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The call highlights a mix of near-term headwinds and strategic progress. Top-line revenue declined sequentially largely due to seasonality and fewer third-party distribution deals (total revenue -8%, ad -8%, distribution -54%), and the company remains modestly loss-making on a non-GAAP basis (~RMB 149M, ~2% margin) with limited operating cash (RMB 186M). Offsetting these weaknesses are clear operational and strategic positives: sequential membership growth and longer subscription duration, strong international membership expansion (overseas membership +40% YoY; Indonesia +80% YoY; Brazil/Mexico >100% YoY), broad adoption of Nadou Pro (10,000+ creators) and large-scale AI content initiatives (3,000+ AI micro dramas; 14,000+ micro animation titles), improved monetization for micro dramas (+60% revenue per inventory unit YoY), and disciplined cost reductions (content cost -2%, operating expenses -10%). Management also advanced IP commercialization (iQIYI LAND, merchandise records) and capital actions to strengthen the balance sheet. Overall, strategic momentum in AI, international expansion and content monetization outweigh the near-term revenue and cash challenges, suggesting a cautiously positive outlook.
Management guided toward product, geographic and AI-driven growth while calling out many concrete metrics: they plan to launch over 100 short‑form dramas in 2026 and build an Internet feature‑film slate, prioritize Q2 actions to maximize ad sales and reactivate dormant members (including smart‑TV partnerships and June 18 promotions), expand iQIYI LAND to Kaifeng and Beijing, and commercialize Nadou Pro (live since Apr 20 with >10,000 active creators and ~100 iQIYI original projects) and international rollout; Q1 operating metrics referenced included total revenue RMB 6.2bn (‑8% seq), membership RMB 4.2bn (+2% seq), online ads RMB 1.2bn (‑8% seq), content distribution RMB 358.7m (‑54% seq), other RMB 426.7m (‑22% seq), content cost RMB 3.7bn (‑2% seq), operating expenses RMB 1.2bn (‑10% seq), net cash from operations RMB 186m, non‑GAAP operating loss RMB 149m (~2% margin) and cash/resources RMB 4.0bn; content/AI scale metrics included >3,000 AI micro‑dramas launched in Q1 and a micro‑animation/AI library of >14,000 titles, and overseas membership momentum cited as >40% YoY (Indonesia +80% YoY; Brazil & Mexico +100% YoY) — financial actions include a proposed HK listing and a USD 100m buyback program (to date ~6.45m ADS repurchased for ~USD 8m) and debt reduction via repurchase of the 6.5% 2028 convertible notes.
Membership services revenue of RMB 4.2 billion, up 2% sequentially; driven by premium titles (Pursuit of Jade, The Punishment 2, How Dare You!?, The Devil Between Us) and improved upselling/longer average subscription duration for monthly subscribers; higher-tier F7 membership continued to scale.
Overseas membership revenue grew by over 40% year-over-year; Indonesia grew >80% YoY; Brazil and Mexico membership revenue each grew >100% YoY; average daily subscribers reached a new high and ARPU overseas reported higher than domestic.
Launched Nadou Pro publicly (since April 20) with over 10,000 active creators onboard and ~100 iQIYI original projects using the platform; launched 3,000+ AI-generated micro dramas in Q1 and featured Peter Pau iQIYI AI Theater (16 titles), demonstrating practical AI-driven production capabilities and developer/creator ecosystem momentum.
Multiple long-form dramas reached top popularity: The Punishment 2 and Pursuit of Jade exceeded 10,000 on iQIYI popularity index; Born with Luck and Born to Be Alive received strong user/critical reception (Born to Be Alive highest Douban rating among domestic Q1 releases); variety and animation franchises also performed well.
Micro animation and AI-native formats expanded to over 14,000 titles at quarter end; plan to launch over 100 short-form dramas in 2026; original micro drama contributed over half of micro-drama category revenue in Q1—indicating scalable, lower-cost content supply.
Revenue per inventory unit for micro dramas increased by over 60% year-over-year; targeted dramas delivered double-digit annual growth in brand ad contributions; small and mid-sized advertisers and verticals (Internet services, e-commerce, mini games) showed strong growth.
Content cost decreased 2% sequentially to RMB 3.7 billion; total operating expenses decreased 10% sequentially to RMB 1.2 billion, reflecting disciplined spending and greater capital efficiency in Q1.
Repurchased 6.45 million ADSs for ~USD 8 million and repurchased 6.5% convertible senior notes due 2028 (reduced outstanding debt); announced proposed Hong Kong main board listing and a share repurchase program up to USD 100 million through Sept 2027.
iQIYI LAND Yangzhou performed in line with expectations with positive feedback; IP-based consumer merchandise set new sales records (collectible cards from Pursuit of the Chaser Games), demonstrating offline monetization traction and IP extension.
Thank you for standing by, and welcome to the iQIYI First Quarter 2026 Earnings Conference Call. [Operator Instructions] I would now like to hand the conference over to Ms. Chang You, IR Director of the company. Please go ahead.
Thank you, operator. Hello, everyone, and thank you for joining iQIYI's First Quarter 2026 Earnings Conference Call. The company's results were released earlier today and are available on the company's Investor Relations website at ir.iqiyi.com. On the call today are Mr. Yu Gong, our Founder, Director and CEO; Ms. Ying Zeng, our Interim CFO; Mr. Xiaohui Wang, our Chief Content Officer; Mr. Youqiao Duan, Senior Vice President of our Membership Business; and Mr.
Xianghua Yang, Senior Vice President of International and over online game business. Mr. Gong will give a brief overview of the company's business operations and highlights, followed by Ying, who will go through the financials. After the prepared remarks, the management team will participate in the Q&A session. Before we proceed, please note that the discussion today will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations. Potential risks and uncertainties include, but are not limited to, those outlined in our public filings with the SEC.
iQIYI does not undertake any obligation to update any forward-looking statements, except as required under applicable law. I will ...
