Iqiyi executives interpret earnings: they will continue to invest more content in the next few years.

Iqiyi executives interpret earnings: they will continue to invest more content in the next few years.

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Sina Technology News Beijing August 1st afternoon news, Iqiyi (Nasdaq:IQ) today issued as of June 30th, the 2018 fiscal year second quarter unaudited financial report. The report shows that Iqiyi's total revenue in the second quarter was 6 billion 200 million yuan (about $932 million 500 thousand), up 51% from the same year, and the net loss in the second quarter was 2 billion 100 million yuan (about $316 million 900 thousand), compared with the net loss of 953 million 200 thousand yuan in the same period last year.

After the release, Iqiyi founder, CEO Gong Yu and CFO Wang Xiaodong and other companies held a telephone conference to read the main points of the financial report and answer the questions of the analysts.

The following is the main content of this conference call Q & a session.

Eddie Leung, Merrill Lynch analyst at Bank of America: Can management talk about the trend in content costs for the rest of the year? Just now, you seem to mention that Iqiyi will play more famous TV dramas in the second half of this year. The program will change the level of content cost in the first half of the year, because the first half of the year is Iqiyi's original variety show.

Wang Xiaodong: I think we have introduced Iqiyi's content strategy in detail, especially the original content. We think this strategy works well, so at least in the next few years, we will continue to invest in the content, although the proportion of the content cost is higher in revenue. At present, the proportion of content cost to total revenue is between 70%-80% and close to 80% by the end of this year, because we believe that in the long run, investment in content can bring better benefits. As far as traffic is concerned, the third quarter is a year's peak, so we are sure to invest more in this quarter to attract more user traffic and create a more stable user base.

Thomas Chong, Credit Suisse analyst: First question, can management talk about the long-term trend of paying subscribers? The second question is about the prospect of Iqiyi's advertising business in the second half of this year.

Gong Yu: first of all, paying members will continue to grow at a high speed. This trend is very good. As for the trend of advertising in the second half of this year, we have two kinds of advertising, the most important is brand advertising, the second is the information stream advertising, the information flow advertising is growing very fast. We have a cautious and optimistic attitude towards the second half of the brand advertising. The main reason is that the budgets of the brand advertisers are basically fixed, in the just time. In the past, the Russian World Cup, CCTV obtained a large number of brand advertisers budget, more than the original expectations, may have a certain impact on the second half of the brand advertising market, but the impact is limited, not too big.

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