Over the past year, short-form dramas have challenged traditional long-form video content with their disruptive narrative formats. Combined with increasingly fragmented user attention, long-form video platforms are facing unprecedented pressure, which is reflected in iQiyi Inc.'s latest financial results.

On August 20th, iQiyi Inc. (Nasdaq: IQ) released its second quarter 2025 financial results for the period ending June 30th. Total revenue reached 6.63 billion yuan, declining 11% year-over-year. The company reported a net loss attributable to iQiyi of 133.7 million yuan, compared to a net profit of 68.7 million yuan in the same period last year. On a non-GAAP basis, net profit attributable to iQiyi was 14.7 million yuan, down from 246.9 million yuan in the prior year period.

By business segment, membership services revenue was 4.09 billion yuan, down 9% year-over-year, primarily due to reduced content reserves compared to the same period last year. Online advertising services revenue reached 1.27 billion yuan, declining 13% year-over-year, as some advertisers adjusted their advertising spending and promotion strategies due to macroeconomic pressures. Content distribution revenue was 440 million yuan, down 37% year-over-year, while other revenue increased 6% to 830 million yuan.

Despite revenue challenges, iQiyi achieved some success in cost control. Total costs for the reporting period were 5.29 billion yuan, down 7% year-over-year. Content costs, the largest component of expenses, totaled 3.78 billion yuan, declining 8% year-over-year. Sales and administrative expenses and research and development expenses were 960 million yuan and 420 million yuan respectively, both showing varying degrees of decline.

iQiyi's second quarter Non-GAAP operating profit was 58.7 million yuan, marking the 14th consecutive quarter of Non-GAAP operating profitability.

An industry insider noted that the decline in net profit was related to both the traditional off-season in the second quarter and the number of hit shows available on the platform during the period.

In terms of content, iQiyi had three drama series - "Linjiang Xian," "Zhao Xue Lu," and "Sheng Wan Wu" - achieve popularity ratings exceeding 10,000 during the second quarter. In the short-form video segment, iQiyi produced micro-dramas including "Zhi Ai Nan Tao," "Cheng He Ti Tong," and "Zhang Shang Zhu." The company disclosed a content reserve of 15,000 micro-drama titles.

During tonight's earnings call, analysts discussed the recently implemented "21 Measures to Further Enrich TV Screen Content and Promote Radio and Television Audio-Visual Content Supply" by the National Radio and Television Administration. The policy removes the 40-episode limit for TV series, eliminates the one-year gap requirement for seasonal drama broadcasts, and addresses restrictions on period dramas, which the industry interprets as an important signal to revitalize content supply.

iQiyi management responded that the new policies effectively shorten the cycle from content production to approval, enabling better creation of content that resonates with current social sentiment while improving capital efficiency. The policies also increase content creation flexibility, with expectations that more content will achieve simultaneous online and TV broadcast, stabilizing distribution prices and attracting more capital and talent into film and television production.

Regarding content strategy, iQiyi management stated they will continue focusing on high commercial value premium dramas for long-form content. For micro-dramas, the premium content approach is expected to attract more users, with monetization paths expanding beyond the current membership and free models to actively explore off-platform distribution, commercial product placement, and IP derivative opportunities. In the first half of the year, iQiyi's self-operated film and TV card business achieved gross merchandise volume (GMV) exceeding 100 million yuan.

iQiyi founder and CEO Gong Yu also indicated that the company will focus on innovation, investing in key growth areas including AI applications, micro-dramas, user experience, and overseas business.

Regarding capital activities, recent reports suggest iQiyi has engaged Bank of America, China International Capital Corporation, and JPMorgan Chase to collaborate on raising approximately $200-300 million for a potential secondary listing in Hong Kong. The company currently states it has no additional information to provide.

As of June 30, 2025, iQiyi held cash, cash equivalents and other liquid assets totaling 5.06 billion yuan.