Citibank: The third quarter performance of Bilibili-W (09626) is expected to be in line with expectations, advertising revenue is being dragged down by the macro

The Zhitong Finance App learned that Citibank released a research report saying that the total revenue for the third quarter of Bilibili W (09626) is expected to increase 7.1% year-on-year to 8.23 billion yuan, slightly lower than the market consensus estimate of 8.3 billion yuan, and the performance is in line with expectations. The bank maintained the Bili-W (BILI.US) “buy” rating and lowered the target price of US stocks from $27 to $26.5.

According to the report, Bilibili-W's total revenue for the third quarter was mainly driven by a year-on-year decline of 8%, 20%, 5%, and no increase or decrease in the mobile game, advertising, and value-added services business; non-GAAP (non-GAAP) gross margin is expected to remain flat at 37.6% quarter-on-quarter, and the adjusted operating margin is expected to be 10%, higher than 8.8% in the second quarter. The adjusted net profit is estimated at 817 million yuan, in line with market consensus.

Citi believes that due to continued weakness in consumption and a weak macroeconomic environment, which affects e-commerce and consumption-related vertical sectors, it has lowered its advertising revenue growth forecast for the fourth quarter from 17% to 15%, and the advertising growth forecast for the third quarter was also lowered to 20%. In terms of mobile games, “Lumi Master”, which was launched at the end of September, performed as expected.

Although Bilibili-W's adjusted operating profit for the third quarter of 2026 may be in line with the bank's previous expectations, a further slowdown in the advertising business may cause a slight drag on profit margin performance in the fourth quarter of 2026. As a result, the bank lowered Bilibili-W's 2026-2028 earnings forecast by 3%, 2%, and 1%, respectively. Despite external pressure, Bilibili-W's advertising revenue growth is expected to outperform the industry and major peers, and the bank believes that the launch of “Three Kingdoms: Wang Dao Tianxia” at the end of the year will be a key catalyst to drive stock prices.