After the H.K. close on Aug 27 (Beijing time), $Bilibili(BILI.US) released its Q2 2026 results. The print was broadly in line with no major surprises, and the focus ahead remains on the games pipeline.

In detail:

1) Ads stayed strong: Q2 ad revenue grew 28%, in line with expectations. The sector backdrop worsened, so this was a solid outcome for Bilibili. Behind the growth, platform traffic (total time spent) kept rising and ad load increased.Structurally, demand benefited from marketing around AI foundation models and new app launches, as well as a slate of major new game launches in Q2 that required promotion.

On these two drivers, we expect ads to remain on a high-growth track in H2. Growth may decelerate modestly as comps get tougher.

2) One of the few legacy internet platforms still growing traffic: Q2 MAUs reached 371 mn (+2% YoY), with a seasonal QoQ drop of 5 mn. DAU/MAU hit a record 31.5%, and avg. daily time spent rose 8 minutes YoY to 113 minutes.

QM data show total user time in Jun still grew 7% YoY. This traffic recovery has lasted for over a year, and versus peers pressured by ByteDance’s ecosystem, Bilibili stands out relatively.

2) New game cycle to start in Q4: The key issue this year is a lack of new games. On a high base from 'Three Schemes', game revenue fell sharply YoY, and while Q2 saw the self-developed 'Hundred Generals Cards', its scale was too small, so bookings continued to decline YoY.A meaningful stabilization requires at least a medium-scale hit.

H2 comps drop quickly, which should naturally ease the downtrend. Based on the current pipeline, two self-developed titles, 'Shine Lummy' and 'Three Kingdoms: Wangdao' (sell-side expects both could reach bn-level GMV), are slated for Q4, and the new cycle could restore game growth.

3) Live-streaming and long-form video: mediocre but intact: Value-added services grew 4.6% in Q2, and premium subs net-added nearly 10 mn QoQ. Growth is still at the low end, but versus iQIYI, Youku, and Tencent Video, Bilibili is the best of a weak cohort.

Broad, high-quality PUGC content keeps users sticky. Leveraging bullet comment data and deep user insight, classic series meet premium users’ video needs, reducing reliance on new-series-driven growth as seen at iQIYI/Youku/Tencent Video.

Q2 also benefited from the June release of the new season of the 'A Record of a Mortal’s Journey to Immortality' IP. Both Japanese and Chinese anime are key to Bilibili’s user mindshare.

4) Profit beat by a small margin: Q2 OP was RMB 370 mn (OPM 4.7%), helped by tighter S&M and G&A spend, with the game cycle at a trough and limited need for heavy marketing. R&D accelerated as guided last quarter, driven by AI-related opex.Adj. net profit reached RMB 720 mn (NPM 9%), up nearly 200 bps QoQ, consistent with prior guidance.

From Dolphin Research’s long-tracked 'traffic monetization vs. cost' lens, monetization efficiency remains healthy, reflecting a stable ecosystem and intrinsic monetization power. Whether AI spend pays off will require management to deliver faster growth and better monetization to prove the case.

5) New buyback plan kicked off: In Jun, the company approved a new 2-year $300 mn buyback (larger than the prior plan). It repurchased $30 mn in Jun alone, implying a fast pace.On a neutral run-rate of $300 mn over two years, shareholder yield is a modest 2%. If annualized at the Jun pace, yield would rise to ~5%, a mid-range level.

6) Key metrics at a glance

Dolphin Research View

Q2 was uneventful: on revenue, the game shortfall and high ad cycle are largely priced in. On profit, there was a small beat, but the AI spend highlighted last quarter still caps the market’s expectations for further margin improvement.

Bilibili underperformed peers in Q2, beyond the profit drag from AI investment. Tencent’s unexpected selldown also weighed on the stock. Tencent still holds about 4% of Bilibili, so after a neutral valuation reset, this overhang could cap further upside.

From a cycle standpoint, with comps falling quickly in H2, growth should continue to re-accelerate. With the Q4 games cycle approaching, we expect sentiment to keep warming.

On an estimated RMB 3.1 bn adj. net profit for this year, the current $6.8 bn market cap implies ~15x P/E. The valuation premium over other China ADRs has narrowed visibly, and is below the expected growth rate over the next two years as comps ease.

Given Bilibili’s relatively stable traffic ecosystem, we see limited downside from here. That said, if the stock re-rates near $8.0 bn, implying >18x P/E on current-year numbers, watch for pullbacks as selldown expectations heat up.

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Dolphin Research on 'Bilibili' (history):

Earnings season (recent)

May 19, 2026 call Trans: 'Bilibili (Minutes): Plan to reinvest part of incremental profit into AI this year'

May 19, 2026 results take: 'Bilibili: Tencent to cut stake, AI eats profit, games needed to step up'

Mar 5, 2026 call Trans: 'Bilibili (Minutes): Plan to reinvest part of incremental profit into AI this year'

Mar 5, 2026 results take: 'Bilibili: Ads resilient; a tough 'limping' phase for the platform'

Risk disclosures and statements for this piece: Dolphin Research Disclaimer and General Disclosures