Bilibili Inc. Q2 FY2025 earnings call

• Maintained strong momentum in Q2 with total net revenues growing 20% y-o-y to RMB 7.3 billion, driven by Core Games and Advertising. Games revenues up 60% y-o-y, Advertising up 20% y-o-y. - DAU reached 109 million, MAU 363 million, MPU 31 million, average daily time spent 105 minutes. - AI integration boosted advertising efficiency, with upgrades to AIGC tools helping advertisers generate creative. - Games business saw 60% y-o-y revenue growth due to San Mou and evergreen titles. - VAS revenues grew 11% y-o-y, driven by live broadcasting, premium memberships, etc. - Gross margin expanded to 36.5%, operating profit RMB 252 million, adjusted net profit RMB 561 million. - Executed share repurchase program, repurchasing shares and canceling them.

Total net revenues for the second quarter grew by 20% year-over-year to RMB 7.3 billion. Games revenues rose 60% year-over-year to RMB 1.6 billion. Advertising revenues increased 20% year-over-year to RMB 2.4 billion. VAS revenues grew 11% year-over-year to RMB 2.8 billion. Revenue breakdown for Q2 was approximately 39% from VAS, 33% from advertising, 22% from games, and 6% from IP derivatives and other businesses. Gross profit rose 46% year-over-year to RMB 2.7 billion, with gross margin expanding to 36.5% from 29.9% in the same period last year.

• Gross margin expected to continue improving, reaching around 37% by Q4. - Midterm target for operating margin is 15%-20%. - Share repurchase program ongoing with about USD 84 million available for future buybacks as of June 30, 2025.

Q: My question is on the game business. Can management share any color on the recently concluded San Mou first anniversary season 8. How should we think about the second half trend for San Mou as well as for next year? And on your new game pipeline, what are the key games that you would like to highlight?

A: San Mou's first anniversary season 8 had strong performance. San Mou is expected to be a long-lasting title with new monetization tools. Focus on retaining and activating old users. Plan to launch traditional Chinese version in end 2025/early 2026 to HK, Macau, Taiwan, and explore overseas markets. Pipeline includes 4-5 games waiting for licensing approval, including a casual game based on [non-fangu] IP.

Q: My question is about our profit margin. We have seen our group profit margin continued to trend high. So what are the potential areas of our cost efficiency and the cost discipline going forward? How should we think about the second half in terms of profitability outlook? And any time line to achieve our media targets, they are 15% above our operating margin. And in terms of use of the cash, so what are the future areas of capital allocation? How should we think about our shareholder return policy?

A: In Q2, top line grew 20%, gross profit up 46%. Gross margin expected to reach ~37% by Q4. OpEx efficiency improved, expecting OpEx decline in H2. Target 15%-20% Op margin. Share repurchase ongoing, USD 83 million remains available for buybacks under the USD 200 million program.

Q: So my question is on AI. Can you discuss what kind of AI application we have on platform? And what is the latest progress?

A: AI is applied across multiple scenarios. Helps in advertising with AIGC cover title generation improving click-through rate. Assists in content identification and promotion via user comments. Working on AI-assisted content creation for mid-to longer-form video, and virtual companionship. AI helps in early identification of high-quality content and amplifying it across platforms.