On May 19th, Bilibili Inc. (Bilibili) released its financial report for the first quarter ended March 31, 2026. Following the earnings release, company executives including Chairman and CEO Rui Chen, Vice Chairman and COO Li Ni, and CFO Xin Fan attended the subsequent earnings conference call to discuss the key financial results and address questions from analysts.

The following are the main points from the analyst Q&A session:

Goldman Sachs Analyst Lincoln Kong: Congratulations on the strong performance this quarter. I would like to ask, what is the contribution of AI to user growth and engagement time? How do you view the role of AI creation tools within Bilibili's creator ecosystem?

Rui Chen: The core drivers of user growth and engagement remain the supply of high-quality content and the unique community experience. AI has not altered Bilibili's fundamental logic but has amplified these two key advantages. Firstly, AI amplifies content supply. While short-form video content may be oversupplied, there is a significant shortage of high-quality medium and long-form videos. AI enhances creative leverage, expands expressive boundaries, and releases more premium video content. In Q1, the number of daily active UP creators and daily submissions increased by 6% and 19% year-over-year, respectively. AI not only increases quantity but also improves quality. The creative process for certain content categories has been fundamentally transformed: previously, film and television content required a full production and post-production team, but now, 1-2 core creators can produce stunning works. Similarly, music production, which once required collaboration between composers, singers, musicians, and performers, can now achieve team-level results with just 1-2 core creators. We are pleased that complex and expensive creations from the past can now be accomplished by a small number of individuals. In a recent AI creation contest, UP creators produced a large number of hit works. The contest accumulated over 700 million views, with 150 works exceeding one million views each, fully demonstrating AI's positive impact on content quality. Secondly, AI amplifies community value. The core reason Bilibili can produce high-quality content is that its users are passionate about content and possess exceptionally high aesthetic standards. The platform sees over 17 billion genuine user interactions monthly. In the AI era, this represents a precious dataset of real human annotations from what is arguably China's most content-savvy and aesthetically discerning user base. Our internal models enable earlier identification of potential hits. This capability is directly reflected in UP creator follower growth: in Q1, the number of UP creators with over one thousand followers grew by more than 30% year-over-year, while those with ten thousand, one hundred thousand, and one million followers all grew by over 20%. This follower growth drives income, with average revenue per UP creator increasing 24% year-over-year in Q1. In summary, AI empowers high-quality creators to become even stronger. Bilibili aggregates China's most creative and deeply expressive creators. AI represents a historical, tenfold amplification opportunity that we are determined to seize.

J.P. Morgan Analyst Daniel Chen: Advertising revenue accelerated to 30% growth in Q1. Which industries or products exceeded expectations? What is the outlook for advertising trends in Q2 and for the full year?

Li Ni: Advertising revenue in Q1 was RMB 2.6 billion, a 30% year-over-year increase, marking the 13th consecutive quarter of double-digit growth. The fundamental driver of advertising growth is Bilibili's community and its users. Our users have an average age of 26.5, and their personal and household consumption power is rapidly increasing, making them the core incremental audience most coveted by advertisers. Unlike pure traffic platforms, the value of advertising on Bilibili is not one-off. It can deeply influence user consumption mindsets, moving from single impressions to multiple touchpoints, and from simple conversions to long-term brand building. In Q1, brand advertising, performance advertising, and creator advertising all achieved double-digit growth, with some segments reaching high double-digits. The top five advertising industries were: gaming, internet services, digital/consumer electronics & home appliances, e-commerce, and automotive. Looking ahead to Q2 and the full year: First, the deepening application of AI continues to enhance advertising efficiency. Our improved capabilities in understanding user interests, consumption intent, and content, combined with a more precise recommendation model, better match users, content, and ads. In Q1, the Click-to-Conversion Rate (CTCVR) for performance ads exceeded expectations. We provide advertisers with AI-managed campaigns and intelligent creative capabilities. The penetration of automatic ad consumption increased to 85% in Q1 and will continue to rise. AIGC (AI-Generated Content) ad materials achieved a double-digit improvement in Click-Through Rate (CTR) compared to traditional materials, contributing to efficiency gains. Second, expansion across multiple screens and scenarios. Coverage spans all scenarios including the mobile app, PC, Pad, OTT, and in-vehicle systems, with touchpoints across information feeds, search, comments, in-player ads, and mini-programs. This provides more advertising inventory and improves matching efficiency. Third, deepening vertical industry strategies. Moving from industry sales to deep operational integration, we provide complete solutions. High-value industries are expected to see concentrated growth in the second half of the year: AI technology, automotive, home renovation, and home appliances will continue rapid growth; leading categories like gaming, e-commerce, and education will continue to expand market share. In summary, we are confident in maintaining healthy advertising growth this year.

Morgan Stanley Analyst Yang Liu: I have a question regarding the gaming business. How did the testing for "Three Kingdoms: Hundred Generals Card" perform? What are the expectations for this game? "Shine! Rumi" began monetization testing this month. Could you share the test results and the specific launch timeline? What are the expectations for "Romance of the Three Kingdoms: The Path to Kingship"? Also, are there any other noteworthy games in the pipeline?

Rui Chen: The low-key testing for "Three Kingdoms: Hundred Generals Card" in April met expectations. A formal launch is planned for July. It is the industry's first game to integrate hero skills with card-based competition, appealing to younger users. We plan to iterate and launch simultaneously, aiming to build a large Daily Active User (DAU) base. It has the potential to become a long-running, large-DAU casual product. "Romance of the Three Kingdoms: The Path to Kingship" is an officially licensed Three Kingdoms IP title with 3D visual upgrades. It targets more mature, quality-focused SLG (Strategy) players, complementing "Three Kingdoms: Strategic World". The first round of monetization testing at the end of March received positive feedback, with a launch planned within this year. The self-developed game "Shine! Rumi" pioneers a multi-pet and casual gameplay fusion. Global testing in early May received positive feedback, with a global launch planned for the fourth quarter. Furthermore, sales for "Escape from Yakolev" have surpassed 4 million copies this year. We continue to optimize operations and advance development on console and mobile versions, aiming to build it into a long-lasting IP popular with young people. Bilibili's gaming strategy can be summarized in three points: Long-term Operation: Emphasizing product lifecycle management. Games like "Fate/Grand Order" and "Azur Lane" will celebrate their 10th and 9th anniversaries, respectively. "Three Kingdoms: Strategic World" has been operating stably for two years. All products aim for longevity. Category Leadership: Deep cultivation in niche segments, striving to be first or pioneering. For the Three Kingdoms theme, we are building a "Three Kingdoms Universe". We continue to invest in PC/indie games. Catering to Younger Demographics: Staying close to the needs of young players, with innovations in gameplay and design that align with their preferences.

CICC Analyst Xueqing Zhang: My question is related to finances. What is the progress of AI investments in 2026? When will the outputs materialize? What is the outlook for AI-related capital expenditures and operating expenses? How will margins evolve in Q2 and for the full year?

Xin Fan: AI investments are focused on three key areas: video understanding, video distribution, and video creation. These significantly enhance the PUGV (Professional User Generated Video) content ecosystem and community value, directly benefiting all monetization businesses. Applications were implemented in Q1, with results reflected in DAU, engagement time, and advertising revenue growth. This positive feedback loop has just begun. Capital expenditures in Q1 increased by approximately 80% year-over-year to about RMB 200 million, primarily for servers and computing resources to support AI. For the full year, AI-related capital expenditures are expected to increase by approximately RMB 1 billion. The impact on the income statement is estimated to be around RMB 500 million; however, we are optimizing operating expenses to partially offset this impact. Research and development expenses grew 9% year-over-year in Q1, but revenue growth and operating leverage drove strong performance on the profit side. Adjusted net profit increased 62% year-over-year, with a net profit margin of 7.8%. We expect advertising revenue to maintain rapid growth in Q2, with AI's contribution continuing to be realized. Gross margin is expected to improve steadily, and there remains room for further expansion in the net profit margin. We maintain our medium- to long-term targets of 40%-45% for gross margin and 15%-20% for operating profit margin.