Guosen Securities issued a research report expressing optimism about the commercial potential of Bilibili-W (09626). It maintains its adjusted net profit forecasts for 2026, 2027, and 2028 at RMB 3.336 billion, RMB 4.240 billion, and RMB 5.368 billion, respectively, corresponding to forward P/E ratios of 16.4x, 12.9x, and 10.2x. The company's significant community and user advantages, coupled with new technologies like AI, provide substantial growth potential for its gaming, advertising, and value-added services businesses. The current market capitalization and valuation present attractive upside potential. Guosen Securities is positive on the company's long-term development prospects and maintains an "Outperform" rating.
The key points from the report are as follows:
**Steady Revenue Growth and Improving Profitability**
For the first quarter of 2026, the company reported revenue of RMB 7.472 billion, a year-on-year increase of 7%. Gross profit was RMB 2.773 billion, up 9%, with a gross margin of 37.1%, an improvement of 0.8 percentage points year-on-year. This marks the 15th consecutive quarter of margin improvement. The increase in gross profit was primarily driven by a higher contribution from advertising revenue and effective control of platform operating costs. GAAP net profit was RMB 202 million. Adjusted net profit reached RMB 585 million, a significant increase of 62% year-on-year, with an adjusted net profit margin of 7.8%, up 2.6 percentage points year-on-year, indicating steady improvement in profitability.
By segment, advertising revenue, which grew 30% year-on-year, remains the core growth engine, marking the 13th consecutive quarter of double-digit growth. Value-added services revenue grew steadily by 4%, with the number of premium members reaching 24.8 million, a 5% increase. Revenue from fan "charging" grew by 50%.
**User Community: Engagement Hits New Highs, Commercial Potential Unlocks**
Daily Active Users (DAU) in Q1 reached 115.2 million, an 8% year-on-year increase. Monthly Active Users (MAU) hit a new record of 376 million. Average daily user time spent reached a new high of 119 minutes, an increase of 11 minutes year-on-year, with total user time spent up 19% year-on-year. The user profile continues to shift towards higher value: the average user age is approximately 26.5 years, a demographic in the income growth phase with increasing influence over household consumption decisions, thereby enhancing advertising value.
The creator ecosystem remains vibrant. The number of daily active creators increased by 6% year-on-year, and daily content submissions grew by 19%. The number of creators with follower counts exceeding 1,000, 10,000, 100,000, and 1 million all grew by over 20%. Average creator income increased by 24% year-on-year, indicating a deepening of Bilibili's unique data moat.
**AI Strategy: A Three-Pronged Investment Approach**
The company has defined three core areas for AI investment: video understanding, video recommendation, and video creation. Capital expenditure in Q1 was approximately RMB 200 million, an 80% increase year-on-year, primarily allocated to servers and computing infrastructure. The incremental annual capital expenditure related to AI is estimated at around RMB 1 billion, with an impact on the P&L of approximately RMB 500 million, partially offset by reductions in other operating expenses.
The effects of this investment are already evident across multiple fronts. For the community, AI is lowering the barrier to creation, leading to increases in both creator numbers and content supply. Commercially, AI has improved advertising recommendation efficiency, with a double-digit improvement in Click-Through Rate (CTR) and a 25% increase in Click-to-Conversion Rate (CTCVR). The penetration rate of automated ad placement has reached 85%. Regarding content, AI is transforming production methods for certain content categories, such as music and video editing.
**Risk Factors**
Potential risks include user growth falling short of expectations, slower-than-expected commercialization, regulatory policy changes, and content costs rising more than anticipated.
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