Bilibili (BILI) Q2 2026 Earnings Call Transcript

Bilibili reported Q2 total net revenues of RMB 7.94B ($1.17B), up 8% YoY, with advertising revenues rising 28% YoY to RMB 3.13B and gross margin expanding to 37.2% (16th consecutive quarter of sequential improvement). Adjusted net profit increased 25% YoY to RMB 703.6M (8.9% margin), while DAUs grew 7% YoY to 116.5M and average daily time spent rose to 113 minutes (+8 minutes YoY). Management said AI advertising revenue more than doubled YoY (with CTCVR up 19% YoY), is deploying 70–80% of a RMB 1B AI-related capex target in H1, and expects games revenue to resume YoY growth in Q4 as it launches Lumi Master globally on Sept. 17, 2026. The company also repurchased 5.8M shares for $118M year-to-date, supporting shareholder returns.

Analysis

The key mechanism here is mix shift, not just growth: BILI is proving it can monetize attention through higher-intent ad inventory faster than it can grow raw engagement. That matters because it moves the equity story from a cyclical content platform toward a more durable performance-marketing rail, which should support multiple expansion if management keeps converting traffic into conversion-led revenue rather than vanity impressions.

Second-order, AI is a double-edged sword that BILI may be better positioned for than peers. More AI-generated supply can commoditize generic content, but that actually raises the value of BILI’s community filter and creator graph, where discovery is driven by trust and interaction rather than pure feed ranking. The same AI tools that could flood the internet with mediocre video may widen the gap for platforms that can identify quality early and monetize it efficiently; that is structurally favorable to BILI versus entertainment peers with weaker community moats.

Catalyst-wise, the next 1-2 quarters are about whether ad growth stays resilient if China macro stays soft, while 3-6 months are about game launches re-accelerating revenue enough to validate the margin story. The main falsifier is a visible deceleration in ad growth or a launch miss that forces the market to question whether AI spending is real operating leverage or just incremental fixed-cost creep. The contrarian miss is that investors may be overfocusing on AI as a narrative and underappreciating that buybacks plus ad-led operating leverage can drive earnings even without a blockbuster game hit.

Key Decisions for Investors

• Accumulate BILI on 3-5% post-print weakness over the next 1-2 weeks; the setup is favorable as long as ad growth holds above 20% and gross margin does not roll over, with upside to a re-rate if the market starts pricing the 15%-20% operating margin path as credible.
• Buy a 3-6 month BILI call spread into the September and Q4 game-launch window to express convex upside from a re-acceleration in gaming revenue; define risk tightly because the payoff is driven by launch execution and live-ops retention, not macro beta.
• Use BILI as a relative long against broader China internet exposure via KWEB on any sector rally; the thesis is company-specific execution plus AI-driven monetization, while the hedge offsets macro/regulatory noise over the next 1-3 months.
• Set a thesis alarm if AI-related R&D keeps rising but ad conversion metrics stall; if revenue growth decelerates while spending stays elevated, treat that as a signal to trim rather than average down.