BILI (Trans): Will reinvest part of incremental profits in AI this year

Below is the $Bilibili(BILI.US) 4Q25 earnings call Trans. For our earnings take, cf. 'BILI: Ads holding up; the platform is in a tough patch---'

I. Key Financials

II. Management Commentary

1) Community: Momentum accelerated sharply with DAU and MAU both up. While the internet still overflows with snackable content, more users are seeking depth and quality. As of early 2026, our Avg. user age reached 26.5. They skew high-income with stronger purchasing power and more diverse needs.

As users dive deeper into interests, their willingness to pay keeps rising, and Q4 paid users hit a record. Bilibili has become a trusted consumption platform where users not only watch but also research and try new products. AI is a case in point, with more AI advertisers viewing Bilibili as the ideal channel to reach curious young audiences.

In Q4, time spent on lifestyle content rose 30%+ YoY, while time spent on China anime and gaming content rose 56% and 24%, respectively. In Jul-2025, we officially launched video podcasts and quickly built a lead in this influential format. Our highly engaged community drove rapid adoption and more meaningful discussions. In 2H25, total watch time for video podcasts topped 8.0bn minutes.

Total watch time on AI-related themes grew 53% YoY in Q4, further cementing Bilibili as the go-to platform for AI learning. AI-driven content distribution helps quality works find audiences faster, benefiting emerging creators in particular. In Q4, the number of creators with 1,000+ fans rose 30%+ YoY.

In 2025, nearly 3mn creators earned income on our platform via VAS advertising channels. With better monetization efficiency, Avg. creator income rose 21% YoY. Over 10mn users supported quality competitive content and creators via tipping last year.

In Q4, Avg. active users followed 90+ creators vs. 81 a year ago, underscoring stronger network effects. By end-2025, we had over 284mn official members.

Our New Year’s Eve gala delivered the best commercial results to date and has become a must-see annual event for young viewers. During the recent Chinese New Year, we again partnered with CCTV as the exclusive bullet-chat platform, enabling shared online celebrations. On the live day, over 133mn bullet chats were shared, and DAU hit an all-time high, up 16% YoY.

2) Advertising: By leveraging our interactive community, advertisers convert exposure into actual user conversion and durable brand impact. Coupled with a more complete ad stack, Q4 ad revenue rose 27% YoY, again beating estimates.

Top-five ad verticals in Q4 were gaming, digital products & home appliances, internet services, e-commerce, and autos. Home-related spend rose 80%+ YoY, signaling a maturing user base that favors lifestyle upgrades. AI-related ad budgets also surged, up nearly 180% YoY in Q4, with momentum carrying into 2026.

We also made performance ad buying faster and easier. With smart delivery systems and AI creative tools, campaign setup was streamlined, lifting new-user conversion nearly 300% YoY. Beyond efficiency, we expanded inventory, and new surfaces in search, PC, and OTT drove 60%+ YoY growth in related ad revenue.

We remain upbeat on 2026 ads, driven by AI-enhanced ROI and sustained advertiser demand from gaming and AI, as both sectors seek stronger tools to reach Bilibili’s young, high-value users in a favorable market backdrop.

3) Games: In Q4, ‘Three Schemes’ S11 held steady as we focus on long-term lifecycle through better UX and a rational monetization model. Globally, we launched the Traditional Chinese version in Jan and plan to expand to more Asian markets later this year.

‘FGO’ and ‘Azur Lane’ remained stable and continued to contribute steady revenue.

‘Escape from Duckov’—a self-developed title—performed exceptionally well. It sold 3mn+ copies within the first three weeks post the Oct launch, later becoming the year’s best-selling domestic single-player game and now ranks No.3 all-time. The success shows how we identify unmet demand and turn it into a hit.

Pipeline ahead: exclusive casual card game ‘NCard’ and simulation game ‘Shine! Lumi’.

4) VAS: Revenue grew 6% YoY in Q4 to RMB 3.3bn; full-year revenue rose 8% to RMB 11.9bn. In 2025, livestreaming grew steadily, with GPM continuing to improve.

By year-end, premium membership fees reached $25.3mn, up 12% YoY. Strong China anime titles underpinned the gains, especially ‘A Mortal’s Journey to Immortality,’ with annual subs and auto-renew holding around 80%, reflecting core-user loyalty and long-term support.

Tipping revenue stood out, doubling for the year as 10mn+ users directly funded creators and quality content.

5) AI investment: To better serve an evolving community, we are applying AI across Bilibili. For us, AI is not a buzzword but a practical tool to unlock creativity, strengthen connections, and improve content distribution. Using LLMs, we have made content discovery and recommendations more precise than ever.

We also offer AIGC tools to help creators and advertisers produce and promote content more easily. AI translation helps bring top content to global audiences. As we step up investment, we are confident AI will lift our ecosystem and business to the next level.

We will continue to invest in AI to reinforce our position as China’s leading platform for active young users. Having reached profitability with solid momentum, we remain focused on core moats—quality content, a strong community, and disciplined execution that creates lasting value.

III. Analyst Q&A

Q1: You noted user growth—what drove it specifically? How should we view the runway for future user growth and time spent? Given competition, what strategies help retain creators and users?

A: User growth stems from more quality content. Bilibili can consistently generate high-quality content because we have the soil and conditions to nurture it, in contrast to the rising tide of fast-food content elsewhere.

First, our user base is that fertile soil. Bilibili has many users who can appreciate, identify, and amplify great content, discovering value early and spreading it across the community.

Users do more than watch—they actively provide feedback, which helps define what quality is. Creators rely on user input to make better content. As a result, our creators produce works loved by Bilibili users and recognized by the broader public.

Some may think top creators have similar experiences across platforms. But for the vast middle and emerging creators, they truly depend on community feedback to learn what ‘good’ looks like and where to go next, which is critical for the creator ecosystem.

When we announced the Top-100 creators, about one-third were first-time nominees—new rising stars. This is the power of our community—the fertile ground that cultivates abundant new talent.

For 17 years, we have focused on building this community, powered by real user contributions and feedback. It takes patience and time to forge such tight-knit bonds. This is our biggest edge—backed by community, our biz. has a strong defensive moat, whereas traffic-only models find this hard to replicate.

We are confident about future user growth. As we have said, there is a clear, one-way upgrade in content consumption, and once people experience truly high-quality content, it is hard to go back to low-quality consumption.

As people consume more, short-form supply looks increasingly saturated, so they naturally value truly high-quality content more.

We also hold a mindshare advantage, attracting more users with high-quality content. And with an Avg. age of 26–27, as users enter their next life stage, their content needs evolve and purchasing power grows, representing a long-term structural opportunity for us.

On competition, we focus on two things.

First, we reinforce our positioning in high-quality content, ensuring the platform remains the ideal place for self-expression and interest-based quality communities.

Second, we double down on creator needs, offering a long-term home for creation and improving earnings potential. We are pleased with creator tenure—many have created on our platform for 5–10 years, consistently attracting more fans with valuable content.

On monetization, in 2025 we expanded earning avenues for creators. About 1mn creators earned on our platform, with Avg. income up 21% YoY.

Moreover, creators with 10k, 100k, and 1mn fans each grew 20%+ YoY. Together, these position us well to compete and sustain growth.

Q2: Which industries and products drove Q4’s outperformance? AI apps are boosting marketing—how will that benefit ads? Any outlook for 1Q26 and full-year 2026 ad growth?

A: First, expanded inventory. Across multi-screen and multi-scenario products, we added ad resources beyond the feed. Search, PC, and outdoor surfaces each grew ad volume 60%+ YoY, and certain scenarios exceeded 200% YoY.

Second, higher ad efficiency via AIGC-creative integration, deeper conversion optimization, and our AI-driven smart delivery system. Together, these improved overall ad efficiency and recommendations.

Third, beyond strong verticals like internet services, digital products, home appliances, and e-commerce, other sectors also contributed. In Q4, aided by AI app adoption and rapid on-demand retail, we delivered solid results. Education, autos, and home decor also grew strongly, with double-digit growth across the board.

Whenever a sector booms or competition intensifies, search and ad budgets typically rise in the short term. AI is no exception. Longer term, when budgets are reallocated, opportunities also emerge. For now, AI has significant budget upside both short and long term.

AI brings more budget to Bilibili across apps, LLMs, and AI tools, becoming a strong growth driver for ad platforms including us. Bilibili fits AI ads well: our young, tech-forward users like trying new AI apps and knowledge, and the platform centers on high-quality content, lifting conversion to real awareness.

On the outlook for Q1 and 2026, the market is still focused on share capture, and advertisers are raising performance expectations. At the same time, they care more about conversion quality over sheer exposure, where our ad utility can create real value.

Our users’ purchasing power and decision influence are rising quickly, making them prime targets for advertisers.

Over the past 2–3 years, our ad products and algorithms have reached a mature mid-to-high level vs. the industry, with substantial room to improve. We remain confident in continued growth and further share gains in 1Q26 and for the full year.

Q3: Share the 2026 games strategy. What are the priorities for ‘Three Schemes’? What are recent trends? And details on the pipeline for ‘Three Kingdoms: Hundred Generals Cards’ and ‘Shine! Lumi’?

A: For ‘Three Schemes’, our goals and strategy are clear. First, long-term operations. Second, maintain top-tier status within SLG.

SLG lends itself to long-run ops. This year we plan multiple season iterations, refreshing gameplay and narratives across seasons so players enjoy new, fun experiences.

We will run more systematic brand and community events around key beats, encouraging discussion to deepen community identity and stickiness.

While sustaining our large China fan base, we will continue to expand the IP globally. In Jan, we launched in Hong Kong, Macau, and Taiwan. We plan to take the IP to Korea, Japan, and other Asian markets to scale influence and strength.

For ‘Escape from Duckov’, we are pleased with PC performance and are working on console ports. We are also exploring a mobile version and believe it can become a well-known China IP.

‘Three Kingdoms: Hundred Generals Cards’ is designed as a lightweight strategy PvP card game. It is fun and easy to play, with ~3-minute rounds, ideal for fragmented time.

We created a distinctive loop, combining casual poker with a unique card-hero system, matching Gen-Z preferences for light, novel fun.

Tests show strong appeal among young players. We have completed two rounds, plan a paid test in Mar, and target an official launch by mid-year.

‘Shine! Lumi’ is a nurturing sim with a relaxing style, blending planting with raising and capturing mechanics. It reflects our refreshed strategy for the new generation of players.

It combines pet-raising and sim-management cores in a unique experience. The license was approved late last year, with a paid test planned for Q2 and a global open beta within the year.

Our 2026 game strategy: first, long-term ops—70% of our game revenue comes from evergreen titles; second, explore high-potential new projects. Our edge is being China’s closest platform to young gamers, coupled with a commitment to quality content.

With robust curation and strong teams, these advantages will help us find and build standout products.

Q4: How do you view the opportunities and challenges from AI for video creation? What are the AI investment priorities for 2026?

A: The essence of AI creative tools is boosting mid-length video production efficiency, since short video supply is already saturated and adding more short content brings limited benefit. For Bilibili, known for high-quality long videos, AI helps a subset of strong creators produce quality content faster, expanding the scarce supply of great works. Net-net, this technology is positive for our platform.

We are seeing early benefits from AI tools in improving content quality. Music is a good example—AI music tools let enthusiasts without formal training turn good ideas into professional-level tracks.

The same for meme-remix videos. They used to be hard to make, but now creators with creativity can produce high-quality works much faster. In Q4, watch time and views for AI-related or AI-assisted content increased several-fold YoY.

Key initiatives to enhance AI ROI and support our biz.:

First, use LLMs to better understand content and user intent, especially for a platform rich in high-quality long-form. It used to be hard to truly parse content and match it with the right user, but AI now enables precise understanding and better matching, while deepening our grasp of user needs and helping identify quality content.

User data from Q3–Q4 shows that contextual understanding lifts engagement and growth, which will remain a focus. AI also improves ad matching, by understanding both content and user expectations to serve the right ads to the right users.

Second, AIGC tools to help creators produce more efficiently. We have launched several products and will upgrade them this year to further boost video productivity. This should significantly improve content supply and the overall creation workflow.

These AIGC tools also offer translation—not just text, but accurate context, narration, and creator voice. We believe we can translate Bilibili content into all major languages, helping creators take quality works global.

We will focus on two areas: improving creator efficiency and increasing recommendation accuracy to better understand content and user needs. Our investments will stay disciplined in these two, which we believe create the most long-term value for our ecosystem.

Q5: Adj. OPM reached 10.1% in Q4, near your 15%–20% mid-term target. How should we think about revenue and profit from here, and any update on mid- to long-term goals?

A: For 2026, we remain confident in continued community growth. We will keep improving profit efficiency, converting user growth into commercial value more effectively. Ads remain a key growth driver, and operating leverage will continue to show.

We expect gross profit to edge up QoQ in Q1, with Adj. OPM improving YoY, as we steadily move toward 40%–45% GPM and 15%–20% OPM mid-/long-term goals.

As noted, we will moderately increase AI investment in 2026, reinvesting part of incremental profit into AI applications closely tied to core biz., to further expand quality content supply, drive user growth, and raise profit efficiency for sustainable long-term returns.

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