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 attributable to iQIYI, non-GAAP diluted net income 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 attributable to iQIYI, Inc. represents net income 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 per ADS represents diluted net income per ADS calculated by dividing non-GAAP net income 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 Relations

iQIYI, Inc.

ir@qiyi.com

 
                            iQIYI, INC. 
            Condensed Consolidated Statements of Income 
         (In RMB thousands, except for number of shares and 
                           per share data) 
 
                                    Three Months Ended 
                       --------------------------------------------- 
                       September 30,    June 30,      September 30, 
                           2023           2024            2024 
                       -------------  -------------  --------------- 
                            RMB            RMB             RMB 
                        (Unaudited)    (Unaudited)     (Unaudited) 
Revenues: 
   Membership 
    services               5,011,617      4,495,310      4,365,955 
   Online advertising 
    services               1,674,260      1,461,367      1,336,932 
   Content 
    distribution             537,058        698,175        814,028 
   Others                    792,144        783,933        728,766 
Total revenues             8,015,079      7,438,785      7,245,681 
                       -------------  -------------  ------------- 
 
Operating costs and 
expenses: 
   Cost of revenues      (5,839,540)    (5,678,342)    (5,649,836) 
   Selling, general 
    and 
    administrative         (981,409)      (969,673)      (907,885) 
   Research and 
    development            (447,383)      (448,677)      (449,039) 
Total operating costs 
 and expenses            (7,268,332)    (7,096,692)    (7,006,760) 
                       -------------  -------------  ------------- 
Operating income             746,747        342,093        238,921 
                       -------------  -------------  ------------- 
 
Other 
income/(expense): 
   Interest income            45,219         68,688         69,044 
   Interest expenses       (281,528)      (288,162)      (256,440) 
   Foreign exchange 
    (loss)/gain, net        (38,084)       (51,338)        296,030 
   Gain/(loss) from 
    equity method 
    investments                1,355        (2,100)          4,627 
   Others, net                18,802         32,476      (104,867) 
Total other 
 (expense)/income, 
 net                       (254,236)      (240,436)          8,394 
                       -------------  -------------  ------------- 
 
Income before income 
 taxes                       492,511        101,657        247,315 
                       -------------  -------------  ------------- 
   Income tax expense        (9,012)       (25,741)       (11,483) 
                       -------------  -------------  ------------- 
 
Net income                   483,499         75,916        235,832 
                       -------------  -------------  ------------- 
  Less: Net income 
   attributable to 
   noncontrolling 
   interests                   7,579          7,231          6,420 
                       -------------  -------------  ------------- 
Net income 
 attributable to 
 iQIYI, Inc.                 475,920         68,685        229,412 
Net income 
 attributable to 
 ordinary 
 shareholders                475,920         68,685        229,412 
                       =============  =============  ============= 
 
Net income per share 
for Class A and 
Class B ordinary 
shares: 
   Basic                        0.07           0.01           0.03 
   Diluted                      0.07           0.01           0.03 
 
Net income per ADS 
(1 ADS equals 7 
Class A ordinary 
shares): 
   Basic                        0.50           0.07           0.24 
   Diluted                      0.49           0.07           0.24 
 
Weighted average 
number of Class A 
and Class B ordinary 
shares used in net 
income per share 
computation: 
   Basic               6,712,002,812  6,725,978,497  6,737,281,504 
   Diluted             6,850,839,094  6,857,915,450  6,779,359,665 
 
 
 
                              iQIYI, INC. 
                 Condensed Consolidated Balance Sheets 
           (In RMB thousands, except for number of shares and 
                             per share data) 
 
                                           December 31,   September 30, 
                                               2023           2024 
                                           ------------  --------------- 
                                               RMB             RMB 
                                                           (Unaudited) 
ASSETS 
  Current assets: 
   Cash and cash equivalents                  4,434,525      3,241,336 
   Restricted cash                                6,120              - 
   Short-term investments                       941,738        936,267 

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