Shulou(Shulou.com)11/24 Report--

According to news from February 22, Beijing time, iqiyi (Nasdaq:IQ) today released its financial results for the fourth quarter and full year of 2022 as of December 31. In the fourth quarter, iqiyi's total revenue was 7.6 billion yuan ($1.1 billion), up 3% from a year earlier. Iqiyi's net profit was 304.3 million yuan ($44.1 million), compared with a net loss of 1.8 billion yuan a year earlier. Excluding Non-GAAP, iqiyi's net profit was 856.4 million yuan ($124.2 million), compared with a net loss of 1 billion yuan a year earlier.

For the whole of 2022, iqiyi's total revenue was 29 billion yuan ($4.2 billion), down 5 per cent from 2021. Iqiyi posted a net loss of 136.2 million yuan ($19.7 million), compared with a net loss of 6.2 billion yuan in 2021. Without general US accounting standards, iqiyi's net profit was 1.3 billion yuan ($186.2 million), compared with a net loss of 4.5 billion yuan in 2021.

After the release of the results, iqiyi founder and CEO Gong Yu, CFO Wang Jun, CCO Wang Xiaohui, CTO Liu Wenfeng, Senior Vice President Duan Youqiao, Film and overseas Business Group President Yang Xianghua, Senior Vice President Wu Gang and other management held a conference call to interpret the main points of the results and answer analysts' questions.

The following is the main content of this conference call: gong Yu: at the end of 2022, we launched iqiyi's self-made anti-triad drama "the Wind", which has become another hit drama. "Storm" broke a number of records: the heat value exceeded 10000, setting a new record; the audience rating of a single episode and the average daily playback reached an all-time high. This popular drama has also had a positive impact on society, setting off an upsurge of "raging" across the country.

The success of "Storm" proves that iqiyi has entered a positive cycle in the production and operation of homemade dramas, the flywheel effect has been formed, and we have the ability to produce high-quality and stable content to improve profitability and cost efficiency. We believe that success can be replicated, we will continue to strive to create more quality content in the future, and we also believe that we have the ability to surpass ourselves.

Why is iqiyi's ability to create homemade dramas unique and can not be easily copied? I want to say that there are never shortcuts on the way to creating "popular dramas". Since 2014, we have launched the "iqiyi self-made Drama" project, during which we have invested a lot of resources, including time, money, talent and technology. After nearly a decade of unremitting efforts, we have successfully made a substantial breakthrough in 2022. Especially in the past two years, our investment in original content is close to 20 billion RMB. Through continuous investment in manpower and material resources, we have created iqiyi's self-made drama studio, bringing together the most creative talents in the industry. In addition, after years of exploration, we have gradually developed a complex, efficient, data-driven decision-making system to ensure that we do not miss any key opportunities to create original content.

Xueqing Zhang, analyst of CICC: first of all, I like Qiyi's "all the way" performance this quarter. We have noticed a very strong performance of the "hurricane" that launched in January. Can you ask the management to look forward to the content performance of the whole quarter? In addition, the management mentioned in the shareholder's letter that iqiyi is now a "recognized popular style manufacturing camp". Could you ask the management to share with us how iqiyi plans to replicate more successful blockbuster dramas like "Storm" in the future? Finally, how does the management view the long-term space of membership size at the current stage?

Gong Yu: the content performance in the first quarter was very good, exceeding our expectations. Of course, the original expected performance has been very good, but the actual performance has exceeded expectations. As to whether we can replicate the success of "Luoxiao", please ask Wang Xiaohui, our chief content officer (CCO), to answer; as for the ceiling of membership scale, let Duan Youqiao, who is in charge of member business, answer.

Wang Xiaohui: first of all, we have great confidence in the ability of iqiyi platform to continue to produce popular styles. Over the past decade, one of the main goals of our efforts is to systematically improve the success rate of popular styles. Looking at the performance of the content in the past year, whether it is the "Canglan Formula", "punishment", "Qing Qing Daily", "the Wind blowing Banxia", "the returned daughter", or the recent "wild wind", we can all see the manifestation of this achievement, that is, the sustainability and diversity of the content of iqiyi's popular style.

The core competitiveness is mainly talents. We have set up a number of distinctive studios and gathered the most creative talents in the industry, who are also in line with the personalized creative characteristics of the creative industry. at the same time, we have also established a strong platform, which provides scientific mechanism support for the improvement of creative efficiency and success probability. The second is the system. We have established a complex, data-driven, decision-making efficient film and television production management system, which can cover every critical moment in the whole life cycle of content production. The third is operation. We have formed a strong content operation ability, which can run through every link such as content creativity, production, publicity, broadcast and so on. The fourth is intelligent technology. Through intelligent production technology, we have effectively improved production efficiency and saved costs, which has become a strong guarantee for our content production. The fifth is insight. After years of experience accumulation and law summary, we have a relatively obvious advantage in the law of content creation and the accurate grasp of aesthetics in China's entertainment consumer market.

To sum up, our current content production mechanism and strong operational capacity can ensure that iqiyi has a stable and sustainable supply of high-quality content in the future.

Duan Youqiao: we have full confidence in the long-term growth of our members. In 2022, iqiyi continues to accumulate in member operation, member sales and user scale, and has shown a healthy growth momentum. In the fourth quarter of 2022, iqiyi's membership has broken through the transitional range of the past two years. Therefore, we are optimistic about the continued growth of membership in 2023.

By the end of December 2022, iqiyi had nearly 120 million members. Thanks to high-quality content, our membership growth has remained high and growing since the beginning of the year. In addition, the structure of iqiyi members is more optimized, and the annual card and large screen members have a good growth momentum, which also helps to enhance the stickiness and long-term cash realization ability of platform members.

As for the ceiling of membership size. In the long run, the ceiling of domestic video membership depends on the number of people consuming long video content, the number of households and the competitive pattern of the industry. At present, compared with the Internet population and families, there is still a lot of room for growth in the number of video members. In the future, the member business has a good prospect in both user direct selling and channel selling: in the direct selling market. Video members have become the rigid demand of users; in the channel sales market, video members have also become the most popular equity products of telecom operators, Internet services, finance and other partners.

Finally, we believe that with the continuous improvement of iqiyi's content quality, it will certainly bring the enhancement of members' willingness to pay and the improvement of the overall realization ability.

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