iQIYI Q1 2026 Earnings Call - AI-Driven Content Revolution and Overseas Surge

Conference Operator: Thank you for standing by, and welcome to the iQIYI first quarter 2026 earnings conference call. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by number 1 on your telephone keypad. I would now like to hand the conference over to Ms. Chang You, IR Director of the company. Please go ahead.

Chang You, IR Director, iQIYI: Thank you, operator. Hello, everyone, and thank you for joining iQIYI’s first quarter 2026 earnings conference call. The company’s results were released earlier today and are available on the company’s investor relations website at ir.iqiyi.com. On the call today are Mr. Yu Gong, our Founder, Director, and CEO, Ms. Ying Zeng, our Interim CFO, Mr. Xiaohui Wang, our Chief Content Officer, Mr. Youqiao Duan, Senior Vice President of our membership business, and Mr. Xianghua Yang, Senior Vice President of International and over online game business. Mr. Gong will give a brief overview of the company’s business operations and highlights, followed by Ying, who will go through the financials. After the prepared remarks, the management team will participate in the Q&A session.

Before we proceed, please note that the discussion today will contain forward-looking statements made under the Safe Harbor Provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations. Potential risks and uncertainties include, but are not limited to, those outlined in our public filings with the SEC. iQIYI does not undertake any obligation to update any forward-looking statement except as required under applicable law. I will now pass on to Mr. Gong. Please go ahead.

Yu Gong, Founder, Director, and CEO, iQIYI: Hello, everyone. Thank you for joining us today. The convergence of breaking breakthrough AI and a supportive domestic regulatory landscape is fundamentally reshaping entertainment and creating incredible opportunities for iQIYI. Let me share iQIYI’s value proposition in this new area from three perspectives. Reinforcing our core today, igniting new growth engines, and building for the long term. Let’s start with the first perspective, reinforcing our core fundamental foundational strength. Premium content remains the cornerstone of our strategy. In Q1, we reaffirmed its compelling appeal for audiences. Our diverse lineup of hit dramas, including The Punishment 2, Azay Are, Born to Be Alive, Sheng Shu, Pursuit of Jade, Zhu Yu, and How Dare You!?, Chong Qi Tong, secured our dominant position in the core drama category per Enlightent data.

Moving forward, our commitment to content quality is stronger than ever, designed to deliver expert experience that profoundly connect with viewers. This focus is revitalizing our core operations, evidenced by the sequential growth in membership revenue. We are also highly encouraged by the supportive domestic regulatory landscape, which is accelerating the content approval progress and driving stronger capital efficiency. Importantly, these regulatory policies are unlocking innovation across new formats. This includes short-form dramas, Zhong Ju. Typically, 15-25 minutes per episode with flexible episode counts and internet feature films, Wang Wo Gu Shi Pian, which are limited to 3 chapters of 60 minutes each. These formats are not only shorten production cycles and lower capital barriers, but also attract a broader pool of creative talent, enabling more innovative storytelling than traditional long-form content.

Furthermore, they are perfectly for AI, perfectly suited for AI integration, automatically enriching our portfolio and maximizing our ROI. Looking ahead, we plan to launch over 100 short-form dramas in 2026, while steadily building our internet feature film slate. By continually delivering premium long-form content while strategically expanding into new formats, we are reinforcing our foundational strengths. Importantly, this expansion is efficient, allowing us to capture new opportunities without putting additional pressure on our overall content costs. Second, we are igniting new growth engines. Among our emerging business segments, our overseas business has established it as a proven second growth driver. In Q1, overseas membership revenue surged by over 40% annually. This success stemmed from a highly differentiated market positioning compared to global peers. We focus on premium Asian content tailored primarily for young female demographics.

Within our Asian content portfolio, K-dramas, whose global influence continue to rise, serve as the key catalyst for our international expansion, complemented by our growing slate of local content. Geographically, we are anchoring our presence in Southeast Asia, while also expanding into high-growth markets in the Middle East and Latin America, with Brazil as a key focus. We are also deeply integrating AI across our global operations to drive efficiency. Parallel to our market expansion, we are maximizing IP value through our experience business, expanding our content value from online to offline, and extending the IP lifecycle. For IP-based consumer products, we are driving deeper user engagement through merchandising, while empowering popular IPs to generate both broadcasting window and long-tail monetization. Finally, our foraying into offline experience is yielding encouraging results.

Our first iQIYI Land in Yangzhou has garnered solid initial feedback, allowing us to rapidly accumulate operational experience to apply to other locations. Thirdly, we are laying a robust foundation for long-term growth, powered by AI and our decentralized platform. AI is breaking down the historic barrier that once made quality content costly, time-consuming, igniting explore growth in both creators and content value. Anticipating that this accelerating shift will soon outgrow the traditional centralized media platform model. We have strategically pivoted to build an upgraded and vibrant decentralized social media ecosystem. This will unlock substantial value. A decentralized ecosystem greatly expands content supply, allowing us to meet diverse demand at a whole new scale.

Creators will have greater opportunities to brainstorm and succeed, retaining full ownership of their IP and converting it into real attractive returns, while also cultivating private traffic, building loyal fan base, and gathering valuable data from direct user interactions. Meanwhile, for iQIYI originals, we are sharpening our focus on premium content, while the decentralized planning flow drives scale. Our original will serve as our signature offerings. Additionally, we are building a comprehensive support system so creators can focus purely on creativity. One key pillar is Nado Pro, iQIYI’s proprietary platform for studio-grade content production. Nado Pro is powered by both public and self-deployed large models, but it goes beyond generic models. It’s built upon our years of technology infrastructure and deep content expertise.

We transform years of industry know-how into AI agent, and then combine them with our core IP and digital assets to deliver accessible platform capabilities. Nado Pro offers one-stop services from content creation to operations and commercial collaborations. Beyond Nado Pro, we offer professional training and workspaces. We also facilitate financing solutions, connecting talent with capital from our own funds and external investor networks. Now, let’s explore what defines iQIYI’s long-term investment value and how we are uniquely positioned to lead in the AI era. Our confidence rests on two core pillars. First, on how to replicate competitive. We possess a unique blend of deep content expertise and a cutting-edge technology. We have a proven DNA of innovation from pioneering genre-specific theater brands to now leading the AIGC transformation in the industry. Crucially, we possess a vast high-quality IP library that is essential in the AI era.

Alongside a high engaged user base that we are committed to serving with excellence. Second, a long-term structural enhancement to our business economics. AI is poised to address major industry pain points, expanding our margins, and maximizing capital efficiency. At the same time, our decentralized platform will boost content diversity to capture a broader audience base, while IQ originals focus on crafting enduring premier IPs. Together, these initiatives fuel our diversified monetization system, expanding membership, advertising, and offline experiences, unlocking IP value across both domestic and global markets. Before we dive into Q1 details, I want to emphasize our core philosophy, the true power of technology is to empower humanity, not replace it. It will serve audiences with richer, deeply resonate content. It will empower creators to overcome human limitation, turning their boldest inspiration into reality with absolute efficiency and freedom.

Ultimately, it will elevate the entire industry, unlocking new avenues for growth and helping more creators, especially young talent, realize both their creative vision and commercial value. Let’s move on to the detailed performance in Q1. Let’s start with content. We are pioneering AI-driven storytelling and talent cultivation. In Q1, we unveiled Peter Paul and Qi AI Theater, featuring a suite of 16 titles across science fiction, thriller, wuxia, and fantasy genres, each running 11-20 minutes. Nado Pro powered key production process from capture, design, and scene setting to storyboarding, demonstrating AI transformative potential in professional content creation. In terms of our long-form drama performance, The Punishment II became our second franchise with two seasons exceeding the 10,000 iQIYI popularity index. Pursuit of Jade also surpassed 10,000, while our in-house produced custom drama, How Dare You!?, exceeded 9,000.

Both Pursuit of Jade and How Dare You resonated strongly with young female audiences, further solidifying our connection with these key demographics. Furthermore, we secured our leadership in realistic and suspense genres. Born to Be Alive earned the highest Douban rating among all domestic drama releases in Q1. The Devil Between Us II, and our own suspense theater brand, was also well received by users. For variety shows, our in-house production, Wander Together, [Foreign language], topped Enlightent market share ranking for the first quarter. For animations, we expanded our offering with four key original titles. Among these, the long-running The Great Ruler, 大主宰, continued to captivate audiences, and season two of How Dare You achieved a strong synergy with its drama series adaption.

For our micro dramas, original production contributed over half of revenue from this category in Q1. AIGC has emerged as a powerful driver for content releases. In Q1, we launched more than 3,000 AI-generated micro dramas, further enriching our offerings. Finally, for micro animation and AI native format, we are rapidly expanding our library, which feature over 14,000 titles as of quarter end, with viewership continuing to rise steadily. Next, let me share our Q2 content pipeline. Our drama serials lineup features a rich variety of titles, from historical epics to niche genres, including Echoes of a Thousand Moons, 八千里路云和月, Bloom Lion, Born with Luck, The Heir, 家业, and Archives: The Nanyang Mystery, Nandu Dang An.

Among the already released titles, Born with Luck gained wide popularity, driven by its innovative storytelling, combining comedy and mystery, and surpassed iQIYI popularity score of 10,000, becoming the third title to reach such mark this year. For films, our pipeline includes original online movies, The Same Trick, Zuiue, Wind of Death, Man Lizhi, and The Counterfeit, Wei Chao Zhong An. For licensed titles, we will release theatrical hits on our platform like Pegasus 3, featuring Shang, Awaking of Insects in Silence, Jing Zhuo Wu Sheng, and The Blaze of the Goddess, Biaoren, along with the online film, The Legend Hunter, Xiang Long Ju.

For variety shows, we will continue to captivate audience with established franchise, such as Fight House Season 6, Become a Farmer Season 4, The Rap of China 2026, and Yes I Do Season 6, Xi Huang Mi Wei Shi. While launching new IP like Voice of the Youths, Chao Ren Qing Chun De He Chang. For micro dramas, we have a diverse slate schedule, including Perfect Match, Deng Duili, San Di Yu, Zhong Yi Ni, One Night Pearl, Bai Ye Wei Qing, Phoenix Rules, Ou Scan, Man Zha Chou Huang, and Spring Rain of Phoenix, Feng Ren. For animations and children’s content, we will continue the long-running Against the Gods, Ni Tian Xie Shen, and then debut a localized adaptation of the BBC classic, I’ll Tell You With. Now, turning to membership business.

Revenue growth sequentially, primarily driven by premium titles, including Pursuit of Jade, The Punishment 2, How Dare You!?, and The Devil Between Us. Operationally, our refined upselling strategies and value-driven membership options successfully encouraged users to extend their plans, driving a year-over-year increase in average subscription duration for monthly subscribers this quarter. Additionally, our higher care F7 membership continued to scale, driven by a highly differentiated value proposition that features free express package. Moving on to advertising business. For brand ads, revenue contribution from targeted dramas recorded double-digit annual growth, with titles like Born to Be Alive, How Dare You!?, and Pursuit of Jade gained strong recognition from advertisers. Sector-wise, food and beverage, internet services, and e-commerce all achieved double-digit annual growth. We are expanding our advertising appeal across new content formats.

For example, we partner with leading advertisers to co-produce stream of content for micro dramas, creating new avenues for brand integration. On the technology front, AI continue to empower our advertising operations. We leverage Nado Pro to produce marketing materials and combine AIGC capabilities with our IPs to generate high-quality ad content. During Q2, our focus will be on maximizing ad sales across premium variety shows, dramas, and traditional display ads. We’re further enhancing monetization on large screens. Concurrently, we will continue to leverage AI to optimize advertising efficiency. For performance ads, the advertiser mix is healthier and more balanced. Revenue from small and mid-sized advertisers recorded strong annual growth with sustained improvements by sector. Internet services, e-commerce, and mini games delivered outstanding quarterly results. Additionally, monetization efficiency for micro drama improved as well. Measured by revenue per inventory unit increased by over 60% year-over-year.

For the rest of the year, our strategy for performance ad focus on 4 key areas. First, expanding our client base across high growth verticals, including internet services, short-form videos, mini-games, and AI tools. Second, capturing greater market share during peak window, such as major e-commerce festival. Third, enhancing monetization efficiency through AI-powered capabilities. Finally, tapping into additional ad budgets by harnessing a more diverse content ecosystem and upgraded ad placement system. Moving on to our business performance in regions outside of mainland China. Membership revenue increased by over 40% annually in Southeast Asia markets. Membership revenue from Indonesia grew by over 80% annually. Meanwhile, Portuguese and Spanish-speaking regions demonstrated robust growth, with membership revenue from Brazil and Mexico both grew by over 100% annually. Average daily subscribers reached a new high. The global influence of C-dramas continue to expand.

Notably, Pursuit of the Chaser Games lead last performance across multiple markets and secure top position on our international platform viewership rankings. It topped the Google Trends among all C-dramas broadcast during the same window in 15 markets, and set a record as the most searched Chinese drama on Google. Beyond C-dramas, we are scaling original local production to elevate the appeal of our content library, particularly in key Southeast Asia markets in Q1. Our first original Thailand show, Running Man Thailand, delivered exceptional results, setting multiple new records for variety shows on our international platform. Google Trends confirmed its position as the most popular paid variety show over the past three years, and the title earned strong recognition from advertisers. Meanwhile, our first original Indonesian drama is on track to premiere in Q2, marking a further step in our localization journey.

Our overseas micro drama business also gained momentum with growing revenue contribution fueled by both licensed and original content. Our original production pipeline consistently delivered new releases across multiple languages, including English, Thai, Korean, and Indonesian. Our experience business. We focus on 2 core areas: IP-based consumer products and iQIYI Land. For IP-based consumer products, our self-operated merchant apps deliver solid performance with collectible cards from Pursuit of the Chaser Games, setting a new sales record in this category. For offline experience business, our first iQIYI Land in Yangzhou performed in line with expectations and was highly acclaimed for its scenery design, immersive experiences, and technology-enabled interactions. Going forward, we will continue refining operations and introducing new creative offerings to encourage repeat visits and on-site consumption.

Furthermore, we are leveraging our experience gained in Yangzhou to drive through development of new location in Kaifeng and Beijing, which are progressing smoothly. Now, I would like to hand it to Ying for the financials. Thank you.

Gigi Xiao, Analyst, Guangfa0: Thanks, Mr. Gong, and hello, everyone. Let me walk you through the key numbers for Q1. Total revenues were CNY 6.2 billion, down 8% sequentially. Membership services revenue reached CNY 4.2 billion, up 2% sequentially, driven primarily by our diverse lineup of hit dramas. Online advertising revenue was CNY 1.2 billion, down 8% sequentially, primarily due to seasonality. Content distribution revenue reached CNY 358.7 million, down 54% sequentially, primarily because less number of dramas we distribute to third parties. Other revenues were CNY 426.7 million, down 22% sequentially. Moving on to costs and expenses. We adopted a disciplined strategy in Q1. Content cost was CNY 3.7 billion, down 2% sequentially. Total operating expenses were CNY 1.2 billion, down 10% sequentially.

Moving on to cash flow. Net cash provided by operating activities were 186 million RMB, reflecting some encouraging early signs in financial performance driven by our new business initiatives. Turning to bottom line and cash balance. Non-GAAP operating loss was 149 million, 1,400 million RMB, and the Non-GAAP operating loss margin was approximately 2%. As of the end of Q1, we had cash equivalents, restricted cash, short-term investments and long-term restricted cash, including prepayments and other assets at a total of 4 billion RMB. The sequential decrease in cash balance was primarily due to the repurchase of our 6.50% Convertible Senior Notes due 2028, which reduced our outstanding debt, further strengthening our capital structure.

At quarter end, the company had a loan of $636.6 million to PAG, recorded under the line item of prepayments and other assets. We remain committed to delivering shareholder value over the long run. In March, we announced a proposed listing on the main board of the Hong Kong Stock Exchange and our first share repurchase program of up to $100 million effective through September 2027. Up to now, we have repurchased a total of approximately 6.45 million ADSs for a total cost of $8 million. For detailed financial data, please refer to our press release on our IR website. I will open the floor for Q&A.

Conference Operator: Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you are on a speakerphone, please pick up the handset to ask your question. We ask that you please ask your question in Chinese first, and then translate the question into English. In the interest of time, please limit to one question per person. If you would like to ask further questions, you may press star one again to rejoin the queue. Your first question comes from Xueqing Zhang with CICC. Please go ahead.

Xueqing Zhang, Analyst, CICC: Thank management for taking my question. My question about Nado Pro. The company previously launched Nado Pro, an AI agent for film and television content creation. Could management share more details about the recent progress of Nado Pro and any specific examples of its practical applications? In addition, how does management view the future commercialization prospects for Nado Pro? Thank you.

Chang You, IR Director, iQIYI: The CEO Gong Yu is taking this question. Nado Pro is iQIYI’s proprietary platform for studio-grade con-production. It is powered by public large models, but it goes beyond generic models. It’s actually built upon our years of tech infrastructure and deep content expertise. For example, we have transformed years of industry know-hows from key areas such as screenwriting, filming, and post-production into AI agents and combined them with our core IP and digital assets to deliver accessible platform capabilities. Creator tools previously used only within iQIYI, such as the script evaluation and shot-based reference search, have now been incorporated to Nado Pro.

Yu Gong, Founder, Director, and CEO, iQIYI: 自从四月二十号Nado Pro向行业正式开放商用以来，现在已经有活跃的创作者超过了一万名。然后有传统影视公司的创作者，也有新的独立的创作者。

Chang You, IR Director, iQIYI: Nado Pro has been available to all creators across the industry since April 20th. We now currently have over 10,000 active creators on board, ranging from traditional pro-production companies to independent creators.

Yu Gong, Founder, Director, and CEO, iQIYI: 制作的内容包括长剧、中剧、网络故事片、短剧，当然也有漫剧，还有广告。

Chang You, IR Director, iQIYI: Content productions cover a wide variety of formats including the long-form dramas, micro dramas, micro animation, and short videos, also for some commercial, ad content.

Yu Gong, Founder, Director, and CEO, iQIYI: 其中有一百个左右是爱奇艺的自制项目。

Chang You, IR Director, iQIYI: Among which, about 100 of them are, iQIYI original titles, projects.

Yu Gong, Founder, Director, and CEO, iQIYI: Nado Pro最近上线了创作者社区，让创作者之间交流经验，也向爱奇艺的团队反馈对Nado Pro的改进意见。后续还将推出撮合平台，让创作者得到工作、接制作的单子。

Chang You, IR Director, iQIYI: Nado Pro actually recently launched a creator community as a platform for creators to interchange experiences and form some feedbacks and that will feed internal development for the upgrades in the coming up versions. This platform will feature some commercial matchmaking features upcoming next. These will empower the creators with the full cycles from content creation to commercial monetization.

Yu Gong, Founder, Director, and CEO, iQIYI: Nado Pro 海外版也即将上线。

Chang You, IR Director, iQIYI: In addition, the international version of Nado Pro is in development and will be online soon.

Yu Gong, Founder, Director, and CEO, iQIYI: 未来Nado Pro就是作为一个独立的产品，不断地研发迭代，然后增加收入。现在每周消耗的token也在快速增加中。

Chang You, IR Director, iQIYI: Regarding Nado Pro’s commercial prospect, it will serve as a standalone product to boost actually monetization capabilities. It will continue to reiterate and continue to improve the development and also to roll out upgraded version to create more better features.

Yu Gong, Founder, Director, and CEO, iQIYI: 谢谢。

Chang You, IR Director, iQIYI: Thank you.

Conference Operator: Thank you. Your phone comes from Vicky Wei, Citi please.

Vicky Wei, Analyst, Citi: 嗯，管理层晚上好，谢谢接受我的提问。我的问题是关于行业的盗版问题的，能不能请管理层给我们分享一下，就是行业打击盗版有具体的进展，跟我们分享最新的情况可以吗？Thanks management for taking my question. Will management share some latest progress about the industry anti-piracy updates? Thank you.

Chang You, IR Director, iQIYI: Thanks, Vicky. We’ll invite, our Chief Content Officer, Wang Xiaohui, to take this question. Please go ahead.

Xiaohui Wang, Chief Content Officer, iQIYI: 好，谢谢。我来回答这个问题。近期确实我们看到了打击盗版方面的非常可喜的一些局面。因为国家广电总局从四月底、五月初开始，会同相关部门开始集中重点治理非法网站和浏览器、搜索引擎、网盘的戏剧内容侵权的传播问题。行业主管部门对此都非常重视，并对网络侵权行为的预防与处置这次都给予了清晰的要求。

Chang You, IR Director, iQIYI: For the anti-piracy situation, we actually have observed very positive progress. Around the end of April and early May, the National Radio and Television Administration launched a targeted campaign to crack down on the pirated distribution of drama content across illegal websites, browsers, search engines, and cloud storage services. The industry regulators actually attach great importance to this issue and have established clear requirements for the prevention and handling of online copyright infringement, including some of the initiatives.

Xiaohui Wang, Chief Content Officer, iQIYI: 举几个比较具体的措施吧。比如它建立了侵权内容的快速处置机制，实现版权方和相关平台实时对接，来快速响应处置盗版问题。

Chang You, IR Director, iQIYI: To give us, give you guys some examples. For example, we established a rapid response mechanism for infringement content, enabling real-time communication between copyright owners and platforms to ensure swift response and removal.

Xiaohui Wang, Chief Content Officer, iQIYI: 其次，压实平台与属地管理的双重责任。总局这次要求各省市局要落实属地管理的责任，加大监控的力度和处置的效率。各个平台在接到举报或者有关通知以后，要在24小时之内处置完毕。首播热播剧或者重点的项目剧要在4小时之内处置完毕。

Chang You, IR Director, iQIYI: Second, the new policies and regulations actually enforce dual responsibilities for platforms and local authorities, requiring provincial and municipal bureaus to fulfill their local management duties. For example, enhancing monitoring and improve processing efficiency. The platforms must resolve and remove infringing content within 24 hours of receiving a report or notice. For newly released dramas, hit series, or key titles, the removal must be completed within 4 hours.

Xiaohui Wang, Chief Content Officer, iQIYI: 另外也建立了联动机制，来定期通报侵权的情况、下线率、典型案例等。同时也对多次违规者点名通报，并视违规违法的情况，会移交版权、公安等相关部门来查办。

Chang You, IR Director, iQIYI: Third, building a coordinated enforcement mechanism, regularly reporting on infringement status, takedown rates, and typical cases. For repeat offenders who will be publicly named and handed over to copyright and police authorities for investigation and prosecution.

Xiaohui Wang, Chief Content Officer, iQIYI: 这一次的集中治理将与常态化的治理来相结合。后续紧随其后的国家版权局的剑网2026专项行动，也把网络侵权盗版列为了首要重点的整治领域。治理的力度将会更加严厉。

Chang You, IR Director, iQIYI: This targeted campaign will be integrated with routine regulatory enforcement. Looking ahead, the National Copyright Administration’s Sword Net 2026 anti-piracy special campaign has designated online copyright infringement and piracy as its top priority, signaling even stricter enforcement measures.

Xiaohui Wang, Chief Content Officer, iQIYI: 我们看到当前侵权的处置效率确实得到了明显的提升。我们也相信未来盗版问题也会得到显著的改善。强力的版权保护能够保障行业各方的商业利益，能够提振我们优质内容创作的投入意愿，形成内容供给的正向循环。爱奇艺将持续升级技术与运营的机制，来共建良性的版权生态，助力提升我们长视频业务的用户规模和营收水平。谢谢。

Chang You, IR Director, iQIYI: Currently, we’re happy to see the efficiency of handling infringement has improved significantly. We believe the piracy issue will be substantially mitigated in the future. We believe strong copyright protection safeguards the commercial interests of all industry stakeholders, boosts the willingness to invest in high quality content creation, and foster a virtuous cycle of content supply. For iQIYI, we will continue to upgrade our technology and operational mechanism to co-build a healthy copyright ecosystem, ultimately helping to drive user growth and revenue of our long form video business. Thank you.

Conference Operator: Thank you. Your next question comes from Jenny Yuan with UBS. Please go ahead.

Jenny Yuan, Analyst, UBS: 谢谢管理层的提问机会。那我的问题是关于会员业务的。那Q1的时候，我们会员业务环比有所改善，尤其是海外增长非常强劲。那请问管理层如何看待这个改善趋势的持续性，以及说我们对于Q2以及说以后季度的会员业务的发展趋势我们是如何展望的？

Chang You, IR Director, iQIYI: Let me translate myself. Membership business saw sequential recovery in the first quarter. In particular, overseas business delivered a robust growth momentum. How does management view the sustainability of this improving trend? How should we think about the membership business outlook into second quarter and beyond? Thank you. Thank Jenny. We’ll invite the Senior Vice President of membership business to take on this question. Go ahead, please.

Gigi Xiao, Analyst, Guangfa1: Q1呢，在多部优质内容供给，还有精细化运营的加持下呢，爱奇艺会员收入实现了环比增长。

Chang You, IR Director, iQIYI: In Q1, driven by a strong slate of premium content and refined operational strategies, membership revenue delivered sequential growth in the first quarter.

Xiaohui Wang, Chief Content Officer, iQIYI: 展望Q2，我们的内容储备题材更加丰富。近期已经上线的多部作品表现得不错。其中，《第十3罪》凭借悬疑加喜剧的风格，热度破万。另外，《八千里路云和月》、《密语者》、《家业》、《五哈6》、《种地吧（第4季）》，这些已经播出和正在播出以及即将播出的优质内容，将有效覆盖更多全层的用户。

Chang You, IR Director, iQIYI: We have a rich content pipeline for Q2. A number of recently launched titles actually have performed well. Noticeably, Born with Luck surpassed 10,000 on iQIYI popularity index, powered by a distinct suspense but comedy narrative style. In addition, we have also an expanded slate for the second quarter, including the long-form dramas, for example, Echoes of a Thousand Moons, The Epic of Milu, The Heir, for variety shows, we have Hahahahaha Season 6, Become a Farmer Season 4. We believe these content will effectively reach a broad membership base.

Gigi Xiao, Analyst, Guangfa1: 在Q2，我们在会员的运营和销售方面，将聚焦沉默用户的召回，也包括综艺排播的优化，那会增加更多会员可看的内容。同时，我们通过和电视机厂商的联合运营，会提升大屏的用户规模和会员收入以及占比。最后，我们会把握好Q2最重要的营销节点618，并在其中强化年卡还有联名会员的销售，从而提高整个的会员规模，并且有效拉长用户的订购周期。

Chang You, IR Director, iQIYI: Looking ahead, for Q2, we are looking at our operations and the sales priorities. For example, we’re focusing on reactivating dormant members, optimizing variety show schedules to offer more content for members, and expanding large screen membership via joint operating initiatives with smart TV manufacturers. Also leveraging the 618 E-commerce Festival to boost annual and bundled memberships. Together, we believe these efforts will expand our subscriber base and expand subscription cycles.

Gigi Xiao, Analyst, Guangfa1: 未来，随着头部内容供给的稳定性和连续性的持续增强，并且有效叠加会员运营能力的不断优化，我们相信爱奇艺会员业务将保持稳健的发展态势。谢谢。

Chang You, IR Director, iQIYI: Looking ahead, as the stability and consistency of our premium content pipeline continues to strengthen, and coupled with our ongoing optimization of our membership operations, we believe our membership business will maintain a steady development trajectory. Thank you.

Conference Operator: Thank you. Your next question comes from Thomas Chong with Jefferies. Please go ahead.

Thomas Chong, Analyst, Jefferies: 晚上好，谢谢管理层接受我的提问。我的问题是关于我们海外的业务的。看到我们在东南亚的趋势都是在一个非常高速的增长的态势。想问一下，就是我们未来一段的时间，在海外的投入的情况是怎么样？然后可以分享一下，海外跟国内用户的习惯，或者是他们在付费的一个趋势方面，会不会有一些 metrics 可以分享呢？Thanks management for taking my question.

Congratulations on the fast growth of your overseas business. Just now, we talk about the fast growth in Southeast Asia. May I ask about our investment strategies in Southeast Asia market? Also, can you share about some of the differences or similarities in terms of the audience preference in domestic versus overseas? Thank you.

Chang You, IR Director, iQIYI: Thank you, Thomas. We’ll invite our Senior Vice President of our global overseas business, Mr. Xianghua Yang to take on this question. Please go ahead.

Xianghua Yang, Senior Vice President of International and Online Game Business, iQIYI: 大家好，一共有两个部分，先回答第一部分，关于海外未来的一些计划。分几个方面，第一个在重点市场方面，我们继续加强在东南亚的业务，这里边包括现在做得比较好的泰国、印尼、马来西亚以及有潜力的包括越南、菲律宾等市场。第二个，同时我们加强在美洲，包括北美和拉美、巴西、墨西哥等地区的内容收入的增长，包括营销的投入。

Chang You, IR Director, iQIYI: Okay, well, I will take this part in 2 segments. First, for the key markets. Currently our key markets are performing pretty well. For the Southeast Asia market have been growing quickly. For the market that’s crucial for our Southeast Asia will continue to invest in countries such as Thailand, Indonesia, Malaysia, Vietnam, and Philippines. Now also for some of the emerging markets that’s been also growing pretty well. For example, North America, Brazil, etc. We’ll continue to invest in these areas and markets.

Xianghua Yang, Senior Vice President of International and Online Game Business, iQIYI: 关于具体的举措方面，几个方向，第一个是关于内容，内容我们以继续以陆剧为核心来推广和获得我们的用户。陆剧中间又是以偶像剧为主，然后具体对于陆剧，我们国内已经生产好的，我们会在各个市场加大宣传的力度。我们已经建立了种草、线上投放和用户获客的团队，针对各个市场的团队。然后还有一部分是在本地的内容，本地内容我们会控制好投入的节奏和数量，做同样是针对年轻女性观众的本地的内容。

Chang You, IR Director, iQIYI: Let’s start with content. For us, our key differentiation is our C-drama. That will continue to be our key in terms of getting users and especially for these content that’s favorable and liked by young female users. In key areas that I mentioned earlier that will increase the promotional activities and marketing activities for these markets. For example, for user growth, using content to attract and also to retain users. For local content that will control and also have a good pace in terms of the content investment. Also in terms of the volume that we’re investing into the local content. We also focus for the young female users like genre and content for local production.

Xianghua Yang, Senior Vice President of International and Online Game Business, iQIYI: 第三部分是我们继续在成熟的市场加强跟外部运营商、电商以及其他一些合作伙伴的合作，以提升我们的会员的增长，并且把这样的策略逐步逐步拓展到一些新增的市场上去。

Chang You, IR Director, iQIYI: For a third, for our matured markets, we’ll continue to cooperate with telecom carriers and also e-commerce platforms to increase our membership scale. We will continue to use this strategy to replicate it to other markets that we’re trying to explore. Thank you.

Xianghua Yang, Senior Vice President of International and Online Game Business, iQIYI: 关于第二个问题，海外用户的membership方面，我们现在看到海外的用户主要是以年轻女性为主，四十岁以下的女性占比比较高。

Chang You, IR Director, iQIYI: In terms of the user demographics for overseas audiences, is majority are focusing on the young female user who are under 40 years old.

Xianghua Yang, Senior Vice President of International and Online Game Business, iQIYI: 用户的会员行为习惯方面，跟国内其实每个市场都不太一样。如果跟国内比的话，有的市场它的付费习惯和续费率都比较高，有些市场是比国内差一点，但总体来讲它的ARPU都比较——比国内的——我们总体的海外的ARPU是高于国内的。

Chang You, IR Director, iQIYI: For the user behaviors, for overseas market, each major market is a bit different. Some of them have higher user, you know, subscription cycles, better cycles, better retention than others. Overall speaking, the ARPU for overseas memberships are higher than the domestic ones.

Xianghua Yang, Senior Vice President of International and Online Game Business, iQIYI: 谢谢。

Chang You, IR Director, iQIYI: Thank you.

Conference Operator: Thank you. Your next question comes from Gigi Xiao with Guangfa. Go ahead.

Gigi Xiao, Analyst, Guangfa: 谢谢王宇澄接受我的提问。可以听见对吧？我想这个季度问一下，我们其实也看到了公司在AI上面一系列的一些战略和推出的举措，比如说像这个Nado Pro，还有我们的宝德系的AI剧场。我想请王宇澄分享一下我们怎么看待AI时代的整个竞争格局上的变化。I will translate the question myself. Seeing iQIYI’s efforts in Nado Pro and fostering AI-driven creation and talent cultivation, how do we view the competitive landscape in the AI era?

Thank you.

Chang You, IR Director, iQIYI: We’ll have the CEO Gong Yu to take this question. Please go ahead.

Yu Gong, Founder, Director, and CEO, iQIYI: 影视，就是我们平时说的长视频，最大的一个难点是成本越来越高，投资的风险会逐渐变大。那么这个作品的数量就不得不减少，然后追求头部的，越头部的投资就越大，形成这么一个循环。但是AI技术可以大幅度地降低成本，缩短制作周期，所以就会让更多的创作者去做长篇的内容。就我们平时说的长视频的内容，那么作品的数量逐渐会增大，用户自然就会增多，形成一个正向的飞轮，正向的一个循环。那么对于长视频的这种业态或者这种商业模式是极大的利好，要把用户吸引到长视频的平台上。

Chang You, IR Director, iQIYI: For long, long-form video, we in the past, our challenge has been the investment scale or the amount that we invest in content is massive. The content cost is high, which means the investment risk is high, which leads to less number of titles that’s been invested and rolled out for the industry. For any content that we invested, we typically focus on the premium head content. That was the cycle that we faced and the challenge we faced. For AI, it actually fundamentally improves this situation. Under the AI model, you know, the content cost is much cheaper.

The production cycle and production period is shorter, which means there are more titles, more number of titles will be rolled out and introduced in this industry. Because there are more content, there are more choices for users to enjoy. User scale will increase under the new AI model. Overall speaking, we think it’s greatly beneficial for long-term video to improve its business fundamentals and economics, and also to attract more users to the platform.

Yu Gong, Founder, Director, and CEO, iQIYI: 为了迎接这种变化，我们也主动地做一些工作，比如说研发Nado Pro，比如说让我们的爱奇艺号功能更强大，更多的人通过分账方式与iQIYI合作，让创作者获得更多的收入。这些措施都是为了迎接成本降低之后，创作者和作品数量的激增带来的这种必然做的事情。

Chang You, IR Director, iQIYI: To better accommodate this industry trend, you know, we built a number of initiatives. For example, the Nado Pro we discussed and also the iQIYI account, which means the users can upload their content to our platform. Under the revenue share model, they will have the opportunity to introduce their content to more users to enjoy and to increase their revenue performance and also monetization capabilities. Under this whole backdrop, we believe the content cost will be lower and the number of video content will be increased.

Yu Gong, Founder, Director, and CEO, iQIYI: 回顾过去十年短视频还有短剧的发展，都是因为科技创新或者其他缘故，导致这个创作的成本降低，然后创作门槛降低，创作者更多，导致行业繁荣。对于长视频来讲，我们非常相信也会是同样的规律。

Chang You, IR Director, iQIYI: If we look back for the past 10 years of the internet, and especially for short-form video and also micro drama in the recent years, we believe that technology is the fundamental driver in terms of the in-industry boom and industry development. We think, you know, under this AI era, we think it becomes a great opportunity for the long-form video to have better economics and better industry dynamics.

Yu Gong, Founder, Director, and CEO, iQIYI: 谢谢。

Chang You, IR Director, iQIYI: Thank you.

Conference Operator: Thank you. There are no further questions at this time. I’ll now hand back to the company for closing remarks.

Chang You, IR Director, iQIYI: Thank you, everyone, for participating on the call today. If you have further questions, don’t hesitate to contact us. Thank you.

Conference Operator: Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.