Q2 FY2026
Filed Aug 19, 2026Q2 revenue declined 5% year over year to RMB6.29 billion, while operating loss narrowed sequentially to RMB104.8 million and free cash flow improved to RMB319.6 million.
Revenue declined year over year and the company remained loss-making on both GAAP and non-GAAP bases, including a higher income tax expense. Sequential operating-loss and cash-flow improvement, content-distribution growth, lower selling, general and administrative expenses, and share repurchases were offsets.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Total revenuesGAAP | RMB6.29 billion (US$926.6 million) | – | decreasing 5% year over year |
| Cost of revenuesGAAP | RMB5.25 billion (US$773.7 million) | – | decreasing 1% year over year |
| Content costs as a component of cost of revenuesGAAP | RMB3.82 billion (US$563.7 million) | – | increasing 1% year over year |
| Selling, general and administrative expensesGAAP | RMB744.2 million (US$109.7 million) | – | decreasing 22% year over year |
| Research and development expensesGAAP | RMB398.0 million (US$58.7 million) | – | decreasing 6% year over year |
| Total operating costs and expensesGAAP | RMB6,391,822 thousand | – | – |
| Operating lossGAAP | RMB104.8 million (US$15.4 million) | – | – |
| Operating loss marginGAAP | 2% | – | – |
| Operating lossnon-GAAP | RMB30.3 million (US$4.5 million) | – | – |
| Non-GAAP operating loss marginnon-GAAP | 0.5% | – | – |
| Total other expense, netGAAP | RMB5.5 million (US$0.8 million) | – | decreasing 91% year over year |
| Loss before income taxesGAAP | RMB110.2 million (US$16.2 million) | – | – |
| Income tax expenseGAAP | RMB219.8 million (US$32.4 million) | – | – |
| Net loss attributable to iQIYI, Inc.GAAP | RMB287.5 million (US$42.4 million) | – | – |
| Diluted net loss attributable to iQIYI per ADSGAAP | RMB0.30 (US$0.04) | – | – |
| Net loss attributable to iQIYInon-GAAP | RMB209.7 million (US$30.9 million) | – | – |
| Non-GAAP diluted net loss attributable to iQIYI per ADSnon-GAAP | RMB0.22 (US$0.03) | – | – |
| Net cash provided by operating activitiesGAAP | RMB339.6 million (US$50.0 million) | – | – |
| Capital expendituresother | RMB20,015 thousand | – | – |
| Free cash flownon-GAAP | RMB319.6 million (US$47.1 million) | – | – |
| Cash, cash equivalents, restricted cash and short-term investmentsGAAP | RMB4.12 billion (US$607.8 million) | – | – |
| Short-term loansGAAP | RMB1,945,742 thousand | – | – |
| Long-term loans, current portionGAAP | RMB1,600,388 thousand | – | – |
| Long-term loansGAAP | RMB3,546,659 thousand | – | – |
| Convertible senior notes, current portionGAAP | RMB1,067 thousand | – | – |
| Convertible senior notesGAAP | RMB6,615,221 thousand | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Membership servicesNo driver was provided. | RMB4.01 billion (US$591.6 million) | – | decreasing 2% year over year |
| Online advertising servicesNo driver was provided. | RMB1.25 billion (US$183.7 million) | – | decreasing 2% year over year |
| Content distributionPrimarily driven by the increase in cash transactions. | RMB681.5 million (US$100.4 million) | – | increasing 56% year over year |
| Other revenuesPrimarily due to the alteration of certain business cooperation arrangement. | RMB344.9 million (US$50.8 million) | – | decreasing 58% year over year |
Capital returns
- Pursuant to the share repurchase program of up to US$100 million adopted in March 2026 and effective through September 2027, the Company had repurchased a total of approximately 21.8 million ADSs for a total cost of US$24.1 million as of June 30, 2026.
What drove it
- Content distribution revenue increased 56% year over year, primarily driven by the increase in cash transactions.
- Selling, general and administrative expenses decreased 22% year over year, primarily attributable to disciplined marketing spending.
- Research and development expenses decreased 6% year over year, primarily attributable to the decrease in personnel-related expenses.
- Total other expense decreased 91% year over year, primarily attributable to the decrease in interest expense.
- Management stated that it maintained the No. 1 domestic market share across long-form dramas, films, and children’s content during the quarter, and that short-form dramas claimed the top domestic market share for the first time in June.
Concerns
- Total revenues decreased 5% year over year.
- Membership services revenue and online advertising services revenue each decreased 2% year over year.
- Other revenues decreased 58% year over year.
- GAAP operating loss was RMB104.8 million, compared with an operating loss of RMB46.2 million in the same period in 2025.
- Non-GAAP operating loss was RMB30.3 million, compared with non-GAAP operating income of RMB58.7 million in the same period in 2025.
- Income tax expense was RMB219.8 million, including discrete enterprise income tax expenses and related interest totaling RMB193.6 million relating to certain adjustments at a Chinese mainland subsidiary.
- Net loss attributable to iQIYI was RMB287.5 million, compared with net loss attributable to iQIYI of RMB133.7 million in the same period in 2025.
What to watch
- Membership services revenue, which was RMB4.01 billion and decreased 2% year over year.
- Online advertising services revenue, which was RMB1.25 billion and decreased 2% year over year.
- Whether content distribution revenue growth, which was 56% year over year in the quarter, continues.
- The financial effect of the alteration of certain business cooperation arrangement that contributed to the 58% year-over-year decrease in other revenues.
- Operating-loss progression following disciplined marketing spending and lower personnel-related expenses.
- The impact of the RMB193.6 million discrete enterprise income tax expenses and related interest.
- Further execution of the US$100 million share repurchase program effective through September 2027.
Balance sheet and cash flow
- As of June 30, 2026, cash, cash equivalents, restricted cash and short-term investments were RMB4.12 billion (US$607.8 million).
- As of June 30, 2026, the Company had an aggregate loan of US$636.6 million to PAG, classified as a non-current asset under prepayments and other assets.
- Net cash provided by operating activities was RMB339.6 million (US$50.0 million), compared to net cash used for operating activities of RMB12.7 million in the same period in 2025.
- Free cash flow was RMB319.6 million (US$47.1 million), compared to free cash flow of negative RMB34.1 million in the same period in 2025.
- Net cash used for investing activities was RMB245,937 thousand.
- Net cash used for financing activities was RMB200,228 thousand.
- Cash, cash equivalents and restricted cash at the end of the period were RMB3,206,423 thousand.
Analysis
iQIYI reported total revenues of RMB6.29 billion (US$926.6 million), down 5% year over year. Membership services revenue declined 2% year over year to RMB4.01 billion (US$591.6 million), and online advertising services revenue also declined 2% to RMB1.25 billion (US$183.7 million). Content distribution was the clear growth area, rising 56% year over year to RMB681.5 million (US$100.4 million), primarily driven by increased cash transactions. Other revenues declined 58% year over year to RMB344.9 million (US$50.8 million), primarily because of the alteration of certain business cooperation arrangement.
Profitability improved from the prior quarter but deteriorated from the prior-year period. GAAP operating loss was RMB104.8 million (US$15.4 million), versus RMB228,433 thousand in the prior quarter and RMB46.2 million in operating loss in the same period in 2025. Non-GAAP operating loss was RMB30.3 million (US$4.5 million), versus RMB148,599 thousand in the prior quarter, but compared with RMB58.7 million in non-GAAP operating income a year earlier. Selling, general and administrative expenses fell 22% year over year to RMB744.2 million (US$109.7 million), which the company attributed to disciplined marketing spending, while research and development expenses declined 6% year over year.
The bottom line was pressured by income tax expense of RMB219.8 million (US$32.4 million), compared with RMB27.2 million a year earlier. The company said the increase primarily reflected RMB193.6 million (US$28.5 million) of discrete enterprise income tax expenses and related interest relating to certain adjustments at a Chinese mainland subsidiary. Net loss attributable to iQIYI was RMB287.5 million (US$42.4 million), and non-GAAP net loss attributable to iQIYI was RMB209.7 million (US$30.9 million). Total other expense fell 91% year over year to RMB5.5 million (US$0.8 million), primarily due to lower interest expense.
Cash generation strengthened. Net cash provided by operating activities was RMB339.6 million (US$50.0 million), compared with RMB12.7 million of cash used in operating activities in the same period in 2025. Free cash flow was RMB319.6 million (US$47.1 million), compared with negative RMB34.1 million a year earlier. Cash, cash equivalents, restricted cash and short-term investments were RMB4.12 billion (US$607.8 million) as of June 30, 2026. The company also repurchased approximately 21.8 million ADSs for US$24.1 million under its US$100 million repurchase program.
Management emphasized content-market-share leadership and its strategic transformation toward a decentralized social media ecosystem and AI. The filing provided no forward financial guidance. The key reported tension is between sequentially narrower operating losses and improved free cash flow, versus year-over-year revenue contraction, weaker membership and advertising revenue, a sharp decline in other revenues, and losses on both GAAP and non-GAAP measures.
Management, verbatim
In the second quarter, we reinforced our content leadership and advanced our strategic transformation. According to Enlightent, we maintained the No. 1 domestic market share across long-form dramas, films, and children’s content during the quarter, while our short-form dramas claimed the top domestic market share for the first time in June.
Yu Gong, Founder, Director, and Chief Executive Officer of iQIYI
Our financial performance improved sequentially in the second quarter, marked by revenue growth and substantially narrowed operating loss. We implemented our share repurchase program, underscoring our commitment to creating long-term value for shareholders.
Ying Tian, Chief Financial Officer of iQIYI
Not in the filing
stated, not guessed- Forward financial guidance was not provided.
- Previous-release outlook was not provided.
- Gross margin was not reported.
- Gross profit was not reported.
- Tax rate was not reported.
- Dividend information was not reported.
- Aggregate total debt was not reported as a single line item.
- Segment revenue quarter-over-quarter percentage changes were not reported.
- Total revenue quarter-over-quarter percentage change was not reported.
- Operating-income or operating-loss year-over-year and quarter-over-quarter percentage changes were not reported.
- Net-income or net-loss year-over-year and quarter-over-quarter percentage changes were not reported.
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.