PR Newswire | Aug 12, 2021 05:56AM EDT

08/12 04:55 CDT

iQIYI Announces Second Quarter 2021 Financial Results BEIJING, Aug. 12, 2021

BEIJING, Aug. 12, 2021 /PRNewswire/ -- iQIYI, Inc. (Nasdaq: IQ) ("iQIYI" or the "Company"), an innovative market-leading online entertainment service in China, today announced its unaudited financial results for the second quarter ended June 30, 2021.

Second Quarter 2021 Highlights

* Total revenues were RMB7.6 billion (US$1.2 billion1), representing a 3% increase from the same period in 2020. * Operating loss was RMB1.1 billion (US$173.7 million) and operating loss margin was 15%, compared to operating loss of RMB1.3 billion and operating loss margin of 17% in the same period in 2020. * Net loss attributable to iQIYI was RMB1.4 billion (US$216.4 million), compared to net loss attributable to iQIYI of RMB1.4 billion in the same period in 2020. Diluted net loss attributable to iQIYI per ADS was RMB1.75 (US$0.27), compared to diluted net loss attributable to iQIYI per ADS of RMB1.96 in the same period of 2020. * The number of total subscribing members was 106.2 million as of June 30, 2021, or 105.2 million excluding individuals with trial memberships.

"Our second quarter results were largely in line with our expectation," commented Mr. Yu Gong, Founder, Director, and Chief Executive Officer of iQIYI. "Despite the fact that the second quarter is traditionally an off-season, the number of our subscribers grew to 106.2 million, driven by the hit original dramas we launched during the quarter. We continued to lead the market across multiple operating metrics. We also saw encouraging momentum from our iQIYI Lite app targeting lower-tier cities in China and from our overseas expansion. We are still in the early stage of industrialization in video production, and we are continuing to drive industry evolution to achieve long-term growth. Leveraging our deep understanding of users, our highly innovative in-house production teams, as well as our advanced technologies, we believe we are well positioned to address current challenges and capture future market opportunities."

"Our total revenue in the second quarter approached the high end of our guidance," commented Mr. Xiaodong Wang, Chief Financial Officer of iQIYI. "We continue to grow our subscribers and diversify our monetization channels through our premium content and massive user base. Our net loss narrowed for five consecutive quarters on a year-over-year basis as we continue to execute our disciplined investment strategy. Looking ahead, we strive to offer increasingly diversified content portfolio in the second half of the year, which is a key pillar to regain the revenue momentum."

Footnotes:

[1] Unless otherwise noted, all translations from RMB to U.S. dollars are madeat a rate of RMB6.4566 to US$1.00, the exchange rate in effect as of June 30,2021 as set forth in the H.10 statistical release of the Board of Governors ofthe Federal Reserve System. Translations are provided solely for theconvenience of the reader.

Second Quarter 2021 Financial Results

Total revenues reached RMB7.6 billion (US$1.2 billion), representing a 3% increase from the same period in 2020.

Membership services revenue was RMB4.0 billion (US$618.4 million), flat compared with the same period in 2020.

Online advertising services revenue was RMB1.8 billion (US$282.7 million), representing a 15% increase from the same period in 2020. The increase was primarily driven by the sustained rebound of brand-advertising budgets amid the macroeconomic recovery in China.

Content distribution revenue was RMB687.9 million (US$106.5 million), representing a 20% decrease from the same period in 2020. The decrease was primarily due to less barter transaction, partially offset by the increase of cash transaction.

Other revenues were RMB1.1 billion (US$170.7 million), representing a 20% increase from the same period in 2020, primarily driven by the strong growth of certain business lines.

Cost of revenues was RMB6.9 billion (US$1.1 billion), flat compared with the same period in 2020. Content costs as a component of cost of revenues were RMB5.1 billion (US$794.8 million), flat compared with the same period in 2020.

Selling, general and administrative expenses were RMB1.2 billion (US$183.5 million), representing a 1% decrease from the same period in 2020.

Research and development expenses were RMB676.5 million (US$104.8 million), representing a 2% increase from the same period in 2020.

Operating loss was RMB1.1 billion (US$173.7 million), compared to operating loss of RMB1.3 billion in the same period in 2020. Operating loss margin was 15%, compared to operating loss margin of 17% in the same period in 2020.

Total other expense was RMB226.4 million (US$35.1 million), compared to total other expense of RMB140.8 million during the same period of 2020. This was mainly due to increased interest expenses related to our financing activities.

Loss before income taxes was RMB1.3 billion (US$208.8 million), compared to loss before income taxes of RMB1.4 billion in the same period in 2020.

Income tax expense was RMB30.4 million (US$4.7 million), compared to income tax expense of RMB15.9 million in the same period in 2020.

Net loss attributable to iQIYI was RMB1.4 billion (US$216.4 million), compared to net loss attributable to iQIYI of RMB1.4 billion in the same period in 2020. Diluted net loss attributable to iQIYI per ADS was RMB1.75(US$0.27) for the second quarter of 2021, compared to diluted net loss attributable to iQIYI per ADS of RMB1.96 in the same period of 2020.

As of June 30, 2021, the Company had cash, cash equivalents, restricted cash and short-term investments of RMB12.3 billion (US$1.9 billion).

Financial Guidance

For the third quarter of 2021, iQIYI expects total net revenues to be between RMB7.62 billion (US$1.18 billion) and RMB8.05 billion (US$1.25 billion), representing a 6% to 12% increase year over year. This forecast reflects iQIYI's current and preliminary view, which may be subject to change.

Conference Call Information

iQIYI's management will hold an earnings conference call at 7:00 AM on August 12, 2021, U.S. Eastern Time (7:00 PM on August 12, 2021, Beijing Time).

Please register in advance of the conference using the link provided below. Upon registering, you will be provided with participant dial-in numbers, Direct Event passcode and unique registrant ID by email.

Participant Online Registration: http://apac.directeventreg.com/registration/event/7088859

It will automatically direct you to the registration page of " iQIYI Second Quarter 2021 Earnings Conference Call", where you may fill in your details for RSVP. If it requires you to enter a participant conference ID, please enter "7088859".

In the 10 minutes prior to the call start time, you may use the conference access information (including dial-in number(s), Direct Event passcode and unique registrant ID) provided in the confirmation email that you have received following your pre-registration.

A telephone replay of the call will be available after the conclusion of the conference call through August 19, 2021.

Dial-in numbers for the replay are as follows:

International Dial-in +61 2 8199 0299

Passcode: 7088859

A live and archived webcast of the conference call will be available at http://ir.iqiyi.com/.

About iQIYI, Inc.

iQIYI, Inc. is an innovative market-leading online entertainment service in China. Its corporate DNA combines creative talent with technology, fostering an environment for continuous innovation and the production of blockbuster content. iQIYI's platform features highly popular original content, as well as a comprehensive library of other professionally-produced content, professional user generated content and user-generated content. The Company distinguishes itself in the online entertainment industry by its leading technology platform powered by advanced AI, big data analytics and other core proprietary technologies. iQIYI attracts a massive user base with tremendous user engagement, and has developed a diversified monetization model including membership services, online advertising services, content distribution, online games, live broadcasting, IP licensing, talent agency, online literature, etc.

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "confident" and similar statements. Among other things, the Financial Guidance and quotations from management in this announcement, as well as iQIYI's strategic and operational plans, contain forward-looking statements. iQIYI may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including but not limited to statements about iQIYI's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: iQIYI's strategies; iQIYI's future business development, financial condition and results of operations; iQIYI's ability to retain and increase the number of users, members and advertising customers, and expand its service offerings; competition in the online entertainment industry; changes in iQIYI's revenues, costs or expenditures; Chinese governmental policies and regulations relating to the online entertainment industry, general economic and business conditions globally and in China and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in the Company's filings with the Securities and Exchange Commission. All information provided in this press release and in the attachments is as of the date of the press release, and iQIYI undertakes no duty to update such information, except as required under applicable law.

Non-GAAP Financial Measures

To supplement iQIYI's consolidated financial results presented in accordance with GAAP, iQIYI uses free cash flow as non-GAAP financial measure. The presentation of the non-GAAP financial measure is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP.

iQIYI believes that the non-GAAP financial measure provides meaningful supplemental information regarding its liquidity by excluding certain items that may not be indicative of its recurring liquidity position, such as operating cash flows adjusted by capital expenditures. The Company believes that both management and investors benefit from referring to the non-GAAP financial measure in assessing its liquidation and when planning and forecasting future periods. The non-GAAP financial measure also facilitates management's internal comparisons to iQIYI's historical liquidity. The Company believes the non-GAAP financial measure is useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision making. A limitation of using the non-GAAP financial measure is that the non-GAAP measure exclude certain items that have been and will continue to be for the foreseeable future a significant component in the Company's results of operations. The non-GAAP financial measure presented here may not be comparable to similarly titled measures presented by other companies. Other companies may calculate similarly titled measures differently, limiting their usefulness as comparative measures to the Company's data.

Free cash flow represents net cash provided by operating activities less capital expenditures.

For more information, please contact:

Investor RelationsiQIYI, Inc.+ 86 10 8264 6585 ir@qiyi.com

iQIYI, INC.

Condensed Consolidated Statements of Loss

(In RMB thousands, except for number of shares and per share data)

Three Months Ended Six Months Ended

June 30, March 31, June 30, June 30, June 30,

2020 2021 2021 2020 2021

RMB RMB RMB RMB RMB

(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)

Revenues:

Membership services 4,045,968 4,311,804 3,992,956 8,680,315 8,304,760

Online advertising services 1,586,083 1,916,584 1,825,333 3,122,853 3,741,917

Content distribution 860,629 779,058 687,891 1,463,401 1,466,949

Others 918,897 960,977 1,102,094 1,794,774 2,063,071

Total revenues 7,411,577 7,968,423 7,608,274 15,061,343 15,576,697

Operating costs and expenses:

Cost of revenues (6,833,586) (7,109,394) (6,868,868) (14,736,450) (13,978,262)

Selling, general and administrative (1,195,632) (1,200,984) (1,184,736) (2,506,235) (2,385,720)

Research and development (664,045) (672,256) (676,481) (1,342,180) (1,348,737)

Total operating costs and expenses (8,693,263) (8,982,634) (8,730,085) (18,584,865) (17,712,719)

Operating loss (1,281,686) (1,014,211) (1,121,811) (3,523,522) (2,136,022)

Other income/(expenses):

Interest income 44,425 28,569 29,231 101,019 57,800

Interest expenses (265,656) (330,585) (343,124) (527,686) (673,709)

Foreign exchange gain/(loss), net 61,199 (13,193) 35,404 (251,223) 22,211

Loss from equity method investments (62,205) (3,076) (64,230) (159,043) (67,306)

Others, net 81,389 95,846 116,280 67,578 212,126

Total other expense, net (140,848) (222,439) (226,439) (769,355) (448,878)

Loss before income taxes (1,422,534) (1,236,650) (1,348,250) (4,292,877) (2,584,900)

Income tax expense (15,926) (20,613) (30,418) (20,767) (51,031)

Net loss (1,438,460) (1,257,263) (1,378,668) (4,313,644) (2,635,931)

Less: Net income attributable to 3,357 9,747 18,559 2,815 28,306noncontrolling interests

Net loss attributable to iQIYI, Inc. (1,441,817) (1,267,010) (1,397,227) (4,316,459) (2,664,237)

Accretion of redeemable noncontrolling (1,747) (3,194) (4,343) (3,464) (7,537)interests

Net loss attributable to ordinary (1,443,564) (1,270,204) (1,401,570) (4,319,923) (2,671,774)shareholders

Net loss per share for Class A and ClassB ordinary shares:

Basic (0.28) (0.23) (0.25) (0.84) (0.48)

Diluted (0.28) (0.23) (0.25) (0.84) (0.48)

Net loss per ADS (1 ADS equals 7 Class Aordinary shares):

Basic (1.96) (1.61) (1.75) (5.88) (3.36)

Diluted (1.96) (1.61) (1.75) (5.88) (3.36)

Weighted average number of Class A andClass B ordinary shares used in net lossper share computation:

Basic 5,151,499,718 5,526,721,856 5,569,531,698 5,144,464,250 5,548,245,034

Diluted 5,151,499,718 5,526,721,856 5,569,531,698 5,144,464,250 5,548,245,034

iQIYI, INC.

Condensed Consolidated Balance Sheets

(In RMB thousands, except for number of shares and per share data)

December 31, June 30,

2020 2021

RMB RMB

(Unaudited)

ASSETS

Current assets:

Cash and cash equivalents 10,915,282 6,684,907

Restricted cash 25,230 51,174

Short-term investments 3,358,174 5,526,397

Accounts receivable, net 3,344,433 3,144,074

Prepayments and other assets 3,515,855 4,049,567

Amounts due from related parties 96,111 190,183

Licensed copyrights, net 1,035,339 890,326

Total current assets 22,290,424 20,536,628

Non-current assets:

Fixed assets, net 1,393,467 1,353,765

Long-term investments 3,202,828 3,422,487

Deferred tax assets, net 51,347 80,368

Licensed copyrights, net 6,435,055 6,714,313

Intangible assets, net 627,198 594,900

Produced content, net 6,556,084 8,675,781

Prepayments and other assets 2,699,423 2,518,445

Operating lease assets 1,001,857 1,049,711

Goodwill 3,888,346 3,888,346

Amounts due from related parties 39,400 81,400

Total non-current assets 25,895,005 28,379,516

Total assets 48,185,429 48,916,144

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTSAND SHAREHOLDERS'EQUITY

Current liabilities:

Accounts and notes payable 7,561,532 8,227,836

Amounts due to related parties 1,778,783 2,308,768

Customer advances and deferred revenue 3,444,917 3,248,965

Convertible senior notes, current portion 4,752,061 4,777,143

Short-term loans 2,965,957 3,008,224

Long-term loans, current portion 909,034 915,501

Operating lease liabilities, current portion 201,307 209,015

Accrued expenses and other liabilities 3,240,987 3,531,999

Total current liabilities 24,854,578 26,227,451

Non-current liabilities:

Convertible senior notes 11,926,715 12,591,930

Deferred tax liabilities 4,588 12,531

Amounts due to related parties 977,407 852,788

Operating lease liabilities 767,676 700,555

Other non-current liabilities 210,167 196,525

Total non-current liabilities 13,886,553 14,354,329

Total liabilities 38,741,131 40,581,780

Redeemable noncontrolling interests 108,629 230,086

Shareholders' equity:

Class A ordinary shares 165 172

Class B ordinary shares 183 183

Additional paid-in capital 47,687,483 49,077,376

Accumulated deficit (40,973,853) (43,645,627)

Accumulated other comprehensive income 2,542,680 2,590,176

Non-controlling interests 79,011 81,998

Total shareholders' equity 9,335,669 8,104,278

Total liabilities, redeemable noncontrolling 48,185,429 48,916,144interests and shareholders' equity

iQIYI, INC.

Condensed Consolidated Statements of Cash Flows

(In RMB thousands, except for number of shares and per share data)

Three Months Ended

June 30, March 31, June 30,

2020 2021 2021

RMB RMB RMB

(Unaudited) (Unaudited) (Unaudited)

Net cash used for operating activities (1,358,278) (1,350,028) (1,425,910)

Net cash provided by/(used for) 1,144,401 (2,777,975) 58,140investing activities ^(1)

Net cash provided by financing 822,793 610,991 801,074activities

Effect of exchange rate changes on cash,cash equivalents (10,016) (28,225) (92,498)and restricted cash

Net increase/(decrease) in cash, cashequivalents and 598,900 (3,545,237) (659,194)restricted cash

Net cash used for operating activities (1,358,278) (1,350,028) (1,425,910)

Less: Capital expenditures ^(2) (57,465) (60,550) (60,728)

Free cash flow (1,415,743) (1,410,578) (1,486,638)

(1) Net cash provided by or used for investing activities primarilyconsists of net cash flows from investing in debtsecurities, purchase of long-term investments and capital expenditures.

(2) Capital expenditures are incurred primarily in connection withleasehold improvements, computers and servers.

View original content: https://www.prnewswire.com/news-releases/iqiyi-announces-second-quarter-2021-financial-results-301354203.html

SOURCE iQIYI, Inc.