Data as of September 11, 2026. Bilibili has reached the phase every unprofitable internet platform eventually has to face: engagement is no longer enough. For years, investors were asked to believe that a uniquely loyal audience of young Chinese users would one day translate into durable earnings. In 2026, that argument is finally becoming measurable.
Second-quarter revenue rose 8% year over year to RMB7.94 billion. Advertising revenue jumped 28% to RMB3.13 billion. Gross profit increased 10% to RMB2.95 billion, and gross margin reached 37.2%, the sixteenth consecutive quarter of year-over-year margin improvement. Net profit rose 55% to RMB339 million, while adjusted net profit increased 25% to RMB704 million.
Those figures matter because the business is no longer being valued purely on user growth. The central question is now whether Bilibili can turn its culture, engagement and creator ecosystem into a mature advertising-and-gaming platform without damaging the community that made it valuable in the first place.
Engagement is still growing
Bilibili reported 116.5 million average daily active users in Q2, up 7% year over year. Monthly active users reached 371 million, and average daily time spent climbed to 113 minutes. Total user time increased more than 14%.
That is important because monetization is improving at the same time. The worst version of a social platform is one that squeezes more money from a shrinking audience. Bilibili is doing the opposite: engagement remains healthy while advertising economics improve.
The next stage is not simply adding more users. It is increasing the value of each hour spent on the platform.
Advertising is now the cleanest growth engine
Advertising revenue rose 28% year over year to RMB3.13 billion, far faster than total revenue growth. In the first half, advertising revenue increased 29% to RMB5.72 billion.
This is the most important mix shift in the company. Advertising monetizes a user base Bilibili already owns. It requires better targeting, better tools for brands and more inventory, but it does not demand the same capital intensity as physical businesses or the same hit risk as games.
If advertising keeps growing faster than total revenue, Bilibili can become less dependent on volatile gaming cycles and more like a scaled digital-media platform.
Source: Bilibili Q2 2026 results. Bars normalized for visual comparison.
Gaming is weaker — and that is not entirely bad
Mobile-game revenue fell 14% year over year to RMB1.39 billion. The company attributed much of the decline to a high comparison base from San Guo: Mou Ding Tian Xia, which has moved into a more mature stage of its life cycle.
At first glance, that looks negative. But the more interesting point is that Bilibili still grew total revenue and profit despite the gaming decline. That is evidence the broader monetization model is becoming more resilient.
Gaming remains powerful because successful titles can generate extremely high incremental margins. But investors should prefer a business where gaming is a source of upside, not a single point of failure.
The community is the real moat
Bilibili does not win because video hosting is difficult. It wins because users identify with the platform’s culture, creators and interest-based communities. That social identity is hard to replicate.
Premium members reached 25.7 million in the first half, up 9% year over year, and roughly 80% of subscriptions were annual or auto-renewal plans. Monthly paying users also increased.
Those data points suggest users are willing to pay for content and community experiences rather than treating Bilibili as a disposable entertainment feed.
The risk is over-monetization. A platform can damage its moat by increasing ad load too quickly or changing incentives in ways that alienate creators. The best outcome is higher monetization per user with stable engagement.
Creator economics matter more than they look
Bilibili depends on professional and user-generated video creators. The platform needs them to keep producing high-quality content, but creators also need ways to earn money.
In the first half of 2026, revenue from Bilibili’s fan-charging program increased more than 50% year over year. Direct fan monetization can strengthen creator loyalty while giving users another reason to remain inside the ecosystem.
The long-term opportunity is a diversified creator economy: advertising, memberships, fan support, livestreaming, games and commerce all working around the same audience.
Margin improvement is the strongest proof of progress
Gross margin reached 37.2% in Q2, compared with 36.5% a year earlier. The change looks small, but the direction has been consistent. Management said this was the sixteenth consecutive quarter of year-over-year gross-margin improvement.
That consistency matters more than one dramatic quarter. It suggests the company is gradually improving revenue mix and cost discipline rather than relying on temporary cuts.
For a digital platform, sustainable margin expansion is the clearest sign that scale is beginning to work for shareholders.
Operating expenses are becoming more productive
Total operating expenses rose 7% year over year, slightly slower than revenue. Sales and marketing increased only 1%, while general and administrative expense was roughly flat. R&D rose 16%, partly because of server depreciation and technology investment.
This is the kind of cost structure investors should want. Marketing does not need to rise as quickly as revenue when the brand and user network already exist. At the same time, Bilibili can continue investing in products, recommendation systems and AI.
If revenue keeps outgrowing sales and administrative costs, operating leverage can become increasingly visible.
AI is more useful as an efficiency layer than a new story
Bilibili’s management has highlighted two AI opportunities: helping creators produce content faster and improving content understanding and recommendations.
Both have direct economics. Better creator tools can increase content supply without proportional labor growth. Better recommendation systems can raise engagement and advertising relevance.
AI can also improve moderation, translation, search and commerce matching. None of these requires investors to assign Bilibili a speculative AI multiple. The benefit can show up directly in higher monetization and lower cost per unit of content.
Why Bilibili is different from Tencent
Our Tencent stock analysis shows what mature gaming, social media and advertising economics can look like at enormous scale. Tencent has a broader ecosystem and stronger cash generation.
Bilibili is smaller, more concentrated and riskier. But that also creates more room for monetization improvement. Tencent has already harvested much of its platform maturity. Bilibili is still moving up the curve.
Why NetEase offers a useful contrast
NetEase is a more gaming-focused company with established cash generation. Bilibili owns something different: a media and community layer that can support multiple monetization channels.
The comparison is useful because it highlights the central trade-off. NetEase offers more mature profitability. Bilibili offers greater upside if advertising and creator monetization continue scaling.
China regulation remains a permanent discount factor
Bilibili operates across gaming, video, livestreaming and user-generated content, all of which are regulated in China. Game approvals, content standards and monetization rules can affect growth quickly.
This risk justifies a valuation discount relative to a similar U.S. platform. But the relevant question is not whether regulation exists. It is whether the environment remains stable enough for the company to plan product launches and monetize normally.
Free cash flow will decide whether the rerating is real
Accounting profit is encouraging, but cash conversion matters more. A digital platform should eventually generate substantial free cash flow because it does not need heavy physical capital for every unit of growth.
If Bilibili’s profit improves but cash flow remains weak, investors should question the quality of earnings. If cash generation rises alongside margins, the stock becomes much easier to value on fundamental terms.
The stock no longer deserves a pure growth multiple
Bilibili’s history is a warning against valuing the company on users and revenue alone. During earlier cycles, the market paid aggressively for growth long before profitability was proven.
The healthier framework today is based on sustainable operating profit, cash flow and advertising economics. That reduces narrative risk.
A bullish thesis does not require Bilibili to become China’s version of every Western media platform at once. It only requires the company to preserve its community while increasing monetization and cost discipline.
Three scenarios for Bilibili
| Scenario | Advertising | Gaming | Profitability |
|---|---|---|---|
| Bear | Growth slows sharply | Pipeline disappoints | Margins stall |
| Base | Healthy double-digit growth | Several solid titles | Operating leverage continues |
| Bull | Monetization per user rises fast | Global hit emerges | FCF scales faster than revenue |
What I would watch next
Advertising growth is number one. If it remains above total revenue growth, the business mix keeps improving. Second, I would watch gaming diversification. One blockbuster is useful; several durable titles are better.
Third, I would track gross margin and free cash flow together. Margin expansion without cash generation would be less convincing. Finally, user time spent should remain healthy as commercialization rises.
What would break the thesis?
The biggest risk is that profitability proves temporary. If advertising slows and gaming remains weak, the current margin trajectory could stall.
A second risk is community damage from aggressive monetization. A third is regulation affecting gaming approvals or content distribution. Bilibili’s moat is cultural, and cultural moats can weaken quickly if users feel the product has changed.
My view on Bilibili stock
Bilibili is becoming a more investable company because profits now matter more than dreams about user growth. Q2 showed 8% revenue growth, 28% advertising growth and 55% net-profit growth while engagement continued rising.
That is exactly the combination investors wanted to see for years.
I would not treat the transition as complete. Gaming is still volatile, cash-flow durability needs to be proven and the platform must monetize without weakening its community. But the direction is materially better.
If advertising continues compounding and margins keep expanding, Bilibili can evolve from a niche youth platform into a durable digital-media business. In that scenario, the stock should eventually be valued on cash generation rather than on skepticism inherited from its loss-making years.
Sources
This article is independent analysis, not investment advice.
