iQIYI, Inc. (NASDAQ:IQ) ("iQIYI" or the "Company"), an innovative
market-leading online entertainment service in China, today
announced its unaudited financial results for the first quarter
ended March 31, 2018.
First Quarter 2018
Highlights
- Total revenues were RMB4.9 billion (US$777.6 million),
representing a 57%1 increase from the same period in 2017.
- Operating loss was RMB1.1 billion (US$169.4 million) and
operating loss margin was 22%, compared to operating loss of RMB1.0
billion and operating loss margin of 34% in the same period in
2017.
- Net loss attributable to iQIYI was RMB395.7 million (US$63.1
million), compared to RMB1.1 billion in the same period in 2017.
Fully diluted net loss per ordinary share was RMB1.97 (US$0.31),
compared to RMB5.37 in the same period in 2017.
“We are pleased to report a set of solid results
for the first quarter of 2018,” commented Dr. Yu Gong, Founder
and Chief Executive Officer of iQIYI. “Both of our major business
pillars, advertising services and membership services, generated
significant growth driven by our premium content, especially a
series of successful self-produced variety shows launched during
the quarter. Our recent IPO positions us well for the exciting
future ahead as iQIYI now enjoys higher brand recognition with
increasingly more partners and artists around the world seeking to
collaborate with us. Going forward, we will continue to
strategically allocate our resources and bandwidth to original
content production and technology innovation as we aspire to become
a technology-based entertainment giant.”
“Our strong first quarter performance was marked
by a 57% year-over-year growth in total revenues, and
better-than-expected improvement on our bottom line,” commented
Xiaodong Wang, Chief Financial Officer of iQIYI. “The financial
results reflect enhanced monetization and operating efficiency
across our various business lines during the quarter. With the
capital raised via our IPO, we are more confident than ever to
capture the tremendous opportunities in the fast-growing
entertainment industry and deliver long-term value to our
shareholders. ”
Footnote: [1] Starting from January 1,
2018, iQIYI adopted a new revenue accounting standard (ASC 606),
which reclassifies value added tax from the cost of revenues to net
against revenues. To increase comparability of operating results
and help investors better understand our business performance and
operating trends, 2017 net revenues have been used to calculate all
percentage changes in revenues and operating loss margins. 2017 net
revenues are defined as gross revenues under legacy GAAP after the
deduction of value added-taxes, which is presented on the same
basis as 2018 and going forward.
First Quarter 2018 Financial
Results
Total revenues reached RMB4.9 billion (US$777.6
million), representing a 57% increase from the same period in
2017.
Membership services revenue was RMB2.1 billion
(US$334.0 million), representing a 67% increase from the same
period in 2017. The increase was primarily driven by a series of
premium original content titles released in the first quarter of
2018 as well as various initiatives we rolled out during the
Chinese New Year holiday.
Online advertising services revenue was RMB2.1
billion (US$336.5 million), representing a 52% increase from the
same period in 2017. The increase was primarily due to our improved
efficiency in the monetization of brand advertising business,
driven by our strong and expanding library of self-produced
content, as well as the robust growth of our in-feed advertising
business.
Content distribution revenue was RMB266.7
million (US$42.5 million), representing a 44% increase from the
same period in 2017. The increase was primarily due to several
major drama series titles that we sub-licensed to external partners
in the first quarter of 2018.
Other revenues were RMB405.0 million (US$64.6
million), representing a 51% increase from the same period in 2017.
The increase was primarily driven by strong performance across
various other business lines in the first quarter of 2018.
Cost of revenues was RMB4.8 billion (US$772.9
million), representing a 44% increase from RMB3.4 billion after
deducting the value added tax in the same period in 2017. The
increase was primarily driven by content costs due to higher
amortization of licensed copyrights and produced content, which was
in turn caused by our increased investment in content offerings.
Content costs as a component of cost of revenues were RMB3.9
billion (US$617.0 million), representing a 54% increase from the
same period in 2017.
Selling, general and administrative expenses
were RMB704.2 million (US$112.3 million), representing a 42%
increase from the same period in 2017. The increase was primarily
due to increased channel and marketing expenses associated with the
pre-installation of iQIYI’s app, as well as brand and content
promotional expenses.
Research and development expenses were RMB387.3
million (US$61.7 million), representing a 44% increase from the
same period in 2017, primarily due to increased headcount in
research and development.
Operating loss was RMB1.1 billion (US$169.4
million), compared to operating loss of RMB1.0 billion in the same
period in 2017. Operating loss margin was 22%, compared to
operating loss margin of 34% in the same period in 2017.
Total other income was RMB666.2 million
(US$106.2 million), compared to total other expenses of RMB79.1
million during the same period of 2017. In the first quarter of
2018, we recognized RMB186.6 million (US$29.7 million) of fair
value gain arising from one of our private company investments in
accordance with the new financial instruments accounting standard
adopted on January 1, 2018 and RMB474.2 million (US$75.6 million)
of foreign exchange gain arising from the appreciation of the
Renminbi against the U.S. dollar.
Loss before income taxes was RMB396.2 million
(US$63.2 million), compared to RMB1.1 billion in the same period in
2017.
Income tax expenses were RMB0.5
million (US$0.1 million), compared to income tax expense of
RMB0.8 million in the same period in 2017.
Net loss attributable to iQIYI was RMB395.7
million (US$63.1 million), compared to RMB1.1 billion in the same
period in 2017. Fully diluted net loss per ordinary share was
RMB1.97 (US$0.31), compared to RMB5.37 in the same period in
2017.
As of March 31, 2018, the Company had cash, cash
equivalents and short-term investments of RMB896.1 million
(US$142.9 million).
Recent Developments
On March 29, 2018, the Company had an initial
public offering (the “IPO”) of 125,000,000 American Depositary
Shares (“ADSs”), each representing seven Class A ordinary shares of
the Company, on the NASDAQ Global Select Market. The Company
expects to receive a total of approximately US$2.36 billion of net
proceeds from the IPO and the underwriters' partial exercise of
their option to purchase additional ADSs, after deducting the
underwriting discounts and commissions and estimated offering
expenses payable by the Company. Upon completion of the IPO, all
outstanding preferred shares and ordinary shares held by Baidu
Holdings Limited were automatically re-designated and converted
into Class B ordinary shares on a one-for-one basis into
2,839,530,705 Class B ordinary shares, all preferred shares and
ordinary shares other than those held by Baidu Holdings Limited
were automatically re-designated and converted into Class A
ordinary shares on a one-for-one basis into 1,231,841,032 Class A
ordinary shares. Each Class A ordinary share is entitled to one
vote, and each Class B ordinary share is entitled to ten votes and
is convertible into one Class A ordinary share at any time. Class A
ordinary shares cannot be converted into Class B ordinary
shares.
On April 12, 2018, the Company completed
issuance of 36,860,691 Class B ordinary shares to Baidu Holdings
Limited pursuant to a share purchase agreement entered into between
the Company and Baidu Holdings Limited on February 12, 2018.
Financial Guidance
For the second quarter of 2018, iQIYI expects
total net revenues to be between RMB5.80 billion (US$924.0 million)
and RMB6.04 billion (US$963.1 million), representing a 42% to 48%
increase from the same period in 2017. This forecast reflects
iQIYI's current and preliminary view, which is subject to
substantial uncertainty.
Conference Call Information
iQIYI's management will hold an earnings
conference call at 9:00 PM on April 26, 2018, U.S. Eastern Time
(9:00 AM on April 27, 2018, Beijing/Hong Kong Time). Dial-in
details for the earnings conference call are as follows:
International |
+65 67135090 |
China |
4006 208038 |
US |
+1 845 675 0437 |
UK |
+44 2036 214779 |
Hong Kong |
+852 3018 6771 |
Passcode: |
8484358 |
A telephone replay of the call will be available
two hours after the conclusion of the conference call through May
4, 2018.
Dial-in numbers for the replay are as
follows:
International Dial-in
|
+61 2 8199 0299 |
U.S. Toll
Free |
+1 855 452 5696 |
Passcode: |
8484358 |
A live and archived webcast of this conference
call will be available at http://ir.iqiyi.com.
About iQIYI,
Inc.
iQIYI, Inc. (NASDAQ:IQ) (“iQIYI” or the
“Company”) is an innovative market-leading online entertainment
service in China. Its corporate DNA combines creative talent with
technology, fostering an environment for continuous innovation and
the production of blockbuster content. iQIYI’s platform features
highly popular original content, as well as a comprehensive library
of other professionally-produced content, partner-generated content
and user-generated content. The Company distinguishes itself in the
online entertainment industry by its leading technology platform
powered by advanced AI, big data analytics and other core
proprietary technologies. iQIYI attracts a massive user base with
tremendous user engagement, and has developed a diversified
monetization model including membership services, online
advertising services, content distribution, live broadcasting,
online games, IP licensing, online literature and e-commerce etc.
For more information on iQIYI, please visit
http://ir.iqiyi.com.
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 Financial Guidance
and 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.
For more information, please contact:
Investor RelationsiQIYI, Inc.+86 10 6267 7171
ext. 7888ir@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, |
|
2017 |
|
2017 |
|
2018 |
|
RMB |
|
RMB |
|
RMB |
|
(Unaudited) |
|
(Unaudited) |
|
(Unaudited) |
Revenues: |
|
|
|
|
|
Membership services |
1,329,976 |
|
|
1,929,825 |
|
|
2,094,985 |
|
Online
advertising services |
1,473,445 |
|
|
2,142,839 |
|
|
2,110,670 |
|
Content
distribution |
196,016 |
|
|
233,485 |
|
|
266,670 |
|
Others |
284,597 |
|
|
511,265 |
|
|
404,980 |
|
Total
revenues |
3,284,034 |
|
|
4,817,414 |
|
|
4,877,305 |
|
|
|
|
|
|
|
Operating costs
and expenses: |
|
|
|
|
|
Cost of
revenues |
(3,558,628 |
) |
|
(4,535,111 |
) |
|
(4,848,219 |
) |
Selling,
general and administrative |
(496,145 |
) |
|
(774,184 |
) |
|
(704,237 |
) |
Research
and development |
(268,880 |
) |
|
(364,227 |
) |
|
(387,329 |
) |
Total operating
costs and expenses |
(4,323,653 |
) |
|
(5,673,522 |
) |
|
(5,939,785 |
) |
Operating
loss |
(1,039,619 |
) |
|
(856,108 |
) |
|
(1,062,480 |
) |
|
|
|
|
|
|
Other
expense |
|
|
|
|
|
Interest
income |
7,499 |
|
|
38,185 |
|
|
4,726 |
|
Interest
expenses |
(68,071 |
) |
|
(43,581 |
) |
|
(8,325 |
) |
Foreign
exchange (loss)/gain, net |
(17,601 |
) |
|
222,986 |
|
|
474,155 |
|
Loss from
equity method investments |
(28 |
) |
|
(160 |
) |
|
(99 |
) |
Other
(expense)/income, net |
(909 |
) |
|
16,402 |
|
|
195,780 |
|
Total other
(expense)/income, net |
(79,110 |
) |
|
233,832 |
|
|
666,237 |
|
|
|
|
|
|
|
Loss before
income taxes |
(1,118,729 |
) |
|
(622,276 |
) |
|
(396,243 |
) |
|
|
|
|
|
|
Income
tax (expense)/benefit |
(840 |
) |
|
9,896 |
|
|
(509 |
) |
|
|
|
|
|
|
Net
loss |
(1,119,569 |
) |
|
(612,380 |
) |
|
(396,752 |
) |
Net loss attributable
to noncontrolling interests |
- |
|
|
- |
|
|
(1,059 |
) |
Net loss
attributable to iQIYI, Inc. |
(1,119,569 |
) |
|
(612,380 |
) |
|
(395,693 |
) |
Accretion
of redeemable convertible preferred shares |
(720,456 |
) |
|
17,166,808 |
|
|
(289,363 |
) |
Extinguishment and reissuance of Series B preferred shares |
- |
|
|
(363,279 |
) |
|
- |
|
Net
(loss)/income attributable to ordinary shareholders |
(1,840,025 |
) |
|
16,191,149 |
|
|
(685,056 |
) |
|
|
|
|
|
|
Net
(loss)/earnings per share: |
|
|
|
|
|
Basic |
(5.37 |
) |
|
4.27 |
|
|
(1.97 |
) |
Diluted |
(5.37 |
) |
|
(0.16 |
) |
|
(1.97 |
) |
|
|
|
|
|
|
Shares used in
net (loss)/earnings per share computation: |
|
|
|
|
|
Basic |
342,548,237 |
|
|
342,548,237 |
|
|
347,381,732 |
|
Diluted |
342,548,237 |
|
|
3,795,709,775 |
|
|
347,381,732 |
|
|
|
|
|
|
|
iQIYI, INC.
Condensed Consolidated Balance
Sheets
(In RMB thousands, except for number of
shares and per share data)
|
|
|
December 31, |
|
March 31, |
|
2017 |
|
2018 |
|
RMB |
|
RMB |
|
(Audited) |
|
(Unaudited) |
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and
cash equivalents |
733,010 |
|
|
403,519 |
|
Short-term investments |
779,916 |
|
|
492,587 |
|
Accounts
receivable |
2,235,384 |
|
|
2,912,775 |
|
Prepayments and other assets |
1,123,372 |
|
|
1,014,129 |
|
Amounts
due from related parties |
9,979 |
|
|
19,885 |
|
Licensed
copyrights, net |
818,867 |
|
|
1,201,687 |
|
Total current assets |
5,700,528 |
|
|
6,044,582 |
|
|
|
|
|
Non-current assets: |
|
|
|
Fixed
assets, net |
1,248,968 |
|
|
1,318,390 |
|
Long-term
investments |
567,887 |
|
|
1,184,719 |
|
Deferred
tax assets, net |
11,380 |
|
|
11,380 |
|
Licensed
copyrights, net |
4,558,083 |
|
|
4,945,351 |
|
Intangible assets, net |
428,005 |
|
|
357,488 |
|
Produced
content, net |
1,564,279 |
|
|
2,738,236 |
|
Prepayments and other assets |
2,845,662 |
|
|
3,053,337 |
|
Goodwill |
3,276,107 |
|
|
3,276,107 |
|
Total non-current assets |
14,500,371 |
|
|
16,885,008 |
|
|
|
|
|
Total
assets |
20,200,899 |
|
|
22,929,590 |
|
|
|
|
|
LIABILITIES,
MEZZANINE EQUITY AND SHAREHOLDERS’ DEFICIT |
|
|
|
Current liabilities: |
|
|
|
Accounts
payable |
7,041,304 |
|
|
8,725,820 |
|
Amounts
due to related parties |
130,099 |
|
|
180,491 |
|
Customer
advances and deferred revenue |
1,633,649 |
|
|
1,795,911 |
|
Short-term loans |
299,374 |
|
|
396,748 |
|
Long-term
loans, current portion |
10,000 |
|
|
10,000 |
|
Accrued
expenses and other liabilities |
2,511,186 |
|
|
2,341,576 |
|
Total current liabilities |
11,625,612 |
|
|
13,450,546 |
|
Non-current liabilities: |
|
|
|
Long-term
loans |
284,000 |
|
|
279,000 |
|
Deferred
tax liabilities |
2,255 |
|
|
1,093 |
|
Amounts
due to related parties |
- |
|
|
650,000 |
|
Other
non-current liabilities |
6,432 |
|
|
18,527 |
|
Total non-current liabilities |
292,687 |
|
|
948,620 |
|
|
|
|
|
Total
liabilities |
11,918,299 |
|
|
14,399,166 |
|
|
|
|
|
Mezzanine
equity: |
22,601,664 |
|
|
22,891,027 |
|
Shareholders’
deficit: |
|
|
|
|
|
|
|
Ordinary shares |
23 |
|
|
24 |
|
Additional paid-in
capital |
600,834 |
|
|
769,151 |
|
Accumulated
deficit |
(15,016,867 |
) |
|
(14,851,247 |
) |
Accumulated other
comprehensive income (loss) |
93,126 |
|
|
(281,292 |
) |
Non-controlling
interests |
3,820 |
|
|
2,761 |
|
Total iQIYI,
Inc. shareholders’ deficit |
(14,319,064 |
) |
|
(14,360,603 |
) |
|
|
|
|
Total
liabilities, mezzanine equity and shareholders’
deficit |
20,200,899 |
|
|
22,929,590 |
|
|
|
|
|
|
|
iQiyi (NASDAQ:IQ)
Historical Stock Chart
From Jun 2024 to Jul 2024
iQiyi (NASDAQ:IQ)
Historical Stock Chart
From Jul 2023 to Jul 2024