20260519-招银国际-Inline_1Q26_results_solid_progress_on_new_growth_engines_5页_1mb

iQiyi (IQ US) 1Q26 Results Summary

Core Content

iQiyi released its 1Q26 financial results, reporting a total revenue decline of 13% year-over-year (YoY) and 8% quarter-over-quarter (QoQ) to RMB6.23 billion, aligning with the Bloomberg consensus and CMBIGM's estimates. The company recorded a non-GAAP net loss of RMB234 million, down from a net income of RMB308 million in 1Q25, primarily due to operating deleverage.

For 2Q26E, the company expects a 2% QoQ revenue recovery to RMB6.35 billion, driven by the sequential growth in online advertising and content distribution revenue. However, the overall revenue forecast for FY26-FY28 is slightly trimmed by 1-2% due to the slow recovery in membership business.

The target price for IQ US has been revised to US$1.58, based on a 0.40x FY26E price-to-sales (P/S) multiple, down from the previous US$1.80 based on a 0.45x multiple. The current share price is US$1.13, with a 39.8% upside potential.

Key Financial Highlights

Revenue

• 1Q26: RMB6.23 billion (-13% YoY, -8% QoQ)
• FY26E: RMB25.9 billion
• FY27E: RMB26.7 billion
• FY28E: RMB27.7 billion

Adjusted Net Profit

• 1Q26: RMB-38 million
• FY26E: RMB-38 million
• FY27E: RMB778 million
• FY28E: RMB1,241 million

EPS (Adjusted)

• 1Q26: RMB-0.04
• FY26E: RMB-0.04
• FY27E: RMB0.81
• FY28E: RMB1.29

P/S

• FY26E: 0.40x
• FY27E: 0.30x
• FY28E: 0.30x

Valuation

• Target Price: US$1.58
• Current Price: US$1.13
• Upside Potential: 39.8%

Main Revenue Drivers and Performance

• Membership Services Revenue: Declined by 5% YoY but increased by 2% QoQ to RMB4.20 billion, supported by the strong viewership of titles like Pursuit of Jade and How Dare You.
• Online Advertising Revenue: Declined by 7% YoY and 8% QoQ to RMB1.24 billion, affected by seasonality and the lack of popular variety shows.
• Content Distribution Revenue: Dropped by 43% YoY and 54% QoQ to RMB359 million, due to a strategic shift in content distribution.
• Other Revenue: Declined by 49% YoY and 22% QoQ to RMB427 million.

New Growth Engines

iQiyi is making solid progress on new growth initiatives:

• Overseas Membership Revenue: Increased by over 40% YoY, driven by the appeal of its premium Asian content.
• IP-Based Consumer Products: Delivered strong performance, notably with the sales of collectible cards for popular titles.
• NaDou Pro (AI-Powered Content Production Platform): Attracted over 10,000 active creators since its launch in April, with rapid token consumption indicating potential for long-term monetization.

AI and Efficiency

The company is leveraging AI to improve content production efficiency:

• Launched over 3,000 AI-generated micro dramas in 1Q26.
• Expected improved content production and review efficiency to gradually enhance profitability and cash flow generation.

Financial Performance Overview

Gross Margin

• 1Q26: 18.6%
• FY26E: 18.6%
• FY27E: 21.3%
• FY28E: 22.9%

Operating Margin

• 1Q26: -2.4%
• FY26E: 0.4%
• FY27E: 3.4%
• FY28E: 5.3%

Non-GAAP Net Margin

• 1Q26: -0.1%
• FY26E: -0.1%
• FY27E: 2.9%
• FY28E: 4.5%

Shareholding and Stock Data

• Market Cap (US$ million): 1,090.7
• Average 3-Month Turnover (US$ million): 6.9
• 52-Week High/Low (US$): 2.79/1.11
• Total Issued Shares (million): 965.2

Shareholding Structure

• Baidu: 45.1%
• PAG: 12.2%

Share Performance

Analyst Recommendations

• Rating: BUY (Maintain)
• Target Price: US$1.58 (Previously US$1.80)
• Reasoning: Despite short-term challenges, the company's new growth initiatives (AI, overseas, IP-related businesses) are expected to drive long-term recovery in business fundamentals and valuation.

Conclusion

iQiyi faces short-term revenue and profitability challenges, but its strategic focus on new growth engines is expected to lead to a gradual recovery in the mid-to-long term. The company is actively leveraging AI to enhance content production efficiency and is expanding its reach internationally. While its current valuation is at a discount to the sector average, the long-term growth potential and business fundamentals suggest a BUY rating.