Key Takeaways:
iQIYI reported Q2 revenue of RMB6.29 billion, missing the RMB6.4 billion consensus as shares fell over 8% pre-market.
"In the second quarter, we reinforced our content leadership and advanced our strategic transformation," Yu Gong, founder and chief executive officer of iQIYI, said. "Our financial performance improved sequentially, marked by revenue growth and substantially narrowed operating loss," Ying Tian, chief financial officer, said.
Membership services revenue declined 2% to RMB4.01 billion and online advertising fell 2% to RMB1.25 billion, while content distribution jumped 56% to RMB681.5 million. Net loss attributable to iQIYI widened to RMB287.5 million from RMB133.7 million a year earlier, driven by RMB219.8 million in income tax expense that included RMB193.6 million of discrete tax items at a Chinese mainland subsidiary.
The revenue miss pressured the stock, which narrowed its decline to under 4%. iQIYI repurchased 21.8 million ADSs for US$24.1 million under its US$100 million buyback program, while operating cash flow improved to RMB339.6 million from negative RMB12.7 million.
Other revenues fell 58% to RMB344.9 million after the alteration of a business cooperation arrangement. Cost of revenues declined 1% to RMB5.25 billion, with content costs rising 1% to RMB3.82 billion. Selling, general and administrative expenses dropped 22% to RMB744.2 million on disciplined marketing spending, and research and development costs fell 6% to RMB398.0 million.
Operating loss widened to RMB104.8 million from RMB46.2 million, with non-GAAP operating loss of RMB30.3 million versus non-GAAP operating income of RMB58.7 million a year earlier. Non-GAAP net loss attributable to iQIYI was RMB209.7 million, swinging from non-GAAP net income of RMB14.7 million.
The company held RMB4.12 billion in cash, cash equivalents, restricted cash and short-term investments at June 30, plus a US$636.6 million loan to PAG recorded as a non-current asset. Revenue improved sequentially from RMB6.23 billion in the first quarter, and the operating loss narrowed from RMB228.4 million.
The results mark the second straight quarter of year-over-year revenue decline for iQIYI, which faces competition from Tencent Video and short-video platforms in China's streaming market. Investors will watch the earnings call on Aug. 18 for management's outlook on membership growth and the pace of its AI-driven content strategy.
This article is for informational purposes only and does not constitute investment advice.
