Key highlights

  • Q1 2026 total revenues of RMB 7.5 billion, up 7% year over year; adjusted net profit up 62% to RMB 585 million
  • 15th consecutive quarter of gross Margin expansion, reaching 37.1%; adjusted net margin widened to 7.8%
  • Record daily average time spent of 119 minutes per user, driving a 19% surge in total user time spent
  • Advertising Revenue grew 30% year over year to RMB 2.6 billion; AI-related advertiser budgets up over 170%
  • AI CapEx to increase by RMB 1 billion for full year; mid-to-long term gross margin target maintained at 40–45%
  • Gaming revenues declined 12% on high comparables; global self-developed title Lumi Master targeting Q4 2026 launch

Bilibili Inc. (Nasdaq: BILI / HKEX: 9626) delivered a notably strong first-quarter 2026 Earnings report, combining accelerating profitability with record user engagement metrics that together paint the clearest picture yet of the Chinese video platform's evolution from a fast-growing but loss-making content Business into a structurally improving monetisation engine.

Total revenues for the quarter reached RMB 7.5 billion, up 7% year over year — a headline growth rate that, while measured, masks a far more consequential story playing out beneath the surface. Adjusted net profit grew 62% year over year to RMB 585 million, with adjusted net profit margin expanding to 7.8% from 5.2% in the prior year period. Crucially, the quarter marked Bilibili's 15th consecutive period of gross margin expansion, with gross margin reaching 37.1% — a milestone that underscores the compounding operational improvements the company has quietly assembled across multiple reporting periods.

For a platform that spent years prioritising user growth over unit Economics, the sustained margin trajectory is the most important number in the report.

Engagement reaches record territory

The user metrics accompanying the financial results carry their own significance. Daily active users grew 8% year over year to 115 million, while monthly active users reached 376 million. Average daily time spent hit a record 119 minutes — up 11 minutes year over year — driving a 19% surge in total user time spent across the platform.

That 119-minute figure deserves particular attention. Time spent is the foundational currency of digital advertising, and Bilibili's ability to extend session duration at this scale — across a user base that skews toward China's younger, more educated and more commercially valuable demographic cohort — directly underpins the advertising revenue growth that is now emerging as the company's most powerful financial lever.

The depth of engagement also reflects Bilibili's distinctive content ecosystem. Unlike short-form video platforms where passive consumption dominates, Bilibili's community is characterised by longer-form content, active creator participation and strong audience loyalty built around specific interest communities. That stickiness is difficult to replicate and increasingly valuable to advertisers seeking sustained Brand exposure rather than fleeting impressions.

Advertising emerges as the growth engine

Advertising revenue grew 30% year over year to RMB 2.6 billion — the standout line in an otherwise solid report. Within that figure, AI-related advertiser budgets surged over 170% year over year, reflecting the extraordinary pace at which China's domestic AI industry is scaling its Marketing spend as companies compete aggressively for developer mindshare, enterprise customers and consumer awareness.

Bilibili's platform is particularly well positioned to capture AI advertising budgets. Its user base of technically literate, younger professionals and students represents exactly the demographic that AI companies — from large language model providers to coding tools and productivity applications — are most aggressively targeting. As China's AI sector continues to expand and intensify its competitive dynamics, Bilibili stands to benefit disproportionately from the resulting advertising spend.

Management expressed confidence in maintaining healthy advertising growth for the remainder of the year, with Q2 advertising revenue expected to maintain rapid growth. That guidance, while carefully worded, suggests the advertising momentum observed in Q1 has continued into the current quarter rather than representing a one-off spike.

AI Investment signals long-term infrastructure commitment

The company announced plans to increase AI-related Capital Expenditure by approximately RMB 1 billion for the full year, with a projected profit and loss impact of around RMB 500 million. The investment reflects Bilibili's determination to build proprietary AI capabilities across content recommendation, advertising targeting, creator tools and platform operations — rather than relying entirely on third-party AI infrastructure.

Importantly, management maintained its mid-to-long term gross margin targets of 40–45% and operating profit ratio targets of 15–20%, signalling that the incremental AI investment is viewed as a temporary drag rather than a structural impediment to profitability improvement. That framing will reassure investors who have watched Chinese internet companies make large, opaque AI commitments without clear returns frameworks.

The 40–45% gross margin target, if achieved, would represent a significant further step up from the current 37.1% level and would place Bilibili firmly within the range of structurally profitable digital media businesses.

Gaming faces a high-bar comparable but pipeline rebuilds

The one area of softness in the Q1 report was gaming, where revenues declined 12% year over year to RMB 1.5 billion. Management attributed the decline primarily to a high prior-year comparable — a standard and credible explanation for a segment where individual title launches can create lumpy quarterly revenue patterns.

The pipeline provides some reassurance. N Card Sanguo is slated for a July 2026 launch, with Sam Wang Wangdao Tianxia planned for later in the year. Perhaps most intriguingly, Lumi Master — a self-developed title targeting a global Q4 2026 launch — signals Bilibili's ambition to extend its gaming business beyond the domestic Chinese market. A successful global launch would open an entirely new revenue stream and demonstrate the international commercial viability of Bilibili's content and game development capabilities.

Gaming remains a volatile and competitive segment, and investors should expect continued quarterly fluctuations tied to the release cadence of major titles. The medium-term trajectory will depend on whether the pipeline titles gain traction with users — a question that data from the second half of 2026 will begin to answer.

The investment case sharpens

Bilibili's Q1 2026 results reinforce a thesis that has been building for several quarters: the company has passed an inflection point in its financial model. Fifteen consecutive quarters of gross margin expansion is not an accident — it reflects sustained operational discipline, improving monetisation mix and a platform that is generating increasing returns from its existing user base rather than simply chasing growth at any cost.

The combination of record engagement, 30% advertising growth, AI budget tailwinds and a credible path to 40–45% gross margins gives the investment case a durability that was absent in earlier periods of the company's development.

Risks remain. Gaming revenue Volatility, the broader Chinese regulatory environment for internet platforms, macroeconomic headwinds affecting domestic advertising budgets and the near-term profit and loss impact of incremental AI investment all Warrant monitoring. Competition from short-form video platforms, particularly Douyin, for both user time and advertising budgets remains structurally unresolved.

But the direction of travel is increasingly clear. Bilibili is becoming a profitable business — and the pace of that transition is accelerating.