Bilibili's Upgraded Earnings Outlook and Its Implications for Long-Term Growth

in the third quarter of 2025, Bilibili Inc. (BILI) delivered a financial performance that has sparked renewed interest among investors. The company reported a 5% year-over-year increase in total net revenues to RMB7.69 billion (US$1.08 billion), driven by a 23% surge in advertising revenue to RMB2.57 billion. Simultaneously, user engagement metrics reached record highs, with daily active users (DAUs) rising 9% to 117.3 million and monthly active users (MAUs) growing 8% to 376 million. These figures underscore a strategic pivot toward content-driven monetization and cost discipline, reshaping BILI's investment narrative.

User Engagement: The Engine of Growth

Bilibili's ability to retain and expand its user base remains a cornerstone of its long-term value proposition. The platform's average daily time spent hit 112 minutes, a six-minute increase year-over-year. This metric is critical, as it directly correlates with ad inventory and user retention. Analysts attribute this success to Bilibili's focus on high-quality, niche content-such as gaming, anime, and educational content-that fosters a loyal community. As stated by a report from DCF Modeling, "Bilibili's user engagement metrics reflect a platform that is not just a video-sharing site but a cultural ecosystem."

However, the company's reliance on user-generated content (UGC) also presents risks. While UGC drives organic growth, it requires continuous investment in moderation and curation to maintain quality. Bilibili's cost of revenues rose 2% to RMB4.87 billion in Q3 2025, largely due to higher revenue-sharing costs with content creators. This highlights a delicate balance: sustaining user engagement while managing margin pressures.

Profitability Turnaround: A Structural Shift

Bilibili's Q3 2025 results marked a pivotal shift in its financial trajectory. The company achieved a GAAP net profit of RMB469.4 million (US$65.9 million), a stark contrast to its historical losses. This turnaround was fueled by a 23% year-over-year increase in advertising revenue and a 6% reduction in total operating expenses to RMB2.46 billion, driven by a 13% decline in sales and marketing costs. Non-GAAP net profit surged even more dramatically, by 233% to RMB786.3 million.

The structural shift in Bilibili's revenue mix is equally noteworthy. Advertising now accounts for 33.4% of total revenue, while the mobile games segment-once its primary income source-declined 17% year-over-year. This diversification reduces exposure to cyclical gaming trends and aligns with broader industry shifts toward ad-supported platforms. As SimplyWall Street notes, "Bilibili's pivot to advertising mirrors the strategies of global tech giants like YouTube and Meta, which prioritize scalable, recurring revenue streams."

Valuation Dilemma: DCF vs. P/E

Despite these positives, Bilibili's valuation remains contentious. A discounted cash flow (DCF) analysis suggests the stock is undervalued by approximately 32.8%, with an intrinsic value of $36.84 per share compared to its current price of $24.77. This model emphasizes Bilibili's projected 37% annual earnings growth and 8.3% revenue growth. Conversely, the company's price-to-earnings (P/E) ratio of 93.4x far exceeds the 31.4x fair ratio derived from fundamentals, signaling overvaluation. This dichotomy reflects divergent market sentiments.

On one hand, Bilibili's profitability and user growth justify optimism; on the other, its high P/E ratio raises concerns about overhyped expectations. Analysts at Financhill argue that "Bilibili's valuation is a tug-of-war between its strong fundamentals and speculative investor behavior."

Competitive Positioning and Analyst Outlook

Bilibili's competitive edge is further reinforced by its favorable analyst ratings. The stock has received 20 "buy" ratings and 5 "hold" ratings, with a consensus price target of $26.25-implying a 15.05% upside. In contrast, peers like iQIYI and Phoenix New Media lag in both ratings and growth projections. Bilibili's beta of 0.945 also suggests lower volatility compared to the S&P 500, making it an attractive option for risk-averse investors.

Looking ahead, analysts project Bilibili to achieve CN¥4.77 in per-share earnings in 2026, a 156% increase from previous estimates. However, revenue growth is expected to slow to 11% in 2026, below its historical 15% average and the industry's 12% benchmark. This moderation underscores the challenges of sustaining hypergrowth in a saturated market.

Implications for Long-Term Growth

Bilibili's upgraded earnings outlook and user engagement metrics position it as a compelling long-term investment, but with caveats. The company's strategic shift to advertising and cost discipline has unlocked profitability, yet its high P/E ratio and slowing revenue growth projections necessitate caution. Investors must weigh the DCF model's optimism against the risks of overvaluation and market saturation.

For Bilibili to maintain its trajectory, continued innovation in content and monetization-such as expanding into live streaming, e-commerce, or AI-driven personalization-will be critical. As the platform matures, its ability to balance user experience with profit margins will determine whether it becomes a sustainable growth story or a short-lived revival.