iQIYI(US:IQ)2021-05-18 17:14Financial Data and Key Metrics Changes - Total revenues for Q1 2021 reached RMB 8.0 billion, with membership business accounting for 54% of total revenues [14] - Membership services revenue increased by 12% sequentially to RMB 4.3 billion, with 105.3 million subscribers and 3.6 million net additions during the quarter [9][10] - Advertising services revenue increased by 25% year-over-year, indicating a recovery in the overall advertising market [11] - Cost of revenues decreased by 10% year-over-year, primarily due to a 9% decline in content costs [14] - Operating loss margin narrowed by 16% year-over-year to 13% for the fourth consecutive quarter [14] Business Line Data and Key Metrics Changes - Membership business remains the largest pillar, with significant growth driven by premium content and innovative marketing initiatives [9][10] - Advertising business showed notable growth, particularly in content marketing revenue, which accounted for around 64% of brand ad revenue in Q1 [11] - The company continues to lead in total number of top titles and viewership across various content categories [11] Market Data and Key Metrics Changes - Monthly active users (MAU), daily active users (DAU), and monthly time spent on the platform ranked first in the industry [8] - The company is expanding its total addressable market with a new VIP plan for iQIYI Lite and increasing its overseas footprint [10] Company Strategy and Development Direction - iQIYI focuses on enhancing in-house production capacity and diversifying content genres to improve content quality [6][7] - The company aims to industrialize video production through technology advancements, enhancing production schedules, content quality, and reducing costs [7][28] - The strategy includes a disciplined approach to international expansion, focusing on increasing in-house original content production [24][25] Management's Comments on Operating Environment and Future Outlook - Management acknowledges challenges in the membership business due to a lack of high-quality content, emphasizing the need for improved content quality [5][31] - The company expects short-term volatility in subscriber numbers but remains confident in mid and long-term growth based on premium content and production capabilities [10] - Management highlighted the importance of addressing regulatory challenges and the impact on content pipeline and advertising revenue [17][38] Other Important Information - The company has established over 50 in-house studios within two years, focusing on original dramas and variety shows [6] - The original content budget is around 30% of total content costs, with plans to improve quality and expand into movies and animations [36] Q&A Session Summary Question: Regulatory environment and short-form video strategy - Management noted stable regulatory intensity but acknowledged potential short-term impacts on content pipeline [17] Question: Content cost expectations for the year - Management expects continued optimization of content costs, with a focus on expanding original content across different categories [20] Question: ARPU outlook and international market scale - ARPU growth is around 10%, with expectations for continued growth; international business is in early stages with rapid growth potential, particularly in the ASEAN region [22][23] Question: Subscriber growth volatility and content quality improvement - Management identified content quality as the primary reason for subscriber volatility and emphasized plans to enhance content quality in the second half [31] Question: Original content budget and large screen strategy - Original content spending is around 30%, with a focus on improving quality; user metrics for smart TVs show increasing time spent compared to mobile [34][35] Question: Impact of new regulations on reality shows - Management is evaluating the impact of new regulations on advertising revenues from reality shows [38]