iQIYI Announces Third Quarter 2023 Financial Results
BEIJING, CHINA, November 21, 2023 – iQIYI, Inc. (Nasdaq: IQ) ("iQIYI" or the"Company"), a leading provider of online entertainment video services in China, today
announced its unaudited financial results for the third quarter ended September 30, 2023.

Third Quarter 2023 Highlights
●
●
●

●
●

Total revenues were RMB8.0 billion (US$1.1 billion1), increasing 7% year over year.
Operating income was RMB746.7 million (US$102.4 million) and operating income
margin was 9%, compared to operating income of RMB309.7 million and operating
income margin of 4% in the same period in 2022.
Non-GAAP operating income2 was RMB894.9 million (US$122.7 million) and nonGAAP operating income margin was 11%, compared to non-GAAP operating incomeof RMB524.3 million and non-GAAP operating income margin of 7% in the same
period in 2022.
Net income attributable to iQIYI was RMB475.9 million (US$65.2 million), comparedto net loss attributable to iQIYI of RMB395.6 million in the same period in 2022.
Non-GAAP net income attributable to iQIYI2 was RMB622.1 million (US$85.3
million), compared to non-GAAP net income attributable to iQIYI of RMB187.2
million in the same period in 2022.

“We recorded strong results in both revenues and profits. ARM increased by 12% year overyear, driven by our compelling content offering and growing perceived value of ourmembership privilege,” commented Mr. Yu Gong, Founder, Director, and Chief Executive
Officer of iQIYI. “Our business proves to be defensible against the fluctuations of
economic cycles.”“We continue to benefit from operating leverage. Our GAAP and Non-GAAP operating
income grew by 141% and 71% year over year, respectively. Our GAAP and Non-GAAP
operating margin further expanded from 4% and 7% in the third quarter of 2022 to 9% and
11% this quarter, respectively,” commented Mr. Jun Wang, Chief Financial Officer ofiQIYI. “Our operating cash flow and free cash flow reached RMB831 million and RMB826
million, respectively.”

Third Quarter 2023 Financial Highlights
Three Months Ended(Amounts in thousands of Renminbi (“RMB”), except for per
ADS data, unaudited)

September 30,

June 30,

September 30,

2022

2023

2023

RMB

RMB

RMB

Total revenues

7,471,081

7,802,297

8,015,079

Operating income

309,665

610,392

746,747

Operating income (non-GAAP)

524,347

786,391

894,879

Net (loss)/income attributable to iQIYI, Inc.

(395,569)

365,207475,920

Net income attributable to iQIYI, Inc. (non-GAAP)187,207594,663

622,071

Diluted net (loss)/income per ADS(0.46)

0.37

0.49

Diluted net income per ADS (non-GAAP)2

0.21

0.61

0.64

Third Quarter 2023 Operating Highlights●●

The average daily number of total subscribing members3 for the quarter was 107.5
million, compared to 101.0 million for the same period in 2022 and 111.2 million forthe second quarter in 2023. The average daily number of subscribing members
excluding individuals with trial memberships4 for the quarter was 106.9 million,
compared to 100.2 million for the same period in 2022 and 110.7 million for the second
quarter in 2023.
The monthly average revenue per membership (ARM5) for the third quarter was
RMB15.54, compared to RMB13.90 for the same period in 2022 and RMB14.82 forthe second quarter in 2023, increasing 12% year over year.

Footnotes:[1]
Unless otherwise noted, RMB to USD was converted at an exchange rate of RMB7.2960 as of September 29, 2023, as set forth in
the H.10 statistical release of the Board of Governors of the Federal Reserve System. Translations are provided solely for theconvenience of the reader.
[ 2]
Non-GAAP measures are defined in the Non-GAAP Financial Measures section (see also “Reconciliations of Non-GAAP Financial
Measures to the Nearest Comparable GAAP Measures” for more details).
[3]
The average daily number of total subscribing members for a quarter is calculated by averaging the number of total subscribing
members in each day of such quarter.
[4]
The average daily number of subscribing members excluding individuals with trial memberships for the quarter is calculated byaveraging the number of subscribing members excluding individuals with trial memberships in each day of such quarter.
[ 5]
The monthly ARM for the quarter is calculated by dividing our total revenues from membership services during a given quarter by
the average daily number of total subscribing members for that quarter and the number of months in the quarter.

Third Quarter 2023 Financial Results
Total revenues reached RMB8.0 billion (US$1.1 billion), increasing 7% year over year.
Membership services revenue was RMB5.0 billion (US$686.9 million), increasing 19%
year over year, primarily attributable to the increase in ARM and our continuous efforts inrefining operations to improve monetization capabilities. The average daily number of total
subscribing members for the quarter was 107.5 million, compared to 101.0 million for thesame period last year. The number of total subscribing members was 102.8 million as of
September 30, 2023, compared to 106.2 million as of September 30, 2022.
Online advertising services revenue was RMB1.7 billion (US$229.5 million), increasing
34% year over year, driven by growth in both performance-based advertising and brandadvertising businesses. For performance-based advertising, revenue growth was
attributable to our improved sales efforts and optimized algorithms. Additionally, ourpremium original content attracted stronger advertising demand and drove the growth inbrand advertising service revenue.

Content distribution revenue was RMB526.1 million (US$72.1 million), decreasing 28%
year over year, primarily due to the decrease in average unit price of barter transactions,partially offset by the increase in average unit price of cash transactions.
Other revenues were RMB803.1 million (US$110.1 million), decreasing 37% year overyear, primarily due to deconsolidation of live broadcasting business and lesser revenue
derived from third-party cooperation.
Cost of revenues was RMB5.8 billion (US$800.4 million), increasing 2% year over year.
Content costs as a component of cost of revenues were RMB4.2 billion (US$573.4 million),decreasing 3% year over year.
Selling, general and administrative expenses were RMB981.4 million (US$134.5 million),flat year over year.
Research and development expenses were RMB447.4 million (US$61.3 million),decreasing 6% year over year, primarily due to the decrease in personnel-relatedcompensation expenses.
Operating income was RMB746.7 million (US$102.4 million), compared to operating
income of RMB309.7 million in the same period in 2022. Operating income margin was
9%, compared to operating income margin of 4% in the same period in 2022. Non-GAAP
operating income was RMB894.9 million (US$122.7 million) and non-GAAP operating
income margin was 11%, compared to non-GAAP operating income of RMB524.3 million
and non-GAAP operating income margin of 7% in the same period in 2022.
Total other expense was RMB254.2 million (US$34.8 million), compared to total otherexpense of RMB662.0 million during the same period of 2022. The year over year decrease
was primarily driven by the decrease in the impairment provision, less loss pick-up fromequity method investment and loss from foreign exchange, and partially offset by increased
interest expenses.
Income before income taxes was RMB492.5 million (US$67.5 million), compared to loss
before income taxes of RMB352.4 million in the same period in 2022.
Income tax expense was RMB9.0 million (US$1.2 million), compared to income tax
expense of RMB42.5 million in the same period in 2022.
Net income attributable to iQIYI was RMB475.9 million (US$65.2 million), compared to
net loss attributable to iQIYI of RMB395.6 million in the same period in 2022. Diluted net
income attributable to iQIYI per ADS was RMB0.49 (US$0.07) for the third quarter of2023, compared to diluted net loss attributable to iQIYI per ADS of RMB0.46 in the same
period of 2022. Non-GAAP net income attributable to iQIYI was RMB622.1 million(US$85.3 million), compared to non-GAAP net income attributable to iQIYI of RMB187.2
million in the same period in 2022. Non-GAAP diluted net income attributable to iQIYIper ADS was RMB0.64 (US$0.09), compared to non-GAAP diluted net income
attributable to iQIYI per ADS of RMB0.21 in the same period of 2022.
As of September 30, 2023, the Company had cash, cash equivalents, restricted cash, shortterm investments and long-term restricted cash included in prepayments and other assets
of RMB7.2 billion (US$980.9 million).

Conference Call Information
iQIYI's management will hold an earnings conference call at 6:30 AM on November 21,
2023, U.S. Eastern Time (7:30 PM on November 21, 2023, 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, passcode and uniqueaccess PIN by a calendar invite.
Participant
Onlineabdow7.html

Registration:

https://s1.c-conf.com/diamondpass/10034674-

It will automatically direct you to the registration page of " iQIYI Third Quarter 2023
Earnings Conference Call", where you may fill in your details for RSVP.
In the 10 minutes prior to the call start time, you may use the conference access information(including dial-in number(s), passcode and unique access PIN) provided in the calendar
invite that you have received following your pre-registration.
A telephone replay of the call will be available after the conclusion of the conference callthrough November 28, 2023.
Dial-in numbers for the replay are as follows:
International Dial-in+1 855 883 1031
Passcode:10034674
A live and archived webcast of the conference call will be available at http://ir.iqiyi.com/.

About iQIYI, Inc.
iQIYI, Inc. is a leading provider of online entertainment video services in China. It
combines creative talent with technology to foster an environment for continuous
innovation and the production of blockbuster content. It produces, aggregates anddistributes a wide variety of professionally produced content, as well as a broad spectrumof other video content in a variety of formats. 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 daily subscriber

base of more than 100 million, and its diversified monetization model includes membershipservices, online advertising services, content distribution, online games, IP licensing, talentagency, online literature, etc.
Safe Harbor Statement
This announcement contains forward-looking statements. These statements are made underthe "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 quotations from management in thisannouncement, 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 toshareholders, in press releases and other written materials and in oral statements made byits 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 forwardlooking statements. Forward-looking statements involve inherent risks and uncertainties.
A number of factors could cause actual results to differ materially from those contained inany forward-looking statement, including but not limited to the following: iQIYI's
strategies; iQIYI's future business development, financial condition and results ofoperations; iQIYI's ability to retain and increase the number of users, members andadvertising 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 thepress 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 the following non-GAAP financial measures: non-GAAP operating income,non-GAAP operating income margin, non-GAAP net income attributable to iQIYI, nonGAAP diluted net income attributable to iQIYI per ADS and free cash flow. The
presentation of the non-GAAP financial measure is not intended to be considered inisolation or as a substitute for the financial information prepared and presented inaccordance with GAAP.
iQIYI believes that these non-GAAP financial measures provide meaningful supplemental
information regarding its operating performance by excluding certain items that may not
be indicative of its business operating results, such as operating performance excluding

non-cash charges or non-operating in nature. The Company believes that both management
and investors benefit from referring to the non-GAAP financial measures in assessing its
performance and when planning and forecasting future periods. These non-GAAP financial
measures also facilitate management’s internal comparisons to iQIYI’s historical operating
performance. The Company believes the non-GAAP financial measures are useful toinvestors in allowing for greater transparency with respect to supplemental information
used by management in its financial and operational decision making. A limitation of using
these non-GAAP financial measures is that the non-GAAP measures 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. These non-GAAP financial measures presented
here may not be comparable to similarly titled measures presented by other companies.
Other companies may calculate similarly titled measures differently, limiting theirusefulness as comparative measures to the Company’s data.
Non-GAAP operating income represents operating income excluding share-based
compensation expenses, amortization and impairment of intangible assets resulting frombusiness combinations.
Non-GAAP net income attributable to iQIYI, Inc. represents net (loss)/income attributable
to iQIYI, Inc. excluding share-based compensation expenses, amortization and impairmentof intangible assets resulting from business combinations, disposal gain or loss, impairmentof long-term investments, fair value change of long-term investments, adjusted for related
income tax effects. iQIYI’s share of equity method investments for these non-GAAP
reconciling items, primarily amortization and impairment of intangible assets not on theinvestees’ books, accretion of their redeemable non-controlling interests, and the gain orloss associated with the issuance of shares by the investees at a price higher or lower thanthe carrying value per shares, adjusted for related income tax effects, are also excluded.
Non-GAAP diluted net income per ADS represents diluted net (loss)/income per ADS
calculated by dividing non-GAAP net income attributable to iQIYI, Inc, by the weighted
average number of ordinary shares expressed in ADS.
Free cash flow represents net cash provided by operating activities less capital expenditures.
For more information, please contact:
Investor Relations
iQIYI, Inc.
ir@qiyi.com

iQIYI, INC.
Condensed Consolidated Statements of (Loss)/Income(In RMB thousands, except for number of shares and per share data)

Three Months Ended
September 30,
2022
RMB(Unaudited)

June 30,
2023
RMB(Unaudited)

September 30,
2023
RMB(Unaudited)

Revenues:
Membership services
Online advertising services
Content distribution
OthersTotal revenues

4,210,722
1,247,114
729,698
1,283,547
7,471,081

4,946,567
1,495,378
553,319807,033
7,802,297

5,011,617
1,674,260
526,132
803,070
8,015,079

Operating costs and expenses:
Cost of revenues
Selling, general and administrative
Research and development
Total operating costs and expenses
Operating income(5,705,260)(980,293)(475,863)(7,161,416)
309,665(5,773,867)(979,000)(439,038)(7,191,905)
610,392(5,839,540)(981,409)(447,383)(7,268,332)
746,747

Other income/(expense):
Interest income
Interest expenses
Foreign exchange loss, net(Loss)/gain from equity method investments
Others, net
Total other expense, net

18,631(181,641)(79,768)(69,807)(349,455)(662,040)

52,196(278,521)(114,992)
33,78972,928(234,600)

45,219(281,528)(38,084)
1,355
18,802(254,236)(Loss)/Income before income taxes
Income tax expense(352,375)(42,501)

375,792(7,930)492,511(9,012)

Net (loss)/ income
Less: Net income attributable to noncontrolling interests
Net (loss)/income attributable to iQIYI, Inc.
Net (loss)/income attributable to ordinary shareholders(394,876)
693(395,569)(395,569)

367,8622,655
365,207
365,207483,499
7,579
475,920475,920

Net (loss)/income per share for Class A and Class B ordinary shares:
Basic
Diluted(0.07)(0.07)

0.05
0.05

0.07
0.07

Net (loss)/income per ADS (1 ADS equals 7 Class A ordinary shares):
Basic
Diluted(0.46)(0.46)

0.38
0.37

0.50
0.49

6,081,974,163
6,081,974,163

6,704,546,096
6,851,986,558

6,712,002,812
6,850,839,094

Weighted average number of Class A and Class B ordinary shares used in net
income per share computation:
Basic
DilutediQIYI, INC.
Condensed Consolidated Balance Sheets(In RMB thousands, except for number of shares and per share data)

December 31,
2022
RMB

September 30,
2023
RMB(Unaudited)

ASSETS
Current assets:
Cash and cash equivalents
Restricted cash
Short-term investments
Accounts receivable, net
Prepayments and other assets
Amounts due from related parties
Licensed copyrights, net
Total current assets

7,097,938
13,618818,265
2,402,675
2,602,927
104,154746,058
13,785,635

4,230,587
6,120
1,024,923
2,473,873
2,953,466
202,155
696,997
11,588,121

Non-current assets:
Fixed assets, net
Long-term investments
Licensed copyrights, net
Intangible assets, net
Produced content, net
Prepayments and other assets
Operating lease assets
Goodwill
Amounts due from related parties
Total non-current assets

1,104,721
2,453,644
6,840,629
436,685
13,001,904
3,865,133
673,971
3,826,147
59,88032,262,714

908,418
2,365,120
6,991,874
390,021
12,625,559
4,631,872
635,886
3,820,823
147,852
32,517,425

46,048,349

44,105,546

5,993,416
3,521,646
4,232,110
8,305,447
3,347,638
103,5172,626,244
28,130,018

5,935,958
3,087,489
4,505,676
3,114,492
3,360,681
95,544
2,496,508
22,596,348

9,568,279
1,832
100,941
508,571
1,395,269
11,574,892

8,349,132
1,048
85,519474,763
1,252,833
10,163,295

39,704,910

32,759,643

Class A ordinary sharesClass B ordinary shares
Additional paid-in capital
Accumulated deficit
Accumulated other comprehensive income
Non-controlling interests
Total shareholders’ equity

194
193
50,885,688(46,498,897)
1,863,454
92,807
6,343,439

236
193
54,811,647(45,039,661)
1,483,659
89,82911,345,903

Total liabilities and shareholders' equity

46,048,349

44,105,546

Total assets
LIABILITIES AND SHAREHOLDERS’ EQUITYCurrent liabilities:
Accounts and notes payable
Amounts due to related parties
Customer advances and deferred revenue
Convertible senior notes, current portion
Short-term loans
Operating lease liabilities, current portion
Accrued expenses and other liabilities
Total current liabilities
Non-current liabilities:
Convertible senior notes
Deferred tax liabilities
Amounts due to related parties
Operating lease liabilities
Other non-current liabilities
Total non-current liabilities
Total liabilities

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
September 30,
2022
RMB(Unaudited)
Net cash provided by operating activities,
Net cash provided by/ (used for) investing activities (1 2)

195,724

June 30,
2023
RMB(Unaudited)

September 30,
2023
RMB(Unaudited)

885,560

830,689

406,840(420,481)(55,245)(105,876)(1,175,147)

269,189

60,182

127,759

4,587

556,870(582,309)

1,049,220

3,019,384

5,664,674

5,082,365

3,576,254

5,082,365

6,131,585

3,559,899
16,355-3,565,285
6,120
1,510,960

4,230,587
6,120
1,894,878

3,576,254

5,082,365

6,131,585

Net cash provided by operating activities
Less: Capital expenditures (2)195,724(48,143)885,560(13,307)

830,689(4,192)

Free cash flow

147,581872,253

826,497

Net cash (used for)/ provided by financing activities
Effect of exchange rate changes on cash, cash
equivalents and restricted cash
Net increase/ (decrease) in cash, cash equivalents andrestricted cash
Cash, cash equivalents and restricted cash at the
beginning of the period
Cash, cash equivalents and restricted cash at the end of
the period
Reconciliation of cash and cash equivalents andrestricted cash:
Cash and cash equivalents
Restricted cash
Long-term restricted cash
Total cash and cash equivalents and restricted cash
shown in the statements of cash flows(1) Net cash provided by or used for investing activities primarily consists of net cash flows from investing in debt
securities, purchase of long-term investments and capital expenditures.
(2) Capital expenditures are incurred primarily in connection with leasehold improvements, computers and servers.

iQIYI, INC.
Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures(Amounts in thousands of Renminbi (“RMB”), except for per ADS information, unaudited)Three Months Ended
September 30,

June 30,

September 30,

2022

2023

2023

RMB

RMB

RMB

Operating income

309,665

610,392

746,747

Add: Share-based compensation expenses

204,770

169,380

145,730

9,912

6,619

2,402

Operating income (non-GAAP)

524,347

786,391

894,879

Net (loss)/income attributable to iQIYI, Inc.

(395,569)

365,207475,920

Add: Share-based compensation expenses

204,770

169,380

145,730

9,912

6,619

2,402

-

(89,571)-

Add: Impairment of long-term investments

376,339

155,011-Add: Fair value gain of long-term investments(26,652)(3,550)(1,756)

Add: Reconciling items on equity method investments(2)16,323(8,895)-

Add: Tax effects on non-GAAP adjustments(3)

2,084

462

(225)

187,207594,663

622,071

Diluted net (loss)/income per ADS(0.46)

0.37

0.49

Add: Non-GAAP adjustments to earnings per ADS

0.67

0.24

0.15

Diluted net income per ADS (non-GAAP)

0.21

0.61

0.64

Add: Amortization and impairment of intangible assets(1)Add: Amortization and impairment of intangible assets(1)

Add: Disposal gain

Net income attributable to iQIYI, Inc. (non-GAAP)

(1)
(2)

(3)

This represents amortization and impairment of intangible assets resulting from business combinations.
This represents iQIYI’s share of equity method investments for other non-GAAP reconciling items, primarily
amortization and impairment of intangible assets not on the investee’s books, accretion of their redeemablenoncontrolling interests, and the gain or loss associated with the issuance of shares by the investees at a pricehigher or lower than the carrying value per shares.
This represents tax impact of all relevant non-GAAP adjustments.