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 second quarter
ended June 30, 2019.
Second Quarter 2019
Highlights
- Total revenues were RMB7.1 billion (US$1.0 billion1),
representing a 15% increase from the same period in 2018.
- Operating loss was RMB1.9 billion (US$272.6 million) and
operating loss margin was 26%, compared to operating loss of RMB1.3
billion and operating loss margin of 22% in the same period in
2018.
- Net loss attributable to iQIYI was RMB2.3 billion (US$339.0
million), compared to net loss attributable to iQIYI of RMB2.1
billion in the same period in 2018. Diluted net loss attributable
to iQIYI per ADS was RMB3.22 (US$0.49).
- The number of total subscribing members was 100.5 million as of
June 30, 2019, 98.9% of whom were paying subscribing members. This
compares to 67.1 million of total subscribing members as of June
30, 2018, up 50% year over year.
“We are pleased to report another solid quarter
of performance highlighted by our total subscribing members
surpassing 100 million, marking a historic milestone for the
Company,” commented Dr. Yu Gong, Founder, Director and Chief
Executive Officer of iQIYI. “We further solidified our market
leadership position across various operating metrics, and
strengthened our product matrix that generates strong synergies
across our platform. We remain committed to our strategy of
enhancing production capabilities of high quality original content
and advancing our AI technology innovation in content production,
distribution and monetization. With the fast development of China’s
entertainment industry and the approaching 5G commercialization, we
are confident in our growth prospects and look forward to capturing
the enormous opportunities ahead to grow in tandem with our users,
partners, and investors.
“We achieved continued revenue growth in the
second quarter despite some recent challenges facing our industry,”
commented Mr. Xiaodong Wang, Chief Financial Officer of iQIYI. “Our
membership business generated solid growth with subscription
revenues increasing 38% year-over-year, driven by our strong
content slate during the quarter. As our IP-centered
diversification strategy grows to scale, we are constantly
expanding the scope of our value-added services and pursuing better
monetization. We believe our long-term growth landscape remains
intact, and we will continue to invest in our original content and
technology which serve as the dual engines to drive our future
growth.”
Footnote:[1] This announcement contains translations of certain
RMB amounts into U.S. dollars at specified rates solely for the
convenience of the reader. Unless otherwise noted, all translations
from RMB to U.S. dollars are made at a rate of RMB6.8650 to
US$1.00, the effective noon buying rate as of June 28, 2019, in The
City of New York for cable transfers of RMB as certified for
customs purposes by the Federal Reserve Bank of New York.
Second Quarter 2019 Financial
Results
Total revenues reached RMB7.1 billion (US$1.0
billion), representing a 15% increase from the same period in
2018.
Membership services revenue was RMB3.4 billion
(US$497.1 million), representing a 38% increase from the same
period in 2018. The increase resulted from the solid growth in the
number of subscribing members, driven by our premium content,
especially our original hits, as well as various operational
initiatives during the quarter.
Online advertising services revenue was RMB2.2
billion (US$320.6 million), down 16% year over year, mainly due to
the challenging macroeconomic environment in China, the delay of
certain content launches and slower-than-expected recovery of our
in-feed advertising.
Content distribution revenue was RMB517.9
million (US$75.4 million), representing a 4% decrease from the same
period in 2018 due to the delay of certain content launches during
the quarter.
Other revenues were RMB979.2 million (US$142.6
million), representing an 82% increase from the same period in
2018. The increase was driven by strong performance across various
vertical business lines, especially the robust growth of our game
business after the acquisition of Skymoons.
Cost of revenues was RMB7.0 billion (US$1.0
billion), representing a 14% increase from the same period in 2018.
The increase was primarily driven by higher content costs as well
as other cost items. Content costs as a component of cost of
revenues were RMB5.0 billion (US$731.9 million), representing a 7%
increase from the same period in 2018.
Selling, general and administrative expenses
were RMB1.3 billion (US$196.1 million), representing a 42% increase
from the same period in 2018. This was primarily due to higher
marketing spending on game business and increased share-based
compensation expenses associated with the acquisition of
Skymoons.
Research and development expenses were RMB654.6
million (US$95.4 million), representing a 48% increase from the
same period in 2018, primarily due to the increase of
personnel-related compensation expenses.
Operating loss was RMB1.9 billion (US$272.6
million), compared to operating loss of RMB1.3 billion in the same
period in 2018. Operating loss margin was 26%, compared to
operating loss margin of 22% in the same period in 2018.
Total other expense was RMB426.7 million
(US$62.2 million), compared to total other expense of RMB768.3
million during the same period of 2018. The year-over-year variance
was a combined result of less foreign exchange loss due to the
fluctuation of exchange rate between Renminbi and the U.S. dollar,
and increased interest expenses associated with our financing
activities.
Loss before income taxes was RMB2.3 billion
(US$334.8 million), compared to loss before income taxes of RMB2.1
billion in the same period in 2018.
Income tax expense was RMB5.8
million (US$0.8 million), compared to income tax expense of
RMB4.9 million in the same period in 2018.
Net loss attributable to iQIYI was RMB2.3
billion (US$339.0 million), compared to net loss attributable to
iQIYI of RMB2.1 billion in the same period in 2018. Diluted net
loss attributable to iQIYI per ADS was RMB3.22 (US$0.49) for the
second quarter of 2019.
As of June 30, 2019, the Company had cash, cash
equivalents, restricted cash and short-term investments of RMB16.4
billion (US$2.4 billion).
Financial Guidance
For the third quarter of 2019, iQIYI expects
total net revenues to be between RMB7.21 billion (US$1.03 billion2)
and RMB7.63 billion (US$1.09 billion), representing a 4% to 10%
increase from the same period in 2018. This forecast reflects
iQIYI's current and preliminary view, which is subject to
substantial uncertainty.
Footnote:[2] The translations from RMB to U.S. dollars for the
expected revenues in the third quarter of 2019 are made at a rate
of RMB7.0 to US$1.0, the rounded noon buying rate as of August 8,
2019, in The City of New York for cable transfers of RMB as
certified for customs purposes by the Federal Reserve Bank of New
York. We make no representation that any Renminbi or U.S. dollar
amounts could have been, or could be, converted into U.S. dollars
or Renminbi, as the case may be, at this rate, or any particular
rate, or at all.
Conference Call Information
iQIYI's management will hold an earnings
conference call at 8:00 PM on August 19, 2019, U.S. Eastern Time
(8:00 AM on August 20, 2019, Beijing 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: |
|
4885756 |
|
A telephone replay of the call will be available
two hours after the conclusion of the conference call through
August 27, 2019.
Dial-in numbers for the replay are as
follows:
International
Dial-in |
|
+61 2 8199
0299 |
|
Passcode: |
|
4885756 |
|
A live and archived webcast of this conference
call will be available at http://ir.iqiyi.com.
About iQIYI,
Inc.
iQIYI, Inc. 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, online
games, live broadcasting, IP licensing, online literature, talent
agency and e-commerce 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 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 8264 6585
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 |
|
Six Months Ended |
|
June 30, |
|
March 31, |
|
June 30, |
|
June 30, |
|
June 30, |
|
2018 |
|
2019 |
|
2019 |
|
2018 |
|
2019 |
|
RMB |
|
RMB |
|
RMB |
|
RMB |
|
RMB |
|
(Unaudited) |
|
(Unaudited) |
|
(Unaudited) |
|
(Unaudited) |
|
(Unaudited) |
Revenues: |
|
|
|
|
|
|
|
|
|
Membership services |
2,474,474 |
|
|
3,445,343 |
|
|
3,412,349 |
|
|
4,569,459 |
|
|
6,857,692 |
|
Online advertising services |
2,617,507 |
|
|
2,119,433 |
|
|
2,200,682 |
|
|
4,728,177 |
|
|
4,320,115 |
|
Content distribution |
539,359 |
|
|
467,861 |
|
|
517,939 |
|
|
806,029 |
|
|
985,800 |
|
Others |
538,891 |
|
|
957,282 |
|
|
979,211 |
|
|
943,871 |
|
|
1,936,493 |
|
Total
revenues |
6,170,231 |
|
|
6,989,919 |
|
|
7,110,181 |
|
|
11,047,536 |
|
|
14,100,100 |
|
|
|
|
|
|
|
|
|
|
|
Operating costs
and expenses: |
|
|
|
|
|
|
|
|
|
Cost of revenues |
(6,106,729 |
) |
|
(7,277,196 |
) |
|
(6,980,957 |
) |
|
(10,954,948 |
) |
|
(14,258,153 |
) |
Selling, general and administrative |
(949,934 |
) |
|
(1,140,611 |
) |
|
(1,346,324 |
) |
|
(1,654,171 |
) |
|
(2,486,935 |
) |
Research and development |
(441,482 |
) |
|
(598,072 |
) |
|
(654,601 |
) |
|
(828,811 |
) |
|
(1,252,673 |
) |
Total operating
costs and expenses |
(7,498,145 |
) |
|
(9,015,879 |
) |
|
(8,981,882 |
) |
|
(13,437,930 |
) |
|
(17,997,761 |
) |
Operating
loss |
(1,327,914 |
) |
|
(2,025,960 |
) |
|
(1,871,701 |
) |
|
(2,390,394 |
) |
|
(3,897,661 |
) |
|
|
|
|
|
|
|
|
|
|
Other
expense |
|
|
|
|
|
|
|
|
|
Interest income |
25,615 |
|
|
65,097 |
|
|
130,721 |
|
|
30,341 |
|
|
195,818 |
|
Interest expenses |
(9,562 |
) |
|
(135,247 |
) |
|
(247,762 |
) |
|
(17,887 |
) |
|
(383,009 |
) |
Foreign exchange (loss)/gain, net |
(777,968 |
) |
|
328,035 |
|
|
(306,117 |
) |
|
(303,813 |
) |
|
21,918 |
|
Loss from equity method investments |
(896 |
) |
|
(34,535 |
) |
|
(38,112 |
) |
|
(995 |
) |
|
(72,647 |
) |
Other (expense)/income, net |
(5,468 |
) |
|
(12,224 |
) |
|
34,593 |
|
|
190,312 |
|
|
22,369 |
|
Total other
(expense)/income, net |
(768,279 |
) |
|
211,126 |
|
|
(426,677 |
) |
|
(102,042 |
) |
|
(215,551 |
) |
|
|
|
|
|
|
|
|
|
|
Loss before
income taxes |
(2,096,193 |
) |
|
(1,814,834 |
) |
|
(2,298,378 |
) |
|
(2,492,436 |
) |
|
(4,113,212 |
) |
Income tax expense |
(4,858 |
) |
|
(7,443 |
) |
|
(5,776 |
) |
|
(5,367 |
) |
|
(13,219 |
) |
|
|
|
|
|
|
|
|
|
|
Net
loss |
(2,101,051 |
) |
|
(1,822,277 |
) |
|
(2,304,154 |
) |
|
(2,497,803 |
) |
|
(4,126,431 |
) |
Net (loss)/income attributable to noncontrolling interests |
(4,120 |
) |
|
(8,301 |
) |
|
23,291 |
|
|
(5,179 |
) |
|
14,990 |
|
Net loss
attributable to iQIYI, Inc. |
(2,096,931 |
) |
|
(1,813,976 |
) |
|
(2,327,445 |
) |
|
(2,492,624 |
) |
|
(4,141,421 |
) |
Accretion of redeemable convertible preferred shares |
(9,627 |
) |
|
- |
|
|
- |
|
|
(298,990 |
) |
|
- |
|
Net loss
attributable to ordinary shareholders |
(2,106,558 |
) |
|
(1,813,976 |
) |
|
(2,327,445 |
) |
|
(2,791,614 |
) |
|
(4,141,421 |
) |
|
|
|
|
|
|
|
|
|
|
Net loss per
share for Class A and Class B ordinary shares: |
|
|
|
|
|
|
|
|
|
Basic |
(0.43 |
) |
|
(0.36 |
) |
|
(0.46 |
) |
|
(1.05 |
) |
|
(0.81 |
) |
Diluted |
(0.43 |
) |
|
(0.36 |
) |
|
(0.46 |
) |
|
(1.05 |
) |
|
(0.81 |
) |
|
|
|
|
|
|
|
|
|
|
Net loss per ADS
(1 ADS equals 7 Class A ordinary shares): |
|
|
|
|
|
|
|
|
|
Basic |
(3.01 |
) |
|
(2.52 |
) |
|
(3.22 |
) |
|
(7.35 |
) |
|
(5.67 |
) |
Diluted |
(3.01 |
) |
|
(2.52 |
) |
|
(3.22 |
) |
|
(7.35 |
) |
|
(5.67 |
) |
|
|
|
|
|
|
|
|
|
|
Weighted average
number of Class A and Class B ordinary shares used in net loss per
share computation: |
|
|
|
|
|
|
|
|
|
Basic |
4,931,100,562 |
|
|
5,083,030,810 |
|
|
5,102,652,726 |
|
|
2,651,903,354 |
|
|
5,092,895,972 |
|
Diluted |
4,931,100,562 |
|
|
5,083,030,810 |
|
|
5,102,652,726 |
|
|
2,651,903,354 |
|
|
5,092,895,972 |
|
iQIYI, INC.
Condensed Consolidated Balance
Sheets
(In RMB thousands)
|
|
|
|
December 31, |
|
June 30, |
|
|
2018 |
|
2019 |
|
|
RMB |
|
RMB |
|
|
|
|
(Unaudited) |
ASSETS |
|
|
|
|
Current
assets: |
|
|
|
|
Cash and cash equivalents |
|
4,586,405 |
|
|
5,427,362 |
|
Restricted cash |
|
2,174,042 |
|
|
2,196,656 |
|
Short-term investments |
|
6,061,832 |
|
|
8,817,980 |
|
Accounts receivable |
|
2,889,234 |
|
|
3,046,343 |
|
Prepayments and other assets |
|
2,696,381 |
|
|
3,864,062 |
|
Amounts due from related parties |
|
281,710 |
|
|
312,232 |
|
Licensed copyrights, net |
|
1,163,839 |
|
|
1,176,403 |
|
Total current
assets |
|
19,853,443 |
|
|
24,841,038 |
|
|
|
|
|
|
Non-current
assets: |
|
|
|
|
Fixed assets, net |
|
1,618,147 |
|
|
1,811,313 |
|
Long-term investments |
|
2,572,040 |
|
|
2,553,252 |
|
Deferred tax assets, net |
|
23,873 |
|
|
23,873 |
|
Licensed copyrights, net |
|
6,640,910 |
|
|
6,043,029 |
|
Intangible assets, net |
|
1,678,193 |
|
|
1,445,553 |
|
Produced content, net |
|
3,736,063 |
|
|
4,483,123 |
|
Prepayments and other assets |
|
4,695,883 |
|
|
4,467,330 |
|
Operating lease assets |
|
- |
|
|
532,645 |
|
Goodwill |
|
3,888,346 |
|
|
3,888,346 |
|
Amounts due from related parties |
|
52,800 |
|
|
154,600 |
|
Total
non-current assets |
|
24,906,255 |
|
|
25,403,064 |
|
|
|
|
|
|
Total
assets |
|
44,759,698 |
|
|
50,244,102 |
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
|
|
Current liabilities: |
|
|
|
|
Accounts and notes payable |
|
10,162,366 |
|
|
9,583,950 |
|
Amounts due to related parties |
|
692,390 |
|
|
1,204,727 |
|
Customer advances and deferred revenue |
|
2,195,283 |
|
|
2,295,522 |
|
Short-term loans |
|
3,046,449 |
|
|
4,017,485 |
|
Long-term loans, current portion |
|
83,720 |
|
|
353,386 |
|
Operating lease liabilities, current portion |
|
- |
|
|
137,926 |
|
Accrued expenses and other liabilities |
|
3,632,148 |
|
|
3,850,910 |
|
Total current
liabilities |
|
19,812,356 |
|
|
21,443,906 |
|
Non-current liabilities: |
|
|
|
|
Long-term loans |
|
644,169 |
|
|
384,462 |
|
Convertible senior notes |
|
4,712,284 |
|
|
11,918,836 |
|
Deferred tax liabilities |
|
96,405 |
|
|
69,964 |
|
Amounts due to related parties |
|
1,281,370 |
|
|
1,142,912 |
|
Operating lease liabilities |
|
- |
|
|
209,745 |
|
Other non-current liabilities |
|
57,551 |
|
|
56,022 |
|
Total
non-current liabilities |
|
6,791,779 |
|
|
13,781,941 |
|
|
|
|
|
|
Total
liabilities |
|
26,604,135 |
|
|
35,225,847 |
|
|
|
|
|
|
Shareholders’ equity: |
|
|
|
|
|
|
|
|
|
Ordinary shares |
|
321 |
|
|
323 |
|
Additional paid-in
capital |
|
39,666,150 |
|
|
40,696,243 |
|
Accumulated deficit |
|
(23,509,486 |
) |
|
(27,650,907 |
) |
Accumulated other
comprehensive income |
|
1,879,946 |
|
|
1,837,517 |
|
Non-controlling interests |
|
118,632 |
|
|
135,079 |
|
Total shareholders’ equity |
|
18,155,563 |
|
|
15,018,255 |
|
|
|
|
|
|
Total liabilities and shareholders’
equity |
|
44,759,698 |
|
|
50,244,102 |
|
|
|
|
|
|
|
|
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