Bilibili Inc. / BILIBILI-W is set to release its latest quarterly earnings report on November 13, 2025 (before the U.S. stock market opens). The market is focused on whether the advertising and gaming momentum will continue, along with the stability of gross margin and profitability improvement.

Market Expectations

According to Tiger Trade data, the market consensus forecasts Bilibili’s third-quarter revenue at RMB 7.65 billion, a year-on-year increase of 4.77%, with earnings per share of RMB 1.505, up 163.96% year-on-year.

In the company’s previous earnings call, the management noted that gross margin has improved sequentially for 12 consecutive quarters. The financial team predicts a gross margin of approximately 37% for the second half of the year. However, no specific quarterly guidance for net profit or net profit margin was disclosed.

Last quarter’s highlights mainly came from advertising and gaming segments: advertising maintained strong growth driven by both brand and performance ads, while the gaming segment was supported by "Three Kingdoms: Strategic Battle," FGO, and long-term products like "Azur Lane." Among existing businesses, advertising presented the most promising prospects, with Q2 advertising revenue reaching RMB 2.449 billion, up 20% year-on-year. Collaboration between brand and performance advertising prompted a more than 20% year-on-year increase in the number of advertisers.

Q2 Review

The company’s revenue for Q2 amounted to RMB 7.338 billion, marking a year-on-year growth of 19.76%. Gross margin stood at 36.47%, showcasing an improvement year-on-year. Net profit attributable to shareholders reached RMB 219 million, with a net profit margin of 2.98%, showing significant sequential improvement. Adjusted EPS was $1.29, a year-on-year increase of 198.46%.

The key highlights of the previous quarter include high-margin advertising and gaming businesses driving profitability, accompanied by a year-on-year optimization in operating expense ratios. In terms of segmental performance, livestreaming and value-added services revenue reached RMB 2.837 billion, up approximately 11% year-on-year; advertising revenue stood at RMB 2.449 billion, growing by about 20%; mobile gaming revenue hit RMB 1.612 billion, up approximately 60%; while revenue from intellectual property derivatives and other segments decreased by about 15% to RMB 440 million.

Q3 Outlook

Advertising Momentum and Conversion Efficiency

The advertising segment continues its dual-drive growth strategy of brand and performance ads observed in Q2. During the reporting period, the company disclosed a year-on-year increase of over 20% in advertiser numbers and an approximately 30% growth in performance ads, closely tied to platform DAU, usage duration, and the integration of AI in advertising infrastructure. While heavily policy-driven product categories such as home appliances and digital e-commerce experienced strong growth in viewing time and ad revenue during Q2, their heat has normalized in Q3. Nevertheless, core verticals such as gaming, e-commerce, automotive, and web services maintain stable ad spend. Structural improvements in advertising (with an increased proportion of performance ads) are expected to continue enhancing conversion efficiency and ROI, boosting per-customer contribution.

Advertising is a high-margin segment, and as ad spend remains strong and supported by optimized algorithms and conversions, gross margin remains a positive contributor to overall profitability. However, seasonal fluctuations and large promotional cycles may impact brand budgets. Management previously stated a gross margin target of about 37% for H2, which will be easier to achieve if advertising momentum remains steady.

Potential risks include diminishing benefits from policy incentives for home appliances and durable goods and cautious overall macro advertising budgets. However, the company’s increasing penetration in gaming and e-commerce ads could serve as a counterbalance.

Sustainability of Gaming Business and Release Schedule for New Games

Q2 gaming revenue grew by approximately 60% year-on-year to RMB 1.612 billion, primarily driven by the first-year performance of "Three Kingdoms: Strategic Battle" and the stability of two long-term products. In Q3, "Three Kingdoms: Strategic Battle" continued to maintain active participation through seasonal updates and anniversary events, demonstrating revenue resilience from lifecycle management of mature products.

During the earnings call, management mentioned multiple products awaiting approval for publishing licenses, while international versions are also on the agenda. High continuity of revenue is expected for Q3, but the timing of new game launches and overseas versions will determine the magnitude of incremental revenue. If new game progress proceeds smoothly, revenue growth from Q3 to Q4 could have a synergistic effect on advertising.

On the cost side, the gaming business has a relatively high gross margin. The optimization of co-publishing and exclusive licensure structures is favorable for boosting overall margins. However, investment in channels and marketing expenses for new game cycles may pose short-term pressures on profits.

Community Ecosystem and Payment Conversion

In Q2, daily active users (DAU) reached 109 million, while monthly active users (MAU) hit 363 million. Monthly paying users averaged around 31 million, with daily usage time at 105 minutes, reflecting stable engagement with content and interactions. During Q3, despite a seasonal decline following the summer season, key community categories (gaming, knowledge, lifestyle, entertainment) and PUGV content supply are expected to support usage duration and sticky interactions.

On the payment side, premium membership and live-streaming value-added services continued to perform steadily. Management revealed growth in content creators earning income through diversified tools, along with increases in both the number of creators and their average income. Creator economy activity serves as support for memberships, live streaming, and e-commerce conversions. The key focus in Q3 lies in the sustainability of high-quality content and operational activities, driving synergy in membership fees, sponsored orders, and in-app purchases.

Regarding costs and expenses, sales expense ratio and R&D expense ratio both improved year-on-year in Q2. Should similar discipline be maintained in Q3, earnings elasticity will become more apparent. At the same time, long-term investments into content and community maintenance remain crucial, requiring a delicate balance between efficiency and growth.