• Total Revenue: RMB6.6 billion, down 14% annually.
• Membership Services Revenue: RMB4.1 billion, down 15% annually.
• Online Advertising Revenue: RMB1.4 billion, down 13% year over year.
• Content Distribution Revenue: RMB406.6 million, down 20% annually.
• Other Revenues: RMB670.2 million, down 10% annually.
• Content Cost: RMB3.4 billion, down 9% annually.
• Total Operating Expenses: RMB1.3 billion, down 5% annually.
• Non-GAAP Operating Income: RMB405.9 million with a margin of 6%.
• Net Cash Provided by Operating Activities: RMB519 million, positive for 11 consecutive quarters.
• Cash and Cash Equivalents: RMB4.5 billion as of the end of Q4.

• Warning! GuruFocus has detected 4 Warning Signs with IQ.

Release Date: February 18, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• iQIYI Inc (NASDAQ:IQ) observed a significant rebound in business performance, with increased net additions of subscribing members and user time spent.
• The company solidified its leadership in the drama viewership market, particularly in the suspense genre, with popular titles like 'We Are Criminal Police' and 'Drifting Away'.
• iQIYI Inc (NASDAQ:IQ) expanded its mini-drama portfolio to over 10,000 titles, capturing 95% of the leading mini-drama content providers in the market.
• The company upgraded its ad placement system, effectively monetizing the growing traffic of mini-dramas, leading to swift growth in its user base.
• iQIYI Inc (NASDAQ:IQ) maintained a strong performance in international markets, with significant membership revenue growth in regions like Hong Kong, UK, Thailand, and Australia.

Negative Points

• Total revenues for Q4 were down 14% annually, with membership services revenue decreasing by 15% due to a lighter content slate.
• Online advertising revenue decreased by 13% year over year, primarily due to a decline in brand advertisement business.
• Content distribution revenue fell by 20% annually, impacted by lower revenue from theatrical movie distribution and other transactions.
• Other revenues decreased by 10% annually, reflecting challenges in diversifying revenue streams.
• Despite operational improvements, the company faces ongoing challenges in sustaining revenue growth amidst a competitive market landscape.

Q & A Highlights

Q: We have noticed that iQIYI had launched many drama series since the beginning of this year. Looking ahead to 2025, what's your content pipeline about the quality of these titles? How many of them have the potential to become blockbusters? A: Xiaohui Wang, Chief Content Officer, explained that iQIYI had a strong start in 2025 with the drama "Drifting Away" reaching a popularity index of over 10,000. The focus for 2025 is to enhance the quality and share of premium long-form video content, with a significant increase in top-tier dramas planned for release. The company will maintain its leading position in suspense and crime genres and strengthen female-oriented content offerings.

Q: I want to know further updates on your mini-drama area. And do we have any strategic plan on mini-drama in 2025? A: Yu Gong, CEO, clarified that mini-dramas are short, vertical format videos. iQIYI invested in mini-dramas due to user preference for fast-paced content and the market's potential, which is expected to exceed the Chinese box office in 2025. The company has expanded its mini-drama library to over 10,000 titles and plans to enhance advertising and user growth strategies.

Q: My question is about the membership business. How is the impact from recent content performance and measures like a semi card or a Star Diamond member on the membership business? A: Youqiao Duan, Senior Vice President, stated that premium content has driven a significant increase in subscribing members. The membership offerings have been reclassified into individual and family categories, with enhanced benefits to improve retention. The focus for 2025 is on stabilizing premium content programming and expanding membership services.

Q: Could you please provide an update on the core strategy for our overseas business in 2025? A: Xianghua Yang, Senior Vice President, outlined that the strategy for 2025 is to pursue rapid revenue growth while maintaining profitability. iQIYI will focus on markets like Southeast Asia and North America for profit and revenue growth, while new markets like Indonesia and South Korea will focus on revenue growth. The company plans to expand into the Middle East and Latin America.

Q: What are the financial highlights for Q4 2024? A: Jun Wang, CFO, reported that total revenues were RMB6.6 billion, down 14% annually. Membership services revenue was RMB4.1 billion, down 15% annually. Online advertising revenue decreased by 13% year over year to RMB1.4 billion. Non-GAAP operating income was RMB405.9 million, with a margin of 6%. The company had cash and equivalents of around RMB4.5 billion at the end of Q4.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.