(BILI)
Q1 2026 Earnings-Transcript
Bilibili Inc. beats earnings expectations. Reported EPS is $0.1899, expectations were $0.17.
Operator: Good day, and welcome to Bilibili’s First Quarter 2026 Financial Results and Business Update Conference Call. Today’s conference is being recorded. At this time, I’d like to turn the conference over to Juliet Yang, Executive Director of Investor Relations. Please go ahead.
Juliet Yang: Thank you, operator. During this call, we’ll 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 and including those mentioned in our most recent filings with the SEC and Hong Kong Stock Exchange. The non-GAAP financial measure will 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.
Joining us today from Bilibili senior management are Mr. Rui Chen, Chairman of the Board and Chief Executive Officer; Ms. Ni Li, Vice Chairwoman of the Board and Chief Operating Officer; and Mr. Xin Fan, Chief Financial Officer. I will now turn the call to Mr. Chen.
Rui Chen: Thank you, Juliet, and thank you to everyone joining us today. 2026 is off to a great start for Bilibili. In the first quarter, we kept up the momentum from last year, delivering solid growth across our community, commercialization and profitability. Let’s start with the community. High-quality content and authentic experience continued to drive organic growth and deepen user engagement. In Q1, DAUs grew 8% year-over-year to 115 million and MAUs increased to 376 million. Average daily time spent reached a new high of 119 minutes up 11 minutes year-over-year, which led to a 19% surge in total user time spent. We see this level of engagement as a powerful engine for our commercial business. In the first quarter, we delivered robust advertising revenue growth of 30% year-over-year, further accelerating from 2025.
Meanwhile, MPUs increased by 7% year-over-year to 34.4 million as more users directly pay for content and services they truly care about on our platform. This commercial momentum led to a strong financial performance. Total revenues grew 7% year-over-year to RMB 7.5 billion. Gross profit was up 9% year-over-year and gross margin reached 37.1%, marking our 15th consecutive quarter of margin expansion, thanks to our top line growth and increased operating leverage. Our operating profit was over 10x what it was a year ago. On a non-GAAP basis, net profit grew by 62% year-over-year with our adjusted net profit margin expanding to 7.8%. To us, this set of results confirms the fundamental shift in user behavior. In a world full of quick hits, more users are choosing to spend more time on quality content.
That is exactly what Bilibili stands for, and it will continue to drive our growth. With our average user now around 26.5 years old, our cohort is starting to spend more and spend better. As their needs evolve, we are staying close to them, offering the products and experiences they care about most. The content ecosystem we have built remains our most durable asset. Today, we are using AI to make this ecosystem even more powerful. We are focusing our investments on three key areas: how we understand videos, how we recommend them and how we help creators build them. Ultimately, we are not just evolving with AI, we are using it to reinforce the very thing that makes Bilibili unique. Having said that, we remain very disciplined with our capital.
Although AI requires an upfront investment, the returns in engagement and monetization are already tangible. At the same time, AI is driving meaningful efficiencies across our operations, which is directly supporting our margin expansion. By combining the heart of our community with the power of our technology, we are creating lasting value for our users and shareholders. With that, let me walk you through our core pillars of content, community and commercialization. Starting with content and community. As content options multiply, users are becoming even more selective. They are coming to Bilibili for high-quality PUGV content and a unique community experience that they cannot find anywhere else. Across our content categories, ACG remains our cultural anchor.
In the first quarter, watch time for games in Chinese anime grew 27% and 20% year-over-year, respectively, proving our enduring appeal to the younger generation. Beyond our ACG legacy, knowledge-based content, including AI-related information, grew 20% year-over-year as users turn to us for deeper insights. Music categories also saw robust growth with a 25% year-over-year increase in time spent, largely driven by AIGC music. Consumption-related categories kept rising with watch time for parenting and early education and outdoor-related categories surging by more than 50% year-over-year. The breadth of our content library is only one part of the story. Our deeper competitive moat lies in the humanity of the community. Every month, our users generate over 17 billion real human interaction.
In an AI-driven world, they are the most authentic human signals available. While high-quality data is becoming a global scarcity or hundreds of billions of organic interactions provide us with the gold standard for understanding true human preferences. This profound insight is what fuels our engagement and loyalty. In the first quarter, total user time spent rose 19% year-over-year and 291 million official members maintained an 80% 12-month retention rate. Meanwhile, we continue to see AI as an amplifier for our ecosystem’s flywheel. On the supply side, the unique creative spirit of our community has found new momentum through the AI-powered tools that scale creativity across the platform. By lowering the barriers to entry and boosting productivity, we have seen a significant influx of creators and content.
In Q1, the number of daily active creators in daily submissions grew by 6% and 19% year-over-year, respectively. But this isn’t just a game of volume. With AI assisting the creative process, more talent is producing high-quality breakout content right out of the gate. Our recent AI creation contest is a perfect example. We attracted the most talented creators to join our platform, creating nearly 150 breakout works with over 1 million views each. By deepening our comprehension of both content and user behavior, we’ve made content discovery more efficient, directly accelerating growth for our creators. In the first quarter, the number of creators with over 1,000 followers grew by more than 30% year-over-year and those with 10,000; 100,000 and 1 million or more followers each grew over 20%.
Naturally, as their audiences grow, earnings follow, average income per creator rose 24% this quarter, creating a powerful virtuous cycle. Now let us take a closer look at our commercial businesses and their progress. First, our advertising business once again delivered standout results in Q1. Revenues grew 30% year-over-year, reaching RMB 2.6 billion. This ongoing acceleration reflects the value of our community that we continue to unlock and how we are turning user engagement into real results for advertisers. In Q1, our top 5 ad verticals were games, Internet services digital products and home appliances, e-commerce and automotive. Game Apps delivered strong incremental revenue growth this quarter. In the Internet services sector, AI advertisers kept scaling with ad budgets surging over 170% year-over-year.
At the same time, our maturing user base is also capturing more advertisers’ budgets. Ad revenues from digital products and home appliances and automotive both grew over 30% year-over-year in Q1. Home decoration was a particular standout with ad spending jumping more than 130% year-over-year. Using AI to improve efficiency and drive ad business is a core priority this year. By integrating AI more deeply into our algorithm, we’ve gained much sharper insights into user interest and long-term patterns. This clarity has meaningfully optimized how we match users with ads, resulting in a 25% year-over-year increase in CTCVR of performance-based ads this quarter. Furthermore, our AIGC tools are streamlining creative production and crafting ads that resonate with users, helping advertisers connect with our community more effectively and drive higher click-through rates.
We are also unlocking growth across diverse platforms and touch points. In the first quarter, ad revenues from PC and OTT platforms grew by over 50% year-over-year. while new scenarios like search and mini programs more than doubled. We’re exploring new integrated formats within video player, finding new ways to turn user time into commercial value. With expanding traffic, diverse new scenarios and continuous efficiency gains, we remain confident in the sustained momentum of our ad business. Now turning to our games business. Game revenues were RMB 1.5 billion down 12% year-over-year and flat quarter-over-quarter. The year-over-year decline was mainly due to the high base set by San Guo: Mou Ding Tian Xia in the same period last year. While the latest seasons of San Guo performed steadily quarter-over-quarter.
We’re focused on the game’s long-term life cycle, keeping the experience balanced and the IP strong. Meanwhile, our evergreen titles, FGO and Azur Lane remain stable and continue to provide a solid revenue base. In 2026, we’re building on San Guo success and expanding our presence in the 3 Kingdoms IP. In April, we soft launched NCard, San Guo: Bai Jiang Pai, a lighter casual card game that has received positive feedback on its core gameplay. We’re iterating the product and optimizing user acquisition as we prepare for its official launch this July. Meanwhile, our new SLG title, San Guo: Mou Ding Tian Xia began initial testing in late March built on the original San Yue Yu A Gou IP with enhanced 3D visuals, San Juan targets a differentiated group of SLG fans and complements San Mou, early user feedback was encouraging, and we plan to roll the game out late this year.
Beyond NCard and San Guo, our self-developed simulation game, Lumi Master, [ Caoba ], Lumi entered its paid testing in May. It has been well received for its cozy art style, an accessible gameplay, and we plan to bring it to global gamers in Q4 this year. Our jointly operated pipeline for the coming quarters is also expanding into more genres giving us broader player coverage and a more balanced portfolio. Turning to our VAS business. VAS revenue grew by 4% year-over-year to RMB 2.9 billion in Q1. We kept refining our live broadcasting operations delivering a stable performance with improved gross margin. Premium members reached 24.8 million by the end of the first quarter, up 5% year-over-year. Around 80% are on annual or auto renewal plan.
Our fan charging program also kept growing at a healthy pace. Revenue was up over 50% year-over-year, driven by stronger creator user relationships and users growing willingness to directly support content they love. In April, we published our 2025 ESG report, outlining our continued focus on high-quality content, healthy community development and steady improvements in governance and operations. Given our reach and influence among China’s young generation, we take this responsibility very seriously, and we have maintained our key rating by MSCI, reflecting our consistent approach to long-term sustainable growth. To close, we believe great content and a strong community bring people together. The value we have built is just beginning to show its potential with AI as the accelerator, our community and commercial ecosystems are reinforcing each other more than ever.
We will stay focused on strengthening that flywheel and investing in areas that support long-term growth, taking Bilibili to the next level. We are excited about what is ahead. With that, I will turn the call over to Sam to walk through our financials in more detail. Sam?
Xin Fan: Thank you, Mr. Chen. Hello, everyone. This is Sam. In the interest of time on today’s call, I will review our first quarter highlights. We encourage you to refer to our press release issued earlier today for a closer look at our results. Total revenues for the first quarter was RMB 7.5 billion, up 7% year-over-year. Our total revenues breakdown by revenue stream for Q1 was approximately 39% VAS. 35% advertising, 20% mobile games and 6% from our IP derivatives and other businesses. Our cost of revenues increased by 5% year-over-year to RMB 4.7 billion in the first quarter. While our gross profit rose 9% year-over-year to RMB 2.8 billion. Our gross profit margin reached 37.1% in Q1, up from 36.3% in the same period last year, marking our 15th consecutive quarter of margin expansion.
In the first quarter, we continued to improve monetization efficiency with disciplined spending. Our total operating expenses were up 3% year-over-year to RMB 2.6 billion. Sales and marketing expenses decreased by 1% year-over-year. G&A expenses increased by 3% and R&D expenses increased by 9%, primarily due to expanded AI investments and partially offset by efficient spending control. Our operating profit was RMB 167 million, up over 10x year-over-year. Our adjusted operating profit reached RMB 524 million, and our adjusted operating profit margin reached 7.0% in the first quarter versus 4.9% in the same period a year ago. Net profit was RMB 202 million versus an RMB 11 million net loss in Q1 2025. Our adjusted net profit was RMB 585 million, up 62% year-over-year, and our adjusted net profit margin was 7.8%, improved from 5.2% in the same period a year ago.
As of March 31, 2026, we had cash and cash equivalents, time deposits and short-term investments of RMB 24.2 billion or USD 3.5 billion. In Q1, we repurchased 2.5 million shares for a total cost of USD 60.3 million under our USD 200 million share repurchase program. As of today, we have completed the share repurchase program. purchasing a total of 9.9 million shares. We remain committed to enhancing long-term shareholder return, and our Board is considering renewing the share repurchase program at an appropriate time. Thank you for your attention. We would now like to open the call to your questions. Operator, please go ahead.
Receive real-time insider trading and news alerts
Operator: [Operator Instructions] And we will now take our first question from the line of Lincoln Kong of Goldman Sachs.
Lincoln Kong: [Foreign Language] Congrats on a very solid first quarter results. My question is about the community. So we have seen our user metrics have continued to deliver our stellar performance. So how significant is this AI has been a driver in terms of the user acquisition and engagement duration. Also, what’s our perspective on the strategic role that sort of this AI created assisted creation tools has played with the Bilibili’s content ecosystem?
Rui Chen: [Foreign Language]
Juliet Yang: [Interpreted] What’s really driving our user growth and time spend as the Bilibili’s reach supply as high-quality content and our very unique community experience. AI doesn’t change that fundamental logic, if anything, it’s making our strength even stronger. So from a high-quality content supply perspective, as I mentioned last quarter, AI is bringing greater leverage [Audio Gap] pushing their expression boundaries and [indiscernible] more productive . That’s why you’re seeing during the first quarter that the average daily active content creator and the daily submission grew by 6% and 19% year-over-year, respectively. It’s not just about efficiency. AI is not only helping us to increase supply, but we are seeing is bringing so much quality into our content offering.
For example, in some category, AI is already fundamentally changing how content gets made. For example, in the film industry, [ a reparse of flu food ] to work on shooting in production and postproduction area. But now with the help of AI, we only need one or two very poor production and creativity people, and they can make the equivalent or even better content. And another example would be music in the traditional music industry. It requires a full crew and team to work on music production and now with the help of AI, just one talented content trader can make very high-quality music content. That’s why we’re very delighted to see the in the past, some categories that was very hard and expensive to make now with the help of AI of those talented content creators can make this production very easily.
In our most recent AI creation context, we’re seeing that AIGC videos are very, very impressive in terms of the quality that over this context, we saw over 150 videos each surpassed 1 million views. In summary, we are seeing that AI is bringing so much more quality and quantity into the PUGV side. And another booster is that AI amplifies the power of Bilibili community, in a community like Bilibili, where user love content, know what they want to have high standards that have strong taste, high-quality content is naturally more likely to stand up. We’re seeing AIS making that effect even more stronger. Every month, our user generates more than 17 billion real human interactions on Bilibili. And in the AI era, this kind of human real human feedback and tagging has become even more valuable.
And like I said, those tagging, those feedbacks are from people who know what they want, who has a strong taste and have high desire for high-quality content. So our internally developed model, we are spending a lot of time to making it understand what is high-quality content and identify those high-quality content in a much earlier stage. We are seeing this ability to directly translate on creators followers growth. In the first quarter, the number of content creators with more than 1,000 followers who buy over 30% year-over-year creators set with 10,000; 100,000 and 1 million followers also grew by more than 20% year-over-year. That’s great. Again, more followers. They also make more money in Q1 average income per creator is up 24% year-over-year.
To summarize, AI is making our great content creator, even more powerful. And Bilibili is the home to many of the most creative creators the one who really wanted to express themselves build lasting connection with users. Over the years. We built a very strong creator ecosystem and community culture and AI is really amplifying that effect. And we believe this historical opportunity of AI can bring the opportunity that makes Bilibili 10x more valuable, and we will really invest and seize that opportunity for us.
Operator: We will now take our next question from Daniel Chen of JPMorgan.
Qi Chen: [Foreign Language] So my question is on the advertising revenue. So we see that the ad revenue growth accelerate to 30% year-over-year in the first quarter, which is very strong. I mean we know which industry for the — actually see your expectation? Also, how should we expect the outlook for the second quarter and the full year advertising revenue?
Ni Li: [Foreign Language]
Juliet Yang: [Interpreted] Our advertising revenue reported RMB 2.6 billion in the first quarter, up 30% year-over-year, marking our 13th consecutive quarter of double-digit growth. At the very core, the biggest driver behind our advertising growth is to the value of Bilibili’s community and our users. The average age of our user is about 26.5 years old, which means they are entering a stage of life where both personal spending power and house hold decision-making power arising rapidly. And that is at the kind of high-value user group advertiser are most eager to wait. And what set us apart from platform that’s purely traffic to them is that the value of advertising on Bilibili has never one-off spending instead we run much deeper into users mindshare will help us brands to move from a single one-off impression to repeated continuous touch points and from a single isolated transaction to lasting brent equity.
That is exactly why we saw a continuous growth of our advertising efficiency. During Q1, our brand app, performance app and native ads all delivered a strong double-digit growth. And for certain category even high double-digit growth. And for Q1, our top 5 advertising verticals were an Internet services, digital products and home appliances, e-commerce and automotive. Well, looking ahead into Q2 and onwards, is that we do see a deeper integration of AI into our advertising system, we’ll continue to improve our ad efficiency in the near term. But more importantly, we believe the bigger value will come from the long-term transformation that AI can bring to us. This year, we continue to improve both distribution efficiency and recommendation algorithms.
We have further leveled up our ability to understand user interest purchase intent and our content themselves. By plugging this into our recommendation models, we can now match user content and ads so much more precisely. That’s the reason why you see the strong growth in our advertising revenue in Q1 and this is driving a more accurate mashing capability deliver and a strong CPCVR growth for our performance app in the first quarter. We are also providing advertisers with more automated campaign management and AI-powered creative tools. To help them to improve ad delivery efficiency. In Q1, penetration of our automated ad spending increased to about 85%. And we will continue to see this penetration to further increase into Q1 and for the rest of the year.
On top of that, the AIGC tools are helping advertisers to create the material stuff perfectly by both Bilibili community style and the adoption of AIGC creative continue to increase. At the same time, this AIGC creators are delivering much better ad performances with improved click-through rate generally around double digit better. That summarize how AI is helping us to improve our ad efficiency I will be sharing more information on next quarter and going forward, we believe there is so much more that I can bring into our ad system. And on top of that, we’re also expanding ad inventory across different screens and more user scenarios from the mobile app to our PC, iPad, OTT and in-car streams, and we currently already cover a majority of fast scenarios.
And on different products or ad scenarios, we are also trying new inventories from fleet to search comments and in player ads and mini programs with this covering Bilibili’s user time spent across the major product touch points. This will bring an additional ad inventory and app volume for our business. Well, on top of that as inventory and scenario growth, our strategy across this and ad industry is also very important, and we will continue to deepen our services into different industry verticals by aligning our sales operation, tech capabilities, we can now offer a full stack solution tailored to each specific industry looking into the second half of this year, we expect stronger growth momentum from those high-value categories such as AI technology, automotive, home decoration and appliances, which we believe will continue to lead a very strong growth.
Meanwhile, we will also continue to expand our market share in our core verticals such as games, e-commerce and education. So to summarize, we remain confident in maintaining a very healthy advertising growth for the rest of the year. Thank you.
Operator: We will now take our next question from Yang Liu of Morgan Stanley.
Yang Liu: [Foreign Language] My question is about the game segment. Could management comment on the Three Kingdom NCard’s soft launch performance and what is our expectation for this game? And also another self-developed game, Lumi Master started to pay test this month. What’s the test result? And what is the expectation on launch timing? And another game, Three Kingdom [indiscernible], how to expect this game contribution and could the management comment if there’s any other game pipeline, except for the three games I mentioned before?
Rui Chen: [Foreign Language]
Juliet Yang: [Interpreted] The NCard soft launch performance is generally in line with expectation. We plan to officially launch this game in July this year. This game as one of a kind game and the first of its kind that features a very unique game places in that line hero skills with poker mechanism from the soft launch feedback, our user we find this game play has resonated with young user group quite nicely. Because the statements are very creative and innovative we take the approach to iterate the game as we launch as we collect more user feedback, we believe this is a more sustainable approach to make this game even better. We believe this game has the potential to become a large DAU title that can last for a very long time in this casual category and we believe they have the right elements to get to that.
So we are putting more — a lot of resource and hoping this game will continue to refine its game plan operation by the time it’s ready, we will be launching it to a mass audience. Well, as we mentioned, the NCard, Three Kingdom, I will briefly touch upon the San Guo title. So the San Guo title is a very unique SLG title based on the very authentic Three Kingdom IP by Cao. And this theme has stayed trueto the original Three Kingdom IP experience while introducing so much refreshed 3D visual style. It’s targeting a more mature SLG audiences and have higher taste towards the game’s quality and visual experience. We think San Guo and San Mou really complement each other, but with a differentiated target user group where San Guo is target to the IP fans, who has strong taste and preferences towards better visual quality, where San Guo targets a younger cohort that doesn’t want to spend so much time and money into the SLG title.
That is the reason why after launching San Mou, we choose another to license another title in the Three Kingdom IP. We think these two title has great synergies and really complement each other. We already completed the first round of beta test paid testing at the end of March for San Guo title. And we saw very positive user feedback and we are currently continuing refine and polishing the title and listening closely to user feedback, and we are planning to launch this title within this year. Next, I’ll talk about our self-developed game Lumi Master. For Lumi Master, it is also one of its kind, the very first title that combines tech catching with casual game play. We started a global user testing in early May this year has and that we have received a very encouraging user feedback and we target to — we are targeting a global launch for this title in Q4 this year.
Lastly, I wanted to briefly touch up on Escape from Duckov, which is Bilibili’s self-development title. This year, we broke another record by selling over 4 million copies of this game. As we continue to promote this game on the PC front, we are actually actively working on the console version and the mobile version. Our goal is to continue to enhance the IP and over time, make this game as make this IP Escape from Duckov IP become a well-known franchise for young gamers. Over the past few years, I’ve been sharing our game strategy. I think it summarized two, three points. One as long-term operations. We’ve seen that into our legacy title, FGO and Azur Lane which was celebrating its tenth year anniversary and ninth year anniversary, respectively, this year and San Mou is going to celebrate its second year anniversary very soon.
And going forward for all Bilibili game title, we are targeting a very long-term operation even for consol one-off gains like Escape from Duckov we’re hoping this game will have lasting impact when you continue to generate sales over time. So long-term operation is definitely one of the most most important strategy for our game business. And the second strategy is to become the leader in the segment genre. So first of all, our strategy into game genre is very, very focused we will be deciding a good direction. Our view will dig deep into the genre to be become either the best or the first in this genre, for example, the SLG, the Three Kingdom IP, we’ve launched one game. We have two in the pipeline. And we have more tests coming up potentially in the near future, we will do if we can do universe.
Another example is the console game, the PC copy based game, this is also a direction we believe has very large opportunity and strong user demand and we will be focusing to produce the best or become the first in its own kind. This will be another important strategy for our game business. The last one is we’re creating games for the young generation of gamers. We believe that for all game business that focusing on young user is a must — and as non-generation community hub, we’re the platform that is closest to this young cohort and understanding their desire inventing games to cater to their preference is that is Bilibili’s bread and butter. And by staying close to the young generation, there will always be been opportunities. This is showing on our NCard and our Lumi Master titles.
Fundamentally, we are just creating a new type we are creating here reinventing this title to catering to this generation of gamers that fits their taste the best. So by staying close to the young gamers, we believe this brings us so much more opportunity. So that concludes this question.
Operator: Our next question comes from Xueqing Zhang of CICC.
Xueqing Zhang: [Foreign Language] My question about financials. Last quarter, the company mentioned that it would this investment in [indiscernible] progress achieved so far, when should we expect to see meaningful returns from the AI investments. Also, could you provide some color on the outlook for OpEx and the CapEx related to AI as well as the margin outlook for the second quarter and the full year?
Xin Fan: Thanks, Xueqing. I will take this question. First of all, about the direction of our AI investment. As mentioned by Mr. Chen, we are very focused primarily on key words of Bilibili. We are investing in three main areas: video understanding, video distribution and video creation. We believe this investment will significantly enhance the value of Bilibili content ecosystem and the community and directly benefit all monetization line. In Q1 we have already begun exploring and applying these efforts with the initiative results evidence in our view growth, user time spent growth and advertising revenue growth. We expected positive feedback Lee has just begun and will continue to deliver greater efficiency. Regarding to the CapEx. In Q1, our CapEx increased about 80% year-over-year around RMB 200 million, mainly driven by higher investment in servers and computing resources to support AI improvements.
For the full year, we expect our AI-related CapEx to increase by approximately RMB 1 billion with an impact on P&L of around RMB 500 million. Meanwhile, we will cut certain OpEx expenses to offset part of such impact using our Q1 results as an example. When we see R&D expenses increased by 9% year-over-year, while we still deliver solid bottom line results. Driven by revenue growth and continued operating leverage, our adjusted net profit increased by 62% year-over-year with adjusted net profit margin rising to 7.8%. We expect Q2 advertising revenue to maintain rapid growth with the contribution from our AI initiatives with gross margin steadily improving and the net profit margin has further room to increase. We also maintain our mid- to long-term gross margin target to 45% and operating profit ratio target of 15% to 20% unchanged.
Thank you for this question.
Operator: And that concludes the question-and-answer session. Thank you once again for joining Bilibili’s First 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. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]
Receive real-time insider trading and news alerts