Bilibili Inc. Q1 FY2026 earnings call

Community and User Engagement

• Core user metrics delivered strong organic growth: Quarterly Average Active Users (CAUs) grew 8% YoY to 115 million, Monthly Active Users (MAUs) reached 376 million, and average daily user time spent hit a new high of 119 minutes (up 11 minutes YoY), driving a 19% total increase in aggregate user time spent.
• 291 million official members maintained an 80% 12-month retention rate, with over 17 billion organic monthly user interactions providing high-quality, authentic human preference data that is valuable for AI development.

Content Ecosystem and AI Integration

• Bilibili's content ecosystem grew across all core categories: Watch time for games grew 27% YoY, Chinese anime grew 20% YoY, knowledge-based content (including AI-related topics) grew 20% YoY, music grew 25% YoY (driven by AIGC content), and parenting/early education and outdoor categories both grew over 50% YoY.
• AI-powered creation tools amplified content supply: Daily active creators grew 6% YoY, daily content submissions grew 19% YoY, and the number of creators with over 1,000 followers grew over 30% YoY. Creators across all follower tiers (10k, 100k, 1M+) all grew over 20% YoY, and average creator income rose 24% YoY, creating a virtuous cycle for the creator ecosystem.
• Management focused AI investments on three core areas: video understanding, content recommendation, and creator tools, reinforcing rather than changing Bilibili's core community strengths.

Commercialization Progress

• Advertising: Top 5 verticals were games, internet services, digital products/home appliances, e-commerce, and automotive. AI advertiser budgets surged over 170% YoY, ad spending on home decoration jumped over 130% YoY, and ad revenue from PC/OTT platforms grew over 50% YoY, while new ad scenarios (search, mini programs) more than doubled. AI optimization drove a 25% YoY increase in click-to-conversion rate for performance ads, and AIGC ad creatives delivered roughly double the click-through rate of traditional creatives.
• Games: Evergreen titles FGO and Azure Lane remained stable, providing a solid revenue base. Three new titles are in the pipeline: NCard (San Guo by Jiang Hai) soft-launched in April with positive feedback and is scheduled for an official launch in July 2026; the SLG title San Wang (Three Kingdoms: Wang Dao Tian Xia) completed initial testing in March with encouraging feedback and is scheduled for launch in late 2026; self-developed simulation game LumiMaster entered paid testing in May 2026 with positive reception and is scheduled for a global launch in Q4 2026. Escape from SOCOP has sold over 4 million copies, with console and mobile versions in development.

Financial and ESG

• Bilibili maintained disciplined capital spending, with AI investments driving operational efficiencies that supported margin expansion. It completed its $200 million share repurchase program, repurchasing a total of 9.9 million shares, and the board is considering renewing the program. Bilibili retained its MSCI ESG A rating, reflecting its commitment to sustainable long-term growth.

Total company revenue in Q1 2026 grew 7% year-over-year (YoY) to RMB 7.5 billion, with a gross profit of RMB 2.8 billion (up 9% YoY) and a gross margin of 37.1%, marking the 15th consecutive quarter of margin expansion. Operating profit reached RMB 167 million, over 10 times higher than the prior-year period; on a non-GAAP basis, adjusted net profit grew 62% YoY to RMB 585 million, with an adjusted net profit margin of 7.8%. By segment:

1. Value Added Services (VAS): Revenue grew 4% YoY to RMB 2.9 billion, contributing 39% of total revenue. Premium membership reached 24.8 million (up 5% YoY), and revenue from the fan charging program grew over 50% YoY.
2. Advertising: Revenue grew 30% YoY to RMB 2.6 billion, contributing 35% of total revenue. It marked the 13th consecutive quarter of double-digit revenue growth.
3. Mobile Games: Revenue was RMB 1.5 billion, down 12% YoY and flat quarter-over-quarter, contributing 20% of total revenue. The YoY decline was driven by a high base effect from major launches in the prior-year period.
4. IP Derivatives and Other: Contributed the remaining 6% of total revenue.

• Advertising: Management expects to maintain healthy advertising growth for the full year 2026, with stronger momentum expected from high-value categories including AI technology, automotive, home decoration, and home appliances in the second half of the year, alongside continued market share expansion in core verticals such as games, e-commerce, and education.
• Games: Three new major titles are scheduled to launch between Q3 and Q4 2026, with management targeting a balanced, diversified game portfolio and long-term sustainable growth for the segment.
• AI Investment and Capital Expenditure: Full-year 2026 AI-related capital expenditure is expected to increase by approximately RMB 1 billion, with an estimated impact on depreciation and amortization of around RMB 500 million; partially offset by cost cuts to other operating expenses.
• Profitability and Margin: Q2 2026 is expected to see continued rapid advertising revenue growth driven by AI initiatives, steady gross margin improvement, and further expansion of net profit margin. Bilibili maintained its mid-to-long term targets: 45% gross margin and 15-20% operating profit margin, with no changes to these targets.
• The board of directors is considering renewing the share repurchase program at an appropriate time to continue delivering long-term shareholder returns.

Management noted that forward-looking statements are inherently uncertain, and actual results could differ materially from expectations due to unstated risks and uncertainties referenced in Bilibili's regulatory filings with the SEC and Hong Kong Stock Exchange. No additional material risks or ongoing operational failures were explicitly discussed on the call.

Q: How significant has AI been for driving user acquisition, engagement, and what strategic role does AI-assisted creation play in Bilibili's content ecosystem? / A: Core user growth and engagement remain driven by Bilibili's unique high-quality content and community experience, with AI acting as an amplifier rather than changing this underlying dynamic. AI increases both the quantity and quality of PUGV content by lowering creation barriers, allowing small teams of creators to produce content that previously required large crews. It also leverages Bilibili's 17 billion monthly organic user interactions as high-quality training data to improve content discovery, leading to faster follower growth for creators and a 24% YoY increase in average creator income in Q1. Management views AI as a 10x growth opportunity that amplifies Bilibili's existing competitive strengths in creator and community ecosystems.

Q: Which industries and ad products outperformed expectations in Q1, and what is the outlook for advertising in Q2 and full year 2026? / A: Advertising growth is fundamentally driven by Bilibili's high-value 26.5-year-old average user base, which is entering a period of rapidly rising spending power. In Q1, all core ad formats delivered strong double-digit growth, with AI-related internet services ad spending up 170% YoY and home decoration ad spending up 130% YoY, both outperforming expectations. AI is driving continued efficiency gains, with automated ad penetration reaching 85% in Q1 and AIGC creatives delivering roughly double the CTR of traditional creatives. Management remains confident in continued healthy advertising growth for the full year, with stronger momentum expected from high-value verticals in H2 2026.

Q: What is the performance of recently soft-launched and tested new games, what are launch timelines, and what is Bilibili's core game strategy? / A: NCard (Three Kingdoms) soft launch performance met expectations, with its unique poker-based gameplay resonating well with young users, and an official launch is scheduled for July 2026. San Wang (Three Kingdoms SLG) completed initial testing with positive feedback, targeting mature SLG players and complementing Bilibili's existing Sunmo Three Kingdoms title, with a full launch planned for 2026. LumiMaster paid testing has received encouraging feedback, with a global launch scheduled for Q4 2026. Bilibili's core game strategy is three-fold: long-term operation of all titles, focusing on becoming the leader in targeted genres, and building innovative games tailored to the preferences of young users, leveraging Bilibili's position as a leading young gamer community.

Q: What progress has been made on AI investments so far, when can returns be expected, and what is the margin outlook for 2026? / A: Bilibili focused AI investments on three core areas: video understanding, distribution, and creation, with positive initial results already visible in Q1 user growth, engagement, and advertising growth. Q1 AI-related CapEx increased ~80% YoY (~RMB 200 million), with full-year AI CapEx expected to increase by ~RMB 1 billion, partially offset by other OPEX cuts. Q2 is expected to see continued rapid advertising growth, steady gross margin improvement, and further net profit margin expansion. Bilibili maintained its mid-to-long term targets of 45% gross margin and 15-20% operating profit margin with no changes.