Bilibili users reach 117m a day as advertising becomes its largest revenue business

Bilibili Inc. delivered another quarter of expanding profitability as second-quarter revenue increased 8% year over year to RMB7.94 billion, or approximately US$1.17 billion, while net profit surged 55% to RMB339.1 million. Advertising emerged as the most important growth engine, climbing 28% to RMB3.13 billion and overtaking value-added services as the company’s largest revenue category, even as mobile gaming revenue declined 14%. Daily active users increased 7% to 116.5 million and average daily time spent reached 113 minutes, driving total user time 14% higher and giving Bilibili a larger inventory of highly engaged attention to monetize. Gross margin improved for the 16th consecutive quarter to 37.2%, while operating profit increased 48%, reinforcing the shift from years of user-acquisition spending toward a more profitable advertising-led business model. Bilibili shares were up about 2.3% at approximately $16.52 during morning trading on August 27 as investors responded positively to the earnings improvement and continued advertising momentum.

The quarter also highlights an important change in what increasingly drives Bilibili’s valuation. The platform was historically evaluated heavily through user growth, gaming releases and its ability to eventually monetize a highly engaged young Chinese audience, but advertising is now proving that monetization case at much greater scale. Management said advertising has delivered at least 20% year-over-year growth for 14 consecutive quarters, while AI is being applied to recommendations, search, advertising placement and content creation to improve both engagement and commercial efficiency.

Advertising becomes Bilibili’s largest revenue stream as sales jump 28% to RMB3.13 billion

Advertising revenue reached RMB3.13 billion during Q2, representing approximately 39% of total company revenue and moving ahead of value-added services for the first time as the largest individual revenue contributor. Value-added services generated RMB2.97 billion, up 5%, while advertising expanded more than five times faster than overall company revenue.

That shift matters because advertising carries attractive incremental economics once the underlying audience and content infrastructure are already in place. Bilibili does not need user growth to match advertising growth if it can show more relevant advertisements, unlock additional inventory and extract greater value from the time existing users already spend on the platform.

The advertiser mix also appears to be broadening. Games, digital products and home appliances, internet services, e-commerce and automobiles were Bilibili’s five largest advertising categories during Q2, while advertising revenue from home decoration, footwear and apparel, and automobiles each increased by more than 60% year over year. The total advertiser base expanded 14%.

Artificial-intelligence companies are providing another source of incremental spending. Management said advertising revenue from the AI sector more than doubled during Q2, while user time spent watching AI-related knowledge content increased 72%, giving Bilibili a useful combination of an AI-interested audience and advertisers attempting to reach that demographic.

Bilibili is simultaneously using AI inside its own advertising system. Management said its combined click-through and conversion metric improved 19% year over year as AI was applied to user profiling, content understanding, creative generation and automated ad placement.

Search is becoming particularly valuable because users searching for products or information typically demonstrate clearer intent than users passively consuming content. Bilibili said search advertising revenue doubled during Q2, while revenue generated from newer advertising scenarios including search, PC, smart TV and watch-page placements increased 50% during the first half.

That expansion gives Bilibili several paths to continue growing advertising without dramatically increasing the number of users. The company can monetize more surfaces, improve conversion rates and capture advertisers from newer sectors, potentially supporting faster advertising growth even if China’s broader consumer environment remains relatively weak.

User engagement reaches 113 minutes a day as Bilibili strengthens its attention advantage

Average daily active users increased to 116.5 million from approximately 109 million a year earlier, while monthly active users reached 371 million. Average daily time spent increased to 113 minutes from 105 minutes, pushing total time spent across the platform more than 14% higher.

The combination of user growth and rising time spent is more valuable commercially than either metric individually. More users create additional advertising inventory, while longer sessions increase the number of opportunities to expose those users to advertisements, premium services, gaming content and other monetized experiences.

Bilibili’s engagement profile also distinguishes it from platforms built primarily around very short-form consumption. Watch time for videos longer than five minutes increased 18% year over year during Q2, while average daily consumption of video podcasts recently surpassed 100 million minutes.

Several content categories continue expanding rapidly as Bilibili’s original Gen Z audience moves into different stages of life. General entertainment viewing increased 35%, baby and maternity content grew 36%, gaming-related viewing rose 20% and music watch time increased 24%.

That demographic evolution could be important to Bilibili’s advertising economics. Management said the average user is now about 26.5 years old, meaning many of the users who joined the platform as students are entering higher-income years with greater spending power across automobiles, home furnishings, consumer electronics and family-related categories.

Creator activity is growing alongside consumption. Daily video submissions increased 28% year over year, while the number of creators with more than 1,000 followers rose approximately 30%, indicating that Bilibili’s content supply is continuing to expand without requiring the company to produce most of that material itself.

A larger creator ecosystem can reinforce the platform’s network effects because additional content attracts users, increased users make the platform more attractive to creators and advertisers, and stronger monetization gives Bilibili more resources to improve recommendation and creation tools.

Gross margin improves for a 16th straight quarter as operating profit rises 48%

Bilibili’s gross profit increased 10% to RMB2.95 billion while revenue grew 8%, pushing gross margin to 37.2% from 36.5%. Management said the result represented the company’s 16th consecutive quarter of year-over-year gross-margin improvement.

Operating leverage was even stronger below gross profit. Operating expenses increased 7% to RMB2.58 billion, allowing operating profit to rise 48% to RMB372.9 million from RMB251.6 million a year earlier.

Sales and marketing expenses increased only 1% to RMB1.06 billion and general and administrative expenses were essentially unchanged at RMB510.8 million. Those relatively restrained increases helped offset a 16% rise in research and development spending to RMB1.01 billion, which management attributed primarily to higher server depreciation.

The higher R&D spending is particularly notable because Bilibili is increasing AI investment while continuing to expand profitability. Management has emphasized that its AI spending will remain closely connected to the core video business, concentrating on video understanding, distribution and creation rather than attempting to compete across every part of the AI technology stack.

That approach provides a clearer path toward measurable financial returns. Better video understanding can improve recommendation quality, stronger recommendations can increase time spent, and more accurate understanding of user interests can simultaneously improve advertising targeting and conversion.

Adjusted net profit increased 25% to RMB703.6 million, while adjusted net profit margin expanded to 8.9% from 7.6%. GAAP net margin improved even faster, reaching 4.3% compared with 3.0% a year earlier.

Management continues to target gross margin of 40% to 45% and an operating margin of approximately 15% to 20% over the medium to long term. Reaching those levels would require substantially more operating leverage from the current base, but the 16-quarter gross-margin improvement provides evidence that the business is moving consistently in that direction.

Mobile gaming falls 14% but a five-title pipeline could restore growth beginning in Q4

Mobile gaming remains the major weakness in the Q2 revenue mix. Revenue declined 14% to RMB1.39 billion, primarily because San Guo: Mou Ding Tian Xia faced a difficult comparison with its unusually strong performance during the prior-year quarter.

The game remains commercially relevant rather than collapsing, with its second-anniversary season reaching the No. 2 position on China’s iOS top-grossing chart. Older titles including Fate/Grand Order and Azur Lane also continued generating stable revenue, providing a recurring base beneath newer releases.

Bilibili expects the gaming comparison to improve materially later this year. Management said five new titles are scheduled for launch beginning in Q4 and continuing into 2027, and it expects gaming revenue to return to year-over-year growth starting during the fourth quarter.

One of the more immediate catalysts is the planned September 17 global launch of the internally developed simulation game Lumimaster following positive testing. Bilibili has also launched the casual card title Encard and is refining customer acquisition around retention and return on investment rather than simply maximizing initial downloads.

Gaming growth would meaningfully improve the revenue mix because the current company-level growth rate is being achieved despite the 14% decline in one of Bilibili’s historically important businesses. If games return to positive growth while advertising maintains a strong double-digit pace, consolidated revenue could accelerate without requiring a major change in user growth.

The principal risk is the inherent volatility of hit-driven gaming. A strong pipeline does not guarantee commercial success, and regulatory approvals, player retention and competition can materially affect the lifetime economics of individual titles.

RMB24.3 billion liquidity and $300 million buyback give Bilibili room to invest while returning capital

Bilibili finished June with RMB24.30 billion, approximately US$3.58 billion, in cash, cash equivalents, time deposits and short-term investments. That liquidity provides considerable flexibility to fund AI infrastructure, content, game development and product expansion while preserving a buffer against China’s uncertain consumer environment.

The company is increasingly pairing that investment with shareholder returns. Bilibili’s board approved a new two-year US$300 million share-repurchase program in June, and 1.9 million listed securities had already been purchased for approximately US$31.3 million by quarter-end.

Across the new program and its previous authorization, Bilibili had repurchased 5.8 million listed securities for approximately US$118 million from the beginning of 2026 through August 27. Management said it intends to remain disciplined with investment while continuing to use repurchases to return value to shareholders.

The buyback is particularly relevant after Bilibili’s substantial share-price decline from earlier highs. Even with the approximately 2.3% earnings-day gain to around $16.52 during morning trading, the shares remained more than 30% lower for 2026, leaving a significant gap between improving operating performance and recent investor sentiment.

Whether that gap closes will depend increasingly on earnings rather than user numbers alone. Bilibili has already demonstrated that its audience can be monetized more effectively, but investors will want advertising growth to remain durable as comparisons become harder and China’s economic environment stays challenging.

The potential next leg is clearer than it was a year ago. If advertising remains above company-wide growth, gaming returns to expansion in Q4 and gross margins continue moving toward management’s 40% to 45% target, Bilibili could produce considerably faster profit growth than revenue growth for an extended period.

Key takeaways from Bilibili’s Q2 advertising growth, profit expansion and user engagement

• Q2 revenue increased 8% to RMB7.94 billion, while net profit jumped 55% to RMB339.1 million as stronger monetization drove faster earnings growth.
• Advertising revenue surged 28% to RMB3.13 billion, becoming Bilibili’s largest revenue category and strengthening the platform’s shift toward higher-margin monetization.
• Daily active users increased 7% to 116.5 million, while average daily time spent reached 113 minutes and total user time grew more than 14%.
• Gross margin reached 37.2%, marking a 16th consecutive quarter of improvement and moving Bilibili closer to its longer-term 40% to 45% target.
• Operating profit rose 48% to RMB372.9 million as sales and marketing spending increased only 1% and administrative expenses remained broadly flat.
• AI advertising revenue more than doubled, while search advertising revenue also doubled, creating new monetization opportunities beyond conventional feed-based advertisements.
• Mobile gaming revenue fell 14% to RMB1.39 billion, making games the main drag on growth despite continued strength in advertising and subscriptions.
• Management expects gaming revenue to return to year-over-year growth in Q4 as five new titles enter the launch pipeline through late 2026 and 2027.
• Bilibili held RMB24.3 billion of cash and short-term investments and has authorized a US$300 million buyback, providing flexibility for both AI investment and capital returns.
• BILI shares rose about 2% after the results, with future rerating increasingly dependent on sustaining advertising growth, gaming recovery and continued margin expansion.