(Yicai Global) March 3 -- Shares in Bilibili surged today after the Chinese video site operator said it was putting a gloomy 2022 behind it and was expecting a significant increase in revenue and a narrowing of losses this year.

Bilibili’s Hong Kong-traded stock [HKG:9626] was trading up 9.6 percent at HKD167.80 (USD21) as of 12 noon China time today, while its shares in the US [NASDAQ:BILI] closed up 9.6 percent at USD21.57 yesterday.

Bilibili expects revenue to advance between 10 percent and 19 percent this year from 2022 to between CNY24 billion (USD3.4 billion) and CNY26 billion, according to the Shanghai-based company’s latest annual report released yesterday.

Investors are even more optimistic. "We consider the guidance to be conservative, as there are still many uncertainties in Bilibili’s various business segments' 2023 outlook," said Daniel Chen, analyst at US financial services firm J.P. Morgan. Economic recovery will be a key driver for Bilibili's advertising business and more game licenses need be approved.

2022 was a difficult year for Bilibili, during which the firm’s net loss widened 10.3 percent from a year earlier to CNY7.5 billion (USD1.1 billion), although revenue jumped 13 percent to CNY21.9 billion (USD3.2 billion), according to the report.

But net losses narrowed 29 percent in the fourth quarter year on year, on the back of a 15 percent leap in the average number of monthly subscribers to 28.2 million.

The deficit should continue to shrink this year and the firm should break even by 2024, said Chairman and Chief Executive Officer Chen Rui.

“Nowadays, the changing market environment calls for increased adaptability,” Chen said. "As such, we have taken steps to tighten our expenses and streamline our organization. Moving through 2023, we will elevate our execution in these core areas, ensuring we achieve our financial goals while continuing to foster a welcoming and inclusive community for our users,” he aded.

Revenue generated from mobile games dipped 1 percent last year to CNY5 billion (USD724 million), and those from value-added services including live streaming and membership surged 26 percent to CNY8.7 billion, the report said. Advertising and e-commerce generated CNY5.1 billion and CNY3.1 billion, gaining 12 percent and 9 percent, respectively.

But expenditure also increased. Cost of revenue soared 18 percent to CNY18 billion (USD2.6 billion), due to high revenue-sharing and content costs. The revenue-sharing cost, which Bilibili shares with creators, surged 18 percent year on year to CNY9.1 billion.

Administrative expenses were also high, mainly due to large severance costs of CNY341.4 million (USD49 million). Bilibili laid off a number of staff last year, particularly from its livestreaming, comics and website departments.

Editor: Kim Taylor