iQIYI's Q1 revenue and operating profit improved sequentially, and the revenue amount exceeded expectations.
Additionally, affected by reduced content supply, cuts in advertising business, and simultaneous declines in revenue from TV series and film distribution, iQIYI's main business lines—membership, advertising, and content distribution—faced comprehensive pressure year-on-year, with only &#34;other businesses&#34; growing by 16% year-on-year.
On May 21, iQIYI released its unaudited financial report for the first quarter of 2025.
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Q1 revenue was 7.19 billion yuan, a year-on-year decrease of 9%, but a sequential increase of 9%, estimated at 7.09 billion yuan.
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<li>Q1 membership service revenue was 4.4 billion yuan, a year-on-year decrease of 8%.</li>
</ul>
Q1 operating profit was 342 million yuan, a year-on-year decrease of 64%, but a sequential increase of 20%.
Operating profit margin fell from 12% in the same period last year to 5%, and non-GAAP operating profit margin dropped from 14% to 6%.
Q1 net profit was 182 million yuan, a year-on-year decrease of 72.2%.
Q1 earnings per ADS were 0.19 yuan, estimated at 0.17 yuan.
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iQIYI's U.S. stock rose over 5% in pre-market trading before slightly retreating.
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/23cf58f2-46f4-45b0-afb8-d404fd8ea3d2.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/23cf58f2-46f4-45b0-afb8-d404fd8ea3d2.png"/>
<h2>iQIYI's core business shrinks year-on-year, but short-term operations show improvement</h2>
iQIYI's total revenue in Q1 decreased by 9% year-on-year but increased by 9% sequentially, reflecting that the company's core business still faces certain growth pressures year-on-year, but short-term operational trends have improved.
In the current market environment, iQIYI's profitability is under pressure:
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The company's Q1 operating profit was 342 million yuan, with an operating profit margin of only 5%, significantly down from 12% in the same period last year.
Non-GAAP operating profit also fell from 1.09 billion yuan in the same period last year to 459 million yuan, with the profit margin dropping from 14% to 6%.
The company's Q1 net profit was 182 million yuan, a year-on-year decrease of 72.2%, with diluted earnings per ADS of 0.19 yuan, down from 0.68 yuan in the same period last year.
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From a business structure perspective, iQIYI's core business shrank year-on-year, while the side business &#34;other income&#34; unexpectedly performed well:
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Membership service revenue was 4.4 billion yuan, a year-on-year decrease of 8%, mainly due to reduced content supply.
Online advertising revenue was 1.33 billion yuan, a year-on-year decrease of 10%, mainly due to a reduction in brand advertising business and a contraction in performance advertising.
Content distribution revenue was 629 million yuan, a significant year-on-year decline of 32%, mainly due to decreased revenue from TV series distribution, and revenue from theatrical films invested by iQIYI also fell.
&#34;Other income&#34; grew by 16% year-on-year to 831 million yuan, the only segment among the company's various business lines that achieved growth, indicating some success in business diversification.
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In terms of cost control, the company is saving money by controlling content and R&amp;D, but customer acquisition costs have instead increased, indicating that acquiring customers has become more difficult:
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iQIYI's total cost in the first quarter was RMB 5.41 billion, a year-on-year decrease of 4%.
Content costs were RMB 3.79 billion, a year-on-year decrease of 7%. The company stated that this was mainly due to improvements in content strategy and fewer movie supplies during the quarter.
Sales, general and administrative expenses reached RMB 1.03 billion, a year-on-year increase of 11%, primarily due to increased marketing expenditures.
R&amp;D expenses were RMB 412 million, a year-on-year decrease of 4%.
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In terms of the balance sheet, the company has cash + short-term investments of RMB 5.7 billion:
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As of March 31, 2025, iQIYI held a total of RMB 5.7 billion in cash, cash equivalents, restricted cash, short-term investments, and long-term restricted cash included in prepaid expenses and other assets.
In February 2025, iQIYI issued USD 350 million notes maturing in 2030 while repurchasing approximately USD 300 million of existing notes.
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The company's CFO Wang Jun specifically pointed out in the financial report that iQIYI has seen a decline in net interest expenses for six consecutive quarters, optimizing its debt structure:
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&#34;Our net interest expenses have decreased for six consecutive quarters, reflecting our efforts to optimize our capital structure and enhance financial flexibility, which is crucial for supporting sustainable long-term growth.&#34;
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iQIYI's founder and CEO Gong Yu stated in the financial report that the growth of micro-dramas is significant, and the long-drama market share is leading:
<blockquote>
&#34;We performed steadily in the first quarter, with total revenue and operating profit increasing by 9% and 20% quarter-on-quarter, respectively. We are pleased to see that, according to Enlightent data, our long-form series continue to lead in total viewing market share, while our micro-dramas also showed significant growth in viewership and user engagement this quarter.&#34;
</blockquote>

The keyword for this season of iQIYI is "growth amidst decline." The quarter-on-quarter recovery shows a 9% increase in revenue, exceeding market expectations, and a 20% increase in operating profit. iQIYI CEO Gong Yu stated that long dramas lead in market share, and there is significant growth in micro-short dramas. Additionally, the company's Q1 revenue fell 9% year-on-year, and net profit decreased by 72.2%. Advertising, distribution, and membership services all saw a decline, with only "other businesses" experiencing counter-trend growth

- iQIYI reported a Q1 revenue of 7.19 billion yuan, a 9% year-over-year decline but a 9% quarter-over-quarter increase, exceeding expectations.  
- The company's core business lines faced pressure, with membership and advertising revenues down 8% and 10% respectively, while "other revenues" grew 16%.  
- Despite a net profit drop of 72.2% to 182 million yuan, iQIYI's cash and short-term investments totaled 5.7 billion yuan, indicating ongoing financial stability.

iQIYI pre-market rose over 2%, Q1 revenue exceeded expectations, net profit of 182 million yuan | Earnings Report Insights