Chinese video streamer iQiyi sees profit slump in second quarter

China-based video streaming company iQiyi reported a 5% decline in revenue and an 80% plunge in net profit in the second quarter.

The company said on Thursday that revenue for the April-June period was 7.45 billion RMB ($1.04 billion at the current exchange rate), down from the same period last year and also 6 percent from the first quarter.

Net profit was RMB 68.7 million (US$9.6 million), compared to RMB 365 million (US$51.1 million) in the corresponding quarter of the previous year and RMB 655 million (US$91.7 million) in the first quarter of January-March.

Last year, the company posted an annual net profit for the first time. This was achieved despite falling subscriber numbers (101 million at the end of December 2023), which were more than offset by higher average revenue per user.

Since the beginning of the year, iQiyi has not released membership numbers or ARPU. The regulatory notice only said that revenue from membership services was RMB 4.5 billion (US$630 million), down 9% year-on-year, “mainly due to fluctuations in the performance of content offerings.” It was the second consecutive quarter in which subscription revenue declined.

Advertising revenue from the platform's free tiers fell 2% to RMB 1.5 billion ($210 million), “mainly due to the decline in the brand advertising business, partially offset by the growth of the performance-based advertising business.”

“Content distribution revenue was RMB 698 million, up 2% year-on-year, and other revenue was RMB 784 million, up 16% year-on-year, primarily due to the increase in revenue from talent agency services and third-party cooperation,” the company said.

The document did not directly address the company's shrinking subscription business, but hinted at the impact of competition from other streaming platforms. Nor did it shed light on iQiyi's attempts to build an international business outside mainland China.

“We believe the lively competition in the long-form video sector in the second quarter is constructive for the industry and increases its attractiveness over other entertainment formats,” said Gong Yu, founder, director and CEO of iQiyi. “The key to long-term success is consistent delivery of premium content that balances artistic qualities and commercial benefits, and we remain committed to that.”

The company's NASDAQ-listed ADR shares closed near an all-time low of $3.08 apiece on Wednesday. At that price, iQiyi, which is majority owned by technology giant Baidu, has a market capitalization of $1.62 billion.