Bilibili Inc. (BILI) Q2 2026 Earnings Report, Transcript and Summary

Good day, and welcome to the Bilibili's Second Quarter 2026 Financial Results and Business Update Conference Call. Today's conference is being recorded. At this time, I would like to turn the call over to Juliet Yang, Executive Director of Investor Relations. Please go ahead.

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 filings with the SEC and Hong Kong Stock Exchange. The non-GAAP financial measures we provide are for comparison purposes only. The definition of this measure and a 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. Rui Chen, Chairman of the Board and Chief Executive Officer; Ms. Carly Li, 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, Juliet, and thank you to everyone joining us today. Our strong momentum carried into the second quarter, and we delivered another set of solid results. Both our community and top line growth remained healthy and profitability continued to expand. As users increasingly seek substance over noise, our high-quality content and authentic community experience keep attracting new users and driving deeper engagement. In Q2, DAUs increased by 7% year-over-year to 117 million, while MAUs grew to 371 million, average daily time spent rose to 113 minutes from 105 minutes a year ago, which drove total time spent up over 14%. That engagement is translating into stronger commercial results. Advertising revenue grew 28% year-over-year, marking another quarter of industry-leading growth. Meanwhile, MPUs increased 7% year-over-year to 33.4 million, reflecting users' increasing willingness to pay for the content and community experiences they truly value. You can also see that momentum in our financial results. Total revenues for Q2 rose 8% to RMB 7.9 billion, and gross profit grew 10% year-over-year. Gross margin expanded to 37.2%, marking our 16th consecutive quarter of margin improvement. Our top line growth and increased operating leverage drove our net profit up 55% year-over-year, and our adjusted net profit reached RMB 704 million, with our adjusted net profit margin expanding to 8.9%. In the AI era, we see 2 major tailwinds. First, AI tools help our creators produce great content much faster, while AI-empowered content understanding is making our recommendations far more efficient. Second, and perhaps more importantly, in a world full of passive algorithmic content, real human connection becomes a rare commodity. People choose Bilibili because they want meaningful content, shared interest and genuine interaction. And that makes our community even more attractive. That is why we remain committed to our AI strategy while staying highly disciplined in how we invest. We'll use AI to improve content and efficiency without losing sight of our community roots and unique advantage. Strengthening this flywheel of community and monetization will continue to build lasting compounding value for our users, our creators and our shareholders. With that, let me walk you through our core pillars of content, community and commercialization. Let's start with our content. Across our 17-year history, various content formats have come and gone, but Bilibili's distinct blend of quality content and vibrant interest-driven communities continues to capture users' intentional high-value time. In Q2, total time spent on our platform expanded by 14% year-over-year. Notably, watch time from videos over 5 minutes grew by 18% year-over-year, demonstrating users' growing demand for meaningful and high-quality content. Turning to our interest-based content categories. We're seeing steady growth across both core and emerging hubs. Total watch time for game-related content and general entertainment content increased by 20% and 35% year-over-year, respectively. Baby and maternity also grew by 36% year-over-year as more of our users step into parenthood. At the same time, AI tools are expanding creative boundaries across our platform. For instance, watch time for music content grew 24% year-over-year, catalyzed by AIGC-driven creation. Beyond content consumption, AI is also supercharging creator output. In Q2, daily video submissions jumped by 28% compared to the same period last year. Video podcasts offer another compelling example of our users embracing immersive content. Last month, average daily watch time for video podcast exceeded 100 million minutes. This remarkable engagement shows that even in today's world of fast-paced content, there is still a huge and growing appetite for in-depth storytelling. Behind these figures, empowering creators remains a top priority. Through a refined algorithm, we now match quality content with interested users much earlier. In Q2, the number of creators with over 1,000 followers grew by 30% year-over-year. The diverse monetization channels we provide also helped average creator income increased by 21% year-over-year in the second quarter. Turning to our community. As we touched on earlier, authentic human connection has become rare and valuable in the era of automated bite-sized content. That is why Bilibili's interactive community feels like a true oasis in today's digital world. Here, hundreds of millions of users connect over shared passions, expressing their feelings through comments and bullet chats to find a genuine sense of belonging. In Q2, monthly interactions grew 9% year-over-year to 17.4 billion, while deeper connections like long comments jumped over 67%. Meanwhile, by processing these rich user interactions, our algorithms can spot and elevate high-quality content much faster, driving healthy, steady growth in both our user base and time spent. This level of engagement and interaction naturally keeps users coming back and expands our network of trust. In Q2, the average active user followed 96 creators, up 11% from a year ago. By the end of Q2, our official members reached 299 million, with 12-month retention remaining solid at around 80%. Ultimately, our community doesn't just surface the best content, it builds lasting user loyalty and drives enduring platform value. This summer, we brought our community offline once again through our signature events, Bilibili World and Bilibili Macro Link. Over the 3-day event, more than 400,000 fans gathered in person in Shanghai, making it one of the largest offline ACG expos in China and a vibrant new cultural landmark for the city. Seeing so many young people come together to share their passion was a powerful reminder of what community means. This is what Bilibili looks like off screen: authentic, energetic and deeply connected. Now let's turn to our commercial businesses, beginning with advertising. In Q2, advertising revenue increased by 28% year-over-year to RMB 3.1 billion, marking our 14th straight quarter of 20% year-over-year growth. This industry-leading growth reflects our high-value, deeply engaged user base alongside ongoing enhancements to our ad products and technical infrastructure. Growth was broad-based across industries, games, digital products and home appliances, internet services, e-commerce and automotive were our 5 largest advertising verticals in Q2. While our core gaming vertical maintained healthy growth, new verticals are also flourishing as our users mature into new life stages with expanding consumption needs. Ad revenues from home decoration, footwear and apparel and automotive each grew more than 60% year-over-year. We also captured incremental budget from emerging industries. AI advertisers continue to scale and revenues from this vertical more than doubled year-over-year, driving sustained growth in Internet services. Our ads are also becoming more efficient. By deepening our understanding of product information, creative assets, user interest and conversion goals, AI helps us deliver more relevant ads and drive better conversion. Our CTCVR continued to improve, increasing 19% year-over-year in Q2. Beyond matching, we are extending AI across creative production and campaign operations from AIGC tools to ad placement AI agents, making advertising easier and more efficient for a broader range of clients. We are also extending monetization into deeper high-intent user scenarios. Take search, for example, a high-value scenario sitting right at the moment of decision-making. Search revenues doubled year-over-year in Q2. At the same time, we are unlocking growth across additional scenarios, including PC, smart TV and the watch page. As monetization expands across the entire user journey, we see vast commercial potential ahead. Turning to our games business. Game revenues for the quarter were RMB 1.4 billion, down 14% year-over-year, mainly due to the high base San Mou, [ San Guo: Mou Ding Tian Xia ] set last year. San Mou's latest second anniversary season 15 went well with players, ranking #2 on China's [ iOS ] top grossing chart. We'll keep focusing on the game's long-term life cycle by delivering fresh content and carefully balancing user experience with monetization. Meanwhile, our legacy titles, including FGO and Azur Lane, continued to deliver stable performance during the quarter. In July, we officially launched our casual card game NCard [Foreign Language]. We continue to refine the game and enrich its gameplay while approaching user acquisition with a long-term focus on ROI and retention. Looking at the second half of 2026, our self-developed simulation game, Lumi Master [Foreign Language] was well received by global players in recent tests. Building on this encouraging reception, we plan to launch the game on September 17 globally. [Foreign Language] Our new licensed SLG title is scheduled to roll out in Q4, complementing San Mou with a differentiated gameplay experience. Beyond Lumi and San Wang, we also introduced 3 new titles at Bilibili World, including 2 licensed games, Ragnarok Online 3, [Foreign Language] an MMORPG based on a globally recognized IP that has already secured its publication license. And [ Mistbound: Guild Wars Card Game ] [Foreign Language], which is adapted from another well-known IP. We also announced a new self-developed tactical RPG, [ Three Kingdoms: The Ravages of Time ] [Foreign Language]. All 3 titles will be released next year. Together, these titles expand our pipeline across genres and development models while attracting new player segments. Turning to our VAS business. In Q2, VAS revenues grew 5% year-over-year to RMB 3.0 billion. Our live broadcasting business maintained its steady performance, and we continue to refine our operations to ensure stable and sustainable growth with better margins. At the end of Q2, premium members reached 25.7 million, up 9% year-over-year with around 80% on annual or auto renewal plan. Fan charging also kept its momentum with revenue up nearly 50% year-over-year. Fan charging turns audience appreciation into direct financial support so creators across a wide range of categories can do what they love and produce quality content over the long term. Beyond the numbers, we remain deeply committed to shaping a healthy culture and community for China's young generation. ESG principles are central to that mission. This year, MSCI ESG upgraded Bilibili to an [ "AA" ] rating from an [ "A" ] rating, recognizing our ongoing progress in using technology and culture to create meaningful social impact. At the end of the day, we found that across every technological shift, one thing remains constant, people crave rich, meaningful content and real human connection. Bilibili is uniquely built at the intersection of both. As AI enables us to fulfill this mission with greater precision and scale, I couldn't be more confident in our path ahead. With that, I will turn the call over to Sam to walk through our financials in more detail. Sam?

Thank you, Mr. Chen, and hello, everyone. In the interest of time on today's call, I will focus on our second quarter financial highlights. We encourage you to refer to our press release issued earlier today for a closer look at our results. Total revenues for the second quarter were RMB 7.9 billion, up 8% year-over-year. The breakdown of total revenues by revenue stream was approximately 39% advertising, 37% VAS, 18% mobile games and 6% from our IP derivatives and other businesses. Cost of revenues increased by 7% year-over-year to RMB 5.0 billion. Gross profit increased around 10% year-over-year to RMB 3.0 billion, while gross margin expanded to 37.2% from 36.5% in the same period last year, marking our 16th consecutive quarter of margin improvement. Our total operating expenses were up 7% year-over-year to RMB 2.6 billion. Sales and marketing expenses increased by 1% year-over-year. G&A expenses were flat and R&D expenses increased by 16%, primarily due to continued investment in our AI capabilities. Operating profit increased 48% year-over-year to RMB 373 million, while adjusted operating profit increased 21% to RMB 696 million, lifting adjusted operating profit margin to 8.8% from 7.8% in the same period last year. Net profit increased by 55% year-over-year to RMB 339 million, while adjusted net profit increased 25% to RMB 704 million and adjusted net profit margin reached 8.9%. As of June 30, 2026, we had cash and cash equivalents, time deposits and short-term investments of RMB 24.3 billion or USD 3.6 billion. In June, our Board approved a new 2-year USD 300 million share repurchase program. Under this new program, a total of 1.9 million shares had been purchased for a total cost of USD 31 million as of June 30, 2026. From the beginning of the year through today, a total of 5.8 million shares had been purchased for a total cost of USD 118 million. Moving forward, we will continue to evaluate market conditions and execute our repurchase program accordingly to enhance long-term shareholder value. Thank you for your attention. We would now like to open the call to your questions. Operator, please go ahead.

[Operator Instructions] 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're going to take our first question. The question comes from the line of Lincoln Kong from Goldman Sachs.

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

[Foreign Language].

[Interpreted] Actually, over the past few years, we see explosive growth for both short video content and long-form content. And the shorter-form content grow much faster. And looking at Bilibili, we're not choosing the length of the content to be focused on, but rather we are focusing on good content, high-quality content. And naturally, for those high-quality content, they are generally more inclined to be in the format of long-form -- mid to long-form...

[Foreign Language]

[Interpreted] We believe whether the length of the content or on the device of the consumption scenario, the ultimate goal from users is everyone wants to watch good content.

[Foreign Language]

[Interpreted] Well, over the past year, we do see exponential supply growth for short video content. But over time, as people are used to have watched enough low-quality repetitive content, they naturally develop a taste for high-quality content. They are no longer satisfied with content that just grab their attention for 1 second. They care more and more about whether the time they spend on the content is actually worth it. And that is exactly why Bilibili has been able to keep growing in the past few years. We have been focusing on providing a high-quality content that is interesting in depth and really connects with user emotionally. And that's why users are willing to slow down and spend their intentional time on Bilibili.

[Foreign Language]

[Interpreted] The reason why Bilibili are able to constantly create high-quality content for 2 reasons. One is that we have a mass a very talented group of content creator who believes in the community, who believes in the Bilibili platform. Secondly, is over the past decade, we have built a very engaging community with a lot of users who truly appreciate high-quality content. They have the view of what is good, high-quality content and forms a community that appreciate and also can select and define the quality, what is the good quality content. They can choose and promote among millions of daily video submissions and allow this high-quality content and talented content creator to emerge from our platform.

[Foreign Language]

[Interpreted] In the second quarter, our monthly user interaction were over 7 billion, up 9% year-over-year. Long comments that over 100 characters grew even faster by 67%. This high level of real human interactions help us to better identify high-quality content.

[Foreign Language]

[Interpreted] And regarding in the AI era, how the video landscape is going to change, we believe that the AI tools will exponentially unleash the supply of video content. And over time, the high-quality content is the only solution or the only answer among those oversupply of video content. We believe over time, only high-quality content will have viewership. Those low-quality content will have no [ traffic ].

[Foreign Language]

[Interpreted] In the AI era, I will be very focused on 2 aspects. One is on video creation -- content creation. Second is on content distribution. First of all, on the content creation, I will pay very close attention to those content creator with high intelligence and high creative power, how they are leveraging AI to create content to realize their creation into actual work. We believe the repetitive low-quality content will have no room for survival, but those talented content creators will be extremely beneficial from this evolution of creation tools. And in the past half year, we have been paying very close attention on this aspect, and it's generating very positive results. As a matter of fact, in the second quarter, our monthly content submissions increased by 28%. This is a hard evidence to support that AI tools is enlarging enhancing uplifting our creators creative output.

[Foreign Language]

[Interpreted] Secondly, on content distribution, compared with the short videos that only have longer-form video much comprehensive information and structures, traditional recommendation algorithm often struggle to fully understand and recommend this type of content. And also users generally have more complex intent when they come to choose to longer-form content. That's why we are focusing on our AI on helping our content distribution become more efficient. And we think this new generation of AI tools is helping us to comprehend, understand the content, the meaning of the content and better understand our user intention. And here's a few numbers to support our progress. In second quarter, DAU grew by 7% year-over-year, and our total user time spent increased by 14% year-over-year. And the number of creators with over 1,000 followers grew by 30% year-over-year. A lot of the driver behind those numbers are from using AI to make our algorithm working better. That concludes the first question's answer. Operator, next question, please.

Perfect. Thank you so much. Now we are going to take our next question. And the question comes from the line of Yang Liu from Morgan Stanley.

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

[Foreign Language]

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

[Foreign Language]

[Interpreted] Our content ecosystem, users' time spent on AI-related knowledge content surged by 72% year-over-year. Bilibili has become the largest AI learning video community across the Internet as users actively come to our platform to track and learn about large language models and AI tools.

[Foreign Language]

[Interpreted] At the same time, ad spend from AI sector grew by over 100% year-over-year in the second quarter, benefiting from the strong match between AI target audiences and our user base. As AI is a major long-term trend, we expect continuous demand from various clients across different stages, and we remain very optimistic about this incremental opportunity.

[Foreign Language]

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

[Foreign Language]

[Interpreted] The average age of Bilibili user now is 26.5 years old, making them the primary driver or the main consumption force in the current Chinese society. Over the past 2 years, they also have established a strong purchasing mindset on Bilibili, demonstrating a clear willingness to buy products recommended by the platform or by the content creators. In the second quarter, our top 5 ad verticals were games, consumer electronics, Internet services, e-commerce and automotive, while our total advertiser base expanded by 14% year-over-year.

[Foreign Language]

[Interpreted] Unlike other platforms, we have a multiscreen multi-scenario strategy that allows Bilibili to accompany users seamlessly throughout their day, whether it's listening or watching Bilibili during commutes or casting Bilibili content on TV screen at home with their family or using our apps or iPad during the time for learning.

[Foreign Language]

[Interpreted] Across these different streams, users can watch and upload video interact bullet chat, commentaries, search their favorite content creators during live stream, watch anime or documentaries and play games. And ads naturally follow users touch. That's why in the first half of this year, in-app search, watch page, smart TV portal, PC and Mini program have all unlocked valuable new ad inventories with revenue from this multi-scenario placement grew by 50% year-over-year in the first half.

[Foreign Language]

[Interpreted] Last but not least is AI is also empowering our ad efficiency from several angles, including improving our user comprehension, including user profiling, content matching, ad creative generation and algorithm efficiency to continuous lift our monetization. And also, we have launched our automated ad placement system that also has made it much easier for new advertisers to join us. This is driving a double-digit growth for our new advertisers client base.

[Foreign Language]

[Interpreted] As we mentioned, it is indeed a very challenging macro environment, and there will be a lot of changes among -- across different industry players. However, given what we just mentioned, we still remain quite confident about our continuous growth for our ad business. Thank you. Operator, next question, please.

And now we're going to take our next question. And the question comes from the line of Daniel Chen from JPMorgan.

[Foreign Language] So my question is on the online game. So the company just shared quite a lot of information on the game pipeline. I was wondering which one is the most anticipated ones? And also, what's the expectation for the launch timing? And besides this So, the 3 Kingdom strategy game has been launched for 2 years. So how should we look at the future performance of this game?

[Foreign Language]

[Interpreted] On the second half to next year, it will be our harvesting season for our games. We do have several exciting titles lined up for launch.

[Foreign Language]

[Interpreted] The first title in our pipeline is Lumi Master. Lumi Master is Bilibili self-developed light casual game that involes pet catching and simulation gameplay. It received a lot of positive feedback during its global test in May and also recent testing feedback has been very well. We are planning for a global launch in September 17 next month. And we have developed a very innovative gameplay and artistic graphic designs to cater to young generation needs. We believe with its lighter gameplay and appeal to younger players, we hope this game can catch a broader casual gaming audiences on a global base, especially for young gamers.

[Foreign Language]

[Interpreted] The second title in our pipeline is San Guo, which is a strategy game officially licensed from the classic Three Kingdom San Guo Kingdom IP. We expect to launch this game towards end of this year compared to it targets a more mature audience with a strong interest in San Guo IP. And both of the visual style and gameplay have been significantly upgraded from the classic IP. And why we are launching another Three Kingdom title, we think it really complements some in both gameplay and target audiences, and it can further strengthen our presence in the strategy game genre. We also gained a lot of valuable feedback from the second beta testing we just finished, and we will continue to fine-tune this game. We hope our goal is to build another strategy game that can be lasting and popular for our audiences.

[Foreign Language]

[Interpreted] And beyond that, we have also introduced several new pipeline titles in Bilibili World and will be launched next year. The first one is Three Kingdom, The Ravage of Time. This is another self-developed title that is focused on tactical RPG genre. This title is based on a classic [indiscernible] IP with a history of over 20 years and Bilibili platform has also produced and published the anime that based on this IP. Our goal is to make this classic IP, revitalize this classic IP and make it a great tactical RPG for younger generation.

[Foreign Language]

[Interpreted] And the second title for next year is RO3. Needless to say, this is a very classic IP with the large audiences that last over 20 years. It's a very classic MMORPG, and we've received a lot of users demand for bringing this title back to them. That is why we have signed and licensed this IP and hopefully to bring this classic IP back to its fan base. Currently, this game has already secured its license. And we -- actually, we started to launch technical testing today within Mainland. Currently, the user feedback has been quite positive, and we are targeting to launch this game next year.

[Foreign Language]

[Interpreted] And to answer your question on our classic [indiscernible] game. This game has just celebrated its second year anniversary with a major update in June, and the new content has been well received by our players. As a matter of fact, from Season 8, our first anniversary season last year. Throughout Season 15, our second anniversary season in this year, San Mou has ranked among the top 5 on the iOS top grossing chart, every game season, which is quite impressive. And for this game, our goal has remained unchanged. Our target is to be the lasting strategy game that can accompany gamers for life. And our goal or strategy for our game business remains to focus on the vertical genre to either do become the best or first in its own segment and make sure every title has a long life cycle. That is the strategy we'll continue to be focusing on.

[Foreign Language]

[Interpreted] And I want to mention touch base on the card game, which was recently launched officially. We've noticed that the LTV for July version has doubled compared to the April version, and we also plan to launch the game season 2 in October with a focus on improving long-term retention and adding more interactive fun game play. You will notice that recently, we have launched many different Three Kingdom IP titles, including this light casual poker game and also we have immersive hardcore strategy game like San Mou and San Guo. The reason why we are exploring this IP in such dynamic way is, first of all, we think that there's a lot of overlap for users who are interested in this IP and they can cross-sell from each other. And secondly is that we have a very high-quality video community that with a lot of gamers who can share their experience and promote this game and also provides a very good platform for us to engage with users and continue to improve our games. That is why we are hoping to achieve long-term operation across different IPs and different titles and continuous to provide good gaming experience for our gamers. That concludes this question. Operator, next question, please.

Now we'll go and take our next question. And the question comes from the line of Xueqing Zhang from CICC.

[Foreign Language] Congratulations on the solid quarter. My question about AI. The company discussed how AI has improved its advertising and help increase ECPM at the Investor Day. Could management elaborate a little more on how AI is enhancing Bilibili's community ecosystem, user engagement and different business lines? In addition, how much of the previously announced TWD 1 billion in AI-related CapEx has been deployed so far? And what's the expected pace of spending going forward?

[Foreign Language]

[Interpreted] So, we believe AI is already a consensus for the next era. And for us, it's not to think about how important AI is for us. is to think about how we will use AI in our own business. As a matter of fact, there are a lot of things in the AI chain we won't be engaged with. The things where we invest will be very closely tied to our core business, which is video. And to be more specific on 3 areas: video understanding, video distribution and video creation. All of our investments will be strictly focused on those 3 areas.

[Foreign Language]

[Interpreted] First of all, AI is helping us to better understand both content and users. Bilibili has a huge amount of video library. And this video carries much more information and our users have a very diverse interest. So be able to better understand the value of our content, the meaning of the content and what users want is a key component in both improving user experience and our commercialization efficiency. With AI, we're improving our video understanding search and recommendation capability. It is helping users to find content they are interested in a more efficient manner while helping our ad system to better match ads with users' needs. And for us, this investment not only is working on our user growth, it is also working on our commercialization results.

[Foreign Language]

[Interpreted] And secondly is AI is helping creating new types of content and unleashing productivity Bilibili. As I mentioned, we are very focused on seeing those high-quality content creator, talented content creator, how they are using -- leveraging AI to produce good content. And in the past 2 quarters, we've seen so many good examples of how AI tools is unleashing those talented brains to bring good content on our platform. We're seeing some animation of film content that used to require a whole professional team or even a company to create now can be created by individual content creators that the quality is so premium that they achieve tens of millions of video views. We are also seeing AI inspire new types of content across animation, film, music, auto tune remix categories. It is truly unleashing the creators, their talent, their creativity. We've seen a surge in content submission and the number of high-quality content videos are emerging on our platform. Here's a very vivid example for your reference. In May, we launched our creator animation campaign on our platform. Just in 3 months, these videos in this campaign has generated 270 minutes of watch time and over 180 million views and 6 series, each surpassing 10 million views. Those are the perfect example of how AI tools is helping Bilibili to unleashing creators' output and unleashing the supply of high-quality content.

[Foreign Language]

[Interpreted] Yes. This is Sam. As Mr. Chen mentioned, our AI investment will remain highly focused. Regarding our previous target of RMB 1 billion, which is well on track. We have already achieved 70% to 80% of it in the first half of the year, primarily on the procurement of server computing power resources. This was expected to impact R&D expenses for the full year 2026 by RMB 500 million, which remain unchanged.

operator, next question, please.

Yes, of course. And now we're going to take our last question for today. And the question comes from the line of Thomas Chong from Jefferies.

[Foreign Language] Congratulations on a very solid set of results. My question is, how does management view the margin upside across different business lines? On AI, how should we think about AI empowerment to fixed cost leverage and rooms for the lowering in OpEx ratio? And any color about the AI spending over the next couple of years? On the other hand, how do management view the potential upside or downside to margin in second half and 2027? And lastly, what are management thoughts on capital allocations?

Thank you. This is Sam. I will take your question. In Q2, our financial performance continued its strong momentum. Both revenue and gross profit grew nicely with our gross profit margin expanding to 37.2%, marking the 6th consecutive quarter of sequential improvement. Meanwhile, our operating leverage continued to expand. Net profit grew by 55% year-over-year, and our adjusted net profit margin increased to 8.9%. Looking at the mid- to long term, we believe there's still significant room for Bilibili's commercialization driven by the sustained and healthy development of our business lines, more efficient operation gains empowered by AI, we are highly confident in our future profitability improvement. First, our high-margin advertising business continued to grow and has become our largest revenue contributor, accounting for 39% of total revenue. Despite some macroeconomic pressure, we expect our advertising revenue to maintain a sustainable and healthy growth trajectory going forward. On games, we have a robust pipeline of 5 new titles set to launch in Q4 of this year and into next year. We are confident that our gaming revenue will resume a year-over-year growth trend starting in the fourth quarter. We remain confident in our future profit expansion and our mid- to long-term target remains unchanged, a gross profit margin of 40% to 45% and an operating margin around 15% to 20%. We are confident in maintaining healthy revenue growth while continuously improving our operating efficiency. also to drive the profit realization. We will carefully balance our AI investment with commercial monetization, and we firmly believe that today's investment will play a vital role in Bilibili.'s sustainable development in the future. Regarding to the shareholder return, delivering shareholder return is also a priority for us. From the beginning of this year to date, we have executed accumulated USD 180 million in share repurchases. In June of this year, our Board of Directors approved a new USD 300 million share repurchase program. As of the end of June, we have already repurchased 1.9 million shares for over USD 31 million under this new program. Going forward, we will continue to execute repurchases during opportunistic market windows to create long-term sustainable value for our shareholders.

Thank you, operator. That concludes our question-and-answer session.

And that concludes the question-and-answer session. Thank you once again for joining Bilibili's Second Quarter 2026 Financial Results and Business Update Conference Call today. If you have any further questions, please contact [ Juliet Yang ], Bilibili's Executive 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.