Bilibili leans on ads and game hits
- Gross margin reached 37.1% in Q1 2026, its 15th straight quarter of expansion.
- Advertising revenue grew 30% from a year earlier to RMB 2.6 billion in Q1 2026.
- AI advertiser budgets rose over 170% from a year earlier, giving the ad story a clear driver.
- Games remain choppy, with Q1 2026 game revenue down 12% because San Mou set a high base last year.
- Escape from Duckov has sold over 4 million copies, easing some worry that Bilibili depends too much on San Mou.
Margins are finally doing real work
Bilibili’s bull case is about operating leverage. That means revenue is growing while costs rise more slowly. Gross margin hit 37.1% in Q1 2026, marking 15 straight quarters of improvement. The company also reached its first full year of GAAP profitability in 2025.
The biggest driver is advertising. Q1 2026 ad revenue grew 30% from a year earlier to RMB 2.6 billion, helped by more ad slots across screens and better ad matching. AI advertisers are also spending more, with budgets up over 170% from a year earlier.
The bear case sits in games. Game revenue fell 12% from a year earlier in Q1 2026 to RMB 1.5 billion because San Mou had a strong launch period last year. Escape from Duckov, with over 4 million copies sold, helps show the portfolio is not only one game. But Bilibili still needs NCard, Lumi Master, San Mou expansions, and new versions of Escape from Duckov to land well.
The stock is not a simple growth story. Advertising is improving, margins are rising, and the user base is getting older with more spending power. At the same time, the ad market is a fight for share, and game revenue can swing hard from one hit cycle to the next.
Ads plus fan spending
Bilibili makes money in two main ways. The business side sells ads to brands and merchants that want to reach its video users. The consumer side earns money from mobile games, premium memberships, live broadcasting, and fan payments.
The platform benefits as its users age. Management says the average user age is 26.5, which matters because older users often have more money to spend. This gives Bilibili more ways to sell ads, game content, memberships, and live services.
AI is becoming part of both sides of the model. It helps creators with tools like music creation and translation, and it helps advertisers target users more efficiently. In 2025, AI-related content watch time rose 73% from the prior-year period, which shows the topic is pulling user attention.
The weak point is that both engines need constant upkeep. Advertisers demand clear returns on spending. Gamers move on fast if new titles miss. Management is trying to control this by being more selective with content investment.
A video home with game swings
Bilibili video platform
The core app hosts user videos across areas like lifestyle, games, entertainment, anime, and knowledge. It is the base for ads, memberships, creator tools, and community engagement.
Advertising infrastructure
Bilibili sells ad space and uses algorithms and AI tools to match advertisers with users. This is the current growth engine, with Q1 2026 ad revenue up 30% from a year earlier.
Live broadcasting and memberships
These sit inside value-added services, or VAS, where users pay for premium access, live features, and fan support. VAS revenue rose 4% from a year earlier in Q1 2026.
San Mou and evergreen games
San Guo: Mou Ding Tian Xia, known as San Mou, is the key long-life strategy game. Older titles like FGO and Azur Lane also help keep the games business from relying only on new launches.
Escape from Duckov
This self-developed single-player hit has sold over 4 million copies globally. Console and mobile rollouts could extend its life beyond the first sales wave.
NCard and Lumi Master
NCard is a casual competitive card game planned for official launch in July 2026. Lumi Master is a self-developed pet-nurturing and simulation game planned for Q4 2026.
Q1 revenue mix
The segment mix uses Q1 2026 revenue disclosures. VAS and advertising are now the largest pieces, while games remain important but more volatile.
What could break the setup
Ad share fight
High impact · Medium oddsChina’s ad market is competitive, and Bilibili is fighting for existing budgets rather than enjoying easy industry growth. If its ad tools stop improving, advertisers may shift money to other platforms with better conversion. That would hurt the highest-growth part of the company.
Game hit cycle
High impact · High oddsGames can rise or fall based on a few titles. Q1 2026 game revenue fell 12% from a year earlier because San Mou created a tough comparison. Escape from Duckov helps diversify the portfolio, but Bilibili still needs repeat hits and long game lives.
Content cost creep
Medium impact · Medium oddsBilibili depends on fresh content to keep users watching. Management says it is taking a more selective approach to content investment to control cost swings. If spending rises faster than revenue again, margin progress could stall.
Aging users change habits
Medium impact · Medium oddsBilibili’s average user age is 26.5, which can help spending power. It can also change what users want from the platform. If Bilibili fails to match older users with useful content and paid products, engagement and spending could weaken.
In one breath
How does Bilibili make money?
Bilibili makes money from advertising, value-added services, games, and IP derivatives. In Q1 2026, VAS was about 39% of revenue, advertising about 35%, games about 20%, and IP derivatives and others about 6%.
Why is advertising so important to Bilibili now?
Advertising is the main growth engine. Q1 2026 ad revenue grew 30% from a year earlier to RMB 2.6 billion, helped by multi-screen ad inventory and AI-based ad tools.
Is Bilibili still too dependent on games?
Games are still a major swing factor. San Mou set a high base last year, which helped explain the 12% game revenue decline in Q1 2026, but Escape from Duckov selling over 4 million copies shows the portfolio is broadening.
What are the next catalysts for Bilibili?
The main catalysts are the official NCard launch in July 2026, Lumi Master in Q4 2026, console and mobile versions of Escape from Duckov, and further San Mou expansion. These matter because they can smooth out game revenue.