Prepared remarks
Good day, and welcome to Bilibili's First Quarter 2026 Financial Results and Business Update Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Juliet Yang, Executive Director of Investor Relations. Please go ahead.
Thank you, operator. During this call, we'll 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 filings with the SEC and Hong Kong Stock Exchange. The non-GAAP financial measure provided are for comparison purposes 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. Ni Li, Vice Chairwoman of the Board and Chief Operating Officer; and Mr. Xin Fan, Chief Financial Officer. I will now turn the call to Mr. Chen.
Thank you, Juliet, and thank you to everyone joining us today. 2026 is off to a great start for Bilibili. In the first quarter, we kept up the momentum from last year, delivering solid growth across our community, commercialization and profitability. Let's start with the community. High-quality content and authentic experience continued to drive organic growth and deepen user engagement. In Q1, DAUs grew 8% year-over-year to 115 million and MAUs increased to 376 million. Average daily time spent reached a new high of 119 minutes, up 11 minutes year-over-year, which led to a 19% surge in total user time spent. We see this level of engagement as a powerful engine for our commercial business. In the first quarter, we delivered robust advertising revenue growth of 30% year-over-year, further accelerating from 2025. Meanwhile, MPUs increased by 7% year-over-year to 34.4 million as more users directly pay for content and services they truly care about on our platform. This commercial momentum led to a strong financial performance. Total revenues grew 7% year-over-year to RMB 7.5 billion. Gross profit was up 9% year-over-year and gross margin reached 37.1%, marking our 15th consecutive quarter of margin expansion, thanks to our top-line growth and increased operating leverage. Our operating profit was over 10x what it was a year ago. On a non-GAAP basis, net profit grew by 62% year-over-year with our adjusted net profit margin expanding to 7.8%. To us, this set of results confirms the fundamental shift in user behavior. In a world full of quick hits, more users are choosing to spend more time on quality content. That is exactly what Bilibili stands for, and it will continue to drive our growth. With our average user now around 26.5 years old, our cohort is starting to spend more and spend better. As their needs evolve, we are staying close to them, offering the products and experiences they care about most. The content ecosystem we have built remains our most durable asset. Today, we are using AI to make this ecosystem even more powerful. We are focusing our investments on three key areas: how we understand videos, how we recommend them and how we help creators build them. Ultimately, we are not just evolving with AI, we are using it to reinforce the very thing that makes Bilibili unique. Having said that, we remain very disciplined with our capital. Although AI requires an upfront investment, the returns in engagement and monetization are already tangible. At the same time, AI is driving meaningful efficiencies across our operations, which is directly supporting our margin expansion. By combining the heart of our community with the power of our technology, we are creating lasting value for our users and shareholders. With that, let me walk you through our core pillars of content, community and commercialization. Starting with content and community. As content options multiply, users are becoming even more selective. They are coming to Bilibili for high-quality PUGV content and a unique community experience that they cannot find anywhere else. Across our content categories, ACG remains our cultural anchor. In the first quarter, watch time for games and Chinese anime grew 27% and 20% year-over-year, respectively, proving our enduring appeal to the younger generation. Beyond our ACG legacy, knowledge-based content, including AI-related information, grew 20% year-over-year as users turn to us for deeper insights. Music categories also saw robust growth with a 25% year-over-year increase in time spent, largely driven by AIGC music. Consumption-related categories kept rising with watch time for parenting and early education and outdoor-related categories surging by more than 50% year-over-year. The breadth of our content library is only one part of the story. Our deeper competitive moat lies in the humanity of the community. Every month, our users generate over 17 billion real human interactions. In an AI-driven world, they are the most authentic human signals available. While high-quality data is becoming a global scarcity, our hundreds of billions of organic interactions provide us with the gold standard for understanding true human preferences. This profound insight is what fuels our engagement and loyalty. In the first quarter, total user time spent rose 19% year-over-year and 291 million official members maintained an 80% 12-month retention rate. Meanwhile, we continue to see AI as an amplifier for our ecosystem's flywheel. On the supply side, the unique creative spirit of our community has found new momentum through the AI-powered tools that scale creativity across the platform. By lowering the barriers to entry and boosting productivity, we have seen a significant influx of creators and content. In Q1, the number of daily active creators and daily submissions grew by 6% and 19% year-over-year, respectively. But this isn't just a game of volume. With AI assisting the creative process, more talent is producing high-quality breakout content right out of the gate. Our recent AI creation contest is a perfect example. We attracted the most talented creators to join our platform, creating nearly 150 breakout works with over 1 million views each. By deepening our comprehension of both content and user behavior, we've made content discovery more efficient, directly accelerating growth for our creators. In the first quarter, the number of creators with over 1,000 followers grew by more than 30% year-over-year and those with 10,000, 100,000 and 1 million or more followers each grew over 20%. Naturally, as their audiences grow, earnings follow; average income per creator rose 24% this quarter, creating a powerful virtuous cycle. Now let us take a closer look at our commercial businesses and their progress. First, our advertising business once again delivered standout results in Q1. Revenues grew 30% year-over-year, reaching RMB 2.6 billion. This ongoing acceleration reflects the value of our community that we continue to unlock and how we are turning user engagement into real results for advertisers. In Q1, our top 5 ad verticals were games, Internet services, digital products and home appliances, e-commerce and automotive. Game apps delivered strong incremental revenue growth this quarter. In the Internet services sector, AI advertisers kept scaling with ad budgets surging over 170% year-over-year. At the same time, our maturing user base is also capturing more advertisers' budgets. Ad revenues from digital products, home appliances and automotive all grew over 30% year-over-year in Q1. Home decoration was a particular standout with ad spending jumping more than 130% year-over-year. Using AI to improve efficiency and drive ad business is a core priority this year. By integrating AI more deeply into our algorithm, we've gained much sharper insights into user interest and long-term patterns. This clarity has meaningfully optimized how we match users with ads, resulting in a 25% year-over-year increase in CTCVR of performance-based ads this quarter. Furthermore, our AIGC tools are streamlining creative production and crafting ads that resonate with users, helping advertisers connect with our community more effectively and drive higher click-through rates. We are also unlocking growth across diverse platforms and touch points. In the first quarter, ad revenues from PC and OTT platforms grew by over 50% year-over-year, while new scenarios like search and mini programs more than doubled. We're exploring new integrated formats within the video player, finding new ways to turn user time into commercial value. With expanding traffic, diverse new scenarios and continuous efficiency gains, we remain confident in the sustained momentum of our ad business. Now turning to our games business. Game revenues were RMB 1.5 billion, down 12% year-over-year and flat quarter-over-quarter. The year-over-year decline was mainly due to the high base set by San Guo: Mou Ding Tian Xia in the same period last year. While the latest seasons of San Guo performed steadily quarter-over-quarter, we're focused on the game's long-term life cycle, keeping the experience balanced and the IP strong. Meanwhile, our evergreen titles, FGO and Azur Lane, remain stable and continue to provide a solid revenue base. In 2026, we're building on San Guo's success and expanding our presence in the Three Kingdoms IP. In April, we soft-launched NCard, San Guo: Bai Jiang Pai, a lighter casual card game that has received positive feedback on its core gameplay. We're iterating the product and optimizing user acquisition as we prepare for its official launch this July. Meanwhile, our new SLG title, San Guo: Mou Ding Tian Xia, began initial testing in late March, built on the original San Yue Yu A Gou IP with enhanced 3D visuals. San Guo targets a differentiated group of SLG fans and complements San Mou; early user feedback was encouraging, and we plan to roll the game out late this year. Beyond NCard and San Guo, our self-developed simulation game, Lumi Master (Caoba), entered its paid testing in May. It has been well received for its cozy art style and accessible gameplay, and we plan to bring it to global gamers in Q4 this year. Our jointly operated pipeline for the coming quarters is also expanding into more genres, giving us broader player coverage and a more balanced portfolio. Turning to our VAS business. VAS revenue grew by 4% year-over-year to RMB 2.9 billion in Q1. We kept refining our live broadcasting operations, delivering a stable performance with improved gross margin. Premium members reached 24.8 million by the end of the first quarter, up 5% year-over-year. Around 80% are on annual or auto-renewal plans. Our fan charging program also kept growing at a healthy pace. Revenue was up over 50% year-over-year, driven by stronger creator-user relationships and users' growing willingness to directly support content they love. In April, we published our 2025 ESG report, outlining our continued focus on high-quality content, healthy community development and steady improvements in governance and operations. Given our reach and influence among China's young generation, we take this responsibility very seriously, and we have maintained our key rating by MSCI, reflecting our consistent approach to long-term sustainable growth. To close, we believe great content and a strong community bring people together. The value we have built is just beginning to show its potential with AI as the accelerator; our community and commercial ecosystems are reinforcing each other more than ever. We will stay focused on strengthening that flywheel and investing in areas that support long-term growth, taking Bilibili to the next level. We are excited about what is ahead. With that, I will turn the call over to Sam to walk through our financials in more detail. Sam?
Thank you, Mr. Chen. Hello, everyone. This is Sam. In the interest of time on today's call, I will review our first quarter highlights. We encourage you to refer to our press release issued earlier today for a closer look at our results. Total revenues for the first quarter were RMB 7.5 billion, up 7% year-over-year. Our total revenues breakdown by revenue stream for Q1 was approximately 39% VAS, 35% advertising, 20% mobile games and 6% from our IP derivatives and other businesses. Our cost of revenues increased by 5% year-over-year to RMB 4.7 billion in the first quarter, while our gross profit rose 9% year-over-year to RMB 2.8 billion. Our gross profit margin reached 37.1% in Q1, up from 36.3% in the same period last year, marking our 15th consecutive quarter of margin expansion. In the first quarter, we continued to improve monetization efficiency with disciplined spending. Our total operating expenses were up 3% year-over-year to RMB 2.6 billion. Sales and marketing expenses decreased by 1% year-over-year. G&A expenses increased by 3% and R&D expenses increased by 9%, primarily due to expanded AI investments and partially offset by efficient spending control. Our operating profit was RMB 167 million, up over 10x year-over-year. Our adjusted operating profit reached RMB 524 million, and our adjusted operating profit margin reached 7.0% in the first quarter versus 4.9% in the same period a year ago. Net profit was RMB 202 million versus an RMB 11 million net loss in Q1 2025. Our adjusted net profit was RMB 585 million, up 62% year-over-year, and our adjusted net profit margin was 7.8%, improved from 5.2% in the same period a year ago. As of March 31, 2026, we had cash and cash equivalents, time deposits and short-term investments of RMB 24.2 billion or USD 3.5 billion. In Q1, we repurchased 2.5 million shares for a total cost of USD 60.3 million under our USD 200 million share repurchase program. As of today, we have completed the share repurchase program, purchasing a total of 9.9 million shares. We remain committed to enhancing long-term shareholder return, and our Board is considering renewing the share repurchase program at an appropriate time. Thank you for your attention. We would now like to open the call to your questions. Operator, please go ahead.
Questions and answers
And we will now take our first question from the line of Lincoln Kong of Goldman Sachs.
Congratulations on a very solid first-quarter result. My question is about the community. We've seen your user metrics continue to deliver stellar performance. How significant has AI been as a driver of user acquisition and engagement duration? Also, what is your perspective on the strategic role that AI-assisted creation tools have played within Bilibili's content ecosystem?
Spoken in a foreign language
What's really driving our user growth and time spent is Bilibili's rich supply of high-quality content and our very unique community experience. AI doesn't change that fundamental logic; if anything, it's making our strength even stronger. From a high-quality content supply perspective, as I mentioned last quarter, AI is bringing greater leverage, pushing creators' expression boundaries and making them more productive. That's why you're seeing during the first quarter that the average daily active content creators and the daily submissions grew by 6% and 19% year-over-year, respectively. It's not just about efficiency. AI is not only helping us to increase supply, but it is also bringing significant quality into our content offering. For example, in some categories, AI is already fundamentally changing how content gets made. In the film industry, traditionally a large crew would work on production and post-production. But now with the help of AI, we only need one or two core production and creative people, and they can make equivalent or even better content. Another example would be music. In the traditional music industry, it requires a full crew and team to work on music production, and now with the help of AI, just one talented content creator can make very high-quality music content. That's why we're very delighted to see that in the past some categories that were very hard and expensive to make can now be produced easily by these talented content creators with AI. In our most recent AI creation contest, we're seeing that AIGC videos are very, very impressive in terms of quality — over the contest, we saw more than 150 videos each surpass 1 million views. In summary, we are seeing that AI is bringing so much more quality and quantity into the PUGV side. Another booster is that AI amplifies the power of the Bilibili community. In a community like Bilibili, where users love content, know what they want, have high standards and strong taste, high-quality content is naturally more likely to stand out. We're seeing AI making that effect even stronger. Every month, our users generate more than 17 billion real human interactions on Bilibili. In the AI era, this kind of real human feedback and tagging has become even more valuable. Those tags and feedback are from people who know what they want, who have a strong taste and who have a high desire for high-quality content. Our internally developed models, we are spending a lot of time making them understand what high-quality content is and identify those high-quality pieces at a much earlier stage. We are seeing this ability directly translate into creators' follower growth. In the first quarter, the number of content creators with more than 1,000 followers rose over 30% year-over-year; creators with 10,000, 100,000 and 1 million followers also grew by more than 20% year-over-year. That's great. Again, more followers also lead to more income: in Q1 average income per creator is up 24% year-over-year. To summarize, AI is making our great creators even more powerful. Bilibili is home to many of the most creative creators — the ones who really want to express themselves and build lasting connections with users. Over the years we built a very strong creator ecosystem and community culture, and AI is really amplifying that effect. We believe this historical opportunity of AI can bring the opportunity that makes Bilibili many times more valuable, and we will invest to seize that opportunity.
We will now take our next question from Daniel Chen of JPMorgan.
My question is about advertising revenue. We see that ad revenue growth accelerated to 30% year-over-year in the first quarter, which is very strong. Which industries are driving this strength? Also, how should we expect the outlook for second quarter and the full year advertising revenue?
Foreign Language
Our advertising revenue was RMB 2.6 billion in the first quarter, up 30% year-over-year, marking our 13th consecutive quarter of double-digit growth. At the very core, the biggest driver behind our advertising growth is the value of Bilibili's community and our users. The average age of our user is about 26.5 years old, which means they are entering a stage of life where both personal spending power and household decision-making power are rising rapidly. That is the kind of high-value user group advertisers are most eager to reach. What sets us apart from platforms that are purely traffic-driven is that advertising on Bilibili is not a one-off; we deliver much deeper mindshare for brands, helping them move from a single impression to repeated continuous touch points and from a single isolated transaction to lasting brand equity. That is exactly why we saw continuous improvement in our advertising efficiency. During Q1, our brand ads, performance ads and native ads all delivered strong double-digit growth. And for certain categories, even high double-digit growth. For Q1, our top 5 advertising verticals were games, Internet services, digital products and home appliances, e-commerce and automotive. Looking ahead into Q2 and onwards, we see a deeper integration of AI into our advertising system, and we'll continue to improve our ad efficiency in the near term. More importantly, we believe the bigger value will come from the long-term transformation that AI can bring. This year, we continue to improve both distribution efficiency and recommendation algorithms. We have further leveled up our ability to understand user interest, purchase intent and the content themselves. By plugging this into our recommendation models, we can now match user content and ads much more precisely. That's the reason why you see the strong growth in our advertising revenue in Q1 and why this is driving more accurate matching capability and a strong CTCVR growth for our performance ads in the first quarter. We are also providing advertisers with more automated campaign management and AI-powered creative tools to help them improve ad delivery efficiency. In Q1, penetration of our automated ad spending increased to about 85%, and we expect this penetration to further increase going forward. On top of that, AIGC tools are helping advertisers create materials that fit both Bilibili community style and the adoption of AIGC creative continues to increase. These AIGC creatives are delivering much better ad performance with improved click-through rates generally around double-digit better. That summarizes how AI is helping us improve our ad efficiency. We will be sharing more details next quarter and going forward. On top of that, we're also expanding ad inventory across different screens and more user scenarios from the mobile app to our PC, iPad, OTT and in-car streams; we currently already cover a majority of fast scenarios. Across different products and ad scenarios, we are also trying new inventories from feed to search, comments, in-player ads and mini programs. This coverage of Bilibili's user time spent across major product touch points will bring additional ad inventory for our business. On top of inventory and scenario growth, our sales strategy across the ad industry is also very important. We will continue to deepen our services into different verticals by aligning our sales operations and tech capabilities so we can offer full-stack solutions tailored to each specific industry. Looking into the second half of this year, we expect stronger growth momentum from high-value categories such as AI technology, automotive, home decoration and appliances, which we believe will continue to lead strong growth. Meanwhile, we will also continue to expand our market share in core verticals such as games, e-commerce and education. To summarize, we remain confident in maintaining healthy advertising growth for the rest of the year. Thank you.
We will now take our next question from Yang Liu of Morgan Stanley.
My question is about the game segment. Could management comment on the Three Kingdoms NCard's soft launch performance and what is your expectation for this game? Also, another self-developed game, Lumi Master, started paid testing this month. What's the test result? What is the expected launch timing? For Three Kingdoms SLG, what is the expected contribution and could management comment if there's any other game pipeline besides the three games mentioned?
The speaker spoke in a foreign language.
The NCard soft launch performance is generally in line with expectation. We plan to officially launch this game in July this year. This game is one of a kind and the first of its kind that features a unique gameplay that blends hero skills with a poker mechanism. From the soft launch feedback, we find this gameplay has resonated with a young user group quite nicely. Because the mechanics are very creative and innovative, we take the approach to iterate the game as we collect more user feedback; we believe this is a more sustainable approach to make the game even better. We believe this game has the potential to become a large DAU title that can last for a long time in the casual category, and we are dedicating significant resources to refine its operations and user acquisition ahead of mass launch. Regarding the San Guo SLG title, it is a unique SLG title based on an authentic Three Kingdoms IP and stays true to the original IP experience while introducing refreshed 3D visual style. It's targeting a more mature SLG audience with higher standards for quality and visual experience. We think San Guo and San Mou really complement each other, with differentiated target user groups: San Mou targets a younger cohort that prefers lighter SLG experiences, while San Guo targets IP fans who have stronger tastes and preferences for higher visual quality. We completed the first round of paid testing at the end of March for the San Guo title and saw very positive user feedback. We are continuing to refine and polish the title based on user input and plan to launch this title within this year. For Lumi Master, it is one of its kind — the first title that combines tech-crafting aspects with casual gameplay. We started global user testing in early May and received encouraging user feedback. We are targeting a global launch for this title in Q4 this year. Lastly, I wanted to briefly touch on Escape from Tarkov — a Bilibili self-developed title — which this year sold over 4 million copies (note: name as provided by speaker). As we continue to promote this game on PC, we are actively working on console and mobile versions. Our goal is to enhance the IP over time and build it into a well-known franchise for young gamers. Over the past few years, our game strategy has summarized to two or three key points. First, long-term operation: we've seen this in legacy titles such as FGO and Azur Lane, which are celebrating their tenth and ninth year anniversaries respectively, and San Mou is about to celebrate its second anniversary. Going forward, for all Bilibili game titles, we are targeting long-term operations even for one-off hits like Escape from Tarkov; we hope these titles will have lasting impact and continue to generate sales over time. Second, we aim to lead in specific segments and genres. Our approach to game genres is very focused: we dig deep into a genre to become either the best or the first in that genre. For example, in SLG and the Three Kingdoms IP, we have one game launched and two in the pipeline, with possibly more tests coming up. Another direction is PC/console copy-based games, where we see large opportunity and strong user demand; we will focus on producing the best or becoming first in that category. The last point is creating games for the younger generation of gamers. As a community hub for this cohort, we are closest to their preferences and desires. Inventing games that cater to them is Bilibili's bread and butter. By staying close to young gamers, there will always be opportunities, as shown by NCard and Lumi Master. Fundamentally, we are reinventing titles to cater to this generation of gamers and their tastes. That concludes my remarks on games.
Our next question comes from Xueqing Zhang of CICC.
My question is about financials. Last quarter, the company mentioned investment in AI progress achieved so far; when should we expect to see meaningful returns from the AI investments? Also, could you provide some color on the outlook for OpEx and CapEx related to AI as well as the margin outlook for the second quarter and the full year?
Thanks, Xueqing. I will take this question. First of all, about the direction of our AI investment. As mentioned by Mr. Chen, we are very focused primarily on three key areas of Bilibili: video understanding, video distribution and video creation. We believe this investment will significantly enhance the value of Bilibili's content ecosystem and the community and directly benefit all monetization lines. In Q1 we have already begun exploring and applying these efforts with initial results evidenced in our user growth, time-spent growth and advertising revenue growth. We expect positive feedback; this is just the beginning and will continue to deliver greater efficiency. Regarding CapEx: in Q1, our CapEx increased about 80% year-over-year to around RMB 200 million, mainly driven by higher investment in servers and computing resources to support AI improvements. For the full year, we expect our AI-related CapEx to increase by approximately RMB 1 billion with an impact on P&L of around RMB 500 million. Meanwhile, we will cut certain OpEx expenses to offset part of such impact. Using our Q1 results as an example: R&D expenses increased by 9% year-over-year, while we still delivered solid bottom-line results. Driven by revenue growth and continued operating leverage, our adjusted net profit increased by 62% year-over-year with adjusted net profit margin rising to 7.8%. We expect Q2 advertising revenue to maintain rapid growth with contribution from our AI initiatives, with gross margin steadily improving and net profit margin having further room to increase. We also maintain our mid- to long-term gross margin target of 45% and operating profit ratio target of 15% to 20% unchanged. Thank you for this question.
And that concludes the question-and-answer session. Thank you once again for joining Bilibili's First Quarter 2026 Financial Results and Business Update Conference Call today. If you have any further questions, please contact Juliet Yang, Bilibili's Executive IR Director or Piacente Financial Communications; contact information for IR in both China and the U.S. can be found on today's press release. Thank you, and have a great day. Portions of this transcript that are marked Interpreted were spoken by an interpreter present on the live call.