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BEIJING,Aug. 12, 2021/PRNewswire/ --iQIYI, Inc.(Nasdaq: IQ) ("iQIYI" or the "Company"), an innovative market-leading online entertainment service inChina, today announced its unaudited financial results for the second quarter endedJune 30, 2021.

Second Quarter 2021 Highlights

• Total revenues were RMB7.6 billion(US$1.2 billion1), representing a 3% increase from the same period in 2020.
• Operating loss wasRMB1.1 billion(US$173.7 million) and operating loss margin was 15%, compared to operating loss ofRMB1.3 billionand operating loss margin of 17% in the same period in 2020.
• Net loss attributable to iQIYI wasRMB1.4 billion(US$216.4 million), compared to net loss attributable to iQIYI ofRMB1.4 billionin the same period in 2020. Diluted net loss attributable to iQIYI per ADS wasRMB1.75(US$0.27), compared to diluted net loss attributable to iQIYI per ADS ofRMB1.96in the same period of 2020.
• The number of total subscribing members was 106.2 million as ofJune 30, 2021, or 105.2 million excluding individuals with trial memberships.

"Our second quarter results were largely in line with our expectation," commented Mr.Yu Gong, Founder, Director, and Chief Executive Officer of iQIYI. "Despite the fact that the second quarter is traditionally an off-season, the number of our subscribers grew to 106.2 million, driven by the hit original dramas we launched during the quarter. We continued to lead the market across multiple operating metrics. We also saw encouraging momentum from our iQIYI Lite app targeting lower-tier cities inChinaand from our overseas expansion. We are still in the early stage of industrialization in video production, and we are continuing to drive industry evolution to achieve long-term growth. Leveraging our deep understanding of users, our highly innovative in-house production teams, as well as our advanced technologies, we believe we are well positioned to address current challenges and capture future market opportunities."

"Our total revenue in the second quarter approached the high end of our guidance," commented Mr.Xiaodong Wang, Chief Financial Officer of iQIYI. "We continue to grow our subscribers and diversify our monetization channels through our premium content and massive user base. Our net loss narrowed for five consecutive quarters on a year-over-year basis as we continue to execute our disciplined investment strategy. Looking ahead, we strive to offer increasingly diversified content portfolio in the second half of the year, which is a key pillar to regain the revenue momentum."

Second Quarter 2021 Financial Results

Total revenues reachedRMB7.6 billion(US$1.2 billion), representing a 3% increase from the same period in 2020.

Membership services revenue wasRMB4.0 billion(US$618.4 million), flat compared with the same period in 2020.

Online advertising services revenue wasRMB1.8 billion(US$282.7 million), representing a 15% increase from the same period in 2020. The increase was primarily driven by the sustained rebound of brand-advertising budgets amid the macroeconomic recovery inChina.

Content distribution revenue wasRMB687.9 million(US$106.5 million), representing a 20% decrease from the same period in 2020. The decrease was primarily due to less barter transaction, partially offset by the increase of cash transaction.

Other revenues wereRMB1.1 billion(US$170.7 million), representing a 20% increase from the same period in 2020, primarily driven by the strong growth of certain business lines.

Cost of revenues wasRMB6.9 billion(US$1.1 billion), flat compared with the same period in 2020. Content costs as a component of cost of revenues wereRMB5.1 billion(US$794.8 million), flat compared with the same period in 2020.

Selling, general and administrative expenses were RMB1.2 billion(US$183.5 million), representing a 1% decrease from the same period in 2020.

Research and development expenses were RMB676.5 million(US$104.8 million), representing a 2% increase from the same period in 2020.

Operating loss was RMB1.1 billion(US$173.7 million), compared to operating loss ofRMB1.3 billionin the same period in 2020. Operating loss margin was 15%, compared to operating loss margin of 17% in the same period in 2020.

Total other expense was RMB226.4 million(US$35.1 million), compared to total other expense ofRMB140.8 millionduring the same period of 2020. This was mainly due to increased interest expenses related to our financing activities.

Loss before income taxes was RMB1.3 billion(US$208.8 million), compared to loss before income taxes ofRMB1.4 billionin the same period in 2020.

Income tax expense was RMB30.4million (US$4.7 million), compared to income tax expense ofRMB15.9 millionin the same period in 2020.

Net loss attributable to iQIYI was RMB1.4 billion(US$216.4 million), compared to net loss attributable to iQIYI ofRMB1.4 billionin the same period in 2020. Diluted net loss attributable to iQIYI per ADS wasRMB1.75(US$0.27) for the second quarter of 2021, compared to diluted net loss attributable to iQIYI per ADS ofRMB1.96in the same period of 2020.

As ofJune 30, 2021, the Company had cash, cash equivalents, restricted cash and short-term investments ofRMB12.3 billion(US$1.9 billion).

Financial Guidance

For the third quarter of 2021, iQIYI expects total net revenues to be betweenRMB7.62 billion(US$1.18 billion) andRMB8.05 billion(US$1.25 billion), representing a 6% to 12% increase year over year. This forecast reflects iQIYI's current and preliminary view, which may be subject to change.