Shares in iQiyi Inc. (Nasdaq: IQ) slipped 15% in trading Tuesday on a decrease of 3% in the company’s total revenue in the third quarter.
China’s top entertainment platform, based in Beijing, said in a statement that its revenue in the three months through September decreased 3% year-over-year to $1.1 billion. It had 104.8 million subscribing members as of Sep. 30, of which 99.5% were paying members, iQiyi said.
“Our business performed fairly well in the third quarter and in-line with our overall expectation,” iQiyi’s founder, director and chief executive, Yu Gong, said in the statement. He also said, “Despite the turbulence this year, we have leveraged a number of strategies, such as launching theatre-themed content and upgrading our membership portfolio, to improve our service and to better serve our users.”
The company reported that revenues in its online advertising and content distribution lines declined. The ads business fell 11% year-over-year, was hurt by “the challenging macroeconomic environment in China,” iQiyi said. Revenue from content distribution, down 42%, was also negatively affected by fewer content titles that distributed to other platforms during the quarter, according to the report.
The report shows the cost of revenue was $937.2 million, falling 22% from last year. The majority of revenue costs were for new content ($692.1 million).
Net loss in the third quarter reached $173 million, or 24 cents per share, according to the report.
Xiaodong Wang, the chief financial officer of iQiyi, said, “We continued our efforts on exploring diversified contents and innovated products with better ROI. Meanwhile, during such challenging times, we also managed our expenses more cautiously and efficiently. We believe our arduous efforts can lead to solid future growth in the long run.”
In the fourth quarter, iQiyi said it expects to reach revenue of between $1.07 billion and $1.14 billion, representing a change in the range of -3% to 3% year-over-year.