iQIYI Q1 Earnings Call Highlights

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iQIYI (NASDAQ:IQ) reported first-quarter 2026 revenue of CNY 6.2 billion, down 8% sequentially, as the Chinese streaming company emphasized artificial intelligence, overseas growth and new content formats as central parts of its strategy.

Founder, Director and CEO Gong Yu said the company is operating in an environment shaped by “breakthrough AI” and a more supportive domestic regulatory landscape, which he said is reshaping entertainment and creating opportunities for iQIYI. Gong framed the company’s strategy around reinforcing its core premium-content business, developing new growth engines and building a longer-term decentralized content ecosystem supported by AI.

Membership Revenue Grows Sequentially as Hit Dramas Drive Engagement

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Interim CFO Ying Zeng said membership services revenue reached CNY 4.2 billion in the quarter, up 2% sequentially, driven primarily by a lineup of hit dramas. Online advertising revenue was CNY 1.2 billion, down 8% sequentially due to seasonality. Content distribution revenue fell 54% sequentially to CNY 358.7 million, which Ying attributed mainly to a smaller number of dramas distributed to third parties. Other revenue totaled CNY 426.7 million, down 22% sequentially.

Gong said premium content remains the foundation of iQIYI’s strategy and pointed to first-quarter dramas including “The Punishment 2,” “Born to Be Alive,” “Pursuit of Jade” and “How Dare You!?” as contributors to the company’s performance. He said “The Punishment II” became the company’s second franchise with two seasons exceeding the 10,000 iQIYI popularity index, while “Pursuit of Jade” also surpassed that threshold. “How Dare You!?” exceeded 9,000 on the index, according to Gong.

Youqiao Duan, senior vice president of the membership business, said during the question-and-answer session that membership revenue improved sequentially due to premium content and refined operating strategies. Looking to the second quarter, Duan said the company is focused on reactivating dormant members, optimizing variety-show schedules, expanding large-screen membership through smart-TV partnerships and using the 618 e-commerce festival to promote annual and bundled memberships.

AI and New Content Formats Take Center Stage

Gong said regulatory changes are accelerating content approvals and improving capital efficiency while supporting new formats such as short-form dramas and internet feature films. He said iQIYI plans to launch more than 100 short-form dramas in 2026 and continue building its internet feature-film slate, adding that these formats can shorten production cycles, lower capital barriers and support AI integration without adding pressure to overall content costs.

The company highlighted Nado Pro, its proprietary AI platform for studio-grade content production, as a key part of its AI strategy. Gong said Nado Pro is built on public and self-deployed large models, along with iQIYI’s technology infrastructure and content expertise. In the Q session, a translator for Gong said Nado Pro has been available to creators across the industry since April 20 and currently has more than 10,000 active creators, including traditional production companies and independent creators.

According to Gong, Nado Pro supports content production across long-form dramas, micro dramas, micro animation, short videos and advertising content. About 100 projects on the platform are iQIYI original titles. He said iQIYI has also launched a creator community for Nado Pro and is developing an international version. Gong said the platform will serve as a standalone product with monetization potential.

Gong also said AI could improve the economics of long-form video by reducing content costs, shortening production cycles and increasing the number of titles available to users. He said the company is building initiatives such as Nado Pro and the iQIYI account system, which allows users to upload content and participate in revenue sharing.

Overseas Business Expands in Southeast Asia and Latin America

Gong described iQIYI’s overseas business as a “proven second growth driver,” saying overseas membership revenue rose more than 40% year over year in the first quarter. He said the company’s international positioning focuses on premium Asian content, especially content aimed at young female audiences.

Management said Southeast Asia remains a key region. Gong said membership revenue in Southeast Asia grew more than 40% annually, while Indonesia rose more than 80%. Portuguese- and Spanish-speaking regions also grew quickly, with Brazil and Mexico each posting membership revenue growth of more than 100% annually. Gong said average daily subscribers outside mainland China reached a new high.

Xianghua Yang, senior vice president of overseas business and online game business, said iQIYI will continue investing in Southeast Asian markets including Thailand, Indonesia, Malaysia, Vietnam and the Philippines, while also investing in emerging markets such as North America and Brazil. He said C-dramas remain the company’s main differentiator overseas and that overseas audiences are primarily young female users under 40. Yang also said overseas membership average revenue per user is higher than in the domestic market.

Advertising, Experiences and Anti-Piracy Efforts

Gong said brand advertising revenue from targeted dramas recorded double-digit annual growth, with “Born to Be Alive,” “How Dare You!?” and “Pursuit of Jade” receiving strong recognition from advertisers. Food and beverage, internet services and e-commerce also posted double-digit annual growth. For performance advertising, he said revenue from small and mid-sized advertisers recorded strong annual growth, while monetization efficiency for micro dramas improved, with revenue per inventory unit up more than 60% year over year.

The company is also expanding IP-based consumer products and offline experiences. Gong said collectible cards tied to “Pursuit of the Chaser Games” set a new sales record in that category on the company’s self-operated merchandise apps. He said the first iQIYI Land in Yangzhou performed in line with expectations, and that additional locations in Kaifeng and Beijing are progressing.

Chief Content Officer Wang Xiaohui said regulators have made progress on anti-piracy efforts. He said the National Radio and Television Administration launched a targeted campaign around late April and early May to address pirated distribution of drama content on illegal websites, browsers, search engines and cloud storage services. Wang said platforms must remove infringing content within 24 hours of receiving a report, or within four hours for newly released dramas, hit series and key titles. He said iQIYI expects piracy to be “substantially mitigated” in the future.

Costs, Cash Flow and Capital Actions

Ying said iQIYI adopted a disciplined strategy in the quarter, with content costs of CNY 3.7 billion, down 2% sequentially. Total operating expenses were CNY 1.2 billion, down 10% sequentially. Net cash provided by operating activities was CNY 186 million.

The company ended the quarter with CNY 4 billion in cash equivalents, restricted cash, short-term investments and long-term restricted cash, including prepayments and other assets. Ying said the sequential decline in cash was primarily due to the repurchase of the company’s 6.50% convertible senior notes due 2028, which reduced outstanding debt. She also noted that iQIYI announced a proposed listing on the main board of the Hong Kong Stock Exchange in March and a share repurchase program of up to $100 million effective through September 2027. As of the call, the company had repurchased approximately 6.45 million ADSs for a total cost of $8 million.

About iQIYI (NASDAQ:IQ)

iQIYI, Inc is a leading online entertainment service provider headquartered in Beijing, China, offering a comprehensive portfolio of streaming video content across multiple genres. The company operates a subscription-based video-on-demand (SVOD) platform, complemented by advertising-supported content (AVOD) and pay-per-view offerings. Its digital library encompasses original series, feature films, variety shows, animation and documentaries, catering to diverse demographic segments and viewer preferences.

Originally launched by Baidu in 2010 as an online video site, iQIYI was formally rebranded in early 2012 and has since expanded its footprint beyond China's domestic market.

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