iQIYI (IQ) 18 May 212021 Q1 Earnings call transcript

Good day and thank you for standing by. Welcome to the iQIYI First Quarter 2021 Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session. [Operator Instructions]. today's being that, advised be conference recorded. is Please Instructions]. [Operator hand over to I would speaker conference to like now your the today, Ms. Fan Liu. of Director Relations iQIYI. Investor Please go ahead.

iQIYI's Relations released earlier Hello, you and are conference Thank and the today ir.iqiyi.com. The first company's on joining Investor call. were operator. earnings at quarter results you, company's available XXXX website everyone, for thank

remarks, Chief Mr. CFO; Gong, CEO; will today, and Mr. join the Mr. and Yang, and the On followed give Mr. shareholder Xianghua through Wang, Xiaodong President Membership Founder, Xiaohui of our who Gong of call and I earlier in today Xiaodong, of business. prepared are Director out go Content will our sent guidance. Vice Xiaohui a by Senior and summary the will On CCO, Wang, letter, Q&A brief Xianghua session. Mr. Mr. our the Officer; Yu our Xiaodong financials we our Gong behalf After

note today of XXXX. of we Securities Act the Reform that provisions Before Litigation the U.S. Harbor forward-looking please will statements under Safe discussion proceed, Private the made contain

Forward-looking any differ and not current outlined of summary SEC. I from brief our will that, letter. may With uncertainties Potential to statements but expectations. with materially the include, except and does update with under shareholder public undertake a risks the law. applicable uncertainties as our obligation kick not limited actual results to iQIYI any subject required forward-looking statements our call are are to cause risks those filings to in that start

and delicious, online competitive can competitive Gong mindset, communicate shares and letter, In the This defined focused and this with the as IPO mainly perspective shareholder noticed, with with industry, which letter of industry From the To video based start As our our advantage. some thoughts be out this today. user's video, video interest strategy. iQIYI to sent shareholders our Mr. our since content time entertainment the have a on content on landscape two. his Gong you may the a for first dynamics latter of Mr. is we have format. earlier of

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original studios are dramas Most a variety years. movies concentrating animations. are on now studios We in-house XX of few and focusing on shows, over have internal established the two and within these and

to video continue is financial outstanding us talents our the techniques. of studios in-house we development amass the IPs production improving in-house dramas the schedule, will industrialization production and capacity efficiencies. production content improving. can controllability Thanks of costs our more quality of to we rules expand our enhance and and This premium are in As the our system content our intelligent and further production production studios. of new diversify of studios, in-house capacity productions. The far intelligent and industry to gradually Through tools in-house restructuring the includes still production the and the and reduce enough, technologies, to enables of industry, and from obtain risks,

first Now I would quarter like to to Xiaodong, our update. for turn over

with year off the We everyone. Morning, a solid quarter. kicked

sequentially previous our our have stable, content quarter, revenue effectively been the continued and both increased losses to have in first guidance. recent Besides, quarters in been relatively and costs above year-over-year narrow. Our revenues controlled which have is the

the the launching continue We the by MAU, our first XXXX. and of to DAU premium spent lead consistent QuestMobile, all stream of to in content. market ranked a first quarter in time According industry monthly

sequentially XX, billion. of business, XXX.X RMBX.XX subscribers, content, in top performed our was with the one, For additions very several growth million revenue services factors, our March by by we as Subscriber increased dramas, XXXX, Membership XX% to X.X Membership had during net million well. particular quarter. premium driven

on holiday blockbuster up time Spring Festival, spent such the holidays For users during video our on top My during more Three, driving marketing introduced our major season. Husband, instance, traffic Festival. drama, the overall Heroic long-form initiatives various during innovative platform. Spring we a the as was Two,

growth we users in the on remain due our XXXX, original expanding well to which overall growth including, in-house accepted also an improvements the strived our footprint driven to among for we factors addressable is the among volatility still based is membership In a pay ecosystem we in numbers, new content premium production to plan addition and Though of content, VIP as our in market; was expect and total iQIYI growth, pricing development sequential membership well Lite, membership short-term our expand business. our revenue increased by dedication November ongoing Two, willingness and headline in to This in long-term we capabilities. to industry. subscriber Meanwhile, to confident launched services one, overseas. to mid- adjustment our two our as users. ARPU

to Moving business. on advertising

the During recover. the quarter, continued advertising overall to market

advertising our online and season revenue traditionally increased a mainly business, attributable revenue. slow marketing growth. Like we Even were trend year-over-year advertising strong sequential the for the is growth XX% services to quarter decent to XXXX, year-over-year. content though by in of first Our able was the fourth quarter achieve

was driven revenue few shows first quarters. the dramas. This content last recorded peak for the content. marketing advertising brand decent revenue XX% our our which validated content Our in recognition again of of marketing major and by around The accounted revenue for variety advertisers' growth premium a quarter,

Next for content.

viewership and the We variety categories, children industry to lead drama, and number content. other including the continued shows, terms of top of animation, total in across titles

style dramas, have after For theme good an movies. hit its innovations our and an In productions. costume instant Its our exclusive drama Heroic future a new Husband launch. which creating way in My impact of whole on original provided became will drama costume

Underworld original from received has a Our high screened RMBXXX box and Crashed platforms. over movie been ratings office million, in various reached of has theaters,

and kept Lady The short promoting romantic in a Dilemma, brands Court Lion's launch our the quarter, theater Dilemma year. for Court well-received aired pipeline Rebel, by to drama with content Crossroad were Love April Love A May for on Lady, in The brand this Bistro, Secret scheduled For users. key and We featuring XXth and others. including second dramas our

entertainment our pipeline, years especially format. The that production, year. that is growth, We of over the capability innovations will Betray Choice in With irreplaceable diversified Wonder video to we Theater also increase we new by be this but some and generation as Mist imagination aired Tales mitigated uncertainties strongly entertainment. the will Son-in-law value, schedule content content of content will No content In expected animation Despite next X Earth, be the meantime, new for in in the a dramas. technology commercial greater long-form others. self-produced launch that our iQIYI's continuous through later content In light to the believe of ten months, expand Father believe ratio, have our empower Keepers coming hit the the generate and the to animation, well impact an Immortal as we As as including

to to shareholders. look all As well, news forward more good we bringing

review the quarter. first let key me for our financial highlights, Now

Membership our total of quarter first reached to continued revenue revenue. which XX% the For billion. be RMBX.X business our total for largest accounts business,

Our advertising other a and business XX% [indiscernible] increase achieved business a year-over-year year-over-year on of on distribution content recorded basis. business growth basis. solid Both

year-over-year licensed content A X% Our cost costs. the decline XX% content costs. probably due of decrease due year-over-year, decline the mainly decreased of of to to revenues was

to loss XX% Our XX% on operating about narrow basis quarter. for continue to GAAP year-over-year the fourth consecutive margins

cash, had and XX RMBXX.X As cash cash billion. of equivalents, of company short-term restricted March investments XXXX the

release press our to refer please, data our financial our on details For on website.

billion the for be Q&A. and This the open second forecast be current reflect total XXXX, X% and quarter forecast reflects of to year-over-year. may this revenue RMBX.XX increase subject RMBX.XX the which will a expect billion floor change. to now iQIYI's decrease to For to view, we preliminary a X% I between

comes your question. [Operator Instructions] ask Chong question first Please from Your from Thomas Jefferies.

you. shared, - questions. is for great. form mid-form the should short that any KPI the strategy we Suike in think think hand, strategies China. our regarding should the about management, regulations Thanks, for about How the My taking video and we on mean be long be video question can video how and my Thank about other the form I that environment regulatory will

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Zhijing Liu The go comes from next from question Please UBS. ahead.

I Thank you, question. have for management, taking my questions. two

original half. Thank of content Can we since short last more see quality are a subscriber we improvement you. have to We volatility? in content How greater launched fluctuation in prominent we expect growth of year. term? Secondly, can such supposed mitigate seen second

of is that The primary behind members the our on the volatility our content platform. reason subscribing

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Thank you.

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last question Your ask comes Alex question. from from Credit your Xie Please Suisse.

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that this operation kind of them. not leverage for of want to we for to high, kinds some tactics paying their because willingness Just subscribers penetrate content the so certain to is

you. Thank

you. Thank

now remarks. the I back pass will to for management call closing

you. joining you for next the to our We thank you in call. so quarter. with forward Thank guys talk look Okay,

conference This you Thank concludes participating. today's for call.

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