iQIYI(US:IQ)2020-11-17 06:49Financial Data and Key Metrics Changes - Total revenue for Q3 2020 reached RMB 7.2 billion, with membership business accounting for 55% of total revenues and growing by 7% year-over-year [16] - Operating loss margin narrowed to 17% from 38% in the same period last year, attributed to a 22% year-over-year decrease in cost of revenues [16] - Cash, cash equivalents, restricted cash, and short-term investments amounted to RMB 7.4 billion as of September 30, 2020 [17] Business Line Data and Key Metrics Changes - Membership services revenue grew by 7% year-over-year to RMB 3.98 billion, with total subscribers at 104.8 million and a paying ratio of 99.5% [4][16] - Advertising business recorded a notable rebound with a 16% increase on a quarter-over-quarter basis, driven by a recovery in the domestic advertising market [9][16] Market Data and Key Metrics Changes - The domestic advertising market is recovering, with brand ads revenue increasing sequentially for two consecutive quarters, mainly from food and beverage, online games, and transportation sectors [10][11] - Education and consumer electronics sectors showed faster recovery in advertising revenue [11] Company Strategy and Development Direction - The company is focusing on diversifying content categories to target different user groups, with successful initiatives like the iQIYI Mist Theater attracting over 68 million viewers [8] - Plans to enhance monetization capabilities on larger screens, as user engagement on smart TVs and set-top boxes is increasing [6] - The company aims to innovate and develop new production and operational strategies for sustainable long-term growth [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the recovery of user behavior and macroeconomic conditions post-COVID-19, despite temporary slowdowns in membership growth due to content release delays [4][7] - The company anticipates uncertainties in membership trends following a recent pricing adjustment, but expects long-term recovery driven by exclusive premium content [9][20] Other Important Information - The company is investing in technology and content production capabilities, including leveraging 5G and AI for content distribution [28] - The Mist Theater has been a significant success, with plans to launch more self-branded content verticals in the future [12][15] Q&A Session Summary Question: Potential uncertainty in subscriber growth after price hike - Management noted that the new pricing plan was effective on November 13, and initial data shows no significant change in new subscriber growth, but potential negative impacts may be observed in the coming quarters [18][19] Question: Rationale behind the new pricing increase - The pricing adjustment was based on user surveys conducted since 2018, indicating acceptance of the new pricing among users [22][24] Question: Advertising outlook for 2021 - Management expects a better advertising outlook in 2021 as the pandemic is controlled, but acknowledges the lack of systematic patterns from the current year [26] Question: Competition and market share outlook - Management stated that they cannot predict competitors' pricing plans but believe the adjusted pricing is reasonable given the content supply and cost gap in the industry [32][33] Question: Content cost outlook - Content costs have decreased due to delays in content release and regulatory audits, but management does not expect a sharp decrease in the long term [34][35] Question: Impact of short video platforms - Management acknowledged that while short video platforms attract new users, they have a net negative impact on long-form video platforms due to copyright issues [40][41]