Image Source: Visual China

BEIJING, May 26 (TMTPOST) — Chinese video streaming platform iQiyi achieved quarterly profitability for the first time in Q1 2022, according to the company’s Q1 earnings report released on Thursday.

The earnings report shows that the net profit attributable to iQiyi in Q1 was 169 million yuan. The company reported 93.4 million yuan in operating profits or a gross margin of 1%. Non-GAAP operating profit was 330 million yuan, representing a non-GAAP gross margin of 4%. 

The company’s founder and CEO Gong Yu had pledged in last quarter’s earnings report that the company would achieve full year non-GAAP break even in 2022 and work to achieve non-GAAP quarterly break even.

iQiyi's profitability was attributed to cost management instead of increasing its revenues.

The streaming service provider’s Q1 revenues were 7.3 billion yuan, registering year-on-year decline of 8.6%. The decline in revenues was caused by decreased revenues from advertising and content distribution. Revenues from its membership business went up by 4% year-on-year from 4.3 billion yuan to 4.5 billion yuan. Average daily subscribing users were 101.4 million, slightly down from the 105.4 million in the same period in 2021.

In Q1, iQiyi saw a drastic decrease in cost, slumping by 16% year-on-year to 5.96 billion yuan, the lowest in the past three years. The decrease of cost was caused by the decreased cost from content. The cost associated with content was 4.4 billion yuan, down 19% year-on-year. The decreased cost of content was a result of an improved strategy for content, fewer variety shows and improved operation efficiency.

In late 2021, Sina Tech reported that iQiyi suspended many projects to decrease investment in content. Gong, the company’s CEO, said previously on the 2021 Q4 earnings report phone conference that the company would streamline its operation strategy while maintaining the number of popular content and purchasing less content of low quality.