(Yicai) Nov. 22 -- IQiyi’s stock price sank even though the Chinese video platform swung into the black in the third quarter from a year earlier due to higher income from membership and online advertising services.

Shares of iQiyi [NASDAQ: IQ] closed 9.2 percent lower at USD4.75 in New York yesterday. The stock was trading up 0.4 percent in pre-market trading as of 6.26 a.m. local time today.

Net profit was CNY475.9 million (USD65.2 million) in the three months ended Sept. 30, versus a net loss of CNY395.6 million a year ago, the Beijing-based company disclosed in a trading report yesterday. Revenue rose 7 percent to CNY8 billion (USD1.1 billion).

“The impressive financial results demonstrate the strength of our robust operating leverage anchored by our exceptional content, which serves as our core competitive advantage,” founder Tim Gong said on the company’s earnings conference call with investors.

Membership services income climbed 19 percent to CNY5 billion. The number of daily subscribers grew 6 percent to 107.5 million. Revenue per membership jumped 12 percent year on year to CNY15.54 (USD2.20), underpinned by the platform’s compelling content offering.

Revenue from online advertising soared 34 percent to CNY1.7 billion, fueled by growth in brand and performance adverts with performance ads showing stronger growth momentum, while that for content distribution slipped 28 percent to CNY526.1 million.

IQiyi has led the industry for share of drama viewership for seven straight quarters, Gong said, citing Enlighten data. For example, Lotus Casebook, a detective drama series, was not only popular in China, but also in Southeast Asia, East Asia, and North America, he added.

"For the fourth quarter, we will continue to drive high-quality growth in addition to enhancing platform, cooperation, and the channel expansion," Gong said. "We are dedicated to bolster our content pipeline to capitalize on the strong momentum of Chinese drama while introducing localized dramas in Thailand, Malaysia, and Taiwan to further expand our influence.”

Gong also announced the firm's progress in using artificial intelligence to guide users to their favorite content or even key characters or plot twists. Users who make use of AI in search to find drama series spend an average of 40 percent more time viewing the subsequent content. 

Editor: Emmi Laine