Revenue headwinds continued: Content cost optimization underway. Maintain Neutral and TP of USD1.3

研报英文原文证据摘录

Global Markets Research

iQIYI Inc IQ.OQ IQ US

19 August 2026

EQUITY: MEDIA & INTERNET

Revenue headwinds continued

Rating

Remains

Content cost optimization underway. Maintain Neutral

and TP of USD1.3

Target price

Remains

USD 1.30

Closing price

17 August 2026

USD 1.33

Implied upside

-2.3%

2Q26 results missed

iQIYI’s (IQ) 2Q26 total revenue dropped 5% y-y to CNY6.3bn (Fig. 1 ) , slightly missing both

Bloomberg consensus and our estimates by 1% due to lower other revenue. Business line-wise,

membership revenue contracted 2% y-y, improving from the 5% decline in 1Q, supported by hit

titles such as Born with Luck ( 低智商犯罪). Online ad revenue edged down 2% y-y, reflecting

relatively soft advertiser demand during this year’s 618 promotions. Content distribution revenue

surged 56% y-y driven by increased cash transactions, and other revenue plunged 58% y-y, owing

to the termination of a business cooperation agreement. Non-GAAP operating profit swung to a loss

of CNY30mn (from a CNY59mn profit a year ago), below our breakeven estimate on revenue miss.

Operating margin (OPM) declined 1.4pp y-y to -0.5%, mainly due to cost deleverage on revenue

decline. Coupled with a higher tax expense from one-off discrete fees related to subsidiary

adjustment, non-GAAP loss reached CNY210mn, missing the consensus estimate of a CNY95mn

loss. Content costs rose 1% y-y, largely in line with our estimate.

3Q outlook: Revenue headwinds persist, while content costs likely to decline largely

We expect revenue to remain weak in 3Q26F, down 8% y-y to CNY6.1bn (7% below pre-2Q

consensus), dragged by declines across most segments except ads which we expect to increase

2% y-y as performance-based ads return to growth. Notably, we estimate membership revenue to

likely reduce 5% y-y to CNY4bn on a relatively muted summer content slate. On the bottom line, we

estimate adjusted operating profit will likely rebound to CNY12mn in 3Q26F vs. a loss of CNY22mn

a year ago, though this still misses the pre-2Q consensus of a CNY92mn profit. While OPM would

likely improve 0.5pp y-y, driven by gross profit margin expansion. IQ expects content cost to decline

…