Investment Rating - The report maintains a "Buy" rating for iQIYI (IQ.O) with a target price of $6.80 per ADS [2][4]. Core Insights - iQIYI's revenue for Q4 2023 is projected at 7.7 billion yuan, showing a year-over-year increase of 1.5% driven primarily by membership revenue growth. The company anticipates revenue to reach 7.8 billion yuan in Q1 2024 [1]. - The gross margin for Q4 2023 is reported at 28%, with a slight year-over-year decrease of 0.65 percentage points but an increase of 1.06 percentage points quarter-over-quarter. The GAAP net profit for Q4 2023 is expected to be 467 million yuan, reflecting a year-over-year increase of 53.24% [1]. - Membership service revenue for Q4 2023 is 4.8 billion yuan, with a year-over-year growth of 1.37%. The total number of paying members is reported at 100 million, a decrease of 10.13% year-over-year but an increase of 6.7% quarter-over-quarter [1]. - The report highlights a significant increase in user engagement with the launch of six popular series, with participation in membership rewards growing nearly 50% compared to the previous quarter [1]. - Advertising revenue for Q4 2023 is 1.65 billion yuan, up 6.25% year-over-year, although a decrease of 1.42% quarter-over-quarter is expected due to the seasonal nature of advertising [1]. Summary by Sections Financial Performance - Q4 2023 revenue is 7.7 billion yuan, with a year-over-year increase of 1.5% and a quarter-over-quarter decrease of 3.85% [1]. - Q4 2023 gross margin is 28%, with a year-over-year decrease of 0.65 percentage points and a quarter-over-quarter increase of 1.06 percentage points [1]. - Q4 2023 GAAP net profit is 467 million yuan, a year-over-year increase of 53.24% [1]. - Q4 2023 membership service revenue is 4.8 billion yuan, with a year-over-year increase of 1.37% [1]. - Q4 2023 advertising revenue is 1.65 billion yuan, a year-over-year increase of 6.25% [1]. Profit Forecast and Investment Recommendations - The report forecasts GAAP net profits for 2023, 2024, and 2025 to be 1.925 billion, 2.672 billion, and 4.050 billion yuan respectively, reflecting adjustments based on paid user assumptions [2]. - The target price of $6.80 per ADS is based on a 24x P/E ratio for comparable companies [2].

Investment Rating - The report maintains a "Buy" rating for iQIYI, with a target price of $8.03 per ADS, reflecting a 15x PE valuation for 2024 [4][26]. Core Insights - iQIYI's Q4 2023 revenue reached 77.06 billion RMB, showing a year-over-year increase of 1% but a quarter-over-quarter decrease of 4%, slightly above consensus expectations [2][8]. - The company achieved double-digit growth in both membership and advertising revenues for 2023, with membership revenue at 48.09 billion RMB in Q4, and advertising revenue at 16.51 billion RMB [2][11]. - The average revenue per member (ARM) increased to 15.98 RMB/month, marking a 13% year-over-year growth [2][11]. - The adjusted net profit for Q4 was 6.82 billion RMB, exceeding expectations by 29% [2][8]. Financial Performance Summary - Q4 2023 gross margin was 28.2%, with operating profit at 7.74 billion RMB, reflecting a year-over-year decrease of 1% but a quarter-over-quarter increase of 4% [2][8]. - The company expects revenues of 338 billion RMB and 376 billion RMB for 2024 and 2025, respectively, with growth rates of 6% and 11% [2][24]. - Adjusted net profits for 2024 and 2025 are projected to be 36.9 billion RMB and 44.1 billion RMB [2][24]. Revenue Breakdown - Membership revenue accounted for 62% of total revenue in Q4 2023, while advertising revenue made up 21% [11][12]. - The company anticipates membership revenue to grow to 212 billion RMB and 244 billion RMB in 2024 and 2025, respectively [24][25]. - Advertising revenue is expected to reach 67 billion RMB and 69 billion RMB in 2024 and 2025, with growth rates of 8% and 3% [24][25]. Cost Management - Content costs for Q4 2023 were 37 billion RMB, down 5% year-over-year, indicating effective cost control measures [2][20]. - The company continues to focus on original content production, which has helped optimize content costs and improve return on investment [20][26].

Core Insights - The Zacks Rank system emphasizes earnings estimates and revisions to identify winning stocks, with a focus on value investing as a preferred strategy in various market conditions [1] - Value investors utilize fundamental analysis and traditional valuation metrics to identify undervalued stocks [1] - The Style Scores system, particularly the "Value" category, helps investors find stocks with high value grades and strong Zacks Ranks [1] Company Analysis: iQIYI (IQ) - iQIYI currently holds a Zacks Rank of 2 (Buy) and a Value grade of A, indicating strong investment potential [2] - The company's P/B ratio is 2, which is favorable compared to the industry average P/B of 3; IQ's P/B has fluctuated between 1.74 and 7.92 over the past 52 weeks, with a median of 2.97 [2] - iQIYI's P/S ratio is 0.75, significantly lower than the industry's average P/S of 1.12, suggesting it may be undervalued [2] - The P/CF ratio for iQIYI is 6.73, which is considerably lower than the industry average of 17; this ratio has ranged from 2.82 to 10.13 in the past 12 months, with a median of 5.02 [3] - Overall, the metrics indicate that iQIYI is likely undervalued, and its strong earnings outlook positions it as one of the market's strongest value stocks [3]

29 Feb 2024 Earnings Summary CMB International Global Markets | Equity Research | Company Update iQIYI (IQ US) Improving profitability with solid guidance iQIYI (IQ) delivered better-than-feared 4Q23 results with inline topline and upbeat margin. Looking into 1Q24E, we expect both revenue and earnings to see sequential growth, with solid ARM trend. We keep confident on IQ's previous FY24E OP target (at RMB5bn), with disciplined content cost and ARM expansion. Given already-low expectation and clear profitab ...

[Management Commentary](index=1&type=section&id=Management%20Commentary) Management highlighted 2023 as the best-performing year with record revenues, operating income, net income, and cash flows, emphasizing business resilience and strengthened financial health - CEO Yu Gong stated that 2023 was the company's best-performing year, with **record highs** in total revenues, operating and net income, and cash flows[5](index=5&type=chunk) - Average Revenue per Membership (ARM) grew for **five consecutive quarters**, reflecting the high attractiveness of content and the growing value of membership services[5](index=5&type=chunk) - CFO Jun Wang highlighted that both operating and free cash flows surpassed **RMB 3.3 billion** in 2023, significantly strengthening the company's financial health[7](index=7&type=chunk) [Financial & Operational Highlights](index=1&type=section&id=Financial%20%26%20Operational%20Highlights) This section provides a high-level overview of iQIYI's financial and operational performance for Q4 and FY2023, presenting key metrics and year-over-year comparisons [Fourth Quarter 2023 Highlights](index=1&type=section&id=Fourth%20Quarter%202023%20Highlights) In Q4 2023, total revenues grew 1% to RMB 7.7 billion, with net income attributable to iQIYI significantly increasing to RMB 466.2 million Q4 2023 Key Financial Metrics (vs. Q4 2022) | Metric | Q4 2023 (RMB) | Q4 2022 (RMB) | Change | | :--- | :--- | :--- | :--- | | Total Revenues | 7.7 billion | 7.6 billion | +1% YoY | | Operating Income | 773.7 million | 783.6 million | -1% YoY | | Non-GAAP Operating Income | 927.8 million | 978.7 million | -5% YoY | | Net Income (attributable) | 466.2 million | 304.3 million | +53% YoY | | Non-GAAP Net Income (attributable) | 682.0 million | 856.4 million | -20% YoY | [Fiscal Year 2023 Highlights](index=1&type=section&id=Fiscal%20Year%202023%20Highlights) For FY2023, total revenues increased 10% to RMB 31.9 billion, with operating income more than doubling to RMB 3.0 billion and net income reaching RMB 1.9 billion Fiscal Year 2023 Key Financial Metrics (vs. 2022) | Metric | FY 2023 (RMB) | FY 2022 (RMB) | Change | | :--- | :--- | :--- | :--- | | Total Revenues | 31.9 billion | 29.0 billion | +10% YoY | | Operating Income | 3.0 billion | 1.3 billion | +128% YoY | | Non-GAAP Operating Income | 3.6 billion | 2.2 billion | +68% YoY | | Net Income (attributable) | 1.9 billion | (136.2 million) | Turnaround to Profit | | Non-GAAP Net Income (attributable) | 2.8 billion | 1.3 billion | +116% YoY | [Fourth Quarter 2023 Operating Highlights](index=2&type=section&id=Fourth%20Quarter%202023%20Operating%20Highlights) In Q4 2023, average daily subscribing members decreased to 100.3 million, offset by a 13% year-over-year increase in monthly ARM to RMB 15.98 - The average daily number of total subscribing members for Q4 was **100.3 million**, compared to **111.6 million** in Q4 2022 and **107.5 million** in Q3 2023[11](index=11&type=chunk) - Monthly Average Revenue per Membership (ARM) for Q4 increased **13%** year-over-year to **RMB 15.98**, up from **RMB 14.17** in Q4 2022[11](index=11&type=chunk) [Detailed Financial Results](index=3&type=section&id=Detailed%20Financial%20Results) This section provides a detailed breakdown of iQIYI's Q4 and FY2023 financial performance, covering revenue streams, costs, expenses, and profitability metrics [Fourth Quarter 2023 Financial Results](index=3&type=section&id=Fourth%20Quarter%202023%20Financial%20Results) In Q4 2023, total revenues rose 1% to RMB 7.7 billion, driven by online advertising growth, while content costs decreased, leading to a 53% increase in net income attributable to iQIYI Q4 2023 Revenue Breakdown (YoY) | Revenue Stream | Q4 2023 (RMB) | YoY Change | | :--- | :--- | :--- | | Membership Services | 4.8 billion | +1% | | Online Advertising | 1.7 billion | +6% | | Content Distribution | 506.1 million | -21% | | Other Revenues | 741.2 million | +13% | | **Total Revenues** | **7.7 billion** | **+1%** | - Content costs decreased by **5%** year-over-year to **RMB 3.7 billion** due to improved content strategy and operational efficiency[15](index=15&type=chunk) - Net income attributable to iQIYI increased by **53%** year-over-year to **RMB 466.2 million**, with diluted net income per ADS at **RMB 0.48**[21](index=21&type=chunk) [Fiscal Year 2023 Financial Results](index=4&type=section&id=Fiscal%20Year%202023%20Financial%20Results) For FY2023, total revenues grew 10% to RMB 31.9 billion, driven by membership and advertising, with operating income surging 128% to RMB 3.0 billion and net income reaching RMB 1.9 billion Fiscal Year 2023 Revenue Breakdown (YoY) | Revenue Stream | FY 2023 (RMB) | YoY Change | | :--- | :--- | :--- | | Membership Services | 20.3 billion | +15% | | Online Advertising | 6.2 billion | +17% | | Content Distribution | 2.5 billion | -4% | | Other Revenues | 2.9 billion | -15% | | **Total Revenues** | **31.9 billion** | **+10%** | - Operating income for FY2023 increased **128%** year-over-year to **RMB 3.0 billion**, with the operating margin expanding from **5%** in 2022 to **9%** in 2023[28](index=28&type=chunk) - The company reported a net income attributable to iQIYI of **RMB 1.9 billion** for 2023, compared to a net loss of **RMB 136.2 million** in 2022[32](index=32&type=chunk) [Financial Statements](index=9&type=section&id=Financial%20Statements) This section presents iQIYI's unaudited condensed consolidated financial statements, including the Income Statement, Balance Sheet, and Statement of Cash Flows, providing a comprehensive view of financial position and performance [Condensed Consolidated Statements of Income/(Loss)](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%2F%28Loss%29) The income statement for FY2023 shows total revenues of RMB 31.9 billion, operating income of RMB 3.0 billion, and a net income of RMB 1.9 billion, a significant improvement from the prior year's loss FY 2023 vs FY 2022 Income Statement Highlights (RMB in thousands) | Line Item | Year Ended Dec 31, 2023 (RMB in thousands) | Year Ended Dec 31, 2022 (RMB in thousands) | | :--- | :--- | :--- | | Total revenues | 31,872,651 | 28,997,548 | | Operating income | 2,989,479 | 1,312,421 | | Net income/(loss) attributable to iQIYI, Inc. | 1,925,469 | (136,212) | | Diluted net income/(loss) per ADS | 1.98 | (0.16) | [Condensed Consolidated Balance Sheets](index=10&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of December 31, 2023, iQIYI's balance sheet shows total assets of RMB 44.6 billion, total liabilities of RMB 32.4 billion, and total shareholders' equity nearly doubled to RMB 12.2 billion Balance Sheet Highlights (RMB in thousands) | Line Item | Dec 31, 2023 (RMB in thousands) | Dec 31, 2022 (RMB in thousands) | | :--- | :--- | :--- | | Total Assets | 44,594,374 | 46,048,349 | | Total Liabilities | 32,409,459 | 39,704,910 | | Total Shareholders' Equity | 12,184,915 | 6,343,439 | [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For FY2023, iQIYI generated RMB 3.35 billion in net cash from operating activities and RMB 3.31 billion in free cash flow, a significant turnaround from the prior year Cash Flow Highlights (RMB in thousands) | Line Item | Year Ended Dec 31, 2023 (RMB in thousands) | Year Ended Dec 31, 2022 (RMB in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | 3,351,600 | (70,569) | | Net cash used for investing activities | (1,739,515) | 265,980 | | Net cash used for financing activities | (4,285,072) | 4,468,863 | | Free cash flow | 3,314,629 | (244,832) | [Non-GAAP Financial Measures and Reconciliation](index=7&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Reconciliation) This section explains iQIYI's non-GAAP financial measures, including operating and net income, and provides a detailed reconciliation to comparable GAAP measures, clarifying adjustments - The company uses non-GAAP measures like **non-GAAP operating income** and **non-GAAP net income** to supplement GAAP results, excluding items such as share-based compensation and amortization of intangible assets from business combinations[39](index=39&type=chunk)[41](index=41&type=chunk)[42](index=42&type=chunk) FY 2023 GAAP to Non-GAAP Reconciliation Highlights (RMB in thousands) | Metric | GAAP (RMB in thousands) | Non-GAAP (RMB in thousands) | Key Adjustments | | :--- | :--- | :--- | :--- | | **Operating Income** | 2,989,479 | 3,643,384 | +636,732 (Share-based comp) | | **Net Income (attributable)** | 1,925,469 | 2,838,292 | +636,732 (Share-based comp), +336,226 (Impairment) | | **Diluted Net Income per ADS** | 1.98 | 2.91 | +0.93 (Non-GAAP adjustments) | [Other Information](index=6&type=section&id=Other%20Information) This section provides supplementary information for investors, including earnings conference call details, a corporate profile, and the Safe Harbor Statement regarding forward-looking statements [Conference Call Information](index=6&type=section&id=Conference%20Call%20Information) iQIYI management will host an earnings conference call on February 28, 2024, at 6:30 AM U.S. Eastern Time, with registration and replay details provided - An earnings conference call is scheduled for **6:30 AM U.S. Eastern Time** on **February 28, 2024**[33](index=33&type=chunk) - A live and archived webcast will be available on the company's investor relations website[36](index=36&type=chunk) [About iQIYI, Inc.](index=6&type=section&id=About%20iQIYI%2C%20Inc.) iQIYI is a leading online entertainment video service provider in China, leveraging AI and big data with a diversified monetization model including membership and advertising - iQIYI is a leading online entertainment video service in China, utilizing AI and big data for its technology platform[37](index=37&type=chunk) - The company's monetization model includes membership services, online advertising, content distribution, online games, IP licensing, and more[37](index=37&type=chunk) [Safe Harbor Statement](index=7&type=section&id=Safe%20Harbor%20Statement) This statement cautions that the announcement contains forward-looking statements subject to inherent risks and uncertainties, directing readers to SEC filings for further information - The announcement includes forward-looking statements subject to risks and uncertainties as per the U.S. Private Securities Litigation Reform Act of 1995[38](index=38&type=chunk)

Investment Rating - The report maintains a "Buy" rating for the company [4] Core Views - The company achieved its best annual performance in 2023, with a revenue of 31.87 billion RMB, a year-on-year increase of 9.9% [4] - The company expects profit growth to outpace revenue growth in 2024, with new growth drivers anticipated from overseas business, IP derivative payments, and AIGC [4] Financial Performance - In Q4 2023, the company reported revenue of 7.71 billion RMB, a year-on-year increase of 1.5% and a quarter-on-quarter decrease of 3.9% [4] - The GAAP net profit for Q4 2023 was 466 million RMB, up 53.2% year-on-year but down 2.0% quarter-on-quarter [4] - The non-GAAP net profit for Q4 2023 was 682 million RMB, down 20.4% year-on-year but up 9.6% quarter-on-quarter [4] - The company’s total revenue for 2023 was 31.87 billion RMB, with a non-GAAP net profit of 2.84 billion RMB, reflecting a year-on-year increase of 121% [4] Membership and Advertising - Membership revenue in Q4 2023 was 4.81 billion RMB, a year-on-year increase of 1.4% [4] - The average monthly payment per member reached 16.0 RMB, a year-on-year increase of 12.8% [4] - The company had a total advertising revenue of 6.22 billion RMB in 2023, a year-on-year increase of 16.7% [4] Cost and Efficiency - Content costs in Q4 2023 were 3.7 billion RMB, down 5% year-on-year, with the cost-to-revenue ratio decreasing to 48% [4] - The company maintained a sales and management expense ratio of 12.6% for 2023, a slight increase of 0.6 percentage points year-on-year [4] Future Projections - The report projects non-GAAP net profits of 3.89 billion RMB for 2024 and 4.41 billion RMB for 2025, with corresponding PE ratios of 6.6 and 5.9 [5]

iQIYI, Inc. (NASDAQ:IQ) Q4 2023 Earnings Conference Call February 28, 2024 6:30 AM ET Company Participants Chang Yu - IR Director Tim Gong - Founder, CEO & Director Jun Wang - CFO Xiaohui Wang - Chief Content Officer Wenfeng Liu - CTO Conference Call Participants Xueqing Zhang - CICC Lincoln Kong - Goldman Sachs Group Lei Zhang - Bank of America Merrill Lynch Operator Good day and welcome to the iQIYI Fourth Quarter and Fiscal Year 2023 Earnings Conference Call. [Operator Instructions]. I would now like to ...

Core Viewpoint - iQIYI, Inc. reported its best financial performance in corporate history for the fiscal year 2023, with significant increases in total revenues, operating income, and net income, reflecting a successful turnaround from previous years [4][3]. Financial Highlights for Fourth Quarter 2023 - Total revenues reached RMB7.7 billion (US$1.1 billion), a 1% increase year over year [2][9]. - Operating income was RMB773.7 million (US$109.0 million), with an operating income margin of 10%, consistent with the same period in 2022 [2][11]. - Net income attributable to iQIYI was RMB466.2 million (US$65.7 million), up 53% from RMB304.3 million in the same period in 2022 [2][12]. - Non-GAAP net income attributable to iQIYI was RMB682.0 million (US$96.1 million), a decrease of 20% year over year [2][12]. Financial Highlights for Fiscal Year 2023 - Total revenues were RMB31.9 billion (US$4.5 billion), representing a 10% increase from 2022 [3][14]. - Operating income increased to RMB3.0 billion (US$421.1 million), with an operating income margin of 9%, compared to 5% in 2022 [3][16]. - Net income attributable to iQIYI was RMB1.9 billion (US$271.2 million), a significant recovery from a net loss of RMB136.2 million in 2022 [3][17]. - Non-GAAP net income attributable to iQIYI was RMB2.8 billion (US$399.8 million), compared to RMB1.3 billion in 2022 [3][17]. Membership and Revenue Streams - Membership services revenue for Q4 2023 was RMB4.8 billion (US$677.3 million), a 1% increase year over year, with an average daily number of total subscribing members at 100.3 million [9][10]. - Online advertising services revenue was RMB1.7 billion (US$232.5 million), increasing 6% year over year, driven by brand advertising growth [9][10]. - Content distribution revenue decreased by 21% year over year to RMB506.1 million (US$71.3 million), primarily due to a reduction in barter transactions [10][15]. Cost Management and Financial Health - Cost of revenues was RMB5.5 billion (US$779.3 million), a 2% increase year over year, with content costs decreasing by 5% to RMB3.7 billion (US$524.5 million) [10][11]. - Selling, general and administrative expenses increased by 1% to RMB947.8 million (US$133.5 million) [11]. - The company reported operating and free cash flows exceeding RMB3.3 billion in 2023, indicating improved financial health [4][3]. Cash Position and Debt Management - As of December 31, 2023, the company had cash, cash equivalents, and restricted cash totaling RMB6.2 billion (US$876.4 million) [13]. - The company repurchased US$31.0 million of its convertible senior notes due 2026 during Q4 2023 [13].

公司研究 | 动态跟踪 爱奇艺 IQ.O 买入（维持） 内容质量持续提升，ARM 保持增长 股价（2024年02月22日） 3.61美元 目标价格 6.57美元 52周最高价/最低价 7.86/3.06美元 ——爱奇艺（IQ.O）23Q4前瞻点评 总股本/流通股（亿股） 9.57/5.22 美股市值（亿美元） 34.54 核心观点 国家/地区 中国 行业 传媒 ⚫ 我们预期公司23Q4营收或达77亿(yoy+1%, qoq-4%)，同比增长主要系会员、广 报告发布日期 2024年02月23日 告收入增长双驱动。 GAAP营业利润或达7.5亿（yoy-4%，qoq+1%）；Non- GAAP营业利润或达9亿（yoy-8%，qoq+1%）。GAAP归母净利润或达4亿 1周 1月 3月 12月 （yoy+32%，qoq-15%）；Non-GAAP归母净利润6.5亿（yoy-24%，qoq+5%）。 绝对表现% 1.55 -0.82 -24 -50.68 我们预期23年全年GAAP营业利润或达30亿（yoy+126%），Non-GAAP营业利 相对表现% 0.7 -5.26 -36.45 -90.09 润或达36亿（ ...

Investment Rating - The report maintains a "Buy" rating for iQiyi (IQ) with a target price of $7.52 per ADS [4] Core Views - iQiyi's Q4 2023 revenue is expected to reach RMB 7.672 billion, up 1% YoY but down 4% QoQ [2] - Q4 2023 gross margin is projected at 28%, down 1pct YoY but up 1pct QoQ [2] - Operating profit for Q4 2023 is estimated at RMB 754 million, with an operating margin of 10% [2] - Adjusted operating profit is forecasted at RMB 903 million, representing a 12% margin [2] - Net profit for Q4 2023 is expected to be RMB 445 million, with adjusted net profit at RMB 657 million, down 23% YoY but up 6% QoQ [2] Membership Business - Q4 2023 membership revenue is projected at RMB 4.798 billion, flat YoY and down 4% QoQ [2] - Average Revenue per Membership (ARM) is expected to reach RMB 15.9, up 12% YoY and 2% QoQ [2] - Membership revenue is forecasted to grow 15% in 2023 and 5% in 2024 [10] Advertising Business - Q4 2023 advertising revenue is estimated at RMB 1.641 billion, up 6% YoY [2] - Advertising revenue is expected to grow 17% in 2023 and 4% in 2024 [10] Content Strategy - iQiyi continues to focus on self-produced content, with a structural shift towards top-tier content [2] - Content cost is projected to account for 51% of revenue in 2023 and 50% in 2024 [10] Financial Projections - 2023 revenue is forecasted at RMB 31.838 billion, up 10% YoY, with 2024 revenue expected to reach RMB 33.305 billion, up 5% YoY [10] - Non-GAAP net profit is projected at RMB 2.813 billion in 2023 and RMB 3.448 billion in 2024 [10] - The company is valued at 15x 2024 PE, implying a fair value of $7.52 per ADS [10] Industry Comparison - Compared to Netflix and Disney, iQiyi's valuation is relatively lower, with a 2024 PE of 15x versus Netflix's 33.1x and Disney's 23.5x [13]