--- title: "BILI (Trans): Capex +RMB 1bn; trim opex to partially offset" type: "Topics" locale: "en" url: "https://longbridge.com/en/topics/40919472.md" description: "Below is Dolphin Research's Trans of $Bilibili(BILI.US) 1Q26 earnings call. For our earnings take, cf. 'Bilibili: A False Alarm on Stake Sale, Margin Erosion? Games to the Rescue'.1) Shareholder returns: the $200mn share repurchase has been fully executed as of today, with 9.3mn shares bought back. The BOD is considering authorizing a new buyback program in due course.2) Q2 and full-year outlook: Q2 ad revenue is expected to sustain rapid growth, driven by AI initiatives. GPM should improve steadily..." datetime: "2026-05-19T14:53:22.000Z" locales: - [en](https://longbridge.com/en/topics/40919472.md) - [zh-CN](https://longbridge.com/zh-CN/topics/40919472.md) - [zh-HK](https://longbridge.com/zh-HK/topics/40919472.md) author: "[Dolphin Research](https://longbridge.com/en/news/dolphin.md)" --- # BILI (Trans): Capex +RMB 1bn; trim opex to partially offset **Below is Dolphin Research's transcript of**$Bilibili(BILI.US) **1Q26 earnings call. For our take on the results, see '**[**Bilibili: False Alarm on Stake Cut, Margin Drag? Games to the Rescue**](https://longbridge.cn/topics/40916284?channel=SH000001&invite-code=355628&app_id=longbridge&utm_source=longbridge_app_share&locale=zh-CN&share_track_id=4d5af2ce-11fd-42fa-8aa3-f7842603cc53)**'.** **I. Key Takeaways** 1\. **Shareholder returns**: The $200mn buyback has been fully executed as of today, with 9.3mn shares repurchased. The BOD is considering authorizing a new program in due course. 2\. **Q2 and full-year outlook**: Q2 ad revenue is expected to sustain rapid growth, driven by AI initiatives, with steady GPM improvement. Net margin still has room to expand further, and mid-to-long-term targets of 45% GPM and 15%-20% OPM remain unchanged. 3\. **AI CapEx plan**: AI-related CapEx for the year is projected to increase by approx. RMB 1bn vs. last year, with an estimated P&L impact of ~RMB 500mn. Q1 CapEx rose ~80% YoY to ~RMB 200mn, mainly for servers and compute, and the company will trim some OpEx to partially offset the AI spend. 4\. **Margin expansion**: Q1 GPM reached 37.1% (36.3% a year ago), marking the 15th straight quarter of GPM expansion. Adj. net margin was 7.8% (5.2% a year ago), and OP was RMB 167mn, up more than 10x YoY. 5\. **Cash balance**: As of Mar 31, 2026, cash and cash equivalents, time deposits and short-term investments totaled RMB 24.2bn (~$3.5bn). **II. Call Details** **2.1 Management Highlights** **1\. Community and users** 1\. Q1 DAU grew 8% YoY to 115mn, while MAU reached 376mn. Avg. daily time spent per user hit a record 119 minutes, up 11 minutes YoY, driving total user time up 19% YoY. 2\. 291mn official members maintained an 80% 12‑month retention rate. This continues to underpin engagement quality. 3\. The avg. user age is ~26.5, entering a phase of rising personal spending power and household decision-making influence. This further enhances the platform’s appeal to advertisers. **2\. Content ecosystem** 1\. ACG remains the cultural anchor: viewing time for games and domestic anime rose 27% and 20% YoY, respectively. Knowledge content (incl. AI news) grew ~20% YoY, and music time increased 25% YoY, largely driven by AIGC music, while parenting/early education and outdoor consumption content each rose over 50% YoY. 2\. Users generate over 17bn authentic human interactions per month, a scarce, high-quality feedback asset in the AI era. This data advantage is increasingly valuable. 3\. Daily active creators rose 6% YoY, and daily uploads grew 19% YoY. Creators with 1k+ followers grew over 30% YoY, and those with 10k, 100k, and 1mn+ followers each rose over 20% YoY, with creator avg. income up 24% YoY, reinforcing a positive flywheel. **3\. AI strategy** 1\. AI investment focuses on three areas: video understanding (quality detection and content comprehension), video distribution (reco engine optimization), and video creation (tooling for creators). These are core to the platform’s moat. 2\. AI lowers the barrier to high-quality content production. For short films, a full crew used to be required; now one to two creatives with AI can deliver comparable or better output, and music production has shifted from full teams to single creators, with 150+ AIGC videos topping 1mn views in a recent contest. 3\. In-house models can identify high-quality content earlier, directly accelerating creator follower and income growth. This supports earlier exposure and monetization. 4\. AI also lifts operating efficiency, directly supporting GPM expansion. Management remains capital-disciplined and views this as a 10x value-creation opportunity for Bilibili. **4\. Advertising** 1\. Q1 ad revenue was RMB 2.6bn, up 30% YoY, marking the 13th straight quarter of double-digit growth. Top advertiser verticals were games, online services, consumer electronics/home appliances, e-commerce, and autos. 2\. AI advertisers ramped rapidly with budgets up over 170% YoY. Consumer electronics/home appliances and autos each rose 30%+ YoY, home improvement jumped 130%+ YoY, PC and OTT ads climbed 50%+ YoY, and new surfaces such as search and mini-programs more than doubled. 3\. AI boosted ad efficiency: CTCVR for performance ads rose 25% YoY. Automated ad buying penetration increased to ~85%, and AIGC creatives delivered double-digit percentage higher CTRs on average. 4\. Ad inventory is expanding from mobile to PC, iPad, OTT and in-car screens. New formats include in-player ads, search ads, comment-section ads and mini-program ads, covering all key user touchpoints. **5\. Games** 1\. Q1 game revenue was RMB 1.5bn, down 12% YoY and flat QoQ. The YoY decline reflects a high base from last year’s performance of 'Three Kingdoms: Master of Strategy', while the latest season remains stable QoQ with a focus on long-life operations. Evergreen titles FGO and Azur Lane remained steady and continue to underpin the revenue base. 2\. New pipeline: \- **Three Kingdoms: NCard**: Soft-launched in Apr, it uniquely combines general-skills with poker mechanics and has tested well with younger users. Planned full launch in Jul, targeting a large-DAU, long-life casual title. \- **Three Kingdoms (new SLG)**: Built on the official Three Kingdoms IP with upgraded 3D visuals for mature SLG users who demand higher fidelity. It targets a different segment from Master of Strategy, with paid testing completed in late Mar and positive feedback, and is planned to go live within the year. \- **Lumi Master**: The first to blend tech-development and light-casual gameplay. Global paid testing began in early May with encouraging feedback, targeting a global launch in Q4. **\- Escape from Duckov**: Cumulative sales surpassed 4mn units this year, with ongoing PC promotion. Console and mobile versions are under development, aiming to build a well-known IP for younger players. 3\. Strategy focuses on three pillars: long-term ops (with FGO, Azur Lane, and Master of Strategy as templates), being best-in-class within niches (deepening Three Kingdoms IP and exploring premium console/PC titles), and designing for the young generation (e.g., NCard and Lumi Master). These guide pipeline and resource allocation. **6\. VAS** 1\. Q1 VAS revenue rose 4% YoY to RMB 2.9bn, with stable live-stream ops and improved GPM. Execution remained disciplined. 2\. Paid subscribers reached 24.8mn, up 5% YoY. Roughly 80% are annual or auto-renew plans. 3\. 'Charging Plan' revenue rose over 50% YoY, driven by deeper creator-user relationships and stronger willingness to pay. Monetization quality improved. 4\. The 2025 ESG report was released in Apr, and MSCI key ratings were unchanged. Tracking remains stable. **2.2 Q&A** **Q: What strategic role does AI play in user growth, time spent, and the creator ecosystem on Bilibili?** A: The fundamental driver of user growth and time spent is Bilibili’s supply of high-quality content and its unique community experience. AI doesn’t change this logic; it amplifies our inherent strengths. On the supply side, AI gives creators stronger expressive power and boosts productivity. In Q1, daily active creators rose 6% YoY and daily uploads increased 19% YoY, and more importantly, quality is rising, not just quantity, with short films and music now achievable by one to two talented individuals leveraging AI, and 150+ AIGC videos surpassing 1mn views in a recent contest. AI also magnifies the power of our community. Users know what they want and pursue quality, yielding over 17bn authentic human interactions per month that serve as precious feedback labels in the AI era, enabling our in-house models to spot quality content earlier and translate that into faster follower growth and monetization for creators. Creators with 1k+ followers rose over 30% YoY, those with 10k, 100k and 1mn+ followers each grew over 20% YoY, and avg. creator income rose 24% YoY. We see this as a historic, 10x value-creation opportunity and will invest with discipline to capture it. **Q: Q1 ad revenue growth accelerated to 30%. Which sectors outperformed, and what is the outlook for Q2 and the full year?** A: Q1 ad revenue was RMB 2.6bn, up 30% YoY, the 13th consecutive quarter of double-digit growth. The core driver is user value: our avg. user age of ~26.5 implies rising personal spending and household decision power, and unlike pure traffic platforms, ads on Bilibili build lasting brand equity through continuous interaction rather than one-off exposure. Brand, performance and other ad formats all grew strongly in double digits in Q1, with some categories posting high double-digits. Top five verticals were games, online services, consumer electronics/home appliances, e-commerce and autos, with AI budgets up 170%+ YoY, consumer electronics/home appliances and autos each up 30%+, and home improvement up 130%+ YoY. Looking ahead, deeper AI integration will continue improving efficiency. We upgraded distribution and recommendation, sharply enhancing our understanding of user interests, purchase intent and content, and embedding these into the reco model materially improved matching, underpinning Q1’s strong CTCVR. Automated buying penetration reached ~85% in Q1 and will keep rising. AIGC creatives are being adopted more broadly, delivering double-digit percentage higher CTRs on average. We are also extending endpoints and scenarios from mobile to PC, iPad, OTT and in-car screens, covering major use cases. New formats include in-player, search, comment-section and mini-program ads, covering all key touchpoints on the platform. In H2, we expect stronger growth in AI tech, autos, and home improvement/appliances, while consolidating share in core verticals such as games, e-commerce and education. We remain confident in robust full-year ad growth. **Q: How is Three Kingdoms: NCard performing in soft launch and what are expectations? What are the results and timing for Lumi Master, and the progress on the new Three Kingdoms SLG and other pipeline titles?** A: NCard’s soft launch is broadly in line with expectations, with the innovative fusion of general-skills and poker mechanics resonating with younger users. We are iterating continuously based on user feedback, a sustainable path to refine the title, and plan a large-scale launch in Jul with the goal of a long-life, large-DAU casual game. For the new Three Kingdoms SLG, it leverages the official IP with a new 3D visual style for mature SLG users who prioritize quality. It complements 'Master of Strategy' by targeting users with strong IP affinity and higher visual expectations, and after paid testing in late Mar with positive feedback, it is slated to launch within the year. For Lumi Master, as the first to combine tech-development with light-casual gameplay, global testing began in early May with encouraging results. We are targeting a global launch in Q4. Also worth noting is Escape from Duckov, Bilibili’s self-developed title whose cumulative sales surpassed 4mn this year. Console and mobile versions are under development alongside continued PC promotion, aiming to build a well-known series IP for younger players. Our games strategy rests on three pillars. First, long-term operations, with FGO at 10 years, Azur Lane at 9 years, and Master of Strategy nearing two years, and even premium titles like Duckov expected to drive ongoing sales. Second, be best-in-class in niches, e.g., Three Kingdoms SLG with one live and two in pipeline and more tests ahead, alongside premium console/PC opportunities with strong demand. Third, build for young players, a core advantage given our proximity to young users, as shown by NCard and Lumi Master. **Q: How is AI investment progressing, when will returns be visible, and what are the outlooks for Q2 and full-year OpEx, CapEx and margins?** A: We focus AI investment on three steps of Bilibili’s core value chain: video understanding, distribution and creation. These will raise the value of our content ecosystem and community, benefiting all monetization lines, with early results already visible in user time and ad revenue in Q1 and more efficiency gains expected ahead. On CapEx, Q1 rose ~80% YoY to ~RMB 200mn, driven by servers and compute. For the year, AI CapEx is expected to rise by ~RMB 1bn with ~RMB 500mn P&L impact, while we cut some OpEx to partially offset, as seen with Q1 R&D up 9% YoY alongside solid profitability, 62% YoY growth in adj. net income, and a 7.8% adj. net margin. For Q2, we expect rapid ad growth to continue on AI initiatives, steady GPM improvement, and further net margin expansion. We reiterate mid-to-long-term targets of 45% GPM and 15%-20% OPM. **Risk disclosure and disclaimer:**[**Dolphin Research Disclaimer and General Disclosure**](https://support.longbridge.global/topics/misc/dolphin-disclaimer) ### Related Stocks - [09626.HK](https://longbridge.com/en/quote/09626.HK.md) - [BILI.US](https://longbridge.com/en/quote/BILI.US.md)