To The Moon

Tiger Research Team maintains a BUY rating and $30.00 Price Target on $Bilibili Inc.(BILI)$ after 1Q26 delivered in-line headline revenue with significantly better quality underneath. The single most important strategic takeaway: advertising growth accelerated to 30% y/y while AI-driven creator tools and recommendation efficiency began showing measurable traction, reinforcing the platform's monetization flywheel. With gross margin expanding for the 15th consecutive quarter and a deepening 2H game pipeline adding optionality, the risk-reward remains asymmetrically positive despite near-term mobile game headwinds.

📊 Section 1 — Lead / Setup

Tiger Research Team maintains a BUY rating and an unchanged $30.00 Price Target on $$Bilibili(BILI)$$ following a solid 1Q26 earnings report. Total revenue reached RMB7.47bn, up 7% y/y, broadly in line with both Tiger Research Team and consensus expectations. The standout performance came from advertising, which grew 30% y/y to RMB2.59bn, beating Tiger Research Team estimates by 4% and consensus by 3%, offsetting softer games, VAS and IP derivatives.

Here is the full breakdown you need to know 👇

The Resilience:

Profitability continued its streak of outperformance. Non-GAAP operating profit hit RMB524mn, 5% above both Tiger Research Team and consensus estimates. Gross margin expanded to 37.1%, marking the 15th consecutive quarter of margin expansion. User engagement metrics were equally robust: DAUs reached 115.2mn (+8% y/y), MAUs surpassed 376mn, and average daily time spent climbed to 119 minutes (+11 minutes y/y), driving total user time spent up 19% y/y.

The Context:

AI is transitioning from narrative to measurable operating lever. Management is concentrating AI investment on video understanding, recommendation/distribution and creator tools. Daily active creators grew 6% y/y, daily submissions rose 19% y/y, and average creator income increased 24% y/y. On the demand side, AI-related advertiser budgets surged over 170% y/y, while digital products/home appliances and auto ad revenue both grew over 30% y/y, and home decoration ad spending jumped over 130% y/y.

The Competitive Shift:

The main near-term weakness remains mobile games, where revenue declined 12% y/y to RMB1.52bn due to the high base from San Mou last year. However, San Mou's second anniversary version launching June 6 should support a revenue pickup, though some revenue may defer into 3Q. Looking ahead, the 2H game pipeline is building optionality with NCard (a DAU/user-pool product feeding the broader Three Kingdoms ecosystem), San Wang (targeting mature Three Kingdoms SLG users and differentiated from San Mou), Lumi Master expected around 4Q, and Escape from Duckov having already surpassed 4mn copies sold with console and mobile versions under development.

💸 Section 2 — Financials

1Q26 demonstrated a clear quality-over-quantity mix shift. While total revenue was in line, the composition tilted meaningfully toward higher-margin advertising, which now represents 35% of total revenue, up from 29% in 1Q25. This mix improvement underpinned continued gross margin expansion and operating leverage at $$Bilibili(BILI)$$.

🔮 Section 3 — Outlook

The Macro View:

Tiger Research Team expects advertising to remain the primary growth engine through 2Q26, likely sustaining high-20s y/y growth. The AI-driven demand tailwind appears durable, with advertiser categories like digital products, autos, and home decoration all showing sustained momentum. User time spent growth of 19% y/y provides a widening inventory base for ad monetization. Gross margin should be stable to slightly higher q/q, and non-GAAP operating margin should continue improving.

The Revisions:

Following the 1Q26 results, Tiger Research Team made selective estimate adjustments. The 2Q26 revenue estimate is largely unchanged, with gross income revised up by 1% and non-GAAP operating income largely unchanged.

• For FY26, advertising revenue was revised up 4% to RMB12.67bn, while mobile game revenue was trimmed by 2% to RMB6.33bn and VAS revenue lowered by 1%.

• Total FY26 revenue is now RMB33.39bn (roughly flat vs prior).

• Gross income for FY26 was raised by 1% to RMB12.42bn with margin at 37% (+28bps).

• FY26 non-GAAP operating income was raised by 4% to RMB3.01bn (9% margin, +28bps), and non-GAAP EPS was lifted from ¥6.65 to ¥6.88.

🔢 Section 4 — Valuation

Valuation Methodology (EV/EBITDA): Tiger Research Team's $30.00 price target (unchanged) is based on 22.3x FY27E EBITDA, a premium to global leading online communities reflecting faster profit trajectory and improving operating leverage. The current share price of $19.56 implies meaningful upside to the target.

• Target Price: $30.00 (unchanged)

• Valuation Multiple: 22.3x FY27E EBITDA

• Current Price: $19.56

• Enterprise Value: $6,149mn

• Market Cap: $8,985mn

• 52-week Range: $17.66 – $36.40

📝 Section 5 — Key Risks

Tiger Research Team highlights the following risk factors for $$Bilibili(BILI)$$:

• Competition: BILI is competing with larger companies (e.g., ByteDance, Tencent and Kuaishou).

• Foreign Company Risk: The US has passed the Holding Foreign Companies Accountable Act, which requires more disclosures by Chinese companies listed in the US and might impact their listing status.

• Data Security Risk: China is tightening the data security rules and might restrict companies with sensitive data from listing overseas.

• VIE Risk: China might also tighten the use of a VIE (Variable Interest Entity), a corporate structure most Chinese Internet companies use to attract foreign capital and list overseas.

• Content Regulation Risk: China has relatively stringent content regulations. BILI might be required to remove certain content and suspend services if it fails to detect inappropriate content.

• Game Regulation Risk: Games in China need to receive approvals from regulators before they can be launched. If the regulators suspend the approval process, BILI's game business could be materially impacted.

📝 Summary

• Long-term constructive view: Tiger Research Team sees AI as a durable operating lever expanding content supply, improving recommendation efficiency, and driving ad revenue growth. The PUGV ecosystem is strengthening with creator income up 24% y/y and daily submissions up 19% y/y.

• Near-term concern: Mobile games remain a drag in 2Q due to the high base from San Mou, with revenue expected to decline low-teens y/y before the second anniversary update and 2H pipeline releases.

• Monitoring points: Progress on AI CapEx offsetting measures, 2Q ad revenue sustainability in the high-20s range, San Mou anniversary monetization impact, and timeline clarity on San Wang and Lumi Master launches.

🐯 Questions for Tigers

• Ad Momentum vs. Game Drag: Advertising grew 30% y/y and is now 35% of revenue, while games declined 12%. Will the 2H game pipeline (San Wang, Lumi Master, Escape from Duckov) be enough to rebalance revenue growth, or will BILI become an ad-dependent platform?

• AI Investment vs. Margin Discipline: Management is adding ~RMB1bn in AI CapEx with ~RMB500mn P&L impact, yet still targets full-year profit growth. Do you believe BILI can absorb this AI spend without derailing its 15-quarter gross margin expansion streak?

• Valuation Gap: Tiger Research Team's $30 PT implies ~53% upside from the current $19.56, based on 22.3x FY27E EBITDA. With the stock near the lower end of its 52-week range ($17.66–$36.40), is the market underpricing the AI flywheel or appropriately discounting regulatory and game risks?

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