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Yahoo
22-05-2025
- Business
- Yahoo
Q1 2025 iQIYI Inc Earnings Call
Chang You; Director of Investor Relations; iQIYI Inc Yu Gong; Chief Executive Officer, Director; iQIYI Inc Jun Wang; Chief Financial Officer; iQIYI Inc Xiaohui Wang; Chief Content Officer; iQIYI Inc Xueqing Zhang; Analyst; CICC Vicky Wei; Analyst; Citi Maggie Ye; Analyst; CLSA Operator Thank you for standing by, and welcome to the iQIYI first quarter 2025 earnings conference call.I would now like to hand the conference over to Ms. Chang You. Please go ahead. Chang You Thank you, operator. Hello, everyone, and thank you for joining iQIYI's first quarter 2025 earnings conference call. The company's results were released earlier today and available on the company's Investor Relations website at the call today are Mr. Yu Gong, our Founder, Director and CEO; and Mr. Jun Wang, our CFO; Mr. Xiaohui Wang, our CCO, Chief Content Officer; Mr. Youqiao Duan, Senior Vice President of our Membership Business; and Mr. Xianghua Yang, Senior Vice President of Movies and Overseas Business; and Mr. [Fan Liu], Senior Vice President of Brand Advertising Gong will give a brief overview of the company's business operations and highlights, followed by Jun, who will go through the financials. After the prepared remarks, the management team will participate in the Q&A we proceed, please note that, the discussion today will contain forward-looking statements made under the Safe Harbor provisions of the US Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations. Potential risks and uncertainties include, but are not limited to, those outlined in our public filings with the SEC. iQIYI does not undertake any obligation to update any forward-looking statements, except as required under applicable law.I will now pass on to Mr. Gong. Please go ahead. Yu Gong Hello, everyone, and thank you for joining us today. We delivered a solid first quarter, gaining sequential growth in both total revenues and progress. This was built on a strong rebound in our long-term premium content and strategic investments in vertical format macro expected cementing its position as a go-to platform for users, making seamless plans of long-form and short-form entertainment, creating exciting opportunities for future commercialization. And this will strengthen our confidence and commitment to drive even deeper upgrades across our business model, and the content ecosystem in response to evolving market and user the core long-form video content, we are committed to delivering, engaging and soft after tariff as we left in our strong IR of top-tier drama, notably, drifting away from our flagship man-on-site brand surpassed the 10,000 iQIYI popularity index score, where the Hunters drama will do one more slide mistakes, right? Financial both achieved the score of over 9, ahead, we are dedicated to focusing on premium content with a strong commercial value, while also upholding excellence. Additionally, we will further enhance our certain production mechanism to deliver stronger, faster test and more additive storytelling that rebounded strongly with the user-centric approach, we are confident in our ability to and reach our full creative potential and foster our work tools, content ecosystem for micro dramas. We made notable programs on HG Life micro dramas, now second in terms of daily time depend and first in the number of daily unique clearly shows the growing appeal in capital rating orders, reinforcing our confidence in further unlocking their full potential. Moving forward, we are committed to expanding our macro drama portfolio, placing a strong appetite on premium micro dramas by enhancing original production and acquisition capabilities. At the same time, we aim to effectively monetize that are growing traffic on advertising and our content ecosystem, we are leveraging technical innovation to improve user experience. Standout even is a launch of our AI power in feature. We transform our users engaged with long-form videos with a simple swap up or down on their mobile screen, users can effortlessly escape between key highlights, each at without missing an exciting moment, delivering a user-centric my Alzheimer like experience tailored to the state willing habits. Highlight points are generated by AI best videos and personalized behaviors of each all investors are aware, the market is becoming increasingly unpredictable as it continues to evolve. However, in fact, volatile environment, the ability to create sustainable value is emerging as a realm and valuable asset with this in are wrapping up our investments in strategic areas such as enriching our content ecosystem and enhancing the user experience. While this investment may lead to short-term costs that are designed to deliver long-term benefits. Now let's move on to the details of our core business with long-form videos, which serves as the conviction of our content ecosystem. We maintained leadership in the core drama category as the current top part in terms of total viewership market share during the quarter, accounting to enlightened strong performance was highlighted by breakthrough in our Jacobs specific cellular note as we have now template 5 in Signature brands, each future on content genres. In the suspense general, our brand achieved a remarkable milestone with a release of drifting away is first title to surpass that 10,000 popularity in a score. It also generated the third heaviest single episode revenue in our history, just behind mega hit, The Snow Cloud on Hongmiao and My Heroic Husband, Pei Roman general on Laban Delta Mianne Zhutang brand made notable progress in this quarter, expanding our portfolio of content appeals for female audiences with relief of four captivating titles. Notably, our in-house produced fantasy drama, Modern Life, Mystic. Baiyue Fanxin garnered an impressive popularity in-depth score of over 9,600. Our modern romance drama, The Best of Sea, anime was not only a success in the domestic market, but also the best-performing modern drama, sea drama on our overseas platform drama and Chinese our masterpiece theater, (inaudible) specializing in theater adaptation and realistic stories they build it first title North work. This summer adapted from a modern literature, a wide winning novel has further strengthened our reputation for popular our micro custom theater, (inaudible) and the locked-on theater, Xiaozhou Yuchang, are focused on innovative drama series with fewer episodes and comedy respectively. Building on the success of past hits such as To the Wonder, without a Time and The Great Novel Day, I want to be a point of this brand are set to release an exciting line after this to movies. We continue to dominate the category during the quarter with the highest viewership market share according to investment. Premium content has a strong long-tail effect. In example, as the success of Ninja 2 during Chinese New Year. The firm boosted viewership of the original Ninja, making its most-watched movie on our platform this quarter. In addition, our original production, Bleed for past logo, achieved the strong revenue and viewership, especially among male users drawn to action and crime already showed during the first quarter our flagship multi-phased IP become a final season fleet -- made a strong comeback, sustaining strong traffic and positive word-of-mouth. Our brand-new IP, The Blooming Journey -- Fanhua, excelled with a peak popularity index score of over 8,000, attracting audiences in lower-tier cities and among older audiences beyond commercial variety show terms of animation, during the first quarter, we continue to improve our production capabilities. Key titles such as Super Cubed, Changli Huang and the Rufu: Season 2. Rofu generated positive user feedback during the on to our content strategy and the pipeline. In our core drama category, our focus is on creating a well-balanced content mix that aligns commercial success with artist excellence. We are committed to three key genres: realistic, suspense and female-focused cater to the pace of viewing habits, we are enhancing our content creation strategies. This includes reducing the episode cost for long-form dramas and increasing the number of high-quality short dramas, with each episode lasting 5 minutes to 20 minutes. This change will expand the value of diversity of our offering, enrich the user experience, and drive deeper audience drama pipeline features an exceptional lineup of top-tier content. We already released the Demand Hunter's rawness and lobbying daily, while retouching, gathered widespread acclaim. Adding to the excitement, the highly anticipated field -- A Dream within a Dream, Shuyuan Yima, will be released the first general, our renowned Light on Celltrac brand recently debuted Breaking the Shadow, and Life for Life Generation, that can also look forward to upcoming release, including justifiable defense and the Born with Luck, each adapted from the renowned novel Low IQ Crime. Additionally, the new science fiction suspense drama, what a Wonderful World, Zaiyun Jian will be released shortly as well. Our lineup of realistic drama includes highly anticipated titles, such as The Shrine, Slime, Shuanghu and Gaoxing among movies, we are increasing investments in original production, focusing on geological releases with strong box office potential. Notably, our original production, Momo, has already achieved the box office revenue of over RMB140 have six more titles scheduled for theatrical release throughout the rest of the year, including The Shadow's Edge -- Additionally, we are boosting support for online movies with revenue-sharing models. Our diverse line-up includes eight original online movies, such as Ultimate Michelin, (spoken in foreign language) Martial Arts, covering comedy and licensed theatrical movies, we launched several hits, including Legends of the Call Door Pharaoh and Detective Chinatown 1900, both of which have successfully the article ranks during the Chinese New Year and are now performing well on our variety of shows we will maintain our focus on producing top-quality programs while introducing exciting new content. This includes sequels to a beloved classic like HAHAHAHAHA and The Lack of China 2025, alongside fresh IPs such as SING! ASIA, and the Reality Show is now as well as Wexiao, Yihaiwei, building on the success of The Blooming Journey. We also plan to launch a second season speaker in this animation, we are dedicated to increasing revenue contribution from original productions, especially high-quality Chinese animation. We also aim to broaden our collection of enduring sales and optimize our operations to maximize iQIYI value. Major titles to be launched include animation over the Divine, Reals (spoken in foreign language) Ambrose. Moreover, we are excited to announce that, the highly acclaimed Japanese animation, One Piece -- has resumed airing for a dedicated fun children's content, we will concentrate on IP commercialization and developed a comprehensive iQIYI ecosystem that spans the entire lifecycle, offering all age services tailored to parents, child audiences. Anticipated title includes Princess Doremi: Season 4, Belle Squad: Season 4. (inaudible)Moving on to macro dramas, which have demonstrated the potential within our content ecosystem, harnessing this powerful momentum. We are poised to amplify our investments in micro drama content and strengthening user acquisition efforts. We have three key objectives, starting with assessing our user base and boosting business resilience by increasing micro dramas into our content we perceive micro dramas as a catalyst for attracting new users and driving membership revenue growth, especially in under the lower-tier cities and among older we are actively exploring monetization opportunities for our micro drama initiatives, such as advertising and commerce. We have successfully achieved the first objective by revamping our apps and rapidly expanding our micro drama portfolio to over 15,000 titles have available for free, and the other half inclusive to members. We've backed us positioned differently in terms of design and targeted audience. The main iQIYI app focuses primarily on long-form videos and mainly uses a subscription model, with micro dramas serving as a complementary value iQIYI app, a primary focus on free micro dramas and monetize them soon advertising and e-commerce. This meaningful progress have driven impressive growth in both daily viewing time and unique data for micro dramas with substantial increases of over 300% and 110% respectively when comparing the April to the future, iQIYI Live will be represented as iQIYI micro dramas, and we are confident that, this transformation will tap into its full potential. We pioneered the concept of dedicated Chinese New Year place for micro dramas, releasing 28 premium titles, hits like My Sweet Home (spoken in foreign language) and Please Come into My Heart, by consistently delivering premium content, we are reinforcing our position as the go-to platform for micro the micro drama industry continues to evolve, the growing user demand for premium titles aligns perfectly with our core strengths with expertize in premium content, a trusted brand and a loyal user base. We are uniquely positioned to capitalize on this trend. Coupled with our extensive resources, talent, teams and advanced technologies, we deliver unique value to the micro drama that end, we are continuously enhancing our ability to produce original micro drama, while exploring innovative genres to broaden our content offerings. These initiatives include notable projects such as adaption around 100 classic Hong Kong movies and producing an extensive series of legal educational content, all to be developed as micro dramas. Additionally, we are integrating technologies like AI and the workflow production to improve both efficiency and on this initial piece, we are collaborating with partners to foster our thriving industry ecosystem. In March, we hosted the first Micro Drama Delivering Light, a ceremony, bringing together hundreds of main actors, creators and industry professionals. The event sparked meaningful interest from attendees eager for future collaboration. As the first-ever ceremony dedicated to the micro drama industry. It not only enhanced our profile but also reinforce our role as a key industry on to membership services. Revenue regained growth momentum during the quarter, increasing 7% sequentially to RMB4.4 billion, which was healthy growth in subscriber base in Q1, supported by the strong performance of key titles such as DRIFTING AWAY, Moonlight, Nystic, and Not War. Average revenue per member remains healthy, thanks to our improved operating strategy is focused on developing a membership business that caters to a broad audience, expands our subscriber base, delivers enhanced value and ultimately accelerate revenue growth. As the core of membership business is exceptional content, we strive to boost both member acquisition and retention by maintaining a consistent flow of premium long-form content and engaging macro continue strengthening our membership plans, delivering value to our members, we are refining product position in collaboration to connect with our user base. The family-oriented premium ad diamond plan saw excellent growth after we introduced free unlimited express package, our ad-supported basic membership plan designed to offer exceptional value and a lower price, which are the historic adoption of high younger generation and users from low-tier cities with this and new members with many joining as first-time subscribers. We are focused on enhancing macro value soon initiatives that boost loyalty and drive members now enjoy greater discounts while premium as the members receive free prize package to drive conversions with expanded options like Express package, counterfeit Express program -- who purchases gift cards and bundled membership plans with added benefits, these steps make all membership services more attractive and valuable, supporting steady revenue growth and strong membership on to the advertising business. Advertising revenue in the first quarter decreased sequentially to RMB1.3 billion, other than the macro pressure Q1 and typically low season compared to Q4. For brand ads, our top-tier dramas and the brand-new shows remain a strong draw for advertisers. With content-driven ads contributed over half of the revenue. Note that the sequel to our classic IP become a -- suite lead advertising sales, while the new IP a growing journey and the fantasy platform more than likely to generate widespread positive ahead, brand ads are showing encouraging signs of our potential rebound driven by premium content We plan to drive ourselves by leveraging premium dramas and the genre's prolific sales repress. For -- shows, we have our focus on delivering high-impact projects and expanding vehicle opportunities for classic IP. Additionally, we aim to launch a mining type, media warranty show, micro dramas and customized advertising products, providing innovative and tailored advertising a performance ad side, we captured budgets from new high-potential customers in the Internet services and the education sector, further diversifying our advertising service. In addition, incorporating API into advertising content creation has boosted ROI by over 20%, compared to apps developed with our AI. The future focus is on continuously enhancing our technologies and capabilities to drive revenue growth across Internet services, e-commerce, gaming and education. Furthermore, we plan to seize growth opportunities in micro dramas and deepen the integration of AI, maximize monetization commitment to enhancing ad efficiency is further demonstrated by the recent launch of our API driven -- ad placement platform by integrating results from both our long-form and the micro genre ecosystem. This platform empowers both brands and performance us with sophisticated smart marketing on to technology and products. We continue to advance video production through industrialization, enhancing cost efficiency and creativity. For example, by scaling up the reuse of digital assets in major original dramas like (spoken in foreign language). Moreover, our interest is to reach dubbing solutions designed to convert emotions of same tier cities -- have already been applied to the English language for both long form and macro the user front, we are hiring -- AI will be define the unmet experience in addition to a newly junk measurement AI. They also used other AI products to enhance user engagement on AI part chatbot, launched last April, features around one from our AI from our popular IPs and have engaged with users of over 100 million. Recently, we introduced the more assistant within the prime form. The uses to discover content discuss plot and the control we launched our senior-most feature tailored for motor users, complementing on earlier call designed for younger audiences. Moving on to our business performance in regions outside of midlife China, we maintained strong growth momentum in the first quarter. We saw revenues increasing by over 30% year-over-year on the average daily number of subscribing members, reaching a new we are thrilled to see dramas, gaining traction with our wider global audiences according to Google Trend Data worldwide search for the drama recently reached a five-year high even surpassing first for Korean drama. Our original production has planned a key role in this growing international appeal, with four of the top 10 overseas dramas in the past six months, coming from iQIYI or modern drama, the best team that wears on our international platform is publishing a new revenue benchmark for this our original Chinese animation Super also achieved the highest single-day revenue for Chinese animation within the first week of over six release. The influence of our premium content from advertising revenues by 48% year-over-year on original time drama, gained as potential traction from brand advertisers, while our Chinese show become a farmer also to interest from overseas ahead, we are focused on expanding our investment in original production to create high-quality content tailored to international audiences while integrating micro dramas into our global portfolio. At the same time, we aim to deepen collaboration with local partners and further enhance our brand improvement across key but not least, achieved consistently pushed the rate of business innovation as evidenced by our pursuit of new opportunities and exploration of untapped relevance. We are leveraging part digital technologies to think lastly integrate of our IPs, extending their life cycle and unlocking greater commercial recently expanded our footprint to off-line experience park, the first iQIYI land is set to open in Hangzhou another with a second project underway in addition of VR immersive shelters are expanding rapidly, future popular IPs such as lower young, are now available in over 50 stores of near 30 believe this immersive entertainment insurances will deepen user engagement with our content and IPs. On the e-commerce front, the breadth of new content formats such as micro dramas, combined with construction the vertical content, has used significant opportunity in the extra to on these opportunities, we have launched trail operations from iQIYI e-commerce by leveraging our rebound iQIYI portfolio, intensive artist resources and a high-quality member banks. We hold distinct advantage in this space this year. We are concentrating on building for foundation from content-driven e-commerce with a goal of driving accelerated growth and in the year summary, as a vital entertainment industry continues to involve, we remain committed to investing in our content ecosystem and elevating the user experience. This is a strategic effort will enable us to accelerate our content flywheel will strengthen resilience, an afore foundation for sustainable growth and deliver long-term value to our let me part on Jun for our financial performance. Jun Wang Thank you, Mr. Gong, and hello, everyone. Now let's take a look at the Q1 key numbers. In the first quarter, total revenues were RMB7.2 billion, up 9% sequentially. Membership services revenue reached RMB4.4 billion, up 7% sequentially. The increase was primarily driven by the strong performance of the long-form advertising revenue decreased by 7% sequentially to RMB4.3 billion, primarily due to macro headwinds and seasonality. Accounting distribution revenue reached RMB28.7 million, up 55% sequentially, driven by more common titles distributed during the quarter. Other revenues increased by 24% sequentially to RMB830.9 million, primarily driven by the growth of certain business on to costs and expenses. Content cost was RMB3.8 billion, up 10% sequentially, driven by higher number of premium dramas launched during the quarter. Total operating expenses were RMB1.4 billion, up 8% sequentially, primarily driven by higher marketing spending. Turning to profit and cash flow. Our non-GAAP operating income was RMB458.5 million, up 13% on a sequential non-GAAP operating margin was 6%. The net cash provided by operating activities totaled RMB339 million, positive for 12 contractual quarters. As of the end of the first quarter, we had cash, cash equivalents, restricted cash, short-term investments, and long-term restricted cash included in the prepayments and other assets, the total of RMB5.7 addition, the company had a loan of USD522.5 million to PAG, recorded under amounts due from other parties. When reviewing our financial performance, the result of our efforts to optimize the capital structure are very clear. Over the past two years, we have onetime the scope through a serious initiative to lower our debt levels, optimize repayment schedules and make our debt restructure more the outstanding principal balance of our convertible bond has sharply declined, dropping from RMB2.9 billion at the end of first quarter back in 2023 to RMB1.17 billion this year. And of the current outstanding balance, the rate RMB522.5 million, as we mentioned earlier, were resolved through equipment loan arrangements with we continue to optimize that debt structure, we have also achieved a substantial reduction in net interest expense, which has declined from RMB223 million to RMB155 million in the first quarter of this year decreased by over [30%] detailed financial performance and data, please refer to our press release on our IR we will open the floor for Q&A. Operator (Operator Instructions) Xueqing Zhang, CICC. Xueqing Zhang (spoken in foreign language)(interpreted) Thanks for taking my question. My question about micro dramas. Gong mentioned some operational updates on micro dramas in your prepared remarks. Could management elaborate a little more on the latest developments of micro dramas and outline the key focus points for its future development? Thank you. Yu Gong (spoken in foreign language) Chang You Our CEO, Mr. Gong, is answering this question. First of all, the users have gradually developed the habit of watching micro dramas on iQIYI. We now have over 15,000 micro dramas titles with free content and a member-exclusive content about tax. Our two mobile apps have also developed very tenanted positioning. The main iQIYI app focuses on members who are for free model, primarily using paid micro dramas, while the IiQIYI Light App primarily focuses on free micro dramas supported by advertising. Yu Gong (spoken in foreign language) Chang You This development, as I mentioned earlier, have driven data growth in both user time spend and user base for micro dramas, while significantly enhancing the user stickiness. So when we compare the April to December of last year, the number of heavy micro dramas users on iQIYI, which are users will spend 80% of their time watching micro drama has increased about 3 times. Yu Gong (spoken in foreign language) Chang You We just step into the micro drama field for not so long and then just started our original production and seeing some impressive proper for example, a recently released original micro drama called [China capable sporting] ranks first in iQIYI's micro drama busing time for several competitive consecutive weeks and also successfully entered the EDX top 10 list, which is well renowned list in the micro drama amount the acquired top-tier titles, for example, like My Sweet Home and Please Come into My Heart to worldwide each achieved revenue-sharing milestone of over RMB1 million within a week, and this progress reflecting the high user recognition and appreciation of high-property in micro dramas. Yu Gong (spoken in foreign language) Chang You I would like to share with everyone. For example, the content cost for each micro drama on average cost less than RMB1 million. And the top-tier titles usually will be less than RMB2 million per title. Yu Gong (spoken in foreign language) Chang You So as such, within the week, the revenue share dollar RMB reached 1 million is actually a very sizable and on income. Yu Gong (spoken in foreign language) Chang You Going forward, there are two areas we're focusing on. First is to have more and better-quality micro dramas, and second, to invest more on user acquisition user form. Yu Gong (spoken in foreign language) Chang You In addition, we'll try more ways to monetize the growing traffic, for example, advertising and also commercial. Operator Vicky Wei, Citi. Vicky Wei (spoken in foreign language)(interpreted) Thanks management for taking my question. Will management share some color about the change of loan video content strategy and the rationale behind it? Thank you. Chang You Thank you. I will invite our Chief Content Officer, Mr. Xiaohui, to answer this question. Xiaohui Wang (spoken in foreign language) Chang You (interpreted) First of all, long-form video are the cornerstone of iQIYI's content ecosystem and our commitment to this remains unwavering. Xiaohui Wang (spoken in foreign language) Chang You Dramas are at the core of long-form videos. So to better cater to involving user preferences, our future drama strategy will focus on two key areas. First of all, releasing high-quality shorter episode premium dramas and second, producing more high-quality short dramas with each episode lasting 5 minutes to 20 minutes. Xiaohui Wang (spoken in foreign language) Chang You Going forward, the total number of drama titles will increase, accompanied by enhanced content quality and greater diversity. This approach will not only improve the flexibility and stability of content settling but will also reduce reliance on individual titles and effectively mitigate risk. Operator Maggie Ye, CLSA. Maggie Ye (spoken in foreign language)(interpreted) Would just please share more details on the latest of our overseas business such as membership and content distribution as well? From a financial perspective, what is the current situation of the overseas business in terms of revenue and profit contribution? And how should we expect from -- what shall we expect from overseas in the next one years to three years? Yu Gong (spoken in foreign language) Chang You We started our overseas business in the second half of 2019. And after that, we experienced three years of COVID. So, there were some difficulties in terms of getting head count and also trouble them between Mainland China and overseas. So the development were actually quite slower than expectation. But after COVID, in the recent two years, the business has been going through a very rapid development phase. But however, we do have some restrictions in terms of the financial resources, so there is some limitations to the development. Yu Gong (spoken in foreign language) Chang You In addition to what I mentioned in the opening remarks that we experienced very rapid growth in terms of the annual revenue growth and also subscriber account, et cetera. So there are some very important progress we made very importantly that we kind of figure out the right content mix for each region, overseas. And also, what can we do from the content mix to drive user growth and also to drive our revenue performance. Yu Gong (spoken in foreign language) Chang You In addition to that, we also take out how we can really operate in each region, for example, how we can promote our content to acquire a better user growth and also in terms of the user growth, how we can improve that as well. Yu Gong (spoken in foreign language) Chang You In terms of the content mix for our overseas business, the Chinese content actually accounts for about half of the content and the other half are a company. Yu Gong (spoken in foreign language) Chang You Based on the data that we collected, the Chinese video content actually devalued that are increasing in the global, which is very beneficial to our overuse business growth. Yu Gong (spoken in foreign language) Chang You Right now, currently, the revenue contribution from the overseas market is still at a relatively low percentage, but it also depends on the future investment into the overseas business, limited to, for example, the scale of our financial support and also the financing source. So, these are the areas where we look out for the overseas business. Jun Wang (spoken in foreign language) Chang You As the CFO just added to our CEO's comments, so we really took from the past few years are really valuable revenue growth, as well as the content mix as well as the operating takeaways from each market, and these are the key takeaways in the past few years. Of course, these are under a very disciplined investment cycle that we did over the past few years as from the management accounting perspective, the overseas business are profitable in the past couple of years. And in the future going forward, of course, maintaining our profitability it's important. However, it doesn't have to be a meaningful amount. What we want is to invest, take that profit and invest into the business. Hopefully, it will drive greater growth opportunities in the future. Operator There are no further questions at this time. I'll now hand back to management for closing remarks. Chang You Thank you, everyone, for participating on the call today. And if you have any questions, don't hesitate to contact us. Thank you and see you next quarter. Yu Gong Thank you. Operator Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect. Portions of this transcript that are marked (interpreted) were spoken by an interpreter present on the live call. The interpreter was provided by the company sponsoring this event.
Yahoo
21-05-2025
- Business
- Yahoo
iQIYI Announces First Quarter 2025 Financial Results
BEIJING, May 21, 2025 (GLOBE NEWSWIRE) -- iQIYI, Inc. (Nasdaq: IQ) ('iQIYI' or the 'Company'), a leading provider of online entertainment video services in China, today announced its unaudited financial results for the first quarter ended March 31, 2025. First Quarter 2025 Highlights Total revenues were RMB7.19 billion (US$990.3 million1), decreasing 9% year over year. Operating income was RMB341.9 million (US$47.1 million) and operating income margin was 5%, compared to operating income of RMB944.8 million and operating income margin of 12% in the same period in 2024. Non-GAAP operating income2 was RMB458.5 million (US$63.2 million) and non-GAAP operating income margin was 6%, compared to non-GAAP operating income of RMB1.09 billion and non-GAAP operating income margin of 14% in the same period in 2024. Net income attributable to iQIYI was RMB182.1 million (US$25.1 million), compared to net income attributable to iQIYI of RMB655.3 million in the same period in 2024. Non-GAAP net income attributable to iQIYI2 was RMB304.4 million (US$42.0 million), compared to non-GAAP net income attributable to iQIYI of RMB844.3 million in the same period in 2024. 'We delivered a solid first quarter, with total revenues and operating income growing sequentially by 9% and 20%, respectively,' commented Mr. Yu Gong, Founder, Director, and Chief Executive Officer of iQIYI. 'We are pleased to see that our long-form dramas continued to lead in total viewership market share, according to Enlightent, while our micro dramas demonstrated notable growth in viewership and engagement during the quarter.' 'We continue to see steady improvements in our balance sheet. Our net interest expense3 has consistently declined in the last six quarters, reflecting our efforts to optimize our capital structure and enhance financial flexibility, which are essential for supporting sustainable, long-term growth,' commented Mr. Jun Wang, Chief Financial Officer of iQIYI. First Quarter 2025 Financial Highlights Three Months Ended (Amounts in thousands of Renminbi ('RMB'), except for per ADS data, unaudited) March 31, December 31, March 31, 2024 2024 2025 RMB RMB RMB Total revenues 7,927,355 6,613,417 7,186,469 Operating income 944,753 285,436 341,897 Operating income (non-GAAP) 1,085,762 405,907 458,535 Net income/(loss) attributable to iQIYI, Inc. 655,317 (189,355 ) 182,145 Net income/(loss) attributable to iQIYI, Inc. (non-GAAP) 844,325 (58,779 ) 304,420 Diluted net income/(loss) per ADS 0.68 (0.20 ) 0.19 Diluted net income/(loss) per ADS (non-GAAP)2 0.87 (0.06 ) 0.31 Footnotes: [1] Unless otherwise noted, RMB to USD was converted at an exchange rate of RMB7.2567 as of March 31, 2025, as set forth in the H.10 statistical release of the Board of Governors of the Federal Reserve System. Translations are provided solely for the convenience of the reader. [2] Non-GAAP measures are defined in the Non-GAAP Financial Measures section (see also 'Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures' for more details).[3] Net interest expense refers to the net amount of interest expense and interest income, both of which are presented in the Condensed Consolidated Statements of Income/(Loss). First Quarter 2025 Financial Results Total revenues reached RMB7.19 billion (US$990.3 million), decreasing 9% year over year. Membership services revenue was RMB4.40 billion (US$606.2 million), decreasing 8% year over year, primarily due to a lighter content slate compared to the same period last year. Online advertising services revenue was RMB1.33 billion (US$183.0 million), decreasing 10% year over year. The decrease was primarily due to the decrease in brand advertising business and, to a lesser extent, the decrease in performance-based advertising business. Content distribution revenue was RMB628.7 million (US$86.6 million), decreasing 32% year over year, primarily due to the decrease in content distribution revenue related to drama series and, to a lesser extent, the decrease in revenue from distribution of theatrical movies invested by iQIYI. Other revenues were RMB830.9 million (US$114.5 million), increasing 16% year over year, primarily driven by the growth of certain business line. Cost of revenues was RMB5.41 billion (US$745.0 million), decreasing 4% year over year. Content costs as a component of cost of revenues were RMB3.79 billion (US$522.5 million), decreasing 7% year over year. The decrease in content cost was primarily due to our improvement in content strategy, as well as lighter movie offerings in the quarter. Selling, general and administrative expenses were RMB1.03 billion (US$141.4 million), increasing 11% year over year. The increase was primarily driven by higher marketing spending. Research and development expenses were RMB412.5 million (US$56.8 million), decreasing 4% year over year. Operating income was RMB341.9 million (US$47.1 million), compared to operating income of RMB944.8 million in the same period in 2024. Operating income margin was 5%, compared to operating income margin of 12% in the same period in 2024. Non-GAAP operating income was RMB458.5 million (US$63.2 million), compared to non-GAAP operating income of RMB1.09 billion in the same period in 2024. Non-GAAP operating income margin was 6%, compared to non-GAAP operating income margin of 14% in the same period in 2024. Total other expense was RMB114.7 million (US$15.8 million), decreasing 56% year over year, primarily due to gain from foreign exchange and decrease in interest expense. Income before income taxes was RMB227.2 million (US$31.3 million), compared to income before income taxes of RMB683.5 million in the same period in 2024. Income tax expense was RMB41.6 million (US$5.7 million), compared to income tax expense of RMB17.6 million in the same period in 2024. Net income attributable to iQIYI was RMB182.1 million (US$25.1 million), compared to net income attributable to iQIYI of RMB655.3 million in the same period in 2024. Diluted net income attributable to iQIYI per ADS was RMB0.19 (US$0.03) for the first quarter of 2025, compared to diluted net income attributable to iQIYI per ADS of RMB0.68 in the same period of 2024. Non-GAAP net income attributable to iQIYI was RMB304.4 million (US$42.0 million), compared to non-GAAP net income attributable to iQIYI of RMB844.3 million in the same period in 2024. Non-GAAP diluted net income attributable to iQIYI per ADS was RMB0.31 (US$0.04), compared to non-GAAP diluted net income attributable to iQIYI per ADS of RMB0.87 in the same period of 2024. Net cash provided by operating activities was RMB339.0 million (US$46.7 million), compared to net cash provided by operating activities of RM937.8 million in the same period of 2024. Free cash flow was RMB307.7 million (US$42.4 million), compared to free cash flow of RMB915.3 million in the same period of 2024. As of March 31, 2025, the Company had cash, cash equivalents, restricted cash, short-term investments and long-term restricted cash included in prepayments and other assets of RMB5.70 billion (US$786.1 million). In addition, as of the same date, the Company had a loan of US$522.5 million to PAG, recorded under the line item of amounts due from related parties. In February 2025, the Company issued US$350 million of the 2030 Notes and concurrently repurchased approximately US$300 million in principal amount of existing notes. As of March 31, 2025, US$2.4 million principal amount of the 2025 Notes, US$0.1 million principal amount of the 2026 Notes, US$522.5 million principal amount of the PAG Notes, US$293.1 million principal amount of the 2028 Notes, and US$350.0 million principal amount of the 2030 Notes remained outstanding. Conference Call Information iQIYI's management will hold an earnings conference call at 7:00 AM on May 21, 2025, U.S. Eastern Time (7:00 PM on May 21, 2025, Beijing Time). Please register in advance of the conference using the link provided below. Upon registering, you will be provided with participant dial-in numbers, passcode and unique access PIN by a calendar invite. Participant Online Registration: It will automatically direct you to the registration page of "iQIYI First Quarter 2025 Earnings Conference Call", where you may fill in your details for RSVP. In the 10 minutes prior to the call start time, you may use the conference access information (including dial-in number(s), passcode and unique access PIN) provided in the calendar invite that you have received following your pre-registration. A telephone replay of the call will be available after the conclusion of the conference call through May 28, 2025. Dial-in numbers for the replay are as follows: International Dial-in +1 855 883 1031 Passcode: 10046866 A live and archived webcast of the conference call will be available at About iQIYI, Inc. iQIYI, Inc. is a leading provider of online entertainment video services in China. It combines creative talent with technology to foster an environment for continuous innovation and the production of blockbuster content. It produces, aggregates and distributes a wide variety of professionally produced content, as well as a broad spectrum of other video content in a variety of formats. iQIYI distinguishes itself in the online entertainment industry by its leading technology platform powered by advanced AI, big data analytics and other core proprietary technologies. Over time, iQIYI has built a massive user base and developed a diversified monetization model including membership services, online advertising services, content distribution, online games, IP licensing, talent agency, online literature, etc. Safe Harbor Statement This announcement contains forward-looking statements. These statements are made under the 'safe harbor' provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as 'will,' 'expects,' 'anticipates,' 'future,' 'intends,' 'plans,' 'believes,' 'estimates,' 'confident' and similar statements. Among other things, the quotations from management in this announcement, as well as iQIYI's strategic and operational plans, contain forward-looking statements. iQIYI may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including but not limited to statements about iQIYI's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: iQIYI's strategies; iQIYI's future business development, financial condition and results of operations; iQIYI's ability to retain and increase the number of users, members and advertising customers, and expand its service offerings; competition in the online entertainment industry; changes in iQIYI's revenues, costs or expenditures; Chinese governmental policies and regulations relating to the online entertainment industry, general economic and business conditions globally and in China and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in the Company's filings with the Securities and Exchange Commission. All information provided in this press release and in the attachments is as of the date of the press release, and iQIYI undertakes no duty to update such information, except as required under applicable law. Non-GAAP Financial Measures To supplement iQIYI's consolidated financial results presented in accordance with GAAP, iQIYI uses the following non-GAAP financial measures: non-GAAP operating income, non-GAAP operating income margin, non-GAAP net income/(loss) attributable to iQIYI, non-GAAP diluted net income/(loss) attributable to iQIYI per ADS and free cash flow. The presentation of the non-GAAP financial measure is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. iQIYI believes that these non-GAAP financial measures provide meaningful supplemental information regarding its operating performance by excluding certain items that may not be indicative of its business operating results, such as operating performance excluding non-cash charges or non-operating in nature. The Company believes that both management and investors benefit from referring to the non-GAAP financial measures in assessing its performance and when planning and forecasting future periods. These non-GAAP financial measures also facilitate management's internal comparisons to iQIYI's historical operating performance. The Company believes the non-GAAP financial measures are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision making. A limitation of using these non-GAAP financial measures is that the non-GAAP measures exclude certain items that have been and will continue to be for the foreseeable future a significant component in the Company's results of operations. These non-GAAP financial measures presented here may not be comparable to similarly titled measures presented by other companies. Other companies may calculate similarly titled measures differently, limiting their usefulness as comparative measures to the Company's data. Non-GAAP operating income represents operating income excluding share-based compensation expenses, amortization of intangible assets resulting from business combinations. Non-GAAP net income/(loss) attributable to iQIYI, Inc. represents net income/(loss) attributable to iQIYI, Inc. excluding share-based compensation expenses, amortization of intangible assets resulting from business combinations, disposal gain or loss, impairment of long-term investments, fair value change of long-term investments, adjusted for related income tax effects. iQIYI's share of equity method investments for these non-GAAP reconciling items, primarily amortization and impairment of intangible assets not on the investees' books, accretion of their redeemable non-controlling interests, and the gain or loss associated with the issuance of shares by the investees at a price higher or lower than the carrying value per share, adjusted for related income tax effects, are also excluded. Non-GAAP diluted net income/(loss) per ADS represents diluted net income/(loss) per ADS calculated by dividing non-GAAP net income/(loss) attributable to iQIYI, Inc, by the weighted average number of ordinary shares expressed in ADS. Free cash flow represents net cash provided by operating activities less capital expenditures. For more information, please contact: Investor RelationsiQIYI, INC. Condensed Consolidated Statements of Income/(Loss)(In RMB thousands, except for number of shares and per share data) Three Months Ended March 31, December 31, March 31, 2024 2024 2025 RMB RMB RMB (Unaudited) (Unaudited) (Unaudited) Revenues: Membership services 4,798,861 4,102,688 4,399,010 Online advertising services 1,482,052 1,433,892 1,327,827 Content distribution 928,009 406,642 628,743 Others 718,433 670,195 830,889 Total revenues 7,927,355 6,613,417 7,186,469 Operating costs and expenses: Cost of revenues (5,631,239 ) (4,994,165 ) (5,406,341 ) Selling, general and administrative (922,035 ) (882,457 ) (1,025,742 ) Research and development (429,328 ) (451,359 ) (412,489 ) Total operating costs and expenses (6,982,602 ) (6,327,981 ) (6,844,572 ) Operating income 944,753 285,436 341,897 Other income/(expense): Interest income 58,740 75,352 78,756 Interest expense (282,135 ) (235,289 ) (233,429 ) Foreign exchange gain/(loss), net (31,551 ) (310,390 ) 41,889 Share of gains/(losses) from equity method investments 13,514 1,749 (3,617 ) Others, net (19,859 ) 2,387 1,724 Total other expense, net (261,291 ) (466,191 ) (114,677 ) Income/(loss) before income taxes 683,462 (180,755 ) 227,220 Income tax expense (17,633 ) (6,233 ) (41,590 ) Net income/(loss) 665,829 (186,988 ) 185,630 Less: Net income attributable to noncontrolling interests 10,512 2,367 3,485 Net income/(loss) attributable to iQIYI, Inc. 655,317 (189,355 ) 182,145 Net income/(loss) attributable to ordinary shareholders 655,317 (189,355 ) 182,145 Net income/(loss) per share for Class A and Class B ordinary shares: Basic 0.10 (0.03 ) 0.03 Diluted 0.10 (0.03 ) 0.03 Net income/(loss) per ADS (1 ADS equals 7 Class A ordinary shares): Basic 0.68 (0.20 ) 0.19 Diluted 0.68 (0.20 ) 0.19 Weighted average number of Class A and Class B ordinary shares used in net income/(loss) per share computation: Basic 6,717,652,924 6,738,808,989 6,740,810,595 Diluted 6,788,073,126 6,738,808,989 6,780,303,294iQIYI, Consolidated Balance Sheets(In RMB thousands, except for number of shares and per share data) December 31, March 31, 2024 2025 RMB RMB (Unaudited) ASSETS Current assets: Cash and cash equivalents 3,529,679 4,320,028 Restricted cash - 1,899 Short-term investments 941,610 946,246 Accounts receivable, net 2,191,178 2,350,422 Prepayments and other assets 2,192,928 2,177,880 Amounts due from related parties 283,123 300,451 Licensed copyrights, net 388,718 714,988 Total current assets 9,527,236 10,811,914 Non-current assets: Fixed assets, net 877,982 849,073 Long-term investments 2,108,477 2,098,342 Deferred tax assts, net 23,536 22,227 Licensed copyrights, net 6,930,053 6,486,922 Intangible assets, net 289,861 271,076 Produced content, net 14,707,869 14,387,653 Prepayments and other assets 2,913,919 3,716,435 Operating lease assets 609,832 594,946 Goodwill 3,820,823 3,820,823 Amounts due from related parties 3,950,937 4,059,664 Total non-current assets 36,233,289 36,307,161 Total assets 45,760,525 47,119,075 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts and notes payable 6,482,209 6,479,916 Amounts due to related parties 3,239,036 3,287,141 Customer advances and deferred revenue 4,403,686 4,606,845 Convertible senior notes, current portion 242,460 2,132,771 Short-term loans 3,786,901 3,440,487 Long-term loans, current portion 167,987 560,412 Operating lease liabilities, current portion 96,675 96,116 Accrued expenses and other liabilities 3,058,379 3,042,689 Total current liabilities 21,477,333 23,646,377 Non-current liabilities: Long-term loans 1,036,835 1,581,902 Convertible senior notes 8,350,570 6,774,762 Amounts due to related parties 59,226 53,642 Operating lease liabilities 461,974 439,901 Other non-current liabilities 1,000,823 985,071 Total non-current liabilities 10,909,428 9,835,278 Total liabilities 32,386,761 33,481,655 Shareholders' equity: Class A ordinary shares 238 238 Class B ordinary shares 193 193 Additional paid-in capital 55,623,841 55,738,946 Accumulated deficit (43,809,369 ) (43,627,224 ) Accumulated other comprehensive income 1,550,523 1,532,754 Non-controlling interests 8,338 (7,487 ) Total shareholders' equity 13,373,764 13,637,420 Total liabilities and shareholders' equity 45,760,525 47,119,075iQIYI, Consolidated Statements of Cash Flows(In RMB thousands, except for number of shares and per share data) Three Months Ended March 31, December 31, March 31, 2024 2024 2025 RMB RMB RMB (Unaudited) (Unaudited) (Unaudited) Net cash provided by operating activities 937,773 519,015 338,950 Net cash used for investing activities (1,2) (222,755 ) (895,709 ) (30,136 ) Net cash provided by financing activities 261,136 114,419 860,477 Effect of exchange rate changes on cash, cash equivalents and restricted cash 14,606 60,746 (1,232 ) Net increase/(decrease) in cash, cash equivalents and restricted cash 990,760 (201,529 ) 1,168,059 Cash, cash equivalents and restricted cash at the beginning of the period 5,280,608 3,791,860 3,590,331 Cash, cash equivalents and restricted cash at the end of the period 6,271,368 3,590,331 4,758,390 Reconciliation of cash and cash equivalents and restricted cash: Cash and cash equivalents 5,045,322 3,529,679 4,320,028 Restricted cash - - 1,899 Long-term restricted cash 1,226,046 60,652 436,463 Total cash and cash equivalents and restricted cash shown in the statements of cash flows 6,271,368 3,590,331 4,758,390 Net cash provided by operating activities 937,773 519,015 338,950 Less: Capital expenditures (2) (22,429 ) (20,891 ) (31,252 ) Free cash flow 915,344 498,124 307,698 (1) Net cash used for investing activities primarily consists of net cash flows from loans provided to related party, investing in debt securities, purchase of long-term investments and capital expenditures.(2) Capital expenditures are incurred primarily in connection with construction in process, computers and servers. iQIYI, of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures(Amounts in thousands of Renminbi ('RMB'), except for per ADS information, unaudited) Three Months Ended March 31, December 31, March 31, 2024 2024 2025 RMB RMB RMB Operating income 944,753 285,436 341,897 Add: Share-based compensation expenses 139,476 118,938 115,105 Add: Amortization of intangible assets(1) 1,533 1,533 1,533 Operating income (non-GAAP) 1,085,762 405,907 458,535 Net income/(loss) attributable to iQIYI, Inc. 655,317 (189,355 ) 182,145 Add: Share-based compensation expenses 139,476 118,938 115,105 Add: Amortization of intangible assets(1) 1,533 1,533 1,533 Add: Impairment of long-term investments 70,745 14,034 2,000 Add: Fair value gain of long-term investments (22,482 ) (3,895 ) (1,740 ) Add: Reconciling items on equity method investments - - 5,377 Add: Tax effects on non-GAAP adjustments(2) (264 ) (34 ) - Net income/(loss) attributable to iQIYI, Inc. (non-GAAP) 844,325 (58,779 ) 304,420 Diluted net income/(loss) per ADS 0.68 (0.20 ) 0.19 Add: Non-GAAP adjustments to earnings per ADS 0.19 0.14 0.12 Diluted net income/(loss) per ADS (non-GAAP) 0.87 (0.06 ) 0.31 (1) This represents amortization of intangible assets resulting from business combinations.(2) This represents tax impact of all relevant non-GAAP in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
