Bilibili Inc. American Depositary Shares 2026 Q2 Earnings Call

Please go ahead. 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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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: 三国：谋定天下 set last year. Sanmo's latest second anniversary season 15 went well with players, ranking number 2 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.

Meanwhile, our legacy titles, including Fate/Grand Order and Azur Lane, continue to deliver stable performance during the quarter. In July, we officially launched our casual card game, N-Card: 三国：百将牌. 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, 闪耀吧！噜咪, 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: 三国志：王道天下, our new licensed SLG title, is scheduled to roll out in Q4, complementing Sanmo with a differentiated gameplay experience.