Ad growth powers margins as games await new hits.
- Gross margin expanded to 37.2 percent in Q2 2026, marking 16 straight quarters of improvement.
- Advertising revenue grew 28 percent from a year earlier to RMB 3.1 billion, becoming the largest revenue segment.
- AI advertiser budgets continued to scale, driving efficiency gains across the platform.
- Game revenues fell 14 percent from a year earlier in Q2 2026 due to tough comparisons against past launches.
- Management expects game revenue to return to yearly growth in the fourth quarter with help from new title launches.
Margins climb while games wait for a spark
Bilibili has proven its ability to control costs and expand margins. Gross margin hit 37.2 percent in Q2 2026, marking 16 straight quarters of improvement. The company achieved its first full year of GAAP profitability in 2025, and current trends show that discipline holds.
Advertising is now the largest piece of the business. Q2 2026 ad revenue grew 28 percent from a year earlier to RMB 3.1 billion. This growth comes from better ad matching tools, AI integrations, and more ad slots across different screens.
The bear case centers on the gaming segment. Game revenue fell 14 percent from a year earlier in Q2 2026. The drop happened because the company faced a tough comparison against the highly successful launch of San Mou last year. Bilibili needs flawless execution on upcoming games to get this segment growing again.
The near future depends on balancing these two sides. Advertising provides steady margin expansion, but the overall growth rate will look much better if management can deliver on its promise to return the gaming segment to yearly growth by the fourth quarter.
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. This matters because older users often have more money to spend, which 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. Advertising is now the primary growth engine for the entire company.
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 and relying heavily on algorithms to boost ad performance.
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, pulling in 39 percent of total revenue in Q2 2026.
Live broadcasting and memberships
These sit inside value-added services, where users pay for premium access, live features, and fan support. This segment provided 37 percent of revenue in Q2 2026.
San Mou and evergreen games
San Guo: Mou Ding Tian Xia 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 are extending its life beyond the first sales wave.
New game pipeline
NCard launched in July 2026, and Lumi Master follows in September. The 2027 slate includes Ragnarok Online 3, Mistbound, and Three Kingdoms: The Ravages of Time.
Q2 2026 revenue mix
The segment mix uses Q2 2026 revenue disclosures. Advertising is now the largest segment, followed closely by value-added services.
What could break the setup
Ad share fight
High impact · Medium oddsChina's ad market is highly competitive. Bilibili is fighting for existing budgets in a zero-sum environment. If its AI ad tools stop improving, advertisers may shift money to other platforms with better conversion rates.
Game hit cycle
High impact · High oddsGames can rise or fall based on a few titles. Q2 2026 game revenue fell 14 percent from a year earlier because San Mou created a tough comparison. Bilibili needs flawless execution on its late 2026 and 2027 game launches to return to growth.
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 helps spending power but can also change what users want from the platform. If Bilibili fails to match older users with useful content, engagement could weaken.
Sources and research notes
This page combines Finn's company research with public filings and other cited materials. The thesis is reviewed when material company information changes; Finn Scores use the latest available scoring data.
- Thesis reviewed
- August 30, 2026
- Score data
- September 6, 2026
- Reviewed by
- Shivam Bharuka
Comparable Internet Content & Information companies
Companies near Bilibili Inc. in Finn's Internet Content & Information industry ranking.
