iQIYI Q2 revenue fell 11% year-on-year, with a loss of 134 million yuan, and all three core businesses are under pressure | Financial Report Insights

iQIYI's revenue in the second quarter saw a double-digit decline, turning from profit to loss, with all three core businesses—membership services, advertising, and content distribution—experiencing shrinkage.

On the afternoon of the 20th, iQIYI released its financial report for the second quarter of 2025, ending June 30. Key points are as follows.

• Financial Performance: Total revenue was 6.628 billion yuan (USD 925 million), a year-on-year decline of 11%; net loss was 134 million yuan, compared to a profit of 68.7 million yuan in the same period last year; non-GAAP net profit significantly decreased to 14.7 million yuan, down from 246.9 million yuan in the same period last year.

• Business Revenue: Membership service revenue was 4.09 billion yuan, a year-on-year decline of 9%; advertising revenue was 1.27 billion yuan, a year-on-year decline of 13%; content distribution revenue was 437 million yuan, a significant year-on-year decline of 37%.

• Operating Conditions: Operating loss was 46.2 million yuan, compared to a profit of 342 million yuan in the same period last year; operating loss margin was 1%, compared to a profit margin of 5% in the same period last year.

• Cash Situation: Cash flow from operating activities turned into a net outflow of 12.7 million yuan, with free cash flow at negative 341 million yuan; as of the end of June, the company held approximately 5.06 billion yuan in cash and cash equivalents.

All three revenue sources significantly declined, with content distribution revenue plummeting 37%

iQIYI's performance in the second quarter of 2025 showed a clear turning point, with revenue declining 11% year-on-year to 6.628 billion yuan, and turning from profit to loss, with a net loss of 134 million yuan, a stark contrast to the net profit of 68.7 million yuan in the same period last year.

This change is primarily due to a reduction in content production plans, which directly impacted the company's core membership services and advertising revenue. From the revenue structure perspective:

Membership service revenue declined 9% to 4.09 billion yuan, reflecting the company's insufficient content output during the quarter.

Online advertising service revenue decreased 13% year-on-year to 1.27 billion yuan, with the company stating that some advertisers adjusted their advertising and promotion strategies due to macro pressures.

The most severe decline was in content distribution revenue, which fell 37% year-on-year to 437 million yuan, mainly due to a reduction in barter transactions and a decrease in cash transactions.

As a result, the company reported an operating loss of 46.2 million yuan in the second quarter, contrasting sharply with the operating profit of 342 million yuan in the same period last year. Non-GAAP operating profit plummeted from 501 million yuan in the same period last year to 58.7 million yuan, with the operating profit margin sharply declining from 7% to 1%.

Cost control failed to offset the impact of revenue decline, cash flow deteriorated

Although iQIYI made some reductions on the cost side, the extent was insufficient to offset the decline in revenue.

In the second quarter, content costs decreased by 8% year-on-year to 3.78 billion yuan, consistent with the company's mention of a "lighter content schedule." Sales, management, and R&D expenses also decreased, but the overall decline was limited.

iQIYI's cash situation also worsened in the second quarter, with cash flow from operating activities turning from an inflow of 411 million yuan in the same period last year to an outflow of 12.7 million yuan. Free cash flow also turned from a positive 382 million yuan to a negative 341 million yuan. As of the end of June, the company held a total of 5.06 billion yuan in cash, cash equivalents, restricted cash, and short-term investments It is worth noting that despite facing business pressures, iQIYI's financial structure continues to optimize, with net interest expenses declining for seven consecutive quarters. In the second quarter, the company also repurchased $85 million of convertible bonds maturing in 2028, demonstrating a continued focus on optimizing its capital structure.

Content Recovery and New Business Potential

In the face of performance pressure, iQIYI's founder, chairman, and CEO Gong Yu stated in the earnings report that the company is focusing on innovation and investing in key growth areas, including AI applications, micro-dramas, experiential businesses, and global expansion, to drive long-term sustainable success.

Chief Financial Officer Wang Jun emphasized the company's effective resource management and optimization of its capital structure, with net interest expenses declining for seven consecutive quarters.

From the earnings report, the key to iQIYI's future performance lies in whether content production can recover strongly, especially in the context of Enlightent data showing that the company held the highest market share in viewership ratings for dramas during the summer. How to convert this content advantage into actual membership growth and revenue enhancement will be crucial. At the same time, changes in advertisers' willingness to spend under macro pressures will continue to affect the company's advertising business performance