Bilibili Inc.

Good day and welcome to Bilibili fourth quarter and fiscal year 2025 financial results and business updates conference call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Juliette Yang, Executive Director of Investor Relations. Please go ahead. 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 SEC and Hong Kong Stock Exchange. The non-GAAP financial measures we provide are for comparison purposes only. The definition of this measure 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.

Thank you, Juliette.

And thank you to everyone for joining us today. 2025 was a marquee year for Bilibili. We delivered standout results across both our community growth and financial performance. Throughout the year, our user growth regained its momentum while engagement and stickiness consistently hit new record highs. We also made incredible strides on the commercial front and achieved our first ever full year of gap profitability. Looking at our community, momentum really picked up speed toward year end. DAU growth accelerated every single quarter year over year, up 4% in Q1, 7% in Q2. 9% in Q3 and 10% in Q4, hitting 113 million users. Q4M AUs also grew by 8% year-over-year to 366 million. While much of the Internet is still flooded with fast-food content, more and more people are gravitating toward depth and quality. They're spending more time on high-quality PUGV content and the authentic community interactions that Bilibili is known for. In Q4, average daily time spent continued to rise up 8% to 107 minutes. This strong momentum reinforces our conviction that users are elevating their content consumption. And we believe the shift gives us a massive long-term runway ahead. As our users dive deeper into the content they love, their willingness to spend continues to rise. This is reflected in our MPUs, which surged 21% year over year to a record 36 million. Users' growing spending power is also extending beyond direct payments. Bilibili has become a trusted destination for consumption decisions where users don't just watch, but actively research and embrace new products. AI is a prime example. A growing number of AI advertisers now view Bilibili as the go-to platform to reach curious young minds. By leveraging our interactive community, they can turn exposure into real user conversion and lasting influence. These strengths, combined with our refined ad infrastructure, drove a 27% year-over-year increase in advertising revenue in Q4, once again exceeding expectations. The power of our community and commercialization engine and its potential is also showing up in our financial results. 2025 marked a major milestone as we reached our first full year of gap profitability alongside solid revenue growth. For the year, total revenues grew to RMB 30.3 billion, up 13% year-over-year, and we reported a gap net profit of RMB 1.2 billion. In Q4, total revenues increased by 8% year-over-year to RMB 8.3 billion. Gross profits grew 11%, and the gross profit margin rose to 37.0%, marking our 14th consecutive quarter of margin expansion. With disciplined cost management and stronger operating leverage, our adjusted net profit nearly doubled to RMB 878 million, and our adjusted net profit margin expanded to 10.6%. By the start of 2026, the average age of our users reached 26.5. They are moving into higher income brackets with greater spending power and more diverse needs. As they move into new stages of life, We are growing with them, expanding our commercial opportunities and unlocking more value across every touchpoint in our ecosystem. To better serve our evolving community, we are integrating AI into every corner of Bilibili. To us, AI isn't just a buzzword. It's a practical tool that expands human creativity, increases connection, and boosts distribution efficiency. By leveraging frontier LLMs, We've made our content discovery and ad targeting sharper than ever. We are also providing AIGC tools that help creators and advertisers get started more easily, while AI translation is helping our best content reach a global audience. The more we invest in these capabilities, the more confident we are that AI will take our ecosystem and our business to the next level. With that, let me walk you through our core pillars of content, community, and commercialization. starting with content and community. The biggest takeaway from our 2025 story is that in a world full of short and disposable content, demand for high-quality content and authentic community connections is only getting stronger. We've leaned into this trend by deliberately allocating more resources to promoting high-quality content and fostering welcoming, interest-driven communities The results are clear. In Q4, average daily time spent reached 107 minutes, up 8% year over year, while watch time for videos longer than five minutes grew by more than 20%. Our commitment to quality content across categories is driving higher user engagement and time spent. In Q4, watch time of lifestyle content grew by more than 30%, while Chinese anime and game-related content increased by 56% and 24% year-over-year, respectively. Notably, in July 2025, we officially launched Video Podcast Initiative and quickly established an early lead in this impactful format. Our highly engaged community played a key role in driving its rapid adoption, sparking more meaningful discussions among users. In the second half of 2025, total watch time for video podcasts exceeded 8 billion minutes. In 2025, AI became a powerful amplifier of our content ecosystem, driving engagement, unlocking creativity, and accelerating the discovery of high-quality content. Total watch time for AI-related topics surged 53% year over year in Q4, cementing Bilibili's position as the go-to platform for AI learning. Beyond consumption, AI is streamlining the creative process and even reshaping how content is made. A great example is AI music. Creators are now turning simple ideas into a professional great music videos with ease. In the fourth quarter, the number of AI music videos reaching the million view milestone grew over five fold year over year. At the same time, AI driven distribution helps high quality work find its audience much faster. This is especially beneficial for emerging creators. In Q4, the number of creators with over 1,000 followers increased by more than 30% year over year. As creators build larger audiences and stronger connections, that engagement is increasingly turning into a monetization on Bilibili. In 2025, nearly 3 million creators earned income on our platform across advertising and VAS channels. And with improved commercialization efficiency, average income per creator grew 21% year over year. Just as importantly, users are demonstrating more and more willingness to pay for content they genuinely enjoy and creators they truly value. Last year, more than 10 million users supported high-quality PUGV content and creators through fan charging. Turning to our core community metrics. In Q4, each active user followed over 90 creators on average, up from 81 a year ago, reflecting strengthening network effects within our community. By the end of 2025, we had over 284 million official members, and their 12-month retention rate remained stable at around 80%. Our creator ecosystem also balances longevity with fresh energy. This is evident in the 2025 Up 100 list, where creators have been active on Bilibili for seven years on average, while nearly 40% were first-time honorees compared with last year. Beyond daily activity, Bilibili continues to reinforce its role as a cultural home for young generation. Our signature New Year's Eve gala delivered its best commercial performance to date and has grown into an annual ritual for young audiences. During the recent Chinese New Year, we once again partnered with CCTV as the exclusive bullet chat platform, enabling young viewers to celebrate the festival together online. On the day of the broadcast, more than 133 million bullet chats were shared. and DAUs reached a record high of 16% compared with last year. Now, let's talk about our commercial businesses and their progress. First, we were very encouraged to see our advertising business deliver better than expected results in Q4. Advertising revenues accelerated to RMB 3.0 billion, up 27% year over year, and full-year advertising revenues increased by 23% to RMB 10.1 billion. This industry-leading growth reflects both the rising value of our user base and our continued progress in improving ad efficiency. As users spend more on the platform, Bilibili is becoming an even more compelling destination for advertisers. In Q4, the top five ad verticals were games, digital products, and home appliances, internet services, e-commerce and automotive. Home decoration was a standout with ad spend jumping over 80% year over year. Another strong signal that our users are maturing and seeking more lifestyle focused upgrades. AI advertisers also ramped up with AI related ad budgets climbing nearly 180% year over year in Q4. And that momentum has carried into 2026. In 2025, we pushed AI even deeper into our commercial algorithms boosting traffic value without compromising the user experience. The precision paid off. Ad spend aimed at deeper conversions grew by more than 40% year over year, and negative user feedback was cut by over 50%. We also made performance advertising faster and easier. Our smart ad delivery system and AI-powered creative tools now streamline campaign setups, lifting cold start success rates, by nearly 300% from last year. On top of these efficiency gains, we've broadened our ad inventory across the ecosystem. New openings in search, PC and OTT drove ad revenue in these scenarios up by over 60% year over year. This rapid growth shows untapped potential we have across our multi-screen, multi-scenario ecosystem, and we still have plenty of runway to expand further. Looking ahead to 2026, We're confident in the outlook for our advertising business. That confidence comes from rising user value and plenty of room to drive more efficiency, especially as we continue applying AI to strengthen monetization capabilities. At the same time, demand from gaming and AI advertisers remains strong, with both sectors eager to reach Bilibili's young, high-value user base. With stronger tools and a supportive market backdrop, we are set to capture even more of the opportunities ahead. Turning to our game business, game revenues were down 14% year-over-year to RMB 1.5 billion in Q4, reflecting the high base set by Sanmo, Sanguo, Moding Tiansha in the same period of last year. Even so, full-year game revenues still grew 14% to RMB 6.4 billion. In Q4, Season 11 of Sanmo held steady, and we're focused on extending the title's lifecycle by elevating the user experience and maintaining balanced monetization. On the global front, we launched the traditional Chinese version in January and plan to roll out the game across more Asian markets later this year. Meanwhile, our evergreen titles, FGO and Azure Lane, remain stable and continue to generate reliable revenues. Our biggest surprise of 2025 was Escape from Duck Off . This self-developed title was a real dark horse. It sold over 3 million copies in the first three weeks of its October debut and went on to become the best-selling domestic single-player game of the year and now ranks among the top three of all time. This success is a clear example of how we spot unmet demand and turn it into breakout hits. As AI continues to reshape the digital landscape, strong IP is becoming even more valuable. It can migrate across platforms and spawn new experiences. That is why DuckHoff is now moving to consoles and mobile, widening its reach and deepening its growth runway. Looking ahead, our pipeline is strong, including our exclusive casual card game and card, and our self-developed simulation game LumiMaster. Our pipeline of jointly operated games for 2026 is also shaping up well, giving us a broad and diversified slate. Our strategy is straightforward, build and scale high quality, genre-defining games that have lasting appeal for the gamers of tomorrow. As for our VAS business, users are showing a stronger willingness to pay directly for the content and services they care about. That demand drove revenues up 6% year-over-year to RMB 3.3 billion in 4Q and up 8% to RMB 11.9 billion for the full year. In 2025, our live broadcasting business maintained steady growth and gross margin continued to expand. Premium memberships reached 25.3 million by year-end, up 12% year-over-year, supported by a strong performance from our Chinese anime slate. Led by our hit production, Mortal's Journey to Immortality, annual subscriptions and auto renewals remained around 80%, highlighting the loyalty and long-term commitment of our core community. Other VAS products delivered strong momentum in 2025. Revenues from our fan charging program was particularly strong. doubling for the full year with more than 10 million users directly supporting creators and high quality content throughout the year. In closing, our progress this year underscores the strength of our content and community. Our flywheel is working. High quality PUGV attracts and retains young users. Deeper engagement creates more value for creators and that energy is translating to healthier and more sustainable commercialization. AI is also reshaping our industry and we see it as a powerful accelerator of this cycle. We will continue investing in AI to reinforce our position as the platform of choice for China's most engaged young audience. With profitability achieved and momentum building, we will stay focused on what defines Bilibili, great content, a strong community, and disciplined execution that creates lasting value. With that, I will turn the call over to Sam to share more financial details Sam, please go ahead.

Thank you, Mr. Chen. Hello, everyone. This is Sam. In the interest of time on today's call, I will review our fourth quarter highlights, as Mr. Chen's remarks have already covered our full-year results at a high level. We encourage you to refer to our press release issued earlier today for a closer look at our full-year results. In the fourth quarter, we continue to deliver solid top-line growth while expanding margins. and strengthening our profitability profile. With gross margin improving for the 14th consecutive quarter and operating leverage continuing to build across the business, we entered 2026 with much greater financial resilience to build on. Total revenues for the fourth quarter were RMB 8.3 billion, up 8% year over year. Our total revenues breakdown by revenue stream was approximately 39% VAS, 37% advertising, 18% mobile games, and 6% from our IP derivatives and other businesses. Our cost of revenues increased by 6% year-over-year to RMB 5.2 billion in the fourth quarter, while our gross profit rose 11% year-over-year to RMB 3.1 billion. Our gross profit margin reached 37.0% in Q4, up from 36.1% in the same period last year. showing the strength of our business model as we continue to scale. Our total operating expenses were down 3% year-over-year to RMB 2.6 billion in the fourth quarter. Sales and marketing expenses decreased by 9% year-over-year to RMB 1.1 billion, mainly due to decreased marketing expenses for our games. G and A expenses increased 4% to RMB 528 million, and R&D expenses were flat at RMB 921 million. Our operating profit was RMB 504 million, up 299% year-over-year. Our adjusted operating profit was RMB 838 million, and our adjusted operating profit margin reached 10.1%, improving from 6.0% in the same period a year ago. Net profit was RMB 514 million, versus RMB 89 million in Q4 2024. Our adjusted net profit was RMB 878 million, and our adjusted net profit margin expanded to 10.6% from 5.8% in the same period last year. Cash flow-wise, we generated about RMB 1.8 billion in operating cash flow in the fourth quarter and RMB 7.1 billion for the full year. As of the 31st of December 2025, We had cash-in-cash equivalents, time deposits and short-term investments of RMB 24.2 billion or 3.5 billion U.S. dollars. Under our 200 million U.S. dollar share repurchase program, approved by the Board in November 2024, we had repurchased a total of 0.6 million shares in Q4 for a total cost of 14.7 million U.S. dollars. As of the 31st of December 2025, we have repurchased a total of 7.0 million shares at a total cost of 131.2 million US dollars, leaving about 68.8 million US dollars available for future buybacks. Thank you for your attention. We would now like to open the call to your questions. Operator, please go ahead.

Thank you.

We will now begin the question and answer session. To ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. For the benefit of all participants on today's call, if you wish to ask your question to management in Chinese, please immediately repeat your question in English. The company will provide consecutive interpretation for management statement during the Q&A session. Please note that English interpretation is for convenience purposes only. In the case of any discrepancy, management statements in the original language will prevail. And now we'll take our first question from the line of Lincoln Kong of Goldman Sachs. Please ask your question, Lincoln.

Thank you, Ms. Guan. Congratulations to our company. Our company has had a very good year in 2020. I actually want to use our community as an example. In fact, when we look at the overall flow of our users in 2020, there has been a good increase in the number of users. It is due to the current situation and the key factors behind it. In the future, we will look at the growth space of our users. So thank you, management, for taking my question. And congrats on a very strong finish. My question is about the community. and how should we think about the future user and time span growth potential. When we think about it, among all the competition, how would we really to maintain our creators and our users and what's our strategies behind it? Thank you.

The core reason behind the growth of Bilibili users is that the quality content on our platform is constantly increasing.

The core driver behind Bilibili's growth is the continued increase in supply of high-quality content on our platform.

As I said before, the competition between content platforms is ultimately about which platform has the most high-quality content. High-quality content is the most important factor that determines the competition. Especially now, when we see more and more fast-tracked content for industrial production,

I've mentioned this before in the content industry, the end game of competition is about quality. That's to say platform that can consistently deliver great content will be the ultimate winner. This is especially true today where there is a clear oversupply. of industrialized fast-food content. In this environment, true high-quality content becomes even more precious and more powerful in shaping users' mindshare.

The reason why Bilibili continues to produce high-quality content is because we have the soil and seeds of high-quality content. In my opinion, community is the soil of high-quality content. The reason why Bilibili has the ability to unlock the supply of high quality content

is because we have both the soil and the seeds to grow the high quality content. First, our community is that very fertile soil. Bilibili has a large base of users who knows how to appreciate, recognize, and spread great content. They are the group of people who have the ability to identify high quality content at a very early stage and spread it across our community.

Yes, these users are the community we mentioned. They are very important to the creation of high-quality content. Because when the app owner creates content, it's not like what everyone thinks. It's closed-door. It requires users to respond to it, to tell it which content is good and which content users like. And these people who appreciate high-quality content, when they respond to the app owner, they are constantly encouraging the app owner to create high-quality content. In that group of user, not just watch content, they actively provide feedback that defines a good content.

And our content creator relies on their input, their feedback to create even better content. That's why content creators on Bilibili can create content not only for Bilibili's user to appreciate, come to the whole society, those are still the top quality content.

This community is very important to creators. We sometimes see a head creator on Bilibili, and we think they will like what he does on other platforms, but that's because this creator has grown up. But in a Well, this type of community is essentially important to content creator.

You might argue that for very top content creator, their experience across multiple platforms may be similar. But for the much larger group of middle or emerging creators, They really, truly rely on the community's feedback, telling them what is good content, what direction they should be aiming for. And this is very, very important for creator community.

So we can see that Bilibili's high-quality app owners are continuous. They produce a new batch every year. Every year, we have about one-third of the app owners

That's why you see that on Bilibili, there's a continuous supply of new content creators that has grown and thrived on our platform. Every year when we publish our top 100 top content creator, About one third of the content creator are the newly emerged content creator that was never nominated before. That is the power of our community soil, the fertile soil that can cultivate and grow a very large number of new talented content creators.

And what we have

done in the past is staying focused for the past 17 years, cultivating and building this kind of community. And this relies on every single real user's contribution and feedback. And this is very neat. We need patience. We need time to build this very tight, neat community. And this is our biggest moat of of this defensive mechanism of having this community as an act in our business. And when it comes to industrialized, pure traffic driven model, it's very hard for this type of model to build a community.

After having the community, after having the community as the soil, we think that the seed of the good content is ABJU. Because I always think that the source of the good content It is actually the unique soul of the app owner. It is because there is an app owner with this and that creative power that they can produce high-quality content. In fact, for Bilibili, the app owner trusts the community of Bilibili. He is willing to put the process of his creative growth in Bilibili. So this is also the ecosystem of our app owner and community.

And the creator are the seeds on the soil. At its core, we believe the high quality content is the result of creators uniqueness. They're one of a kind soul combined with their strong production capabilities is because we have this unique creators and they entrust our platform and they entrust us to witness their growth and unleash their creativity. That's why we have a very unique ecosystem.

We are full of confidence in Bilibili's future growth. As I said before, content consumption is actually a process that can only be upgraded and not reduced. The more content you watch, the more content you want to consume. If you haven't read the content, you might be satisfied with it. But the more content you read, the more content you want to consume. And I think that China has reached a point where there is enough content. So, more and more users will slowly consume content that they want to consume. Because Bilibili has this kind of quality content, more and more users will become Bilibili users. We are very confident about our future user growth.

As we mentioned in the past, we've witnessed that there was a clear content consumption upgrade trend that is happening. And this type of consumption upgrade is just a one-way street. Once people start to experience truly great content, it's very hard for them to go back. And we've seen that oversupply of short content. as people start to consume more and more content, and it's just very natural for them to start to appreciate this high-quality content that visibility has to offer. We also have that user mindshare, so we are seeing that our high-quality content is attracting more and more users onto our platform. And on top of that, our average user age has come to 26 and 27 as they move into their next stage of life, their content will continue. Content consumption will continue to evolve and their purchasing power will grow as well. For us, that represents a long term structural opportunity for growth.

You're so done. They go to wait. I don't even go to King's own legal school. Yeah. Uh, what you're the, uh, what's he going to do? There's a lot of cancer. maintain and strengthen B站's quality content. I think this is very important, because this is for our users and for our creators. As long as we continue to strengthen our mind, I think there will be more and more creators and users coming to us. And then the second one is, I think it is to make our up主, and then have a better development on the platform, have a longer life cycle, have more commercial returns. . . . . . . . When it comes to competition, we'll focus on two things.

First, we'll stay very clear about our positioning around high-quality content and make sure the platform continues to be the place for deeper expression and an interest-based high-quality content community. And secondly is that we'll be focusing on our creators, make sure this is a platform for their long-term creation as well as improved monetization potentials. In terms of their creation period, we are quite happy with the results what we have seen now we have a large number of content creator who's been creating content on our platform for five to ten years and they continue to gain followers and creating lasting values on the platform on the monetization wise we continue to cultivate more avenues for a content creator to make more money and in the last year in 2025 there are about Three million of content creator received income on our platform and their average income also grew by 21% year over year. And on top of that, the number of content creator with 10,000 followers, 100,000 followers and 1 million followers, they all grew over 20% year over year. And those two factors combined will position us very well in this competitive landscape and continue to thrive. Thank you, operator. Next question, please.

Thank you. We will now take our next question from Xueqing Zhang from CICC. Please ask your question.

Thank you, Manager Chen, for accepting my question. Congratulations on the growth of the company's four-season advertising revenue. My question is also about advertising. I would like to ask Manager Chen, which industries or advertising products have achieved this result in the four seasons? We have also noticed that recent AI applications have increased the strength of advertising. How does Bilibili view this trend for our advertising business? And how should we look forward to And thanks management for taking my question and congratulations on this John advertising goes in the first quarter. My question is also about advertising. Can management share which industries or products were the main drivers behind the strong performance in Q4? We have also noticed that many AI applications have been ramping up their marketing spending recently. how does management see this trend benefiting your advertising business and could management also provide some color on the advertising growth outlook for the first quarter and the full year of 2026 thank you the performance of our advertising business in fourth quarter and for the full year 2025 was in line with our internal expectations.

Growth actually accelerated quarter by quarter throughout the year from 20% young year growth in the first quarter to 27% young year growth in the fourth quarter.

也实现了整个广告的预算市场, 在整个广告预算市场的占有率也持续的提升的。 这个结果应该是B站的用户价值得到了进一步的提升, 同时也可以体现出来和商业化效率提升的共同结果。

and we continue to gain larger share of overall ad budgets, the results reflect both rising value of our user base as well as the continuous improvement in our monetization efficiency.

We can briefly look at Q4's driving force that we expect to exceed the market. The first point is that the potential inventory is still released. Look at the drivers behind our stronger than market expectation performance in Q4.

First, we credit that to the on tap ad inventory. Within our multi-screen and multi-consumption products, we continue to release more ad inventories on top of the feed scenarios. Areas such as search, PC, and OTT, they all grew more than 60% year over year. And for some certain scenarios, they even grow over 200% year over year. in terms of ad consumption.

In terms of ad consumption.

Secondly, is that we continue to improve our ad efficiency. This was mainly driven by the integration of AIGC tool with ad creative campaign, deeper conversion penetration, and our AI backed smart delivery ad delivery system. and all combined together is helping us to improve the overall ad efficiency and recommendation efficiency.

第三在行业也可以看一下, 就除了我们比较擅长的包括优势的领域, 网服,数码家电,电商等, 在Q4也实现了像AI应用的繁荣带给我们的收入增量, 以及散购大战带给我们的收入增量,

Certainly looking at the industry contribution, in addition to our strong verticals like internet services, digital products and home appliances and e-commerce, we are benefiting from the AI application competition as well as the rapid growth of instant retail in the fourth quarter. And at the same time, we're also seeing strong growth from education sector, automotive sector, and the home and furnishing sector. They all delivered a double-digit growth.

You just mentioned AI. Any industry that is bustling or competing suddenly increases. In fact, short-term, it will lead to a crisis in advertising budget. The AI industry is actually the same. So in Q4, we saw that the budget for advertising for AI is changing. But in the long term, the difference between the AI industry and other advertising budgets is that in the long term, we still judge that it will face a reshuffle of the budget. I think whether it's short term or long term, it's a big advantage for other companies.

Whenever an industry goes through a boom or sees an intensified competition, it usually leads to a surge in advertising budget in the short term. And AI sector is no exception. But what we see different here is over long term, we also see opportunities when the industry goes through reshuffling and reallocation of budgets but they're still a very long way ahead in both short-term and long-term in terms of the budget gains for us in the AI industry.

So today, I'd like to briefly talk about some of the changes that the short-term has brought us. The AI industry certainly has a new budget for B站. There's no doubt about that, including AI applications, large models, and AI tools. will also become a certain growth point for advertising business on various platforms. However, Bilibili is a more natural and high-quality scene for AI advertising compared to other platforms, including the fact that the technology attributes of young users are actually stronger, and the accessibility to AI is also very high. Bilibili is also a community of interest focused on high-quality content. Therefore, when advertising on Bilibili, Let's just focus on the short-term impact for the AI sector now.

Well, for sure, the AI sector is bringing incremental ad budgets to Bilibili. companies in area like AI applications, large language models, and AI tools are all significantly increasing their app budget spending. And this is becoming a clear growth driver for advertising platforms, including Bilibili and other platforms. But at the same time, Bilibili is a very natural fit for AI advertiser. This goes to our young and highly tech-savvy young user base with a strong openness to embrace new AI applications, new AI knowledges. And the platform itself is because it's an interest-based community centered around high-quality content, the advertising availability is more likely to translate from the spending into real user mindshare. And also when it comes to the branding and performances outcome, it delivers much stronger results compared to pure traffic play.

之后的话说一下就是对于QE以及全年的我们的预期, 就市场的环境现在已经是存量的竞争,就无容置疑的。 When it comes to the Q1 and to 2026 outlook,

What we have witnessed is that the overall market environment is still very much about competing for the existing market shares. And the advertisers are becoming more demanding when it comes to performance and efficiency. But at the same time, what we're seeing is that advertisers are paying more attention to the quality of conversion after the delivery. not just the scale of the number of exposures, that's where Bilibili can deliver real value for our clients.

The average age of Bilibili users is 26 to 27 years old, which is the stage where their consumption and decision-making ability quickly increase. This is not only the case for the users we pay attention to, but also for the consumers they want to acquire the most.

And our users are on average around 26 to 27 years old, which is the stage both of their purchasing power and the decision making influence is rising rapidly. So this is the exact kind of consumer bracket that all advertisers are eager to reach.

In addition, we can pay attention to Bilibili is a high-quality video content community. As Yuezhong mentioned repeatedly, the process of AI evolution will be faster than we thought. So we have been insisting that good content can also make good ads. Good ads can also be good content. Due to the evolution of AI, we predict that Bilibili will realize the scale of these good content and good ads faster.

As our CEO mentioned, Bilibili is a community built around high-quality video content. And as AI technology continues to evolve, the line between good content and good advertisement will blur. That is to say, good ads can feel like a good content, and good content can also function very well as effective ads. we believe this model can scale up very quickly on visibility.

In the past two to three years, our advertising products and algorithmic capabilities have gradually improved, and we should have reached the mid-to-high level of the industry. Because it is mid-to-high, we should have a lot of room and potential for improvement in the future.

And over the past two to three years, our advertising products and algorithm capabilities has already reached a very solid mid- to high-upper level compared to the overall industry. And we still see quite significant room for further improvement going forward.

So Zhongshan, in 2016, As for the growth outlook for Q1 and full year of 2026, we remain confident about continuous growth and further expansion

in terms of market share. Thank you. Operator, next question, please.

Thank you. Next question comes from Alex Liu of Bank of America. Please go ahead, Alex.

Hello, thank you for giving me this opportunity to ask a question. My question is about the game. I would like to ask about the company's exclusive game, Three Kingdoms, One World, and One World. Three Kingdoms has been running for more than a year and a half. And then we are talking about So I want to ask if the management can look forward to the entire game industry in 2026. What are some of the key points of the operation in 2026? And can you share some of the latest trends? Another one is some new games, such as the Three Kingdoms Cardboard and the Flash 8 Lumi. Can you share some of the latest opinions? I'll translate myself. So the company's key game title, Sunmo, has been operating steadily for one and a half years. And we saw last year the self-developed game, Escape the Dark House, has got a lot of attractions among users, gamers last year. So can the management share some high-level strategic thoughts on game business into 2026? And what will be the operational focus for Sunmo and any recent colors on the, any color on the recent growth in trends for that game. And for game pipelines, can you share a little bit more about thoughts and expectations for, for example, Three Kingdom N cards and LumiMaster?

Thank you. About SEMO, I've always said that what I value the most is long-term operation. So in 2026, my hope for SEMO is two words. The first is long-term operation.

The second is to maintain the position of the leading product in the SCLG industry.

Because the SCLG model itself is suitable for long-term operation. Naturally, strategy game is very suitable for a long-term operation.

and that we have planned for this year for this game is to focus on the iteration of different game seasons and focus on the gameplay and different storylines of different seasons to make sure that our users, our gamers have brand new and interesting gaming experience when they are playing this game.

At the same time, we will also pay great attention to the environment of our game.

At the same time, we'll organize a more structural brand and community activities around the key moments to encourage players' participation and the discussion to further strengthen the user mind share.

of a community sense by playing this game. And

While maintaining a robust Chinese fan base, we will continue to expand this IP's influence on a global scale. In January, we already launched this game in the Hong Kong, Macau, Taiwan region, and we do plan to further push this IP into Korea and Japan market and other Asian market to further expand influence and the power of the IP.

Speaking of Yakov, because Yakov has already succeeded in PC single-player games, we will now move him to the main game. At the same time, we are also developing the mobile version of Yakov. The progress of these two works is quite smooth. I think Yakov is likely to become a well-known IP for domestic games.

As for escape from .coff, we are very encouraged by the results they deliver on the PC front. And we're already on the process of converting this game on a console version. And at the same time, we're exploring more possibility of this IP on the mobile devices. And we believe this IP has the potential to become a very influential game overall in the China's gamer market.

You mentioned two new games. The first one is the Three Kingdoms of Berserk. It's a light game in terms of quality. It's very easy and fun to play. It only takes three minutes to play.

And in terms of the pipeline, Ncard is designed to be a lightweight strategy competitive game. And it's very fun. It's very light. It's a three minutes per round type of poker game. It's designed very well to fit into this short fragmented play session.

And the game is a result of our strategy of reinventing games for a young generation.

we have created this one-of-a-kind gameplay that combines casual poker with a unique card hero system. And this fits this generation's game preferences and their demands for casual but different game experience. As a result of our beta testing, we also have discovered this game has been widely accepted and welcomed by the young generation.

Because this is a very innovative game, our team is currently working hard to polish the game's quality. We've already done two rounds of testing. We plan to do one more round of payment testing in March, and then we plan to launch it at the end of the year.

Because this is a very innovative game, Our team has spent a lot of time and focusing on polished game to its best quality. We've already conducted two rounds of beta testing. We plan to conduct another round of paid beta testing in March this year. And we do plan to officially roll out this game around mid this year.

We hope it can become a global product.

Our goal is to, through long-term operation, make this game as large as possible, and at the same time, we'll be very patient about the process. LumiMaster is a self-development game. The game is very casual, cozy style with a dissemination game element and the pet nurturing and catching element of the game.

It is also a product version of our brand new generation strategy. It is a combination of pet breeding and simulation management. It is also a very new way of playing.

This is another product of our game strategy of reinventing games for the new generation of gamers. So this game combines essential gameplay of both pet nurturing and as well as simulation. It's also very one-of-a-kind and unique gameplay.

We got this game at the end of last year. Our plan is to launch a paid test in Q2 this year.

And for this game, we already obtained approval end of last year, and we do plan to launch our paid beta testing in the second quarter, and to officially launch this game globally within this year.

It's called two-handed. One-handed is the long-term operation that I've been emphasizing. Because I've always thought that in the current gaming industry, with less and less profit, long-term operation is the only way to make the business more solid. Now, in terms of agent games, 70% of the revenue should come from our long-term operation products, including our Sample, our FGO, and our D-Line. This also makes our game performance more stable.

And as we look into 2026, there are two areas we'll be focusing on. One is long-term operation. As I mentioned before, this is competition within the existing market. And the long-term operation will provide a solid foundation for our game business. Currently, we have about 70% of the game revenue comes from our long-term operating gains, including SunMall, FGL, and Azur Lane. And this provides a very stable income inflow for the gain business.

In addition to the long-term operating gains, the second word that I pay attention to is the hammerhead. In the future, regardless of whether it is the vision of Ziyan or our new agent project, I emphasize that it must be uh, uh, uh, uh,

And on the other hand, we will continue to explore new project with its gyrin-defining potential. And our principle is whether to be either to be number one in this genre or be the first of its kind in this genre. And this will be our incremental game revenue contribution source. And this is guiding the projects such as NCart, Lumi, and many other games in our pipeline. And we are quite confident about this strategy will guide us to an even brighter future.

I think the advantage of Bilibili is that we are a young Chinese player. And the biggest advantage of Bilibili

in game business is that we are the platform that is staying the closest to the young gamers in China. At the same time, the company has the commitment and the gene in focusing around high-quality content. We have the consensus and have the patience. Those two factors combined will eventually help us to find and develop the best games that we can offer. That concludes this question. And next question, please, operator.

Thank you. We will now take our next question from Felix Liu of UBS. Please ask your question, Felix.

Thank you, Manager Cheng, for accepting my question and congratulating us on our very good Q4 performance. My question is about AI. Recently, AI video creation models have been constantly being used, and it has also made video creation more and more easy to create. I would like to ask Manager Cheng, what kind of challenges has the current AI development brought to Bilibili? In 2026, what is the most important direction Bilibili is investing in AI? Thank you, management, for taking my question and congratulations on the strong Q4 results. My question is on AI. We noticed that there is a continued development in video gen AI, which has made creating video content more and more easy. How do you, management, see your opportunities and challenges from the recent development in video gen AI? And looking ahead into 2026, What are your key investment priorities around AI? Thank you.

AI is definitely an advantage for Bilibili, because other platforms have exceeded the number of short-term content. The main function of AI is to improve productivity and creativity. If the number of short-term content exceeds the number of short-term content, it is not obvious to improve the creativity. But Bilibili's high-quality content is actually lacking in production capacity. If we can improve the efficiency of high-quality content, it will be beneficial for both our app owners and our users. Especially, good app owners are in short supply. If we can improve the efficiency of good app owners in making videos, and speed up the speed of making videos, it will be a great thing for Bilibili.

The essence of AI creation tools is about improving the productivity of high quality content compared with short form vertical content, which is already oversupply. the benefit of creating even more short content is limited. But on the contrary, where Bilibili is standing for is the long-form, high-quality content where AI is essentially helping a small number of high-quality, talented content creators to create high-quality content at a much faster pace. That essentially is increasing the supply of what is known for the quality content. So it's fundamentally benefiting our platform in terms of empowering talented content creators to create more high-quality content.

Yes, I'm very happy to see that Bilibili is actually one of the best AI content creators in the industry. It's the richest and best brand. For example, Like our music, we can see that there are a lot of good music videos that are generated by AI. Because in the past, music had limited production capacity. Because it has high requirements for the app, you have to make original music. But now, as long as you have good aesthetics and creativity, even if you are not that professional in music, you can make good music videos. This makes the quality content of our music grow very fast, including the Guizhou. It used to be very troublesome to make Guizhou, but now it's the same. As long as you have good aesthetics and creativity, it's much easier to make Guizhou than it was in the past. So we can see that Q4, including the quality content of AI-assisted production all year round, has increased very quickly here. Then the viewing time has increased,

And we are already starting to see early signs of how AI creation tool is helping us to improve the supply of high-quality content. AI music is a perfect example. With the help of AI music tools, Even music lovers without formal training can turn their good ideas into professional quality music works. And the same thing goes with categories such as auto-tune remix. In the past, it's very hard to produce a good auto-tune remix video, but now with a good sense of humor and creativity, This is helping our creators to produce high-quality content at a much faster pace. We've seen this on the video views and video watch time growth within the help of AI's content creation tools. Those contents' watch time and video views is growing multiple folds year over year in the fourth quarter.

Let's talk about some of the points that we will focus on in terms of AI. The first one is the enhanced content understanding. In the past, platforms like Bilibili focused on medium and long-term quality content. It was difficult to accurately match users' intentions in the past. But because of an improvement in AI technology, an increase in AI's ability to understand content, It makes it easier for us to match the content that the user likes. And the deeper our understanding of the content is, the sooner we can find the quality content. This is actually very important for the ability of Bilibili. We can see that in Q3 and Q4, the speed of our use is obviously faster than before. In fact, it is directly related to our ability to understand the quality content.

And I'll talk about a few points that will enhance our investment on AI, how AI is helping our community. First of all, is leveraging the large language model to enhance our ability to understand the content and user intent, especially for a platform like Bilibili that offers a very long form high quality content. In the past, it's very difficult to truly comprehend the full meaning of that content and match it with the right users. But now we leveraging the capability, we can truly understand the meaning to comprehend the high quality content and better understand our user at the same time. This is also helping us to identify high-quality content at a much earlier stage and push it to more people. And if you look at the Q3 and Q4 user matrix, the AI comprehension of context is truly helping us to drive the user engagement, drive the user growth. That's the area we'll be focusing on. That's one.

Yes, just now Carly also mentioned that in terms of commercial advertising, This is actually the same. How can we make our content and ads have a better combination? This can also play a very important role for our platform.

And as Kali mentioned earlier, AI is also helping us to better match the advertisement with the right user. This has been done through the content comprehension. at the same time, understand our users' needs and their desire and need on the platform to better match the right advertisement with the right users.

Another very important field is AI support creation. We actually tried this last year. We think that this year we should be able to directly promote the creation of creators. Secondly is on AIGC tools that help content creators to create content more efficiently.

We have already launched few products, but this year will be upgrading that AIGC tools to really enhance the productivity of creating videos, leveraging those tools. And we believe this will be a big efficiency step stepping up for our content supply and for the overall content creation process.

video translation, because it not only translates text and language, but also translates the sound and the tone. It can also achieve a very perfect translation. And now, with our AI ability, we can think that mainstream languages can be translated very well. This can also help our app owners to pass their content to more countries.

And that AIGC tool also includes the translation function. It's not just pure a subtitle translation. It's a very native translation of the context of the meaning as well as lip-thinking and also the creator's voice. We believe we already mastered the ability to translate Bilibili content into all the mainstream languages across the world. This will help our content creators to bring their high-quality content to a global stage.

Through our internal attempts, I am still very sure that AI can improve the potential of our creators and the efficiency of our platform. And based on what we have done and observed, we will be focusing on those two areas.

One is improving the productivity of our content creator. And number two is improve the recommendation efficiency to better understanding our content and our users' needs. And our investment focus will be strictly aligned into those two areas that we believe in a longer term will generating much larger value for our overall ecosystem. That concludes this question. Operator, next question, please.

Thank you. Next question comes from the line of Yiwen Zhang of China Renaissance. Please go ahead, Yiwen.

Thank you, Ms. Guan. Thank you for your question. First of all, congratulations to the company for realizing the gap year. Our problem is about finance. We also noticed that the operating profit rate after the self-adjustment was 10.1%, which is 15% to 20% closer to our center. So thanks for taking my question. First, congrats on your whole year gap profitability. The question regarding financials, we note for Q, last year, our just operating margin has reached 10.1%. A step closer to our mid-term guidance of 15% to 20%. So how should we think about revenue and profitability? For profitability outlook in 2026, Additionally, do we have any update on the medium to long-term target? Thank you.

Thank you. I will take this question. Looking ahead to 2026, we remain confident in the continued growth of our community. At the same time, we will keep improving our monetization efficiency and more effectively translate this growth in high-quality user to the commercial value. Advertising is where we see the clearest growth opportunity. Our operating leverage will also continue to come through. We expect growth will improve slightly quarter over quarter in the first quarter, and our adjusted operating margin should continue to improve year over year in Q1. We are steadily progressing to our mid to long-term target. That's 40 to 45% of our gross profit margin and 15% to 20% of our jet operating margin. At the same time, in 2026, as mentioned by Chen-Rui, we will modestly increase our investment in AI and reinvest partial of our incremental profits into AI applications that are closely aligned with our core business. This investment will help us further improve the supply of high quality content. drive the user growth, and enhance the monetization efficiency, ultimately while delivering strong returns over the long term. Thank you for your question.

Thank you, operator. That concludes all the Q&A session.

Thank you. And that concludes the question and answer session. Thank you once again for joining Bilibili's fourth quarter and fiscal year 2025 financial results and business updates conference call today. If you have any further questions, please contact Juliet Yang, Bilibili's Executive IR Director or PH&A Financial Communications. Contact information for IR in both China and the US can be found on today's press release. Well, thank you and have a great day.