Key Highlights

  • Bilibili's extraordinary general meeting on 28 October 2026 will vote on the repurchase of 13,591,090 Class Z ordinary shares from Tencent for US$200m.
  • The company priced US$700m of convertible senior notes due 2031, of which Tencent subscribed US$200m.
  • Second-quarter 2026 net revenues were RMB7.94bn, up 8%, with GAAP net profit of RMB339m, up 55%.

The vote and the transaction

Bilibili Inc. (NASDAQ:BILI) has called an extraordinary general meeting for 28 October 2026 at 4.30pm Beijing time in Shanghai. Its American depositary shares (ADS) are listed on Nasdaq, and its Class Z ordinary shares are also listed in Hong Kong (9626). Shareholders will vote on a subscription and repurchase agreement with subsidiaries of Tencent Holdings. It covers the repurchase of 13,591,090 Class Z ordinary shares, including those represented by ADSs, for US$200m. ADS holders of record on 30 September 2026 could instruct the depositary.

The repurchase and Tencent's US$200m subscription for convertible senior notes due 2031 are inter-conditional, so completion depends on approval. The pricing announcement said the repurchase requires approval by at least three-fourths of disinterested votes cast.

How the financing is structured

On 4 September 2026 Bilibili priced US$700m of convertible senior notes maturing 15 September 2031, of which Tencent subscribes US$200m and other investors US$500m. The notes bear no regular interest. The initial conversion price is about HK$155.79.

Alongside the notes, Tencent sold 26,374,900 shares in a secondary Placement at HK$115.38, from which Bilibili receives no proceeds, and Bilibili agreed to repurchase shares at that price. The board authorised a separate repurchase programme of up to US$300m. Use of proceeds includes the repurchases, AI-driven growth and general corporate purposes. The US$500m marketed offering completed on 9 September.

The latest reported quarter

For the second quarter of 2026, reported at the end of August, net revenues were RMB7.94bn, up 8%. Gross Margin was 37.2% against 36.5%, GAAP operating profit was RMB373m and GAAP net profit was RMB339m, up 55%.

Advertising Revenue rose 28% to RMB3.13bn, value-added services rose 5% to RMB2.97bn and games fell 14% to RMB1.39bn. Daily active users were about 116.5 million, up 7%, with monthly active users of 371 million and average daily time spent of 113 minutes, up from 105. Cash, time deposits and short-term investments were RMB24.3bn.

On an adjusted basis, operating profit was RMB696m, up 21%, an 8.8% margin, and net profit was RMB704m, up 25%, an 8.9% margin. GAAP operating profit rose faster, up 48%, from a lower base. The pattern suggests that profit is growing faster than revenue, with Advertising the main contributor to the revenue mix, although not every cost driver was itemised on the earnings call.

Management's outlook

No explicit third-quarter guidance was given on the call. Management expects games revenue to return to year-on-year growth in the fourth quarter, AI-related Investment to add about RMB500m to full-year 2026 Research and Development expenses, and mid- to long-term targets of a 40% to 45% gross margin and a 15% to 20% operating margin.

These are management aspirations rather than reported results. The gap between the current 37.2% gross margin and the 40% to 45% target indicates how much improvement the company is seeking.

What to watch

Points to follow include the outcome of the meeting, any change to the share count and Tencent's holding if the repurchase completes, the dilution potential of the convertible notes, and the company's next results.