Profits Crumble at iQiyi, Chinese Video Streamer, in Second Quarter

China-based video streaming company iQiyi recorded a 5% decrease in revenue in the second quarter and an 80% plunge in net profits.

The firm said Thursday that revenues in the April to June period came in at RMB7.45 billion ($1.04 billion at current rates of exchange), down year-on-year and also 6% lower than the first quarter.

Net profit was RMB68.7 million ($9.6 million). That compared with RMB365 million ($51.1 million) in the equivalent quarter last year and with a RMB655 million ($91.7 million) profit in the January-March first quarter.

Last year was the first ever that the company achieved annual net profits, a feat that it achieved on declining subscriber numbers (101 million at the end of December 2023) that was more than offset by increased average revenues per user.

Since the beginning of this year, iQiyi ceased disclosing either member numbers or ARPU. The regulatory filing said only that membership services revenue was RMB4.5 billion ($630 million), decreasing 9% year-on-year “primarily due to fluctuation in the content slate performance.” It was the second consecutive quarter in which subscription revenue shrank.

Advertising earned by the platform s free tiers decreased 2% to RMB1.5 billion ($210 million) “primarily due to the decrease in brand advertising business, partially offset by the growth of performance-based advertising business.”

“Content distribution revenue was RMB698 million, increasing 2% year over year. Other revenues were RMB784 million, increasing 16% year over year, primarily driven by the increase of revenue derived from talent agency services and third-party cooperation,” the company said.

The filing did not directly address the firm’s shrinking subscription business, though it hinted at the effects of competition from other streaming platforms. Nor did it shed any light on iQiyi s attempts to develop an international business outside mainland China.

“We believe the vibrant competition within the long-form video sector in the second quarter is constructive for the industry, enhancing its appeal over other entertainment formats,” said Gong Yu, founder, director and CEO of iQiyi. “The key to long-term success hinges on consistently delivering premium content that balances artistic merits and commercial benefits, to which we remain committed.”

The company s NASDAQ-listed ADR shares closed Wednesday close to their all-time lows, at $3.08 apiece. At that price, iQiyi, which is majority-owned by tech giant Baidu, has a $1.62 billion market capitalization.