Bilibili (BILI) Q1 2025: Game Revenue Jumps 76% as Platform Monetization Accelerates
Bilibili’s Q1 2025 saw a decisive pivot to high-margin growth, with games and advertising fueling a 24% revenue surge and a step-change in profitability. Strategic focus on quality content, creator monetization, and AI-powered ad infrastructure is reshaping the business model and deepening user engagement. Management’s conviction in sustainable margin expansion and new monetization levers signals a structurally stronger outlook for the platform.
Summary
- Game-Led Margin Expansion: High-margin gaming and advertising reshaped profit structure and platform leverage.
- Quality Content Flywheel: User engagement and direct creator monetization hit record highs, reinforcing Bilibili’s content moat.
- AI and Commercialization: AI-driven ad tools and diversified revenue streams position Bilibili for durable, above-industry growth.
Performance Analysis
Bilibili’s first quarter delivered a marked acceleration in both revenue and profitability, led by 76% YoY growth in game revenue and a 20% increase in advertising. These two segments now comprise roughly half of total revenue, up from 47% a year ago, and are the core drivers of gross margin expansion to 36.3% from 28.3%. The platform’s content-centric approach continues to pay off, with DAUs reaching 107 million and MAUs hitting a new high of 368 million, while average daily time spent climbed to a record 108 minutes.
VAS (Value Added Services, which includes live broadcasting and premium memberships) remained the largest revenue contributor at 40%, but the profit mix is shifting decisively toward scalable, high-margin businesses. Gross profit rose 58% YoY, and Bilibili achieved positive adjusted net profit and operating profit, signaling that its model is now capable of self-funding growth. Operating expenses grew just 4% YoY, with R&D and G&A tightly managed, and sales and marketing reflecting one-off brand investments tied to marquee partnerships.
- Gaming Revenue Inflection: The SLG (Simulation Game) title “Sanmo” drove both user and revenue growth, with new season launches and community integration fueling retention and monetization.
- Advertising Mix Upgrade: Performance-based ads, powered by AI tools, grew over 30% YoY and now account for a rising share of ad revenue and margin.
- Creator Monetization Surge: Over 1.5 million creators earned income on the platform, with fan charging revenue up more than 200%, validating Bilibili’s direct-to-creator monetization ecosystem.
With cash and equivalents of RMB 17.4 billion, Bilibili’s balance sheet supports ongoing investment in content, technology, and new growth initiatives, while the improved margin profile reduces reliance on external funding.
Executive Commentary
"Our total revenues accelerated year-over-year, increasing by 24% to RMB 7 billion, driven by strong performances in our high-margin advertising and game businesses... The continued top-line expansion in these high-margin businesses, combined with operating efficiency, provided us with greater operating leverage."
Ray Chen, Chairman & CEO
"Our gross profit margin reached 36.3% in Q1, compared with 28.3% in the same period last year. Our expanding gross profit and margin show how well our model adapts and scales as the business grows."
Sam Fan, CFO
Strategic Positioning
1. Content Quality as Platform Differentiator
Bilibili’s bet on high-quality, long-form video content, in contrast to the industry’s short-form glut, is deepening user engagement and willingness to pay. Management underscored that average daily user time spent and monthly paying users both reached all-time highs, while content categories—from gaming to lifestyle and AI—are expanding to match the evolving interests and purchasing power of its maturing user base. This focus is not just about retention but also about unlocking new monetization vectors, as users increasingly pay for content and creators.
2. Gaming as a Durable Growth Engine
The transformation of Bilibili’s gaming business is structural, not cyclical. The SLG title “Sanmo” is being managed with a multi-year lifecycle in mind, with seasonality, community integration, and cross-platform expansion (including PC and mini-game platforms) all designed to maximize longevity and recurring revenue. Legacy titles like FGO and Azure Lane continue to deliver, while a pipeline of four to five new games positions Bilibili to capture incremental share in both core and emerging genres.
3. AI-Driven Commercialization and Ad Innovation
Bilibili’s investment in AI-powered ad infrastructure is driving both ad effectiveness and monetization efficiency. The company’s proprietary large language models and AIGC (AI-generated content) tools enable more precise targeting and creative optimization, with 30% of performance ads now generated via AI. This allows for deeper conversion and higher eCPM, supporting above-industry ad growth and improved margin structure.
4. Creator Monetization Ecosystem
Direct-to-creator monetization is emerging as a significant revenue pillar. Over 1.5 million creators earned income through multiple avenues, including ads, live streaming, e-commerce, and especially fan charging programs, which grew more than 200% YoY. This not only diversifies revenue but also strengthens platform loyalty and content quality, as creators are incentivized to invest in niche and high-value content categories.
5. Platform Leverage and Margin Trajectory
The business model is now demonstrating operating leverage, with gross margin and operating margin both expanding materially. Management reiterated a mid- to long-term gross margin target of 40–45% and operating margin of 15–20%, underpinned by scalable revenue streams and disciplined cost management.
Key Considerations
Bilibili’s Q1 results highlight a pivotal shift from user scale to monetization and margin expansion, with strategic investments in content, AI, and creator tools now translating into financial performance. The platform’s ability to capture the rising purchasing power of its Gen Z+ user base, while maintaining a differentiated content and community moat, is central to its growth thesis.
Key Considerations:
- Monetization Depth: The surge in direct creator monetization and premium memberships signals untapped ARPU (average revenue per user) potential as user cohorts mature.
- Ad Tech Differentiation: AI-driven infrastructure is enabling Bilibili to outperform industry ad growth and capture higher-margin budgets, especially in emerging verticals like AI and home appliances.
- Gaming Longevity: Management’s focus on long-cycle game operations and cross-platform expansion de-risks reliance on hit-driven revenue and supports recurring cash flow.
- Cost Discipline: Stable R&D and G&A, with marketing flexed around strategic opportunities, are underpinning sustainable margin improvement.
Risks
Key risks include regulatory shifts in China’s digital content and gaming sectors, potential volatility in ad budgets tied to macro conditions, and execution risk around new game launches and international expansion. While AI investments are driving ad innovation, competitive response and technology shifts could pressure future margin gains. Management’s confidence in sustaining above-industry growth is credible, but ongoing vigilance around user monetization and content differentiation is warranted.
Forward Outlook
For Q2 2025, Bilibili guided to:
- Continued above-industry advertising growth, supported by expanded AI ad tools and new verticals.
- Gaming revenue momentum sustained by the launch of Sanmo Season 8 and anniversary events for legacy titles.
For full-year 2025, management maintained guidance:
- Mid- to high-teens operating margin improvement, with gross margin targeting the 40–45% range.
Management highlighted several factors that will drive results:
- Ongoing investment in high-quality content and creator monetization tools.
- Expansion of gaming portfolio and international market entry for core titles.
Takeaways
Bilibili’s Q1 demonstrates a business model transition from audience aggregation to monetization and margin leverage.
- Strategic Monetization: Record game and ad growth, coupled with robust creator monetization, are transforming Bilibili’s revenue mix and financial trajectory.
- Content and Community Moat: Sustained engagement, diversified content, and high user retention reinforce the platform’s defensibility as user cohorts age.
- Watch for: Execution on new game launches, continued AI-driven ad innovation, and the impact of Gen Z+ purchasing power on ARPU and advertiser demand.
Conclusion
Bilibili’s Q1 2025 results mark a structural inflection in platform monetization and profitability, underpinned by high-margin gaming, AI-powered advertising, and a unique content ecosystem. Investors should watch for continued margin expansion, successful game launches, and deepening creator monetization as the company scales its commercial model.
Industry Read-Through
Bilibili’s performance offers several industry signals: The pivot to high-quality, long-form video is gaining traction over short-form commoditization, especially as user demographics age and purchasing power rises. AI-driven ad infrastructure and creator monetization tools are now essential for scalable growth and margin expansion in the digital content sector. Gaming platforms with strong community integration and long-cycle content strategies are best positioned to weather hit-driven volatility. For broader Chinese digital media and gaming peers, Bilibili’s results reinforce the value of platform leverage, direct-to-creator monetization, and disciplined cost control as the sector matures.