iQIYI Announces First Quarter 2024 Financial Results
iQIYI (Nasdaq: IQ) reported its Q1 2024 financial results, showing a 5% year-over-year revenue decline to RMB7.9 billion (US$1.1 billion). Despite this, operating income increased by 10% to RMB944.8 million (US$130.8 million), with an improved operating margin of 12%. Net income attributable to iQIYI rose by 6% to RMB655.3 million (US$90.8 million), but non-GAAP net income decreased by 10% to RMB844.3 million (US$116.9 million). Membership services revenue fell by 13%, while online advertising grew by 6%, and content distribution surged by 27%. Cost of revenues and content costs decreased by 5%. Operating cash flow was RMB937.8 million (US$129.9 million).
- Operating income increased 10% to RMB944.8 million (US$130.8 million).
- Operating income margin improved to 12%.
- Net income attributable to iQIYI rose 6% to RMB655.3 million (US$90.8 million).
- Online advertising revenue grew by 6% year over year.
- Content distribution revenue surged by 27% year over year.
- Cost of revenues decreased by 5%, reflecting improved content strategy and operating efficiency.
- Operating cash flow was positive at RMB937.8 million (US$129.9 million).
- Free cash flow remained strong at RMB915.3 million (US$126.8 million).
- Total revenues decreased by 5% year over year to RMB7.9 billion (US$1.1 billion).
- Membership services revenue fell by 13% to RMB4.8 billion (US$664.6 million).
- Non-GAAP net income attributable to iQIYI decreased by 10% to RMB844.3 million (US$116.9 million).
- Total other expense increased by 25% year over year, mainly due to foreign exchange loss and less interest income.
- Operating cash flow decreased from RMB1.0 billion to RMB937.8 million (US$129.9 million).
Insights
iQIYI's operating income showed impressive growth, rising from RMB858.6 million to RMB944.8 million, which is a substantial improvement in their operating income margin from
On the other hand, the company experienced a significant rise in online advertising services revenue and content distribution revenue by
The substantial decrease in cost of revenues by
However, investors should be cautious about the decrease in non-GAAP net income from RMB939.5 million to RMB844.3 million, reflecting a
The integration of generative AI into iQIYI's operations represents a potentially transformative development, as highlighted by the CEO. The ability to leverage AI for content creation and operational efficiency can provide a competitive edge. This move might positively influence their content output and user engagement metrics in the long-term, though the impact is still in its early stages.
The company's ability to maintain positive operating cash flow for eight consecutive quarters is a positive sign of fiscal discipline and operational stability. This consistency makes their business more attractive to investors, indicating potential for sustained growth.
However, the drop in membership services revenue should be watched closely. The success of their AI integration and overall content strategy will be critical in reversing this trend.
BEIJING, May 16, 2024 (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, 2024.
First Quarter 2024 Highlights
- Total revenues were RMB7.9 billion (US
$1.1 billion 1), decreasing5% year over year. - Operating income was RMB944.8 million (US
$130.8 million ) and operating income margin was12% , compared to operating income of RMB858.6 million and operating income margin of10% in the same period in 2023. - Non-GAAP operating income2 was RMB1.1 billion (US
$150.4 million ) and non-GAAP operating income margin was14% , compared to non-GAAP operating income of RMB1.0 billion and non-GAAP operating income margin of12% in the same period in 2023. - Net income attributable to iQIYI was RMB655.3 million (US
$90.8 million ), compared to net income attributable to iQIYI of RMB618.1 million in the same period in 2023. - Non-GAAP net income attributable to iQIYI2 was RMB844.3 million (US
$116.9 million ), compared to non-GAAP net income attributable to iQIYI of RMB939.5 million in the same period in 2023.
“Our operating profits and corresponding margins reached historical highs, thanks to our quality execution and increased operating efficiency,” commented Mr. Yu Gong, Founder, Director, and Chief Executive Officer of iQIYI. “The initial integration of generative AI into our operations is already yielding promising results. We are eager to harness the power of this innovative technology to improve our capacity for delivering top-tier content and to expand our growth possibilities.”
“We have been generating positive operating cash flow for eight consecutive quarters, and our balance sheet continued to improve,” commented Mr. Jun Wang, Chief Financial Officer of iQIYI. “This makes our business more defensible and offers us more tools to improve shareholder value over time.”
| First Quarter 2024 Financial Highlights | |||||||
| Three Months Ended | |||||||
| (Amounts in thousands of Renminbi (“RMB”), except for per ADS data, unaudited) | March 31, | December 31, | March 31, | ||||
| 2023 | 2023 | 2024 | |||||
| RMB | RMB | RMB | |||||
| Total revenues | 8,348,807 | 7,706,468 | 7,927,355 | ||||
| Operating income | 858,631 | 773,709 | 944,753 | ||||
| Operating income (non-GAAP) | 1,034,296 | 927,818 | 1,085,762 | ||||
| Net income attributable to iQIYI, Inc. | 618,109 | 466,233 | 655,317 | ||||
| Net income attributable to iQIYI, Inc. (non-GAAP) | 939,533 | 682,026 | 844,325 | ||||
| Diluted net income per ADS | 0.64 | 0.48 | 0.68 | ||||
| Diluted net income per ADS (non-GAAP)2 | 0.97 | 0.70 | 0.87 | ||||
Footnotes:
[1] Unless otherwise noted, RMB to USD was converted at an exchange rate of RMB7.2203 as of March 29, 2024, 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).
First Quarter 2024 Financial Results
Total revenues reached RMB7.9 billion (US
Membership services revenue was RMB4.8 billion (US
Online advertising services revenue was RMB1.5 billion (US
Content distribution revenue was RMB928.0 million (US
Other revenues were RMB718.4 million (US
Cost of revenues was RMB5.6 billion (US
Selling, general and administrative expenses were RMB922.0 million (US
Research and development expenses were RMB429.3 million (US
Operating income was RMB944.8 million (US
Total other expense was RMB261.3 million (US
Income before income taxes was RMB683.5 million (US
Income tax expense was RMB17.6 million (US
Net income attributable to iQIYI was RMB655.3 million (US
Operating cash flow was RMB937.8 million (US
As of March 31, 2024, the Company had cash, cash equivalents, short-term investments and long-term restricted cash included in prepayments and other assets of RMB7.3 billion (US
Conference Call Information
iQIYI's management will hold an earnings conference call at 7:00 AM on May 16, 2024, U.S. Eastern Time (7:00 PM on May 16, 2024, 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: https://s1.c-conf.com/diamondpass/10038227-kjuy76.html
It will automatically direct you to the registration page of "iQIYI First Quarter 2024 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 23, 2024.
| Dial-in numbers for the replay are as follows: | |
| International Dial-in | +1 855 883 1031 |
| Passcode: | 10038227 |
A live and archived webcast of the conference call will be available at http://ir.iqiyi.com/.
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 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 | ||||||||||
| March 31, | December 31, | March 31, | ||||||||
| 2023 | 2023 | 2024 | ||||||||
| RMB | RMB | RMB | ||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | ||||||||
| Revenues: | ||||||||||
| Membership services | 5,547,305 | 4,808,727 | 4,798,861 | |||||||
| Online advertising services | 1,403,752 | 1,650,513 | 1,482,052 | |||||||
| Content distribution | 731,907 | 506,059 | 928,009 | |||||||
| Others | 665,843 | 741,169 | 718,433 | |||||||
| Total revenues | 8,348,807 | 7,706,468 | 7,927,355 | |||||||
| Operating costs and expenses: | ||||||||||
| Cost of revenues | (5,956,003 | ) | (5,533,082 | ) | (5,631,239 | ) | ||||
| Selling, general and administrative | (1,105,855 | ) | (947,806 | ) | (922,035 | ) | ||||
| Research and development | (428,318 | ) | (451,871 | ) | (429,328 | ) | ||||
| Total operating costs and expenses | (7,490,176 | ) | (6,932,759 | ) | (6,982,602 | ) | ||||
| Operating income | 858,631 | 773,709 | 944,753 | |||||||
| Other income/(expense): | ||||||||||
| Interest income | 104,986 | 55,098 | 58,740 | |||||||
| Interest expenses | (285,964 | ) | (284,301 | ) | (282,135 | ) | ||||
| Foreign exchange gain/(loss), net | 36,982 | 10,660 | (31,551 | ) | ||||||
| (Loss)/gain from equity method investments | (85,109 | ) | (1,284 | ) | 13,514 | |||||
| Others, net | 20,862 | (39,972 | ) | (19,859 | ) | |||||
| Total other expense, net | (208,243 | ) | (259,799 | ) | (261,291 | ) | ||||
| Income before income taxes | 650,388 | 513,910 | 683,462 | |||||||
| Income tax expense | (24,632 | ) | (38,473 | ) | (17,633 | ) | ||||
| Net income | 625,756 | 475,437 | 665,829 | |||||||
| Less: Net income attributable to noncontrolling interests | 7,647 | 9,204 | 10,512 | |||||||
| Net income attributable to iQIYI, Inc. | 618,109 | 466,233 | 655,317 | |||||||
| Net income attributable to ordinary shareholders | 618,109 | 466,233 | 655,317 | |||||||
| Net income per share for Class A and Class B ordinary shares: | ||||||||||
| Basic | 0.09 | 0.07 | 0.10 | |||||||
| Diluted | 0.09 | 0.07 | 0.10 | |||||||
| Net income per ADS (1 ADS equals 7 Class A ordinary shares): | ||||||||||
| Basic | 0.66 | 0.49 | 0.68 | |||||||
| Diluted | 0.64 | 0.48 | 0.68 | |||||||
| Weighted average number of Class A and Class B ordinary shares used in net income per share computation: | ||||||||||
| Basic | 6,569,658,687 | 6,713,897,712 | 6,717,652,924 | |||||||
| Diluted | 6,754,965,091 | 6,834,735,594 | 6,788,073,126 | |||||||
| iQIYI, INC. Condensed Consolidated Balance Sheets (In RMB thousands, except for number of shares and per share data) | ||||||
| December 31, | March 31, | |||||
| 2023 | 2024 | |||||
| RMB | RMB | |||||
| (Unaudited) | ||||||
| ASSETS | ||||||
| Current assets: | ||||||
| Cash and cash equivalents | 4,434,525 | 5,045,322 | ||||
| Restricted cash | 6,120 | - | ||||
| Short-term investments | 941,738 | 985,970 | ||||
| Accounts receivable, net | 2,169,042 | 2,727,305 | ||||
| Prepayments and other assets | 2,794,259 | 2,602,327 | ||||
| Amounts due from related parties | 1,707,024 | 1,716,816 | ||||
| Licensed copyrights, net | 582,521 | 724,610 | ||||
| Total current assets | 12,635,229 | 13,802,350 | ||||
| Non-current assets: | ||||||
| Fixed assets, net | 863,813 | 845,380 | ||||
| Long-term investments | 2,260,785 | 2,217,918 | ||||
| Licensed copyrights, net | 6,966,508 | 6,920,485 | ||||
| Intangible assets, net | 309,534 | 333,395 | ||||
| Produced content, net | 13,376,985 | 13,613,389 | ||||
| Prepayments and other assets | 3,518,210 | 3,845,572 | ||||
| Operating lease assets | 683,897 | 661,171 | ||||
| Goodwill | 3,820,823 | 3,820,823 | ||||
| Amounts due from related parties | 158,590 | 239,328 | ||||
| Total non-current assets | 31,959,145 | 32,497,461 | ||||
| Total assets | 44,594,374 | 46,299,811 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||
| Current liabilities: | ||||||
| Accounts and notes payable | 5,671,074 | 5,897,266 | ||||
| Amounts due to related parties | 2,953,658 | 2,839,277 | ||||
| Customer advances and deferred revenue | 4,373,208 | 4,650,902 | ||||
| Convertible senior notes, current portion | 2,802,442 | 2,854,578 | ||||
| Short-term loans | 3,571,637 | 3,520,199 | ||||
| Long-term loans, current portion | 2,000 | 23,000 | ||||
| Operating lease liabilities, current portion | 100,883 | 97,214 | ||||
| Accrued expenses and other liabilities | 2,866,632 | 3,111,662 | ||||
| Total current liabilities | 22,341,534 | 22,994,098 | ||||
| Non-current liabilities: | ||||||
| Long-term loans | 97,990 | 326,830 | ||||
| Convertible senior notes | 8,143,994 | 8,357,217 | ||||
| Deferred tax liabilities | 824 | 560 | ||||
| Amounts due to related parties | 80,566 | 75,569 | ||||
| Operating lease liabilities | 523,747 | 499,599 | ||||
| Other non-current liabilities | 1,220,804 | 1,276,089 | ||||
| Total non-current liabilities | 10,067,925 | 10,535,864 | ||||
| Total liabilities | 32,409,459 | 33,529,962 | ||||
| Shareholders’ equity: | ||||||
| Class A ordinary shares | 237 | 237 | ||||
| Class B ordinary shares | 193 | 193 | ||||
| Additional paid-in capital | 54,971,469 | 55,122,923 | ||||
| Accumulated deficit | (44,573,428 | ) | (43,918,111 | ) | ||
| Accumulated other comprehensive income | 1,688,047 | 1,508,392 | ||||
| Non-controlling interests | 98,397 | 56,215 | ||||
| Total shareholders’ equity | 12,184,915 | 12,769,849 | ||||
| Total liabilities and shareholders' equity | 44,594,374 | 46,299,811 | ||||
| iQIYI, INC. Condensed 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, | |||||||
| 2023 | 2023 | 2024 | |||||||
| RMB | RMB | RMB | |||||||
| (Unaudited) | (Unaudited) | (Unaudited) | |||||||
| Net cash provided by operating activities | 1,001,765 | 633,586 | 937,773 | ||||||
| Net cash provided by/(used for) investing activities(1,2) | 166,845 | (1,430,634 | ) | (222,755 | ) | ||||
| Net cash (used for)/provided by financing activities | (3,356,630 | ) | (22,484 | ) | 261,136 | ||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | (8,862 | ) | (31,445 | ) | 14,606 | ||||
| Net (decrease)/increase in cash, cash equivalents and restricted cash | (2,196,882 | ) | (850,977 | ) | 990,760 | ||||
| Cash, cash equivalents and restricted cash at the beginning of the period | 7,861,556 | 6,131,585 | 5,280,608 | ||||||
| Cash, cash equivalents and restricted cash at the end of the period | 5,664,674 | 5,280,608 | 6,271,368 | ||||||
Reconciliation of cash and cash equivalents and restricted cash: | |||||||||
| Cash and cash equivalents | 4,529,267 | 4,434,525 | 5,045,322 | ||||||
| Restricted cash | 6,120 | 6,120 | - | ||||||
| Long-term restricted cash | 1,129,287 | 839,963 | 1,226,046 | ||||||
| Total cash and cash equivalents and restricted cash shown in the statements of cash flows | 5,664,674 | 5,280,608 | 6,271,368 | ||||||
| Net cash provided by operating activities | 1,001,765 | 633,586 | 937,773 | ||||||
| Less: Capital expenditures(2) | (241 | ) | (19,231 | ) | (22,429 | ) | |||
| Free cash flow | 1,001,524 | 614,355 | 915,344 | ||||||
(1) Net cash provided by or 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, INC. Reconciliations 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, | |||||||
| 2023 | 2023 | 2024 | |||||||
| RMB | RMB | RMB | |||||||
| Operating income | 858,631 | 773,709 | 944,753 | ||||||
| Add: Share-based compensation expenses | 169,046 | 152,576 | 139,476 | ||||||
| Add: Amortization of intangible assets(1) | 6,619 | 1,533 | 1,533 | ||||||
| Operating income (non-GAAP) | 1,034,296 | 927,818 | 1,085,762 | ||||||
| Net income attributable to iQIYI, Inc. | 618,109 | 466,233 | 655,317 | ||||||
| Add: Share-based compensation expenses | 169,046 | 152,576 | 139,476 | ||||||
| Add: Amortization of intangible assets(1) | 6,619 | 1,533 | 1,533 | ||||||
| Add: Impairment of long-term investments | 118,984 | 62,231 | 70,745 | ||||||
| Add: Fair value loss/(gain) of long-term investments | 9,445 | (323 | ) | (22,482 | ) | ||||
| Add: Reconciling items on equity method investments(2) | 18,351 | - | - | ||||||
| Add: Tax effects on non-GAAP adjustments(3) | (1,021 | ) | (224 | ) | (264 | ) | |||
| Net income attributable to iQIYI, Inc. (non-GAAP) | 939,533 | 682,026 | 844,325 | ||||||
| Diluted net income per ADS | 0.64 | 0.48 | 0.68 | ||||||
| Add: Non-GAAP adjustments to earnings per ADS | 0.33 | 0.22 | 0.19 | ||||||
| Diluted net income per ADS (non-GAAP) | 0.97 | 0.70 | 0.87 | ||||||
(1) This represents amortization of intangible assets resulting from business combinations.
(2) This represents iQIYI’s share of equity method investments for other non-GAAP reconciling items, primarily amortization and impairment of intangible assets not on the investee’s books, accretion of their redeemable noncontrolling 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.
(3) This represents tax impact of all relevant non-GAAP adjustments.
FAQ
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