iQiyi: The main goal this year is high-quality growth and will make full use of generative AI

iQiyi today released its financial report for the fourth quarter and full year of 2023 as of December 31. Total revenue in the fourth quarter was 7.7 billion yuan, a year-on-year increase of 1%; Not in accordance with US GAAP, net profit attributable to iQiyi was 682.0 million yuan, compared with 856.4 million yuan in the same period last year. Throughout 2023, total revenue was 31.9 billion yuan, an increase of 10% from 2022; net profit attributable to iQiyi was 2.8 billion yuan, while net profit in 2022 was 1.3 billion yuan.

After the release of the financial report, iQiyi founder and CEO Gong Yu, CFO Wang Jun, chief content officer Wang Xiaohui, chief technology officer Liu Wenfeng, senior vice president of membership business Duan Youqiao and film and overseas business Senior Vice President Yang Xianghua and other company management held a conference call to interpret the key points of the financial report and answer questions from analysts.

The following is the transcript of the analyst Q&A session:

Xueqing Zhang, analyst at CICC Securities: There are good advice on other long video platforms. In a case of content, what will be our strategy and core goals for 2024? What indicators are we most concerned about? In the long run, what can become new growth points?

Gong Yu: In 2024, our main goal is high-quality growth, that is, revenue and profit grow at the same time, and the growth rate of profit is higher than the growth rate of revenue. This goal was set in the fourth quarter of 2023. So far, neither this direction nor the specific numbers have changed.

There are several key points to focus on. The first is related to content, including attracting more outstanding talents so that they can create better and more content; the second is to continue to build and optimize our Scientific evaluation mechanisms, including rules, system optimization, make more accurate predictions and judgments; third, the intelligent production system is more optimized to enhance the industrialization of content production.

In addition to regular content business, we also focus on new businesses and strive to cultivate and incubate a second growth curve. The new business I am talking about,generally includes overseas business, online or offline business related to IP value-added services, and possible technological innovations brought about by generative artificial intelligence.

Wang Jun: For the financial data in 2024, we mainly focus on two keywords: growth and financial health. We have mentioned high-quality growth many times in discussions with investors. The meaning is self-evident and I will not go into details here. What needs to be highlighted today is that you will see continued improvement in the company's financial health in the future. Our operating cash flow itself has shown very strong growth, which has reduced leverage on iQiyi's balance sheet and also brought about Comes two benefits.

First, it provides us with a clear roadmap to reduce capital costs. Stable and robust cash inflows can not only be used to repay the company's debt, but also open up a low-cost capital pool for the company, including previously unavailable Obtain long-term loans and investment-grade credit products. We can use these low-cost capital products to replace previously high-cost debt, thereby providing the possibility to reduce the overall discount rate of long-term trading models. If investors agree with my point of view, then in the coming period starting from this year, everyone can focus on the progress of net profit and operating profit. The changes in our net profit will reflect the company's progress in de-risking and deleveraging. value created.

Secondly, this series of changes will also provide support for increasing shareholder returns, which I will not elaborate on here. Overall, this year’s financial goal is to achieve a healthier asset structure and stronger profitability levels for investors.

Goldman Sachs analyst Lincoln Kong:I have a question about generative artificial intelligence technology. How does management view this latest technology, including the recent Sora, on the overall film and television industry? What kind of impact will it have, and what impact will it have on iQiyi? What are the company’s plans to invest in this technology?

Liu Wenfeng: We are very optimistic about the development of generative artificial intelligence technology and the opportunities it brings to the film and television industry. We believe that by actively applying this technology, the efficiency of creation, the level of creation and decision-making can be greatly improved. We will make this technology fully effective in the process of content planning, development, production and promotion. The rapid development of generative artificial intelligence technology allows artists to create higher-quality works with higher efficiency. In particular, we see that generative artificial intelligence technology empowers the creation and production of animation content, which has the opportunity to break the previous production capacity barriers, thereby driving changes in the industrial structure at a creative level.

We have been paying attention to the latest developments in the generative artificial intelligence industry, and have also actively established cooperative relationships with domestic and foreign leading technology companies to apply the latest technology in film and television production, especially iQiyi’s huge film and television data Combine with large models for training and fine-tuning. For the development of vertical applications of generative artificial intelligence in the film and television industry scenario, we will increase investment in research and development and application, and use these developments and comprehensive upgrades to serve iQiyi's intelligent production system to empower the creation of iQiyi's professional film and television content.

Bank of America Merrill Lynch analyst Lei Zhang: I have a question about content. We have noticed that the content of the entire industry has generally improved in 2023, especially when everyone compares Pay attention to some of the top quality content. I would like to ask how the management views the current competition in the overall content industry? How should iQiyi maintain its advantage in content in 2024?

Wang Xiaohui: Fierce competition in the market has always existed, but what everyone is competing for is always the sustainability of the supply of high-quality content, and the balance between content quality and commercial income. In addition, funding is not the only barrier to competition. iQiyi can continue to be ahead of its industry competitors because of the accumulation of talents, control of industry resources, scientific content review and management mechanisms, and the help of business intelligence systems. All factors are indispensable.

The company's core content creation values ​​and goals are: first, to make works with high public recognition and good market returns; second, to make innovative and high-quality content; third, to continue to focus on content online efficiency, volume of input content, and social insights. In terms of our core content dramas, the quality of our content reserves has also been significantly improved. Headline projects are the key to our competitiveness, and our reserve volume also maintains the leading level in the industry. This year, among the self-made and exclusively purchased drama content we plan to launch, the number of head projects is expected to account for more than 50%.

The above is the detailed content of iQiyi: The main goal this year is high-quality growth and will make full use of generative AI. For more information, please follow other related articles on the PHP Chinese website!