BILIBILI-W (09626) Q2 2026 Earnings Call Transcript

Good day and welcome to the Bilibili's Second Quarter 2026 Financial Results and Business Update Conference Call. Today's conference is being recorded. At this time, I would like to turn the call over to Juliet Young, 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 filing with SEC and Hong Kong Stock Exchange. The non-GAAP financial measures we provide are for comparison purpose 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. Rei Chen, Chairman of the Board and Chief Executive Officer, Ms. Kali Li, Vice Chairwoman of the Board and Chief Operating Officer, and Mr. Sam Fan, Chief Financial Officer. I will now turn the call to Mr. Chen.

Thank you, Juliet, and thank you to everyone joining us today. Our strong momentum carried into the second quarter, and we delivered another set of solid results. Both our community and top-line growth remained healthy, and profitability continued to expand. As users increasingly seek substance over noise, our high-quality content and authentic community experience keep attracting new users and driving deeper engagement. In Q2, DAUs increased by 7% year-over-year to $117 million, while MAUs grew to $371 million. Average daily time spent rose to 113 minutes from 105 minutes a year ago, which drove total time spent up over 14%. That engagement is translating into stronger commercial results. Advertising revenue grew 28% year-over-year, marking another quarter of industry-leading growth. Meanwhile, NPUs increased 7% year-over-year to $33.4 million, reflecting users' increasing willingness to pay for the content and community experiences they truly value. You can also see that momentum in our financial results. Total revenues for Q2 rose 8% to RMB 7.9 billion, and gross profit grew 10% year-over-year. Gross margin expanded to 37.2%, marking our 16th consecutive quarter of margin improvement. Our top-line growth and increased operating leverage drove our net profit up 55% year-over-year, and our adjusted net profit reached RMB 704 million, with our adjusted net profit margins expanding to 8.9%. In the AI era, we see two major tailwinds. First, AI tools help our creators produce great content much faster, while AI-empowered content understanding is making our recommendations far more efficient. Second, and perhaps more importantly, in a world full of passive algorithmic content, real human connection becomes a rare commodity. People choose Bilobili because they want meaningful content, shared interests, and genuine interaction. And that makes our community even more attractive. That is why we remain committed to our AI strategy while staying highly disciplined in how we invest. We'll use AI to improve content and efficiency without losing sight of our community roots and unique advantage. Strengthening this flywheel of community and monetization will continue to build lasting, compounding value for our users, our creators, and our shareholders. With that, let me walk you through our core pillars of content, community, and commercialization. Let's start with our content. Across our 17-year history, various content formats have come and gone, but BilliBili's distinct blend of quality content and vibrant interest-driven communities continues to capture users' intentional, high-value time. In Q2, total time spent on our platform expanded by 14% year-over-year. Notably, watch time from videos over 5 minutes grew by 18% year-over-year, demonstrating users' growing demand for meaningful and high-quality content. Turning to our interest-based content categories, we're seeing steady growth across both core and emerging hubs. Total watch time for game-related content and general entertainment content increased by 20% and 35% year-over-year, respectively. Baby and maternity also grew by 36% year-over-year, as more of our users step into parenthood. At the same time, AI tools are expanding creative boundaries across our platform. For instance, watch time for music content grew 24% year-over-year, catalyzed by AIGC-driven creation. Beyond content consumption, AI is also supercharging creator output. it. In Q2, daily video submissions jumped by 28% compared to the same period last year. Video podcasts offer another compelling example of our users embracing immersive content. Last month, average daily watch time for video podcasts exceeded 100 million minutes. This remarkable engagement shows that even in today's world of fast-paced content, there is still a huge and growing appetite for in-depth storytelling. Behind these figures, empowering creators remains a top priority. Through refined algorithms, we now match quality content with interested users much earlier. In Q2, the number of creators with over 1,000 followers grew by 30% year over year. The diverse monetization channels we provide also helped average creator income increased by 21% year-over-year in the second quarter. Turning to our community. As we touched on earlier, authentic human connection has become rare and valuable in the era of automated, bite-sized content. That is why Bilibili's interactive community feels like a true oasis in today's digital world. Here, hundreds of millions of users connect over shared passions, expressing their feelings through comments and bullet chats to find a genuine sense of belonging. In Q2, monthly interactions grew 9% year-over-year to $17.4 billion, while deeper connections like long comments jumped over 67%. Meanwhile, by processing these rich user interactions, our algorithms can spot and elevate high-quality content much faster, driving healthy, steady growth in both our user base and time spent. This level of engagement and interaction naturally keeps users coming back and expands our network of trust. In Q2, the average active user followed 96 creators, up 11% from a year ago. By the end of Q2, our official members reached 299 million, with 12-month retention remaining solid at around 80%. Ultimately, our community doesn't just surface the best content, it builds lasting user loyalty and drives enduring platform value. This summer, we brought our community offline once again through our signature events, Bilibili World and Bilibili MacroLink. Over the three-day event, more than 400,000 fans gathered in person in Shanghai, making it one of the largest offline ACG expos in China and a vibrant new cultural landmark for the city. Seeing so many young people come together to share their passions was a powerful reminder of what community means. This is what Bilibili looks like off-screen, authentic, energetic, and deeply connected. Now, let's turn to our commercial businesses, beginning with advertising. In Q2, advertising revenue increased by 28% year-over-year to RMB 3.1 billion, marking our 14th straight quarter of 20% year-over-year growth. This industry-leading growth reflects our high-value, deeply engaged user base, alongside ongoing enhancements to our ad products and technical infrastructure. Growth was broad-based across industries, games, digital products, and home appliances, internet services, e-commerce, and automotive were our five largest advertising verticals in Q2. While our core gaming vertical maintained healthy growth, new verticals are also flourishing as our users mature into new life stages with expanding consumption needs. Ad revenues from home decoration, footwear, and apparel, and automotive each grew more than 60% year over year. We also captured incremental budget from emerging industries. AI advertisers continue to scale and revenues from this vertical more than doubled year over year, driving sustained growth in internet services. Our ads are also becoming more efficient. By deepening our understanding of product information, creative assets, user interests, and conversion goals, AI helps us deliver more relevant ads and drive better conversion. Our CTC VR continued to improve, increasing 19% year-over-year in Q2. Beyond matching, we are extending AI across creative production and campaign operations, from AIGC tools to ad-placement AI agents, making advertising easier and more efficient for a broader range of clients. We are also extending monetization into deeper high-intent user scenarios take search for example a high value scenario sitting right at the moment of decision making search revenues doubled year over year in q2 at the same time we are unlocking growth across additional scenarios including pc smart tv and the watch page as monetization expands across the entire user journey we see vast commercial potential ahead turning to our games business. Game revenues for the quarter were RMB 1.4 billion, down 14% year-over-year, mainly due to the high-base Sanmo-Sanguo-Mouding-Kensha set last year. Sanmo's latest second anniversary season 15 went well with players, ranking number two on China's iOS top-grossing chart. We'll keep focusing on the game's long-term life cycle by delivering fresh content and carefully balancing user experience with monetization meanwhile our legacy titles including fgo and azure lane continue to deliver stable performance during the quarter in july we officially launched our casual card game end card we continue to refine the game and enrich its gameplay while approaching user acquisition with a long-term focus on roi and retention Looking at the second half of 2026, our self-developed simulation game Lumi Master was well-received by global players in recent tests. Building on this encouraging reception, we plan to launch the game on September 17, globally. Our new licensed SLG title is scheduled to roll out in Q4, complementing Sanmo with a differentiated gameplay experience. Beyond Lumi and San Wang, we also introduced three new titles at Bilibili World, including two licensed games, Ragnarok Online 3, Xenjing Trenshuocent, and MMORPG, based on a globally recognized IP that has already secured its publication license, and Misfound, Guild Wars card game, Gijat Da Pai Yingxiong, which is adapted from another well-known IP. We also announced a new self-developed tactical RPG, Three Kingdoms, The Ravages of Time, San Guo, Huo Feng Liao Yuan. All three titles will be released next year. Together, these titles expand our pipeline across genres and development models while attracting new player segments. Turning to our VAS business. In Q2, VAS revenues grew 5% year over year to RMB 3.0 billion. Our live broadcasting business maintained its steady performance, and we continued to refine our operations to ensure stable and sustainable growth with better margins. At the end of Q2, premium members reached $25.7 million, up 9% year-over-year, with around 80% on annual or auto-renewal plans. Fan charging also kept its momentum, with revenue up nearly 50% year-over-year. Fan charging turns audience appreciation into direct financial support so creators across a wide range of categories can do what they love and produce quality content over the long term. Beyond the numbers, we remain deeply committed to shaping a healthy culture and community for China's young generation. ESG principles are central to that mission. This year, MSCI ESG upgraded Bilibili to an AA rating from an A rating, recognizing our ongoing progress in using technology and culture to create meaningful social impacts. At the end of the day, we found that across every technological shift, one thing remains constant. People crave rich, meaningful content and real human connection. Bilibili is uniquely built at the intersection of both. As AI enables us to fulfill this mission with greater precision and scale, I couldn't be more confident in our path ahead. With that, I will turn the call over to Sam to walk through our financials in more detail.

Sam? Thank you, Mr. Chen, and hello everyone. In the interest of time on today's call, I will focus on our second quarter financial highlights. We encourage you to refer to our press release issued earlier today for a closer look at our results. Total revenues for the second quarter were RMB 7.9 billion, up 8% year over year. The breakdown of total revenues by revenue stream was approximately 39% advertising, 37% VAS, 18% mobile games, and 6% from our IP derivatives and other businesses. Cost of revenues increased by 7% year over year to RMB 5.0 billion. Gross profit increased around 10% year-over-year to RMB 3.0 billion, while gross margin expanded to 37.2% from 36.5% in the same period last year, marking our 16th consecutive quarter of margin improvement. Our total operating expenses were up 7% year-over-year to RMB 2.6 billion. Sales and marketing expenses increased by 1% year-over-year. G&A expenses were flat, and R&D expenses increased by 16%, primarily due to continued investment in our AI capabilities. Operating profit increased 48% year-over-year to RMB $373 million, while adjusted operating profit increased 21% to RMB $696 million, lifting adjusted operating profit margin to 8.8% from 7.8% in the same period last year. Net profit increased by 55% year-over-year to RMB 339 million, while adjusted net profit increased 25% to RMB 704 million, and adjusted net profit margin reached 8.9%. As of June 30, 2026, we had cash-in-cash equivalents, time deposits, and short-term investments of RMB 24.3 billion, or 3.6 billion U.S. dollars. In June, our Board approved a new two-year $300 million U.S. share repurchase program. Under this new program, a total of 1.9 million shares had been purchased for a total cost of $31 million U.S. as of June 30, 2026. From the beginning of the year through today, a total of 5.8 million shares had been purchased for a total cost of $118 million U.S. dollars. Moving forward, we will continue to evaluate market conditions and execute our repurchase program accordingly to enhance long-term shareholder value. Thank you for your attention. We would now like to open the call to your questions. Operator, please go ahead.

Thank you. Dear participants, as a reminder, if you wish to ask a question, please press star 1-1 on your telephone keypad and wait for your name to be announced. To withdraw your question, please press star one and one again for the benefit of all participants on today's call if you wish to ask a question to management in chinese please immediately repeat your question in english the company will provide consecutive interpretation from the management statement during the q a session please note that the english interpretation is for the convenience purposes only in the case of any discrepancy management statements in their original language will prevail and now we're going to take our first question just give us a moment and the question comes line of Lincoln Kong from Goldman Sachs your line is open please ask the question

谢谢管理层接受我的提问 那也恭喜咱们二季度取得了非常稳健的一个业绩 那我是想问就是说我们看过去几年 整个这个短视频的内容其实快速崛起 然后这些长视频的这个时长呢 其实也在逐步的一些下降 但B站在这个变化中呢 其实还是保持了非常健康的一个增长 想问这个背后主要还是什么样的一些原因 那之后在这个AI这个时代 这个用户在内容喜好和消费习惯上 有可能会有怎样的一些变换呢? 那我翻译一下 Thank you, management, for taking my question and congrats on a very solid quarter. So looking back over the past few years, short-form contents have surged, while the average length of the long-form video has also steadily decreased. But Bilibili has sustained a very healthy growth throughout this dynamic period. So what's driving this resilience? And looking ahead to the AI era, how do we expect the user preference and the consumption habits to evolve over time? Thank you.

It's not a high-quality content, but high-quality content, most of them are in the experiment. focusing on good content, high quality content.

And naturally, for those high quality content, they are generally more inclined to be in a format of long form, mid to long form. 我们一直认为无论是长视频还是短视频,无论用户它是用电脑看,还是用手机看,还是用电视看,其实用户它不便的追求是想看更好的内容。 Well, we believe whether the length of the content or on the device of the consumption scenario, the ultimate goal from users is everyone wants to watch good content. 就是当他经过了这一轮碎片化的内容的一个洗礼过后

然后他们也会意识到 就是很多的这种短内容 他只能带来视听上的一个刺激 而他自己的话 还是更希望把时间去花在他认为值得看的一个东西上 所以我觉得这个也是那个B站能在过去几年 一直持续这个健康增长的一个原因 because we're always giving a better-to-be-to-be-to-be-to-be-to-be-to-be-to-be-to-be-to-be-to-be.

And users are more and more aware the B站's new skills, so they'll be taking more time on B站, especially young users. time as people are used to, have watched enough low quality repetitive content, they naturally develop a taste for high quality content. They are no longer satisfied with the content that just grabbed their attention for one second. They care more and more about whether the time they spend on the content is actually worth it. And that is exactly why availability has been, able to keep growing in the past few years we have been focusing on providing a high quality content that is interesting in depth and really connects with user emotionally and that's why users are willing to slow down and spend their intentional time on We can always create a high-quality content.

I think there are two reasons. First of all, we have a very clever of a群体. And these high-quality creators, they definitely recognize our B站. And the second reason is that we have a long-term community. 一个高质量的社区 因为大量的喜欢高质量内容 且有着审美能力的用户 他在过去的十几年 聚集的在我们的平台上 形成了一个社区 然后这个社区 它也会成为高质量内容的一个筛选器 就它能够更好的把一些高质量内容 从每天上百万个投稿当中去筛出来 然后这个是一个非常良性的一个循环 The reason why ability are able to constantly create, curate high-quality content for two reasons.

One is that we have amassed a very talented group of content creator who believes in the community, who believes in the ability platform. Secondly, over the past decade, we have viewed a very engaging community with a lot of users who truly appreciate high-quality content. They have the view of what is good, high-quality content and forms a community that appreciates and also can select and define what is the good quality content. They can choose and promote among millions of daily video submissions and allow this high-quality content and talented content to emerge from our platform. In the second quarter, our monthly user interaction were over 17 billion, up 9% year over year. Long comments that over 100 characters were even faster by 67%. This high level of real human interaction help us to better identify high quality content.

这不优质的视频是没有人看的

它可能会万倍甚至是亿倍的一个增长

就是视频本身会变得过剩 在这种情况下 优质内容会变成视频的唯一解

And regarding in the AI era how the video landscape is going to change we believe that the AI tools will exponentially unleash the supply of video content And over time, the high-quality content is the only solution or the only answer among those oversupply of video content. We believe over time, only high-quality content will have viewership. Those low-quality content will have no trust.

我觉得在AI时代的话 我们会在生产和分发的两个方面 借助AI有极大的提升 在内容的生产和分发上 在内容的生产上 我会更关注有创意的作者如何的用AI 而不是AI去生产同质化的内容 我认为同质化的内容是没有意义的 但是好的创作者 有创意的创作者如何用AI is有很大意义的 因为这个会极大的提升 优质创作者的一个生产力 我们在这方面 在过去的那个半年 还是投入了挺大的一个关注度 也取得了不错的一个成效 就在今年的第二季度 我们的月军投稿量 是增长了28% 然后这个是充分验证了 就确实AI对于 好的创作者的生产力 是有很大的解放

In the AI era, I will be very focused on two aspects. One is on video creation, content creation. Second is on content distribution. First of all, on the content creation, I will pay very close attention to those content creators with high intelligence and high creative power, how they are leveraging AI to create content, to realize their creation into actual work. We believe that repetitive, low-quality content will have no room for survival, but those talented content creators will be extremely beneficial from this evolution of creation tool. And in the past half year, we have been paying very close attention on this aspect, and it's generating very positive results. As a matter of fact, in the second quarter, our monthly content submissions increased by 28%. This is a hard evidence to support that AI tool is enlarging, enhancing, uplifting our creative output. 为什么呢是因为中场视频的信息量更大而且那个用户他去决策去看中场视频他的意图也是更复杂的 他并不是说他这个只要是那个好的内容他都看的因为他还有喜好等等的这些原因而过去的那个推荐的那个技术

在这方面应该是达不到用户的一个期望 因为它在内容理解能力上有了质的提升 所以它确实能够帮助我们去提高 明显的提高推荐的一个体验 这个也是我们在过去的半年 我们能够看到我们的数据在这方面 是有比较明显的一个增长 我们在QR DAO的同比增长是7% And our average revenues rate will 80%, In our the hub tool, we build 30%. In so it's a pass for the AI to challenge us.

Secondly, on content distribution, compare with the short videos that only have 2 seconds, the long techard version of video contains much comprehensive information and structures. Traditional recommendation algorithm often struggles to fully understand and recommend this type of content. And also, users generally have more complex intents when they come to choose much longer-form content. That's why we are focusing on our AI, on helping our content distribution become more efficient. And we think this new generation of AI tool is helping us to comprehend, understand the content, the meaning of the content, and better understand our user intention. And here's a few numbers to support our progress. In second quarter, DAU grew by 7% year over year, and our total user time spent increased by 14% year over year. And the number of creators with over 1,000 followers grew by 30% year over year. A lot of the driver behind those numbers are from using AI to make our algorithm working better. That concludes the first question's answer. Operator, next question, please.

Perfect. Thank you so much. Now we're going to take our next question. And the question comes to the line of Yang Liu from Morgan Stanley. Your line is open.

Please ask your question. 谢谢 感谢提问的机会 首先恭喜公司非常不错的业绩 那我这边的问题都是关于广告业务的 那我们看到2Q以来中国整体的宏观和消费数据都偏弱 那公司的广告业务目前看到下半年的这个增长预期是如何的 那然后来自AI行业的广告投放趋势是否有一些编辑的变化 然后管理层如何拆分 2Q和下半年广告增长的驱动因素 尤其在下半年广告的基数就比较高了 那哪些锤类还可以支撑广告收入维持较快的增长 Let me translate my question My question is about the advertisement business. Since 2Q, we started to see weakening macro and consumption data in China. How to think about the future second half advertisement business growth? And also, what is the marginal change for the advertisement from the AI industry? and also could management help to break down the 2Q and the second half advertisement growth driver and also in second half we start to have a little bit higher base which verticals can support the advertisement business to sustain relatively high growth Thank you In the economic environment, the second季度 will definitely face a certain pressure

The second quarter despite macroeconomic pressure on consumer spending, our ad business delivered a very strong performance with revenue reaching $3.13 billion, up 28% year over year. This resilient growth reflects a strong market recognition of our user base and our community value. More and more advertisers or realize it's a must-invest platform for them to gain access to the young generation. We also achieved early success in our vertical industry strategies and our ad scenario expansion. In our content ecosystem, users' time spent on AI-related knowledge content surged by 72% a year over a year. Bill & Billy has become the largest AI learning video community across the Internet, as users actively come to our platform to track and learn about large language models and AI tools. At the same time, AI has been absent from the AI sector to buy over 100% year over year in the second quarter, benefiting from the strong match between AI target audiences and our user base. As AI is a major long-term trend, We expect continuous demand from various clients across different stages, and we remain very optimistic about this incremental opportunity. As for the second half outlook, you're seeing that more advertisers are demanding higher conversion efficiency in the short term. But at the same time, they also want channels that deliver sustained long-term impacts, rather just one-off impressions, to help them to be lasting brand value. They are also prioritizing their limited budget on high-value users with genuine purchasing power. All of these demands precisely match with availability's unique strengths.

B站用户的平均年纪已经26.5岁左右了 他们已经是社会上最主要的核心消费的人群 最近两年其实他们也在B站多看视频 互动成为很好的朋友 最近两年也逐渐在B站形成了消费的新字 就呈现出来的是我愿意为平台推荐的广告 以及UP主推荐的广告买单

The age age of Bilibili user now is 26.5 years old, making them the primary driver or the main consumption force in the current Chinese society. Over the past two years, they also have established a strong purchasing mindset on billability, demonstrating a clear winning list to buy products recommended by the platform or by the content creators. In the second quarter, our top five ad verticals were game, consumer electronics, internet services, e-commerce, and automotive, while our total advertiser base expanded by 14% year over year.

B站区别其他内容平台 还有一个很坚持的策略 叫多评和场景的一个战略 其实这个是可以实现 B站的内容全天后 去陪伴用户在不同时间段的需求的 无论你在独自在做将军工具 就时候你可以去听B站 或者你在坐车的时候 可以去看视频 也可以去听B站的视频 那你在家里

Like other platforms, we have a multi-screen, multi-scenario strategy that allows Bilibili to accompany users seamlessly throughout their day, whether it's listening or watching Billy Billy during commute or casting Billy Billy content on TV screen at home with their family or using our apps or iPad during fair time for learning. 其实这些不同的场景跟不同的端口,广告都可以伴随用户全天后的消费的情况。

所以上半年,无论是APP中的搜索跟播放页,还是OTT,还是PC,还是我们的小程序都为我们提供了新的广告的有效库存。 这些场景对于整体的广告收入的增速都是超过50%以上的。 Across this different screen, users can watch and upload video, interact through bullet chats, commentaries, search their favorite content or creators, during live stream, watch anime or documentaries, and play games.

And ads naturally follow users without their daily touchpad. That's why in the first half of this year, you see in-app search, watch page, smart TV portal, PC, and mini programs have all unlocked valuable new ads inventories with revenue from this multi-scenario placement to buy 50% year over year in the first half.

当然还有一个是特别重要 但是还有很大空间的 其实是AI 那AI对我们还是 投了比较大的精力 去改造整个广告的投放系统 就用于对用户的理解 包括内容的体配 素材的生成 以及算法效率的提升等等 这都会对广告往后的 持续的效率的变化 以及增长是有帮助的 所以现在其实可以看到一些 具体的数据是 我们自动投放的系统

Last but not least, AI is also empowering our ad efficiency from several angles, including improving our user comprehension, including user profiling, content matching, ad creative generation and algorithm efficiency to continuously lift our monetization. And also, we have launched our automated ad placement system that also has made it much easier for new advertisers to join us. This is driving a double-digit growth for our new advertisers' client base. As you mentioned, it is indeed a very challenging macro environment, and there will be a lot of changes across different industry players. However, given what we just mentioned, we still remain quite confident about our continuous growth for our ad business. Thank you. Operator, next question, please.

Yes, of course.

And now we're going to take our next question. And the question comes line of Daniel Chen from JP Morgan. Your line is open. Please ask your question.

This is a good morning. Thank you for the opportunity to ask me a question. I want to ask the game. So my question is on the online game so the company just shared quite a lot of information on the game pipelines i was wondering uh which one is the most uh anticipated one and also what's the expectation for the launch timing and on uh and besides this uh sunmo uh the three kingdom strategy game has has been launched for two years so how should we look at the uh the future performance of this game Thank you.

From the second half to next year, it will be our harvesting season for Billy Games. We do have several exciting titles lined up for launch. The first title in our Python is Loomi Master. Loomi Master is a self-developed light casual game that involves pet catching and simulation gameplay. It received a lot of positive feedback during its global test in May, and also recent testing feedback has been very well. We are planning for a global launch and September 17th next month. And we have developed a very innovative gameplay and artistic graphic designs to cater to young generation teams. We believe with its lighter gameplay and appeal to younger players, we hope this game can catch a broader casual gaming audiences on a global basis, especially for a young gamer? 画质和玩法都在原来三国制的这个技术上有很大的一个提升 我们为什么又会推出一款三国题材的SRG呢 是因为这一个作品它和这个三谋在用户群上是有明显的差异化 在玩法上也会很互补 它能够进一步完善我们在SRG领域的一个布局 我们是刚刚结束这个游戏的一个二课吧 The second title in our platform is San Wang, which is a strategy game officially licensed from the classic Three Kingdom IP. We expect to launch this game towards end of this year, Compared to Sunmo, it targets a more mature audience with a strong interest in Sangguzhi's IP. And both of the visual style and gameplay have been significantly upgraded from the classic IP. And while we are launching another Three Kingdom titles, we think it really complements Sunmo in both gameplay and target audiences. and it can further strengthen our presence in the strategy game genre. We also gain a lot of valuable feedback from the second beta testing we just finished and we will continue to fine-tune this game.

We hope our goal is to build another strategy game that can be lasting and popular for our audiences. 然后在那个刚刚过去的BW上我们也是那个发布的几本明年会上线的产品 我这也做一下这个介绍 第一个呢是三国火风燎原 它是我们团队自演的一款策略战体类的这个那个RPG的游戏 然后首先火风燎原它是一个20年的一个漫画IP 同时的话它也是我们自己出品的这个那个那个动画 也出品过这个火烹灵的动画

然后我们是想把这一个经典的IP 然后做成一个就是年轻人喜欢的 有创新玩法的一个战棋类的一个游戏 这个游戏呢我们是计划明年会上线 And beyond that we have also introduced several new pipelines titles in the region of DVD world And will be launched next year The first one is Three Kingdoms, The Ravage of Time, 三国火风了源. This is another self-developed title that is focused on tactical RPG genre. This title is based on a classic manga IP with a history of over 20 years. And Bilibili Platform has also produced and published the anime that's based on this IP. Our goal is to make this classic IP, revitalize this classic IP, and make it a great tactical RPG for younger generations.

It's about 20 years of影響力, a classic MMO IP, and there are a lot of RLs of players who hope this IP will be back. And this is our aim to do this, and this is our aim to take this, and this is our aim to take this, and this is our aim to take this, and this is our aim to take this, and this is our aim to take this, and this is our aim to take this. 这个国服的技术测试

目前的这个玩家的这个 税还是挺好的 这个也是我们计划的明年上线 and the second title for next year is RO3 needless to say this is a very classic IP with a large audiences that lasts over 20 years it's a very classic MMORPG and we've received a lot of users demands and for bringing this title back to them. That is why we have signed and licensed this IP and hopefully to bring this classic IP back to its fan base. Currently, the team has already secured its license. And we actually, we started to launch technical testing today with ManLand.

Currently, the user feedback has been quite positive, and we are targeting to launch this game next year. 都保持在这个畅销榜的前五 所以的话我们可以看出这过去两年的时间 我们可以看出三模是一个表现非常稳定的一个 长线运营的一个作品 然后未来呢我们会继续就是认真的去做每一个赛季吧 然后保持这个三模的一个长线健康的运营 因为我在过去每一次财报会当中 我都会强调就是锤类精品长线运营 It's a strategy for our B站 to do a game. So we will always continue to do every game of the 3-mall game. My request for the team is to do a game of the 3-mall game. It can be made to the game of the 3-mall game.

To answer your question on our classic 3-mall game, this game has just celebrated its second year anniversary with a major update in June. And the new content has been well-received by our players. As a matter of fact, from Season 8, our first anniversary season last year, throughout Season 15, our second anniversary season in this year, Senmo has ranked among the top five on the ILS top closing chart every game season, which is quite impressive. And for this game, our goal has remained unchanged. Our target is to build a lasting strategy game that can accompany gamers for life. And our goal or strategy for being business remains to focus on the vertical genre to either do become the best or first in its own segment and make sure every title has a long life cycle.

That is the strategy we'll continue to be focusing on. 最后说一下三国百将牌,因为百将牌我们是在今年早些时候我们是发布了,然后百将牌7月份的LTV是比4月份提升了一倍,而且10月份我们会推出S2赛季,然后目标是提升产品的长期流程和增加赛事玩法。 呃 刚才那个大家也都听到了就是我们在过去的两年确实推出了一系列呃就是以三国为副属材的游戏啊我们内部也是细称为三国宇宙啊这个的好处呢就是呃这些玩家本身他是能够在这些游戏当中是良性的流动然后这些游戏里面他既有像这个摆将牌这种三分钟一一把非常轻松休闲 而且有社交那个那个乐趣的游戏也有像这个那个就是三谋和三王这样子比较重度的就是能够让玩家沉浸一体沉浸式体验的一个游戏再加上B站的这个我们有一个视频社区然后有大量的内容是能够在这个社区上那个去传播以及和用户进行交互就它是能够形成一个很好的一个玩家生态 This also allows us to make this series of games to do a good job for the long-term production.

And when I mentioned Touched Based on the NCAR game, which was recently launched officially, we've noticed that the LTV for July version has doubled compared to the April version. And we also plan to launch the game Season 2 in October with a focus on improving long-term retention and adding more interactive fun gameplay. You will notice that recently we have launched many different Three Kingdom IP titles, including this light casual poker game. And also we have immersive, hardcore strategy game like Sunmo and Sunwong. The reason why we are exploring this IP in such a dynamic way is, first of all, we think that there's a lot of overlap for users who are interested in this IP, and they can cross-sell from each other. And secondly is that we have a very high quality video community that with a lot of gamers who can share their experience and promote this game and also provides a very good platform for us to engage with users and continue to improve our game. That is why we are hoping to achieve long-term operations across different IPs and different titles and continue to provide good gaming experience for our gamers. That concludes this question. Operator, next question, please.

Thank you so much. Now we're going to take our next question. And the question comes line of Xueqing Zhang from CICC. Your line is open.

Please ask a question. 去生态用户活跃以及其他各项业务的一个赋能。 然后公司之前宣布的十一AI相关的一个CAPAS投入,目前的一个进度花得怎么样了。 谢谢。 Thanks management for taking my question and congratulations on the solid quarter. My question about AI. The company discussed how AI has improved its advertising and helped increase ECQM at the university. A convention elaborated a little more on how AI is enhancing B2B's community ecosystem user engagement and different base lines. In addition, how much after the previously announced 1 billion in AI-related cap tax has been deployed so far. and with the expected pace of spending going forward. Thank you.

We believe AI is already a consensus this for the next era. And for us, it's not to think about how important AI is for us. It's to think about how we will use AI in our own business. As a matter of fact, there are a lot of things in the AI chain we won't be engaged with. The things where we invest will be very closely tied to our core business, which is video. And to be more specific, it's on three areas, video understanding, video distribution, and video creation.

All of our investments will be strictly focused on those three areas. 因为那个如何能够理解视频内容理解用户需求是提升用户体验和提升商业效率的关键通过这个AI增强视频理解通过AI去增强分发和就推荐和这个搜索的这个能力 So we can help users to find the value of the content and the content of the content and the content of the content and the content of the content and the content.

First of all, AI is helping us to better understand both content and users. Bilibili has a huge amount of video library. And this video carries much more information. And our users have a very diverse interest. So to be able to better understand the value of our content, the meaning of the content, and what users want is a key component in both improving user experience and our commercialization efficiency. With AI, we're improving our video understanding, search, and recommendation capability. It is helping users to find content they're interested in and more efficiently matter while helping our ad system to better match ads with users' needs.

And for us, this investment not only is working on our user growth, it is also working on our commercialization results. 然后第二的话,我们是很重视如何用AI去提升我们的视频的一个供给,我们在这个领域里面我们是非常看重,就是我刚才提到的就是有创意的这些up主,有能力的up主如何用好AI, 然后我觉得过去的那个那个两个季度我们可以看到就是确实是很多的创作者他能够利用AI极大的加强他的一个那个创作效率 过去需要一个专业团队甚至是需要一个公司才能够去做的这个动画和这种那个影视内容 现在一个创作者也可以把它做得很好 因为我们B站上面过去应该是 就过去几个月应该是出现了多个 就是一个创作者利用AI就能够做出非常好的质量 并且达到千万以上的播放量的一个作品 而且的话我们可以看到 就是在动画影视音乐鬼畜这些领域 就是AI其大的解放的创作者的这个创意 让这几块的这个那个投稿量和精品数量 都明显的在在增加啊所以的话就是我觉得这个方向也是我们会聚焦投入的一个方向啊因为优质内容的源头就是来自于这些那个呃有创意的一个创作者我们五月份呢就是那个我们发起的这个UP主动画剧场啊短短的三个月的一个时间累计的播放时长就达到了2.7亿分钟播放量就是1.8亿然后有六部剧集的播放量就突破了千万啊这个是我们可以

And secondly, AI is helping creating new types of content and unleashing productivity on buildability. As I mentioned, we're very focused on seeing those high-quality content creators, talented content creator, how they are using, leveraging AI to produce good content. And in the past two quarters, we've seen so many good examples of how AI tools is unleashing those talented brains to bring good content on our platform. We're seeing some animation or film content that is to require a whole professional team or even a company to create now can be created by individual content creators that the quality is so premium that they achieve tens of millions of video views. We're also seeing AI inspire new types of content across animation, film, music, auto-tune remix categories. It is truly unleashing the creator's talent, their talent, their creativity. We've seen a surge in content submission and the number of high-quality content videos are emerging on our platform. Here's a very vivid example for your reference. In May, we launched our creator animation campaign on our platform. Just in three months, these videos in this campaign has generated 270 minutes of watch time and over 180 million views and six series, each surpassing 10 million views. Those are the perfect example of how AI tools is helping build a tool, unleashing creators' output, and unleashing the supply of high-quality content.

In AI's specific investment, we will do a little bit of a介绍.

Yeah, this is Sam. As Mr. Kim mentioned, our AI investment is highly focused. Regarding our previous target of one-day R&D, it is well untapped. We have already achieved 70% to 80% of it in the first half of the year, primarily on the procurement of server computing power with the policy. This was expected to be had R&D expenses for the whole year, and it has fixed by 500 million R&D, which remains unchanged.

Operator, next question, please. Yes, of course. And now we're going to take our last question for today. And the question comes line of Thomas Chong from Jefferies. Your line is open. Please ask a question.

Good morning, thank you for your question. Good evening. Thanks, management, for taking my questions and congratulations on a very solid set of results. My question is, how does management view the margin upside across a different business line? On AI, how should we think about AI empowerment to fix cost leverage and rooms for the lowering in OPEX ratio? and any color about the AI spending over the next couple of years. On the other hand, how do management view the potential upside or downside to margin in second half in 2027? And lastly, what are management thoughts on capital allocation?

Thank you. This is Sam. I will take your question. In Q2, our financial performance continues a strong momentum. Both revenue and gross profit grow nicely. with our gross profit margin expanding to 37.2%, marking the 60 consecutive quarter of sequential improvement. Meanwhile, our operating leverage continued to expand. Net profit grew by 55% year-over-year, and our adjusted net profit margin increased to 8.9%. Looking at the mid- to long-term, we believe there's still significant role for B2B's commercialization. Driven by the sustained and healthy development of our business lives, more efficient operation gains empowered by AI, we are highly confident in our future probability improvements. First, our high-margin advertising business continues to grow and has become our largest revenue contributor, accounting for 39% of total revenue. Despite some micro-economic pressure, we expect our advertising revenue to maintain a sustainable and healthy growth trajectory going forward. On GAMS, we have a robust pipeline of five new titles set to launch in Q4 of this year and into next year. We are confident that our gaming revenue will resume a year-over-year growth trend starting in the fourth quarter. We remain confident in our future profit expansion, and our mid-to-long-term target remains unchanged. A gross profit margin of 40% to 45% and an operating operating margin around 15% to 20%. We are confident in maintaining healthy revenue growth when continuously improving our operating efficiency. Also, to drive the profit realization, we will carefully balance our AI investment with commercial monetization, and we firmly believe that today's investment will play a virtual role in BDB's sustainable development in the future. Regarding to the shareholder return, delivering shareholder return is also a priority for us. From the beginning of this year to date, we have executed and accumulated $118 million in share repurchasing. In June of this year, our Board of Directors approved a new $300 million share repurchase program. As of the end of June, we have already repurchased 1.9 million shares for over $31 million under this new program. Going forward, we will continue to execute repurchases during a purchase major market window for the long-term sustainable value for our shareholders.

Thank you, operator.

That concludes our question and answer session. That concludes the question and answer session.

Thank you once again for joining Bilibili's second quarter 2026 financial results and business update conference call today. If you have any further questions, please contact Juliet Zhang, Bilibili's Executive IR Director or PR Center Financial Communications. Contact information for IR in both China and the US can be found on today's press release. Thank you and have a great day.