iQIYI Announces Second Quarter 2022 Financial Results
BEIJING, August 30, 2022 – 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, 2022.

Second Quarter 2022 Highlights
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Total revenues were RMB6.7 billion (US$993.8 million1), decreasing 13% year overyear.
Membership services revenue was RMB4.3 billion (US$639.7 million), increasing 7%
year over year.
Operating income was RMB125.8 million (US$18.8 million) and operating income
margin was 2%, compared to operating loss of RMB1.1 billion and operating loss
margin of 15% in the same period in 2021.
Non-GAAP operating income2 was RMB343.8 million (US$51.3 million) and nonGAAP operating income margin was 5%, compared to non-GAAP operating loss of
RMB779.4 million and non-GAAP operating loss margin of 10% in the same period
in 2021.
Net loss attributable to iQIYI was RMB214.0 million (US$31.9 million), compared to
net loss attributable to iQIYI of RMB1.4 billion in the same period in 2021.
Non-GAAP net income attributable to iQIYI2 was RMB78.3 million (US$11.7
million), compared to non-GAAP net loss attributable to iQIYI of RMB1.1 billion in
the same period in 2021.

“We fought against the gravity of macro downturn throughout the second quarter of 2022
and booked operating profit growth. The process was extremely challenging, but the result
was absolutely remarkable.” commented Mr. Yu Gong, Founder, Director, and Chief
Executive Officer of iQIYI. “In the third quarter, we built important partnership with
Douyin and PAG. This together with the positive momentum of a series of blockbuster
new releases makes us more confident than ever that we will be able to deliver greater
profit growth in the future.”“Our gross margin expanded in the last three consecutive quarters, reflecting ongoing gains
in the ROI of our content business. Meanwhile, we kept our spending disciplined andstabilized total operating expenses in the second quarter.” commented Mr. Jun Wang, Chief
Financial Officer of iQIYI. “We are committed to building a healthy and sustainablebusiness that generates long-term value for our stakeholders.”

Second Quarter 2022 Financial Highlights

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

June 30,

March 31,

June 30

2021

2022

2022

RMB

RMB

RMB

Total revenues

7,608,274

7,277,059

6,656,549

Operating (loss)/income(1,121,811)

93,413

125,787(779,406)

326,555

343,806

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

(1,397,227)

169,093(213,995)

Net (loss)/income attributable to iQIYI, Inc. (non-GAAP)(1,065,310)

162,189

78,253

Diluted net (loss)/income per ADS(1.75)

0.21(0.28)

Diluted net (loss)/income per ADS (non-GAAP)2(1.33)

0.20

0.10

Operating (loss)/income (non-GAAP)

Second Quarter 2022 Other Operating Highlights●●

The average daily number of total subscribing members3 for the quarter was 98.3
million, compared to 99.2 million for the same period in 2021 and 101.4 million for
the first quarter in 2022. The average daily number of subscribing members excluding
individuals with trial memberships4 for the quarter was 97.7 million, compared to 98.5
million for the same period in 2021 and 100.8 million for the first quarter in 2022.
The monthly average revenue per membership (ARM5) for the second quarter was
RMB14.53, compared to RMB13.42 for the same period in 2021 and RMB14.69 forthe first quarter in 2022, increasing 8% year over year.

Footnotes:[1]
Unless otherwise noted, RMB to USD was converted at an exchange rate of RMB6.6981 as of June 30, 2022, as set forth in the
H.10 statistical release of the Board of Governors of the Federal Reserve System. Translations are provided solely for the convenienceof 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.

Second Quarter 2022 Financial Results
Total revenues reached RMB6.7 billion (US$993.8 million), decreasing 13% year overyear.
Membership services revenue was RMB4.3 billion (US$639.7 million), increasing 7% year
over year, primarily attributable to the increase in ARM, as we launched a variety ofpremium content that elevated user experiences and continued to refine operations toimprove monetization capabilities.

Online advertising services revenue was RMB1.2 billion (US$178.2 million), decreasing
35% year over year, primarily due to challenging macroeconomic environment, pandemic
resurgence, and our strategy leading to fewer number of variety shows launched.
Content distribution revenue was RMB479.3 million (US$71.6 million), decreasing 30%
year over year, primarily due to the decrease in the value of cash transactions and bartertransactions.
Other revenues were RMB698.4 million (US$104.3 million), decreasing 37% year overyear, primarily due to the soft performance of various business lines.
Cost of revenues was RMB5.2 billion (US$783.5 million), decreasing 24% year over year,
primarily due to lower content costs during the quarter. Content costs as a component ofcost of revenues were RMB3.9 billion (US$578.7 million), decreasing 24% year over year.
The decrease in content cost resulted from our improvement in content strategy andimprovement in operating efficiency.
Selling, general and administrative expenses were RMB800.6 million (US$119.5 million),decreasing 32% year over year, primarily due to the decrease in marketing spending, sharebased compensation expenses, and personnel-related compensation expenses.
Research and development expenses were RMB482.2 million (US$72.0 million),decreasing 29% year over year, primarily due to the decrease of personnel-relatedcompensation expenses.
Operating income was RMB125.8 million (US$18.8 million), compared to operating lossof RMB1.1 billion in the same period in 2021. Operating income margin was 2%,
compared to operating loss margin of 15% in the same period in 2021. Non-GAAP
operating income was RMB343.8 million (US$51.3 million) and non-GAAP operating
income margin was 5%, compared to non-GAAP operating loss of RMB779.4 million and
non-GAAP operating loss margin of 10% in the same period in 2021.
Total other expense was RMB291.0 million (US$43.4 million), compared to total otherexpense of RMB226.4 million during the same period of 2021. The year over year increase
was a combined result of the foreign exchange loss driven by the appreciation of U.S. dollar
against Renminbi, decreased interest expenses mainly due to the adoption of ASU 202006, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity andless principal amount of convertible bond, as well as the fluctuation of other items.
Loss before income taxes was RMB165.2 million (US$24.7 million), compared to loss
before income taxes of RMB1.3 billion in the same period in 2021.
Income tax expense was RMB36.2 million (US$5.4 million), compared to income tax
expense of RMB30.4 million in the same period in 2021.

Net loss attributable to iQIYI was RMB214.0 million (US$31.9 million), compared to net
loss attributable to iQIYI of RMB1.4 billion in the same period in 2021. Diluted net loss
attributable to iQIYI per ADS was RMB0.28 (US$0.04) for the second quarter of 2022,
compared to diluted net loss attributable to iQIYI per ADS of RMB1.75 in the same periodof 2021. Non-GAAP net income attributable to iQIYI was RMB78.3 million (US$11.7
million), compared to non-GAAP net loss attributable to iQIYI of RMB1.1 billion in thesame period in 2021. Non-GAAP diluted net income attributable to iQIYI per ADS was
RMB0.10 (US$0.01), compared to non-GAAP diluted net loss attributable to iQIYI per
ADS of RMB1.33 in the same period of 2021.
As of June 30, 2022, the Company had cash, cash equivalents, restricted cash and shortterm investments of RMB4.9 billion (US$733.0 million).

Conference Call Information
iQIYI's management will hold an earnings conference call at 7:00 AM on August 30, 2022,
U.S. Eastern Time (7:00 PM on August 30, 2022, 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
sgdy7f.html

OnlineRegistration:

https://s1.c-conf.com/diamondpass/10024346-

It will automatically direct you to the registration page of " iQIYI Second Quarter 2022
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 September 6, 2022.
Dial-in numbers for the replay are as follows:
International Dial-in+1 855 883 1031
Passcode:
10024346
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. We produce, aggregate
and distribute a wide variety of professionally produced content, or PPC, as well as a broad
spectrum of other video content in a variety of formats. The Company distinguishes itself
in the online entertainment industry by its leading technology platform powered byadvanced 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 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(loss)/income, non-GAAP operating (loss)/income margin, non-GAAP net (loss)/income
attributable to iQIYI, non-GAAP diluted net (loss)/income attributable to iQIYI per ADS
and free cash flow. 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 andpresented in accordance 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 (loss)/income represents operating (loss)/income excluding sharebased compensation expenses, amortization and impairment of intangible assets resulting
from business combinations and non-recurring employee severance costs.
Non-GAAP net (loss)/income attributable to iQIYI, Inc. represents net (loss)/income
attributable to iQIYI, Inc. excluding share-based compensation expenses, amortization andimpairment of intangible assets resulting from business combinations, non-recurring
employee severance costs, disposal gain or loss, impairment of long-term investments, fairvalue change of long-term investments, adjusted for related income tax effects. iQIYI’sshare of equity method investments for these non-GAAP reconciling items, amortizationand impairment of intangible assets not on the investees’ books, accretion of theirredeemable non-controlling interests, and the gain or loss associated with the issuance ofshares by the investees at a price higher or lower than the carrying value per shares,
adjusted for related income tax effects, are also excluded.
Non-GAAP diluted net (loss)/income per ADS represents diluted net (loss)/income per
ADS calculated by dividing non-GAAP net (loss)/income attributable to iQIYI, Inc, whichis adjusted for accretion for the redeemable non-controlling interests, 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.
+ 86 10 8264 6585
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

Six Months Ended

June 30,

March 31,

June 30,

June 30,

2021

2022

2022

2021

June 30,
2022

RMB

RMB

RMB

RMB

RMB

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

Revenues:
Membership services

3,992,956

4,471,475

4,285,071

8,304,760

8,756,546

Online advertising services

1,825,333

1,337,299

1,193,809

3,741,917

2,531,108

687,891

626,116

479,261

1,466,949

1,105,377

Others1,102,094

842,169

698,408

2,063,071

1,540,577

Total revenues

7,608,274

7,277,059

6,656,549

15,576,697

13,933,608

Cost of revenues(6,868,868)(5,963,853)(5,247,959)(13,978,262)(11,211,812)

Selling, general and administrative(1,184,736)(744,781)(800,602)(2,385,720)(1,545,383)

Research and development(676,481)(475,012)(482,201)(1,348,737)(957,213)

Total operating costs and expenses(8,730,085)(7,183,646)(6,530,762)(17,712,719)(13,714,408)

Operating (loss)/income(1,121,811)

93,413

125,787(2,136,022)

219,200

Content distribution

Operating costs and expenses:

Other income/(expenses):
Interest income

29,231

8,947

15,70757,80024,654

Interest expenses(343,124)(175,515)(181,907)(673,709)(357,422)

Foreign exchange gain/(loss), net

35,404(9,017)(98,101)

22,211(107,118)

Loss from equity method investments(64,230)(3,158)(93,690)(67,306)(96,848)

116,280

276,076

67,006

212,126

343,082

Total other (expense)/income, net(226,439)

97,333(290,985)(448,878)(193,652)(Loss)/income before income taxes(1,348,250)

190,746(165,198)(2,584,900)

25,548(30,418)(16,882)(36,204)(51,031)(53,086)(1,378,668)

173,864(201,402)(2,635,931)(27,538)

Others, net

Income tax expense

Net (loss)/income
Less: Net income attributable tononcontrolling interests

18,5594,771

12,59328,306

17,364(1,397,227)

169,093(213,995)(2,664,237)(44,902)(4,343)--(7,537)(1,401,570)

169,093(213,995)(2,671,774)(44,902)

Basic(0.25)

0.03(0.04)(0.48)(0.01)

Diluted(0.25)

0.03(0.04)(0.48)(0.01)Net (loss)/income per ADS (1 ADS equals 7
Class A ordinary shares):
Basic
Diluted(1.75)(1.75)

0.21
0.21(0.28)(0.28)(3.36)(3.36)(0.07)(0.07)

Weighted average number of Class A andClass B ordinary shares used in net loss per
share computation:
Basic
Diluted

5,569,531,698
5,569,531,698

5,706,290,530
5,742,801,024

6,074,616,616
6,074,616,616

5,548,245,034
5,548,245,034

5,891,471,047
5,891,471,047

Net (loss)/income attributable to iQIYI, Inc.
Accretion of redeemable noncontrollinginterests
Net (loss)/income attributable to ordinary
shareholders-

Net (loss)/income per share for Class A andClass B ordinary shares:

iQIYI, INC.
Condensed Consolidated Balance Sheets(In RMB thousands, except for number of shares and per share data)

December 31,
2021
RMB

June 30,
2022
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

2,997,212
77,652
1,348,255
2,747,774
3,266,523
155,512931,189
11,524,117

2,923,178
96,206
1,890,542
2,457,691
2,124,381
124,573
796,182
10,412,753

Non-current assets:
Fixed assets, net
Long-term investments
Deferred tax assets, net
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

1,344,784
3,035,155
31,351
7,258,042
545,305
10,951,078
2,905,690
907,297
3,888,346
81,00030,948,048

1,261,847
3,161,746
30,697
6,783,132
478,266
12,526,665
3,143,657
838,800
3,888,346
64,00032,177,156

42,472,165

42,589,909

8,896,460
2,634,089
3,484,509
4,117,774
171,541
3,172,097
22,476,470

6,311,095
3,221,675
3,662,925
8,012,749
4,064,196
181,984
2,702,534
28,157,158

12,652,172
3,127
780,615625,737
260,931
14,322,582

5,990,335
2,452
112,411561,2141,401,226
8,067,638

36,799,052

36,224,796

397,385-Class A ordinary sharesClass B ordinary shares
Additional paid-in capital
Accumulated deficit
Accumulated other comprehensive income
Non-controlling interests
Total shareholders’ equity

173
183
49,642,014(47,163,773)
2,709,002
88,1295,275,728

193
193
50,474,523(46,407,587)
2,205,203
92,5886,365,113

Total liabilities, redeemable noncontrolling interests and shareholders' equity

42,472,165

42,589,909

Total assets
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND SHAREHOLDERS’
EQUITY
Current 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
Redeemable noncontrolling interests
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,
2021
RMB(Unaudited)
Net cash (used for)/provided by operating activities
Net cash provided by/(used for) investing activities (1)(1,425,910)(1,167,049)

47,35958,140801,074(67,305)
2,046,550(652,454)(333,393)(92,498)(4,284)75,096(659,194)807,912(863,392)

Net cash (used for)/provided by operating activities(1,425,910)(1,167,049)

47,359(60,728)(51,315)(66,005)(1,486,638)(1,218,364)(18,646)

Free cash flow

(2)

June 30,
2022
RMB(Unaudited)

Net cash provided by/(used for) financing activities
Effect of exchange rate changes on cash, cash equivalents
and restricted cash
Net (decrease)/increase in cash, cash equivalents andrestricted cash

Less: Capital expenditures (2)(1)

March 31,2022
RMB
(Unaudited)

Net cash provided by or used for investing activities primarily consists of net cash flows from investing in debt securities, purchase oflong-term investments and capital expenditures.
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

Operating (loss)/income

June 30,

March 31,

June 30,

2021

2022

2022

RMB

RMB

RMB

(1,121,811)

93,413

125,787

Add: Share-based compensation expenses

329,940

216,644

201,521

Add: Amortization and impairment of intangible assets(1)12,465

16,49816,498(779,406)

326,555

343,806(1,397,227)

169,093(213,995)

329,940

216,644

201,521
16,498Operating (loss)/income (non-GAAP)

Net (loss)/income attributable to iQIYI, Inc.
Add: Share-based compensation expenses
Add: Amortization and impairment of intangible assets(1)

12,465

16,498(44,861)(429,916)-

Add: Impairment of long-term investments

1,849

182,277

11,000Add: Fair value (gain)/loss of long-term investments(8,602)

(792)

1,760

Add: Reconciling items on equity method investments

31,517

10,914

59,615

Add: Tax effects on non-GAAP adjustments(2)9,609(2,529)1,854(1,065,310)

162,189

78,253

Add: Disposal (gain)/loss

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

Diluted net (loss)/income per ADS(1.75)

0.21(0.28)

Add: Non-GAAP adjustments to earnings per ADS

0.42(0.01)

0.38

Diluted net (loss)/income per ADS (non-GAAP)(1.33)

0.20

0.10

(1)
(2)

This represents amortization and impairment of intangible assets resulting from business combinations.
This represents tax impact of all relevant non-GAAP adjustments.