Profits are crumbling at iQiyi, the Chinese video streamer, in the second quarter

China-based video streaming company iQiyi posted a 5% decline in revenue and an 80% drop in net profit in the second quarter.

The company said Thursday that revenues for the April to June period were 7.45 billion RMB ($1.04 billion at current exchange rates), down year-on-year and also 6% lower than in the first quarter.

Net profit was RMB68.7 million ($9.6 million). That compared with RMB365 million ($51.1 million) in the same quarter last year and with a RMB655 million ($91.7 million) profit in the January-March first quarter.

Last year marked the first time ever that the company achieved annual net profit, a feat it achieved amid a declining subscriber base (101 million at the end of December 2023), which was more than offset by higher average revenue per user.

Since the beginning of this year, iQiyi has stopped releasing membership numbers or ARPU. The regulatory filing only said that revenue from membership services amounted to 4.5 billion RMB ($630 million), down 9% year-on-year “mainly due to fluctuations in the performance of the content list.” It was the second quarter in a row in which subscription revenues fell.

Advertising revenue from the platform’s free tiers fell 2% to RMB 1.5 billion ($210 million), “mainly due to the decline in brand advertising activities, partially offset by the growth of performance-based advertising activities.”

“Content distribution revenue reached RMB698 million, up 2% year on year. Other revenues amounted to RMB784 million, up 16% year-on-year, mainly driven by the increase in revenue from talent agency services and third-party collaborations,” the company said.

The filing did not directly address the company’s shrinking subscription business, although it did hint at the impact of competition from other streaming platforms. It also did not shed any light on iQiyi’s attempts to develop an international business outside of mainland China.

“We believe that the vibrant competition within the long-form video sector in the second quarter will be constructive for the industry, increasing its appeal against other entertainment formats,” said Gong Yu, Founder, President and CEO of iQiyi. “The key to long-term success depends on consistently delivering high-quality content that balances artistic merit and commercial benefit, which we remain committed to.”

The company’s NASDAQ-listed ADR shares closed near their all-time lows of $3.08 each on Wednesday. At that price, iQiyi, which is majority owned by tech giant Baidu, has a market capitalization of $1.62 billion.