Bilibili Inc.

Good day and welcome to Bilibili's first quarter 2026 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, Julia, and thank you to everyone joining us today. 2026 is off to a great start for Bilibili. In the first quarter, we kept up the momentum from last year, delivering solid growth across our community, commercialization, and profitability. Let's start with the community. High-quality content and authentic experience continue to drive organic growth and deepen user engagement. In Q1, CAUs grew 8% year-over-year to 115 million, and MAUs increased to 376 million. Average daily time spent reached a new high of 119 minutes, up 11 minutes year-over-year, which led to a 19% surge in total user time spent. We see this level of engagement as a powerful engine for our commercial business. In the first quarter, we delivered robust advertising revenue growth of 30% year-over-year, further accelerating from 2025. Meanwhile, MPUs increased by 7% year-over-year to 34.4 million, as more users directly pay for content and services they truly care about on our platform. This commercial momentum led to a strong financial performance. Total revenues grew 7% year-over-year to RMB 7.5 billion. Gross profit was up 9% year over year and gross margin reached 37.1%, marking our 15th consecutive quarter of margin expansion. Thanks to our top line growth and increased operating leverage, our operating profit was over 10 times what it was a year ago. On a non-GAAP basis, net profit grew by 62% year over year with our adjusted net profit margin expanding to 7.8%. To us, this set of results confirms a fundamental shift in user behavior. In a world full of quick hits, more users are choosing to spend more time on quality content. That is exactly what Bilibili stands for, and it will continue to drive our growth. With our average user now around 26.5 years old, our cohort is starting to spend more and spend better. As their needs evolve, we are staying close to them, offering the products and experiences they care about most. The content ecosystem we have built remains our most durable asset. Today, we are using AI to make this ecosystem even more powerful. We are focusing our investments on three key areas. How we understand videos, how we recommend them, and how we help creators build them. Ultimately, we are not just evolving with AI, we are using it to reinforce the very thing that makes Bilibili unique. Having said that, we remain very disciplined with our capital. Although AI requires an upfront investment, the returns in engagement and monetization are already tangible. At the same time, AI is driving meaningful efficiencies across our operations, which is directly supporting our margin expansion. By combining the heart of our community with the power of our technology, we are creating lasting value for our users and shareholders. With that, let me walk you through our core pillars of content, community, and commercialization. starting with content and community. As content options multiply, users are becoming even more selective. They are coming to Bilibili for high-quality PUGB content and a unique community experience that they cannot find anywhere else. Across our content categories, ACG remains our cultural anchor. In the first quarter, watch time for games and Chinese anime grew 27% and 20% year over year, respectively. improving our enduring appeal to the younger generation. Beyond our ACG legacy, knowledge-based content, including AI-related information, grew 20% year-over-year as users turned to us for deeper insights. Music categories also saw robust growth with a 25% year-over-year increase in time spent, largely driven by AIGC music. Consumption-related categories kept rising. with watch time for parenting and early education and outdoor related categories surging by more than 50% year over year. The breadth of our content library is only one part of the story. Our deeper competitive moat lies in the humanity of the community. Every month, our users generate over 17 billion real human interactions. In an AI driven world, there are the most authentic human signals available. While high quality data is becoming a global scarcity, Our hundreds of billions of organic interactions provide us with the gold standard for understanding true human preferences. This profound insight is what fuels our engagement and loyalty. In the first quarter, total user time spent rose 19% year over year, and 291 million official members maintained an 80% 12-month retention rate. Meanwhile, we continue to see AI as an amplifier for our ecosystem's flywheel. On the supply side, the unique creative spirit of our community has found new momentum through the AI-powered tools that scale creativity across the platform. By lowering the barriers to entry and boosting productivity, we have seen a significant influx of creators and content. In Q1, the number of daily active creators and daily submissions grew by 6% and 19% year-over-year, respectively. But this isn't just a game of volume. With AI assisting the creative process, more talent is producing high quality breakout content right out of the gate. Our recent AI creation contest is a perfect example. We attracted the most talented creators to join our platform, creating nearly 150 breakout work with over a million views each. By deepening our comprehension of both content and user behavior, we've made content discovery more efficient, directly accelerating growth for our creators. In the first quarter, the number of creators with over 1,000 followers grew by more than 30% year over year, and those with 10,000, 100,000, and 1 million or more followers each grew over 20%. Naturally, as their audiences grow, earnings follow. Average income per creator rose 24% this quarter, creating a powerful virtuous cycle. Now let us take a closer look at our commercial businesses and their progress. First, our advertising business once again delivered standout results in Q1. Revenues grew 30% year over year, reaching RMB 2.6 billion. This ongoing acceleration reflects the value of our community that we continue to unlock and how we are turning user engagement into real results for advertisers. In Q1, our top five adverticals were games, internet services, digital products and home appliances, e-commerce, and automotive. Game ads delivered strong incremental revenue growth this quarter. In the internet services sector, AI advertisers kept scaling with ad budgets surging over 170% year over year. At the same time, our maturing user base is also capturing more advertisers' budgets. Ad revenues from digital products and home appliances and automotive both grew over 30% year over year in Q1. Home decoration was a particular standout, with ad spending jumping more than 130% year over year. Using AI to improve efficiency and drive ad business is a core priority this year. By integrating AI more deeply into our algorithm, we've gained much sharper insights into user interests and long-term patterns. This clarity has meaningfully optimized how we match users with ads. resulting in a 25% year-over-year increase in CTCVR of performance-based ads this quarter. Furthermore, our AIGC tools are streamlining creative production and crafting ads that resonate with users, helping advertisers connect with our community more effectively and drive higher click-through rates. We are also unlocking growth across diverse platforms and touchpoints. In the first quarter, ad revenues from PC and OTT platforms grew by over 50% year over year, while new scenarios like search and mini programs more than doubled. We're exploring new integrated formats within video player, finding new ways to turn user time into commercial value. With expanding traffic, diverse new scenarios, and continuous efficiency gains, we remain confident in the sustained momentum of our ad business. Now turning to our games business, Game revenues were RMB 1.5 billion, down 12% year-over-year, and flat quarter-over-quarter. The year-over-year decline was mainly due to the high base set by Samou, Shanguo, Moding, Tianxia in the same period last year, while the latest seasons of Samou performed steadily quarter-over-quarter. We're focused on the game's long-term life cycle, keeping the experience balanced and the IP strong. Meanwhile, our evergreen titles, FGO and Azure LAN, remain stable and continue to provide a solid revenue base. In 2026, we're building on Sunmo's success and expanding our presence in the Three Kingdoms IP. In April, we soft-launched NCard, Sun Guo by Jiang Hai, a lighter casual card game that has received positive feedback on its core gameplay. We're iterating the product and optimizing user acquisition as we prepare for its official launch this July. Meanwhile, our new SLG title, 三王, 三國志, 王道天下, began initial testing in late March. Built on the original 三國志 IP with enhanced 3D visuals, 三王 targets a differentiated group of SLG fans and complements 三謀. Early user feedback was encouraging, and we plan to roll the game out late this year. Beyond NCard and 三王, our self-developed simulation game, LumiMaster, 想要把 Lumi, entered its paid testing in May, it has been well received for its cozy art style and accessible gameplay, and we plan to bring it to global gamers in Q4 this year. Our jointly operated pipeline for the coming quarters is also expanding into more genres, giving us broader player coverage and a more balanced portfolio. Turning to our VAS business, VAS revenue grew by 4% year over year to RMB 2.9 billion in Q1. We kept refining our live broadcasting operations delivering a stable performance with improved gross margin. Premium members reached 24.8 million by the end of the first quarter, up 5% year-over-year. Around 80% are on annual or auto-renewal plans. Our found charging program also kept growing at a healthy pace. Revenue was up over 50% year-over-year, driven by stronger creator-user relationships and users' growing willingness to directly support content they love. In April, we published our 2025 ESG report, outlining our continued focus on high-quality content, healthy community development, and steady improvements in governance and operations. Given our reach and influence among China's young generation, we take this responsibility very seriously, and we have maintained our A rating by MSCI, reflecting our consistent approach to long-term sustainable growth. To close, we believe great content and a strong community bring people together. The value we have built is just beginning to show its potential. With AI as the accelerator, our community and commercial ecosystems are reinforcing each other more than ever. We will stay focused on strengthening that flywheel and investing in areas that support long-term growth, taking Bilibili to the next level. We are excited about what is ahead. With that, I will turn the call over to Sam to walk through our financials in more detail. Sam?

Thank you, Mr. Chen. Hello, everyone. This is Sam. In the interest of time on today's call, I will review our first quarter highlights. We encourage you to refer to our press release issued earlier today for a closer look at our results. Total revenues for the first quarter was RMB $7.5 billion, up 7% year over year. Our total revenues breakdown by revenue stream for Q1 was approximately 39% VAS. 35% advertising, 20% mobile games, and 6% from our IP derivatives and other businesses. Our cost of revenues increased by 5% year over year to RMB $4.7 billion in the first quarter, while our gross profit rose 9% year over year to RMB $2.8 billion. Our gross profit margin reached 37.1% in Q1, up from 36.3% in the same period last year. marking our 15th consecutive quarter of margin expansion. In the first quarter, we continued to improve monetization efficiency with disciplined spending. Our total operating expenses were up 3% year-over-year to RMB $2.6 billion. Sales and marketing expenses decreased by 1% year-over-year. G&A expenses increased by 3%, and R&D expenses increased by 9%, primarily due to expanded AI investments. and partially offset by efficient spending control. Our operating profit was RMB 167 million, up over 10 times year over year. Our adjusted operating profit reached RMB 524 million, and our adjusted operating profit margin reached 7.0% in the first quarter versus 4.9% in the same period a year ago. Net profit was RMB 202 million, versus an RMB 11 million net loss in Q1 2025. Our adjusted net profit was RMB 585 million, up 62% year-over-year, and our adjusted net profit margin was 7.8%, improved from 5.2% in the same period a year ago. As of March 31, 2026, we had cash-in-cash equivalents. time deposits and short-term investments of RMB 24.2 billion or US dollar 3.5 billion. In Q1, we repurchased 2.5 million shares for a total cost of US dollar 60.3 million under our US dollar 200 million share repurchase program. As of today, we have completed this share repurchase program, purchasing a total of 9.9 million shares. We remain committed to enhancing long-term shareholder returns and our board is considering renewing the share repurchase program at an appropriate time. 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 now, 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 statements 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. A moment for our first question. And we will now take our first question from the line of Lincoln Kong of Goldman Sachs. Please go ahead, Lincoln. Your line is open.

Thank you for accepting my question. Congratulations to us for achieving a strong performance in the first quarter. I would like to ask about our community and users. In fact, I see that the overall community and some of the data in the market are very bright. Thank you very much for taking my question. Congrats on a very solid first quarter result. My question is about the community. So we have seen user metrics continue to deliver stellar performance. So how significant has AI been a driver in terms of the user acquisition and engagement duration? Also, what's our perspective on the strategic role that sort of this AI-assisted creation tools has played with the Billy's content ecosystem? Thank you.

What's really driving our user growth and time spent is still Bilibili's reach supply of high-quality content and our very unique community experience.

AI didn't change the underlying logic of Bilibili, but it magnified Bilibili's two characteristics.

AI doesn't change that fundamental logic. If anything, it's making our strength even stronger.

首先AI放大了B站的一个内容供给。 正如我上个季度提到的,就是现在对于短视频来说,内容的供给已经过剩了。 但是的话,对于优质的中场视频来说,内容的供给其实是远远不足的。

So from a high quality content supply perspective, as I mentioned last quarter, AI is bringing greater leverage

Ladies and gentlemen, please remain on the line. Your conference will resume shortly.

Pushing their expression button, please.

and unleash so much more productivity.

That's why you're saying in during the first quarter that the average daily active content creator and their daily submission grew by 6% and 19% year over year respectively.

And it's not just about efficiency.

AI is not only helping us to increase supply, but we are seeing it bringing so much quality into our content offering.

We can see that in some categories, the way of creation is different from before. For example, in the past, a good film or television work needed a production team and a later team to achieve it. But now,

For example, in some category, AI is already fundamentally changing how content gets made. For example, in the film industry, it requires a full crew to work on the shooting and production and post-production area. But now with the help of AI, we only need one or two very core production and creativity people and they can make the equivalent or even better content.

再比如說像音樂類的作品過去一個好的歌曲它是需要創作加演唱加演奏加表演就是多個角色去配合的而現在來說的話可能也是一兩個核心的創作者它都可以實現過去 Another example would be music.

In the traditional music industry, it requires a full crew and team to work on music production. But now with the help of AI, just one talented content creator can make very high quality music content.

So we are very happy to see that in the AI era,

That's why we're very delighted to see that in the past, some categories that was very hard and expensive to make, now with the help of AI, the most talented content creator can make those production very easy.

In our most recent AI creation context,

we're seeing that AIGC videos are very, very impressive in terms of the quality. Over this contest, we saw over 150 videos, each surpassed 1 million views. In summary, we are seeing that AI is bringing so much more quality and quantity into the PUGV field.

And another booster is that AI amplifies the power of Bilibili community.

In a community like Bilibili, where user love the content, know what they want, have high standards, have strong taste, high quality content is naturally more likely to stand out.

AI can magnify the ability of the B站 community to identify high-quality content. In our community, there are more than 170 real users every month. And these data are actually very valuable real-time data in the AI era. Every, we're seeing AI is making that effect even more stronger.

Every month, our user generates more than 17 billion real human interactions on Billabilly. And in the AI era, this kind of real human feedback and tagging is becoming even more valuable. And like I said, those tagging, those feedbacks are from people who know what they want, who have strong taste and have high desire for high-quality content. So our internally developed model, we are spending a lot of time to making it understand what is high-quality content and identify those high-quality content in a much earlier stage.

. We are seeing this ability to directly translate on creators' followers' growth.

In the first quarter, the number of content creators with more than 1,000 followers grew by over 30% year over year. Creators that we've 10,000, 100,000, and 1 million followers also grew by more than 20% year over year. As creators get more followers, they also make more money. In Q1, average income per creator is up 24% year over year.

To summarize, AI is making our great content creator even more powerful.

And Bilibili is the home to many of the most creative creators, the one who really wanted to express themselves and build lasting connection with users.

So I think because AI can enlarge the creator's environment, enlarge the community's supply chain, so I think this wave of AI for Bilibili is a 10 times bigger opportunity. We will also be able to grab hold of this opportunity.

Over the years, we viewed a very strong creator ecosystem and community culture, and AI is really amplifying that effect. And we believe this historical opportunity of AI can bring the opportunity that makes visibility 10 times more valuable. And we will really invest and seize that opportunity for us. Thank you. Operator, next question, please.

Thank you. We will now take our next question from Daniel Chen of J.P. Morgan. Please ask your question. Daniel, your line is open.

谢谢管理层给我这个机会问问题。 我的问题是关于广告的。 恭喜咱们一季度的广告收入继续加速增长。 So my question is on the advertising revenue. So we see that the ad revenue growth accelerates to 30% year-over-year in the first quarter. which is very strong. May we know which industry or the ad product actually exceeds your expectation? Also, how should we expect the outlook for the second quarter and the full year advertising revenue? Thank you.

Our income in the first quarter of this year is 26 billion, which is 30% higher than before. There has been a growth of double digits for 13 consecutive quarters.

Our advertising revenue reported R&D 2.6 billion in the first quarter, up 30% year over year, marking our 13th consecutive quarter of a double-digit growth.

广告其实B站广告的增长最底层的驱动其实还是B站的社区以及用户。 The very core, the biggest driver behind our advertising growth is still the value of the release community and our users.

The average age of our user is about 26.5 years old, which means they are entering a stage of life where both personal spending power and household decision-making power are rising rapidly. And that is exactly the kind of high-value user groups advertisers are most eager to reach.

区别于纯流量的这种平台来说的话, 其实B站的投放价值也不是一次性的。 What sets us apart from a platform that's purely traffic-driven?

is that the value of advertising on Bilibili is never one-off spending. Instead, we run much deeper into users' mindshare. They help us brands to move from a single one-off impression to repeated, continuous touchpoints, and from a single isolated transaction to build lasting brand equity.

That is exactly why we saw a continuous growth of our advertising efficiencies.

During Q1, our brand ads, performance ads, and native ads all delivered a strong double-digit growth and for certain categories, even high double-digit growth. And for Q1, our top five advertising verticals were games, internet services, digital products and home appliances, e-commerce, and automotive.

Looking ahead into Q2 and onwards,

is that we do see a deeper integration of AI into our advertising system. We'll continue to improve our ad efficiency in the near term. But more importantly, we believe the bigger value will come from the long-term transformation that AI can bring to ad business.

Let's look at it from this year's perspective. I think the efficiency of distribution and calculation will still be more obvious. For example, our interest in users, consumer intent, content understanding, and ability will be further enhanced. Combined with the model we recommend, we can accurately match what users like what content, and at the same time, what kind of advertisement it is suitable for. This year, we continue to improve both distribution efficiency and recommendation algorithms.

We have further leveled up our ability to understand user interest, purchase intent, and our content themselves. By plugging those into our recommendation models, we can now match user content and ads so much more precisely. That's the reason why you see the strong growth in our advertising revenue in Q1, and this is driving a more accurate matching capability delivery and a strong CPCBR growth for our performance ads in the first quarter.

So for the advertiser, we also provide the ability to launch and intelligent innovation on AI, which continues to improve the efficiency of the advertiser's launch, so that they can save money and effort. In terms of the consumption of Q1's automatic advertising penetration, we have increased it to 85%. I think this should be further reflected in the future, from Q2 to Q4.

We are also providing advertisers with more automated campaign management and AI-powered creative tools to help them to improve ad delivery efficiency. In Q1, penetration of our automated ad spending increased to about 85%, and we will continue to see this penetration to further increase into Q1 and for the rest of the year.

AIGC's tools are actually also helping advertisers to produce materials that are more efficient and suitable for B站 communities. So the continuous improvement of relevant material consumption is actually very helpful in improving advertising efficiency. AIGC's materials, now we see that the overall CTR, the average increase in traditional materials compared to CTR is double.

On top of that, the AIGC tools are helping advertisers to create the materials that perfectly vibe with the Bilibili community style. And the adoption of AIGC creatives continue to increase. At the same time, these AIGC creatives are delivering much better ad performances with an improved click through rate. generally around double-digit better.

So the above is probably the impact of AI on us in Q1 and Q2, and some of the positive impacts on us. In the next year and the year after, we can communicate more in the future. This year, we will mainly share some changes this year. The second point is the expansion of multiple topics and multiple scenarios. is very helpful for advertising. So from the app end to the PC, iPad, OTT, car, and the whole scene, we will continue to cover it. Now we have covered most of it. From the scene, we will see from the information stream to the search to the comments. Recently, we will try to cover all the focus points, including small programs, in the playback period. This will provide more advertising materials for our ads, and a higher efficiency for our match users.

That summarizes how AI is helping us to improve our ad efficiency. I will be sharing more information next quarter, and going forward, we believe there's so much more that AI can bring into our ad system. And on top of that, We're also expanding ad inventory across different screens and more user scenarios from the mobile app to our PC, iPad, OTT, and in-car screens. And we currently already cover a majority of that scenario. And on different products or ad scenarios, we are also trying new inventories from feed to search, comments, and in-player ads and mini programs. This is covering Bilibili's users' time spent across the major product touchpoints. This will bring in additional ad inventory and app volume for our business.

Apart from that, I think we should also pay attention to the strategy of the vertical industry. Therefore, our strategy of the vertical industry will be further deepened. From the history, we pay attention to some deep combinations from the industry sales to the industry operation. But we will also combine the industry technology system to provide more complete solutions for vertical industry customers. So, in the second half of the year, some high-value industries will erupt at the same time. For example, we expect AI technology, cars, home appliances,

Well, on top of that, at inventory and scenario growth, our strategy across different ad industry is also very important, and we will continue to deepen our services into different industry verticals. By aligning ourselves, operation, tech capabilities, we can now offer a full stack solution tailored to each specific industry. Looking into the second half of this year, we expect stronger growth momentum from those high value categories such as AI technology, automotive, home decoration and appliances, which we believe will continue to lead a very strong growth. Meanwhile, we will also continue to expand our market share in our core verticals, such as games, e-commerce, and education.

To summarize,

remain confident in maintaining a very healthy advertising growth for the rest of the year. Thank you. Operator, next question, please.

Thank you. We will now take our next question from Yang Liu of Morgan Stanley. Please ask your question. Yang, your line is open.

感谢提问的机会。 我的问题是关于游戏的。 想问一下三国百将牌。 How will it perform after the soft launch? What are our expectations for this game? We also pay attention to the company's self-made game, Shanyaba Lumi, which started the paid test this month. Can you share the test results and the next specific online time? In addition, what should we expect from the Three Kingdoms of the World game? Is there anything else worth looking forward to? Let me translate my question. My question is about the game segment. Could management comment on the Three Kingdom Uncard soft launch performance and what is now our expectation for this game? And also another self-developed game, LumiMaster started the paid test this month. What's the test result and what is the expectation on launch timing. And another game, Three Kingdoms, 王道天下, how to expect this game's contribution, and could management comment if there's any other game pipeline except for the three games I mentioned before. Thank you.

三国百将台在四月份的那个Social Launch是不合预期的,然后我们计划在

The end card soft launch performance is generally in line with the expectation.

We plan to officially launch this game in July this year.

This game is a one-of-a-kind game and a first-of-its-kind that features a very unique gameplay system that brings hero skills with poker mechanisms. From the soft launch feedback, we find this gameplay has resonated with young user groups quite nicely.

Because the gameplay of this game is really fun, Because this game is very creative and innovative, we take the approach to iterate the game

as we launch, as we collect more user feedback. We believe this is a more sustainable approach to make this game even better.

We believe this game has the potential

to become a large DAU title that can last for a very long time in this casual category. And we believe it has the right elements to get to that. So we are putting a lot of resource and hoping this game will continue to refine its game plan operation By the time it's ready, we will be launching it to a mass audience.

Speaking of the statue, I would also like to mention the Three Kingdoms King of the World. The characteristics of the Three Kingdoms King are, first of all, it is authorized by the Three Kingdoms government. Second, it is based on the original art of the Three Kingdoms. We created a 3D fantasy. Therefore, its target audience

Well, as we mentioned the NCAR Three Kingdoms, I will briefly touch upon the Sanwang title. So the Sanwang title is a very unique SLG title based on the very authentic Three Kingdom IP by Kale. And this game has stayed true to the original Three Kingdoms IPN experience while introducing so much refreshed 3D visual style. It's targeting a more mature SLG audiences and has higher taste towards the game's quality and visual experience.

Yes, this game, Three Kingdoms, The triad that we used before is a complementary relationship. Because the triad is a high-quality art position added to the three-digit IP. And the triad is a position of young people with liver detection. So it happens to be a complementary relationship. This is also the reason why we have to continue to push the triad after pushing the triad.

We think San Wang and San Mo really complement each other, but with a differentiate target user group, where San Wang is target to the IP fans who has strong taste and preferences towards a better visual quality, where San Mo targets a younger cohort that doesn't want to spend so much time and money into the SLG title. That is the reason why after launching Sunmo, we choose to license another title in the Three Kingdom IP. We think these two titles have great synergies and really complement each other.

The players' response is very positive.

We already completed the first round of beta type testing at the end of March for Sanwang title and we saw very positive user feedback and we are currently continuing refine and polishing the title and listening closely to user feedback. and we are planning to launch this title within this year. Next, I'll talk about our self-developed game, Lumi Master. For Lumi Master, it is also one of its kind, the very first title that combines tech-hatching with We started a global user testing in early May this year and we have received a very encouraging user feedback. and we are targeting a global launch for this title in Q4 this year.

Lastly, I wanted to briefly touch upon

escaped from SOCOP, which is Ability Self-Development title. This year, we broke another record by selling over 4 million copies of this game.

While we are continuing to optimize the game, we are also actively promoting its mainstream version.

As we continue to promote this game on the PC front, we are actively working on the console version and the mobile version. Our goal is to continue to enhance the IP and over time, make this game, make this IP escape from Dock of IP, become a well-known franchise for young gamers.

In fact, in the past few years, I have also been talking to everyone about this Bilibili game at the press conference. In fact, to sum up, the answer to the Bilibili game is three words. The first word is long-term operation. We pay great attention to the long-term operation of games, including the FGO B-Lan that we have in our hands. It will soon be their 10th and 9th anniversary, including Sammo. It has been running steadily for two years, and our goal is to turn it into a game that players can play to their hearts' content. So the long-term operation is a game strategy that B-Zen will always stick to. Every game we discover in the future, including the single-player Yakov,

Over the past few years, I've been sharing our game strategy. I think it's summarized to three points. One is long-term operation. We've seen that into our legacy title, FGO and Azure Lane, which are celebrating its 10th year anniversary and ninth year anniversary, respectively, this year. And Sunmo is going to celebrate it. second year anniversary very soon. And going forward, for all Bilibili game titles, we're targeting a very long-term operation. Even for console one-off games like Escape From Dotcom, we're hoping this game will have lasting impact and will continue to generate sales over time. So long-term operation is definitely one of the most most important strategy for our game business.

第二句话的话就是锤类头部, 我们绝对不做那种打一枪算个地方的这种打法, 我们一般的话决定去做一个方向, 我们就会把它在这个锤类上升更下去, 就是我们要么就是做这个锤类的第一名, 要么就是做锤类的第一个, 而且, . . . . . And the second strategy is to become the leader in the segment genre.

So first of all, our strategy into game genre is very very focused we will be deciding a good direction how we will dig deep into this genre to be become either the best or the first in this genre for example the SLG the three kingdom IP we've launched one game we have two in the pipeline and we'll have more that's coming up. Potentially, in the near future, we will build a Free Kingdom universe. Another example is the console game, the PC copy-based game. This is also a direction we believe has very large opportunity and strong user demand, and we will be focusing to produce the best or become the first in its own kind. This will be another important strategy for our game business.

第三句话是品的年轻化,因为B站是年轻的游戏玩家最活跃的一个社区,所以的话就是这些年轻玩家有什么样的需求,我们肯定是行业里面第一个知道的。 And the game is always a category that faces young people. As long as you go in the direction of young people, you will definitely have new opportunities. So you can see that whether it's like the innovative fusion of the Three Kingdoms General Staff, or like Luminous, it is also an innovative fusion. Younger people are basically in the design aspect of playing games or games. We will make the most suitable innovation for young people. This is also our

The last one is we're creating games for the young generation of gamers. We believe that for all game business, that focusing on young users is a must. And as a young generation community hub, we're the platform that is closest to this young cohort. and understanding their desire, inventing games to cater to their preferences is Billy Billy's bread and butter. And by staying close to the young generation, there will always be good opportunities. This is showing on our end card and our Looney Monster titles. Fundamentally, we are just creating a new title. We are creating or reinventing this title to catering to this generation of gamers that fits their taste the best. So by staying close to the young gamers, we believe this brings us so much more opportunity. So that concludes this question and this question. Operator, next question, please. Thank you.

Our next question comes from Xueqin Zhang of CICC. Please ask your question, Xueqin. Your line is open.

谢谢管理层接受我的提问,我的问题是关于财务的。 那上个季度公司提到2026年要增加对AI的投入, 想请问到目前为止有哪些值得分享的进展? 然后AI的投入的产出我们预计在什么时候可以看到? Thanks management for taking my question and my question about financials. Last quarter, company mentioned that it would invest in AI in six I commend your progress, actually, so far. One should expect to see meaningful returns from these AI investments. Also, could you provide some color on the outlook for OPEX and the capacity related to AI, as well as the margin outlook for the second quarter and the full year? Thank you.

Thanks, Xueqing. This is Sam. I will take this question. First of all, about the direction of our AI investment. As mentioned by Mr. Chen, we are very focused primarily on the keyword of Bilibili, video. We are investing in three main areas, video understanding, video distribution, and video creation. We believe this investment will significantly enhance the value of Bilibili's content ecosystem and the community, and it directly benefits all monetization lines. In Q1, we have already began exploring and applying these efforts. We see initiative results evidenced in our DAO growth, user time span growth, and advertising revenue growth. We expect this positive feedback to have just begun and will continue to deliver greater efficiency. Regarding to the CapEx, in Q1, our CapEx increased about 80% year-over-year, around 200 million RMB. mainly driven by higher investment in server and computing resources to support AI improvements. For the full year, we expect our AI-related CapEx to increase by approximately 1 billion RMB, with an impact on PML of around 500 million RMB. Meanwhile, we will cut certain OPEX expenses to offset part of such impact. Using our Q1 result as an example, When we see R&D expenses increase by 9% year-over-year, while we still deliver solid bottom-line results. Driven by revenue growth and continued operating leverage, our adjusted net profit increased by 62% year-over-year, with the adjusted net profit margin rising to 7.8%. We expect Q2 advertising revenue to maintain rapid growth with the contribution from our AI initiative, with gross margin steadily improving and net profit margin have further room to increase. We also maintain our mid to long-term gross margin target to 45 percent and operating profit ratio target of 15 to 20 percent and change. Thank you for this question.

Thank you. And that concludes the question and answer session. Thank you once again for joining Bilibili's first quarter 2026 financial results and business updates conference call today. If you have any further questions, please contact Juliette Young, Bilibili's Executive IR Director, or Piacente Financial Communications. Contact information for IR in both China and the U.S. can be found on today's press release. Thank you and have a great day.