File Photo/NBD

On May 16, iQIYI (NASDAQ:IQ) released its unaudited financial results for the first quarter ending March 31, 2024. The total revenue for the quarter was 7.9 billion yuan, a 5% decrease year-over-year. Net profit attributable to iQIYI was 655.3 million yuan, compared to 618.1 million yuan in the same period of 2023.

The decline in revenue was primarily due to a 13% year-over-year decrease in the revenue from the membership services business, which is the largest contributor, down to 4.8 billion yuan. However, the average revenue per member (ARM) reached a new high. The report explains that the decline was mainly due to a high base in the same period last year, notably when iQIYI launched the hit series “The Knockout” in the first quarter of last year. Additionally, revenue from online advertising services and content distribution saw an increase compared to the same period last year, amounting to 1.5 billion yuan and 930 million yuan, respectively.

While total revenue declined, the cost of revenue was further compressed to 5.6 billion yuan, a 5% decrease year-over-year. Content costs, which are a major part of the cost structure, were 4 billion yuan, down 5% year-over-year, benefiting from improved content strategy and operational efficiency. Sales and management expenses and R&D expenses for the quarter were 922 million yuan and 429 million yuan, respectively. The financial report shows that iQIYI’s operating profit and operating profit margin increased during the quarter. iQIYI’s Non-GAAP operating profit was 1.1 billion yuan, and the Non-GAAP operating profit margin reached 14%, setting a new historical record.

Gong Yu, the founder and CEO of iQIYI, stated: “Thanks to the steady improvement in operational efficiency, our operating profit and operating profit margin have reached an all-time high. The initial success of generative AI in empowering operations is evident, and we look forward to using generative AI to enhance the supply of top-tier content and expand our future growth potential.”