iQIYI, Inc.

Thank you for standing by and welcome to the iQiyi third quarter 2025 earnings conference call. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Ms. Chang Yu. Please go ahead.

Thank you, operator. Hello, everyone, and thank you for joining ITE's third quarter 2025 earnings conference call. The company's results were released earlier today and are available on the company's investor relations website at ir.ite.com. On the call today are Mr. Li Gong, a founder, director, and CEO, Mr. Jun Wang, our CFO, Mr. Xiao Gui Wang, our CCO, chief content officer, Mr. Youqiao Duan, senior vice president of our membership business, and Mr. Xiangfa Yang, Senior Vice President of Movies and Overseas Business, and Mr. Gang Wu, Senior Vice President of Brand Advertising Business. Mr. Gong will give a brief overview of the company's business operations and highlights, followed by Jun, who will go through the financials. After the prepared remarks, the management team will participate in the Q&A session. Before we proceed, please note that the discussion today will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations. Potential risks and uncertainties include, or are now limited to, those outlined in our public filings with the SEC. ITE does not undertake any obligation to update any forward-loading statement except as required under applicable law. I will now pass on to Mr. Gong. Please go ahead.

Hello, everyone. Thank you for joining us today. This summer, we captured the hearts of audiences with our original blockbuster drama, The Thriving Man. As we begin today's earnings call, I would like to share the journey of bringing the compelling story to life. The thriving land became a highlight of IT's highly acclaimed masterpiece theater, 大家聚场, a collection renowned for its expertly crafted adaptation of famous novels. The thriving land tells a compelling tale of three families across two generations in rural China in the 1920s. When production began in Shandong last September, we heard questions and concerns. Can today's audience be drawn to a story that 100 years ago However, we built this project with strong confidence, backed by our years of experience in adopting literature to hit dramas. A lifelong journey. It is our belief that great stories resonate universally They transcend time, culture, and age, forging deep connections with viewers across regions and demographics. This ability to tell timeless stories is what sets non-form content apart from faster-paced, bite-sized entertainment. As we all now know, the thriving land became a major hit exceeding the 10,000 mark on IT popularity index score and topping this year's enlightened data chat for Peep Daily market share. Its influence expanded far beyond our plan for making meaningful impact on traditional TV and offline as well. It achieved the highest average rating per episode on CCTVs drama channel and boosted tourism in its filming location, echoing the offline success of the NOCOT and Food Abundance. The success of the Thriving Land is a no-cone incidence. It's built on IT proven content methodology to create and amplify IT values from high quality storytelling and advanced production technology to connect with broad and diverse audiences and to develop our business model with IP at the core. From online to offline, from domestic markets to global audiences, Our business model continues to evolve and scale. Today, our online operations are well established. Global expansion is accelerating and our experience business is advancing accordingly. On top of that, we are embracing exciting opportunities enabled by our supportive regulatory environment and advancements in AI. These new regulatory policies lay a solid foundation for innovation and growth in the long-form video industry. At the same time, we leverage AI to transfer how content is created and consumed. In July, we partnered with Google and ByteDance and launched a global AI short film competition, and to them as discovering and nurturing talents who create short videos using AI technologies. We also collaborated with academic award-winning cinematographer, Mr. Peter Paul, on a program at AI Center featuring AI-driven content. We aim to leverage IT's professional production expertise to cultivate the next generation of creators, pioneer innovative AI-driven content production methods, and deliver compelling AI-powered storytelling that resonates with audiences. Now let's dive into the details of our business performance in Q3. Starting with content, which is a cornerstone of our business. Our goal is to engage audiences with diverse, beloved content that drives commercial success. For long-form drummers, We focus on top-notch storages with high commercial value. In the third quarter, we once again secured the top position in total wheel-shaped market share. According to enlightened data, our diverse high-quality line-up included the nationwide hit, the thriving ad, and our in-house custom detective scenarios, coroner's diary, fortune book, which emerged as a summer's dark house with an IT popularity index exceeding 10,000. Additionally, the science fiction series movies earned strong acclaim for its innovative storytelling, reaching a peak popularity score of over 8,800. Moving to movies. We achieved major in original article releases. The Shadow Edge grossed over RMB 1.2 billion, leading the office and making a historic achievement for us. On our online movie platform, we retained the top for 15 consecutive corners driven by a diverse slate of 10 key titles. In Q2, we launched an innovative revenue sharing model to maximize returns for fields with limited box office opportunities. This strategy is gaining traction in Q3. With new titles like A Cool Fish 2, Woman's Back for Yi Tai Lai, generating over RMB 17 million in revenue sharing model in two months. For variety shows, our focus on top tier titles delivered strong results in both popularity and revenue. The king of stand-up comedy season two, Xi Juzheng and Kouqi, our flagship IT generated impressive membership and advertising revenues. It achieved an IHE popularity index of over 8,000 and dominated the generals with a leading market share, according to Enlightened data. Additionally, our newly launched observation show, Her Prime, Xie Daidangjia, sparked widespread discussions. To deepen audience engagement and elevate our virtual IP value, we introduced consumer products like collectible cars and co-branded merchandise collections, resulting in a stronger audience loyalty. Turning to microgrammers, they continue to enhance our content ecosystem, achieving double-digit sequential growth in average daily viewing time and daily subscription revenue in the third corner. Our microgrammers also have attracted sponsorship from brand advertisers with more partnership anticipated in the future. This growth has been driven by our focus on premium content, enhanced original production capabilities, and an expanded library of free titles. Our microdrama content library now includes over 20,000 titles with over half available for free. We have also established strong capabilities for consistently releasing original microdramas. Feats such as Feat of Three Lives, Yuan Qi San Sheng, Nurturing the Night, Si Yang Ye Se, and Immoral Paradise, Lin Shi De Tian Tang, resonate strongly with audiences. Additionally, we introduce a dedicated micro animation channel, Man Ju, and a kick-off original production. Micro animations is an innovative format of short form animation that has experienced rapid growth in the past year following the success of micro drama and heavily leveraging AI technology. For animations, we continue to improve our original production capabilities. In the third production, all of the divided rooms, Shen Guo Zhi Shang, continued to enjoy strong viewership. Additionally, our highly regarded original production, Love Between Fairy and Devil, Tang Wenjie returned with a second season, captivating the audience and driving high engagement. Next, let me show our exciting slate of content for the first quarter. The diverse summer pipeline includes Fitted Hearts, Yi Xiao Sui Ge, Sword and Beloved, King Yu Jian Xin, Silent Honor, Chen Mo Le Rong Yao, Dead End, Shui Yu Yi Gong, Strange Tales of Tang Dynasty III to Chang'an, Tang Chao, Gui Shu, Zhi Chang, Legend of the Magnet, Da Shu Ni Ren, Speed and Love, Shuang Gui, and Silent Pies, Feng Yu Chao. The movie pipelines include our original cell article film, Skin, Pinang, for cell article release, and our original cell article hit, The Shadow's Edge, for online streaming. The first batch of Original Internet Films and the Emerging Film Projects, and the licensed films such as Died to Rise, The Legend of He2, The Volunteers, Peace and Last, and Nobody, . The original variety show includes flagship IP, Blooming Journey 2, Hi, Young Farmers, and the brand new IP, Wonder Together. The microdrama pipeline includes the first microdrama based on the highly popular IP, A Strange Tale of Tongue Dynasty, titled Tang Dynasty Mysterious, The Horizon Conspiracy, Tang Hui, Qi Tan, Shi Chang, and Xian Pei, as well as Foreseeing You in My Final Days, San Miao Yu Jian Yin, and Self-Marked Destiny, Xiao Gu. The animation and children's content includes new animation, Ascendant of the Night Sun, and a new IP payment and a first food truck. Moving on to membership services, we aim to build a household name membership brand with brand market appeal. by a vibrant content ecosystem and exceptional services. Membership services revenue recorded sequential growth in Q3, driven mainly by original heat tremors, like the thriving land and the coroner's diary, as well as the electrical mega-heat, NOJA2. Beyond content, we are increasing our efforts to enhance membership services and deliver unmatched value. Our family-oriented S-Diamond plan stands out with inclusive perks like express packages offering early access to show the values, a proven driver of new subscriptions and upgrades to this premium tab. The accountancy experience program in Baochang continues to boost engagement with meaningful revenue growth year-over-year. We have created stronger synergy between membership and advertising revenues by introducing branded groups within the program while also integrating membership experience with top IPs. This quarter, we launched IP-themed membership cards for Nezha II and the Journey of Legend. The Journey of Legend for Shanghai giving fans a deeper connection to their favorite story and characters. Connecting with our audience is at the heart of what we do. Our annual flagship July 17th IT Membership Festival has become a signature fund appreciation event loaded with inclusive perks and irresistible subscription offers. We also strengthened membership value and loyalty from over 10 VIP-only gatherings ranging from event meetups to advanced screenings. We have elevated membership performance by focusing on operational optimization aiming to boost membership value and encourage subscribers to stay with our service longer. This includes initiatives to promote longer term plans and promotions for specific audiences. Additionally, we expanded our bundled membership partnership to 16 brands while broadening our sales channel across e-commerce and telecom platforms. Moving on to advertising business. In the so-called brand ads, Recalling double-digit annual growth, mainly driven by premium variety shows like The King of Stand-Up Comedy Season 2 and hit dramas like The Journey of Legend and The Thriving Land, our content-related ad solutions continue to gain traction, contributing over 60% of brand ad revenue. Key verticals, such as food and beverage, internet services and e-commerce, beauty and personal care, all show robust annual growth. We use AI to drive production, innovation, and advertising efficiency with features like creative bullet charts. and AI-generated ad materials, including animation style for innovative marketing solutions. As we enter Q4, we aim to capitalize on major advertising opportunities, such as W11 shopping festivals, Christmas and New Year campaigns, and new smartphone launches. Our focus will be on maximizing ad sales from premium variety shows, dramas, and all drama-centered brands. We will further enhance monetization on smart TVs. We will continue leveraging AI to improve brand advertising efficiency. For performance ads, We now have a healthier and more balanced advertiser portfolio with revenue dependent on individual client. By industry, internet services and education and training will send out contributors this quarter. Looking ahead, we will focus on capturing new budgets in the internet services sector, including tools the social platforms, and the meaning games while scaling up revenue in education and training, wellness management, and e-commerce. Additionally, we plan to expand our performance as inventory and utilize AI to further enhance monetization efficiency. Moving onto technology and the products, we continue to harness cutting-edge technologies to transform the entertainment experience, improve content production efficiency, and boost content value across our platform. On the content creation front, we are leveraging AI to transform storytelling. A notable example is our partnership with academic award-winning Mr. Peter Paul. Together we will launch the Peter Paul IT AI Center to pioneer the next generation of AI-driven storytelling and talent development. The first titles are sent to premium soon, which we are very excited for. Additionally, we are using AI to produce high-quality original micro animation at much lower cost. Another unique example is the AI part, iQuick Reel Collection, 2K, which now covers all major content categories. This feature utilizes a smart editing agent to automatically convert long-form videos into vertical shots, which are then included in iQuick Reel collections. iQuick Reel collections offer users a real experience akin to that of microgrammers. We are transforming user engagement with total and AI-powered personnel assistant that provides present life support including video search recommendation and plot insights. The latest update improved recommendation for micro drummers and short form videos alongside long form content while also enhancing plot Q and A capabilities. Additionally, we introduced binge-watching rankings, allowing users to track time spent on their favorite scenarios and view their rankings. This feature has received highly positive feedback from fans. In addition to advancing AI applications, we are driving the industrialization of video production with cutting-edge virtual production technology. Although virtual production capabilities now support both in-house and external projects, this quarter we launched an omnidirectional motion-simulating vehicle rig filming platform. Powered by our in-house developed IQ stage virtual production system, the platform naturally enhances efficiency of high-frequency VCO scene shots. It delivers streamlined, repeatable workflow and has already been utilized for virtual production in major cell article productions. Moving on to business performance in regions outside of mainland China, we maintained strong growth momentum in Q3 with membership revenue increased by over 40% annually. Markets like Brazil, five Spanish-speaking regions, Mexico, and Indonesia had membership value more than doubled year over year. In this quarter, the average daily subscribers also reached an all-time high. The strong performance is supported by an exceptional content lineup of C drama, Chinese drama, continued to gain popularity globally, with revenues growing double-digit both annually and sequentially. Notably, the pie-dubbed version of Corona's diary set platform records for both viewing time and peak revenue within its language segment. It also topped IT popularity charts in 13 overseas markets. Meanwhile, our local content slate also exceeded. In general, the serials emerged as a phenomenon in Thai language content this year, generating the highest membership revenue among all Thai drummers on our platform on the topic-related rankings on Google and Twitter. Beyond long-form content, micro-drummers, continue to build strong momentum overseas. Membership revenue from micro drummers rose 114% sequentially by the end of September. Micro drummers ranked second only to long-form drummers across several core metrics, including membership revenue and viewing time. Moreover, multiple IT organizations' micro drummers gain solid traction abroad. For example, How Dare You! has shown a strong long-tail effect three months post-launch while also expanding into locally produced multiple dramas. Multiple projects in English, Thai, Korean, and Indonesian are in production and are targeted for launch this year. Looking ahead, we will continue to deliver high-quality content to international audiences, deepen partnership with telecom operators and local partners, and leverage AI to drive user acquisition. Moving on to experience business. Well, we are focusing on two key areas, IP-based consumer products and offline experiences We are leveraging our extensive and unique IP resources to build a more robust entertainment ecosystem. For IP-based consumer products, we have upgraded our business model from a licensing-only approach to a dual-track strategy combining self-operated merchandise with licensing. Q3 growth was strong, with revenue from IP-based consumer products more than doubling year-over-year. In particular, revenue from self-oriented merchandise grew more than 70% sequentially, driven mainly by collectible cars from top drama titles. Meanwhile, Our self-operated portfolio has expanded beyond collectible cards into additional categories, supported by the establishment of in-house teams. For IP licensing, the hit drama, The Journey of Legend, has partnered with over 30 licenses, setting a new record by expanding multiple sectors, including e-commerce, FMCT, and beauty. In our offline experience business, we are pioneers in this emerging field. At the heart of these initiatives are IT labs, which are designed to operate under an asset-light model. Our two locations, Yangzhou and Kaifeng, are under development, with the Yangzhou IT lab scheduled to open early next year. A third site in Beijing has also been announced. By integrating technologies like AI and XR with all content IT land, we'll provide interactive and scalable experiences that are faster to iterate and more efficient than traditional theme parks. This approach reduces space and capital requirements with revenues expected to come mainly from ticket sales and other unsigned spending. As 2025 draws to a close, we reflect on a year of rapid transformation driven by technical innovation and evolving business models. We are not morally We are not merely adapting, we are advancing, fueled by our thriving overseas expansion, growing experience business, and ongoing AI investments. Breakthroughs in any of these areas could elevate us to a new height amid this change. Our call remains the same. Creating premium content IP supported by proven commercial model, this foundation earns us the loyalty of hundreds of millions of users and the trust of industry partners. Moving forward, we will continue delivering quality content, fostering creativity with partners, and driving long-term value for shareholders. Now, let me hand it over to Jun for the financials.