Earnings call transcript: Bilibili Q2 2025 beats earnings expectations, stock drops

Bilibili Inc. (BILI), a prominent player in the Interactive Media & Services industry, reported its second-quarter earnings for 2025, surpassing analyst expectations with an earnings per share (EPS) of $1.29 versus the forecasted $1.20. Despite this positive financial performance, the company’s stock experienced a pre-market decline of 5.71%, trading at $23.86. Revenue for the quarter reached RMB 7.3 billion, slightly above projections, marking a 20% year-over-year increase. According to InvestingPro analysis, the stock currently trades near its Fair Value, with analysts maintaining a strong buy consensus rating of 1.45.

Key Takeaways

• Bilibili’s EPS exceeded forecasts by 7.5%.
• Revenue increased by 20% year-over-year, driven by strong growth in Value-Added Services and Advertising.
• The stock fell 5.71% in pre-market trading despite positive earnings results.
• Bilibili’s user engagement metrics showed significant growth, with daily active users rising 7% year-over-year.

Company Performance

Bilibili demonstrated robust performance in Q2 2025, with total net revenues reaching RMB 7.3 billion, a 20% increase from the previous year. The company’s gross profit rose by 46% year-over-year, reflecting improved operational efficiency and a strong market position in anime, comics, and games (ACG) content. The net profit of RMB 218 million marked a significant turnaround from the prior year’s loss, highlighting the company’s effective cost management and revenue diversification strategies. InvestingPro data reveals the company maintains a healthy financial position with more cash than debt on its balance sheet and a solid current ratio of 1.36.

Financial Highlights

• Revenue: RMB 7.3 billion, up 20% year-over-year.
• Gross profit: RMB 2.7 billion, a 46% increase year-over-year.
• Gross margin: 36.5%, up from 29.9% last year.
• Net profit: RMB 218 million, compared to a loss last year.
• Adjusted net profit: RMB 561 million.

Earnings vs. Forecast

Bilibili’s EPS of $1.29 surpassed the forecasted $1.20, resulting in a 7.5% earnings surprise. This marks a continuation of the company’s trend of outperforming market expectations, as it has consistently demonstrated strong revenue growth and improved profitability. The revenue of RMB 7.3 billion slightly exceeded the forecast of RMB 7.33 billion, reinforcing the company’s stable financial trajectory.

Market Reaction

Despite the positive earnings results, Bilibili’s stock dropped by 5.71% in pre-market trading, settling at $23.86. This decline may reflect investor concerns over broader market conditions or sector-specific challenges, rather than company-specific performance. The stock’s movement contrasts with its 52-week high of $31.77, indicating potential volatility in investor sentiment. However, InvestingPro highlights the stock’s impressive 80.49% return over the past year, with analyst targets ranging from $19.95 to $37.01. Discover 8 additional exclusive ProTips and comprehensive valuation metrics with an InvestingPro subscription, including access to the detailed Pro Research Report covering what really matters for smarter investment decisions.

Outlook & Guidance

Bilibili remains optimistic about its future prospects, targeting a mid-term gross margin of 40-45% and an operating margin of 15-20%. The company is focusing on international game expansion and AI integration, with expectations of a 10% operating margin in Q4. This strategic direction underscores Bilibili’s commitment to leveraging technology for growth and efficiency.

Executive Commentary

CEO Rui Chen remarked, "We maintained strong momentum in the second quarter, delivering solid revenue growth alongside our thriving community of high-value, loyal young users." Management emphasized the role of AI in enhancing advertising revenue and efficiency, indicating a strategic focus on technological advancements to drive future growth.

Risks and Challenges

• Regulatory hurdles in game licensing could impact future revenue streams.
• Increased competition in the digital entertainment space may pressure market share.
• Macroeconomic factors, such as currency fluctuations, could affect financial performance.
• Dependence on ACG content might limit diversification opportunities.
• Potential slowdowns in user growth could affect advertising revenue.

Q&A

During the earnings call, analysts inquired about the performance of the Sanmu game and the integration of AI in content and advertising. Bilibili’s management detailed strategies for advertising business growth and future game monetization, providing insights into the company’s long-term vision and operational priorities. The company’s Financial Health Score of 2.93 (rated as GOOD) by InvestingPro suggests strong fundamentals, with particularly high scores in growth (4.09) and price momentum (3.25). For deeper insights into Bilibili’s financial health and growth prospects, access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.

Full transcript - Bilibili Inc (BILI) Q2 2025:

Conference Operator: Good day, and welcome to the Bilibili Second Quarter twenty twenty five Financial Results and Business Update Conference Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Juliet Yang, Executive Director of Investor Relations. Please go ahead.

Juliet Yang, Executive Director of Investor Relations, Bilibili: 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 measures we provide are for comparison purpose only.

The definition of this measure and a 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.

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.

Rui Chen, Chairman of the Board and Chief Executive Officer, Bilibili: Thank you, Juliet, and thank you to everyone for joining us today to discuss our twenty twenty five second quarter results. We maintained strong momentum in the second quarter, delivering solid revenue growth alongside our thriving community of high value, loyal young users. Total net revenues for the second quarter grew by 20% year over year to RMB7.3 billion, driven by the continued strength of our core games and advertising businesses. Games revenues rose 60% year over year to RMB1.6 billion, propelled by new seasons of our popular SLG title, Advertising revenues increased 20% year over year to RMB2.4 billion, supported by greater AI integration that made our ads more efficient and effective. Underpinned by operating efficiency, our growth in games and advertising drove a 46% year over year increase in gross profit, with gross margin expanding to 36.5% from 29.9% in the same period last year.

As a result, we achieved GAAP net profit of RMB218 million and adjusted net profit of RMB561 million. Our performance reflects our growing influence among China’s Gen Z plus audience. By providing users with high quality content they love, we foster deeper engagement that fuels our commercial ecosystem. In the second quarter, DAUs reached a new high of 109,000,000, up 7% year over year, and MAUs grew by 8% to three sixty three million. MPUs also grew by 9% to 31,000,000.

The average daily time spent rose to one hundred and five minutes, up six minutes compared to the same period last year, reflecting our continued focus on high quality videos that capture and hold our community’s interest in meaningful and fulfilling content. Our growing influence among our core users is showing up both online and offline. This year’s Bilibili World and Bilibili MacroLink drew in record crowds. Over 400,000 participants attended the three day event, 60% more than last year, making it one of the largest offline animation expos in China. The strong turnout reflects the vitality of our brand and the power of our community, showing the tremendous potential of our young users.

Their tastes are already shaping mainstream trends, and countless more interests within our community are waiting to be unleashed. Looking ahead, we will sharpen our focus on delivering the best PUGV community experience, attracting more users and growing alongside them. At the same time, we will continue to proactively invest in monetization initiatives to drive sustainable profitability. Through these efforts, we are confident in our ability to create long term value for all of our stakeholders. With that overview, let’s take a closer look at our core pillars of content, community, and commercialization.

Beginning with content and community, we remain firm believers that high quality content and an engaging community are essential to the lives of today’s young generation. Gen Z plus comes to Billabilly not for quick hits, but for meaningful content they care about. And we’re seeing that translate into stronger influence, longer watch time, and greater commercial potential across every corner of our platform. Driven by high quality PUGV content, the average daily time spent reached one hundred and five minutes in the second quarter, up six minutes year over year. Notably, the watch time for videos longer than five minutes increased nearly 20% year over year in Q2, proving Billabilly’s undeniable user mindshare to consume mid to long form meaningful content.

Not only are people spending more time, but more people are paying for premium content. Monthly paying users increased by 9% year over year to 31,000,000, driven by membership, fan charging, and live broadcasting. In the meantime, our community remains engaged and loyal. The number of official members was up by 11% year over year to two seventy million, with a twelve month retention rate remaining around 80%. We maintained our dominant leadership in ACG content.

Chinese anime content performed strongly during the second quarter, with watch time up 34% year over year, driven by popular titles such as A Record of Mortal’s Journey to Immortality, The Tales of Hurting Gods, and Lin Cage Season two Game content remained one of our top categories with watch time increasing by 21% year over year, making Billabilly an essential platform for game developers to engage deeply with the gamer community and strengthen their IP. It is also no surprise that AI related content continues to be a breakout category. Watch time grew 61% year over year, cementing Billability’s role as the go to platform for Gen Z plus to learn, explore, and create with AI. Likewise, AI advertiser demand increased by about 150%, highlighting the great synergy between content value and commercial potential. Meanwhile, consumption related content categories continue to grow, driven by evolving user behavior.

As our Gen Z plus users become more financially independent, they increasingly rely on peer creators for trusted reviews and tutorials when making purchase decisions. This has boosted engagement across verticals. Watch time for home appliance content rose 14% year over year. Parenting and early education rose more than 50%. And travel and lodging saw an 11% increase, reflecting growing interest in experience driven consumption.

We continue to enhance our products and services to help creators make more money. In the first half of the year, about 2,000,000 creators earned income on Bilibili through various channels. Creators’ total income from our fan charging program more than doubled in the first half of the year, once again showing users increasing willingness to pay for quality content. The number of creators monetizing through Sparkle Ads and video and livestream e commerce also grew nineteen percent and forty nine percent year over year, respectively, in the first half of the year. Now let’s talk about our commercial businesses and their progress.

Our commercial growth demonstrates how our growing influence among younger users is directly translating into commercial value. Advertising is one of the most direct business lines that shows this. In the second quarter, our ad business grew 20% year over year, reaching RMB 2,400,000,000.0 and continuing to outpace the industry’s average growth rate. During the second quarter, we continued to advance our ad infrastructure, improving ad conversion efficiency through recommendation algorithms, creative generation, and smart ad placements. Through deeper LLM integration with multimodal content understanding, we are capturing user intent more precisely and delivering smarter, more personalized ad recommendations.

The upgrades we’ve made to the AIGC tools are also helping advertisers generate high performing creative ads at scale. In the second quarter, roughly 10 of new ad titles and over 30% of ad covers were created using these tools, helping advertisers reach users more effectively with content that resonates with their target audiences. We also offer smart ad placement tools to allocate, sequence, and monitor ad performance in real time, significantly reducing manual operations at the same ad spend. These enhancements are boosting both efficiency and scalability, improving eCPM by more than 10% year over year and fueling around 30% year over year growth in performance based advertising revenue in the second quarter. Revenues for brand and native advertising also maintained healthy momentum.

Industry wise, games, digital products, and home appliances, e commerce, internet services, and automotive were our top five advertising verticals in the second quarter. The number of advertisers increased by over 20% year over year, reflecting our growing appeal to brands. Leveraging our dominant user mindshare, game developers are allocating larger ad budgets to Billabilly to engage more deeply with young gamers. Demand for 3C and digital products remained robust, supported by our leadership in these categories and national subsidy tailwinds. In e commerce, Bilibili delivered an average new customer acquisition rate of about 60% for advertisers across industries under the SIMPOL plan during this year’s 06/18 season.

GMV from products priced above RMB1000 increased nearly 50% year over year, further demonstrating our users’ strong purchasing power and our ability to convert user engagement into high intent transactions. Turning to our games business. In the second quarter, revenues increased by 60% year over year to RMB1.6 billion, owing to Sanmu’s enduring strength in its first year and evergreen titles FGO and Azerlane, which recently celebrated their ninth and eighth anniversaries, respectively. To mark Sanmu’s first year anniversary, we rolled out an upgraded season eight on May 31, featuring new gameplay, characters, and in game events, backed by a targeted marketing push. Both engagement and retention have been solid as we enhanced onboarding, monetization path, and returning user experiences.

Building on this strong momentum, we are developing new game seasons, piloting mini program offerings, and preparing for SEMO’s international rollout later this year. Looking at our game pipeline, we have a number of games in the approval process, including multiple ACG titles and casual games. Once approved, we are prepared to bring them to our community and further expand our presence in the gaming space. And finally, let’s look at our VAS business. Revenues grew 11% year over year to RMB 2,800,000,000.0, driven by steady momentum across live broadcasting, premium memberships, and other value added services.

Our focus remains on refining live broadcasting operations by fostering more quality content and diversifying monetization features to support steady growth. Through refined operations, gross profit margin for live broadcasting continued to improve in the second quarter. Premium memberships maintained stable growth, reaching 23,700,000.0 at the end of the period, with over 80% on annual or auto renewal plans, demonstrating their loyalty and commitment to our platform. Meanwhile, our other VAS products continued to grow rapidly in the second quarter, especially our fan charging program, which increased by more than 100% year over year, with more users showing their support for the creators and high quality content they love. Looking ahead, our focus remains on what sets Bilibili apart, high quality content that resonates with China’s Gen Z plus generation.

This is the foundation of our growing influence and the engine behind our expanding commercial opportunities. At the same time, we are actively embracing the transformative opportunities brought by AI, from enhancing operational efficiency to elevating user experience, accelerating monetization, and expanding our global reach. These advancements further strengthen our foundation for sustained growth and long term profitability. With that, I will turn the call over to Sam to share more financial details. Sam, please go ahead.

Sam Fan, Chief Financial Officer, Bilibili: Thank you, Mr. Chen. Hello, everyone. This is Sam. In the interest of time on today’s call, I will review our second quarter highlights.

We encourage you to refer to our press release issued earlier today for a closer look at our results. In the second quarter, we continued to grow revenues, expand our margins and grow our profitability, driven by growth across our commercial businesses, particularly in our high margin advertising and games businesses. Total net revenues for the second quarter were RMB7.3 billion, up 20% year over year. Our revenue breakdown for Q2 was approximately 39% from VAS, 33% from advertising, 22% from games, and 6% from our IP derivatives and other businesses. Our cost of revenues increased by 9% year over year to RMB4.7 billion in the second quarter, while our gross profit rose 46 year over year to RMB2.7 billion.

Our gross profit margin reached 36.5% in Q2 compared with 29.9% in the same period last year. Our expanding gross profit and margin show that our model is built to scale. Our total operating expenses were RMB 2,400,000,000.0, remaining stable compared with the same period last year. S and M expenses increased 1% year over year to RMB 1,000,000,000. G and A expenses were RMB510 million, up 4% year over year.

R and D expenses were RMB866 million, down 3% year over year, mainly related to R and D efficiency improvements. These efforts allowed us to maintain positive operating results. Our operating profit was RMB $252,000,000, and our adjusted operating profit was RMB $573,000,000, both compared with losses in Q2 twenty twenty four. Adjusted operating profit margin reached 7.8% in the second quarter. Net profit was RMB $218,000,000 and adjusted net profit was RMB $561,000,000 versus losses in the prior year period.

Our adjusted net profit ratio in the second quarter was 7.6 compared with an adjusted net loss ratio of 4.4% in the same period a year ago. Cash flow wise, we generated about RMB2 billion in operating cash flow in the second quarter. As of the 06/30/2025, we had cash and cash equivalents, time deposits and short term investments of RMB22.3 billion or USD3.1 billion. During the second quarter, we enhanced our shareholder return by repurchasing approximately 5,600,000.0 Class Z ordinary shares, each equal to one ADS, for a total of HKD783 million, or US100 million dollars as part of our ongoing share repurchase program. These shares have all been canceled as of the end of the 2025.

Under our $200,000,000 share repurchase program approved by the Board in November 2024, We’ve repurchased a total of 6,400,000 shares so far at a total cost of US116 million dollars leaving about US84 million dollars available for future buybacks as of 06/30/2025. Thank you for your attention. We would now like to open the call to your questions. Operator?

Conference Operator: Thank you. If you wish to ask your question to management in Chinese, please immediately repeat your question in English. The company will provide consecutive interpretation for management’s statement during the Q and A session. Please note that English interpretation is for convenience purposes only. In the case of any discrepancy, management’s statements in the original language will prevail.

We will now take the first question from the line of Xuexing Tsang from CICC. Please go ahead. Thanks management for taking my question and congratulations on the strong quarter. My question is about the user ecosystem. We have noticed that the company’s DAU and MAU growth accelerated in the first half of this year and average daily time spent has also continued to increase.

So what are the main drivers and what’s the outlook for the future? In addition, some of the set a record with 400,000 participants. So what opportunities can we see for the Bilibili community from BWS success? Thank you.

Juliet Yang, Executive Director of Investor Relations, Bilibili: In the past sixteen years, we have been focusing on providing the highest quality content and fostering a thriving welcoming community culture. And under the current Internet environment, we think the high quality content and supportive constructive community environment, it’s what’s in scarcity. In the current video landscape, I think there’s an oversupply of video content. People are not lacking content to watch, but they’re lacking high quality content to watch. The same thing goes with the content, the feedback, the voice from the netizens.

There’s plenty of voices across all apps, but what’s truly missing is those supportive, resonating voice from welcoming friendly communities. So that’s what Bilibili will continue to focus on by curating the highest quality content and also fostering a welcoming community environment that allow people to connect over the same interest and resonate with each other. We believe that by mastering both quality content and a thriving community culture, user will naturally come, they will be drawn into this unique experience. And the user statistics in second quarter, our DAU grew by 7% and MAU grew by 8%. That’s a result of us focusing on the quality content as well as a welcoming community environment.

Just like the update we see in lifestyle consumption, content consumption is also evolving. And more importantly, the upgrade in content consumption particularly in statistics and taste is largely one way. Once someone received and have been watched high quality content, it’s very hard for them to go backwards. And over the past sixteen years, have really established a strong presence in users mind shares in categories like anime games and knowledge based content. And there’s still a lot of things we can do to further expand surrounding the users interest network.

And in addition to that, we think there are more to be done beyond just QGD, for example, podcasts, teacher and text based content, AI based virtual companionship, there are lots of potentials and tremendous room for us to expand into. So, to summarize, we think that it’s an integral part for high quality content as well as a good and welcoming community environment that’s actually self sustaining and ever evolving. For example, we think the high quality content can attract those people who can truly appreciate this type of content. And the friendly, welcoming, supportive from the users will continue to motivate the content creator to continuously create good content. That’s why on Bilibili we’ve noticed that a talented content creator can be easily discovered and by our users and at the same time they can quickly adapt and evolving into a larger more influential content creator.

And even for the same content, I can see everywhere, but the number of interactions and the quality of that interaction is always the best on Bilibili. And also for those high quality content creators, their fan base, their stickiness is the highest, the strongest on Bilibili. And that is a well established and common knowledge among the content creators in China. And that’s why you see many high quality content has been discovered on Bilibili platform. For example, a few years ago, the first PV of Black Mist recall was discovered by Bilibili user and quickly become viral and so influential across the internet.

And also a few years ago, we co produced the mini animation, Nobody that was also discovered by Bilibili user and become viral popular recognizing Bilibili’s community. And now we’re very glad to see that Its big movie is now getting more even more wide recipients from audience and its boxing the grossing has exceeded RMB1 billion. And another example would be last yesterday at 4AM, Black Luchon Blackness, Zhongkuei was pioneered premiered on Bilibili platform. And less within less than two days, it’s total video views has already exceeded 12,000,000. And that’s why you’ve seen many, many good content will be the most appreciated and be discovered by Bilibili users because we have established that environment that allows high quality content to thrive.

This year’s visibility world has broke many records. We have attracted audience from more than 20 countries and regions with over 400,000 people attend the events. Among them 70% came from outside of Shanghai and 11% of the tickets were purchased by foreign passports. And it’s safe to say that Bilibili has become the largest ACG event in China, both in terms of scale and influence. And even for the Shanghai city has invented the word of ACG consumption for delivery because the event drew a large number of young people to Shanghai boosting local offline consumption and even become a new cultural landmark for the city.

And at its core, Bilibili is a real world reflection of Bilibili brand and community offline. People not only use Bilibili product, they also come to offline events not named after Bilibili. This is shows and reaffirms the influence of IP as well as our community. It’s safe to say that Bilibili brand has become a part of the lifestyle of the young generation in China. Thank you, operator.

Next question, please.

Conference Operator: Thank you. We will now take the next question from the line of Miranda Tsong from Bank of America Securities.

Juliet Yang, Executive Director of Investor Relations, Bilibili: Thank you, management for taking my question. My question is about the advertising business. So second quarter ad business beat expectation again. Can management share what are the drivers? And looking ahead into second half, what are the trends you are seeing for the industry?

And what’s your expectation about companies’ business trends? And what kind of new products and technologies will you roll out? Thank you. In the second quarter, our advertising business maintained a strong growth, outpacing the overall industry. Quarterly revenue reached a record high of billion, up 20% year over year.

Speaking of the driver behind that growth, we continue to focus on the one horizontal and vertical strategy. In this quarter, we continue to strengthening our ad infrastructure, product and technology efficiency allow us to further unleash our users’ value and traffic The following three points will support that. One is during the quarter, we further enhanced our integrated campaign combining seeding and conversion. In the second quarter, over 50% of the Sparkle ads also leveraged our QiFei program, which is the traffic acquisition program we have in our ad system. Number two is that, we continue to strengthen our marketing data and stock structure leveraging the multi model large model to significantly improve our ad delivery efficiency.

The last thing is we continue to optimize the deep conversion capabilities. The share of deep conversion doubled in the second quarter year over year and there’s still room for us to improve And that directly leads to uplift in our overall ad eCPM. And from industry standpoint, in the second quarter, our top five advertisers verticals, there’s slight change, which are games, digital products and home appliances, e commerce, online services and automotive. And the number of advertisers increased over 20% year over year in the second quarter. Looking at more details, GAME remains our largest verticals.

We continue to leverage our high quality full chain conversion capability. We further strengthened our market share in premium game advertising, while expanding to new scenarios such as Bilibili mini games and game live streaming, creating incremental revenue opportunities. And professional reviews from by our professional content creators and in-depth content from those creators continue to attract advertisers to target the young consumers. In second quarter, home decorations ad revenue grew nearly 70% year over year. We will continue to deepen our vertical marketing solutions while consolidating our leadership in key industries.

At the same time, we’re looking to expanding into broader consumer categories. I wanted to add some June 18 data for your reference. First of all, we continue to press on our open loop strategy and attractor attracting more advertiser to come to Bilibili and see us as a must invest platform during major sell seasons. The number of advertiser during the June 18 campaign increased 60% year over year. And the engagement between creators and consumer continued to rise.

During the June 18 campaign, the total GMV grew over 33% year over year. And the number of creators exceeding RMB 10,000,000,000 GMV grew over 60% year over year. And here’s some data points to show the consumers trend on billability. Digital appliance grew 50 over 50% during the season, household up 85% even for categories such as maternity and childcare, food and beverage and even watches all grew over 60% year over year showing visibility to users strong consumption power as they grow with the platform. For the second half outlook, there are two points we invite you to take a closer look.

One is a broader application and linkage of products and technologies across multiple endpoints and scenarios, including but not limited to PC, OTT, store mode, live streaming, search and trending topics. And then scenario that we can link the consumer with the advertiser, we will be putting more effort into. The second point will be on AI. We believe that AI will continue to drive improvements, not only on efficiency, but also delivering actual advertising revenue. One thing is that we’ll continue to implement ongoing iteration of our recommendation algorithm, enabling deeper content understanding and more precise ad targeting based on our user interest and historical behavior.

Another point would be the AIGC advertising tools to help our advertiser to generate ad covers and titles or even content tailored to Bilibili’s users’ language and creative style at scale. Currently about 30% of the ad covers are AI generated and there will be more room for us to push the number forward. And lastly is on AI powered automated ad developer products. We will be launching more of those products to improve our advertisers’ cost control capability as well as scaling capabilities. From an industry vertical standpoint, in the near term, we think the advertisers’ budget are migrating from multiple platforms to a few core platforms.

Platforms that are indispensable and unique will capture larger shares of the client budget. And in the longer term as China’s consumer market involves, advertiser will be placing more emphasizing on building their brands on top of the pure self conversion budget, because no advertiser can afford to ignore the influence and purchasing power of young people. And on that aspect, we believe it’s at a very unique position. So, in summary, in long term or short term, as long as our community continues to price, the value of Bilibili’s advertising business will become increasingly evident over time. We remain confident in our ability to sustain the growth above industry average.

Thank you. Operator, next question, please.

Conference Operator: Thank you. We’ll now take the next question from the line of Felix Liu from UBS. Please go ahead.

Felix Liu, Analyst, UBS: Thank you management for taking my question. My question is on the game business. Can management share any color on the recently concluded Samo first anniversary Season eight? How should we think about the second half trend for Samo as well as for next year? And on your new game pipeline, what are the key games that you would like to highlight?

Thank you.

Juliet Yang, Executive Director of Investor Relations, Bilibili: On June 13, Sanmol celebrated its first anniversary. And during that season, the DAU broke a record a new record within the year of 2025. The achievement of Sunmo on its first anniversary truly demonstrate that the game has established itself and laid a foundation to become a long lasting title. We are confident that Sunmo will become a lifestyle with a life cycle of over five years and continue to contribute solid game revenue for us. During the season eight and anniversary celebration event we have launched a multiple new monetization tools such as the limited edition skins, which is well received by our users.

We believe for example, like the skin cells during the anniversary has met with our expectations and showed that we have explored a new monetization tool that’s even more healthier and sustainable compared to other tools. Going forward, we’ll have the new card monetization combining with the skins as well as new innovative monetization model that will help us to make SAML even more sustainable and healthy. The most important thing for us is to focusing on making every game season the best game season. As long as we continue to provide that experience, we think the users will naturally stay and continue to play with this game. One hand, we think the overall development capacity for Samoa has improved quite a lot.

And each new game season will be featuring richer content. And moving forward, we will continue to optimize the gameplay, make it more fun, more balanced and make the game even more engaging. On top of the new user acquisition going forward, we’ll be putting more emphasize on retaining and activating the old users because this game has sustained ace game seasons and there will be a lot of old user or dormant users. It’s very important for us to activate and awaken those existing user who have played Sun Mobile but have left the game for some reason. This will be a very important channel for us to maintain a healthy game community.

So, as far as we see so far, the user retention rate has been maintained at very healthy level. We are expecting to launch the traditional Chinese version of Fanmul in the end of this year or early next year to the players in Hong Kong, Macau and Taiwan. And we’re also going to explore full of potential releases in overseas markets such as Japan and Korea. Looking at our pipeline, we currently have four to five games that’s waiting for licensing approval. And once the approval is being obtained, the game will be releasing accordingly.

In short term, we will be expecting to release a casual game based on Nongfanggu IP, which I believe is quite fun and entertaining to look forward to. And going forward, we’ll continue to execute on the strategy of creating games, reinventing games for the new generation of gamers. And we’ll be exploring new game genres and making innovation across different genres. And there are a number of potential categories in our pipeline and we’re quite look forward to. Operator, next question, please.

Thank you.

Conference Operator: Thank you. We will now take the next question from the line of Lin Kun from Goldman Sachs. Please go ahead.

Rui Chen, Chairman of the Board and Chief Executive Officer, Bilibili: So thank you management for taking my questions. So my question is about our profit margin. We have seen our group profit margin continue to trend high. So what are the potential areas of our cost efficiency and the cost discipline going forward? How should we think about the second half in terms of our profitability outlook and any timeline to achieve our media target?

They are 15% above operating margin. And in terms of use of the cash, so what are the future areas of capital allocation? How should we think about our shareholder return policy? Thank you.

Lin Kun, Analyst, Goldman Sachs: Thank you, Lincoln. This is Sam. I will take your question. In Q2, our top line grew by 20%. Our gross profit increased by 46%.

So we saw very strong operating leverage here. Our gross margin had been increased sequentially for twelve quarters. We expect the same trend to continue in the second half of this year, reaching around 37% by Q4, let’s say. So we still maintain our mid term gross profit margin target 40% to 45%. And for the OpEx, we have continued to improve our efficiency of the operation.

So if you look at the absolute dollar amount of our OpEx in the second in the first half of this year, is still flat year over year. So we expect to achieve the year over year decline of the OpEx in the second half because in the second half last year, we have more marketing spending on Samo, right, at the first two quarters. So for the profitability, over the past two years, our gross profit margin grew very well and our operating profit has grown even faster, outpacing our gross margin improvement. In Q2, the OP margin was 7.8%. So we are confident that we can achieve quarter over quarter improvement to achieve like 10% adjusted operating margin in Q4 this year.

So again, we maintain our mid term target of 15% to 20% for our OP margin. And regarding to the cash usage, to enhance our shareholder returns, we already repurchased US100 million dollars shares in our Hong Kong line in Q2, and we have canceled all those repurchased shares. So under the current million buyback program, we still have RMB83 million remains available. As we have sufficient U. S.

Dollar cash reserve offshore, the repurchase will continue based on the market condition. So, thanks for your question.

Juliet Yang, Executive Director of Investor Relations, Bilibili: You. Operator, next Thank question,

Conference Operator: you. We will now take the next question from the line of Yuan Tsang from China Renaissance.

Lin Kun, Analyst, Goldman Sachs: Thanks for taking my question. So my question is on AI. Can you discuss what kind of AI application we have on platform? And what is the latest progress? Thank you.

Juliet Yang, Executive Director of Investor Relations, Bilibili: As a matter of fact, the AI application or adoption across multiple scenarios on Bilibili has already started to generate value. For example, the advertising revenue grew by 20% year over year and Colleen mentioned AI has played an important role behind that number. For example, the AIGC cover title generation has meaningfully improved the click through rate. And also from behind the MAU and DAU number increases, AI also played vital role in terms of delivering the right content to the right users. And on the topic of providing high quality content and fostering a friendly community, we have also leveraged AI capability to amplify Bilibili’s strength through early identification of high quality content through understanding the user’s commentary session.

And that has helped us to promote high quality content at very early stage and allow that content to be seen by more people. This has already shown in our user matrix and community engagement. I’ll elaborate on three aspects of how AI is helping ability to become better. One is that AI can really amplify Billability strength from one aspect. One example would be every day, there will be over 1,000,000 long comments generated by our users in that era of AI.

That means about 1,000,000 people helping the AI to mapping the content, to identify the content as good content, good data points. And this asset, this type of long comments generated by real Bilibili user is a truly unique data asset for us to identify high quality content at very early stage and promote that across our platform. And we already have specific tools to help us to amplify that strength and we will be adopting that technology going forward across multiple content categories and scenarios. And the second is on AI assisted content creation for mid to longer form video. We’ve seen other players have made even for open source tools for short video creation, but that’s merely just on the video material itself, no longer than thirty seconds.

Whether AI can make mid to longer form video. The question we think the answer is yes. On the one hand, we’ve seen other players in the market have that tools to make mid to longer form videos. But it just seems that first look it’s produced by AI. However, we think we have the ability to make human like mid to longer form video because we have best and most talented content creators on our platform who can help us to make this into reality.

And we will be launching that product very soon. And we think it might be the best human like mid to longer form AI video creation tool that’s out there. Well, the purpose of that tool, of course, goes back to help our content creator to lower their barriers and improve their production efficiency and contributing to overall content supply rather than making AI produced video. So, we think another analogy is to make a very good Chinese food. You will have the Chinese ingredients, not just to have offer them microwave and we are here to offer the ingredients.

And on areas that Bilibili has key advantage on, for example, such as animation, virtual idle and virtual streamers, AI also have a strong potential to help us to meet the demand of those ACG lovers. It can for example, the virtual companionship by a virtual streamer or virtual idol that can be very effectively resolved by the help of AI. And we have already dabbed on that area and they will be products to launch soon to the market. All right. Thank you, operator.

That concludes the question and answer session. Back to you.

Conference Operator: And that concludes the question and answer session. Thank you once again for joining Bilibili’s Second Quarter twenty twenty five 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 Communication. 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.

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