iQiyi's first quarter financial report announced a net loss of 1.814 billion yuan

On May 17, iQiyi released its unaudited financial report for the first quarter ending March 31, 2019. The financial report shows that iQiyi's revenue in the first quarter of 2019 reached 7 billion yuan (about 1 billion US dollars), a year-on-year increase of 43%. The net loss for this quarter was 1.814 billion yuan, compared with 395.7 million yuan in the same period last year.

At the end of the first quarter, iQIYI had 96.8 million subscribers, 98.6% of whom were paid members, a 58% year-on-year increase. In the first quarter of 2019, membership service revenue was RMB 3.4 billion (approximately US$513.4 million), up 64% from the same period in 2018. This was mainly due to the strong growth in the number of subscribers driven by high-quality content and diversified operational measures. Despite the impact of macroeconomic changes and the slower-than-expected recovery of the information flow advertising business, online advertising revenue still reached RMB 2.1 billion (approximately US$315.8 million), the same as the same period last year.

In addition to membership services and advertising revenue, content distribution brought in RMB 442.6 million (approximately US$66 million) in content distribution revenue in the first quarter, a year-on-year increase of 66%. iQIYI said that due to the strong performance of various vertical business lines, other revenue in the first quarter reached RMB 982.5 million (approximately US$146.4 million), accounting for 14% of total revenue. Other revenue increased by 143% year-on-year, which is also the third consecutive quarter that the revenue has doubled year-on-year. In particular, after the acquisition of Tianxiang Interactive Entertainment, the game business performed outstandingly, and a number of successful games were launched this quarter.

iQIYI Game Center

In the first quarter of 2019, iQIYI continued to increase its investment in R&D. R&D expenses in the first quarter were RMB 598.1 million (approximately US$89.1 million), a year-on-year increase of 54%. The increase in this part of expenditure was mainly due to the increase in personnel-related salary expenses. The operating loss for this quarter was RMB 2 billion (approximately US$301.9 million). As of March 31, 2019, iQIYI held a total of RMB 17.9 billion (approximately US$2.7 billion) in cash, cash equivalents, restricted cash and short-term investments. In March 2019, iQIYI completed the issuance of convertible preferred bonds totaling US$1.2 billion. After deducting discount commissions and issuance expenses, the actual total amount of funds raised was US$1.1782 billion. The ample cash reserves will strongly support the investment in high-quality content and ecological businesses.

iQIYI provided an outlook for its second quarter 2019 performance: total revenue is expected to be between RMB 6.91 billion (approximately US$1 billion) and RMB 7.29 billion (approximately US$1.1 billion), with year-on-year growth of between 12% and 18% (this outlook only represents a preliminary forecast based on the current situation and does not rule out the possibility of future adjustments).