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iQiyi (NASDAQ: IQ) reported second-quarter earnings after the market close on Tuesday, delivering sales that came in significantly above the top range of management's targets. The Chinese streaming video company (which was spun off from Baidu in March) once again posted a substantial operating loss, though it expanded roughly proportionally with top line growth. The chart below outlines some key performance metrics for the quarter:
| Q2 2018 | Q2 2017 | YOY Change* | |
|---|---|---|---|
| Revenue | RMB 6.17 billion ($932.5 million) | RMB 4.33 billion ($653.8 million) | 51% |
| Operating loss | RMB 1.33 billion ($200.7 million) | RMB 0.99 billion ($149.7 million) | N/A |
Data source: iQiyi. RMB = Chinese renminbi. Figures converted at rate of RMB 6.6171 to $1. *Reflects accounting changes from the 2017 to 2018 period.
The 51% year-over-year revenue growth came in well ahead of the company's guidance for sales growth between 42% and 48%. On a U.S.-dollar basis, sales climbed from $737.1 million in the March-ended quarter to $932.5 million in the June-ended quarter, representing sequential growth of roughly 27%. Losses per ADS (American Depositary Share) expanded from $0.31 in the first quarter to $0.45 in the June quarter.
Image source: Getty Images.
Impressive paid-user growth
iQiyi added 5.8 million subscribers in the quarter to reach 67.1 million members at the end of June. The company's cross-promotion membership deal with JD.com appears to have played a big role in the substantial subscriber growth. iQiyi announced a partnered membership drive with the online retailer early in May, and revealed that it had added a million new users to its paying member roles just a week after introducing the promo.
The company had just five million paying users in May 2015, so it's having considerable success getting customers on board with its premium service offerings. With the company's ad-supported platform included, iQiyi reaches over 400 million people.
The table below outlines segment sales contribution and comparisons with the prior-year quarter:
| Segment Revenue | Q2 2018 | Q2 2017 | YOY Change* |
|---|---|---|---|
| Membership services | RMB 2.47 billion ($374.0 million) | RMB 1.58 billion ($238.7 million) | 66% |
| Online advertising services | RMB 2.62 billion ($395.6 million) | RMB 1.91 billion ($288.4 million) | 45% |
| Content distribution | RMB 0.54 billion ($81.5 million) | RMB 0.49 billion ($73.5 million) | 18% |
| Others | RMB 0.54 billion ($81.4 million) | RMB 0.35 billion ($53.2 million) | 62% |
Data source: iQiyi. RMB = Chinese renminbi. Figures converted at rate of RMB 6.6171 to $1. *Reflects accounting changes from the 2017 to 2018 period.