IQIYI's Q1 2025: Navigating Contradictions in Micro Dramas, Long-Form Content, and Global Expansion Strategies

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Subscription Revenue Growth:
- iQIYI reported a 7% sequential increase in membership services revenue to RMB4.4 billion in Q1 2025.
- Growth was driven by the strong performance of long-form dramas and a healthy average revenue per member.

Content Strategy and Micro Dramas:
- iQIYI's micro drama portfolio expanded to over 15,000 titles, with a 300% increase in daily viewing time and 110% increase in unique daily visitors since April-December.
- This expansion was part of a strategy to attract new users, drive membership revenue growth, and explore monetization opportunities.

International Business Growth:
- The company's overseas revenues increased by over 30% year-on-year, with a significant boost in the number of subscribing members.
- Growth was attributed to the success of original productions and a well-curated content mix that appeals to global audiences.

Content Costs and Profitability:
- Total content costs for Q1 2025 were RMB3.8 billion, up 10% sequentially, reflecting higher premium drama investments.
- Despite this increase, iQIYI maintained a non-GAAP operating margin of 6%.

Financial and Debt Management:
- iQIYI reported a non-GAAP operating income of RMB458.5 million, up 13% sequentially, with a net cash provided by operating activities of RMB339 million.
- The company has optimized its capital structure, reducing its outstanding debt through equipment loan arrangements with PAG and achieving a 30% year-over-year reduction in net interest expense.