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, 2019.
First Quarter 2019
Highlights
- Total revenues were RMB7.0 billion (US$1.0 billion1),
representing a 43% increase from the same period in 2018.
- Operating loss was RMB2.0 billion (US$301.9 million) and
operating loss margin was 29%, compared to operating loss of RMB1.1
billion and operating loss margin of 22% in the same period in
2018.
- Net loss attributable to iQIYI was RMB1.8 billion (US$270.3
million), compared to net loss attributable to iQIYI of RMB395.7
million in the same period in 2018. Diluted net loss attributable
to iQIYI per ADS was RMB2.52 (US$0.35).
- The number of total subscribing members was 96.8 million as of
March 31, 2019, 98.6% of whom were paying subscribing members. This
compares to 61.3 million of total subscribing members as of March
31, 2018, up 58% year over year.
“We started off 2019 with a solid quarter of
results, especially in membership business driven by our rapidly
growing subscriber base of 96.8 million at quarter end,” commented
Dr. Yu Gong, Founder, Director and Chief Executive Officer of
iQIYI. “We further strengthened our platform and continued to take
the lead in China’s internet video streaming industry in terms of
various 3rd-party tracking metrics. Our strategy remains
focused on producing high quality original content and refining our
IP-centered content ecosystem which will be the key drivers for our
future growth. As China’s online entertainment industry is entering
a new phase of growth, we believe we are well-positioned to capture
the enormous opportunities for us in the years to come.”
“We delivered another
quarter of decent top-line growth with total revenues increasing
43% year-over-year to RMB7.0 billion,” commented Mr. Xiaodong Wang,
Chief Financial Officer of iQIYI. “Membership business again
spearheaded the growth in the quarter, reflecting the strength and
popularity of our vast library of premium content. We also
continued to broaden and diversify our revenue streams by fully
leveraging the IP value of our original content. As 2019 unfolds,
we will continue to build and invest in our content ecosystem which
is the foundation for us to achieve long-term sustainable
growth.”
___________________________________________________________Footnotes:[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 RMB6.7112 to US$1.00, the effective
noon buying rate as of March 29, 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.
First Quarter 2019 Financial
Results
Total revenues reached RMB7.0 billion (US$1.0
billion), representing a 43% increase from the same period in
2018.
Membership services revenue was RMB3.4 billion
(US$513.4 million), representing a 64% increase from the same
period in 2018. The increase resulted from the strong growth in the
number of subscribing members, driven by our premium content as
well as various operational initiatives during the quarter.
Online advertising services revenue was RMB2.1
billion (US$315.8 million), flat compared to the same period in
2018 due to the challenging macroeconomic environment in China and
slower-than-expected recovery of our in-feed advertising.
Content distribution revenue was RMB442.6
million (US$66.0 million), representing a 66% increase from the
same period in 2018. The strong growth was primarily attributable
to a number of premium content titles that we distributed during
the quarter.
Other revenues were RMB982.5 million (US$146.4
million), representing a 143% 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, which launched several
successful games during the quarter.
Cost of revenues was RMB7.3 billion (US$1.1
billion), representing a 50% 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 RMB5.3 billion (US$793.9 million), representing a 38%
increase from the same period in 2018.
Selling, general and administrative expenses
were RMB1.1 billion (US$170.0 million), representing a 62% increase
from the same period in 2018. This was primarily due to increased
share-based compensation expenses and marketing spending on game
business associated with the consolidation of Skymoons.
Research and development expenses were RMB598.1
million (US$89.1 million), representing a 54% increase from the
same period in 2018, primarily due to the increase of
personnel-related compensation expenses.
Operating loss was RMB2.0 billion (US$301.9
million), compared to operating loss of RMB1.1 billion in the same
period in 2018. Operating loss margin was 29%, compared to
operating loss margin of 22% in the same period in 2018.
Total other income was RMB211.1 million (US$31.5
million), compared to total other income of RMB666.2 million during
the same period of 2018. The majority of the year-over-year
variance was due to the fair value gain we recognized in the first
quarter of 2018 arising from our private company equity
investments. The remaining variance came from less foreign exchange
gain we recognized this quarter due to the fluctuation of exchange
rate between Renminbi and the U.S. dollar, as well as increased
interest expenses associated with our financing activities.
Loss before income taxes was RMB1.8 billion
(US$270.4 million), compared to loss before income taxes of
RMB396.2 million in the same period in 2018.
Income tax expense was RMB7.4
million (US$1.1 million), compared to income tax expense of
RMB0.5 million in the same period in 2018.
Net loss attributable to iQIYI was RMB1.8
billion (US$270.3 million), compared to net loss attributable to
iQIYI of RMB395.7 million in the same period in 2018. Diluted net
loss attributable to iQIYI per ADS was RMB2.52 (US$0.35) for the
first quarter of 2019.
As of March 31, 2019, the Company had cash, cash
equivalents, restricted cash and short-term investments of RMB17.9
billion (US$2.7 billion). In March 2019, we closed the offering of
US$1.2 billion in aggregate principal amount of convertible senior
notes, and received aggregate net proceeds of approximately
US$1,178.2 million after deducting discounts and commissions and
offering expenses from the offering.
Financial Guidance
For the second quarter of 2019, iQIYI expects
total net revenues to be between RMB6.91 billion (US$1.0 billion)
and RMB7.29 billion (US$1.1 billion), representing a 12% to 18%
increase from the same period in 2018. 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 8:00 PM on May 16, 2019, U.S. Eastern Time (8:00
AM on May 17, 2019, 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: |
6672348 |
A telephone replay of the call will be available
two hours after the conclusion of the conference call through May
24, 2019.
Dial-in numbers for the replay are as
follows:
International
Dial-in |
+61 2 8199
0299 |
Passcode: |
6672348 |
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, live
broadcasting, online games, IP licensing, online literature 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 |
|
|
March 31, |
|
December 31, |
|
March 31, |
|
|
2018 |
|
2018 |
|
2019 |
|
|
RMB |
|
RMB |
|
RMB |
|
|
(Unaudited) |
|
(Unaudited) |
|
(Unaudited) |
Revenues: |
|
|
|
|
|
|
Membership services |
|
2,094,985 |
|
|
3,200,981 |
|
|
3,445,343 |
|
Online advertising services |
|
2,110,670 |
|
|
2,203,637 |
|
|
2,119,433 |
|
Content distribution |
|
266,670 |
|
|
522,038 |
|
|
442,620 |
|
Others |
|
404,980 |
|
|
1,100,666 |
|
|
982,523 |
|
Total
revenues |
|
4,877,305 |
|
|
7,027,322 |
|
|
6,989,919 |
|
|
|
|
|
|
|
|
Operating costs
and expenses: |
|
|
|
|
|
|
Cost of revenues |
|
(4,848,219 |
) |
|
(8,522,761 |
) |
|
(7,277,196 |
) |
Selling, general and administrative |
|
(704,237 |
) |
|
(1,221,681 |
) |
|
(1,140,611 |
) |
Research and development |
|
(387,329 |
) |
|
(607,468 |
) |
|
(598,072 |
) |
Total operating
costs and expenses |
|
(5,939,785 |
) |
|
(10,351,910 |
) |
|
(9,015,879 |
) |
Operating
loss |
|
(1,062,480 |
) |
|
(3,324,588 |
) |
|
(2,025,960 |
) |
|
|
|
|
|
|
|
Other
expense |
|
|
|
|
|
|
Interest income |
|
4,726 |
|
|
118,025 |
|
|
65,097 |
|
Interest expenses |
|
(8,325 |
) |
|
(61,238 |
) |
|
(135,247 |
) |
Foreign exchange gain/(loss), net |
|
474,155 |
|
|
(73,836 |
) |
|
328,035 |
|
Loss from equity method investments |
|
(99 |
) |
|
(16,016 |
) |
|
(34,535 |
) |
Other income/(expense), net |
|
195,780 |
|
|
(1,686 |
) |
|
(12,224 |
) |
Total other
income /(expense), net |
|
666,237 |
|
|
(34,751 |
) |
|
211,126 |
|
|
|
|
|
|
|
|
Loss before
income taxes |
|
(396,243 |
) |
|
(3,359,339 |
) |
|
(1,814,834 |
) |
|
|
|
|
|
|
|
Income tax expense |
|
(509 |
) |
|
(79,492 |
) |
|
(7,443 |
) |
|
|
|
|
|
|
|
Net
loss |
|
(396,752 |
) |
|
(3,438,831 |
) |
|
(1,822,277 |
) |
Less: Net (loss) income attributable to noncontrolling
interests |
|
(1,059 |
) |
|
37,888 |
|
|
(8,301 |
) |
Net loss
attributable to iQIYI, Inc. |
|
(395,693 |
) |
|
(3,476,719 |
) |
|
(1,813,976 |
) |
Accretion of redeemable convertible preferred shares |
|
(289,363 |
) |
|
- |
|
|
- |
|
Net loss
attributable to ordinary shareholders |
|
(685,056 |
) |
|
(3,476,719 |
) |
|
(1,813,976 |
) |
|
|
|
|
|
|
|
Net loss per Class A
and Class B ordinary share: |
|
|
|
|
|
|
Basic |
|
(1.97 |
) |
|
(0.69 |
) |
|
(0.36 |
) |
Diluted |
|
(1.97 |
) |
|
(0.69 |
) |
|
(0.36 |
) |
|
|
|
|
|
|
|
Net loss per ADS
(1 ADS equals 7 Class A ordinary shares): |
|
|
|
|
|
|
Basic |
|
- |
|
|
(4.83 |
) |
|
(2.52 |
) |
Diluted |
|
- |
|
|
(4.83 |
) |
|
(2.52 |
) |
|
|
|
|
|
|
|
Weighted average
number of Class A and Class B ordinary shares used in net loss per
share computation: |
|
|
|
|
|
|
Basic |
|
347,381,732 |
|
|
5,069,616,758 |
|
|
5,083,030,810 |
|
Diluted |
|
347,381,732 |
|
|
5,069,616,758 |
|
|
5,083,030,810 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
iQIYI, INC. |
|
Condensed Consolidated Balance Sheets |
|
(In RMB thousands, except for number of shares and per
share data) |
|
|
|
December 31, |
|
March 31, |
|
|
2018 |
|
2019 |
|
|
RMB |
|
RMB |
|
|
(Audited) |
|
(Unaudited) |
ASSETS |
|
|
|
|
Current
assets: |
|
|
|
|
Cash and cash equivalents |
|
4,586,405 |
|
|
11,874,293 |
|
Restricted cash |
|
2,174,042 |
|
|
2,151,245 |
|
Short-term investments |
|
6,061,832 |
|
|
3,886,002 |
|
Accounts receivable |
|
2,889,234 |
|
|
3,021,171 |
|
Prepayments and other assets |
|
2,696,381 |
|
|
2,928,591 |
|
Amounts due from related parties |
|
281,710 |
|
|
495,501 |
|
Licensed copyrights, net |
|
1,163,839 |
|
|
1,261,760 |
|
Total current
assets |
|
19,853,443 |
|
|
25,618,563 |
|
|
|
|
|
|
Non-current
assets: |
|
|
|
|
Fixed assets, net |
|
1,618,147 |
|
|
1,746,679 |
|
Long-term investments |
|
2,572,040 |
|
|
2,568,368 |
|
Deferred tax assets, net |
|
23,873 |
|
|
23,873 |
|
Licensed copyrights, net |
|
6,640,910 |
|
|
6,327,855 |
|
Intangible assets, net |
|
1,678,193 |
|
|
1,559,022 |
|
Produced content, net |
|
3,736,063 |
|
|
4,213,078 |
|
Prepayments and other assets |
|
4,695,883 |
|
|
5,151,044 |
|
Goodwill |
|
3,888,346 |
|
|
3,888,346 |
|
Amounts due from related parties |
|
52,800 |
|
|
64,800 |
|
Total
non-current assets |
|
24,906,255 |
|
|
25,543,065 |
|
|
|
|
|
|
Total
assets |
|
44,759,698 |
|
|
51,161,628 |
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
|
|
Current liabilities: |
|
|
|
|
Accounts and notes payable |
|
10,162,366 |
|
|
10,351,228 |
|
Amounts due to related parties |
|
692,390 |
|
|
940,117 |
|
Customer advances and deferred revenue |
|
2,195,283 |
|
|
1,960,719 |
|
Short-term loans |
|
3,046,449 |
|
|
3,586,155 |
|
Long-term loans, current portion |
|
83,720 |
|
|
79,066 |
|
Accrued expenses and other liabilities |
|
3,632,148 |
|
|
3,763,934 |
|
Total current liabilities |
|
19,812,356 |
|
|
20,681,219 |
|
Non-current liabilities: |
|
|
|
|
Long-term loans |
|
644,169 |
|
|
651,276 |
|
Convertible senior notes |
|
4,712,284 |
|
|
11,553,301 |
|
Deferred tax liabilities |
|
96,405 |
|
|
83,530 |
|
Amounts due to related parties |
|
1,281,370 |
|
|
1,260,504 |
|
Other non-current liabilities |
|
57,551 |
|
|
291,001 |
|
Total non-current liabilities |
|
6,791,779 |
|
|
13,839,612 |
|
|
|
|
|
|
Total
liabilities |
|
26,604,135 |
|
|
34,520,831 |
|
|
|
|
|
|
Shareholders’
equity: |
|
|
|
|
|
|
|
|
|
Class A ordinary shares |
|
138 |
|
|
140 |
|
Class B ordinary shares |
|
183 |
|
|
183 |
|
Additional paid-in
capital |
|
39,666,150 |
|
|
40,401,567 |
|
Accumulated deficit |
|
(23,509,486 |
) |
|
(25,323,462 |
) |
Accumulated other
comprehensive income |
|
1,879,946 |
|
|
1,452,078 |
|
Non-controlling interests |
|
118,632 |
|
|
110,291 |
|
Total iQIYI, Inc.
shareholders’ equity |
|
18,155,563 |
|
|
16,640,797 |
|
|
|
|
|
|
Total liabilities,
mezzanine equity and shareholders’ equity |
|
44,759,698 |
|
|
51,161,628 |
|
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