Recently, iQIYI (NASDAQ: IQ) released its unaudited fourth quarter and full-year financial report for the year ended December 31, 2023, which was evaluated by the outside world as "iQIYI's best performance of the year".
According to the financial report, iQIYI's total annual revenue was 31.9 billion yuan, a year-on-year increase of 10%; Non-GAAP operating profit for the full year was $3.6 billion, up 68% year-on-year. The net profit was 2.8 billion yuan, a year-on-year increase of 121%, and the profit growth rate was higher than the revenue growth rate, and the large-scale operation profit was achieved for two consecutive years.
Gong Yu, founder and CEO of iQIYI, also said at the financial report that after achieving a landmark reversal in 2022, the company continued its good momentum and achieved the best annual performance in history in 2023, with core indicators such as total revenue, operating profit, net profit and cash flow all reaching the best in history.
Looking to the future, iQIYI, the leader of the long-term industry, will continue to adhere to long-termism, and systematically improve the return on investment of content through continuous technological innovation and the improvement of content creation and operation management.
According to the business division, in 2023, iQIYI's core business membership service revenue will be 20.3 billion yuan, a year-on-year increase of 15%. iQIYI said in the financial report that the growth of membership service revenue was due to the month-on-month growth of average single member revenue (ARM), the scale of the average daily subscription membership and the year-on-year increase in the proportion of annual card members.
iQIYI's average monthly revenue per member in the fourth quarter increased by 13% year-on-year to 1598 yuan, the average number of daily subscribers reached 100.3 billion person-times, and finally achieved 4.8 billion yuan of membership service income. As of the end of 2023, the platform has a total of 101.1 billion person-times, which continued to stabilize at the "100 million" level.
It is worth mentioning that iQIYI's average monthly single member income in the third quarter of 2023 is 1554 yuan, a record high. On this basis, iQIYI continued to innovate membership value-added services to enhance users' sense of value and willingness to pay, and finally achieved a further jump in the fourth quarter, with five consecutive quarters of quarter-on-quarter growth.
It is reported that iQIYI took the lead in adopting the "unlimited redemption of membership points" model in the TV series "Lotus Building", which greatly improved the paid experience of member users. In the fourth quarter, the platform launched a total of 6 dramas and gifts, with the total number of participants increasing by nearly 50% quarter-on-quarter, the number of people redeeming gift points increasing by 40%, and the number of people purchasing gift packages increasing by 250%.
iQIYI has also comprehensively upgraded the large-screen audition experience for platinum and above members,At present, the frame Qiyinghuamax has certified TV equipment models up to157models,You can enjoy up to"4K Max+HDR+Panoramic sound"Audio-visual experience,High-quality audio-visual range continues to expand。
In addition, iQIYI pays attention to the differentiation of members' rights and benefits, and opens VIP exclusive seats in activities such as Ning'an Dream Appreciation Gift and iQIYI Scream Night, and provides free ticket drawing privileges for high-end members. Overall, the platform's membership service strategy has achieved a closed loop within the value chain.
By stabilizing the basic market of paying users, iQIYI's free cash flow as of the end of 2023 will reach 3.3 billion yuan, and its financial situation is getting better and better. Gong Yu said that in 2024, the platform will further optimize member products, content scheduling and operations, as well as member loyalty programs to improve member stickiness and extend the member life cycle.
In the long-term competition track, the output of high-quality content to users has always been the source of detonating the traffic and volume of the platform and supporting the growth of performance.
According to Yunhe data, iQIYI's drama market share has ranked first in the industry for 3 consecutive years, and in the top 10 of the effective ** list of new dramas in 2023, iQIYI occupies 7 seats in a high-profile manner. In the fourth quarter alone, iQIYI launched record-breaking hit dramas such as "Yi Nian Guan Mountain", "Ning An Like a Dream", and "Three Teams".
According to statistics, in 2023, the number of projects with iQIYI's content popularity value exceeding 9,000 and above will increase by 71% compared with 2021, of which original dramas have played an important role. The number of new key dramas on the platform throughout the year accounted for more than 65%, and the contribution of original dramas to revenue accounted for more than 80%, and remained above 50% for 7 consecutive quarters.
According to Gong Yu, the advantages of strong content management capabilities and creators' creative freedom have reduced the content cost rate of iQIYI dramas in 2023 by 12% compared with 2022, which directly promotes profit growth, and has the ability to output more innovative content while maximizing input-output efficiency.
In addition, iQIYI has also produced significant benefits in many fields such as movies, animation, and children, with a market share of 47% in 2023, and original films will achieve a box office of over 100 million; The number of original animations launched has increased significantly, with revenue contribution increasing by more than 90% year-on-year, and 11 original children's content IPs have been developed, and 8 quarterly works have been developed.
The output of high-quality content has opened up a broader space for the growth of other businesses such as advertising. The platform's advertising business revenue in 2023 will be 6.2 billion yuan, a year-on-year increase of 17%, and popular dramas and variety shows are favored by advertisers, helping the platform to "attract money and attract attention".
iQIYI achieved ** advertising revenue of 1.7 billion yuan in a single quarter in the fourth quarter, a year-on-year increase of 6%, and brand advertising and effect advertising both achieved healthy growth. Among them, brand advertising content targeted advertising revenue accounted for more than 50%, and generative AI technology production also drove the continuous improvement of performance advertising.
Gong Yu has publicly emphasized many times that iQIYI's vision is to "be a great entertainment company driven by scientific and technological innovation", and "scientific and technological innovation" and "greatness" have become the core keywords of iQIYI to build an entertainment kingdom. With the blessing of innovative AI technology, iQIYI is constantly empowering the entertainment ecology through technological innovation and broadening the imagination of users.
iQIYI said in its financial report that the platform's virtual production technology has been able to be applied to original content in the cloud to improve production and operational efficiency. As early as the first quarter of the financial report, Gong Yu revealed that iQiyi's use of virtual production technology has increased the director's shooting efficiency by more than 30%, and the on-site personnel have been reduced by one-third.
Generative AI has the ability to cover the whole process of film and television planning, opening, production, publicity and distribution, which can greatly improve creative efficiency, reduce creative costs, and improve the level of creation and decision-making. In iQIYI's new drama "Big Dream Returns", the amount of virtual shooting material exceeds 3,000 minutes.
In addition, iQIYI has developed the "Xingluo Plot Understanding Platform", through the learning and understanding of barrage, comments and feature film keyframes, quickly generate corresponding plot highlights, and produce personalized clips. The AI's ability to understand the content of film and television dramas in minutes can also assist in refining the first plot introduction, covering more than 3,000 dramas.
In the view of Liu Wenfeng, CTO of iQIYI, the development of generative AI technology can bring more opportunities to the film and television industry. In the future, iQIYI will increase investment in generative AI R&D and application, combine film and television data and large models for training and fine-tuning, and develop vertical applications suitable for the film and television industry.
Gong Yu also revealed at the ** meeting that in addition to the regular content business, iQiyi also pays attention to new businesses, striving to cultivate and incubate the second growth curve. The general direction of the new business includes overseas business, online or offline business related to IP value-added services, and possible technological innovations brought about by generative AI.