iQIYI (IQ) 2023 Financial Report Brief Review
Event:
The company released its 2022Q4 financial report and full-year financial report. In 2022, it will achieve revenue of 29 billion yuan, YOY-5%, and 2022Q4 will achieve revenue of 7.60 billion yuan and YOY + 3%. In 2022, the Net Profit /Non-GAAP Net Profit was -1/1.30 billion yuan, YOY + 98%/+ 129%, and the Net Profit rate /Non-GAAP Net Profit rate was -0.5%/4.4%, an increase of 20 pct/19 pct year-on-year. In 2022Q4, Net Profit /Non-GAAP Net Profit was 3/900 million yuan, YOY + 117%/+ 185%, and Net Profit/Non-GAAP Net Profit was 4%/11%, both of which increased by 9 pct month-on-month.
I. Achieving profitability for the first time: reducing costs and increasing efficiency
High-quality content has driven the rapid growth of the number of subscribers, and membership revenue has increased significantly. It has achieved an operating profit for the first time, and the effect of reducing costs and increasing efficiency has been remarkable. In 2022, the company achieved revenue of 29 billion yuan, YOY-5%, membership revenue of 17.71 billion yuan, and YOY + 6%; content cost of 16.50 billion yuan, YOY-20%; operating profit of 1.31 billion yuan, which turned negative to positive for the first time since 2015.
II. The original strategy has been broken through, and the ability to mass-produce has been significantly improved
Popular dramas have strong continuous output ability, self-made variety shows are dazzling, and the ability to mass-produce high-quality original content has been significantly improved. According to Yunhe data, in 2022, the main feature of the drama will be effectively broadcast 119 billion times, accounting for 39% of all online dramas. High-quality content appears frequently. In 2022, "World of the World", "Freeland Art", "Qingqing Daily", etc. have successively broken into other demographics. The word of mouth of the Mist Theater has warmed up, and the 2023Q1 "Hurricane" has exploded on the whole network; the comprehensive N-generation heat has a steady reputation. Advertisements such as "Annual Comedy, Contest 2", "Moe Exploration 2" and "China Rap Summit Duel" attract bright eyes. Original content production and operation have entered a positive cycle, and the stable supply of high-quality content drives user growth, improves Operational Efficiency and profitability, and further supports the production of high-quality content.
III. Investment advice
The company has successfully completed the strategic goal of 2022, "reducing costs and increasing efficiency, increasing revenue and reducing expenditure, and achieving breakeven at the operational level". The strategy has changed from "market share priority" to "profit priority", focusing on the main business and contraction of non-core businesses. In 2023, the company's goal is "high-quality growth", that is, to achieve double growth in revenue and operating profit. It will continue to focus on developing the core main business of iQIYI, and rationally invest in new businesses at the same time; focus on increasing head content investment and maintaining a high-quality and diversified content portfolio; on the premise of ensuring efficiency, appropriately increasing market investment. Therefore, Guohai Securities believes that long video is a rigid content demand, and is optimistic about the medium and long-term development space of long video.
The company released its 2022Q4 financial report and full-year financial report. In 2022, it will achieve revenue of 29 billion yuan, YOY-5%, and 2022Q4 will achieve revenue of 7.60 billion yuan and YOY + 3%. In 2022, the Net Profit /Non-GAAP Net Profit was -1/1.30 billion yuan, YOY + 98%/+ 129%, and the Net Profit rate /Non-GAAP Net Profit rate was -0.5%/4.4%, an increase of 20 pct/19 pct year-on-year. In 2022Q4, Net Profit /Non-GAAP Net Profit was 3/900 million yuan, YOY + 117%/+ 185%, and Net Profit/Non-GAAP Net Profit was 4%/11%, both of which increased by 9 pct month-on-month.
I. Achieving profitability for the first time: reducing costs and increasing efficiency
High-quality content has driven the rapid growth of the number of subscribers, and membership revenue has increased significantly. It has achieved an operating profit for the first time, and the effect of reducing costs and increasing efficiency has been remarkable. In 2022, the company achieved revenue of 29 billion yuan, YOY-5%, membership revenue of 17.71 billion yuan, and YOY + 6%; content cost of 16.50 billion yuan, YOY-20%; operating profit of 1.31 billion yuan, which turned negative to positive for the first time since 2015.
II. The original strategy has been broken through, and the ability to mass-produce has been significantly improved
Popular dramas have strong continuous output ability, self-made variety shows are dazzling, and the ability to mass-produce high-quality original content has been significantly improved. According to Yunhe data, in 2022, the main feature of the drama will be effectively broadcast 119 billion times, accounting for 39% of all online dramas. High-quality content appears frequently. In 2022, "World of the World", "Freeland Art", "Qingqing Daily", etc. have successively broken into other demographics. The word of mouth of the Mist Theater has warmed up, and the 2023Q1 "Hurricane" has exploded on the whole network; the comprehensive N-generation heat has a steady reputation. Advertisements such as "Annual Comedy, Contest 2", "Moe Exploration 2" and "China Rap Summit Duel" attract bright eyes. Original content production and operation have entered a positive cycle, and the stable supply of high-quality content drives user growth, improves Operational Efficiency and profitability, and further supports the production of high-quality content.
III. Investment advice
The company has successfully completed the strategic goal of 2022, "reducing costs and increasing efficiency, increasing revenue and reducing expenditure, and achieving breakeven at the operational level". The strategy has changed from "market share priority" to "profit priority", focusing on the main business and contraction of non-core businesses. In 2023, the company's goal is "high-quality growth", that is, to achieve double growth in revenue and operating profit. It will continue to focus on developing the core main business of iQIYI, and rationally invest in new businesses at the same time; focus on increasing head content investment and maintaining a high-quality and diversified content portfolio; on the premise of ensuring efficiency, appropriately increasing market investment. Therefore, Guohai Securities believes that long video is a rigid content demand, and is optimistic about the medium and long-term development space of long video.
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