(Yicai) Feb. 19 -- IQiyi's shares plunged after the leading Chinese video streaming site operator reported shrinking earnings for last year despite remaining upbeat for 2025 because of large investments in mini-dramas and overseas expansion.

IQiyi [NASDAQ: IQ] closed 9.3 percent down at USD2.30 in New York yesterday.

Net profit shrank 60 percent to CNY764.1 million (USD104.7 million) last year from the year before, the Beijing-based company said in its latest annual financial statement released yesterday. Based on non-generally accepted accounting principles, net profit declined 47 percent to CNY1.5 billion (USD207.2 million).

Operating profit sank 47 percent to CNY1.8 billion in the period, with operating profit margin dropping to 6 percent from 9 percent. Meanwhile, non-GAAP operating profit plunged 35 percent to CNY2.4 billion, with non-GAAP operating profit margin down to 8 percent from 11 percent.

IQiyi's revenue fell 8 percent to CNY29.2 billion (USD4 billion) last year from 2023.

Revenue from membership services slid 13 percent to CNY17.8 billion, mainly because of a lighter content slate. Online advertising services revenue declined 8 percent to CNY5.7 billion due to the shrinking brand advertising business, which was partially offset by the growth of the performance-based advertising business.

In contrast, content distribution revenue surged 16 percent to CNY2.9 billion, buoyed by increased barter transactions. Other revenue streams inched up 1 percent to CNY2.9 billion.

IQiyi's cost of revenues was nearly CNY22 billion in 2024, decreasing 5 percent from the year before, with content costs as a component of the cost of revenues also declining 5 percent to CNY15.7 billion.

In the fourth quarter of last year, iQiyi reported a net loss of CNY189.4 million, compared to a net profit of CNY466.2 million a year earlier, primarily due to foreign exchange losses, according to the financial statement. Revenue fell 14 percent to CNY6.6 billion in the period.

"Since late November 2024, we have launched a series of blockbusters, driving a strong rebound in business performance and reinforcing our No. 1 position in total drama market share in the fourth quarter," Chief Executive Officer Yu Gong said. "With the release of more smash hits, the momentum has continued into the start of 2025, leading to a significant increase in subscribing members from the end of 2024 to now.

"Meanwhile, our investment in mini-dramas has also achieved significant progress," Yu noted. "We have revamped our products to optimize user experience, expanded our mini-drama portfolio to over ten thousand titles, and enhanced the ad-placement system to more effectively monetize the growing traffic of our mini-dramas.

"Although still in an early stage, we have seen great potential for mini-dramas to bolster our ad inventory and contribute to our ad revenue growth in 2025," Yu pointed out.

In the fourth quarter, iQiyi expanded its mini-drama portfolio to over 10,000 titles, accounting for 95 percent of the leading mini-drama content providers. Thanks to the increased user base and viewing time of mini-dramas, the firm logged CNY1 million (USD137,300) in monthly revenue-sharing income in the period.

IQiyi's overseas business, membership numbers, and revenue maintained strong growth in the fourth quarter of last year.

For example, revenues from Hong Kong, the UK, Thailand, and Australia surged over 30 percent from a year earlier. The average daily number of overseas subscribing members also grew in the fourth quarter, with markets like Hong Kong and Thailand experiencing over 50 percent annual growth.

In the past few years, the company focused on several markets and achieved satisfactory development, Yang Xianghua, president of the company's movie and overseas business unit, said during the earnings conference call. “For 2025, we have different strategies for different markets.”

“For markets we entered in the early days, such as Thailand, Malaysia, and North America, iQiyi's goal this year is to achieve growth in both profit and revenue,” Yang pointed out. “For new foreign markets like Indonesia and South Korea, the focus will be on revenue growth.”

Meanwhile, iQiyi also plans to break into new markets in the Middle East and Latin America this year, Yang added.

Editor: Futura Costaglione