BEIJING - iQIYI, Inc. (NASDAQ:IQ), a prominent online entertainment service in China, reported a fourth-quarter profit that surpassed analyst expectations. While shares were up 2.7% in premarket trading Wednesday, they are down 1.11% as of this writing.
The company announced an adjusted earnings per share (EPS) of RMB0.70, which was RMB0.06 higher than the analyst estimate of RMB0.64. However, revenue for the quarter was slightly below expectations at RMB7.71 billion, compared to the consensus estimate of RMB7.72 billion.
The company's financial results for the fourth quarter of 2023 showed a modest year-over-year (YoY) revenue increase of 1%. Operating income for the quarter was RMB773.7 million (US$109.0 million), with a steady operating margin of 10%, mirroring the same period in 2022. The non-GAAP operating income saw a slight decrease of 5% YoY, reaching RMB927.8 million (US$130.7 million).
Net income attributable to iQIYI showed a significant improvement, with a 53% YoY increase to RMB466.2 million (US$65.7 million). However, the non-GAAP net income attributable to iQIYI decreased by 20% YoY to RMB682.0 million (US$96.1 million).
In their commentary, Mr. Yu Gong, Founder, Director, and CEO of iQIYI, highlighted 2023 as the company's best-performing year, with key financial metrics reaching historical highs. Mr. Jun Wang, CFO of iQIYI, pointed out the strengthened financial health of the company, with operating and free cash flows exceeding RMB3.3 billion in 2023.
The average daily number of total subscribing members for the quarter was 100.3 million, a decrease from 111.6 million in the same period last year. However, the monthly average revenue per membership (ARM) for the fourth quarter increased by 13% YoY to RMB15.98.
iQIYI's focus on content strategy and operational efficiency led to a 5% decrease in content costs, which are a significant component of the company's expenditures. The decrease in content costs was attributed to improved content strategy and fewer major variety shows launched during the quarter.
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