iQIYI, Inc. (IQ) Q1 2026 Earnings Call Transcript

Thank you for standing by and welcome to the IKEE First Quarter 2026 Earnings Conference Call. All students are in a listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number 1 on your telephone keypad. I would now like to hand the comments over to Ms. Cheng Yu, IR Director of the Company. Please go ahead.

Thank you, Operator. Hello, everyone, and thank you for joining IT's first quarter 2026 earnings conference call. The company's results were released earlier today and are available on the company's investor relations website at ir.it.com. On the call today are Mr. Yugong, our founder, director, and CEO. Ms. Ying-sung, our interim CFO. Mr. Xiaogui Wang, our chief content officer. Mr. Yu-jiao-juan, senior vice president of our membership business. and Mr. Xiang Pai Yang, Senior Vice President of International and Over-Online Game Business. Mr. Gong Wu gives a brief overview of the company's business operations and highlights, followed by me, who will go through the financials. After the prepared remarks, the management team will participate in the Q&A session. Before we proceed, please note that the discussion today will contain four looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations. Potential risks and uncertainties include, but are now limited to, those outlined in our public filings with the SEC. ICE does not undertake any obligation to update any forward-looking statement except a required under-applicable law. I will now pass on to Mr. Gong. Please go ahead.

Thank you for joining us today. The coherency of a brainstorming AI and a supportive domestic regulatory landscape is fundamentally Finally, reshaping entertainment and creating incredible opportunities for ITE. Let me show ITE's value of innovation in this new area from three perspectives. We're importing our call today, igniting new growth engines, and building for the long term. Let's start with the first perspective reinforcing our core fundamental, foundational threats. Premium content remains the cornerstone of our strategy. And in Q1, we reaffirmed its compelling appeal for audiences, our diverse lineup of hit dramas, including the punishment to , Born to be Alive, Sheng Shu, Pursuit of James, and How dare you secure our dominant position in the core drama category, Prime, Enlightened Data. Moving forward, our commitment to content quality is stronger than ever. designed to deliver expert experience that profoundly connect with viewers. This focus is revitalizing our core operations evidenced by the sequential growth in membership revenue. We are also highly encouraged by the supportive domestic regulation, which is accelerating the content and driving stronger capital efficiency. Importantly, these regulatory policies are unlocking innovation across new formats. This includes short-form drummers, , typically 15 to 25 minutes per episode with flexible episode counts, and the internet feature films, , which are limited to three chapters of 60 minutes each. These formats are not only shortened production cycles and lower capital barriers, but also attract a broader pool of creative talent, enabling more innovative storytelling than traditional long-form content. Furthermore, they are perfectly suited for AI integration, ultimately enriching our portfolio and maximizing of ROI. Looking ahead, we plan to launch over 100 short-form drummers in 2026 while steadily building our internet feature film slate. By continually delivering premium long-form content while strategically expanding into new formats, we are re-importing our foundational threads. Importantly, this expansion is efficient, allowing us to capture new opportunities without putting additional pressure on our overall content costs. Second, we are igniting new growth engines. Among our emerging business segments, our overseas business has established it as a a proven second growth driver. In Q1, overseas membership revenue surged by over 40% annually. This success is from a highly differentiated market position, compared to global peers. We focus on premium Asian content, tailored primary for young female demographics. We think our Asian content portfolio, sea drummers whose global influence continue to rise, serve as the key catalyst for our international expansion, complemented by a growing slate of local content. Geographically, we are acquiring our presence in Southeast Asia. We are also expanding into high growth markets in the Middle East and Latin America, with Brazil as a key focus. We are also deeply integrating AI across our global operations to drive efficiency. to our market expansion. We are maximizing IP value through our experience business, expanding our content value from online to offline, and extending the IP lifecycle. For IP-based consumer products, we are driving deeper user engagement. So merchandising will empower popular IPs to generate both casting window and long tail monetization. Finally, our foreign into offline experience is yielding, encouraging results. Our first IT land in Yangzhou has gathered solid initial feedback, allowing us to rapidly accumulate operational experience to apply to other locations. Thirdly, we are laying a robust foundation for long-term growth, powered by AI and all decentralized platforms. AI is breaking down the historic barrier that once made quality content costly, time-consuming, igniting, explore growth in both creators and the content value, anticipating that this accelerating shift will soon outgrow the traditional centralized media platform model. We have strategically pivoted to build a decentralized social media ecosystem. This will allow substantial value, but the centralized ecosystem greatly expands content supply, allowing us to meet diverse demands at a whole new scale. Creators will have greater opportunities to break soon and succeed, retaining full ownership of their IP and converting it into fellow attractive returns, while also cultivating private traffic, building lawyers and base, and gathering valuable data from direct user interactions. Meanwhile, for IT originals, we are sharpening our focus on premium content, while the decentralized as the platform, draft scale, or original web server as our signature offerings. Additionally, we are building a comprehensive support system so creators can focus purely on creativity. One key pillar is Netoprop, and she's A proprietary platform for zero-grade content production is powered by both public and self-deployed black models, but it goes beyond generic models. It's built upon all years of technology infrastructure and deep content expertise. We transform years of industry know-how into AI agent and combine them with our core IP and digital assets to deliver accessible platform capabilities. NadoPro offers one-stop services from content creation to operations and commercial collaborations. Beyond other problems, we offer professional training and work spaces. We also facilitate financing solutions, connecting talent with capital through our own funds and external investor networks. Now, let's explore what defines ATS long-term investment value and how we are uniquely positioned to lead in the AI era. Our confidence rests on two core pillars. First, how to do competitive mode. We have posted a unique blend of deep content expertise and cutting edge technology. We have a proven DNA of innovation from Pioneer in general, specific sheltered grants, to now leading the AIGC transformation in the industry, who surely we possess a vast high-quality IP library that is essential in the AI area, alongside a highly engaged user base that we are committed to serving with excellence. A long-term structural enhancement to our business economics, AI is poised to address major industry pain points, expanding on margins and maximizing capital efficiency. At the same time, a decentralized platform will boost content diversity to capture browser other audiences. While IT originals focus on crafting enduring premium IPs together, these initiatives fill our diversified monetization system, spending membership, advertising, and offline experiences, unlocking IP values across both domestic and global markets. Before we dive into Q1 details, I want to emphasize our core philosophy, the true power of technology as to empower humanity, not replace it. It will serve audiences with richer, deeply resonant content. And it will empower creatures to overcome human limitation, turning their boldest inspiration into reality with absolute efficiency and freedom. Ultimately, it will elevate the entire industry, unlocking new avenues for growth and helping creative vision and the commercial value. Now, let's move on to the detailed performance in Q1. Let's start with content. We are pioneering AI-driven storytelling and talent cultivation. In Q1, we unveiled Peter Paul's IT AI Center featuring a slate of 16 titles across science fiction, swivel, wuxia, and fantasy genres, each running 11 to 20 minutes. Network Pro powered key production process from capital design and the theme setting to story volume, demonstrating AI transformative potential in professional content creation. In terms of our long-form drama performance, the Punishment 2 became our second franchise with two seasons, exceeding the 10,000 IT popularity score. Pursuit of Jet also surpassed 10,000, while our Incouse produced a custom drama, How Dare You, exceeded 9,000. both pursuit of jade and how dare you resonate strongly with young female audiences for their solidifying our connection with these key demographics. Furthermore, we secured our leadership in realistic and suspense genres, born to be alive earned the highest door-bar rating among all domestic drama releases in Q1. And the Devil Between Us tour and their own suspense shelter brand was also well received by users. For Varaki Shots, our in-house production, Wander Together, Yuzhou Shanshuo Qingduyi, topped the market share ranking for the first quarter. For our animation, we expanded our offering with four key original titles. Along this, the long-running The Great Ruler, Da Duzai, continued to captivate audiences, and the season two of How Dare You Achieved a Strong Synergy with its drama scenarios. Our micro drummers' original production contributed over half of revenue from this category in Q1. AIGC has emerged as a powerful driver for content releases. In Q1, we launched more than 3,000 AI-generated micro drummers, further enriching our offerings. Finally, for micro-animation and AI-native formats, we are rapidly expanding our library, which features over 14,000 titles as of quarter-end, with viewership continuing to rise that way. Next, let me share our Q2 content pipeline. Our drama series line up features a rich variety of titles, from historical epics to niche including echoes of thousands moves, 八千比路云和院, Bloom Life, 他是永和, Born with Luck, 比治伤犯罪, 二家夜, and Archive the Nanyang Mystery, 南部档案, Among the already released titles, Born with Luck gained wide popularity, driven by its innovative storytelling, combining comedy and mystery, and surpassed the IHG popularity score of 10,000, becoming the third able to reach such mark this year. For films, our pipeline includes original online movies, The Thing Trade, Free Earth, Wing of Stress, Manage BG, and the counterfeit Weichao Zhonghan. For licensed titles, we will release theoretical hits on our platform like Pac-Sat 3, Feature Shenzhen, Awaking of Insects in Silence, Jinzhuo Shenzhen, and The Blaze of the Goddess, Biao Ren, along with the online film The Legend Hunter, Xiong Jun. For variety shows, we will continue to captivate audience with established franchise by half Season 6, Become a Farmer Season 4, The Wrap of China 2026, and Yes, I Do Season 6, Ximony Wenshi. While launching new IP like Voice of Youngs, Chao Ren, Qing Chun De He Chang. For micro drummers, we have a diverse slate schedule, including a perfect match. Deng Duy, San Di Yu, Poro, Bai Ye Viching, Phoenix, Ruth, O-Scan, Wan Zha Cheong Huang, and Spring Dress of Phoenix, Feng Ren. Then, for admissions and children's content, we will continue the long-draining against no-goths in conjunction and then debute a localized adaption of the BBC classic, Tally 2 Ways. Now, turning to membership business, revenue will grow sequentially, primarily driven by Priming titles, including Pursuit Object, The Punishment 2, How Dare You, and Demo Between Us. Additionally, all refined upselling strategies and value-driven membership options successfully encourage users to extend their plans, driving a year-over-year increase in average subscription duration for monthly subscribers this quarter. Additionally, our higher membership continued to scale, driven by a highly different show-edit value proposition that features free express package to advertising business or brand as revenue contribution from targeted drummers, recorded double-digit annual growth with titles like Born to be Alive, How Dare You on the Pursuit of JET gained strong recognition from advertisers, sector-wise, food and beverage, internet services, and e-commerce all achieved a double-digit annual growth. Furthermore, we are expanding our advertising appeal across new content formats. For example, we partner with leading advertisers to co-produce stream of content for micro drummers, creating new avenues for brand integration. On the technology front, AI continues to empower our advertising operations. We leverage Nadocrox to produce marketing materials and combine AIDC capabilities with our IPs to generate high-quality ad content. In Q2, our focus will be on maximizing ad sales across premium variety shows, dramas, We further are enhancing monetization on large screens. Concurrently, we will continue to leverage AI to optimize advertising efficiency. For performance ads, the advertiser mix is healthier and more balanced revenue from small and mid-sized advertisers recorded strong annual growth with sustained improvements by sector, internet services, e-commerce, and the mini-games delivered outstanding core trade results. Additionally, monetization efficiency for micro-dramas, measured by revenue per inventory unit, increased by over 60% year-over-year. For the rest of the year, our strategy for performance has focused on four key areas. First, expanding our client base across high growth verticals, including internet services, short-form videos, mini games, and AI tools. Second, capturing greater market share during peak window, such as major e-commerce festivals. Third, enhancing monetization efficiency through AI-powered capabilities. Finally, typing into additional ad budgets by harnessing a more diverse content ecosystem and upgraded ad placement system onto our business performance in region outside of mainland China. Membership revenue increased by over 40% annually in Southeast Asia markets. Membership revenue from Indonesia grew by over 80% annually. Meanwhile, Portuguese and Spanish-speaking regions demonstrated robust growth with membership revenue from Brazil and domestic over 100% annually. Average daily subscribers reached a new high, less performance across a secure top position on our international platform view shape rankings, and top to Google Trends among all C drummers broadcast during the theme window in 15 markets, and set a record as the most searched Chinese drummer on Google. Beyond sea drummers, we are scaling original local production to elevate the fuel of particular learning in case of East Asia markets in Q1. Our first original Thailand show, Running Man Thailand, delivered exceptional results, setting multiple new records from variety shows on our international platform. For example, Google Trends confirmed its position as the most popular type variety show over the past three years, and the title earned a strong recognition from advertisers. Meanwhile, our first original Indonesian drummer is untracked premium in Q2, marking a further step in our localization journey. Our overseas micro-drama business also gained momentum with growing revenue or contribution fueled by both licensed and original content. Our original production pipeline consistently delivered new releases across multiple languages, including English, Thai, Korean, and Indonesian. of experience business, we focus on two core areas, IT-based consumer products and IT-land. For IT-based consumer products, our soft-operated merchandise delivers solid performance with collectible tasks from the pursuit of a new sales record in its category. For offline experience business, our first IT lab in Yangzhou performed in-line with expectations and was highly acclaimed for its scenery design, immersive experiences, and technology-enabled interactions. Going forward, we will continue refining operations and introducing new creative offerings to encourage repeat visits and on-site consumption. Furthermore, we are leveraging our experience games in Yangzhou to drive to development of new locations in Kaifeng and Beijing which are progressing smoothly. Now, I would like to hand it to Ying for the financials.

Let me walk you through the key revenue raised. The typing revenue, content distribution revenue raised $358,000.

If you cancel your request, please press star 2. If you're on a speakerphone, please pick up the handset to ask your question in Chinese first and then translate the question into English. In the interest of time, please limit it to one question per person. If you would like to ask further questions, you may press star 1 again to rejoin the queue. Your first question comes from Ze-Kring Zhang with the ICC.

Please go ahead. thanks management for taking my question and my question about nato pro the company previously launched nato pro an ai agent for film and television content creation can management share more details about the recent progress of nato pro and any specific examples of its practical applications uh in addition how does management view the future commercialization uh prospects for NATO Pro. Thank you.

ITE內部使用的創作方面的工具, 比如說劇本評估,影視鏡頭的搜索,

這些功能也納入到NadoPro裡面。 The CEO company is taking this question. So NadoPro is ITE's proprietary platform for studio-grade production. It is powered by public large models, but it goes beyond generic models. It's actually built upon our years of tech infrastructure and deep content expertise. For example, we have transformed years of industry know-hows from key areas such as screenwriting, filming, and post-production into AI agents and combine them with our core IP and digital assets to deliver accessible platform capabilities. Creator tools previously used only within ITE, such as the script evaluation and shop-based reference search, have now been incorporated to Nato Pro.

Nato Pro has been available to all creators across the industry since April 20th.

We now currently have over 10,000 active creators on board, ranging from traditional production companies to independent creators. 然后制作的内容包括长剧,中剧,网络故事片,短剧,当然也有漫剧,还有广告 其中有100%左右是爱奇艺的自治项目 Among which, about 100 of them. NatoPro actually recently launched a creator community as a platform for creators to interchange experiences and form some feedbacks, and that will feed internal development for NatoPro. In addition, the international version of NatoPro is in development beyond my team. 先放就是作为一个独立的产品,然后不断地研发别代,然后增加收入. 现在每周消耗的Token也在快速增加中心。 Regarding NATO Pro-Commercial Monetization Capabilities, and it will continue to reiterate and accomplish. 谢谢。

Thank you.

Your friend comes from Dickie Wave City. 管理层,晚上好。 谢谢接受我的提问。 我的问题是关于行业的盗版问题的,能不能请管理层给我们分享一下,就是行业打击盗版有积极的进展,给我们分享最新的情况可以吗? Thanks, management for taking my question. Would management share some latest progress about the industry anti-privacy update? Thank you.

Thank you, K. We'll invite our Chief Content Officer to take this question. Please go ahead. for the enterprise situation we actually have observed very positive progress around the end of April in early May the national radio and television administration launched a targeted campaign to crack down on the priority distribution of trauma content across illegal websites, browsers, search engines, and cloud storage services. The industry regulators actually attached great importance to this issue and have established clear requirements for the prevention and handling of online copyright infringement, including some of the initiatives. To give you guys some examples, for example, we established a rapid response mechanism for infringement content, enabling real-time communication meeting and copyright owners and platforms to ensure swift Second, the new policies and regulations actually enforce dual responsibilities for platforms and local authorities, requiring provincial and municipal bureaus to fulfill their local management duties. For example, enhancing, monitoring, and improve processing efficiency. The platforms must resolve and remove infringing content within 24 hours of receiving a report or notice. For newly released dramas, hit series, or key titles, The removal must be completed within four hours. And third, building a coordinated enforcement mechanism, regularly reporting on infringement status, take down reads and typical cases for repeat offenders who will be publicly named and handed over to copyright and police authorities for investigation and prosecution. This targeted campaign will be integrated with routine regulatory enforcement, looking at the National Copyright Administration's shortnet 2026 anti-piracy special campaign has designated online copyright infringement and piracy as its top priority, signaling even stricter enforcement measures. Thank you so much for joining us. the efficiency of handling infringements has improved significantly, and we believe the piracy issue will be substantially mitigated in the copyright protection safeguards the commercial interests of all industry stakeholders with the willingness to invest in high-quality content creation and foster our virtual cycle mechanism to co-build, helping to drive user growth and revenue of our long-form video business.

Thank you. Your next question I'm Jenny Yuan with UBS. Please go ahead.

So let me translate myself. Membership business saw a sequential recovery in the first quarter, in particular overseas business delivery robust growth momentum. How does management view the sustainability of this improving trend, and how do we think about the membership business outlook into the second quarter and beyond? Thank you.

Thanks, Jenny. We'll invite the senior vice president of membership business to take on those questions. Go ahead, please. In Q1, driven by a strong plate of premium content and refined operational strategies, membership revenue delivered sequential goals in the first quarter. We have a rich content pipeline for Q2, a number of recently launched titles actually we have performed well. Notably, Born With Luck surpassed 10,000 on IT's popularity index, powered by a distinct suspense plus comedy narrative style. And in addition, we have also an extended slate for the second quarter, including the Lancome dramas, for example, Echoes of Thousand Moons, The Epic of Me, The Air, and for variety shows, we have Five Top Season Six, become a farmer season 4, and we believe these content will effectively reach an abroad membership base.

In the end, we will be able to capture Q2's most important, Intel 618, and strengthen the year-to-date and the year-to-date and the year-to-date.

Looking ahead, looking for Q2, we are looking at our operations and the sales priorities. For example, we're focusing on reactivating dormant members, optimizing variety show schedules to offer more content for members, and expanding large screen membership via joint operating initiatives with smart TV manufacturers, and also leveraging the June 18 e-commerce festival to boost annual and bundled memberships. And together, we believe these efforts will expand our subscriber base and expand our subscription sector. And looking ahead, as the stability and consistency of our premium content, pipeline continues to strengthen, and coupled with our ongoing optimization of our membership operations, we believe our membership business will maintain a steady development strategy.

Thank you. Your next question comes from Thomas Chung with Jeffries. Please go ahead.

晚上好,谢谢管理层接受我的提问。我的问题是关于我们海外的业务的。 啊看看我们在东南亚的趋势 都是在一个非常高速的一个增长的太 Dead 想问一下就是我们未来一段的时间 在海外的投入的情况是怎么样 然后可以分享一下海外跟 国内用户的习惯 或者是他们在 Call of Yoast 帮助的一个趋势方面 会不会有一些 Metrics 可以分享的 Thanks, management, for taking my question, and congratulations on the fast growth of your overseas business. Just now, we talked about the fast growth in Southeast Asia. So may I ask about our investment strategies in Southeast Asia market? And also, can you share about some of the differences or similarities in terms of the audience preference in domestic versus overseas? Thank you.

Thank you, Thomas. We'll invite our senior vice-president of our world-received business.

Please go ahead. 大家好,我先回答,用两个部分先回答第一部分, 关于海外未来的一些计划。 分几个方面,第一个,在重点市场方面, 我们继续加强在东南亚的业务。 包括现在做的比较好的泰国,印尼,马来西亚, Okay, well, I will take this part into two segments.

First, for the key markets, currently our key markets are performing pretty well, and then for the Southeast Asia market have been growing quickly. And for the market that's crucial for our Southeast Asia, we'll continue to invest in countries such as Thailand, Indonesia, Malaysia, Vietnam, and Philippines. And also for some of the emerging markets that's also grown pretty well, for example, North America, Brazil, et cetera. So we'll continue to invest in these areas and markets. Let's start with content. So for us, our peak differentiation is our seed drama. So that will continue to be our key in terms of getting users and especially for this content that's favorable and liked by young female users. And in key areas that I mentioned earlier, that will increase the promotional activities and marketing activities for these markets. For example, for user growth, using content to attract and also to retain users. And for local content, we'll control and also have a good pace in terms of the content investment. Also in terms of the volume that we're investing into the local content, we also focus for the young female users like genre and content for local content. And for a third, for our matured markets, we'll continue to cooperate with telecom carriers and also e-commerce platforms to increase our membership scale. and we will continue to use this strategy to replicate it to other markets that we're trying to support. 关于第二个问题,海外用户的 metrics方面, 我们现在看到海外的用户主要是年轻女性为主, 四十岁以下的女性相比比较高。 In terms of the user demographics for overseas audiences, And the majority are focusing on the young female users who are under 40 years old. For the user behaviors for overseas market, each major market is a bit different. Some of them have higher user, you know, switches, cycles, better cycles, better retention than others. But overall speaking, the R pool for overseas memberships are higher than the domestic ones.

Thank you. Your next question comes from Jiji Zhao with Guangfa. Go ahead.

Thank you for your time. Thank you for your time. You can hear me, right? 然后我想这个季度想问一下我们其实也看到了在公司在AI上面一系列的一些战略和推出的举措,比如说像这个Nado Pro,还有我们的报道系的AI剧场,对,我想请文领诚分享一下我们怎么看待AI时代的一个整个竞争格局上的一个变化,对,I will translate the question myself. Seeing IT's efforts in NADO Pro and fostering AI-driven creation and talent cultivation, how do we view the competitive landscape in the AI era? Thank you.

I love the CEO going to take this question.

Please go ahead. 影视就是我们平时说的长视频,最大的一个困境,最大的难点是成本越来越高,投资的风险会逐渐变大,作品的数量就不得不减少,然后追求越投顾的投资就越大,形成这么一个循环。 但是AI技术可以大幅度的降低成本,缩短制作周期,所以就会让更多的创作者去做长篇的内容,就我平时说的长视频的内容,那么作品的数量逐渐会增大,那个用户自然就会增多,形成一个正向的一个飞轮,正向的一个循环。

So for a long-term video, in the past, our challenge has been the investment scale or the amount that we invest in content is massive. The content cost is high, which means the investment risk is high, which leads to less number of titles that have been invested and rolled out for the industry. And for any content that we invested, we typically focus on the premium head content. That was the cycle that we faced and the challenge we faced. For AI, it actually fundamentally improves the situation. Under the AI model, the content cost is much cheaper. The production cycle and production period is shorter, which means there are more titles, more number of titles. To better accommodate this industry trend, you know, we wrote out a number of initiatives, for example, the Nardo Pro we discussed, and also the IGE account, which means the users can upload their content to our platform. Under the revenue share model, they will have the opportunity to introduce their content to more users to enjoy and to eat. So under This is a very difficult backdrop.

短视频还有短剧的发展 都是因为科技创新或者其他元素 导致这个创作的成本降低 然后创作门槛降低 创作者更多 导致行业繁荣 对于长视频来讲 我们非常相信也会是同样的规律

If we look back for the past 10 years of the internet, we believe that technology is a great opportunity for the long-term video to have better economics and better...

There are no further questions at this time. I'll now hand back to the company for closing remarks.

Thank you, everyone, for participating on the call today. If you have further questions, don't hesitate to contact us. Thank you.

Thank you. That does include our conference for today. Thank you for participating. You may now disconnect.