iQIYI Q2 Revenue Hits RMB6.6 Billion

iQIYI(NASDAQ:IQ) reported earnings on August 20, 2025, with revenue of RMB6.6 billion and a non-GAAP operating margin of 1%. Despite a 9% year-over-year decline in membership revenue and a 13% year-over-year drop in advertising revenue, the company made significant progress in overseas expansion, AI-driven product innovation, and IP-based consumer product strategies.

AI adoption drives iQIYI efficiency

AI integration has accelerated both user engagement and digital asset production, while supporting advanced qualitative script analysis and personalizing user interactions. Notably, AI-powered features such as iJump Talkout (introduced in Q2 2025) and Touhou World (launched in early 2024) contributed to a 20% higher click-through rate for AI-driven ads compared to traditional ads in Q2 2025.

"On the set of the Great Nobody two, Dao Wanbei Huang Zhao, AI boosted the efficiency of digital asset generation by over 10 fold cutting costs and shortening production time. For the pre-production for romance dramas, we achieved a breakthrough in qualitative script analysis and are now supporting in-depth evaluation of the leading characters, dramatic relationships, and interactions. In addition to that, AI also helps in identifying unneeded plans."
— Lu Gong, CEO

Rapid AI adoption is enabling iQIYI to control costs and deliver differentiated user experiences, positioning the company for scalable content output and improved monetization in a competitive digital entertainment market.

Overseas growth boosts iQIYI revenue

Overseas membership revenue grew 35% year-over-year, with average daily subscribers reaching an all-time high and markets like Brazil and Indonesia exceeding 80% year-over-year growth. By June, micro dramas became the second largest category for new subscriptions in key overseas regions, reflecting effective content localization and genre diversification.

"In Q2, membership revenue grew by around 35% annually driven by standout performances in markets like Brazil, Mexico, Indonesia, and the five Spanish-speaking regions, all reporting annual growth over 80%. Average daily subscribers reached an all-time high during the quarter. The outstanding performance is anchored in our exceptional content lineup, especially as C drama popularity continues to grow globally. The original C drama Field topped popularity charts in 15 overseas markets on premiere day."
— Lu Gong, CEO

International traction is diversifying revenue streams and strengthening iQIYI's position in global content markets, reducing reliance on domestic growth.

Consumer products and offline experiences expand monetization

The company’s shift from licensing to self-operation in IP-based consumer products generated over RMB100 million in GMV from self-operated live table trading cards in the first half of 2025, and over 50 immersive offline shelters are active in about 30 cities. New asset-light immersive experiences and IT land locations were under development in Yongzhou and Kaibong as of Q2 2025.

"For IT consumer products, in the past, we fully operated in IT licensing, but the percentage of GMV is relatively low in the whole market. So starting this year, we're now transitioning to a self-operation, building a consumer product system that includes planning and design, manufacturing, and sales. Right now, we're starting to test the waters starting from the collectible cards. And then also we're testing the waters for different sales channels. So we will expand those efforts in the future. And for the offline experiences, overall, we take an asset-light approach to this strategy. It mainly has two parts: the immersive theaters, which now is a licensed model that we operate with different stores, now has over 30 cities, have more than 50 stores. And also for IG events, we also take the asset-light approach and we support in terms of content management and technology."
— Lu Gong, CEO

Vertical integration in consumer products and scalable experiential retail offer alternative growth levers beyond core streaming, increasing brand engagement and non-subscription revenue potential.

Looking Ahead

Management provided no precise quantitative outlook for Q3 or fiscal 2025, but emphasized continued AI investment, expansion of original micro drama production overseas, rollout of new IP-based consumer product lines, and growing premium content for both domestic and international markets. The company confirmed further optimization of its debt structure, with sufficient liquidity to meet upcoming obligations and support future strategic initiatives. No specific guidance for revenue or margin was disclosed in the transcript.

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This article was created using Large Language Models (LLMs) based on The Motley Fool's insights and investing approach. It has been reviewed by our AI quality control systems. Since LLMs cannot (currently) own stocks, it has no positions in any of the stocks mentioned. The Motley Fool recommends iQIYI. The Motley Fool has a disclosure policy.