iQIYI reported its unaudited third‑quarter 2025 results, showing total revenue of RMB 6.68 billion (US$938.7 million), a decline of 8% year‑over‑year. Membership‑services revenue fell 4% to RMB 4.21 billion (US$591.7 million) while advertising revenue dropped 7% to RMB 1.24 billion (US$174.3 million). The company posted an operating loss of RMB 121.8 million (US$17.1 million) versus an operating income of RMB 238.9 million in Q3 2024, and a net loss attributable to iQIYI of RMB 248.9 million (US$35.0 million) compared with a net income of RMB 229.4 million in the prior year.
Revenue fell 8% YoY but still beat consensus estimates by about US$16.6 million, landing at US$938.7 million versus the expected US$932.6 million. Non‑GAAP diluted net loss per ADS was RMB 0.15 (≈ –$0.02), matching the consensus of –$0.02. The beat in earnings, despite the revenue shortfall, was largely driven by disciplined cost control that kept operating expenses from expanding in line with revenue, and by a sequential 3% increase in membership services that offset the advertising decline.
Membership services revenue declined 4% YoY but grew 3% sequentially, reflecting a stronger mix of premium drama subscriptions. Advertising revenue slipped 7% YoY and 2% sequentially, a result of a weaker performance‑based advertising mix and a broader slowdown in digital ad spend in China. Content‑distribution revenue fell 21% YoY, while overseas membership revenue grew 35% YoY, underscoring the company’s continued expansion in international markets.
Content costs, a key component of cost of revenues, actually decreased 1% YoY to RMB 4.04 billion, but rose 7% sequentially, indicating a lighter content slate in the quarter. Operating expenses were down 3% sequentially; SG&A increased 2% YoY, while R&D expenses fell 8% YoY. The net effect was a 3% sequential decline in total operating expenses, but the year‑over‑year change was not a 2% decrease as previously reported. The mix of higher SG&A and lower R&D contributed to margin compression, pushing the company into an operating loss.
CEO Yu Gong highlighted the company’s focus on storytelling and IP, noting that high‑quality content continues to drive domestic drama viewership. CFO Jun Wang emphasized robust growth in overseas operations, citing a 1% sequential rise in total revenue and a 3% rise in membership services revenue, driven by blockbuster dramas. Both executives underscored the importance of cost discipline and strategic investment in AI‑driven content production.
Management maintained its full‑year 2025 revenue guidance of US$4.14‑4.15 billion and operating‑income guidance of RMB 2.15‑2.16 billion, unchanged from the prior quarter. The unchanged outlook signals confidence in the company’s cost‑control trajectory and the expected acceleration of AI integration, while also reflecting caution amid macro headwinds in China’s entertainment market.
Investors reacted with muted enthusiasm. The market focused on the revenue miss relative to consensus, while the alignment of EPS with expectations tempered concerns about profitability. The cautious response reflects the company’s need to reverse revenue decline while sustaining the cost discipline that has kept losses from widening further.
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