Bilibili's Q3 2025: Contradictions Emerge on Strategic Content Focus, Gaming Expansion, AI's Impact on Content and Ads, and Ad Revenue Strategies

Date of Call: November 13, 2025

Financials Results

• Revenue: RMB 7.7 billion, up 5% year-over-year
• Gross Margin: 36.7%, compared with 34.9% in the same period last year
• Operating Margin: Adjusted operating margin 9%, compared with 3.7% in the same period last year; operating profit RMB 354 million versus a loss in Q3 2024

Guidance:

• Q4 gross margin expected to be ~37%.
• Midterm gross profit margin target remains 40%–45%.
• Q4 adjusted operating margin expected around 10%; midterm adjusted operating margin target 15%–30%.
• Capital allocation: support ad growth, invest in games and AI initiatives (including console/mobile expansions), and pursue strategic talent hires.
• Remaining share repurchase capacity ~USD 83.6M to be utilized under the existing plan.

Business Commentary:

* User Growth and Engagement: - Bilibili's DAUs rose by 9% year-over-year to 117 million, and MAUs grew by 8% to 376 million, with average daily time spent per user increasing to 112 minutes, up 6 minutes from the same period last year. - The increase in user metrics was driven by high-quality content offerings and the unique community experience that attracts and engages younger users.

• Revenue and Profitability Expansion:
• Bilibili's total net revenues grew by 5% year-over-year to RMB 7.7 billion, with gross profit increasing by 11% and gross margin expanding to 36.7%.
• This growth was supported by disciplined cost management and higher operating leverage, reflecting the continued profitability expansion of the company.

• Advertising Business Performance:
• Advertising revenue grew by 23% year-over-year to RMB 2.6 billion, with an average user age of 26, indicating a maturing cohort with stronger purchasing power.

• The growth was driven by Bilibili's unique user demographics and the effectiveness of its ad targeting, recommendation algorithms, and AIGC creative tools.

• Game and Content Strategy:

• The successful launch of the single-player extraction shooter game Escape from Duckov sold over 3 million copies globally, highlighting Bilibili's capabilities in reinventing games for new generations.
• The focus on high-quality content and the reinforcement of its unique community experience are key drivers behind the growth in engagement and monetization.

Sentiment Analysis:

Overall Tone: Positive

• Management: delivered "solid growth, improved profitability"; total net revenues RMB 7.7B (+5% YoY); gross margin expanded to 36.7% (13th consecutive quarter of improvement); non-GAAP operating and net profits surged 153% and 233% YoY, respectively — signaling strengthening fundamentals and upbeat outlook.

Q&A:

• Question from Alex Liu (BofA Securities): Can management share drivers behind accelerating DAU/MAU/time-spent growth, any medium-term engagement targets, what's driving record monthly paying users (MPU) growth and latest trends in what users pay for?
  Response: User growth and engagement are driven by a long runway for high-quality content plus a unique community that discovers and nurtures creators; MPU (35M, +17% YoY) mainly fueled by premium memberships and creator-led fan monetization, and management expects continued 2C content-pay expansion as the user cohort ages.

• Question from Thomas Chong (Jefferies LLC): Given Escape from Duckov's strong debut, what's the future plan (mobile/console), update on Ncard San Guo monetization/beta and expected release timing, pipeline expectations, and San Mou's performance versus expectations?
  Response: Escape from Duckov is a breakout hit and is being ported to console and mobile; Ncard San Guo is in close beta with a planned release in Q1 2026; San Mou performed in line with expectations and focus is on long-term longevity and international rollouts.

• Question from Felix Liu (UBS Investment Bank): How does management see ad growth potential from here, what incremental benefits are coming from recommendation algorithms and AI, and commentary on Double 11 and Q4 ad demand?
  Response: Ad momentum is strong—Q3 ads RMB 2.57B (+23% YoY)—with AI driving AIGC creatives (55%+ of performance creative), smart delivery (45%+ of performance spend) and >10% uplift in distribution efficiency; Double 11 ad revenue grew ~30% YoY with advertiser counts doubling, and management is upbeat on Q4 and 2026 demand.

• Question from Xueqing Zhang (China International Capital Corporation): With improving profitability, how do you expect gross/net margin trends into Q4/2026 and how will you allocate cash given strong cash position?
  Response: Expect gross margin to reach ~37% in Q4 and maintain midterm 40%–45% target; adjusted operating margin ~10% in Q4 with midterm 15%–30% target; cash will support ad growth, invest in new opportunities (games, AI talent) and complete the remaining ~USD83M of the buyback.

• Question from Yiwen Zhang (China Renaissance): What is management's view and expectation for AI applications on Bilibili and the impact of products like Sora on video production and consumption?
  Response: AI is viewed as an efficiency booster for high-quality video creation—Sora and tools will aid multilingual accessibility (dubbing, subtitles, lip sync) and text-to-video podcast production—helping creators produce higher-quality content rather than changing basic consumption patterns.

Contradiction Point 1

Strategic Focus on High-Quality Content

It highlights inconsistencies in the company's strategic focus on high-quality content, which is a key driver for user engagement and growth.

What are the key drivers for the increase in DAU, MAU, and user engagement time? - Alex Liu (BofA Securities, Research Division)

2025Q3: The growth in user metrics is driven by high-quality content and a unique community aspect. - Unknown Executive

What are the main drivers of DAU and MAU growth and increased average daily time spent in Q2? - Xueqing Zhang (China International Capital Corporation Limited)

2025Q2: The growth in DAU, MAU, and time spent is driven by high-quality content and a welcoming community environment. - [Unidentified Company Representative]

Contradiction Point 2

Gaming Strategy and International Expansion

It involves changes in strategic direction regarding the company's gaming focus and international expansion efforts.

What are the future business plans for Escape from Duckov, the mobile game development plans, and the monetization strategy for Sanguo:Ncard? - Thomas Chong (Jefferies LLC, Research Division)

2025Q3: Escape from Duckov is a successful indie game with over 3 million copies sold globally. Plans include console and mobile versions, focusing on gameplay and community feedback. - Unknown Executive

Can you provide details on Season 8's first anniversary and share expectations for the remainder of the year and next year? Also, discuss key games in the pipeline. - Felix Liu (UBS Investment Bank)

2025Q2: San Mou's first anniversary was successful, with record DAU, indicating a sustainable game. The focus is on providing the best game experience to retain users, with plans to launch in Hong Kong, Macau, and Taiwan and explore international markets like Japan and Korea. - [Unidentified Company Representative]

Contradiction Point 3

AI Integration and Impact on Content Creation

It highlights inconsistencies in the company's approach to AI integration and its impact on content creation, which is crucial for user engagement and growth.

How will future AI applications impact Bilibili, particularly the product Sora? - Yiwen Zhang (China Renaissance, Research Division)

2025Q3: AI tools increase efficiency in high-quality content creation. Sora is new ammo for content creation and user interface, enhancing the quality of long-form content. - Unknown Executive

Can you share updates on AI applications and their recent progress? - Yiwen Zhang (China Renaissance, Research Division)

2025Q2: AI applications are already generating value, improving advertising revenue and user engagement. Key areas include enhancing content identification, AI-assisted content creation for mid- to longer-form videos... - [Unidentified Company Representative]

Contradiction Point 4

AI Applications and Ad Efficiency

It involves differing perspectives on the role and impact of AI applications, particularly in enhancing ad efficiency, which is crucial for advertising revenue and overall business strategy.

What is the growth potential for the ad business and improvements in recommendation algorithms? How does management view demand following the Double 11 Shopping Festival? - Felix Liu (UBS Investment Bank, Research Division)

2025Q3: AI applications are significant, improving ad efficiency and productivity. The Double 11 Shopping Festival saw a 30% YOY increase in ad revenue and high new customer rates, indicating strong potential. - Unknown Executive

What drove the 20% YoY ad revenue growth? What's the ad growth outlook? - Yiwen Zhang (China Renaissance, Research Division)

2025Q1: AI enhancements improve ad efficiency, with AIGC tools accounting for over 30% of performance ad spend. Game ads and AI-related ads are key growth areas. Bilibili expects to maintain growth above industry average. - Rui Chen(CEO)

Contradiction Point 5

Ad Revenue Growth and Strategy

It involves differences in the company's stated approach towards ad revenue growth, which is a critical revenue stream.

What is the growth potential for the ad business and improvements in recommendation algorithms? How does management view demand from the recently concluded Double 11 Shopping Festival? - Felix Liu (UBS Investment Bank, Research Division)

2025Q3: The ad revenue growth is driven by client recognition of Bilibili's value and unique community. Strategies include enhancing service for key accounts, expanding to new verticals, and increasing ad penetration across different community scenarios. - Unknown Executive

What are the key drivers of 2024's strong advertising growth and the 2025 outlook? - Felix Liu (UBS)

2024Q4: 2024 ad growth was driven by our high-quality user base and content. We expect above-industry growth in 2025 with focus on improving ad infrastructure and products, enhancing efficiency, and attracting new advertisers. - Juliet Yang(Investor Relations Executive Director)