UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 6-K

 

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of August 2019

Commission File Number: 001-38431

 

 

iQIYI, Inc.

 

 

9/F, iQIYI Innovation Building

No. 2 Haidian North First Street, Haidian District, Beijing 100080

People’s Republic of China

Tel: +86 10 6267-7171

(Address of principal executive offices)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F  ☒            Form 40-F  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  ☐

 

 

 


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

iQIYI, Inc.
By   :  

/s/ Xiaodong Wang

Name   :   Xiaodong Wang
Title   :   Chief Financial Officer

Date: August 21, 2019


Exhibit Index

Exhibit 99.1—Press Release

EX-99.1

Exhibit 99.1

iQIYI Announces Second Quarter 2019 Financial Results

BEIJING, August 19, 2019 – 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, 2019.

Second Quarter 2019 Highlights

 

   

Total revenues were RMB7.1 billion (US$1.0 billion1), representing a 15% increase from the same period in 2018.

 

   

Operating loss was RMB1.9 billion (US$272.6 million) and operating loss margin was 26%, compared to operating loss of RMB1.3 billion and operating loss margin of 22% in the same period in 2018.

 

   

Net loss attributable to iQIYI was RMB2.3 billion (US$339.0 million), compared to net loss attributable to iQIYI of RMB2.1 billion in the same period in 2018. Diluted net loss attributable to iQIYI per ADS was RMB3.22 (US$0.49).

 

   

The number of total subscribing members was 100.5 million as of June 30, 2019, 98.9% of whom were paying subscribing members. This compares to 67.1 million of total subscribing members as of June 30, 2018, up 50% year over year.

“We are pleased to report another solid quarter of performance highlighted by our total subscribing members surpassing 100 million, marking a historic milestone for the Company,” commented Dr. Yu Gong, Founder, Director and Chief Executive Officer of iQIYI. “We further solidified our market leadership position across various operating metrics, and strengthened our product matrix that generates strong synergies across our platform. We remain committed to our strategy of enhancing production capabilities of high quality original content and advancing our AI technology innovation in content production, distribution and monetization. With the fast development of China’s entertainment industry and the approaching 5G commercialization, we are confident in our growth prospects and look forward to capturing the enormous opportunities ahead to grow in tandem with our users, partners, and investors.

“We achieved continued revenue growth in the second quarter despite some recent challenges facing our industry,” commented Mr. Xiaodong Wang, Chief Financial Officer of iQIYI. “Our membership business generated solid growth with subscription revenues increasing 38% year-over-year, driven by our strong content slate during the quarter. As our IP-centered diversification strategy grows to scale, we are constantly expanding the scope of our value-added services and pursuing better monetization. We believe our long-term growth landscape remains intact, and we will continue to invest in our original content and technology which serve as the dual engines to drive our future growth.”

 

Footnote:

[1] 

This announcement contains translations of certain RMB amounts into U.S. dollars at specified rates solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to U.S. dollars are made at a rate of RMB6.8650 to US$1.00, the effective noon buying rate as of June 28, 2019, in The City of New York for cable transfers of RMB as certified for customs purposes by the Federal Reserve Bank of New York.


Second Quarter 2019 Financial Results

Total revenues reached RMB7.1 billion (US$1.0 billion), representing a 15% increase from the same period in 2018.

Membership services revenue was RMB3.4 billion (US$497.1 million), representing a 38% increase from the same period in 2018. The increase resulted from the solid growth in the number of subscribing members, driven by our premium content, especially our original hits, as well as various operational initiatives during the quarter.

Online advertising services revenue was RMB2.2 billion (US$320.6 million), down 16% year over year, mainly due to the challenging macroeconomic environment in China, the delay of certain content launches and slower-than-expected recovery of our in-feed advertising.

Content distribution revenue was RMB517.9 million (US$75.4 million), representing a 4% decrease from the same period in 2018 due to the delay of certain content launches during the quarter.

Other revenues were RMB979.2 million (US$142.6 million), representing an 82% increase from the same period in 2018. The increase was driven by strong performance across various vertical business lines, especially the robust growth of our game business after the acquisition of Skymoons.

Cost of revenues was RMB7.0 billion (US$1.0 billion), representing a 14% increase from the same period in 2018. The increase was primarily driven by higher content costs as well as other cost items. Content costs as a component of cost of revenues were RMB5.0 billion (US$731.9 million), representing a 7% increase from the same period in 2018.

Selling, general and administrative expenses were RMB1.3 billion (US$196.1 million), representing a 42% increase from the same period in 2018. This was primarily due to higher marketing spending on game business and increased share-based compensation expenses associated with the acquisition of Skymoons.

Research and development expenses were RMB654.6 million (US$95.4 million), representing a 48% increase from the same period in 2018, primarily due to the increase of personnel-related compensation expenses.

Operating loss was RMB1.9 billion (US$272.6 million), compared to operating loss of RMB1.3 billion in the same period in 2018. Operating loss margin was 26%, compared to operating loss margin of 22% in the same period in 2018.


Total other expense was RMB426.7 million (US$62.2 million), compared to total other expense of RMB768.3 million during the same period of 2018. The year-over-year variance was a combined result of less foreign exchange loss due to the fluctuation of exchange rate between Renminbi and the U.S. dollar, and increased interest expenses associated with our financing activities.

Loss before income taxes was RMB2.3 billion (US$334.8 million), compared to loss before income taxes of RMB2.1 billion in the same period in 2018.

Income tax expense was RMB5.8 million (US$0.8 million), compared to income tax expense of RMB4.9 million in the same period in 2018.

Net loss attributable to iQIYI was RMB2.3 billion (US$339.0 million), compared to net loss attributable to iQIYI of RMB2.1 billion in the same period in 2018. Diluted net loss attributable to iQIYI per ADS was RMB3.22 (US$0.49) for the second quarter of 2019.

As of June 30, 2019, the Company had cash, cash equivalents, restricted cash and short-term investments of RMB16.4 billion (US$2.4 billion).

Financial Guidance

For the third quarter of 2019, iQIYI expects total net revenues to be between RMB7.21 billion (US$1.03 billion2) and RMB7.63 billion (US$1.09 billion), representing a 4% to 10% increase from the same period in 2018. This forecast reflects iQIYI’s current and preliminary view, which is subject to substantial uncertainty.

 

Footnote:

[2] 

The translations from RMB to U.S. dollars for the expected revenues in the third quarter of 2019 are made at a rate of RMB7.0 to US$1.0, the rounded noon buying rate as of August 8, 2019, in The City of New York for cable transfers of RMB as certified for customs purposes by the Federal Reserve Bank of New York. We make no representation that any Renminbi or U.S. dollar amounts could have been, or could be, converted into U.S. dollars or Renminbi, as the case may be, at this rate, or any particular rate, or at all.

Conference Call Information

iQIYI’s management will hold an earnings conference call at 8:00 PM on August 19, 2019, U.S. Eastern Time (8:00 AM on August 20, 2019, Beijing Time). Dial-in details for the earnings conference call are as follows:

 

International    +65 67135090
China    4006 208038
US    +1 845 675 0437
UK    +44 2036 214779
Hong Kong    +852 3018 6771
Passcode:    4885756


A telephone replay of the call will be available two hours after the conclusion of the conference call through August 27, 2019.

Dial-in numbers for the replay are as follows:

 

International Dial-in    +61 2 8199 0299
Passcode:    4885756

A live and archived webcast of this 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. iQIYI’s platform features highly popular original content, as well as a comprehensive library of other professionally-produced content, partner-generated content and user-generated content. The Company distinguishes itself in the online entertainment industry by its leading technology platform powered by advanced 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, online literature, talent agency and e-commerce etc.

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the “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 Financial Guidance and quotations from management in this announcement, 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 to shareholders, in press releases and other written materials and in oral statements made by its 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 forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: iQIYI’s strategies; iQIYI’s future business development, financial condition and results of operations; iQIYI’s ability to retain and increase the number of users, members and advertising 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 the press release, and iQIYI undertakes no duty to update such information, except as required under applicable law.


For more information, please contact:

Investor Relations

iQIYI, Inc.

+ 86 10 8264 6585

ir@qiyi.com


iQIYI, INC.

Condensed Consolidated Statements of 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,     June 30,  
     2018     2019     2019     2018     2019  
     RMB     RMB     RMB     RMB     RMB  
     (Unaudited)     (Unaudited)     (Unaudited)     (Unaudited)     (Unaudited)  

Revenues:

          

Membership services

     2,474,474       3,445,343       3,412,349       4,569,459       6,857,692  

Online advertising services

     2,617,507       2,119,433       2,200,682       4,728,177       4,320,115  

Content distribution

     539,359       467,861       517,939       806,029       985,800  

Others

     538,891       957,282       979,211       943,871       1,936,493  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     6,170,231       6,989,919       7,110,181       11,047,536       14,100,100  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating costs and expenses:

          

Cost of revenues

     (6,106,729     (7,277,196     (6,980,957     (10,954,948     (14,258,153

Selling, general and administrative

     (949,934     (1,140,611     (1,346,324     (1,654,171     (2,486,935

Research and development

     (441,482     (598,072     (654,601     (828,811     (1,252,673
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating costs and expenses

     (7,498,145     (9,015,879     (8,981,882     (13,437,930     (17,997,761
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating loss

     (1,327,914     (2,025,960     (1,871,701     (2,390,394     (3,897,661
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other expense

          

Interest income

     25,615       65,097       130,721       30,341       195,818  

Interest expenses

     (9,562     (135,247     (247,762     (17,887     (383,009

Foreign exchange (loss)/gain, net

     (777,968     328,035       (306,117     (303,813     21,918  

Loss from equity method investments

     (896     (34,535     (38,112     (995     (72,647

Other (expense)/income, net

     (5,468     (12,224     34,593       190,312       22,369  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total other (expense)/income, net

     (768,279     211,126       (426,677     (102,042     (215,551
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loss before income taxes

     (2,096,193     (1,814,834     (2,298,378     (2,492,436     (4,113,212
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income tax expense

     (4,858     (7,443     (5,776     (5,367     (13,219

Net loss

     (2,101,051     (1,822,277     (2,304,154     (2,497,803     (4,126,431
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net (loss)/income attributable to noncontrolling interests

     (4,120     (8,301     23,291       (5,179     14,990  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loss attributable to iQIYI, Inc.

     (2,096,931     (1,813,976     (2,327,445     (2,492,624     (4,141,421

Accretion of redeemable convertible preferred shares

     (9,627     —         —         (298,990     —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loss attributable to ordinary shareholders

     (2,106,558     (1,813,976     (2,327,445     (2,791,614     (4,141,421
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loss per share for Class A and Class B ordinary shares:

          

Basic

     (0.43     (0.36     (0.46     (1.05     (0.81

Diluted

     (0.43     (0.36     (0.46     (1.05     (0.81

Net loss per ADS (1 ADS equals 7 Class A ordinary shares):

          

Basic

     (3.01     (2.52     (3.22     (7.35     (5.67

Diluted

     (3.01     (2.52     (3.22     (7.35     (5.67

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

          

Basic

     4,931,100,562       5,083,030,810       5,102,652,726       2,651,903,354       5,092,895,972  

Diluted

     4,931,100,562       5,083,030,810       5,102,652,726       2,651,903,354       5,092,895,972  


iQIYI, INC.

Condensed Consolidated Balance Sheets

(In RMB thousands)

 

     December 31,
2018
    June 30,
2019
 
     RMB     RMB  
           (Unaudited)  

ASSETS

    

Current assets:

    

Cash and cash equivalents

     4,586,405       5,427,362  

Restricted cash

     2,174,042       2,196,656  

Short-term investments

     6,061,832       8,817,980  

Accounts receivable

     2,889,234       3,046,343  

Prepayments and other assets

     2,696,381       3,864,062  

Amounts due from related parties

     281,710       312,232  

Licensed copyrights, net

     1,163,839       1,176,403  
  

 

 

   

 

 

 

Total current assets

     19,853,443       24,841,038  
  

 

 

   

 

 

 

Non-current assets:

    

Fixed assets, net

     1,618,147       1,811,313  

Long-term investments

     2,572,040       2,553,252  

Deferred tax assets, net

     23,873       23,873  

Licensed copyrights, net

     6,640,910       6,043,029  

Intangible assets, net

     1,678,193       1,445,553  

Produced content, net

     3,736,063       4,483,123  

Prepayments and other assets

     4,695,883       4,467,330  

Operating lease assets

     —         532,645  

Goodwill

     3,888,346       3,888,346  

Amounts due from related parties

     52,800       154,600  
  

 

 

   

 

 

 

Total non-current assets

     24,906,255       25,403,064  
  

 

 

   

 

 

 

Total assets

     44,759,698       50,244,102  
  

 

 

   

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

    

Current liabilities:

    

Accounts and notes payable

     10,162,366       9,583,950  

Amounts due to related parties

     692,390       1,204,727  

Customer advances and deferred revenue

     2,195,283       2,295,522  

Short-term loans

     3,046,449       4,017,485  

Long-term loans, current portion

     83,720       353,386  

Operating lease liabilities, current portion

     —         137,926  

Accrued expenses and other liabilities

     3,632,148       3,850,910  
  

 

 

   

 

 

 

Total current liabilities

     19,812,356       21,443,906  
  

 

 

   

 

 

 

Non-current liabilities:

    

Long-term loans

     644,169       384,462  

Convertible senior notes

     4,712,284       11,918,836  

Deferred tax liabilities

     96,405       69,964  

Amounts due to related parties

     1,281,370       1,142,912  

Operating lease liabilities

     —         209,745  

Other non-current liabilities

     57,551       56,022  
  

 

 

   

 

 

 

Total non-current liabilities

     6,791,779       13,781,941  
  

 

 

   

 

 

 

Total liabilities

     26,604,135       35,225,847  
  

 

 

   

 

 

 

Shareholders’ equity:

    

Ordinary shares

     321       323  

Additional paid-in capital

     39,666,150       40,696,243  

Accumulated deficit

     (23,509,486     (27,650,907

Accumulated other comprehensive income

     1,879,946       1,837,517  

Non-controlling interests

     118,632       135,079  
  

 

 

   

 

 

 

Total shareholders’ equity

     18,155,563       15,018,255  
  

 

 

   

 

 

 

Total liabilities and shareholders’ equity

     44,759,698       50,244,102