iQIYI Announces Second Quarter 2024 Financial Results

Core Viewpoint - iQIYI, Inc. reported a decline in total revenues and net income for the second quarter of 2024, highlighting challenges in the competitive online entertainment market in China while emphasizing a commitment to delivering premium content and managing financial resources effectively [2][3][5]. Financial Performance - Total revenues for Q2 2024 were RMB 7.4 billion (US$1.0 billion), a decrease of 5% year over year [2][5]. - Operating income was RMB 342.1 million (US$47.1 million), with an operating income margin of 5%, down from 8% in Q2 2023 [2][7]. - Non-GAAP operating income was RMB 501.4 million (US$69.0 million), representing a 36% decrease year over year, with a non-GAAP operating income margin of 7% [2][7]. - Net income attributable to iQIYI was RMB 68.7 million (US$9.5 million), a significant decline of 81% compared to RMB 365.2 million in Q2 2023 [2][8]. - Non-GAAP net income attributable to iQIYI was RMB 246.9 million (US$34.0 million), down 58% year over year [2][8]. Revenue Breakdown - Membership services revenue was RMB 4.5 billion (US$618.6 million), decreasing by 9% year over year [6]. - Online advertising services revenue was RMB 1.5 billion (US$201.1 million), a decrease of 2% year over year [6]. - Content distribution revenue increased by 2% year over year to RMB 698.2 million (US$96.1 million) [6]. - Other revenues grew by 16% year over year to RMB 783.9 million (US$107.9 million), driven by talent agency services and third-party cooperation [6]. Cost Management - Cost of revenues was RMB 5.7 billion (US$781.4 million), a decrease of 2% year over year [6]. - Selling, general and administrative expenses were RMB 969.7 million (US$133.4 million), down 1% year over year [7]. - Research and development expenses increased by 2% year over year to RMB 448.7 million (US$61.7 million) [7]. Cash Flow and Financial Position - Operating cash flow for Q2 2024 was RMB 410.8 million (US$56.5 million), down from RMB 885.6 million in Q2 2023 [9]. - Free cash flow was RMB 382.5 million (US$52.6 million), compared to RMB 872.3 million in the same period last year [9]. - As of June 30, 2024, the company had cash, cash equivalents, and short-term investments totaling RMB 8.6 billion (US$1.2 billion) [9]. Strategic Initiatives - The company completed the repurchase of US$395.5 million of its 4% convertible senior notes due 2026, reducing outstanding notes to less than US$0.2 million [10]. - iQIYI entered into facility agreements with PAG, providing loan facilities totaling up to US$522.5 million, aimed at optimizing financial leverage [11][12].