Bilibili (NASDAQ:BILI) released second-quarter financial results and hosted an earnings call on Thursday. Read the complete transcript below.

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The full earnings call is available at https://edge.media-server.com/mmc/p/8n4g6mi8/

Summary

Bilibili Inc. reported strong financial results for Q2 2026 with total revenues rising 8% year over year to RMB 7.9 billion, driven by 28% growth in advertising revenue.

User engagement metrics showed significant improvement, with DAUs increasing by 7% to 117 million and average daily time spent rising to 113 minutes.

The company emphasized the role of AI in enhancing content creation and distribution, leading to a 28% increase in daily video submissions.

Operational highlights included the success of Bilibili's offline events and the expansion of its game titles pipeline with several new game launches planned for late 2026 and 2027.

Management expressed confidence in maintaining growth momentum and improving profitability, targeting a gross profit margin of 40% to 45% and operating margin of 15% to 20% in the mid to long term.

Full Transcript

OPERATOR

Good day and welcome to Bilibili's second quarter 2026 financial results and business update conference call. Today's conference is being recorded. At this time, I would like to turn the call over to Juliet Yang, Executive Director of Investor Relations. Please go ahead.

Juliet Yang, Executive Director of Investor Relations

Thank you, operator. During this call we'll discuss our business outlook and make forward-looking statements. These comments are based on our predictions and expectations as of today. Actual events or results could differ materially from those mentioned in today's news release and in this discussion due to a number of risks and uncertainties, including those mentioned in our most recent filing with the SEC and the Hong Kong Stock Exchange. The non-GAAP financial measures we provide are for comparison purposes only.

The definition of these measures and the reconciliation table are available in the news release we issued earlier today. As a reminder, this conference is being recorded. In addition, an investor presentation and a webcast replay of this conference call will be available on the Bilibili IR website at ir.bilibili.com. Joining us today from Bilibili senior management are Mr. Ray Chen, Chairman of the Board and Chief Executive Officer; Ms. Kali Lee, Vice Chairwoman of the Board and Chief Operating Officer; and Mr. Sam Fan, Chief Financial Officer. I will now turn the call to Mr. Chen.

Rui Chen, Chairman and CEO

Thank you Julius and thank you to everyone joining us today. Our strong momentum carried into the second quarter and we delivered another set of solid results. Both our community and top line growth remained healthy and profitability continued to expand as users increasingly seek substance over noise. Our high quality content and authentic community experience keep attracting new users and driving deeper. Engagement in Q2 DAUs increased by 7% year over year to 117 million while MAUs grew to 371 million.

Average daily time spent rose to 113 minutes from 105 minutes a year ago which drove total time spent up over 14%. That engagement is translating into stronger commercial results. Advertising revenue grew 28% year over year, marking another quarter of industry leading growth. Meanwhile, MPUs increased 7% year over year to 33.4 million, reflecting users increasing willingness to pay for the content and community experiences they truly value. You can also see that momentum in our financial results.

Total revenues for Q2 rose 8% to RMB 7.9 billion and gross profit grew 10% year over year. Gross margin expanded to 37.2%, marking our 16th consecutive quarter of margin improvement. Our top line growth and increased operating leverage drove our net profit up 55% year over year and our adjusted net profit reached RMB 704 million with our adjusted net profit margin expanding to 8.9%. In the AI era, we see two major tailwinds. First, AI tools help our creators produce great content much faster, while AI-empowered content understanding is making our recommendations far more efficient.

Second, and perhaps more importantly, in a world full of passive algorithmic content, real human connection becomes a rare commodity. People choose Bilibili because they want meaningful content, shared interest and genuine interactions and that makes our community even more attractive. That is why we remain committed to our AI strategy while staying highly disciplined in how we invest. We'll use AI to improve content and efficiency without losing sight of our community roots and unique advantage.

Strengthening this flywheel of community and monetization will continue to build lasting compounding value for our users, our creators and our shareholders. With that, let me walk you through our core pillars of content community and commercialization. Let's start with our content. Across our 17 year history, various content formats have come and gone, but Bilibili's distinct blend of quality content and vibrant interest driven communities continues to capture users intentional high value time in Q2, total time spent on our platform expanded by 14% year over year.

Notably, watch time from videos over five minutes grew by 18% year over year, demonstrating users growing demand for meaningful and high quality content. Turning to our interest-based content categories, we're seeing steady growth across both core and emerging hubs. Total watch time for game related content and general entertainment content increased by 20% and 35% year over year respectively. Baby and maternity also grew by 36% year over year as more of our users step into parenthood.

At the same time, AI tools are expanding creative boundaries across our platform. For instance, watch time for music content grew 24% year over year catalyzed by AIGC-driven creations. Beyond content consumption, AI is also supercharging Creator output. In Q2, daily video submissions jumped by 28% compared to the same period last year. Video podcasts offer another compelling example of our users embracing immersive content. Last month, average daily watch time for video podcasts exceeded 100 million minutes.

This remarkable engagement shows that even in today's world of fast paced content, there is still a huge and growing appetite for in depth storytelling. Behind these figures, empowering creators remains a top priority. Through refined algorithms, we now match quality content with interested users much earlier. In Q2, the number of creators with over 1,000 followers grew by 30% year over year. The diverse monetization channels we provide also helped average creator income increase by 21% year over year in the second quarter.

Turning to our community as we touched on earlier, authentic human connection has become rare and valuable in the era of automated bite sized content. That is why Bilibili's interactive community feels like a true oasis in today's digital world. Here, hundreds of millions of users connect over shared passions, expressing their feelings through comments and bullet chats to find a genuine sense of belonging. In Q2, monthly interactions grew 9% year over year to 17.4 billion, while deeper connections like long comments jumped over 67%.

Meanwhile, by processing these rich user interactions, our algorithms can spot and elevate high quality content much faster, driving healthy steady growth in both our user base and time spent. This level of engagement and interaction naturally keeps users coming back and expands our network of trust. In Q2, the average active user followed 96 creators, up 11% from a year ago. By the end of Q2, our official members reached 299 million with 12 month retention remaining solid at around 80%.

Ultimately, our community doesn't just surface the best content, it builds lasting user loyalty and drives enduring platform value. This summer we brought our community offline once again through our signature events, Bilibili World and Bilibili MacroLink. Over the three day event, more than 400,000 fans gathered in person in Shanghai, making it one of the largest offline ACG expos in China and a vibrant new cultural landmark for the city. Seeing so many young people come together to share their passions was a powerful reminder of what community means.

This is what Bilibili looks like off screen. Authentic, energetic and deeply connected. Now let's turn to our commercial businesses beginning with advertising. In Q2, advertising revenue increased by 28% year over year to RMB 3.1 billion, marking our 14th straight quarter of 20% year over year growth. This industry leading growth reflects our high value, deeply engaged user base alongside ongoing enhancements to our ad products and technical infrastructure.

Growth was broad based across industries. Games, digital products and home appliances, internet services, e-commerce and automotive were our five largest advertising verticals in Q2. While our core gaming vertical maintained healthy growth. New verticals are also flourishing as our users mature into new life stages with expanding consumption needs. Ad revenues from home decoration, footwear and apparel and automotive each grew more than 60% year over year.

We also captured incremental budget from emerging industries. AI advertisers continued to scale and revenues from this vertical more than doubled year over year driving sustained growth in Internet services. Our ads are also becoming more efficient by deepening our understanding of product information, creative assets, user interests and conversion goals. AI helps us deliver more relevant ads and drive better conversion. Our CTCVR continued to improve, increasing 19% year over year in Q2.

Beyond matching, we are extending AI across creative production and campaign operations from AIGC tools to ad placement AI agents, making advertising easier and more efficient for a broader range of clients. We are also extending monetization into deeper high intent user scenarios. Take Search for example, a high value scenario sitting right at the moment of decision making. Search revenues doubled year over year in Q2. At the same time, we are unlocking growth across additional scenarios including PC, Smart TV and the Watch page.

As monetization expands across the entire user journey, we see vast commercial potential ahead. Turning to our games business, game revenues for the quarter were RMB 1.4 billion, down 14% year over year mainly due to the high base Sanmo Sango Mo Din Tian Xia set last year. Sanmo's latest second anniversary season 15 went well with players ranking number two on China's iOS top grossing chart. We'll keep focusing on the game's long term life cycle by delivering fresh content and carefully balancing user experience with monetization.

Meanwhile, our legacy titles including FGO and Azur Lane continued to deliver stable performance during the quarter. In July we officially launched our casual card game Encard. We continue to refine the game and enrich its gameplay while approaching user acquisition with a long term focus on ROI and retention. Looking at the second half of 2024, our self developed simulation game Lumimaster was well received by global players in recent tests. Building on this encouraging reception, we plan to launch the game on September 17th globally.

Our new licensed SLG title is scheduled to roll out in Q4, complementing Sanmo with a differentiated gameplay experience beyond Lumi and Sanwang. We also introduced three new titles at Bilibili World including two licensed games, Ragnarok Online 3 and an MMORPG, based on a globally recognized IP that has already secured its publication license and Mistbound Guild Wars card game which is adapted from another well known IP. We also announced a new self developed tactical RPG The Ravages of Time.

All three titles will be released next year. Together, these titles expand our pipeline across genres and development models while attracting new player segments. Turning to our VAS business in Q2, VAS revenues grew 5% year over year to RMB 3.0 billion. Our live broadcasting business maintained its steady performance and we continued to refine our operations to ensure stable and sustainable growth with better margins. At the end of Q2, premium members reached 25.7 million, up 9% year over year with around 80% on annual or auto renewal plans.

Fan charging also kept its momentum, with revenue up nearly 50% year over year. Fan charging turns audience appreciation into direct financial support, so creators across a wide range of categories can do what they love and produce quality content over the long term. Beyond the numbers, we remain deeply committed to shaping a healthy culture and community for China's young generation. ESG principles are central to that mission. This year, MSCI ESG upgraded Bilibili to an AA rating from an A rating, recognizing our ongoing progress in using technology and culture to create meaningful social impact at the end of the day, we found that across every technological shift, one thing remains constant. People crave rich, meaningful content and real human connection. Bilibili is uniquely built at the intersection of both, as AI enables us to fulfill this mission with greater precision and scale. I couldn't be more confident in our path ahead. With that, I will turn the call over to Sam to walk through our financials in more detail.

Sam Fan, Chief Financial Officer

Thank you, Mr. Chen, and hello everyone. In the interest of time on today's call, I will focus on our second quarter financial highlights. We encourage you to refer to our press release issued earlier today for a closer look at our results. Total revenues for the second quarter were RMB 7.9 billion, up 8% year over year. The breakdown of total revenues by revenue stream was approximately 39% advertising, 37% VAS, 18% mobile games and 6% from our IP derivatives and other businesses.

Cost of revenues increased by 7% year over year to RMB 5.0 billion. Gross profit increased around 10% year over year to RMB 3.0 billion, while gross margin expanded to 37.2% from 36.5% in the same period last year, marking our 16th consecutive quarter of margin improvement. Our total operating expenses were up 7% year over year to RMB 2.6 billion. Sales and marketing expenses increased by 1% year over year. G&A expenses were flat and R&D expenses increased by 16%, primarily due to continued investment in our AI capabilities.

Operating profit increased 48% year over year to RMB 373 million, while adjusted operating profit increased 21% to RMB 696 million, lifting adjusted operating profit margin to 8.8% from 7.8% in the same period last year. Net profit increased by 55% year over year to RMB 339 million, while adjusted net profit increased 25% to RMB 704 million and adjusted net profit margin reached 8.9%. As of June 30th, 2026, we had cash and cash equivalents, time deposits and short-term investments of RMB 24.3 billion, or US$3.6 billion.

In June, our board approved a new two-year US$300 million share repurchase program. Under this new program, a total of 1.9 million shares had been purchased for a total cost of US$31 million as of June 30, 2026. From the beginning of the year through today, a total of 5.8 million shares had been purchased for a total cost of US$118 million. Moving forward, we will continue to evaluate market conditions and execute our repurchase program accordingly to enhance long-term shareholder value.

Thank you for your attention. We would now like to open the call to your questions. Operator, please go ahead.

OPERATOR

Thank you. Dear participants, as a reminder, if you wish to ask a question, please press on your telephone keypad. Wait for your name to be announced. To withdraw your question, please press star one and one again. For the benefit of all participants on today's call, if you wish to ask a question to management in Chinese, please immediately repeat your question in English. The company will provide consecutive interpretation for the management statements during the Q&A session.

Please note that the English interpretation is for convenience purposes only. In the case of any discrepancy, management statements in the original language will prevail. And now we're going to take our first question. The question comes from Lincoln Kong from Goldman Sachs. Your line is open. Please ask a question.

Lincoln Kong, Analyst at Goldman Sachs

Thank you, management, for taking my question and congrats on a very solid quarter. So looking back over the past few years, short-form content has surged while the average length of long-form video has also steadily decreased. But Bilibili has sustained a very healthy growth throughout this dynamic period. So what's driving this resilience? And looking ahead to the AI era, how do we expect user preference and consumption habits to evolve over time?

Thank you.

Rui Chen, Chairman and CEO

Over the past few years we see explosive growth for both short video content and long-form content, and the shorter form content grew much faster. Looking at Bilibili, we're not choosing the length of the content to be focused on, but rather we are focusing on good content, high-quality content, and naturally for those high-quality content, they are generally more inclined to be in the format of mid- to long-form content. So we believe whether the length of the content or the device of the consumption scenario, the ultimate goal from users is everyone wants to watch good content.

Over the past year we do see exponential supply growth for short video content. But over time, as people have watched enough low-quality, repetitive content, they naturally develop a taste for high-quality content. They are no longer satisfied with content that just grabs their attention for one second. They care more and more about whether the time they spend on the content is actually worth it. And that is exactly why Bilibili has been able to keep growing.

In the past few years we have been focusing on providing high-quality content that is interesting, in-depth and really connects with users emotionally. And that's why users are willing to slow down and spend their intentional time on Bilibili. Bilibili is able to constantly curate high-quality content for two reasons. One is that we have amassed a very talented group of content creators who believe in the community, who believe in the Bilibili platform.

Secondly, over the past decade we have built a very engaging community with a lot of users who truly appreciate high-quality content. They have the view of what is good, high-quality content and form a community that appreciates and also can select and define the quality — what is the good quality content. They can choose and promote among millions of daily video submissions and allow these high-quality, talented content creators to emerge from our platform.

In the second quarter our monthly user interactions were over 17 billion, up 9% year over year. Long comments that are over 100 characters grew even faster by 67%. This high level of real human interactions helps us to better identify high-quality content. Regarding the AI era and how the video landscape is going to change, we believe that AI tools will exponentially unleash the supply of video content, and over time high-quality content is the only solution or the only answer among this oversupply of video content.

We believe over time only high-quality content will have viewership; low-quality content will have no traffic. In the AI era I will be very focused on two aspects: one is video creation/content creation; second is content distribution. First of all, on content creation, I will pay very close attention to those content creators with high intelligence and high creative power — how they are leveraging AI to create content, to realize their creation into actual work.

We believe repetitive, low-quality content will have poor survival, but those talented content creators will be extremely benefited from this evolution of creation tools. In the past half year we have been paying very close attention to this aspect and it's generating very positive results. As a matter of fact, in the second quarter our monthly content submissions increased by 28%. This is hard evidence to support that AI tools are enlarging, enhancing, uplifting our creators' creative output.

Secondly, on content distribution, compared with short videos that only have a few seconds, longer-form video contains much more comprehensive information and structures. Traditional recommendation algorithms often struggle to fully understand and recommend this type of content, and users generally have more complex intent when they come to choose much longer-form content. That's why we are focusing our AI on helping our content distribution become more efficient.

We think this new generation of AI tools is helping us to comprehend and understand the meaning of the content and better understand our users' intentions. And here are a few numbers to support our progress: in the second quarter DAU grew by 7% year over year and our total user time spent increased by 14% year over year. And the number of creators with over 1,000 followers grew by 30% year over year. A lot of the drivers behind those numbers are from using AI to make our algorithm work better.

That concludes the first question's answer. Operator, next question please.

OPERATOR

Perfect. Thank you so much. Now we're going to take our next question and the question comes to the line of Yan Liu from Morgan Stanley. Your line is open. Please ask your question.

Yan Liu, Analyst at Morgan Stanley

Let me translate my question. My question is about the advertisement business. Since 2Q, we started to see weakening macro and consumption data in China. How to think about the future second half advertisement business growth? And also what is the marginal change for the advertisement from the AI industry? And also could management help to break down the 2Q and the second half advertisement growth driver? And also in second half we start to have a little bit higher base — which verticals can support the advertisement business to sustain relatively high growth?

Thank you.

Rui Chen, Chairman and CEO

In the second quarter, despite macroeconomic pressure on consumer spending, our ads have delivered a very strong performance with revenue reaching RMB 3.13 billion, up 28% year over year. This resilient growth reflects strong market recognition of our user base and our community value. More and more advertisers realize it's a must-invest platform for them to gain access to the young generation. We also achieved early success in our vertical industry strategies and our ad scenario expansion within our content ecosystem.

Users' time spent on AI-related knowledge content surged by 72% year over year. Bilibili has become the largest AI learning video community across the Internet as users actively come to our platform to track and learn about large language models and AI tools. At the same time, ad spend from the AI sector grew by over 100% year over year in the second quarter, benefiting from the strong match between AI target audiences and our user base. As AI is a major long-term trend, we expect continuous demand from various clients across different stages and we remain very optimistic about this incremental opportunity.

As for the second half outlook, we're seeing that more advertisers are demanding higher conversion efficiency in the short term, but at the same time they also want channels that deliver sustained long-term impact rather than just one-off impressions to help them build lasting brand value. They are also prioritizing their limited budget on high-value users with genuine purchasing power. All of these demands precisely match with Bilibili's unique strengths.

The average age of Bilibili users now is 26.5 years old, making them the primary driver or the main consumption force in the current Chinese society. Over the past two years they also have established a strong purchasing mindset on Bilibili, demonstrating a clear willingness to buy products recommended by the platform or by the content creators. In the second quarter our top five ad verticals were games, consumer electronics, Internet services, e-commerce and automotive, while our total advertiser base expanded by 14% year over year.

Unlike other platforms, we have a multi-stream, multi-scenario strategy that allows Bilibili to accompany users seamlessly throughout their day — whether it's listening or watching Bilibili during commutes, casting Bilibili content on the TV screen at home with their family, or using our apps or iPad during spare time for learning. OTT and PC. Users can watch and upload video, interact through bullet chats, commentaries, search their favorite content or creators during livestream, watch anime or documentaries, and play games, and ads naturally follow users through their daily touch points. That's why in the first half of this year you see in-app search, watch page, smart TV, portal, PC, and mini program have all unlocked valuable new ad inventories, with revenue from this multi-scenario placement growing by 50% year over year in the first half.

AI is also empowering our ad efficiency from several angles, including improving our user comprehension, user profiling, content matching, ad creative generation, and algorithm efficiency to continuously lift our monetization. And also we have launched our automated ad placement system that has made it much easier for new advertisers to join us. This is driving double-digit growth for our new advertiser client base. As you mentioned, it is indeed a very challenging macro environment and there will be a lot of changes across different industry players.

However, given what we just mentioned, we still remain quite confident about our continuous growth for our app business. Thank you. Operator, next question please.

OPERATOR

Yes, of course. And now we're going to take our next question, and the question comes from the line of Danielle Chen from J.P. Morgan. Your line is open. Please ask your question.

Danielle Chen, Analyst at J.P. Morgan

So my question is on the online game. The company just shared quite a lot of information on the game pipelines. I was wondering which one is the most anticipated one and also what's the expectation for the launch timing? And besides this Sun Mo, the Three Kingdoms strategy game has been launched for two years. So how should we look at the future performance of this game? Thank you.

Rui Chen, Chairman and CEO

From the second half to next year, it will be a harvesting season for Bilibili games. We do have several exciting titles lined up for launch. Yes, the first title in our pipeline is Boom Boomi Master. It is a self-developed light casual game that involves pet catching and simulation gameplay. It received a lot of positive feedback during its global test in May, and also recent testing feedback has been very good. We are planning for a global launch on September 17 next month.

We have developed very innovative gameplay and artistic graphic designs to cater to young generations' needs. We believe with its lighter gameplay and appeal to younger players, we hope this game can catch a broader casual gaming audience on a global basis, especially young gamers. The second title in our pipeline is San Juan, which is a strategy game officially licensed from the classic Three Kingdoms IP. We expect to launch this game towards the end of this year.

Compared to Sun Mo, it targets a more mature audience with a strong interest in Sangoji IP, and both the visual style and gameplay have been significantly upgraded from the classic IP. And why are we launching another Three Kingdoms title? We think it really complements Sun Mo in both gameplay and target audiences, and it can further strengthen our presence in the strategy game genre. We also gained a lot of valuable feedback from the second beta testing we just finished, and we continue to fine-tune this game.

Our goal is to build another strategy game that can be lasting and popular for our audiences. And beyond that, we have also introduced several new pipeline titles that will be launched next year. The first one is The Ravages of Time. This is another self-developed title that is focused on the tactical RPG genre. This title is based on a classic manga IP with a history of over 20 years, and the Bilibili platform has also produced and published the anime based on this IP.

Our goal is to revitalize this classic IP and make it a great tactical RPG for younger generations. The second title for next year is RO3. Needless to say, this is a very classic IP with a large audience that has lasted over 20 years. It's a very classic MMORPG, and we received a lot of user demand for bringing this title back to them. That is why we have signed and licensed this IP and hope to bring this classic IP back to its fan base. Currently this game has already secured its license, and actually we started to launch technical testing today within mainland.

Currently the user feedback has been quite positive, and we are targeting to launch this game next year. To answer your question on our classic Sun Mo game, this game has just celebrated its second-year anniversary with a major update in June, and the new content has been well received by our players. As a matter of fact, from season 8, our first anniversary season last year, through season 15, our second anniversary season this year, Sun Mo has ranked among the top five on the iOS top grossing chart every game season, which is quite impressive.

For this game, our goal has remained unchanged. Our target is to build a lasting strategy game that can accompany gamers for life, and our goal or strategy for the game business remains to focus on the vertical genre to either become the best or first in its own segment and make sure every title has a long life cycle. That is the strategy we will continue to focus on. And when I mentioned Touch, based on the end card game which was recently launched officially, we've noticed that the LTV for the July version has doubled compared to the April version, and we also plan to launch the game season two in October with a focus on improving long-term retention and adding more interactive, fun gameplay. You will notice that recently we have launched many different Three Kingdoms IP titles, including this light casual poker game, and also we have immersive hardcore strategy games like Sun Mo and San Juan. The reason why we are exploring this IP in such a dynamic way is, first of all, we think that there's a lot of overlap for users who are interested in this IP, and they can cross-sell from each other.

And secondly, we have a very high-quality video community with a lot of gamers who can share their experience and promote this game, and also provide a very good platform for us to engage with users and continue to improve our games. That is why we are hoping to achieve long-term operation across different IPs and different titles and continuously provide good gaming experience for our gamers. That concludes this question. Operator, next question please.

OPERATOR

Thank you so much. Now we're going to take our next question, and the question comes from the line of Xue Qing Zhang from CICC. Your line is open. Please ask a question.

Xue Qing Zhang, Analyst at CICC

Thanks, management, for taking my question and congratulations on the solid quarter. My question is about AI. The company discussed how AI has improved its advertising and helped increase EC plan at the investor day. Could management elaborate a little more on how AI is enhancing Bilibili's community ecosystem, user engagement, and different baselines? In addition, how much of the previously announced 1 billion in AI-related capex has been deployed so far, and what's the expected pace of spending going forward?

Thank you.

Rui Chen, Chairman and CEO

Well, we believe AI is already a consensus for the next era, and for us it's not to think about how important AI is for us; it's to think about how we will use AI in our own business. As a matter of fact, there are a lot of things in the AI chain we won't be engaged with. The things we will invest in will be very closely tied to our core business, which is video, and to be more specific on three areas: video understanding, video distribution, and video creation.

All of our investment will be strictly focused on those three areas. First of all, AI is helping us to better understand both content and users. Bilibili has a huge amount of video library, and this video carries much more information, and our users have very diverse interests. So being able to better understand the value of our content, the meaning of the content, and what users want is a key component in both improving user experience and our commercialization efficiency.

With AI, we're improving our video understanding, search, and recommendation capability. It is helping users find content they are interested in more efficiently, while helping our ad system to better match ads with users' needs. And for us this investment not only is working on our user growth, it is also working on our commercialization results. And secondly, AI is helping create new types of content and unleashing productivity. On Bilibili, as I mentioned, we are very focused on seeing those high-quality, talented content creators and how they are leveraging AI to produce good content.

In the past two quarters we've seen so many good examples of how AI tools are unleashing those talented brains to bring good content. On our platform we're seeing some animation or film content that used to require a whole professional team or even a company to create now can be created by individual content creators, and the quality is so premium that they achieve tens of millions of video views. We're also seeing AI inspire new types of content across animation, film, music, auto-tune, and remix categories.

It is truly unleashing creators' talent and creativity. We've seen a surge in content submission, and the number of high-quality content videos is emerging on our platform. Here's a very vivid example for your reference: in May we launched our creator animation campaign on our platform. Just in three months the videos in this campaign have generated 270 million minutes of watch time and over 180 million views, and 6 series each surpassing 10 million views.

Those are the perfect examples of how AI tools are helping to unleash creators' output and the supply of high-quality content.

Sam Fan, Chief Financial Officer

Yeah, this is Sam. As Mr. Chen mentioned, our AI investment was highly focused. Regarding our previous target of 1 billion in R&D, which is well on track, we have already achieved 70% to 80% of this in the first half of the year. Finally, on the procurement of servers and computing power, this was expected to incur R&D expansion for the whole year by 500 million RMB.

OPERATOR

Next question please. Yes, of course. And now we're going to take our last question for today, and the question comes from the line of Thomas Chong from Jefferies. Your line is open. Please ask your question.

Thomas Chong, Analyst at Jefferies

Thanks. Good evening. Thanks, management, for taking my questions and congratulations on a very solid set of results. My question is how does management view the margin upside across different business lines on AI? How should we think about AI empowerment to fixed cost leverage and room for the lowering in OPEX ratio, and any color about the AI spending over the next couple of years? On the other hand, how do management view the potential upside or downside to margin in the second half and 2027?

And lastly, what are management's thoughts on capital allocation? Thank you, thank you.

Sam Fan, Chief Financial Officer

This is Sam. I will take your question in Q2. Our financial performance continued strong momentum. Both revenue and gross profit grew nicely, with our gross profit margin expanding to 37.2%, marking the 60th consecutive quarter of sequential improvement. Meanwhile, our operating leverage continued to expand, net profit grew by 55% year over year, and our adjusted net profit margin increased to 8.9%. Looking at the mid to long term, we believe there's still significant room for B2B commercialization, driven by the sustained and healthy development of our business lines and more efficient operations.

Gains empowered by AI, we are highly confident in our future profitability improvement. First, our high-margin advertising business continues to grow and has become our largest revenue contributor, accounting for 39% of total revenue. Despite some macroeconomic pressure, we expect our advertising revenue to maintain a sustainable and healthy growth trajectory going forward. On games, we have a robust pipeline of five new titles set to launch in Q4 of this year and into next year.

We are confident that our gaming revenue will resume a year-over-year growth trend starting in the fourth quarter. We remain confident in our future profit expansion, and our mid to long term target remains unchanged: a gross profit margin of 40% to 45% and operating margin around 15% to 20%. We are confident in maintaining healthy revenue growth while continuously improving our operating efficiency. Also, to drive profit realization, we will carefully balance our AI investment with commercial monetization, and we firmly believe that today's investment will play a vital role in Bilibili's sustainable development in the future.

Regarding shareholder return, delivering shareholder return is also a priority for us. From the beginning of this year to date, we have executed an accumulated US$180 million in share repurchases. In June of this year, our Board of Directors approved a new US$300 million share repurchase program. As of the end of June, we have already repurchased 1.9 million shares for over US$31 million under this new program. Going forward, we will continue to execute repurchases during our market windows to create long-term sustainable value for our shareholders.

Juliet Yang, Executive Director of Investor Relations

Thank you, operator. That concludes our question and answer session. And that concludes the Q&A session. Thank you once again for joining Bilibili's second quarter 2026 financial results and business update conference call today. If you have any further questions, please contact Juliet Yang, Bilibili's Executive Director of Investor Relations, or Piacente Financial Communications. Contact information for IR in both China and the US can be found on today's press release.

Thank you, and have a great day.

Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.