 1				¥ 1
Share issuance from exercise of share options (in shares) \| shares	2,255,000	2,255,000			2,254,453
Deconsolidation of a subsidiary	¥ 4,199											4,199
Appropriation to statutory reserves									5,797		(5,797)
Foreign currency translation adjustments	140,152									140,152
Balance at the end of the year at Dec. 31, 2019	7,636,460			¥ 53	¥ 155		10,718,190		13,463	466,229	(4,145,606)	583,976
Balance at the end of the year (Shares) at Dec. 31, 2019 \| shares				85,364,814	242,751,341
Net loss	(3,054,017)										(3,007,412)	(46,605)
Impact of adoption of credit loss guidance	(17,900)										(17,900)
Share-based compensation	385,898						385,898
Issuance ordinary shares related to long-term investments	277,467						277,467
Issuance of ordinary shares, net of issuance costs	2,817,458				¥ 12		2,817,446
Issuance of ordinary shares, net of issuance costs (in shares) \| shares					17,310,696
Shares redesignation				¥ (1)	¥ 1
Shares redesignation (in shares) \| shares				(1,649,700)	1,649,700
Accretion to redeemable noncontrolling interests	(5,964)						(4,292)					(1,672)
Capital injection in subsidiaries by noncontrolling interests	21,463											21,463
Acquisition of subsidiaries	162,492						120,865					41,627
Acquisition of subsidiaries (in shares) \| shares					270,435
Purchase of noncontrolling interests	(116,056)				¥ 1		300,728					(416,785)
Purchase of noncontrolling interests (in shares) \| shares					1,731,100
Share issuance from exercise of share options	¥ 3				¥ 3
Share issuance from exercise of share options (in shares) \| shares	4,492,000	4,492,000			4,491,566
Appropriation to statutory reserves									4,421		(4,421)
Foreign currency translation adjustments	¥ (325,100)									(325,100)
Balance at the end of the year at Dec. 31, 2020	7,782,204			¥ 52	¥ 172		14,616,302		17,884	141,129	(7,175,339)	182,004
Balance at the end of the year (Shares) at Dec. 31, 2020 \| shares				83,715,114	268,204,838
Net loss	(6,808,739)	$ (1,068,441)									(6,789,228)	(19,511)
Share-based compensation	999,817						999,817
Issuance ordinary shares related to long-term investments					¥ 1		(1)
Issuance ordinary shares related to long-term investments (in shares) \| shares					1,045,700
Issuance of ordinary shares, net of issuance costs			¥ 19,266,810			¥ 18		¥ 19,266,792
Issuance of ordinary shares, net of issuance costs (in shares) \| shares						28,750,000
Share issuance upon the conversion of convertible senior notes	449,911				¥ 3		449,908
Share issuance upon the conversion of convertible senior notes (in shares) \| shares					2,854,277
Capital injection in subsidiaries by noncontrolling interests	2,187											2,187
Acquisition of subsidiaries	617,999				¥ 1		632,747					(14,749)
Acquisition of subsidiaries (in shares) \| shares					2,056,825
Purchase of noncontrolling interests	(173,135)				¥ 1		(35,604)					(137,532)
Purchase of noncontrolling interests (in shares) \| shares					715,271
Share issuance from exercise of share options	¥ 3				¥ 3
Share issuance from exercise of share options (in shares) \| shares	3,263,000	3,263,000			3,262,562
Appropriation to statutory reserves									6,737		(6,737)
Foreign currency translation adjustments	¥ (420,991)	$ (66,063)								(420,991)
Balance at the end of the year at Dec. 31, 2021	¥ 21,716,066	$ 3,407,725		¥ 52	¥ 199		¥ 35,929,961		¥ 24,621	¥ (279,862)	¥ (13,971,304)	¥ 12,399
Balance at the end of the year (Shares) at Dec. 31, 2021 \| shares				83,715,114	306,889,473

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Parenthetical) $ in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2021 HKD ($)	Dec. 31, 2020 USD ($)	Dec. 31, 2019 USD ($)
Statement of Stockholders' Equity [Abstract]
Issuance costs	$ 337,143	$ 563	$ 9,376

CONSOLIDATED STATEMENTS OF CASH FLOWS ¥ in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2021 CNY (¥)	Dec. 31, 2021 USD ($)	Dec. 31, 2020 CNY (¥)	Dec. 31, 2019 CNY (¥)
Cash flows from operating activities:
Net loss	¥ (6,808,739)	$ (1,068,441)	¥ (3,054,017)	¥ (1,303,570)
Adjustments to reconcile net loss to net cash provided by/(used in) operating activities:
Depreciation of property and equipment	538,600	84,518	326,512	191,784
Amortization of intangible assets	1,903,200	298,658	1,395,129	905,613
Amortization of right-of-use assets	161,873	25,401	96,235	70,712
Amortization of debt issuance costs	25,234	3,960	19,291	9,117
Share-based compensation expenses	999,817	156,893	385,898	172,550
Allowance for doubtful accounts	189,165	29,684	99,165	9,396
Inventory provision	24,454	3,837	6,218	5,987
Deferred income taxes	(21,492)	(3,373)	(13,466)	(10,479)
Unrealized exchange losses /(gains)	(6,592)	(1,034)	(3,018)	2,636
Unrealized fair value changes of investments	200,274	31,428	(50,641)	36,383
Loss on disposal of property and equipment	611	96
Gain from disposal of subsidiaries and long-term investments	(4,413)	(692)		(148,776)
Loss from equity method investments	37,200	5,834	50,531	24,173
Revaluation of previously held equity interests	31,462	4,937
Impairments of long-term investments	91,500	14,357	8,000	5,900
Changes in operating assets and liabilities:
Accounts receivable	(429,460)	(67,392)	(417,237)	(398,968)
Amount due from related parties	8,792	1,380	17,015	7,382
Prepayments and other assets	(1,747,744)	(274,258)	(610,592)	(508,515)
Other long-term assets	(138,396)	(21,717)	(245,224)	(360,497)
Accounts payable	1,056,847	165,843	816,103	586,864
Salary and welfare payable	254,213	39,892	374,442	101,788
Taxes payable	77,365	12,140	54,381	23,114
Amount due to related parties				(50,331)
Deferred revenue	494,551	77,606	734,786	353,997
Accrued liabilities and other payables	319,702	50,168	651,651	277,875
Other long-term liabilities	94,969	14,903	111,941	190,416
Net cash provided by/(used in) operating activities	(2,647,000)	(415,372)	753,103	194,551
Cash flows from investing activities:
Purchase of property and equipment	(965,410)	(151,494)	(602,122)	(296,044)
Purchase of intangible assets	(2,721,799)	(427,110)	(1,636,877)	(1,268,830)
Purchase of short-term investments	(71,748,847)	(11,258,960)	(26,731,176)	(9,973,879)
Maturities of short-term investments	60,524,888	9,497,676	24,921,538	9,993,525
Cash consideration paid for purchase of subsidiaries, net of cash acquired	(521,984)	(81,911)	(498,854)	(719,909)
Cash paid for long-term investments including loans	(6,716,491)	(1,053,964)	(1,261,161)	(1,226,794)
Repayment of loans from investees	539,225	84,616	3,500	11,000
Cash received from disposal/return of long-term assets	74,604	11,707	135,254	566,554
Impact to cash resulting from deconsolidation of a subsidiary				(959)
Placements of time deposits	(10,697,444)	(1,678,662)	(10,907,296)	(4,920,099)
Maturities of time deposits	7,655,147	1,201,260	7,670,373	3,877,158
Net cash used in investing activities	(24,578,111)	(3,856,842)	(8,906,821)	(3,958,277)
Cash flows from financing activities:
Proceeds of short-term loans	1,332,597	209,114	200,000	141,857
Repayment of short-term loans	(214,882)	(33,720)	(100,000)	(100,000)
Repurchase of noncontrolling interests	(104,696)	(16,429)	(280,271)	(121,325)
Capital injections from noncontrolling interests	2,187	343	103,450	154,492
Proceeds from exercise of employees' share options	3		3	1
Proceeds from issuance of ordinary shares, net of issuance costs of US$9,376, US$563, and HKD337,143, respectively	19,288,423	3,026,774	2,817,458	1,647,711
Proceeds from issuance of convertible senior notes, net of issuance costs of US$11,805, US$13,857 and US$23,402, respectively	10,085,520	1,582,638	5,594,779	3,356,106
Net cash provided by financing activities	30,389,152	4,768,720	8,335,419	5,078,842
Effect of exchange rate changes on cash and cash equivalents held in foreign currencies	(319,034)	(50,063)	(466,252)	107,513
Net increase/(decrease) in cash and cash equivalents	2,844,999	446,443	(284,551)	1,422,629
Cash and cash equivalents at beginning of the year	4,678,109	734,097	4,962,660	3,540,031
Cash and cash equivalents at end of the year	7,523,108	1,180,540	4,678,109	4,962,660
Supplemental disclosures of cash flows information:
Cash paid for income taxes, net of tax refund	73,717	11,568	54,022	33,734
Cash paid for interest expense	116,226	18,238	86,167	26,203
Supplemental schedule of non-cash investing and financing activities:
Accretion to redeemable noncontrolling interests			5,964
Fixed assets purchases financed by accounts payable	183,203	28,748	25,797	55,759
Acquisitions and investments financed by payables	731,503	114,789	125,363	79,059
Intangible assets purchases financed by payables	830,596	130,339	746,404	¥ 365,187
Issuance of ordinary shares in the business combination, purchase of noncontrolling interests and investment addition	1,207,980	189,558	¥ 889,957
Issuance of ordinary shares in connection with debt conversion	¥ 449,914	$ 70,601

CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) $ in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2021 USD ($)	Dec. 31, 2021 HKD ($)	Dec. 31, 2020 USD ($)	Dec. 31, 2019 USD ($)
Proceeds from issuance of ordinary shares, net of issuance costs		$ 337,143	$ 563	$ 9,376
Proceeds from issuance of convertible senior notes, net of inssuance costs	$ 23,402		13,857	11,805
Ordinary shares
Proceeds from issuance of ordinary shares, net of issuance costs		$ 337,143	$ 563	$ 9,376

Operations

12 Months Ended

Dec. 31, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Operations

1.	Operations

Bilibili Inc. (the “Company” or “Bilibili”) is an online entertainment platform for young generations. Incorporated as a limited liability company in the Cayman Islands in December 2013, the Company, through its consolidated subsidiaries, variable interest entities (“VIEs”) and subsidiaries of the VIEs (collectively referred to as the “Group”), is primarily engaged in the operation of providing online entertainment services to users in the People’s Republic of China (the “PRC” or “China”).

In April 2018, the Company completed its IPO on the NASDAQ Global Select Market. In March 2021, the Company successfully listed its Class Z ordinary shares on the main board of the Hong Kong Stock Exchange. The Company issued a total 28,750,000 Class Z ordinary shares in the global offering, including the fully exercised over-allotment option of 3,750,000 Class Z ordinary shares. Net proceeds from the global offering, including the over-allotment option, after deducting underwriting fees and other offering expenses, were approximately HKD22.9 billion (RMB19.3 billion).

As of December 31, 2021, the Company’s major subsidiaries, VIEs and subsidiaries of the VIEs are as follows:


Major Subsidiaries	Place and Year of Incorporation	Percentage of Direct or Indirect Economic Ownership	Principal Activities
Bilibili HK Limited	Hong Kong, 2014	100	Investment holding
Hode HK Limited	Hong Kong, 2014	100	Investment holding
Chaodian HK Limited	Hong Kong, 2019	100	Investment holding
Bilibili Co., Ltd.	Japan, 2014	100	Business development
Hode Shanghai Limited (“Hode Shanghai”)	PRC, 2014	100	Technology development
Shanghai Bilibili Technology Co., Ltd.	PRC, 2016	100	Technology development
Chaodian (Shanghai) Technology Co., Ltd.	PRC, 2019	100	E-commerce and advertising


Major VIEs and VIEs’ subsidiaries	Place and Year of Incorporation Acquisition	Percentage of Direct or Indirect Economic Ownership	Principal Activities
Shanghai Hode Information Technology Co., Ltd. (“Hode Information Technology”)	PRC, 2013	100	Mobile game operation
Shanghai Kuanyu Digital Technology Co., Ltd. (“Shanghai Kuanyu”)	PRC, 2014	100	Video distribution and game distribution
Sharejoy Network Technology Co., Ltd. (“Sharejoy Network”)	PRC, 2014	100	Game distribution
Shanghai Hehehe Culture Communication Co., Ltd. (“Shanghai Hehehe”)	PRC, 2014	100	Comics distribution
Shanghai Anime Tamashi Cultural Media Co., Ltd. (“Shanghai Anime Tamashi”)	PRC, 2015	100	E-commerce platform

Contractual agreements with major VIEs

In order to comply with the PRC laws and regulations which prohibit or restrict foreign control of companies involved in provision of internet content services, the Group operates its restricted businesses in the PRC through its VIEs, whose equity interests are held by certain founders of the Group. The Company obtained control over these VIEs by entering into a series of contractual arrangements with the legal shareholders who are also referred to as nominee shareholders. These nominee shareholders are the legal owners of the VIEs. However, the rights of those nominee shareholders have been transferred to the Company through the contractual arrangements.

The contractual arrangements that are used to control the VIEs include powers of attorney, exclusive technology consulting and services agreements or exclusive business cooperation agreements, equity pledge agreements and exclusive option agreements. Management concluded that the Company, through the contractual arrangements, has the power to direct the activities that most significantly impact the VIEs’ economic performance, bears the risks of and enjoys the rewards normally associated with ownership of the VIEs, and therefore the Company is the ultimate primary beneficiary of these VIEs. As such, the Company consolidates the financial statements of these VIEs. Consequently, the financial results of the VIEs were included in the Group’s consolidated financial statements in accordance with the presentation as stated in Note 2(a).

The following is a summary of the contractual agreements entered into by and among the Company’s relevant subsidiaries, the VIEs, and respective nominee shareholders of the VIEs.

Exclusive Technology Consulting and Services Agreements.

Under the exclusive technology consulting and services agreements between the Company’s relevant subsidiaries and the VIEs, the Company’s relevant subsidiaries have the exclusive right to provide the VIEs consulting and services related to, among other things, research and development, system operation, advertising, internal training and technical support. The Company’s relevant subsidiaries have the exclusive ownership of intellectual property rights created as a result of the performance of these agreements. These VIEs shall pay the Company’s relevant subsidiaries an annual service fee, which are subject to the adjustment by the Company’s relevant subsidiaries at its sole discretion. These agreements will remain effective for a 10 year’s term and then be automatically renewed, unless the Company’s relevant subsidiaries give the VIEs a termination notice 90 days before the term ends. On December 23, 2020, the above agreements were replaced by the exclusive business cooperation agreements, which contain terms substantially similar to the exclusive business cooperation agreements described above, the exclusive business cooperation agreements have an infinite period commencing from December 23, 2020, unless the Company’s relevant subsidiaries give the VIEs a termination notice 30 days before the term ends.

Exclusive Option Agreements.

Pursuant to the exclusive purchase option agreement, among the Company’s relevant subsidiaries, the VIEs and its nominee shareholders, each of the nominee shareholders of the VIEs irrevocably granted the Company’s relevant subsidiaries an exclusive option to purchase, or have its designated person to purchase, at its discretion, to the extent permitted under PRC law, all or part of their equity interests in the VIEs, and the purchase price shall be the lowest price permitted by applicable PRC law. In addition, the VIEs irrevocably granted the Company’s relevant subsidiaries an exclusive option to purchase, or have its designated person to purchase, at its discretion, to the extent permitted under PRC law, all or part of the VIEs’ assets at the book value of such assets, or at the lowest price permitted by applicable PRC law, whichever is higher. The nominee shareholders of the VIEs undertake that, without the prior written consent of the Company’s relevant subsidiaries, they shall not increase or decrease the registered capital, dispose of its assets, incur any debts or guarantee liabilities, enter into any material purchase agreements, conduct any merger, acquisition or investments, amend its articles of association or provide any loans to third parties. The exclusive option agreements will remain effective until all equity interests in the VIEs held by their nominee shareholders and all assets of the VIEs are transferred or assigned to the Company’s relevant subsidiaries or its designated representatives.

Powers of Attorney

. Pursuant to the powers of attorney, each of the nominee shareholders of the VIEs, executed a power of attorney to irrevocably appoint the Company’s relevant subsidiaries or its designated person as nominee shareholder’s

attorney-in-fact

to exercise all of the rights as a shareholder of the VIEs, including, but not limited to, the right to convene and attend shareholders’ meeting, vote on any resolution that requires a shareholder vote, such as the appointment or removal of directors and executive officers, other voting rights pursuant to the then-effective articles of association of the VIEs and transfer of VIE’s assets. The powers of attorney will remain in force for so long as the nominee shareholders remain shareholders of the VIEs. The powers of attorney were amended on December 23, 2020, which were extended the life to an indefinite terms commencing from December 23, 2020 and will be terminated in the event that (i) the power of attorney is unilaterally terminated by the Company’s relevant subsidiaries; or (ii)it is legally permissible for the Company or any of the subsidiaries to hold equity interests directly or indirectly in VIEs or their designated person is registered to be the sole shareholder of VIEs.

Equity Pledge Agreements.

Pursuant to the equity pledge agreements, among the Company’s relevant subsidiaries, the VIEs and its nominee shareholders, the nominee shareholders of the VIEs pledged all of their equity interests in the VIEs to guarantee their and the VIEs’ performance of their obligations under the contractual arrangements. In the event of a breach by the VIEs or the VIEs’ shareholders of contractual obligations under these agreements, the Company’s relevant subsidiaries, as pledgee, will be entitled the right to dispose of the pledged equity interests in the VIEs. The nominee shareholders of the VIEs also undertake that, during the term of the equity pledge agreements, they shall not dispose of the pledged equity interests or create or allow any encumbrance on the pledged equity interests. During the term of the equity pledge agreements, the Company’s relevant subsidiaries has the right to receive all of the dividends and profits distributed on the pledged equity interests. The pledge will remain binding until the VIEs and their nominee shareholders discharge all their obligations under the contractual arrangements.

Risks in relation to the VIE structure

A significant part of the Group’s business is conducted through the VIEs of the Group, of which the Company is the ultimate primary beneficiary. In the opinion of management, the contractual arrangements with the VIEs and the nominee shareholders are in compliance with PRC laws and regulations and are legally binding and enforceable. The nominee shareholders are also shareholders of the Group and have indicated they will not act contrary to the contractual arrangements. However, there are substantial uncertainties regarding the interpretation and application of PRC laws and regulations including those that govern the contractual arrangements, which could limit the Group’s ability to enforce these contractual arrangements and if the nominee shareholders of the VIE were to reduce their interests in the Group, their interest may diverge from that of the Group and that may potentially increase the risk that they would seek to act contrary to the contractual arrangements.

On March 15, 2019, the National People’s Congress approved the Foreign Investment Law, effective on January 1, 2020. The Foreign Investment Law has a

catch-all

provision under the definition of “foreign investment” which includes investments made by foreign investors in China through means stipulated in laws or administrative regulations or other methods prescribed by the State Council. In the event that the State Council in the future promulgates laws and regulations that deem investments made by foreign investors through contractual arrangements as “foreign investment,” the Group’s ability to use the contractual arrangements with its VIEs and the Group’s ability to conduct business through the VIEs could be severely limited.

The

Company’s ability to control the VIEs also depends on the powers of attorney the founders have to vote on all matters requiring shareholder approval in the VIEs. As noted above, the Company believes these powers of attorney are legally enforceable but may not be as effective as direct equity ownership.

In addition, if the Group’s corporate structure or the contractual arrangements with the VIEs were found to be in violation of any existing or future PRC laws and regulations, the PRC regulatory authorities could, within their respective jurisdictions:

•

revoke the Group’s business and/or operating licenses;

•

impose fines on the Group;

•

confiscate any of the Group’s income that they deem to be obtained through illegal operations;

•

discontinue or place restrictions or onerous conditions on the Group’s operations

•

restrict the Group’s right to collect revenues;

•

shut down the Group’s servers or block the Group’s app/websites;

•

require the Group to restructure the operations,

re-apply

for the necessary licenses or relocate the Group’s businesses, staff and assets;

•

impose additional conditions or requirements with which the Group may not be able to comply; or

•

take other regulatory or enforcement actions against the Group that could be harmful to the Group’s business.

The imposition of any of these restrictions or actions could result in a material adverse effect on the Group’s ability to conduct its business. In such case, the Group may not be able to operate or control the VIEs, which may result in deconsolidation of the VIEs in the Group’s consolidated financial statements. In the opinion of management, the likelihood for the Group to lose such ability is remote based on current facts and circumstances. The Group believes that the contractual arrangements among each of the VIEs, their respective

individual

shareholders and relevant wholly foreign-owned enterprises are in compliance with PRC law and are legally enforceable. The Group’s operations depend on the VIEs to honor their contractual arrangements with the Group. These contractual arrangements are governed by PRC law and disputes arising out of these agreements are expected to be decided by arbitration in the PRC. Management believes that each of the contractual arrangements constitutes valid and legally binding obligations of each party to such contractual arrangements under PRC laws. However, the interpretation and implementation of the laws and regulations in the PRC and their application on the legality, binding effect and enforceability of contracts are subject to the discretion of competent PRC authorities, and therefore there is no assurance that relevant PRC authorities will take the same position as the Group herein in respect of the legality, binding effect and enforceability of each of the contractual arrangements. Meanwhile, since the PRC legal system continues to evolve, the interpretations of many laws, regulations and rules are not always uniform and enforcement of these laws, regulations and rules involve uncertainties, which may limit legal protections available to the Group to enforce the contractual arrangements should the VIEs or the nominee shareholders of the VIEs fail to perform their obligations under those arrangements. Conflicts of interest may arise between the roles of them as shareholders, directors or officers of Group and as shareholders of the VIEs.

The following combined financial information of the Group’s VIEs as of December 31, 2020 and 2021 and for the years ended December 31, 2019, 2020 and 2021 included in the accompanying consolidated financial statements of the Group was as follows:


	December 31, 2020			December 31, 2021

	RMB in thousands


Cash and cash equivalents		349,190			377,114
Time deposits		22,161			6,997
Accounts receivable, net		343,099			524,311
Amounts due from Group companies		173,596			391,951
Amount due from related parties		59,117			101,983
Prepayments and other current assets		1,383,648			1,806,185
Short-term investments		1,175,309			927,124
Long-term investments, net		1,223,943			1,745,466
Other non-current assets		2,183,411			4,926,989

Total assets		6,913,474			10,808,120

Accounts payable		2,332,372			3,164,301
Salary and welfare payables		288,686			343,008
Taxes payable		106,492			128,817
Short-term loans		100,000			400,000
Deferred revenue		1,769,992			2,192,460
Accrued liabilities and other payables		449,370			1,184,523
Amounts due to the Group companies		3,752,973			7,214,146
Amounts due to related parties		—			117,901
Other long-term payable		19,640			222,719

Total liabilities		8,819,525			14,967,875

Total Bilibili Inc’s shareholders’ deficit		(1,941,724	)		(4,170,459	)
Noncontrolling interests		35,673			10,704

Total shareholders’ deficit		(1,906,051	)		(4,159,755	)

Total liabilities and shareholders’ deficit		6,913,474			10,808,120


	For the Year Ended December 31,
	2019			2020			2021

	RMB in thousands


Third-party revenues		6,056,332			9,651,207			12,867,536
Inter-company revenues		531,830			667,765			1,574,896

Total revenues		6,588,162			10,318,972			14,442,432
Third-party costs and expenses		(5,795,826	)		(9,931,047	)		(16,283,295	)
Inter-company consulting and services costs and expenses		(1,266,411	)		(1,021,596	)		(593,272	)
Other inter-company costs and expenses		(75,552	)		(201,587	)		(271,096	)
Total costs and expenses		(7,137,789	)		(11,154,230	)		(17,147,663	)
Gain/(Loss) from non-operations		122,116			8,368			(163,146	)

Loss before income tax expenses		(427,511	)		(826,890	)		(2,868,377	)
Income tax expenses		(20,603	)		(27,080	)		(38,997	)

Net loss		(448,114	)		(853,970	)		(2,907,374	)
Net loss attributable to noncontrolling interests		1,936			8,501			10,367

Net loss attributable to Bilibili Inc.’s shareholders		(446,178	)		(845,469	)		(2,897,007	)


	For the Year Ended December 31,
	2019			2020			2021

	RMB in thousands


Consulting and services charges to Group companies		(1,579,212	)		(1,074,899	)		(637,787	)
Other operating cashflow from Group companies		1,027,392			586,017			1,683,907
Operating cashflow from/(to) third-parties		823,119			1,965,376			(1,729,079	)
Net cash provided by/(used in) operating activities		271,299			1,476,494			(682,959	)

Purchase of short-term investments		(6,535,669	)		(13,973,904	)		(12,610,305	)
Maturities of short-term investments		6,113,861			13,498,485			12,954,425
Placements of time deposits		(7,584	)		(25,515	)		(39,318	)
Maturities of time deposits		7,584			7,896			54,319
Other investing activities		(1,097,123	)		(1,928,125	)		(3,265,756	)

Net cash used in investing activities		(1,518,931	)		(2,421,163	)		(2,906,635	)

Investments and loans from Group companies		1,300,740			990,287			3,307,226
Other financing activities		—			100,000			300,000

Net cash provided by financing activities		1,300,740			1,090,287			3,607,226

accordance with various contractual agreements, the Company has the power to direct the activities of the VIEs and can have assets transferred out of the VIEs. Therefore, the Company considers that there are

assets in the respective VIEs that can be used only to settle obligations of the respective VIEs, except for the registered capital of the VIEs amounting to RMB

92.1

million and RMB

494.1

million, as of December

2020

and

2021

, as well as certain

non-distributable

statutory reserves amounting to RMB

17.9

million and RMB

22.6

million, respectively, as of December

2020

and

2021

. As the respective VIEs are incorporated as limited liability companies under the PRC Company Law, creditors do not have recourse to the general credit of the Company for the liabilities of the respective VIEs. There is currently

contractual arrangement that would require the Company to provide additional financial support to the VIEs. As the Group is conducting certain businesses in the PRC through the VIEs, the Group may provide additional financial support on a discretionary basis in the future, which could expose the Group to a loss.

There is no VIE in the Group where the Company or any subsidiary has a variable interest but is not the primary beneficiary.

Liquidity

The Group incurred net losses of RMB1,303.6 million, RMB3,054.0 million and RMB6,808.7 million for the years ended December 31, 2019, 2020 and 2021, respectively. Net cash provided by operating activities was RMB194.6 million, RMB753.1 million for the years ended December 31, 2019 and 2020, respectively, and net cash used in operating activities was RMB2,647.0 million for the year ended December 31, 2021. Accumulated deficit was RMB7,175.3 million and RMB13,971.3 million as of December 31, 2020 and 2021, respectively. The Group assesses its liquidity by its ability to generate cash from operating activities and attract investors’ investments. Historically, the Group has relied principally on both operational sources of cash and

non-operational

sources of financing from investors to fund its operations and business development. The Group’s ability to continue as a going concern is dependent on management’s ability to successfully execute its business plan, which includes increasing revenues while controlling operating expenses, as well as, generating operational cash flows and continuing to gain support from outside sources of financing. In the past, the Group has been continuously receiving financing support from outside investors. In 2018, the Company completed its IPO, raising US$443.3 million (RMB2,781.8 million), and issued 25,063,451 Class Z Ordinary Shares to Tencent with net proceed of US$317.2 million (RMB2,170.8 million). In 2019, the Company completed its offering of

convertible senior notes due April 2026 (

the

“

April 2026 Notes

”)

and the Primary Offering, raising US$733.9 million (RMB5,003.8 million), after deducting commissions and offering expenses. In 2020, the Company completed an offering of convertible senior notes due 2027 (the “2027 Notes”) raising US$786.1 million (RMB5,594.8 million), after deducting commissions and offering expenses, and the Company issued 17,310,696 Class Z Ordinary Shares to Sony

Corporation of America (“SCA”), a wholly owned subsidiary of Sony Corporation (“Sony”),

raising US$399.4 million (RMB2,817.5 million), after deducting offering expenses.

2021, the Company successfully listed its Class Z ordinary shares on the main board of the Hong Kong Stock Exchange

, raising HKD22.9 billion (RMB19.3 billion),

after deducting

commissions

and offering expenses,

and

the Company completed an offering of convertible senior notes due

December

2026 (the “December 2026 Notes”), raising US$1,576.6 million (RMB10.1 billion), after deducting commissions and offering expenses. Moreover, the Group can adjust the pace of its operation expansion and control the operating expenses. Based on the above considerations, the Group believes the cash and cash equivalents and the operating cash flows are sufficient to meet the cash requirements to fund planned operations and other commitments for at least the next twelve months from the date of the issuance of the consolidated financial statements. The Group’s consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and liquidation of liabilities in the normal course of business.

Significant Accounting Policies

12 Months Ended

Dec. 31, 2021

Significant Accounting Policies

Significant Accounting Policies

2.	Significant Accounting Policies

a)	Basis of presentation

The consolidated financial statements of the Group have been prepared in accordance with the accounting principles generally accepted in the United States of America (“U.S. GAAP”).

Significant accounting policies followed by the Group in the preparation of the accompanying consolidated financial statements are summarized below.

b)	Principles of consolidation

The consolidated financial statements include the financial statements of the Company, its subsidiaries and VIEs for which the Company is the primary beneficiary.

Subsidiaries are those entities in which the Company, directly or indirectly, controls more than one half of the voting power, has the power to appoint or remove the majority of the members of the board of directors, or to cast a majority of votes at the meeting of the board of directors, or has the power to govern the financial and operating policies of the investee under a statute or agreement among the shareholders or equity holders.

A consolidated VIE is an entity in which the Company’s subsidiary, through contractual arrangements, has the power to direct the activities that most significantly impact the entity’s economic performance, bears the risks of and enjoys the rewards normally associated with ownership of the entity, and therefore the Company’s subsidiary is the primary beneficiary of the entity.

All transactions and balances among the Company, its subsidiaries and VIEs have been eliminated upon consolidation.

c)	Use of estimates

The preparation of the Group’s consolidated financial statements in conformity with the U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities at the balance sheet date and reported revenues and expenses during the reported periods in the consolidated financial statements and accompanying notes. Significant accounting estimates include, but are not limited to, determination of the average playing period for paying players, and assessment for the impairment of long-term investments accounted for using the measurement alternative.

d)	Functional currency and foreign currency translation

The Group uses Renminbi (“RMB”) as its reporting currency. The Company and several of its overseas subsidiaries use US$ or their respective local currencies as their functional currency. The functional currency of the Group’s PRC entities is RMB.

In the consolidated financial statements, the financial information of the Company and other entities located outside of the PRC have been translated into RMB. Assets and liabilities are translated at the exchange rates on the balance sheet date, equity amounts are translated at historical exchange rates, and revenues, expenses, gains and losses are translated using the average rate for the year. Translation adjustments are reported as foreign currency translation adjustments, and are shown as a component of other comprehensive income/(loss) on the consolidated statements of operations and comprehensive loss.

Foreign currency transactions denominated in currencies other than the functional currency are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency using the applicable exchange rates at the balance sheet dates. Net gains and losses resulting from foreign exchange transactions are included in exchange gains/(losses) on the consolidated statements of operations and comprehensive loss.

e)	Convenience Translation

Translations of balances on the consolidated balance sheets, consolidated statements of operations and comprehensive loss and consolidated statements of cash flows from RMB into US$ as of and for the year ended December 3

, 2021 are solely for the convenience of the reader and were calculated at the rate of US$1.00 = RMB 6.3726, representing the noon buying rate in The City of New York for cable transfers of RMB as certified for customs purposes by the Federal Reserve Bank of New York on December 30, 2021. No representation is made that the RMB amounts represent or could have been, or could be, converted, realized or settled into US$ at that rate on December 30, 2021, or at any other rate.

f)	Fair value measurements

Financial instruments

Accounting guidance defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Group considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability.

Accounting guidance establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Accounting guidance establishes three levels of inputs that may be used to measure fair value:

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices included within Level 1 that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical asset or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3 applies to asset or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

The Group’s financial instruments include cash and cash equivalents, time deposits, accounts receivable, amounts due from/to related parties, short-term investments, and accounts payable

, short-term loans, accrual liabilities and other payables

of which the carrying values approximate their fair values. Please see Note 22 for additional information.

g)	Cash and cash equivalents and time deposits

Cash and cash equivalents mainly represent cash on hand, demand deposits placed with large reputable banks in the United States of America and China, and highly liquid investments that are readily convertible to known amounts of cash and with original maturities from the date of purchase with terms of three months or less. As of December 31, 2020 and 2021, there were cash on hand and demand deposits with terms of and less than three months denominated in U.S. dollars amounting to approximately US$582.2 million and US$999.9 million, respectively (equivalent to approximately RMB3,798.5 million and RMB6,375.1 million, respectively). As of December 31, 2020 and 2021, the Group had cash held in accounts managed by online payment platforms such as Alipay and Paypal in connection with the collection of online service fees for a total amount of RMB42.0 million and RMB50.7 million, respectively, which have been classified as cash and cash equivalents on the consolidated balance sheets.

As of December 31, 2020 and 2021, the Group had approximately RMB2,144.5 million and RMB1,554.5 million cash and cash equivalents held by its PRC subsidiaries and VIEs, representing 46% and 21% of total cash and cash equivalents of the Group, respectively.

Time deposits represent deposits placed with banks with original maturities more than three months but less than one year. As of December 31, 2020 and 2021, there were time deposits denominated in U.S. dollars amounting to approximately US$721.1 million and US$1,197.1 million, respectively (equivalent to approximately RMB4,705.1 million and RMB7,632.3 million, respectively).

The Group had no other lien arrangements for the years ended December 31, 2019, 2020 and 2021. As of December 31, 2020 and 2021, the Group had no restricted cash balance.

h)	Receivables, net

Prior to January 1, 2020, the Group monitors the collection of its receivables and records allowance for specifically identified

non-recoverable

amounts. If the economic situation and the financial condition of a customer deteriorate resulting in an impairment of the customer’s ability to make payments, additional allowances might be required. Receivable balances are written off when they are determined to be uncollectible.

Starting from January 1, 2020, the Group adopted

ASU No. 2016-13, “

Financial

Instruments—Credit Losses (Topic 326)

: Measurement of Credit Losses on Financial Instruments

” (“ASC Topic 326”), which amends previously issued guidance regarding the impairment of financial instruments by creating an impairment model that is based on expected losses rather than incurred losses. The Group used a modified retrospective approach with a cumulative-effect increase of approximately RMB17.9 million recorded in accumulated deficit.

The Group’s accounts receivable and other receivables recorded in prepayments and other current assets are within the scope of ASC Topic 326. Accounts receivable consist primarily of receivables from advertising customers, and receivables from distribution channels.

To estimate expected credit losses, the Group has identified the relevant risk characteristics of its customers and the related receivables and other receivables which include size, type of the services or the products the Group provides, or a combination of these characteristics. Receivables with similar risk characteristics have been grouped into pools. For each pool, the Group considers the past collection experience, current economic conditions, future economic conditions (external data and macroeconomic factors) and changes in the Group’s customer collection trends. This is assessed at each quarter based on the Group’s specific facts and circumstances. No significant impact of changes in the assumptions since adoption.

The Group recorded a provision for current expected credit loss. The following table sets out movements of the allowance for doubtful accounts for the years ended December 31, 2019, 2020 and 2021:


	For the Year Ended December 31,
	2019			2020			2021

	RMB in thousands



Beginning balance prior to ASC 326		—			17,696			—
Impact of adoption to ASC 326		—			17,900			—
Beginning balance		14,420			35,596			121,003

Provisions		9,396			99,165			189,165
Write-offs		(6,120	)		(13,758	)		(17,695	)
Ending balance		17,696			121,003			292,473

i)	Inventories, net

Inventories, mainly represent products for the Group’s

e-commerce

business, are stated at the lower of cost or net realizable value on the consolidated balance sheets. Cost of inventories is determined using the weighted average cost method. Adjustments are recorded to write down the cost of inventories to the estimated net realizable value due to slow-moving merchandise and damaged goods, which is dependent upon factors such as historical and forecasted consumer demand, and promotional environment. The Group takes ownership, risks and rewards of the products purchased. Write downs are recorded in cost of revenues on the consolidated statements of operations and comprehensive loss. Certain costs attributable to buying and receiving products, such as purchase freights, are included in cost of inventories.

j)	Property and equipment, net

Property and equipment are stated at cost less accumulated depreciation and impairment, if any. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally three years. Leasehold improvements are amortized over the shorter of the estimated useful lives of the assets or the remaining lease term. Expenditures for maintenance and repairs are expensed as incurred. The gain or loss on the disposal of property and equipment is the difference between the net sales proceeds and the carrying amount of the relevant assets and is recognized on the consolidated statements of operations and comprehensive loss.

k)	Intangible assets, net

Intangible assets acquired through business acquisitions are recognized as assets separate from goodwill if they satisfy either the “contractual-legal” or “separability” criterion. Purchased intangible assets are initially recognized and measured at fair value. Major identifiable intangible assets that have determinable lives continue to be amortized over their estimated useful lives using the straight-line method as follows:


Licensed copyrights of content		shorter of the licensed period or projected useful life of the content, mainly vary from 1 to 8 years
License rights of mobile games		shorter of the licensed period or projected useful life of mobile games, mainly vary from 1 to 3 years
Intellectual property and others		1 to 10 years, based on the underlying intangible assets expected to contribute to the future cash flows

If expectations of the usefulness of the content are revised downward, the unamortized cost is written down to the fair value, which establishes a new cost basis.

Goodwill

Goodwill represents the excess of the purchase consideration over the fair value of the identifiable tangible and intangible assets acquired and liabilities assumed from the acquired entity as a result of the Company’s acquisitions of interests in its subsidiaries and consolidated VIEs. Goodwill is not depreciated or amortized but is tested for impairment at the reporting unit level on an annual basis, and between annual tests when an event or circumstances change occurs that indicate the asset might be impaired. Under ASC

350-20-35,

the Group has the option to choose whether it will apply the qualitative assessment first and then the quantitative assessment, if necessary, or to apply the quantitative assessment directly.

The Group applies the quantitative impairment test, which consists of a

two-step

quantitative impairment test. The first step was comparing the carrying amount of the reporting unit to the fair value of the reporting unit. If the fair value of the reporting unit exceeded the carrying value of the reporting unit, goodwill was not impaired and the Group was not required to perform further testing. If the carrying value of the reporting unit exceeds the fair value of the reporting unit, then the Group must perform the second step of the

two-step

quantitative goodwill impairment test to measure the amount of impairment loss by comparing the implied fair value of the reporting unit goodwill with the carrying amount of that goodwill.

On January 1, 2020, the Group adopted

ASU No. 2017-04,

Simplifying the Test for Goodwill Impairment

to simplify the test for goodwill impairment by removing Step 2, which was issued by the FASB in January 2017. The Group, therefore, performs the goodwill impairment test by comparing the fair value of the reporting unit with its carrying amount and recognizing an impairment charge for the amount by which the carrying amount exceeds the fair value, not to exceed the total amount of goodwill allocated to the reporting unit. This adoption did not have a material impact on the consolidated financial statements.

Application of a goodwill impairment test requires significant management judgment, including the identification of reporting units, assigning assets and liabilities to reporting units, assigning goodwill to reporting units, and determining the fair value of each reporting unit. The estimated fair value of reporting unit is determined using either an income approach or a market approach, when appropriate. The judgment in estimating the fair value of reporting units includes estimating future cash flows, determining appropriate discount rates and making other assumptions. Changes in these estimates and assumptions could materially affect the determination of fair value for each reporting unit. The Group as a whole is determined to be one reporting unit for goodwill impairment testing. The Group applied the quantitative assessment and performed the goodwill impairment test by quantitatively comparing the fair values of the reporting unit to its carrying amounts. The Group determines the fair value of the reporting unit based on its quoted stock price, and no impairment charge was recognized for any of the periods presented.

m)	Impairment of long-lived assets other than goodwill

Long-lived assets are evaluated for impairment whenever events or changes in circumstances (such as a significant adverse change to market conditions that will impact the future use of the assets) indicate that the carrying value of an asset may not be fully recoverable or that the useful life is shorter than the Group had originally estimated. When these events occur, the Group evaluates the impairment for the long-lived assets by comparing the carrying value of the assets to an estimate of future undiscounted cash flows expected to be generated from the use of the assets and their eventual disposition. If the sum of the expected future undiscounted cash flows is less than the carrying value of the assets, the Group recognizes an impairment loss based on the excess of the carrying value of the assets over the fair value of the assets.

n)	Research and development expenses

Research and development expenses mainly consist of payroll-related expenses incurred for the innovation of video function, development and enhancement to the Group’s websites and platforms of applications and development of online games.

For internal use software, the Group expenses all costs incurred for the preliminary project stage and post implementation-operation stage of development, and costs associated with repair or maintenance of the existing platforms. Costs incurred in the application development stage are capitalized and amortized over the estimated useful life. Since the amount of the Group’s research and development expenses qualifying for capitalization has been immaterial, as a result, all development costs incurred for development of internal used software have been expensed as incurred.

For external use software, costs incurred for development of external use software have not been capitalized since the inception of the Group, because the period after the date technical feasibility is reached and the time when the software is marketed is short historically, and the amount of costs qualifying for capitalization has been immaterial.

o)	Sales and marketing expenses

Sales and marketing expenses consist primarily of marketing and promotional expenses, salaries and other compensation-related expenses to the Group’s sales and marketing personnel. Marketing and promotional expenses consist primarily of costs for the promotion of corporate image and product marketing. The Group expenses all marketing and promotion costs as incurred and classifies these costs under sales and marketing expenses. For the years ended December 31, 2019, 2020 and 2021, the marketing and promotional expenses were RMB934.7 million, RMB3,006.0 million and RMB5,102.9 million, respectively.

p)	General and administrative expenses

General and administrative expenses consist primarily of salaries and other compensation-related expenses to the Group’s general and administrative personnel, professional fees, rental expenses and allowance for doubtful accounts.

Leases

On January 1, 2019, the Group adopted ASU No. 2016-02, “

Leases (Topic 842)

”, which requires a lessee to recognize operating and financing lease liabilities and corresponding right-of-use assets on the balance sheet. The group recognized the right-of-use assets recorded in “Other long-term assets” and corresponding short-term leasing liabilities recorded in “Accrued liabilities and other payables” and long-term leasing liabilities recorded in “Other long-term liabilities” respectively on the consolidated balance sheet.

The Group elected to apply practical expedients permitted under the transition method that allow the Group not recognize lease assets and lease liabilities for leases with a term of twelve months or less, to not separate

non-lease

components from lease components, and to not reassess lease classification, treatment of initial direct costs, or whether an existing or expired contract contains a lease. Under ASC 842, the Group determines if an arrangement is or contains a lease at inception.

Right-of-use

assets and liabilities are recognized at lease commencement date based on the present value of remaining lease payments over the lease terms. The Group considers only payments that are fixed and determinable at the time of lease commencement

The Group leases office space and staff quarters under

non-cancelable

operating lease agreements, which expire at various dates through

2026. As of December 31, 2020 and 2021, the Group’s operating leases had a weighted average remaining lease term of 3.1 years and 2.7 years and a weighted average discount rate of 4.75% and 4.75%, respectively. Future lease payments under operating leases as of December 31, 2021 were as follows:


	December 31, 2021
	RMB in thousands


2022		207,531
2023		148,596
2024		87,763
2025		49,981
2026 and thereafter		3,735

Total future lease payments		497,606
Impact of discounting remaining lease payments		(41,635	)

Total lease liabilities		455,971

Operating lease cost for the year ended December 31, 2019, 2020 and 2021 was RMB79.4 million, RMB107.2 million and RMB177.4 million, respectively, which excluded cost of short-term contracts. Short-term lease cost for the year ended December 31, 2019, 2020 and 2021 was immaterial. Supplemental cash flow information related to operating leases was as follows:


	For the Year Ended December 31,
	2020		2021

	RMB in thousands

Cash payments for operating leases		107,772		161,997
Right-of-use assets obtained in exchange for operating lease liabilities		260,867		152,481