Bilibili's AI-Fueled Flywheel: Ad Growth Accelerates, Community Deepens, Profitability Compounds
Q2 2026: Ad revenue +28%, gross margin 37.2%, and AI investment starts to show returns amid macro softness.
BILI · Earnings Call · 2026-08-27
AI: The New Growth Engine
Bilibili's second-quarter report once again demonstrated the power of its unique flywheel: high-quality content, an engaged community, and increasingly efficient monetization. Despite a challenging macro environment, the company posted its 16th consecutive quarter of gross margin expansion and a 28% year-over-year jump in advertising revenue. The CEO opened the call with a clear verdict: “Both our community and top line growth remained healthy and profitability continued to expand.” — Rui Chen, Senior Executive (likely CEO or similar) · 2026-08-27 That momentum is now being amplified by AI. AI has moved from buzzword to tangible driver. The company's focused investment in video understanding, distribution, and creation is already paying off—daily video submissions jumped 28% year-over-year, and the number of creators with over 1,000 followers grew 30%. As management explained, AI tools are unleashing the creative potential of talented users, allowing a single creator to produce content that once required a full team. This isn't just about supply; it's reshaping advertising efficiency. The COO noted, “In the second quarter, despite macroeconomic pressure on consumer spending, our ad business delivered a very strong performance with revenue reaching RMB 3.13 billion, up 28% year-over-year.” — Juliet Yang, Executive Director of Investor Relations · 2026-08-27 The AI era is also opening up new ad verticals—AI-related ad spend more than doubled year-over-year, and search revenue doubled, as the platform monetizes its high value user base.Community and Content: The Moat
The company's resilience is rooted in its community, which the CEO describes as an oasis in a world of algorithmic noise. Monthly interactions reached 17.4 billion, up 9%, and long comments grew 67%. This deep engagement is a self-reinforcing moat. As Juliet Yang highlighted in the prior quarter, “What's really driving our user growth and time spend as the Bilibili's reach supply as high-quality content and our very unique community experience.” — Juliet Yang, Executive Director of Investor Relations · 2026-05-19 That focus on long form, intentional content is what draws users who value substance over noise—average daily time spent rose to 113 minutes, and total time spent grew 14%. This community strength directly supports the commercial engine. The average user now follows 96 creators, up 11%, and the platform's official members reached 299 million with 80% retention. As the CEO reiterated in March, “The core driver behind Bilibili growth is the continued increase in supply those high-quality content on our platform.” — Rui Chen, Management · 2026-03-05 AI is now accelerating that supply, making the moat wider.Financial Discipline and Shareholder Returns
Bilibili continues to balance growth with profitability. Gross margin expanded to 37.2%, and adjusted net profit reached RMB 704 million with an 8.9% margin. The company reiterated its mid-term targets of 40-45% gross margin and 15-20% operating margin, with confidence in operating leverage from AI. CFO Sam Fan stated, “Looking at the mid- to long term, we believe there's still significant room for Bilibili's commercialization driven by the sustained and healthy development of our business lines, more efficient operation gains empowered by AI.” — Xin Fan, Senior Executive (likely CFO or similar) · 2026-08-27 That optimism is backed by a fresh repurchase program—a new $300 million buyback, with $118 million already executed year-to-date. Meanwhile, the game segment is in a transition. Revenue declined 14% year-over-year due to the high base from San Mou, but the pipeline is rich: Lumi Master launches globally on September 17, and a new licensed SLG title is slated for Q4. This strategy game expansion, combined with the company's community ecosystem, positions games to return to growth in the fourth quarter.That AI investment—RMB 1 billion in CapEx with a RMB 500 million P&L impact—is exactly what management expects to fuel the next leg of efficiency gains. The question is whether the macro headwinds will test the resilience of Bilibili's ad growth in the second half. But given the company's track record of delivering industry-leading growth even in soft conditions, the burden of proof lies with the skeptics.We have already achieved 70% to 80% of it in the first half of the year, primarily on the procurement of server computing resources.