Bilibili Q2 2026 Earnings Call Transcript

Quartr
Provided by Quartr
August 27, 2026

Key Takeaways

  • Positive Sentiment: Strong user engagement and profitability growth: Q2 DAUs rose 7% year over year to 117 million, average daily time spent increased to 113 minutes, and total revenue grew 8% to RMB 7.9 billion. Gross margin reached 37.2% for its 16th consecutive quarter of improvement, while adjusted net profit increased 25% to RMB 704 million.
  • Positive Sentiment: Advertising remained a key growth engine: Advertising revenue rose 28% to RMB 3.1 billion despite macroeconomic pressure, supported by strong growth in automotive, apparel, home decoration, and AI-related advertising. AI-driven improvements in targeting and automated ad placement, along with expanding search and multi-screen inventory, are expected to support continued growth.
  • Positive Sentiment: AI investment is focused and progressing: Management is concentrating AI spending on video understanding, distribution, and creator tools, helping increase content submissions by 28% and improve recommendations and ad matching. The company said it has deployed roughly 70%-80% of its RMB 1 billion AI-related capital expenditure target in the first half of the year.
  • Negative Sentiment: Gaming revenue declined in the quarter: Game revenue fell 14% year over year to RMB 1.4 billion, primarily because of a high comparison base from Sanmo. Management expects gaming revenue to return to year-over-year growth beginning in the fourth quarter, dependent on the performance and launches of upcoming titles.
  • Positive Sentiment: Game pipeline and shareholder returns provide potential upside: Bilibili plans to launch Lumi Master globally on September 17, Sanwang by year-end, and several additional titles in 2027, while Sanmo continued ranking among China’s top five iOS grossing games through its second anniversary season. The board also approved a new two-year, $300 million share-repurchase program, following $118 million of buybacks year to date.
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Earnings Conference Call
Bilibili Q2 2026
00:00 / 00:00

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Operator

Good day, and welcome to the Bilibili Second Quarter 2026 Financial Results and Business Update Conference Call. Today's conference is being recorded. At this time, I would like to turn the call over to Juliet Yang, Executive Director of Investor Relations. Please go ahead.

Juliet Yang
Juliet Yang
Executive Director of Investor Relations at Bilibili

Thank you, operator. During this call, we will discuss our business outlook and make 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 measure we provide are for comparison purpose only. The definition of this measure and the 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 at ir.bilibili.com.

Juliet Yang
Juliet Yang
Executive Director of Investor Relations at Bilibili

Joining us today from Bilibili senior management are Mr. Rui Chen, Chairman of the Board and Chief Executive Officer, Ms. Carly Li, Vice Chairwoman of the Board and Chief Operating Officer, and Mr. Sam Fan, Chief Financial Officer. I will now turn the call to Mr. Chen.

Rui Chen
Rui Chen
Chairman of the Board and CEO at Bilibili

Thank you, Juliet, and thank you to everyone joining us today. Our strong momentum carried into the second quarter, and we delivered another set of solid results. Both our community and top-line growth remained healthy, and profitability continued to expand. As users increasingly seek substance over noise, our high-quality content and authentic community experience keep attracting new users and driving deeper engagement. In Q2, DAUs increased by 7% year-over-year to 117 million, while MAUs grew to 371 million. Average daily time spent rose to 113 minutes from 105 minutes a year ago, which drove total time spent up over 14%. That engagement is translating into stronger commercial results. Advertising revenue grew 28% year-over-year, marking another quarter of industry-leading growth. Meanwhile, MPUs increased 7% year-over-year to 33.4 million, reflecting users' increasing willingness to pay for the content and community experiences they truly value.

Rui Chen
Rui Chen
Chairman of the Board and CEO at Bilibili

You can also see that momentum in our financial results. Total revenues for Q2 rose 8% to RMB 7.9 billion, and gross profit grew 10% year-over-year. Gross margin expanded to 37.2%, marking our 16th consecutive quarter of margin improvement. Our top-line growth and increased operating leverage drove our net profit up 55% year-over-year, and our adjusted net profit reached RMB 704 million, with our adjusted net profit margin expanding to 8.9%. In the AI era, we see two major tailwinds. First, AI tools help our creators produce great content much faster, while AI-empowered content understanding is making our recommendations far more efficient. Second, and perhaps more importantly, in a world full of passive algorithmic content, real human connection becomes a rare commodity. People choose Bilibili because they want meaningful content, shared interests, and genuine interactions, and that makes our community even more attractive.

Rui Chen
Rui Chen
Chairman of the Board and CEO at Bilibili

That is why we remain committed to our AI strategy while staying highly disciplined in how we invest. We will use AI to improve content and efficiency without losing sight of our community roots and unique advantage. Strengthening this flywheel of community and monetization will continue to build lasting, compounding value for our users, our creators, and our shareholders. With that, let me walk you through our core pillars of content, community, and commercialization. Let's start with our content. Across our 17-year history, various content formats have come and gone, but Bilibili's distinct blend of quality content and vibrant interest-driven communities continues to capture users' intentional high-value time. In Q2, total time spent on our platform expanded by 14% year-over-year. Notably, watch time from videos over five minutes grew by 18% year-over-year, demonstrating users' growing demand for meaningful and high-quality content.

Rui Chen
Rui Chen
Chairman of the Board and CEO at Bilibili

Turning to our interest-based content categories, we are seeing steady growth across both core and emerging hubs. Total watch time for game-related content and general entertainment content increased by 20% and 35% year-over-year respectively. Baby and maternity also grew by 36% year-over-year as more of our users step into parenthood. At the same time, AI tools are expanding creative boundaries across our platform. For instance, watch time for music content grew 24% year-over-year, catalyzed by AIGC-driven creations. Beyond content consumption, AI is also supercharging creator output. In Q2, daily video submissions jumped by 28% compared to the same period last year. Video podcasts offer another compelling example of our users embracing immersive content. Last month, average daily watch time for video podcasts exceeded 100 million minutes.

Rui Chen
Rui Chen
Chairman of the Board and CEO at Bilibili

This remarkable engagement shows that even in today's world of fast-paced content, there is still a huge and growing appetite for in-depth storytelling. Behind these figures, empowering creators remains a top priority. Through refined algorithms, we now match quality content with interested users much earlier. In Q2, the number of creators with over 1,000 followers grew by 30% year-over-year. The diverse monetization channels we provide also helped average creator income increase by 21% year-over-year in the second quarter. Turning to our community. As we touched on earlier, authentic human connection has become rare and valuable in the era of automated bite-sized content. That is why Bilibili's interactive community feels like a true oasis in today's digital world. Here, hundreds of millions of users connect over shared passions, expressing their feelings through comments and bullet chats to find a genuine sense of belonging.

Rui Chen
Rui Chen
Chairman of the Board and CEO at Bilibili

In Q2, monthly interactions grew 9% year-over-year to 17.4 billion, while deeper connections like long comments jumped over 67%. Meanwhile, by processing these rich user interactions, our algorithms can spot and elevate high-quality content much faster, driving healthy, steady growth in both our user base and time spent. This level of engagement and interaction naturally keeps users coming back and expands our network of trust. In Q2, the average active user followed 96 creators, up 11% from a year ago. By the end of Q2, our official members reached 299 million, with 12-month retention remaining solid at around 80%. Ultimately, our community doesn't just surface the best content, it builds lasting user loyalty and drives enduring platform value. This summer, we brought our community offline once again through our signature events, Bilibili World and Bilibili Macro Link.

Rui Chen
Rui Chen
Chairman of the Board and CEO at Bilibili

Over the three-day event, more than 400,000 fans gathered in person in Shanghai, making it one of the largest offline ACG expos in China and a vibrant new cultural landmark for the city. Seeing so many young people come together to share their passions was a powerful reminder of what community means. This is what Bilibili looks like off-screen: authentic, energetic, and deeply connected. Let's turn to our commercial businesses, beginning with advertising. In Q2, advertising revenue increased by 28% year-over-year to RMB 3.1 billion, marking our 14th straight quarter of 20% year-over-year growth. This industry-leading growth reflects our high-value, deeply engaged user base, alongside ongoing enhancements to our ad products and technical infrastructure. Growth was broad-based across industries, games, digital products and home appliances, internet services, e-commerce, and automotive were our five largest advertising verticals in Q2.

Rui Chen
Rui Chen
Chairman of the Board and CEO at Bilibili

While our core gaming vertical maintained healthy growth, new verticals are also flourishing as our users mature into new life stages with expanding consumption needs. Ad revenues from home decoration, footwear and apparel, and automotive each grew more than 60% year-over-year. We also captured incremental budget from emerging industries. AI advertisers continued to scale, and revenues from this vertical more than doubled year-over-year, driving sustained growth in internet services. Our ads are also becoming more efficient. By deepening our understanding of product information, creative assets, user interests, and conversion goals, AI helps us deliver more relevant ads and drive better conversion. Our CTCVR continued to improve, increasing 19% year-over-year in Q2. Beyond matching, we are extending AI across creative production and campaign operations from AIGC tools to ad placement AI agents, making advertising easier and more efficient for a broader range of clients.

Rui Chen
Rui Chen
Chairman of the Board and CEO at Bilibili

We are also extending monetization into deeper high-intent user scenarios. Take search, for example, a high-value scenario sitting right at the moment of decision-making. Search revenues doubled year-over-year in Q2. At the same time, we are unlocking growth across additional scenarios, including PC, smart TV, and the watch page. As monetization expands across the entire user journey, we see vast commercial potential ahead. Turning to our games business. Game revenues for the quarter were RMB 1.4 billion, down 14% year-over-year, mainly due to the high base Sanmo [Non-English content] set last year. Sanmo's latest second anniversary season 15 went well with players, ranking number two on China's iOS top-grossing chart. We'll keep focusing on the game's long-term life cycle by delivering fresh content and carefully balancing user experience with monetization.

Rui Chen
Rui Chen
Chairman of the Board and CEO at Bilibili

Meanwhile, our legacy titles, including FGO and Azur Lane, continue to deliver stable performance during the quarter. In July, we officially launched our casual card game, N-Card: [Non-English content]. We continue to refine the game and enrich its gameplay while approaching user acquisition with a long-term focus on ROI and retention. Looking at the second half of 2026, our self-developed simulation game, Lumi Master, [Non-English content], was well-received by global players in recent tests. Building on this encouraging reception, we plan to launch the game on September 17 globally. Sanwang: [Non-English content], our new licensed SLG title, is scheduled to roll out in Q4, complementing Sanmo with a differentiated gameplay experience.

Rui Chen
Rui Chen
Chairman of the Board and CEO at Bilibili

Beyond Lumi and Sanwang, we also introduced three new titles at Bilibili World, including two licensed games, Ragnarok Online 3, [Non-English content]3, an MMORPG based on a globally recognized IP that has already secured its publication license, and MISTBOUND: Guild Wars Card Game, [Non-English content], which is adapted from another well-known IP. We also announced a new self-developed tactical RPG, Three Kingdoms: The Ravages of Time, [Non-English content] All three titles will be released next year. Together, these titles expand our pipeline across genres and development models while attracting new player segments. Turning to our VAS business. In Q2, VAS revenues grew 5% year-over-year to RMB 3.0 billion. Our live broadcasting business maintained its steady performance, and we continue to refine our operations to ensure stable and sustainable growth with better margins.

Rui Chen
Rui Chen
Chairman of the Board and CEO at Bilibili

At the end of Q2, premium members reached 25.7 million, up 9% year-over-year, with around 80% on annual or auto-renewal plans. Fan charging also kept its momentum, with revenue up nearly 50% year-over-year. Fan charging turns audience appreciation into direct financial support, so creators across a wide range of categories can do what they love and produce quality content over the long term. Beyond the numbers, we remain deeply committed to shaping a healthy culture and community for China's young generation. ESG principles are central to that mission. This year, MSCI ESG upgraded Bilibili to an AA rating from an A rating, recognizing our ongoing progress in using technology and culture to create meaningful social impact. At the end of the day, we found that across every technological shift, one thing remains constant. People crave rich, meaningful content and real human connection.

Rui Chen
Rui Chen
Chairman of the Board and CEO at Bilibili

Bilibili is uniquely built at the intersection of both. As AI enables us to fulfill this mission with greater precision and scale, I couldn't be more confident in our path ahead. With that, I will turn the call over to Sam to walk through our financials in more detail. Sam?

Sam Fan
Sam Fan
CFO at Bilibili

Thank you, Mr. Chen, and hello, everyone. In the interest of time on today's call, I will focus on our second quarter financial highlights. We encourage you to refer to our press release issued earlier today for a closer look at our results. Total revenues for the second quarter were RMB 7.9 billion, up 8% year-over-year. The breakdown of total revenues by revenue stream was approximately 39% advertising, 37% VAS, 18% mobile games, and 6% from our IP derivatives and other businesses. Cost of revenues increased by 7% year-over-year to RMB 5.0 billion. Gross profit increased around 10% year-over-year to RMB 3.0 billion, while gross margin expanded to 37.2% from 36.5% in the same period last year, marking our 16th consecutive quarter of margin improvement. Our total operating expenses were up 7% year-over-year to RMB 2.6 billion.

Sam Fan
Sam Fan
CFO at Bilibili

Sales and marketing expenses increased by 1% year-over-year. G&A expenses were flat, and R&D expenses increased by 16%, primarily due to continued investment in our AI capabilities. Operating profit increased 48% year-over-year to RMB 373 million, while adjusted operating profit increased 21% to RMB 696 million, lifting adjusted operating profit margin to 8.8% from 7.8% in the same period last year. Net profit increase d by 55% year-over-year to RMB 339 million, while adjusted net profit increased 25% to RMB 704 million, and adjusted net profit margin reached 8.9%. As of June 30, 2026, we had cash and cash equivalents, time deposits, and short-term investments of RMB 24.3 billion, or $3.6 billion. In June, our board approved a new two-year, $300 million share repurchase program.

Sam Fan
Sam Fan
CFO at Bilibili

Under this new program, a total of 1.9 million shares had been purchased for a total cost of $31 million as of June 30, 2026. From the beginning of the year through today, a total of 5.8 million shares had been purchased for a total cost of $118 million. Moving forward, we will continue to evaluate market conditions and execute our repurchase program accordingly to enhance long-term shareholder value. Thank you for your attention. We would now like to open the call to your questions. Operator, please go ahead.

Operator

Thank you. Dear participants, as a reminder, if you wish to ask a question, please press star one one on your telephone keypad and wait for your name to be announced. To withdraw your question, please press star one one again. For the benefit of all participants on today's call, if you wish to ask a question to management in Chinese, please immediately repeat your question in English. The company will provide consecutive interpretation for the management statement during the Q and A session. Please note that the English interpretation is for convenience purposes only. In the case of any discrepancy, management statements in their original language will prevail. Now we are going to take our first question. Just give us a moment. The question comes line of Lincoln Kong from Goldman Sachs. Your line is open. Please ask the question.

Lincoln Kong
Lincoln Kong
Analyst at Goldman Sachs

[Non-English content] Thank you management for taking my question, and congrats on a very solid quarter. Looking back over the past few years, short-form contents have surged while the average length of the long-form video has also steadily decreased. What is driving this resilience? Looking ahead to the AI era, how do we expect user preference and the consumption habits to evolve over time? Thank you.

Rui Chen
Rui Chen
Chairman of the Board and CEO at Bilibili

[Non-English content]

Juliet Yang
Juliet Yang
Executive Director of Investor Relations at Bilibili

Actually, over the past few years, we have seen explosive growth for both short video content and long-form content, and the shorter form content grow much faster. Looking at Bilibili, we are not choosing the length of the content to be focused on, but rather we are focusing on good content, high-quality content. Naturally, for those high-quality content, they are generally more inclined to be in the format of mid to long-form content.

Rui Chen
Rui Chen
Chairman of the Board and CEO at Bilibili

[Non-English content]

Juliet Yang
Juliet Yang
Executive Director of Investor Relations at Bilibili

We believe whether the length of the content or on the device of the consumption scenario, the ultimate goal from users is everyone wants to watch good content.

Rui Chen
Rui Chen
Chairman of the Board and CEO at Bilibili

[Non-English content]

Juliet Yang
Juliet Yang
Executive Director of Investor Relations at Bilibili

Well, over the past year, we do see an exponential supply growth for short video content. But over time, as people are used to have watched enough low quality, repetitive content, they naturally develop a taste for high quality content. They are no longer satisfied with the content that just grab their attention for one second. They care more and more about whether the time they spend on the content is actually worth it. That is exactly why Bilibili have been able to keep growing in the past few years. We have been focusing on providing a high quality content that is interesting, in-depth, and really connects with user emotionally. That's why user are willing to slow down and spend their intentional time on Bilibili.

Rui Chen
Rui Chen
Chairman of the Board and CEO at Bilibili

[Non-English content]

Juliet Yang
Juliet Yang
Executive Director of Investor Relations at Bilibili

The reason why Bilibili are able to constantly curate high quality content for two reasons. One is that we have amassed a very talented group of content creator who believes in the community, who believes in the Bilibili platform. Secondly is over the past decade, we have built a very engaging community with a lot of user who truly appreciates high quality content. They have the view of what is good high quality content and forms a community that appreciates and also can select and define the quality, what is the good quality content. They can choose and promote among millions of daily video submissions and allow this high quality content and talented content creator to emerge from our platform.

Rui Chen
Rui Chen
Chairman of the Board and CEO at Bilibili

[Non-English content] 174 [Non-English content] 9%。[Non-English content] 67% [Non-English content]

Juliet Yang
Juliet Yang
Executive Director of Investor Relations at Bilibili

In the second quarter, our monthly user interaction were over 17 billion, up 9% year-over-year. Long comments that over 100 characters were even faster, up by 67%. This high level of real human interaction help us to better identify high quality content.

Rui Chen
Rui Chen
Chairman of the Board and CEO at Bilibili

[Non-English content]

Juliet Yang
Juliet Yang
Executive Director of Investor Relations at Bilibili

Regarding in the AI era, how the video landscape is going to change, we believe that the AI tools will exponentially unleash the supply of video content, and over time, the high quality content is the only solution or the only answer among those oversupply of video content. We believe over time, only high quality content will have viewership. Those low quality content will have no traffic.

Rui Chen
Rui Chen
Chairman of the Board and CEO at Bilibili

[Non-English content] AI [Non-English content], [Non-English content] AI, [Non-English content] AI [Non-English content]28%, [Non-English content] AI [Non-English content]

Juliet Yang
Juliet Yang
Executive Director of Investor Relations at Bilibili

In the AI era, I will be very focused on two aspects. One is on video creation, content creation, second is on content distribution. First of all, on the content creation, I will pay very close attention to those content creator with high intelligence and high creative power, how they are leveraging AI to create content to realize their creation into actual work. We believe the repetitive low quality content will have no room for survival, but those talented content creators will be extremely beneficial from this evolution of creation tool. In the past half year, we have been paying very close attention on this aspect, and it is generating very positive results. As a matter of fact, in the second quarter, our monthly content submissions increased by 28%. This is a hard evidence to support that AI tool is enlarging, enhancing, uplifting our creators creative output.

Rui Chen
Rui Chen
Chairman of the Board and CEO at Bilibili

[Non-English content] AI, [Non-English content]Q2, DAU [Non-English content] 7%, [Non-English content] 4%，[Non-English content] UP [Non-English content] 30%，[Non-English content]

Juliet Yang
Juliet Yang
Executive Director of Investor Relations at Bilibili

Secondly, on content distribution, compared with the short videos that only have a few seconds, the longer form videos contain much comprehensive information and structures. Traditional recommendation algorithms often struggle to fully understand and recommend this type of content. Also, users generally have more complex intents when they come to choose much longer form content. That is why we are focusing on our AI and on helping our content distribution become more efficient. We think this new generation of AI tool is helping us to comprehend, understand the meaning of the content, and better understand our user intention. Here are a few numbers to support our progress. In second quarter, DAU grew by 7% year-over-year, and our total user time spent increased by 14% year-over-year. The number of creator with over 1,000 followers grew by 30% year-over-year.

Juliet Yang
Juliet Yang
Executive Director of Investor Relations at Bilibili

A lot of the driver behind those numbers are from using AI to make our algorithm working better. That concludes the first question's answer. Operator, next question, please.

Operator

Perfect. Thank you so much. Now we are going to take our next question. The question comes to line of Yang Liu from Morgan Stanley. Your line is open. Please ask your question.

Yang Liu
Yang Liu
Analyst at Morgan Stanley

[Non-English content] 2Q [Non-English content] Let me translate my question.

Yang Liu
Yang Liu
Analyst at Morgan Stanley

My question is about the advertisement business. Since 2Q, we start to see weakening macro and consumption data in China. How to think about the future second half advertisement business growth? What is the marginal change for the advertisement from the AI industry? Could management help to break down the 2Q and the second half advertisement growth driver? In second half, we start to have a little bit higher base. Which verticals can support the advertisement business to sustain relatively high growth? Thank you.

Carly Li
Carly Li
Vice Chairwoman of the Board and COO at Bilibili

[Non-English content] Q [Non-English content] 31.3 [Non-English content]28%. [Non-English content]

Juliet Yang
Juliet Yang
Executive Director of Investor Relations at Bilibili

In the second quarter, despite macroeconomic pressure on consumer spending, our ads business delivered a very strong performance with revenue reaching RMB 3.13 billion, up 28% year-over-year.

Juliet Yang
Juliet Yang
Executive Director of Investor Relations at Bilibili

This resilient growth reflects a strong market recognition of our user base and our community value. More and more advertisers realize it is a must-invest platform for them to gain access to the young generation. We also achieved early success in our vertical industry strategies and our ads scenario expansion.

Carly Li
Carly Li
Vice Chairwoman of the Board and COO at Bilibili

[Non-English content]

Juliet Yang
Juliet Yang
Executive Director of Investor Relations at Bilibili

In our content ecosystem, users time spent on AI related knowledge content surged by 72% year-over-year. Bilibili has become the largest AI learning video community across the internet, as user actively come to our platform to track and learn about large language models and AI tools.

Carly Li
Carly Li
Vice Chairwoman of the Board and COO at Bilibili

[Non-English content] AI[Non-English content] 100%。AI[Non-English content] AI [Non-English content]

Juliet Yang
Juliet Yang
Executive Director of Investor Relations at Bilibili

At the same time, ad spend from AI sector grew by over 100% year-over-year in the second quarter, benefiting from the strong match between AI target audiences and our user base.

Juliet Yang
Juliet Yang
Executive Director of Investor Relations at Bilibili

As AI is a major long-term trend, we expect continuous demand from various clients across different stages, and we remain very optimistic about this incremental opportunity.

Carly Li
Carly Li
Vice Chairwoman of the Board and COO at Bilibili

[Non-English content]

Juliet Yang
Juliet Yang
Executive Director of Investor Relations at Bilibili

As for the second half outlook, we are seeing that more advertisers demand higher conversion efficiency in the short term. At the same time, they also want channels that deliver sustained long-term impacts rather than just one-off impressions to help them to build lasting brand value. They are also prioritizing their limited budget on high-value users with genuine purchasing power. All of these demands precisely match with Bilibili's unique strengths.

Carly Li
Carly Li
Vice Chairwoman of the Board and COO at Bilibili

[Non-English content] 26.5 [Non-English content] UP[Non-English content] Q1 [Non-English content]

Juliet Yang
Juliet Yang
Executive Director of Investor Relations at Bilibili

The average age of Bilibili user now is 26.5 years old, making them the primary driver or the main consumption force in the current Chinese society. Over the past two years, they also have established a strong purchasing mindset on Bilibili, demonstrating a clear willingness to buy products recommended by the platform or by the content creators. In the second quarter, our top five ad verticals were game, consumer electronics, internet services, e-commerce, and automotive, while our total advertiser base expanded by 14% year-over-year.

Carly Li
Carly Li
Vice Chairwoman of the Board and COO at Bilibili

B [Non-English content]App [Non-English content] iPad [Non-English content]

Juliet Yang
Juliet Yang
Executive Director of Investor Relations at Bilibili

Unlike other platforms, we have a multi-screen, multi-scenario strategy that allows Bilibili to accompany users seamlessly throughout their day. Whether it's listening or watching Bilibili during commutes, or casting Bilibili content on TV screen at home with their family, or using our apps or iPad during spare time for learning.

Carly Li
Carly Li
Vice Chairwoman of the Board and COO at Bilibili

[Non-English content] OTT, [Non-English content] PC, [Non-English content]

Juliet Yang
Juliet Yang
Executive Director of Investor Relations at Bilibili

Across these different streams, user can watch and upload video, interact through bullet chats, commentaries, search their favorite content or creators during live stream, watch anime or documentaries, and play games. Ads naturally follow users throughout their daily touch points. That's why in the first half of this year, we've seen in-app search, watch page, smart TV portal, PC and mini programs have all unlocked valuable new ads inventories, with revenue from this multi-scenario placement grew by 50% year-over-year in the first half.

Carly Li
Carly Li
Vice Chairwoman of the Board and COO at Bilibili

[Non-English content]

Juliet Yang
Juliet Yang
Executive Director of Investor Relations at Bilibili

Last but not least, AI is also empowering our ad efficiency from several angles, including improving our user comprehension, including user profiling, content matching, ad creative generation, and algorithm efficiency to continuously lift our monetization. We have also launched our automated ad placement system that also has made it much easier for new advertisers to join us. This is driving a double-digit growth for our new advertisers client base.

Carly Li
Carly Li
Vice Chairwoman of the Board and COO at Bilibili

[Non-English content]

Juliet Yang
Juliet Yang
Executive Director of Investor Relations at Bilibili

As we mentioned, it is indeed a very challenging macro environment, and there will be a lot of changes across different industry players. However, given what we just mentioned, we still remain quite confident about our continuous growth for our ad business. Thank you. Operator, next question, please.

Operator

Yes, of course. Now we are going to take our next question. The question comes from the line of Daniel Chen from JPMorgan. Your line is open. Please ask your question.

Daniel Chen
Daniel Chen
Analyst at JPMorgan

[Non-English content] So my question is on the online game.

Daniel Chen
Daniel Chen
Analyst at JPMorgan

The company just shared quite a lot of information on the game pipelines. I was wondering which one is the most anticipated one? Also, what is the expectation for the launch timing? Besides this, Sanmo, the Three Kingdom strategy game, has been launched for two years. So how should we look at the future performance of this game? Thank you.

Rui Chen
Rui Chen
Chairman of the Board and CEO at Bilibili

[Non-English content]

Juliet Yang
Juliet Yang
Executive Director of Investor Relations at Bilibili

From the second half to next year, it will be our harvesting season for Bilibili games. We do have several exciting titles lined up for launch.

Rui Chen
Rui Chen
Chairman of the Board and CEO at Bilibili

[Non-English content]

Juliet Yang
Juliet Yang
Executive Director of Investor Relations at Bilibili

The first title in our pipeline is Lumi Master. Lumi Master is Bilibili self-developed light casual game that involves pet catching and simulation gameplay. It received a lot of positive feedback during its global test in May, and also recent testing feedback has been very well. We are planning for a global launch on September 17 next month. We have developed a very innovative gameplay and artistic graphic design to cater to young generations' needs. We believe with its lighter gameplay and appeal to younger players, we hope this game can catch a broader casual gaming audiences on a global base, especially for young gamers.

Rui Chen
Rui Chen
Chairman of the Board and CEO at Bilibili

[Non-English content] SLG [Non-English content] SLG [Non-English content]

Juliet Yang
Juliet Yang
Executive Director of Investor Relations at Bilibili

The second title in our pipeline is Sanwang, which is a strategy game officially licensed from the classic Three Kingdom IP, Sanguozhi, Three Kingdom IP. We expect to launch this game towards end of this year. Compared to Sanmo, it targets a more mature audience with a strong interest in Sanguozhi IP, and both of the visual style and gameplay have been significantly upgraded from the classic IP. Why we are launching another Three Kingdom title, we think it really complements Sanmo in both gameplay and target audiences, and it can further strengthen our presence in the strategy game genre. We also gain a lot of valuable feedback from the second beta testing we just finished, and we have continued to fine-tune this game. Our goal is to build another strategy game that can be lasting and popular for our audiences.

Rui Chen
Rui Chen
Chairman of the Board and CEO at Bilibili

[Non-English content] BW [Non-English content] RPG [Non-English content] 20 [Non-English content] IP, [Non-English content]

Juliet Yang
Juliet Yang
Executive Director of Investor Relations at Bilibili

Beyond that, we have also introduced several new pipelines of titles in the Bilibili World and will be launched next year. The first one is Three Kingdom: The Ravages of Time, [Non-English content]. This is another self-developed title that is focused on tactical RPG genre. This title is based on a classic manga IP with a history of over 20 years. Bilibili platform has also produced and published the anime that based on this IP. Our goal is to make this classic IP, revitalize this classic IP, and make it a great tactical RPG for younger generation.

Rui Chen
Rui Chen
Chairman of the Board and CEO at Bilibili

[Non-English content] 3，[Non-English content] RO3。[Non-English content] 20 [Non-English content] MMO [Non-English content] IP。[Non-English content] RO [Non-English content]

Juliet Yang
Juliet Yang
Executive Director of Investor Relations at Bilibili

The second title for next year is RO3. Needless to say, this is a very classic IP with a large audience that last over 20 years. It is a very classic MMORPG, and we have received a lot of users' demand for bringing this title back to them. That is why we have signed and licensed this IP, and hopefully to bring this classic IP back to its fan base. Currently, this game has already secured its license, and actually we started to launch technical testing today within mainland. Currently, the user feedback has been quite positive, and we are targeting to launch this game next year.

Rui Chen
Rui Chen
Chairman of the Board and CEO at Bilibili

[Non-English content] S8, [Non-English content]

Juliet Yang
Juliet Yang
Executive Director of Investor Relations at Bilibili

To answer your question on our classic Sanmo game, this game has just celebrated second year anniversary with a major update in June, and the new content has been well received by our players. As a matter of fact, from season eight, our first anniversary season last year, throughout Season 15, our second anniversary season in this year, Sanmo has ranked among the top five on the iOS top grossing charts every game season, which is quite impressive. For this game, our goal has remained unchanged. Our target is to build a lasting strategy game that can accompany gamers for life. Our goal or strategy for our game business remains to focus on the vertical genre to either become the best or first in its own segment and make sure every title has a long life cycle. That is the strategy we will continue to be focusing on.

Rui Chen
Rui Chen
Chairman of the Board and CEO at Bilibili

[Non-English content] ARPV [Non-English content] 4 [Non-English content] S2 [Non-English content]

Juliet Yang
Juliet Yang
Executive Director of Investor Relations at Bilibili

When I mentioned touch based on the N-Card game, which was recently launched officially, we have noticed that the LTV for July version has doubled compared to the April version. We also plan to launch the game season two in October with a focus on improving long-term retention and adding more interactive fun gameplay. You will notice that recently we have launched many different Three Kingdom IP titles, including this light casual poker game, and also we have immersive hardcore strategy game like Sanmo and Sanwang. The reason why we are exploring this IP in such a dynamic way is, first of all, we think that there is a lot of overlap for users who are interested in this IP and they can cross-sell from each other.

Juliet Yang
Juliet Yang
Executive Director of Investor Relations at Bilibili

Secondly is that we have a very high quality video community that with a lot of gamers who can share their experience and promote this game, and also provides a very good platform for us to engage with users and continue to improve our games. That is why we are hoping to achieve long term operation across different IPs and different titles and continue to provide good gaming experience for our gamers. That concludes this question. Operator, next question, please.

Operator

Thank you so much. Now we are going to take our next question. The question comes line of Xueqing Zhang from CICC. Your line is open. Please ask your question.

Xueqing Zhang
Xueqing Zhang
Analyst at CICC

[Non-English content] A[Non-English content] ECPM[Non-English content] B [Non-English content] 10 [Non-English content] AI [Non-English content] CapEx[Non-English content] Thanks management for taking my question and congratulations on the solid quarter.

Xueqing Zhang
Xueqing Zhang
Analyst at CICC

My question about AI. The company discussed how AI has improved its advertising and helped increase ECPM at the Investor Day. Could management elaborate a little more on how AI is enhancing Bilibili's community ecosystem, user engagement and different business lines? In addition, how much of the previously announced RMB 1 billion in AI-related CapEx has been deployed so far? What is the expected pace of spending going forward? Thank you.

Rui Chen
Rui Chen
Chairman of the Board and CEO at Bilibili

[Non-English content] AI[Non-English content] AI [Non-English content] AI [Non-English content] AI [Non-English content] AI [Non-English content]

Juliet Yang
Juliet Yang
Executive Director of Investor Relations at Bilibili

Well, we believe AI is already a consensus for the next era. For us, it is not to think about how important AI is for us. It is to think about how we will use AI in our own business. As a matter of fact, there are a lot of things in the AI chain we will not be engaged with. The things where we invest will be very closely tied to our core business, which is video. To be more specific, some three areas: video understanding, video distribution, and video creation. All of our investments will be strictly focused on those three areas.

Rui Chen
Rui Chen
Chairman of the Board and CEO at Bilibili

[Non-English content] AI[Non-English content] AI [Non-English content] AI [Non-English content]

Juliet Yang
Juliet Yang
Executive Director of Investor Relations at Bilibili

First of all, AI is helping us to better understand both content and users. Bilibili has this huge amount of video library, and this video carries much more information, and our user have a very diverse interest. So be able to better understand the value of our content, the meaning of the content, and what user want, is a key component in both improving user experience and our commercialization efficiency. With AI, we are improving our video understanding, search, and recommendation capability. It is helping users to find content they are interested in a more efficiently matter, while helping our ad system to better match ads with users' needs. For us, this investment not only is working on our user growth, it is also working on our commercialization results.

Rui Chen
Rui Chen
Chairman of the Board and CEO at Bilibili

[Non-English content] AI [Non-English content] UP [Non-English content] UP [Non-English content] AI。[Non-English content] AI [Non-English content] 5 UP [Non-English content] 2.7 [Non-English content] 1.8 [Non-English content] 6 [Non-English content] AI [Non-English content]

Juliet Yang
Juliet Yang
Executive Director of Investor Relations at Bilibili

And secondly is AI is helping creating new types of content and unleashing productivity on Bilibili. As I mentioned, we are very focused on seeing those high quality content creator, talented content creator, how they are using leveraging AI to produce good content. In the past two quarters, we've seen so many good examples of how AI tools is unleashing those talented brains to bring good content on our platform. We're seeing some animation or film content that used to require a whole professional team or even a company to create, now can be created by individual content creators, that the quality is so premium that they achieve tens of millions of video views. We are also seeing AI inspire new types of content across animation, film, music, auto-tune remix categories.

Juliet Yang
Juliet Yang
Executive Director of Investor Relations at Bilibili

It is truly unleashing the creators' talent, their creativity. We've seen a surge in content submission, and the number of high quality content videos are emerging on our platform. Here's a very vivid example for your reference. In May, we launched our creator animation campaign on our platform.

Juliet Yang
Juliet Yang
Executive Director of Investor Relations at Bilibili

Just in three months, these videos in this campaign have generated 270 minutes of watch time and over 180 million views, and six series, each surpassing 10 million views. Those are the perfect example of how AI tools is helping Bilibili to unleashing creators output and unleashing the supply of high-quality content.

Sam Fan
Sam Fan
CFO at Bilibili

[Non-English content] Yeah. This is Sam. As Mr. Chen mentioned, our AI investment were highly focused. Regarding our previous target of RMB 1 billion, which is well on track. We have already achieved 70%-80% of it in the first half of the year. Primarily on the procurement of server computing power resources. This was expected to incur R&D expenses for the whole year, and it has hit by RMB 500 million, which remain unchanged.

Juliet Yang
Juliet Yang
Executive Director of Investor Relations at Bilibili

Operator, next question please.

Operator

Yes, of course. Now we are going to take our last question for today. The question comes line of Thomas Chong from Jefferies. Your line is open, please ask your question.

Thomas Chong
Thomas Chong
Analyst at Jefferies

[Non-English content] Good evening. Thanks management for taking my questions and congratulations on a very solid set of results. My question is, how does management view the margin upside across different business line? On AI, how should we think about AI empowerment to fix cost leverage and rooms for the lowering in OpEx ratio? Any color about the AI spending over the next couple of years? On the other hand, how do management view the potential upside or downside to margin in second half in 2027? Lastly, what are management thoughts on capital allocation? Thank you.

Sam Fan
Sam Fan
CFO at Bilibili

Thank you. This is Sam. I will take your question. in Q2, our financial performance continued a strong momentum. Both revenue and gross profit grow nicely with our gross profit margin expanding to 37.2%, marking the 60 consecutive quarter of sequential improvement. Meanwhile, our operating leverage continued to expand. Net profit grew by 55% year-over-year, and our adjusted net profit margin increased to 8.9%. Looking at the mid to long term, we believe there is still significant role for Bilibili's commercialization, driven by the sustained and healthy development of our business lines, more efficient operation against empowered by AI. We are highly confident in our future profitability improvement. First, our high margin advertising business continued to grow and has become our largest revenue contributor, accounting for 39% of total revenue.

Sam Fan
Sam Fan
CFO at Bilibili

Despite some micro economic pressure, we expect our advertising revenue to maintain a sustainable and healthy growth trajectory going forward. On games, we have a robust pipeline of five new titles set to launch in Q4 of this year and into next year. We are confident that our gaming revenue will resume a year-over-year growth trend starting in the fourth quarter. We remain confident in our future profit expansion and our mid to long-term target remains unchanged. A gross profit margin of 40%-45% and an operating margin around 15%-20%. We are confident in maintaining healthy revenue growth while continuously improving our operating efficiency. Also to drive the profit realization. We will carefully balance our AI investment with commercial monetization, and we firmly believe that today's investment will play a virtual role in Bilibili sustainable development in the future.

Sam Fan
Sam Fan
CFO at Bilibili

Regarding the shareholder return, delivering shareholder return is also a priority for us. From the beginning of this year to date, we have executed an accumulated $118 million in share repurchases. in June of this year, our board of directors approved a new $300 million share repurchase program. As of the end of June, we have already repurchased 1.9 million shares for over $31 million under this new program. Going forward, we will continue to execute repurchases during opportunistically market windows to create long-term sustainable value for our shareholder.

Juliet Yang
Juliet Yang
Executive Director of Investor Relations at Bilibili

Thank you, operator. That concludes our question and answer session for today.

Operator

That concludes the question and answer session. Thank you once again for joining Bilibili's second quarter 2026 financial results and business update conference call today. If you have any further questions, please contact Juliet Yang, Bilibili's Executive IR Director or Piacente Financial Communications. Contact information for IR in both China and the U.S. can be found on today's press release. Thank you and have a great day.

Executives
    • Juliet Yang
      Juliet Yang
      Executive Director of Investor Relations
    • Rui Chen
      Rui Chen
      Chairman of the Board and CEO
    • Sam Fan
      Sam Fan
      CFO
    • Carly Li
      Carly Li
      Vice Chairwoman of the Board and COO
Analysts
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