BilibiliBILI

Key highlights

• Advertising growth accelerates: Advertising revenue grew 30% to RMB2.59 billion, which is faster than the total company growth of 7% and helps shift the business toward more profitable sales.
• User engagement record: Daily active users grew 8% to 115.2 million and people spent an average of 119 minutes per day on the platform, which is 11 minutes longer than they spent a year ago.
• Gross margin expansion: Gross margin, which shows the profit left after direct costs, improved to 37.1% from 36.3% a year ago, marking the 15th straight quarter of expansion as the company gets more efficient at making money.
• Mobile gaming decline: Gaming revenue fell 12% to RMB1.52 billion because a major title from last year, San Guo: Mou Ding Tian Xia, has entered a more stable and mature phase with lower sales.
• Sustained profit growth expected: Management expects their investments in AI to continue driving long-term value and sustained profitability after growing adjusted net profit 62% to RMB585.4 million this quarter.

Our take: This was a strong quarter that proved the company can turn its massive audience into real profit. While total revenue growth was modest, the 30% jump in high-margin advertising and the milestone of 115 million daily users suggest the business is becoming much healthier. It strengthens the case that Bilibili is successfully maturing into a profitable platform.