Chinese video streaming provider iQiyi’s profits fall in Q2

Chinese video streaming company iQiyi reported a 5 percent drop in second-quarter revenue and an 80 percent drop in net profit.

The company said on Thursday that revenue in the April-June period was RMB7.45 billion ($1.04 billion at current exchange rates), down year-on-year and down 6% from the first quarter.

Net profit was RMB68.7 million ($9.6 million), compared with RMB365 million ($51.1 million) in the same quarter last year and RMB655 million ($91.7 million) in the January-March first quarter.

Last year was the first in the company’s history in which it achieved an annual net profit, which was achieved despite a decline in the number of subscribers (101 million at the end of December 2023), which was, however, more than compensated for by an increase in average revenue per user.

Since the beginning of this year, iQiyi has stopped disclosing its membership numbers or ARPU. In a regulatory filing, it said only that membership revenue was RMB4.5 billion ($630 million), down 9% year over year “primarily due to fluctuations in content listing performance.” It was the second consecutive quarter that subscription revenue declined.

Advertising revenue on the platform’s free versions fell 2% to RMB1.5 billion ($210 million), “primarily due to a decline in the brand advertising business, partially offset by growth in the performance-based advertising business.”

“Content distribution revenue was RMB 698 million, up 2% year-on-year. Other revenue was RMB 784 million, up 16% year-on-year, mainly due to growth in revenue from talent agency services and third-party collaboration,” the company said.

The filing did not directly address the company’s shrinking subscription business, though it hinted at the effects of competition from other streaming platforms, and it did not shed light on iQiyi’s attempts to expand internationally beyond mainland China.

“We believe that the intensified competition in the long-form video sector in the second quarter is constructive for the industry, increasing its attractiveness compared to other entertainment formats,” said Gong Yu, founder, director and CEO of iQiyi. “The key to long-term success is the consistent delivery of premium content that balances artistic merit and commercial benefits, to which we remain committed.”

The company’s NASDAQ-listed ADR shares closed near their all-time lows Wednesday at $3.08 apiece. At that price, iQiyi, majority-owned by tech giant Baidu, has a market capitalization of $1.62 billion.