iQIYI (IQ) Q4 2025: Overseas Membership Revenue Soars 40%, Unlocking Second Growth Engine
iQIYI’s fourth quarter marked a pivotal shift as overseas membership revenue surged 40% YoY, accelerating the company’s diversification beyond its core China streaming business. AI-driven cost reductions and a multi-format IP strategy are reshaping both content economics and global reach, while the launch of IT Land signals early traction in experiential monetization. Investors should watch for sustained margin gains and international scale as AI and new business lines mature.
Summary
- AI-Led Cost Structure Shift: Proprietary AI models are rapidly reducing content production costs across multiple genres.
- International Expansion Momentum: Overseas membership and microdrama adoption are outpacing domestic growth rates.
- Emerging Experience Business: IT Land’s early success positions iQIYI for IP-driven offline monetization in 2026.
Performance Analysis
iQIYI closed 2025 with total revenue growth returning both annually and sequentially in Q4, driven by a diversified content slate and strong execution in emerging business lines. Membership services remained the largest revenue stream, though seasonality led to a slight sequential decline. Online advertising rebounded on the back of premium content and e-commerce events, while content distribution saw a double-digit sequential lift due to increased cash transactions.
Cost discipline was evident as content costs fell 5% sequentially—a direct result of a more selective, quality-focused acquisition strategy and AI-driven efficiencies. Operating expenses remained tightly managed, and the company delivered positive non-GAAP operating income, with a modest margin. Cash and short-term investments totaled 4.7 billion RMB, providing ample liquidity for ongoing investment in both technology and international expansion.
- Membership Revenue Leadership: Membership services accounted for the majority of revenue, with subscriber numbers at record highs and annualized growth exceeding 30%.
- Advertising Rebound: Brand advertising and variety show sponsorships posted double-digit annual growth, reflecting improved advertiser mix and AI-enhanced delivery.
- Content Cost Efficiency: AI-native production and targeted content acquisition yielded lower costs and shortened production cycles, supporting margin stabilization.
International and experiential business lines are now material contributors, with overseas revenue and IT Land both showing strong early growth and validation of new monetization avenues.
Executive Commentary
"Our overseas business has evolved into a sustainable and scalable second growth engine, powered by accelerated organic momentum. In 2025, membership services revenue increased by over 30% year over year, with growth accelerating to 40% in the second half of the year."
Yu Gong, Founder, Director & CEO
"Content cost was 3.8 billion RMB, down 5% sequentially. As we adopt a more accurate content acquisition strategy centered on quality, total operating expenses were 1.4 billion RMB, up 2% sequentially."
Ying Zeng, Interim CFO
Strategic Positioning
1. AI-Enabled Content Production
iQIYI’s proprietary AI tools, such as NadoPro, are now integral to content creation, reducing production costs by up to 90% for microdramas and animation. AI is also accelerating script-to-screen timelines, making the company more nimble and competitive in both domestic and global markets.
2. IP Franchise and Multi-Format Expansion
The company is transitioning from a hit-driven model to evergreen IP franchises, exemplified by “Strange Tales of Tang Dynasty” and “The Punishment 2.” These franchises are being extended across long-form, microdrama, animation, and offline experiences, maximizing monetization and engagement.
3. International Scale and Localization
Overseas markets now represent the fastest-growing revenue segment, with tailored content mixes and AI-powered localization (translation, dubbing, and marketing asset creation) driving adoption. ARPU in developed international regions now exceeds domestic levels, and microdrama is emerging as a key differentiator versus Western platforms.
4. Experience Business and Offline Monetization
IT Land, iQIYI’s IP-based immersive park, launched in Yangzhou with strong initial ratings and broad demographic appeal. Management sees potential for a 100% increase in consumer product revenue as locations expand and product offerings deepen, positioning offline experiences as a material future growth engine.
5. Advertising Model Evolution
Brand and performance advertising both benefited from AI-driven optimization and a more balanced advertiser portfolio. Microdrama and micro-variety formats are attracting new brand partners, further diversifying the revenue base and reducing dependence on traditional ad models.
Key Considerations
iQIYI’s Q4 signals a business model in transition, with technology, IP, and international scale reshaping the company’s risk and opportunity set.
Key Considerations:
- AI-Driven Margin Opportunity: Rapid adoption of AI in production is compressing costs and could structurally improve margins if scaled across more genres.
- International Diversification: Overseas revenue growth is outpacing domestic, but sustainability depends on continued localization and competitive ARPU levels.
- IP Monetization Depth: Multi-format IP extension (drama, microdrama, animation, merchandise, offline) is increasing lifetime value but requires careful franchise management.
- Offline Monetization Validation: Early IT Land results are promising, but scale, repeat visitation, and consumer product attachment rates will determine economic impact.
- Ad Revenue Mix Shift: Growth in micro-content and AI-optimized delivery is attracting new brand dollars, but ad market volatility remains a watchpoint.
Risks
Key risks include: potential overreliance on hit IP franchises, volatility in international content preferences, and execution risk in scaling experiential and consumer product businesses. AI-driven cost savings may be offset by rising competition as barriers to entry fall, and regulatory or platform shifts could affect monetization models, especially overseas.
Forward Outlook
For Q1 2026, iQIYI expects:
- Continued international membership revenue growth, targeting sustained or accelerated YoY rates.
- Further margin improvement as AI-driven cost efficiencies scale across more content categories.
For full-year 2026, management aims to:
- Strengthen domestic core with higher-quality original content and deeper membership/advertising monetization.
- Expand international and experience businesses as dual engines for long-term growth.
Management highlighted AI’s transformative impact on content cost structure and the upcoming IT World Conference in April as a catalyst for unveiling new initiatives. Watch for:
- International ARPU and retention trends
- Offline experiential revenue ramp and consumer product attachment
Takeaways
iQIYI’s Q4 demonstrates a business in active transformation, with AI, IP, and international scale unlocking new levers for growth and profitability.
- International Growth Engine: Overseas membership and microdrama are gaining share, validating the company’s localization and content strategy.
- AI-Driven Efficiency: Proprietary AI models are compressing costs and accelerating production, with early evidence of margin expansion.
- Experiential Monetization Watchpoint: IT Land’s initial traction is promising, but scaling and repeat economics will be critical for long-term impact.
Conclusion
iQIYI enters 2026 with renewed momentum, leveraging AI, global expansion, and multi-format IP to diversify revenue and compress costs. Execution on international scale and experiential monetization will determine whether these new engines can meaningfully augment the core business and lift profitability in the coming years.
Industry Read-Through
iQIYI’s rapid deployment of AI in content production and localization signals a broader industry inflection, where traditional cost barriers are falling and multi-format IP strategies are becoming essential for platform differentiation. Streaming peers and content platforms should note the accelerating shift toward AI-native content, the rising importance of international ARPU diversification, and the potential for offline experiential models to supplement digital monetization. Global players will need to adapt quickly as the boundaries between content creation, distribution, and merchandising continue to blur, and as emerging formats like microdrama and AI-driven animation reshape audience engagement and revenue streams.