Bilibili Q2 Net Profit Surges 55%, Advertising Becomes Growth Engine, Gross Margin Improves for 16 Consecutive Quarters | Earnings Report Insights

Bilibili's second quarter performance continued its improvement trend: revenue grew steadily, advertising business accelerated, and profitability saw significant improvement.

On August 27, Bilibili released its unaudited financial results for the second quarter of 2026, ending June 30. During the period, the company achieved revenue of 7.94 billion RMB, up 8% year-over-year; net profit reached 339 million RMB, an increase of 55% year-over-year, with net profit margin rising from 3.0% in the same period last year to 4.3%. Non-GAAP adjusted net profit was 704 million RMB, up 25% year-over-year, and the adjusted net profit margin further increased to 8.9%.

User growth and engagement remained robust. During the second quarter, average daily active users (DAU) reached 116.5 million, an increase of 7% year-over-year; monthly active users reached 371 million, with users spending an average of 113 minutes per day, driving total user time spent to grow by 14% year-over-year. According to CEO Chen Rui, in an era of "abundant content but scarce attention," the emotional connection between quality content and users is becoming an important competitive barrier for Bilibili.

Advertising: Fastest Growth, Driving Force of Revenue Increase

The advertising business continued to be the most impressive growth point for Bilibili’s performance. In the second quarter, advertising revenue reached 3.13 billion RMB, a 28% year-over-year increase, accounting for nearly 40% of total revenue and becoming the largest source among the four major business segments.

The rapid increase in advertising revenue mainly resulted from continuous optimization of the advertising product matrix and improved delivery efficiency. Despite pressures in the overall advertising market, Bilibili’s advertising still achieved nearly 30% growth, indicating accelerated release of platform user value and improved commercialization efficiency.

Looking at the revenue structure, the advertising business has grown from a previously weaker segment to one of Bilibili’s core revenue sources. With ongoing iteration of advertising products and algorithms, its impact on overall company performance continues to strengthen.

Value-Added Services Steady, Gaming Business Faces Short-Term Pressure

Second quarter value-added services (VAS) revenue was 2.97 billion RMB, up 5% year-over-year.

Growth in value-added services mainly came from increases in premium memberships and other VAS revenues. Compared to the high growth of advertising, VAS growth was relatively moderate, but as Bilibili's mature fundamental segment, its stability remains crucial. As the scale of paying users continues to expand, the membership system remains an important support for the monetization of the platform’s content ecosystem.

The gaming business became the only segment to decline this quarter. Second quarter mobile game revenue was 1.39 billion RMB, down 14% year-over-year. The company explained that this was mainly because the game "Three Kingdoms: Strategy Edition" generated a high base of revenue last year and has now entered a relatively mature and stable stage. With this high base effect, the gaming segment still faces short-term pressure.

Looking at the first half of the year, Bilibili’s total game revenue reached 2.91 billion RMB, lower than the 3.34 billion RMB recorded in the first half of 2025. For the gaming segment, whether new blockbuster titles can be launched and create revenue relay will be key to whether the segment can resume growth.

Gross Margin Improves for 16 Consecutive Quarters, Operating Leverage Further Released

Improvement in profitability remains a major highlight of this quarter's performance.

Second quarter cost of revenue was 4.98 billion RMB, an increase of 7% year-over-year, lower than the 8% revenue growth rate, driving gross profit to 2.95 billion RMB, up 10% year-over-year, with gross margin rising from 36.5% in the same period last year to 37.2%. This marked the 16th consecutive quarter of year-over-year improvement in Bilibili's gross margin.

From the cost structure, revenue-sharing costs were 3.08 billion RMB, up 4% year-over-year, still the largest cost item. Total operating expenses were 2.58 billion RMB, up 7% year-over-year, with overall expense growth also lower than revenue growth. Of this, selling expenses were 1.06 billion RMB, up only 1% year-over-year; administrative expenses were 510 million RMB, essentially flat compared to the same period last year; R&D expenses were 1.01 billion RMB, up 16% year-over-year, mainly due to increased server depreciation costs.

While revenue continues to grow, expense expansion remains controlled, further releasing operating leverage. In the second quarter, the company’s operating profit reached 373 million RMB, up 48% year-over-year, with the profit growth rate significantly outpacing revenue growth. CFO Fan Xin said the company will continue to maintain investment discipline and actively reward shareholders through stock repurchases. As of 2026, Bilibili had repurchased approximately $118 million worth of shares via its buyback program.

Overall, the core change in Bilibili’s second quarter results has shifted from “narrowing losses” to “profit release”: strong advertising growth supports revenue, gross margin continues to improve, expense control releases operating leverage, while the gaming business remains the segment under relative pressure in current performance.