IQ’s Q1 Report Fails To Cheer Investors – CEO Banks On AI To Reduce Content Production Costs Amid Topline Decline

• iQIYI stated that its Membership services revenue for the quarter clocked RMB4.20 billion ($608.8 million), declined 5% year over year, mainly due to a lighter content slate.
• Despite year-over-year revenue losses, the company said its overseas business sustained robust growth momentum and achieved record revenue in the quarter. 
• The firm stated that its content costs as a component of cost of revenues in Q1 were RMB3.74 billion ($542.8 million), down just 1% from a year-ago quarter.

Shares of iQIYI Inc. (IQ) declined over 3% premarket on Monday after the Chinese streaming platform reported quarterly results showing a 13% decline in its topline and a net loss in the first quarter.

The company reported first-quarter (Q1) revenue of RMB6.23 billion ($902.5 million), down 13% from the year-ago quarter, while adjusted net loss came in at $0.24 per American Depositary Share (ADS), compared with earnings of $0.31 per ADS.

"We are reinforcing our core strengths, unlocking new growth drivers, and building for the long term. In the first quarter, our hit drama lineup drove sequential membership revenue growth and cemented our leadership in domestic viewership market share, according to Enlightent,” said Yu Gong, Founder, Director, and Chief Executive Officer at iQIYI.

IQ’s Domestic Segment Topline Worries

iQIYI stated that its Membership services revenue for the quarter clocked RMB4.20 billion ($608.8 million), declining 5% year over year, mainly due to a lighter content slate compared to the same period last year.

The firm reported a 7% decline in revenue from its online advertising services and stated that certain advertisers adjusted their advertising and promotion strategies in response to macroeconomic pressures.   

In the content distribution segment, the company reported revenue of RMB358.7 million ($52.0 million), a 43% year-over-year decline, as barter transactions declined.

Despite year-over-year revenue losses, the company said its overseas business sustained robust growth momentum and achieved record revenue in the quarter. iQIYI did not report specific overseas figures in the earnings release.

"Looking ahead, we are leveraging AI to reduce content production costs, accelerate production cycles, and expand our content ecosystem," said Yu Gong, Founder, Director, and Chief Executive Officer at iQIYI.

The AI pivot is critical, as content costs, a component of cost of revenues, in Q1 were RMB3.74 billion ($542.8 million), down just 1% from a year ago.

IQ’s Debt Management And Cash Flow

iQIYI ended the first quarter with RMB3.99 billion ($578.4 million) in cash, cash equivalents, restricted cash, short-term investments, and long-term restricted cash. The company also holds a $636.6 million loan to PAG classified as a non-current asset.

The firm also stated that net cash from operating activities was at RMB186.4 million ($27.0 million), compared to RMB339.0 million from the same period a year ago, while free cash flow was at RMB109.8 million ($15.9 million), versus free cash flow of RMB307.7 million in the same period of 2025.

What Does Retail Think Of IQ?

On Stocktwits, retail sentiment surrounding the stock has remained ‘bullish’ while message volumes remained ‘normal’ in the past 24 hours.

Shares of iQIYI Inc have declined more than 42% so far this year.

(RMB1= $0.15)

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