IQ - Earnings call transcript Q2 2024

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Operator

Thank you for standing by, and welcome to the iQIYI Second Quarter 2024 Earnings Conference Call. [Operator Instructions]

I would now like to hand you over to -- the conference to Ms. Chang Yu, IR Director of the company. Please go ahead.

Chang Yu

operator. you, Thank thank Earnings and joining Second iQIYI's Hello, Call. you XXXX Conference Quarter everyone, for The released ir.iqiyi.com. results company's company's were Investor on are Relations the available website at earlier today and

Gong, On today Mr. Wang, Chief CFO; the our CCO, Director Xiaohui our Officer; are Yu Jun Wang, call Mr. Content and our Mr. CEO; Founder, Mr.

Senior Xianghua Business. President Vice and Overseas Yang, Vice of of Membership our President Duan, Senior Youqiao Business; Mr. and Movies

highlights, followed the prepared Mr. and Gong will company's brief through Q&A go of give remarks, the session. team the Jun, will business by the a overview management participate After will in who operations financials. the

Litigation the made Act Before we harbor of the safe that will Securities contain of discussion under note Reform the forward-looking statements proceed, XXXX. provisions please Private today U.S.

subject to, risks actual required the filings in expectations. update as Potential with under that may are any obligation except differ from but statements applicable any include, those does SEC. limited uncertainties to forward-looking iQIYI uncertainties to are our statements cause materially and not law. outlined risks current not to undertake results public Forward-looking our and

now will pass go Mr. on Please I Gong. ahead. to

Tim Yu

we results. second you a financial top premium Thank content-led pressure performance. everyone. did content. overcome In After of saw quarter, short-term of have the work, joining of the our us intense titles competition Hello, great our content, we serials high today. meet without not fluctuation well for in diversified putting on Certain hard our expectations, deal

its has tactics. and opportunity other formats. our view review competition have sectors the constructive, within over vibrant the refine a entertainment enhanced video As and private to of a fact, long-form which And also valuable we matter appeal

our of mind, this importantly, ultimately supply the success ability on gain our further us stable preference the and the the depends content future that our goal the growth. of overall commercial of improve It benefit. of a performance. improve understanding and ability success premium We in more in the balance quality long-form of both helped business in believe firmly video and and better achieve business rate for user is content to With to portfolio content content

category our release brought Language] fact, leading our to and gained and enlightened has part planned Tales fall, titles summer our of share season operating terms momentum, [indiscernible] according and Strange the to market content such strong premium of [Foreign metrics Season us of Dynasty drama In have the offset as in key data. in in the after The X back July key Tang

season iQIYI, Tang our XXth second addition of the business. of user of experience of Strange Notably, Tales Dynasty in XX,XXX score bring index another content, high-quality for providing our great delivering the drama done as to becomes cornerstone popularity to

content benefits, enhancing to performance. user we remain member bring committed As also refining balancing in commercial viewer superior free we distribution our are experience while

we are investing long-term to sustainable drive ahead, the Looking areas growth. in multiple company's

to we improve creation, extensively efficiency experience. AI applying user and Firstly, are operational content

overseas enhance expanding footprint domestic our further while will we survey. Secondly, in our broader market business

IP IP maximizing such for content with perfectly initiatives and pivots its opportunities core explore portfolio through future. influence advertisement to creativity, beyond which our using are exciting We and stage centered revenue, membership These innovation IP align setting that and iQIYI derivatives and as experiences. off-line content on an technical value revenue the -- were our the

core Services. the move our let's on Membership of starting Now, business performance with to segments,

year's the latest key members the megahit, user content in Services our and the on attrition superior effect Our from and premium related sustainable last experience. growth membership types primary down of was driving fluctuation annually, revenue goal causing through performance for primarily Membership revenue second top-notch high-base quarter, company's remains In X% Knockout. The long-term of to

partially fulfilled strategy back was This as the we promotions grew by year-over-year. on and ARM scaled displaying discounts. overall pricing steadily

up high And dramas played sign to benefits members the enhanced have pay. Express to the effectively for also launched a tier. number Our the users added the Package role, and Notably, furthermore, major cash we in innovative, second we purchases. XX revenue of however, encourage quarter for drama highest network do not garnered

in plan Following as drama animation. the success to to show category, categories Package expand Express content and variety such we other

several confident of in outlook is factors. by the which long-term supported key We our business, membership remain

members. Firstly, we foundation a layer have built of successfully solid ticket

marketing to primary Initiatives quarter, growth. providing second as conversation exclusive we In key by include: initiatives events. in our XX by improving strategy cohorts. Furthermore, off-line broader member our to to And the committed viral content membership our one, such expanding and offline had plan reaching diversified and remains services are or content are sales demographic events Express rates for and the [indiscernible] value popular membership content directly we social launching channel season Package enhancing broader as of we driver acquisition high-tier more through Secondly, utilizing received long-term of our to introducing user the groups middle and subscribers operational marketing improve encourage of premium organized positive package. retention. will such and feedback. many

iQIYI views. the XX content Festival. XXX X discounts to celebrities hosted July, first over generated participated our in broadcasting Through strong the coincide for of its further X perceived exemplified on XX December promote even membership Macau. the More than by was our in event our last Building and members year event, The in off-line live this value annual year, iQIYI flagship from is offered XX reception events, live-streaming XXXX titles pipeline. comeback we over appealing very million Member our user the set and

opportunity activities. annual only we key a the but Festival boost event to serve members, an Membership to is the In the and ramp inclusive festival iQIYI attractive deals influence. to This substantial or set will future, provide an the is also to be July, our not to underscore It members. value discover XXth will as our event

Moving to on content.

QX that we the in expect lot this operation performance in have a analysis setback our the from short-term insights valuable of the we and and flat projects, the future. company's to short-term through in drive our gained content overcoming creation in-depth learned are We fluctuation

to Firstly, edge and creation, higher-quality with particular, into we the of establishes to our with will meets content with to our offerings deeper of maintain creation, our In appetite producing more aim content field content tap a plan ability thereby to that audience especially portfolio further constantly enhance content social that connection respect broaden in the our our to audiences. craft female mainstream traps we that evolving audiences. to popular we appeal

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user regarding and audiences' user our Secondly, that retention. that adopt a with viewing rollout approach ensures and trends will often dynamic This closely scaling, we our preferences common habits. strategy guided is tended align monitor by gathering is content our to engagement and

managing our studios, stage terms committed to of operation enhancing effectiveness in at and creative Thirdly, each in-house of are process. key the efficiency our the we nodes of

is can to an ample our freedom creativity ensure among cultivate aim foster artistic culture where unleash environment more proactive a to swipe. their Our and talents, fully skills, they have

the detailed in content Moving on quarter. to the second performance

unchallenged. leadership reality our suspense dramas, remains in genres the For and

show's merits boosts by tourism extend which to we to of benefits the sponsors in To worked well artistic influence Wonder in vitality and it widely concert remarkable its tourism drama metrics. the effect exceptional the commercial demonstrated and as performance blending the with users, Xinjiang expanding was generated team success online its original location open large-scale an ala our local beyond in impressive demand all filming July, and What's Our to field across effectively acclaimed with creative culture carte the is the IP, Xinjiang host bureaus. in more

brand. suspense platform by One go launching in position [Foreign dramas, Tell Language] as under and the In our the Shadows solidified addition, genere we for further Language] On our Light [Foreign Lost the to No Theatre

peers movies, channel, the viewership Cinema, according article they and outperform our Argyll multiple box such XX such R. In quarter, [indiscernible]. we of including X, latest Article box-office in total continued patent our The Cloud popular XX most These in as Pegasus hits office titles the our launched second releases XX, titles, we movie to launched and In key covering a data. to for Situation as

we released Hai Yang, from Tan. suspense Chao Future, and crime, Yi Zhu Suspect, You disaster comedy, Qian such Chen movies, the genres, original For as various

Adventure For Detective China Wan variety of China namely both shows, our generated of and be X also revenues. XXXX Rap The Rap season, Season flagship of shows the X, returned which to the advertisers. considerable well with Shuo The Xin new Chang, recognized by membership continued Peng XXXX,

original [Foreign as animation to and we animation enhanced original platforms multiple initial its new a acquisition is capabilities. as the animation. How animations, revenue also popularity iQIYI encouraging to of off Chinese to example, user production original first for X,XXX continued index results invest see and For Language], with Dare highs. You serves in in-house perfect began hit break our new It reached it

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we on In to expanding to initiative VR traditional the have Xian. our the in beyond success, content the presence original impact of our vendors, broaden key and Beijing, capitalize development aims launched business Shenzhen as and IP strategy, move This this such screens.

score Beyond brand-new of Show, has iQIYI its popularity garnered iQIYI dramas, Variety and a peak original categories our a index recorded praise then user expanding innovative X,XXX. and over format iQIYI creativity is new for into

offerings of exploration initial an Standup Additionally, the comedy feedback variety King out first has show Comedy standing into among Language] and market The [Foreign standup the comedy. summer. received this encouraging IT's

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toys established licensing with worked product joint customization also have and marketing. IP and for for brands We

year-over-year. was the billion, a has total as RMB remained Moving advertising such quarter, revenue as rate quarter, In Key business. of X.X of performance on the growing solid results services highlight from fair and year-over-year. a X% to the our Performance sectors XX performance, services down healthy at second e-commerce revenue technical XX% is with revenue growing annually. The solid and Internet from and the for shopping advancement. XX% demonstrated a June also reflection festival Internet annually e-commerce

reinforced ROI our further traffic mechanism clients. we ad and the of the algorithm, upgraded have efficiency smart placement monetization enhanced bidding So and for

and our sequentially. revenue Additionally, now AI enabling driving efficient industries, AI part broader more production cover ad tools XXX% by

brand brand double-digit advertisers, annually, notably of major fewer to content-targeted annual shows For revenue. revenue down was attract was The the particular, continued app, our of achieved shopping festival from due past XX variety to performance apps. expectations. the in In line mainly premier dramas stemming our the that launched with in growth revenue in also June our content XX% with

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to virtual be technology production For to our used example, limited genres. fantasy

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to marketing, we generate models all content and among information have marketing those efficiency. improve implied points analyze marketing AI For cloud to key

membership from annually C-dramas that for Finally, overseas annual revenues regions China, second influence performance quarter. of performance with sequentially. in C-drama sustained our the total and iQIYI's quarter, continues The outside and membership strengthen business, revenue both by original business, in over from Mainland we XX% continue the increase solid grow our and in evidence our content the to to revenue during

bear U.S., -- Thai a localization fruit. [indiscernible] have attempts including number of of views location and our our started accumulated The to Our of also number the the U.K. drama original Canada in ranked first markets

countries. all in We is set, and has all-Chinese even have outperformed revenue high Japanese solid viewership among in also You made attained remarkable Dare and our which top on progress iQIYI animation historical animation, overseas several animation, How

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pursuing to ahead, our we a long-term In sustainable are dedicated summary, with approach. looking growth

content, ecosystem our apply effect enhance capabilities. IT technologies creativity believe We innovative long-term the will we that, out and of execution more continue growth. rule diversified will premium team and our drive to With content extensively more flywheel

financial to Jun Now, go through let on to performance. our me pass

Jun Wang

and everyone. Gong, hello, Thanks, Mr.

total annually, RMB through The revenue RMB down due as revenues billion, Let content were performance walk in fluctuations the second Services X% you Membership numbers. billion, discussed. In quarter, annually. reached X.X X.X X% the the key me to previously primarily

decrease due revenue advertising, RMB was to shows decrease That of to online again, the brand quarters. performance This the primarily variety ad result which, had the businesses. ad X% to offset For year-over-year partially due during is was X.X healthy the the growth businesses, by the decreased we by in billion. of

annually. talent XXX partially RMB million revenue RMB by annually driven and million, grew of distribution deriving increase from revenues agency services and reached increased to by Content XXX the cooperation. third-party XX% the X% revenue Other

costs to RMB X% and disciplined was in cost expenses billion, expenses. strategy. RMB operating annually. Content were on X.X annually. down our billion, Moving This was X.X with Total marketing spending flat line

and flow The Turning RMB the to corresponding operating X profit XXX non-GAAP and million, positive RMB X%. quarters. The cash operating cash income totaled million, XXX for consecutive has remained was margin flow.

investments quarter, cash cash, of short-term the restricted As X.X long-term billion. equivalents, assets second of and of the RMB included prepayments we and totaling had end cash a in other

rights have our striving In and of optimize financial balance health offer of improve An XXX of USD for business leverage We million we was have resources, of surrendered and principal repurchase sheet. remains aggregate amount our notes August, to XXXX. completed the outstanding. prudently XXX,XXX only overall validly our convertible financial the our managed the aggregate the and to notes repurchased, in principal amount

detailed to IR our I will now on For floor the refer data, for open our please release press financial website. Q&A.

Operator

Chinese, For Instructions] on today's of in your benefit you your question call, question to English. all [Operator [Operator management if immediately wish the Instructions] ask please repeat to in participants

question Your with Xueqing Zhang CICC. comes from first

Xueqing Zhang

had My the fluctuated. Language] also years current And landscape. here is some for our videos? question leading blockbusters view competition [Foreign landscape your long has been competition We share, does what's has about strategy? the market over that How platforms and noticed other management which

Tim Yu

[Foreign Language]

Chang Yu

[Interpreted] answer Xiaohui, question. We will this CCO, our to invite

Xiaohui Wang

[Foreign Language]

Chang Yu

competitiveness the richness industry entertainment, competition forms always present. actually often overall mentioned video to intense us the competition this quality The helps to the we video. as long-form short-form other the sector the industry's within of compared such content, been the And of [Interpreted] has enhancing and improve

motivates it same to continually diverse supply improve quality gold us long-form ultimate content in and competition the to also the a is sustain time, content that benefit. situation win-win future. between commercial We've the and content in high-quality, always quality emphasized At the a the the video achieve

Xiaohui Wang

[Foreign Language]

Chang Yu

position a our long of performance, market at a has maintained long-term categories drama leading in share of period Looking actually time. for [Interpreted] film core iQIYI and the

but some optimization, thorough returned drama a #X the in review in overcome market our we've difficulties and short-term experienced after QX, the to category share position market we targeted and in Although share. fluctuation drama a

Xiaohui Wang

Language] [Foreign

Chang Yu

continues quality Tales and performance content In Dynasty future. and Winter to are The the the The X [Interpreted] Tang enhance Season great will of believe drama the advantage To commercial in and Strange returns, this we iQIYI's balancing series examples, lead. further

Xiaohui Wang

Language] [Foreign

Chang Yu

supply. [Interpreted] and Going insights female dedicated in every our we the our forward, we Enhancing to all remain will tailored and the innovation, scheduling of of high-quality strategies initiatives audiences. creating for studios. diverse And optimizing content content at content facet believe these aimed are strengthening social and income our high-quality, stability management mainstreams improving

Xiaohui Wang

[Foreign Language]

Chang Yu

[Interpreted] the drama of current reserve demand Our mainstream accommodates viewing the audience.

aimed for and dramas. for have core the mystery audiences ample relatively reality suspense the specifically reserve as female We ancient of well the genres themed a at as costing dramas

Xiaohui Wang

[Foreign Language]

Chang Yu

also serialization will IP our development. for capabilities continue strengthen We [Interpreted] to

of the Season as example, will Tang And you. Season preparation. is Tales season future, content X the the is The introduced. second development. Under For Dynasty well-loved serialized case series also and In Strange Fearless the One their in such in Skin a soon The X, also Ingenious and Thank launched be of successful the seasons which launched QX, third

Operator

next comes Goldman Sachs. Lincoln Kong Your from question with

Lincoln Kong

should subscribers business. the the membership about [Foreign about ARPU as especially we question the growth? prospects future, Language] well the in think membership My growth as of How is

Tim Yu

Language] [Foreign

Chang Yu

Business, question. Youqiao VP [Interpreted] We of Duan Membership our will Senior this answer to invite

Youqiao Duan

Language] [Foreign

Chang Yu

structure, of members perspective and Fluctuations of content. attracted base are come have stable who and from new popular our a members steady. our [Interpreted] subscribers the actually by mainly From cornerstone a membership remained represent

content retention return arrives, season summer has the numbers. offering of positively the and long-standing the hit-driven of As influenced our users

Youqiao Duan

[Foreign Language]

Chang Yu

the provides revenue. In focus our membership, with member, The our ultimate level expanding revenue of to year-over-year terms the us remains but the goal ARM, [Interpreted] QX, growth. scale operational in of per of the solid future, flexibilities on which is near current our a will In tactics. membership ARM average be maximize maintained

Youqiao Duan

Language] [Foreign

Chang Yu

[Interpreted] more the every progress and proactive long-term share plans of membership piracy, In our implement business. that's also the measures future, We'll the sharing plan specific to made. of optimize we'll account with thereby supporting combat healthy to growth one

Operator

Maggie with from Your next question comes CLSA. Ye

Maggie Ye

Language] of by local [Foreign very high-quality in premium seen to production overseas revenue Regarding Mandarin distribution in quarters content. we've business, decent our addition our growth past

overseas As anniversary, management and iQIYI can thoughts business? business our international X-year its share on celebrates latest strategy your plan for

Tim Yu

[Foreign Language]

Chang Yu

responsible [Interpreted] answer We'll our VP, overseas is the Youqiao who Senior to this invite business question. Duan, for

Youqiao Duan

Language] [Foreign

Chang Yu

achieved expanding success. operations [Interpreted] actually into In XXXX, reached XXXX the market We and in overseas operating initial our breakeven. have overseas started earlier

increase a also for the also growth maintain goal revenue profit. while continuing to Our overseas year-over-year for QX will this to And year, quarter-over-quarter revenues boost and healthy XXXX for growth. membership is total revenue and

Youqiao Duan

[Foreign Language]

Chang Yu

aim content, our of have content measures. increase suitable optimal terms markets, In discovered an further mix overseas content [Interpreted] for to we different we and through offerings

the has language major overseas significantly becoming example, content for our for For increased, platform. content top source overseas a popularity of our Chinese

content X past XX the dramas, which were opportunities Chinese over on original the offerings and years, strength iQIYI the continue overseas to content. demonstrates offerings. the of explore we'll the increase overseas of production and IP over dramas to most were as popular shows half influence our Chinese of our the content This of language actively And originals. future, fact, Chinese of most foundation of use local In in original

the And content industry, video the localized of the the perspective, we of also, efficiency original aspects overseas. technology's empower to long-form from production AI different utilize technology enhancing will iQIYI's

Youqiao Duan

[Foreign Language]

Chang Yu

operators in have and local content believe increase with telecom [Interpreted] collaboration our our will overseas. already with And partners. brand connection awareness to in influence Regarding operators regions. we with our certain our additional enhance telecom we deep established and both forward, partnerships to going And countries expand local we to and -- aim these cooperation partnerships,

and the models. influence platform while And expanding coverage of language diversified continue to content, monetization to iQIYI's overseas the Chinese for is local our make long-term home the content, increasing of IP also explore content of objectives Asian beloved

Jun Wang

[Foreign Language]

Chang Yu

XXXX, Wang management based overseas added in CFO, from This to the mentioned on accounting And our breakeven. full reached And year Jun, he our actually a perspective. is that this. operating business that [Interpreted] just fact

Jun Wang

Yes, based the management account. is this on

Chang Yu

Correct. And has developed very then trend is year. healthy over the a past this that

Operator

from question with Chong Jefferies. Your next comes Thomas

Thomas Chong

strategy has [Foreign unlocking Language] of in can potential a and rather good the As of your areas than different iQIYI lot IP IP, share advertising? management membership

Tim Yu

[Foreign Language]

Chang Yu

enhancing [Interpreted] the Our metaphor content is its fish described IP ability mentioned our eating that Promoting a IP into this We IP CEO which of our answering the He model including business is is this an actually long-term of question. asset and off-line forms, in piece competitiveness. core that transform numerous each value various in business IP-based of monetization effort our a is ways, company. our key called actually content prospects. content important with and to sustained multiple to emphasized

we this markets believe across maximize For its revenue, will thereby, different value and platforms.

Tim Yu

[Foreign Language]

Chang Yu

significantly. years [Interpreted] the grown IP of assets company's content, our focus has Our many value of actually, producing original

original quarterly X instance, period, have high now original an key maintained for accounted our dramas. stabilized found only demonstrated around extended half And XX%. our also QX, which release their effect, period sustainable dramas during years in have leading high-quality, of not a has ago, also popularity over new proportion time. long-tail success initial dramas at XXXX, For this has of over And but broadcasting

Tim Yu

Language] [Foreign

Chang Yu

IP in shift content role cultural where premium hope sectors, will actually the And consumer domestic commerce the in behavior growth experience business and off-line become change our actually tourism in plays creating we curve noted We offline second in experiences. engaging the the [Interpreted] an important increasingly that also future.

vast our serve core of video IPs in our as content actually example, For area. strength library high-quality this

online of Strange in from The VR drama the called For successfully hit recent key and example, in an leveraged immersive introducing Xian. Beijing we are the experience cities its Dynasty Tang China. like beyond title Tale IP presence, These cities

extending games In the such younger further a developed derivative as appeal new car to the IP's we've designed of to impact. taste reach and products demographic, addition,

Tim Yu

[Foreign Language]

Chang Yu

has [Interpreted] prospect light -- incremental revenue which for actually actually, limited for cost. operational a asset the And approach, this under we promising favor model, a operating

Tim Yu

[Foreign Language]

Chang Yu

this off-line [Interpreted] approach actually terms experiences, be our validated scaling. experiences. been on model Actually, now to based of able this and And in being is replicated has

Tim Yu

[Foreign Language]

Chang Yu

I what addition I earlier, the In around that further initiatives similar we're to experiences IP. [Interpreted] virtual mentioned just also our VR exploring mentioned,

QiBubble partners mentioned, IP now park are similar actually our And our Language] aim is these which to provide and light-asset the what the in approach. children. for For And example, the collaboration merchandise a just entertainment with which also designed Park, developing a [Foreign is engaged its very I comprehensive stores, theme to is experience. with initiatives users

Operator

no this to back are further remarks. closing at There time. I'll for management now questions hand

Chang Yu

further call. Thank don't for to if the questions, in Thank And you, participating everyone, please you have hesitate us. contact you.

Tim Yu

Thank Bye-bye. you.

Operator

That Thank our you conference does for participating. for conclude today.

now disconnect. may You

live [Portions were of this interpreter the transcript call.] on that by are an [Interpreted] marked spoken present

iQIYI (IQ) 22 Aug 242024 Q2 Earnings call transcript