Bilibili 3Q25 Update: Solid Quarter with Further Profit Improvement
Tiger Research maintains a BUY on $Bilibili Inc.(BILI)$ and raises its price target to $30 (from $25) following a quarter that again demonstrated the platform’s strong engagement and improving profitability.
Bilibili posted record user stickiness, with DAUs up 9% YoY to 117M, MAUs up 8% to 376M, and paying users up 17% to 35M. Average daily time spent reached a new high of 112 minutes, underscoring growing user retention and long-term monetization potential.
Revenue grew 5% YoY to RMB 7.69B, with advertising once again the standout. Ad revenue rose 23% YoY to RMB 2.57B, supported by stronger brand budgets, better targeting from the platform’s multimodal LLM, and wider use of AI-generated creatives. Management also highlighted strong Double 11 traction, with ads up 30% and new-client penetration above 55%. VAS rose 7% YoY to RMB 3.02B, helped by record premium memberships (25.4M) and rapidly rising fan-charging contributions.
Gaming revenue declined 17% YoY due to last year’s high base from San Guo: Mou Ding Tian Xia. While existing titles remain healthy, management expects the segment to stay soft until 1H26. Still, the successful indie hit Escape from Duckov (3M+ global copies sold, 96% positive rating) and the upcoming casual title NCard offer upside once new launches ramp.
Margins continued to expand. Gross profit increased 11% YoY with gross margin reaching 36.7%, the 13th straight quarter of improvement. Adjusted net profit surged to RMB 786M (+233% YoY) as operating expenses fell 6% YoY amid ongoing cost discipline.
Management remains upbeat about the outlook. Advertising momentum is expected to carry into 2026, supported by AI-driven efficiency and demand from categories such as gaming, electronics, e-commerce, and autos. Gross margin is guided to reach around 37% in 4Q25, with a mid-term target of 40–45%, while adjusted operating margin is expected to trend toward 10% by year-end and 15% mid-term. Although gaming may remain soft near term, strong ad performance and expanding VAS should support steady top-line and margin progression.
Estimate changes: 4Q revenue and gross profit are trimmed by 1%, with margins unchanged, resulting in RMB 4M lower non-GAAP operating income.
Bottom line:
[Smile]Bilibili delivered another healthy quarter. Record engagement, improving monetization, and accelerating AI-enabled ad growth reinforce the long-term earnings trajectory. With a maturing, high-spending user base and rising operational efficiency, Bilibili remains well positioned for sustained margin expansion.
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