BEIJING - iQIYI, Inc. (NASDAQ: IQ), a prominent online entertainment service in China, reported its unaudited financial results for the first quarter ended March 31, 2024. IQ stock was trading up 1.9% in premarket trading.
The company announced earnings per share (EPS) of RMB0.68, surpassing the analyst consensus of RMB0.59. Total revenue for the quarter was RMB7.93 billion, slightly above the consensus estimate of RMB7.86 billion, but marked a 5% decrease from the same quarter last year.
The company's operating income saw a 10% year-over-year (YoY) increase, reaching RMB944.8 million (US$130.8 million), with an operating margin of 12%, up from 10% in the previous year. Adjusted operating income also climbed 5% YoY to RMB1.1 billion (US$150.4 million), with an adjusted operating margin of 14%. Net income attributable to iQIYI experienced a 6% YoY increase to RMB655.3 million (US$90.8 million). However, adjusted net income attributable to iQIYI decreased by 10% YoY to RMB844.3 million (US$116.9 million).
Yu Gong, Founder, Director, and CEO of iQIYI, attributed the strong operating profits and margins to "quality execution and increased operating efficiency," highlighting the promising results from the initial integration of generative AI into the company's operations. CFO Jun Wang emphasized the company's continued positive operating cash flow for eight consecutive quarters and the strengthening of its balance sheet, which he believes will provide more opportunities to enhance shareholder value over time.
In terms of revenue breakdown, membership services revenue decreased by 13% YoY to RMB4.8 billion (US$664.6 million), while online advertising services revenue grew by 6% YoY to RMB1.5 billion (US$205.3 million). Content distribution revenue saw a significant increase of 27% YoY, reaching RMB928.0 million (US$128.5 million), and other revenues increased by 8% YoY to RMB718.4 million (US$99.5 million).
The company's cost of revenues decreased by 5% YoY to RMB5.6 billion (US$779.9 million), with content costs also reducing by 5% YoY. Selling, general, and administrative expenses saw a 17% YoY decrease, primarily due to disciplined marketing spending and the reversal of allowance for credit losses.
As of March 31, 2024, iQIYI had cash, cash equivalents, short-term investments, and long-term restricted cash included in prepayments and other assets totaling RMB7.3 billion (US$1.0 billion). The company's financial position appears robust, with a focus on improving operating efficiency and leveraging AI technology to drive future growth.
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