Key Takeaways:
Bilibili reported Q2 revenue of RMB 7.9 billion, up 8% year over year, with net profit jumping 55% to RMB 339 million.
"The community and top-line growth remained healthy during the quarter," Rui Chen, chairman and chief executive officer at Bilibili, said.
Advertising revenue climbed 28% to RMB 3.1 billion, representing about 39% of total revenue and making it the company's largest revenue contributor. Gross margin expanded to 37.2% from 36.5%, the 16th consecutive quarter of improvement, according to Chief Financial Officer Sam Fan. Mobile games revenue fell 14% to RMB 1.4 billion on a high comparison base from the prior year's Sanmo title.
The shift toward advertising gives Bilibili a higher-margin growth engine as it invests in AI tools for content creation, recommendation and ad matching. Management expects gaming revenue to resume year-over-year growth in the fourth quarter as new titles including Lumi Master and Sanwang launch.
Adjusted net profit rose 25% to RMB 704 million, producing an adjusted net profit margin of 8.9% compared with 7.8% a year earlier. Operating profit climbed 48% to RMB 373 million. Daily active users increased 7% to 117 million, while monthly active users reached 371 million. Average daily time spent rose to 113 minutes from 105 minutes, lifting total time spent by more than 14%.
Watch time for videos longer than five minutes rose 18% year over year, with gaming content up 20% and general entertainment up 35%. Daily video submissions increased 28%, while the number of creators with more than 1,000 followers rose 30% and average creator income increased 21%.
The company's AI-driven advertising capabilities improved click-through conversion rate by 19% year over year. Search advertising revenue doubled, while new ad inventory across in-app search, watch pages, smart TVs, PCs and mini-programs generated revenue growth of more than 50% in the first half, Chief Operating Officer Carly Li said.
Research and development expense increased 16% year over year, driven by AI investment. Bilibili completed roughly 70% to 80% of its RMB 1 billion AI-related capital expenditure plan during the first half, Fan said, with the full-year effect on R&D expenses expected at RMB 500 million. The company's medium- to long-term targets remain gross margin of 40% to 45% and operating margin of approximately 15% to 20%.
Bilibili held RMB 24.3 billion in cash and short-term investments as of June 30. The board approved a new two-year, $300 million share repurchase program in June, under which the company had repurchased 1.9 million shares for $31 million by June 30.
The results show Bilibili's advertising-led model gaining traction even as China's consumer environment pressures other revenue lines. Investors will watch the fourth-quarter gaming pipeline, including the global launch of Lumi Master on Sept. 17 and the release of Sanwang, for the next leg of growth.
This article is for informational purposes only and does not constitute investment advice.
