Core Viewpoint - iQIYI's Q2 2025 financial performance shows a significant decline in both revenue and profit, indicating severe pressure on its core business and a lack of effective support from new ventures [1][2][3] Revenue Performance - Total revenue for Q2 2025 was RMB 6.628 billion, down 11% year-on-year from RMB 7.439 billion in Q2 2024, and down 7.8% from RMB 7.186 billion in Q1 2025, marking a rare consecutive revenue contraction [2] - Membership services, the largest revenue source, generated RMB 4.090 billion, accounting for 61.7% of total revenue, but saw a 9% decline year-on-year [5] - Online advertising revenue fell to RMB 1.272 billion, a 13% decrease year-on-year, attributed to macroeconomic pressures affecting advertisers [5][6] - Content distribution revenue dropped to RMB 436 million, a 37% decline, indicating reduced attractiveness of iQIYI's content for external partnerships [6] Profitability Analysis - iQIYI reported an operating loss of RMB 46 million in Q2 2025, with an operating loss margin of 1%, a stark contrast to an operating profit of RMB 342 million in Q2 2024 [3] - The net loss attributable to iQIYI was RMB 133 million, compared to a net profit of RMB 68 million in the same period last year, reflecting a fundamental shift from profitability to loss [3][4] - Non-GAAP operating profit was RMB 58 million, down 88.3% from RMB 501 million in Q2 2024, while non-GAAP net profit fell 94% to RMB 15 million [3] Cash Flow Situation - Q2 2025 saw negative cash flow from operating activities of RMB 12.7 million, a significant decline from a positive cash flow of RMB 410.8 million in Q2 2024, indicating deteriorating operational cash generation [7] - Free cash flow was negative RMB 34.1 million, down from RMB 382.5 million in the previous year, highlighting the company's inability to generate discretionary funds [7][8] New Business Developments - iQIYI's management mentioned a focus on innovation and investment in AI applications and micro-short dramas, but no specific revenue contributions or investment details were provided, suggesting a lack of substantial progress [9] - R&D expenses decreased by 6% year-on-year to RMB 422 million, raising concerns about the alignment of investment with strategic goals [9] Industry Context - The long video industry typically follows a positive cycle of content investment leading to user growth and revenue increase, but iQIYI's current strategy appears to be leading to a negative cycle of cost-cutting and revenue decline [10] - Compared to competitors like Tencent Video and Youku, which are increasing content investment, iQIYI's reduction in content spending may widen the gap and lead to user attrition [10][11]
爱奇艺营收利润双降、现金流承压,长视频转型突围遇挫