iQIYI, Inc.

Thank you for standing by and welcome to the IQIYI second quarter 2026 earnings conference call. All participants are in 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 You, IR Director of the company. Please go ahead.

Thank you, operator. Hello, everyone, and thank you for joining ITE's second quarter 2026 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. Yu Gong, our founder, director, and CEO, Mr. Ying Tian, our CFO, Mr. Xiaohui Wang, our CCO, Chief Content Officer, , Mr. Youqiao Duan, Senior Vice President of our Membership Business, Mr. Xianghua Yang, Senior Vice President of International and Online Game 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 me, 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, but are now limited to, those outlined in our public filings with the SEC. ITE does not undertake any obligation to update any forward list statement except as required under applicable law. I will now pass on to Mr. Gong. Please go ahead.

Hello, everyone. In the second quarter, we continue to reinforce our core business, high-quality, diversified content powered by industry-leading performance. According to enlightened data, We maintained the number one market share in each of the long-form drama, film, and children's content categories. And for short-form dramas, Zhong Ju, we made a major breakthrough, reaching number one market share for the first time in China. Financial performance also improved quarter over quarter. Total revenues The total revenues grew sequentially and our non-GAAP operating laws narrowed substantially, approaching breakeven. We are fully announcing our strategic transformation. First, we are shifting from a centralized media to a decentralized, creator- and user-centric AI can dramatically lower the cost and vary the content creation, turning what was once a niche professional activity into a mass capability and triggering and paralleling a search in content supply. because traditional centralized models cannot accommodate this scale and diversity. We are upgrading our content acquisition and distribution mechanism to efficiently connect creators and audiences. Second, we are taking an all-in approach on AI to revolutionize both live action production and pure AITC. Our guiding principle is clear, maximizing cost efficiency without compromising quality. Together, these two pillars reinforce each other like a flying wheel. AI drives rapid growth in content supply, which helps us move faster toward a decentralized model. As we decentralize, more creatures can participate, users get more engaged, and our platform becomes even stronger. In Q2, both strategy moved from plans to measurable results over time. They will structurally improve our content cost, revenue quality, profitability, and cash flow. Let me walk you through the progress. Our decentralization, we are improving our platform and accelerating the creator. In April, we refreshed our core creator hub, the IQID IT Creator Center. Early signs are promising the number of creators and uploads are all trending higher. Content with short production cycles, lower production scales, and a good fit for AI-driven creation has seen especially strong growth. For various types of content, the daily average number of uploaded works in the second quarter increased by 30% to 500% compared to the first quarter. In June, daily views for micro-dramas and micro-animations were up by double digits compared with March. Short-form dramas and animation are also gaining Looking ahead, more long-form video categories will join the decentralized content ecosystem as we preserve IT's premium content advantage. We will broaden our content slate by adopting lighter, more flexible content acquisition models. On content production, AI is a AI is substantially optimizing production efficiency and cost structure First, in live action, AI is streamlining the entire workshop workflow For example, we leverage AI in our variety show Her Prime Season 2 to achieve a tenfold leap in rough cut efficiency compared to traditional methods Second, for content tests well suited to AIGC AIGC production can reduce production costs and timelines by 70% to 90% compared with traditional methods while pushing past the physical limits of live action shooting Naturally, AI adoption is faster in Android-CG-having formats. We have launched a multiple AI-generated Internet features field. A major milestone was the July 1st premiere of Mystic Tale Cheetah, the industry's first AIGC Internet feature film to launch with an Internet drama and a field distribution license. This marks the official shift of long-form AIGC from technical testing to standardized large-scale production In addition, year-to-date, we have launched 16 AI-generated short-form drummers under a revenue-sharing model with Trill's Hand Magnet as the top performing title In the second half of the year, we have launched a diversified list of AIGC titles, including multiple IT-invested fields, with an even broader pipeline across expanded categories next year. Currently, we have multiple AI-generated short-form dramas in development. Nadoprom is a pseudo-grade production platform for creators. It rests on optimized third-party and in-house models, plus IT long-standing expertise in professional content. By replacing costly steps with lower compute and tool costs, it lowers barriers and speeds up professional content production. Our strategy is clear. Internally, NADO-PRO has development and production costs. Externally, NADO-PRO explores new revenue streams and gradually converts all professional production capabilities into incremental revenue. NADO-PRO's edge isn't generally AI output. It changes the key parts of long-form production. scriptwriting, shop design, workflows, digital assets, editing, and dubbing into platform features. It delivers an end-to-end workflow, connects talent with content assets, and makes progress repeatable and reusable. WPROY is evolving from a tool into a comprehensive greater ecosystem It links content demand with creators and enables them to realize commercial returns through flexible business model. This activist flywheel commercial returns encourage more content supply. Expanded supply fortifies the ecosystem. A stronger ecosystem scales both creators and works. Powering We believe these advances will improve content production efficiency, lower unit costs, and increase both users and revenue. As we roll them out across all operations and scales, we expect it their contributions to profit and cash flow to steadily materialize. Now, let's move on to the detailed performance in Q2. Let's start with content. Our premium content is well recognized by users and the industry. As the magnolia of work, this room, one of China's top TV owners, Bai Yulanjia, ITE Titles and their creative teams won 14 of 23 awards, including 10 of 11 in the drama category, well ahead of peers. In Q2, our content performed well across formats. In long-form dramas, we continued to focus on female-centric stories. With the help of Jiayi, ranking among this year's top two titles by Ad Revenue, we also reinforce our lead in the suspense zone's general innovation. The suspense comedy form with luck, Bi Zhi Shang Fan Zui, surpassed the 10,000 ITE popularity score and joined the strong membership sign-up. In separate, Suoye Jiangchi, from our IT suspense theater, earned strong reviews. Our original title, Archives, The Nanyang Mystery, exceeded a 9,300 popularity index score, and the non-inclusive, The Epoch of Meiyu, Meiyuqi, topped 8,000. In place supported transform drummers, typically 15-25 minutes per episode with flexible episode counts, we delivered exciting early results. Per enlightened data, our market share doubled from 25% in March to 50% in June. Taking No.1 for the first time, the strong performance was supported by all original The Fireman 10th Anniversary , which reached a peak daily market share of about 60%. Transform titles can offer structural advantages over long-form dramas, potentially reducing average per-minute costs by over 50% and shortening production to approval time-lapse by 30% to 50% In Microdramas, we released premier live action titles like All About Saccharine Lee, Falling For You and Phoenix Blade all resounded well with audiences AIDC scaled quickly under revenue sharing model, accounting for over 50% of all microposthelial and unique visitors in June, while AI-native micro animations expanded with strong sequential growth in views and timestamps. In films, we maintained a diversified slate of different audiences, Originals like The Counterfeit, Weichao Dong'an, The Thin Train, Zhiyue, received positive feedback, well-licensed, their article hits, Packers 3, Fisher and Shun, Blaze of the Garden, Youren, Zoom Top Gear 2, were also well-received on our platform. In variety shows, we launched seven originals in Q2. These are flagship franchises delivering sustained value across a popularity index score of 9,000, reaching a new franchise high. For 10 years, Evergreen IP, the rep of China in 2026, also stood out, surpassing a popularity index score of 8,800. In animation, we further solidified our original offers, the long-running against the gods. Yiqian Xieshen, with Pre-mail in April, topped our animation popularity index chart and brought notable off-platform users back to IT, together with both rulers of DaZhuZan. We now have two long-running titles to keep users engaged year-round. Finally, in children's content, we reinforce our leadership with the return of our original IP SQL DELT squad and the localized adoption of the BBC classic Teletubbies. Next, let me show Our pipeline for the second half of the year Our summer long-form drama features a diversified line-up which includes multiple female-oriented titles like Road to Success , Key to the Phoenix Heart , Overdue , Genius, Girlfriends , Spring of the Blade , and in my prime, Shengfeng Qishi, complemented by the military theme, Windblown Warriors , and the major realistic drama, Forging Justice . For the remainder of the year, Premier, The Great Long March, Changzhong, Take a Nap, Haidaoshu, Rizhi, Small Town Remedy, Xiaocheng Liangfang, and The River of No Return, Liangjing Shuri As for short dramas, our upcoming releases include Death of Winter, Ding Dong Xia De Zui E, There is Zui An, The Five Worlds of Fetal Caves, The sixth group of fetal case, Zuan Liu's womb and the great nobody 2 Da Wang bie huang zhang In films, our pipeline features original theoretical films including Winter and Summer, Yi Lu Chao Ting An, No Goal to the Child, Si Wang Jin Qu Shi Lu, and Prohibition for Misfortune In the second half of the year, on the license front, our pipeline includes a varnishing hunt Xiao Shuleng and the furious Huo Zhuo Yan this summer with I Know Who You Are, But How Dare You, Geng Ama Qing Shu, and Crossing Si Du slated for the latter half of the year. For Internet feature films, which are limited to a maximum Of three chapters, each at least 60 minutes long, our pipeline includes multiple AIPC titles based on the classic IP, The Fireman in Hongbaidu. The first two chapters, A Butterfly Dream and The Dream of Celestial Madam, are sent to launched this summer. Additionally, audiences can also enjoy a strong lineup of live action titles, including Motor Game and Speed and Battle this summer. Shifting to variety shows while deepening audience engagement with established IPs, including The Wrap of China 2026, The King of Sanda comedy season 3 and her prime 2 this summer followed by The Blooming Journey and Wonder Together 2 in the second half For animations, this year could be iQIYI's strongest animation summer today The line of feature, A Good Day to Ascend, Zhuo Shifisheng raised the bias among panellists Lv Xiongmao, Golden Horse, Caishen Dou Zhanlong, and to be a winner, Chengye Xiaohe, alongside the AIGC titles The Legend of King, Hongwu, Tianzi Chuanqi, Hongwu Daji, and The Legend of King, Ji Fa, Tianzi Chuanqi, Ji Fa For children's content, our summer slate features a new season of the popular present god and big, big wolf as well as original AIGC animations like Lala Beat. Looking ahead to the second half of the year, we will roll out the original AIGC animation Wu Sheng Armor and Kamen and Burst Proof Track, tested travel, Xiao Chu, Miao Can Che, Qu Yu Xing Now turning to membership business revenue declined sequentially due to seasonality We are strengthening the business with more refined operations For example, targeted discounts for students and teachers drove a year-over-year increase of over 60% in quota and subscribers within this cohort. We also continue to enhance membership value with all Express packages. In Q2, we launched Express packages across 16 drummers, driving a nearly 80% annual increase in total participants. In addition, we are expanding joint membership with Frequently Purchased, a top-tier brand popular among young users to support membership growth and retention. Next, moving on to advertising business. Our brand has revenue from drama-targeted ads, delivered double-digit year-over-year growth by sector, beauty, personnel, care, and HealthCal recorded double-digit year-over-year growth. We also depend on use of AI in operations and now support customized AIGC ratings. For performance ads, when we return to year-over-year growth, we continue to optimize advertising needs. Revenue from small and mid-sized advertisers delivers strong year-over-year growth. Sector-wise, revenue from advertisers in AI applications, instant retail, and e-commerce recorded strong year-over-year growth, with further strengthened results with with AI by upgrading our proprietary large models, improving targeting precision and driving revenue. Moving on to our business performance in regions outside of mainland China. In Q2, this business sustained rapid growth. Membership revenue grew 40% year-over-year. Portuguese and Spanish-speaking regions demonstrated robust growth. Notably, membership revenue from Brazil and Mexico surged by over 215% and 150% year-over-year, respectively. Arabic-speaking markets also showed strong potential with membership revenue increasing 85%. The global influence of C-Drama continues to expand. In Q2, membership revenue from C-Dramas grew over 40% year-over-year. A store-out hit was Faith Truth You, Jiang Ou, Tian Cheng. It topped our international platform. Rankings across 14 regions in its first week and stayed in the top 10 of the three drummers' chat for 10 consecutive weeks. On the local production front, we are accelerating our pace. Our first original Indonesian drummer, the other sister, gained strong traction through Google Chats. became the number one local internet drummer in Indonesia in the first half of 2026. Metal drummers were another major highlight, serving as the second largest membership revenue contributor, following long-form drummers. In Q2, membership revenue from this category grew over 300% year-over-year. This momentum was partly fueled by stronger original production. Notably, originals rose to three of the top ten contributors to membership revenue. AIGC was another key driver of our overseas micro drama expansion. In Q2, we launched AI-generated titles in multiple languages, including English, Thai, and Korean. Our original titles delivered exceptional efficiency, recovering production costs within the same quarter and demonstrating stable profit potential. We are scaling supply through both originals and external partnerships. In May, we released our first original DEI-generated micro-drama overseas. which quickly ranked in the top three for micro-drama revenue on all international platforms. The title was produced by NATOPRO, which helped us establish full-fledged AIGC know-how, laying a strong foundation for scale production. In parallel, We are proactively affording external partnerships to connect overseas script production and tool ecosystems, including NanoPro, unlocking capacity and scaling AIGC supply. Beyond content, we are driving growth with joint memberships. We have partnered We are excited about the future potential of our overseas business. With that, I will hand it over to Ying Tian, our new CFO, to walk you through the financials.