iQIYI (IQ) Q3 Earnings call transcript Nov 21, 2024

iQIYI, a leading streaming platform in China, recently held its Third Quarter 2024 Earnings Conference Call, revealing insights into the company's operational strategies, financial performance, and market trends. The call, led by Founder, Director, and CEO, Yu Gong, provided a comprehensive overview of iQIYI's business operations and financial highlights.

Strategic Upgrades and Market Trends

iQIYI's strategy has been centered around premium long-form videos, which the company believes continue to provide unmatched entertainment value. The company has identified three key trends in the entertainment industry: consumers becoming more prudent and facing more entertainment options, including mini and short dramas, which are growing rapidly. In response, iQIYI has optimized its production processes and introduced new offerings to cater to these trends.

Mini and Short Dramas

iQIYI has made significant strides in the mini and short drama sector, adapting its content strategy to align with evolving market trends. The company's strategy includes optimizing production and distribution of these formats, enhancing membership offerings, and expanding AI applications across its ecosystem. This strategic shift has been driven by the growing popularity of mini and short dramas among audiences and the need to cater to users seeking quick entertainment.

Financial Performance

In terms of financial performance, iQIYI reported a total revenue of RMB 7.2 billion in the third quarter, down 10% annually. The membership services revenue was RMB 4.4 billion, down 13% annually, largely due to the impact of the macro environment and users' cautious spending habits. Online advertising revenue was RMB 1.3 billion, down 20% year-over-year, primarily due to a decrease in brand advertising revenue.

Looking Ahead

Despite the challenges, iQIYI remains optimistic about its future prospects, emphasizing its commitment to driving innovation and expanding its global reach. The company plans to continue investing in content production and technology, particularly in the area of AI applications. It also aims to expand its local and international partnerships to capture a greater share of the global streaming market.

iQIYI's strategic adaptations and financial performance underscore its resilience and agility in navigating the evolving entertainment landscape. As the company continues to innovate and expand its offerings, it is well-positioned to capitalize on the growing demand for diverse and high-quality content across various formats.