On February 18, 2021, Beijing time (February 17, US Eastern Time), iQiyi (NASDAQ: IQ) announced unaudited financial reports for the fourth quarter and full year ending December 31, 2020. According to financial reports, iQiyi's total revenue for FY2020 reached 29.7 billion yuan (US$4.6 billion), an increase of 2% over the previous year. Of this, revenue for the fourth quarter was 7.5 billion yuan (US$1.1 billion), in line with previous expectations. As of the end of the fourth quarter, iQiyi's subscription membership reached 101.7 million.
“The fourth quarter results are in line with our overall expectations.” Gong Yu, founder, director and CEO of iQiyi, said, “According to third-party data, iQiyi still maintains a leading position in providing key content, including series and variety shows. At the same time, we have also made breakthroughs in the fields of original movies, smart screens, and VR. In 2021, we will continue to provide users with more diverse, high-quality content while enhancing the value perception of paid members. We believe these measures will help increase the number of subscribers and increase revenue as the macro environment recovers.”
“Our operating loss ratio narrowed sharply year over year for three consecutive quarters.” Wang Xiaodong, chief financial officer of iQiyi, said, “We continue to seek content strategies that provide a better return on investment and strictly control costs in a challenging macro environment. In December 2020, we completed our largest round of funding since our IPO, which allows us to further improve our content delivery and technical standards.”
In the fourth quarter of 2020, iQiyi's membership service revenue was 3.8 billion yuan (US$587.8 million), and the annual membership service revenue was RMB 16.5 billion (US$2.5 billion), an increase of 14% over 2019. This is mainly due to the increase in the number of subscribed members in the first half of 2020 and the launch of exclusive content and diversified operations during the year. In the fourth quarter, advertising revenue achieved revenue of 1.9 billion yuan (US$284.9 million). Against the backdrop of a challenging macroeconomic environment, annual advertising revenue reached 6.8 billion yuan (US$1 billion). In addition to membership and advertising revenue, iQiyi's content distribution business achieved revenue of 804.3 million yuan (US$123.3 million) in the fourth quarter, and the total annual content distribution revenue was 2.7 billion yuan (US$407.7 million), an increase of 5% over 2019. Benefiting from growth in some business lines, other revenue in the fourth quarter reached 959.6 million yuan (about 147.1 million US dollars), an increase of 10% compared to the same period last year, and other revenue for the whole year reached 3.7 billion yuan (about 572.3 million US dollars).
In the fourth quarter of 2020, iQiyi's revenue costs fell 14% compared to the same period in 2019, mainly due to a decrease in content costs. Content costs for the fourth quarter were RMB 5.1 billion (US$786.1 million), down 10% from the same period in 2019. The decline in content costs is mainly due to a reduction in production costs, production of more short dramas to meet the diverse needs of users, and updated accounting estimates of future viewership consumption patterns and content asset life cycles. Annual revenue costs are down 8% compared to 2019. As an important component of revenue costs, content costs for the full year of 2020 were RMB 20.9 billion (US$3.2 billion), down 6% from 2019.
iQiyi lost 1.3 billion yuan (US$200.4 million) in operations in the fourth quarter and 6 billion yuan (US$925.7 million) in operating losses throughout the year. The full-year operating loss ratio was reduced to 20% compared to 32% in 2019.
As of December 31, 2020, the company had cash, cash equivalents, restricted use cash, and short-term investments totaling RMB 14.3 billion (approximately US$2.2 billion).
iQiyi forecasts the results for the first quarter of 2021: total revenue is expected to be between RMB 7.07 billion (US$1.08 billion) and RMB 7.53 billion (US$1.15 billion). (This outlook only represents a preliminary forecast based on the current situation, and does not rule out the possibility of future adjustments).