Bilibili relies on games and AI to turn around

Author | Liu Baodan

Editor | Huang Yu

The long-standing profitability issue that has plagued content community platforms for years has finally seen a breakthrough with Kuaishou, Zhihu, and Bilibili moving towards profitability.

It has been three quarters since Bilibili first achieved profitability, and after 15 years of losses, this video platform has finally demonstrated the stability of its profitability through concrete actions.

Recently, Bilibili released its unaudited financial report for the first quarter of 2025, showing a total net revenue of 7.003 billion yuan, an increase of 24% year-on-year; gross profit was 2.539 billion yuan, up 58% year-on-year. The gross margin reached 36.3%, an increase of 8 percentage points year-on-year, setting a new historical high.

At the same time, Bilibili achieved an adjusted net profit of 362 million yuan in the first quarter, a non-GAAP financial metric that represents the basic trend of Bilibili's core business. This marks the third consecutive quarter of positive adjusted net profit for Bilibili, indicating the sustainability of its profitability.

This is a highly valuable quarterly financial report, with the driving factors behind Bilibili's profitability coming from the performance of its gaming and advertising businesses, as well as the company's exploration of more diversified revenue streams as its content mindset strengthens.

Bilibili's revenue sources mainly consist of four aspects: value-added services, advertising, mobile games, and IP derivatives and others. Among these, the high-margin advertising and gaming businesses are key to Bilibili's profit growth.

In the first quarter, Bilibili achieved advertising revenue of 1.998 billion yuan, a year-on-year increase of 20%, significantly outpacing the overall advertising market, primarily due to strong growth in performance-based advertising. The top five contributing industries were gaming, online services, e-commerce, home appliances, and automotive.

However, the fastest-growing segment was AI-related advertising. In a conference call, Bilibili Chairman and CEO Chen Rui stated that Bilibili is one of the most valued advertising platforms for AI companies. In the first quarter of this year, AI-related advertising on Bilibili doubled, directly driving advertising investments in related fields.

In terms of gaming, Bilibili's mobile games generated revenue of 1.731 billion yuan, a year-on-year increase of 76%, maintaining rapid growth for three consecutive quarters, mainly due to the strong performance of the exclusively licensed game "Three Kingdoms: Strategy of the World." In addition to "Three Kingdoms: Strategy of the World," Bilibili is also operating games like "Azur Lane" and continues to explore new games.

The highest contribution to Bilibili's revenue came from value-added services, which achieved revenue of 2.807 billion yuan in the first quarter, an increase of 11% year-on-year, remaining at a high level over the past four quarters, mainly due to increased revenue from live streaming and other value-added services. As for IP derivatives and others, revenue was 467 million yuan, a year-on-year decrease of 4%.

Moreover, in recent years, Bilibili has been focused on cost reduction and efficiency improvement, significantly enhancing its commercial conversion efficiency through AI technology.

Chen Rui stated that in terms of product and technology infrastructure capabilities, the fastest-growing capability in the first quarter was AI large model capabilities. Through multimodal large models, the company has gained a deeper understanding of users' consumption intentions and interests, while also significantly improving AIGC advertising generation. "Currently, AIGC-generated performance ads account for 30% of performance ad consumption." Beyond profitability, Bilibili has also released more positive signals regarding user growth, which are key forward-looking indicators for assessing Bilibili's future performance guidance.

In the first quarter of 2025, Bilibili's daily active users reached 106.7 million, an increase of approximately 4.3 million year-on-year, while monthly active users reached 368 million, with a net increase of 28 million quarter-on-quarter. As the "first stock of Generation Z," Bilibili had previously been constrained in commercial monetization due to its predominantly young user base, but this situation has quietly changed.

Chen Rui stated that by 2025, the average age of Bilibili users will be 26 years, and they not only maintain high engagement but also demonstrate an increasingly strong purchasing power. The average daily usage time per user is 108 minutes, and the number of monthly paying users has also reached a historical high of 32 million, which has become a key driver of Bilibili's revenue growth.

Notably, industries such as home furnishings and automobiles, which rank high in Bilibili's advertising revenue, signal the growth of user purchasing power. According to observations from Wall Street, Bilibili's advertising clients in recent years have mainly come from the beauty, food, and beverage industries.

This also opens up the possibility for Bilibili to explore more diversified revenue streams. Last year, Bilibili upgraded its fan charging plan, requiring users to pay to watch exclusive high-quality videos produced by creators. Wall Street has learned from internal sources that Bilibili's charging-related revenue grew by 200% year-on-year this quarter. Chen Rui predicts that users paying for content they like will become a new growth area in the video sector.

Regarding future profitability expectations, Bilibili's CFO Fan Xin stated in a conference call that the company's gross margin and net margin will gradually improve throughout the year. In the medium to long term, the company is confident in gradually increasing its gross margin to 40% to 45%. "The company's long-term operating profit margin target, which is 15% to 20%, will remain unchanged."

Although it has attempted to reduce its dependence on games, it is undeniable that games remain the main driver of Bilibili's current growth.

The game "Three Kingdoms: Strategizing the World," launched last year, is undoubtedly a correct bet by Bilibili on the gaming market. In the conference call, Chen Rui stated that one of the most important requirements for "Three Kingdoms: Strategizing the World" is "long-term operation." He revealed that his requirement for this project is "at least a five-year, stable business cycle."

As an important AI content community, Chen Rui believes that Bilibili has unique advantages in the AI era. Bilibili is now the largest Chinese video corpus in the world, and while it is easy for AI to simulate user comments and pretend to be users, generating a high-quality, credible video remains challenging.

Chen Rui predicts that in the AI era, diversifying the monetization of high-quality content will be easier, and the value of content may multiply, allowing it to be consumed by more users.

After 16 years of establishment, Bilibili has finally ended its long-standing losses and entered a profitable track. For Bilibili, this is a brand new beginning.

However, Bilibili is still far from a time to relax, as AI is brewing a technological revolution that is more influential than the mobile internet. Like other tech companies, Bilibili must also recalibrate its positioning in the AI era