Iqiyi Inc ((IQ)) has held its Q4 earnings call. Read on for the main highlights of the call.
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The recent earnings call for iQIYI Inc. revealed a sentiment of cautious optimism, marked by a notable rebound in business performance. While the company celebrated significant growth in content expansion and advertising, it also faced challenges with declining annual revenues and pressures in membership and advertising revenue sectors, casting a somewhat mixed outlook.
Significant Rebound in Business Performance
Since late November, iQIYI has witnessed a substantial increase in subscribing members and user engagement. This resurgence is attributed to the return of top-tier content, which has bolstered the company’s market share and user activity, indicating a positive shift in its business dynamics.
Expansion of Content Portfolio
The company has expanded its mini-drama portfolio to over 10,000 titles, capturing a dominant share of the market with 95% of leading mini-drama content providers. This expansion underscores iQIYI’s commitment to enhancing its content offerings and capturing a wider audience.
Improvement in Membership Revenue
In the first quarter, iQIYI reported RMB 4.1 billion in membership revenue. The company has adopted strategies focused on mass audiences and improving membership benefits, which are central to its revenue growth plans.
Advertising Revenue Growth
Advertising revenue saw a 7% sequential increase, driven by double-digit growth in brand advertisements, particularly from premium dramas. This growth highlights the effectiveness of iQIYI’s advertising strategies.
Strong Overseas Market Performance
The company reported over 30% year-over-year growth in membership revenue in foreign markets such as Hong Kong, the U.K., Thailand, and Australia. iQIYI plans to further its international presence by expanding into the Middle East and Latin America.
Annual Decline in Total Revenues
Despite positive growth in certain areas, iQIYI faced a 14% annual decline in total revenues for Q4, amounting to RMB 6.6 billion. This decline reflects ongoing challenges in the company’s revenue streams.
Decrease in Membership Services Revenue
The company experienced a 15% annual decrease in membership services revenue, attributed to a lighter content slate. This decline poses a challenge that iQIYI aims to address through content enhancements.
Online Advertising Revenue Decline
Online advertising revenue decreased by 13% year-over-year, primarily due to reductions in the brand advertisement business, highlighting an area in need of strategic focus.
Content Distribution Revenue Drop
Content distribution revenue fell by 20% annually, largely due to reduced revenue from theatrical movies and decreased barter transactions, indicating a need for strategic adjustments in content distribution.
Forward-Looking Guidance
Looking ahead, iQIYI is optimistic about a significant rebound in business performance, with plans to enhance content quality and expand advertising revenue. The company aims to improve user retention with new membership tiers and benefits, such as the S Diamond membership plan, and is confident about its growth prospects in Southeast Asia, North America, and new regions like the Middle East and Latin America.
In conclusion, iQIYI’s earnings call provided a mixed yet promising outlook. While the company faces challenges with declining annual revenues, its strategic initiatives in content expansion, advertising growth, and international market penetration offer a hopeful trajectory for the future.
