First Read: Bilibili "Strong 1Q26 result demonstrated ecosystem resilience;..."

Research evidence excerpt

First Read: Bilibili "Strong 1Q26 result demonstrated ecosystem resilience;..."

Analyst

kenneth-kc.fong@ubs.com

3. Game catalysts backloaded in H2: We expect Q2 game revenue to decline 12% +852-3712 3890

YoY on a high base. Q3 could capture the carry-through from San Mou's anniversary-

Jenny Yuan

driven grossing recovery via deferred revenue, but this could be partly offset by a

potential extension of the deferral period from 3 mos. to 4 mos. That said, we model a S1460525030004

moderate sequential recovery in Q3 game revenue. Mgmt. is constructive on its game jenny-za.yuan@ubs.com

pipeline in Q4, incl. Lumi Master (likely early Oct) and San Wang. The There Kingdoms +86-21-3866 8912

ecosystem strategy, spanning San Mou (younger, lighter SLG gamers), N Card (large

Wei Xiong

DAU, low ARPU) and San Wang (older, IP-and quality-driven gamers), support cross- Analyst

selling synergies and mitigate cannibalisation concerns given differentiated positioning. S1460518100005

wei.xiong@ubs.com

4. AI capex and profitability outlook: Mgmt. reaffirmed healthy earnings growth as a +86-21-3866 8883

priority despite investment in AI. AI capex is expected at Rmb1bn in 2026, implying

Rmb500m P&L impact, of which cRmb100m was already reflected in Q1. Mgmt. see this

drag should be partially mitigated by ongoing cost saving measures. AI investment will

remain disciplined and return driven from here. Early benefits are visible in engagement,

content supply and ad efficiency. Mgmt. maintained its mid/long term targets of 40-

Highlights (Rmbm) 12/23 12/24 12/25 12/26E 12/27E 12/28E 12/29E 12/30E

Revenues 22,528 26,832 30,348 33,013 35,612 37,721 39,652 41,367

EBIT (UBS) (3,932) (61) 2,442 2,924 3,980 5,099 6,124 6,831

Net earnings (UBS) (3,425) (22) 2,590 3,005 3,942 4,848 5,464 6,112