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DATE
Wednesday, May 21, 2025 at 7 a.m. ET
CALL PARTICIPANTS
Chief Executive Officer — Yu Gong
Chief Financial Officer — Jun Wang
Chief Content Officer — Xiaohui Wang
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RISKS
Content costs rose 10% sequentially to RMB 3.8 billion, which management said "may lead to short-term costs" as they pursue long-term growth strategies.
Online advertising revenue declined 7% sequentially to RMB 1.3 billion, attributed to "macro headwind seasonality."
Overseas business revenue "is still at a relatively low percentage" of total revenue, with future growth dependent on expanded financial resource allocation, which management cited as a limitation.
TAKEAWAYS
Total Revenues: RMB 7.2 billion, up 9% sequentially, driven by long-form drama performance and diversified content offerings.
Membership Services Revenue: RMB 4.4 billion, up 7% sequentially, supported by key drama releases.
Online Advertising Revenue: RMB 1.3 billion, down 7% sequentially, reflecting seasonal macroeconomic impacts and lower ticket volume.
Content Distribution Revenue: RMB 628.7 million, up 55% sequentially, driven by a greater volume of distributed titles.
Other Revenues: RMB 830.9 million, up 24% sequentially, driven by growth in certain business lines.
Non-GAAP Operating Income: RMB 458.5 million, up 13% sequentially, with a 6% non-GAAP operating margin.
Operating Cash Flow: Net cash provided by operating activities was RMB 339 million, marking twelve consecutive quarters of positive operating cash generation.
Content Costs: RMB 3.8 billion, up 10% sequentially, reflecting higher investment in premium original dramas.
Total Operating Expenses: RMB 1.4 billion, up 8% sequentially, primarily due to additional marketing spending.
Convertible Debt Reduction: Outstanding principal balance declined from RMB 2.9 billion to RMB 1.17 billion year over year, indicating proactive debt management.
Micro Drama Growth: Over 300% increase in daily time spent and 110% increase in daily unique micro drama users when comparing December to the first week of April.
App Segmentation Strategy: The main iQIYI app now focuses on paid micro dramas and long-form video subscriptions, while the iQIYI Lite app supports free micro dramas and advertising monetization.
AI-Driven Product Enhancements: The launch of the AI-powered "I Jump" feature allows users to skip video highlights, and AI chatbots have facilitated over one million interactions since their launch in April.
International Revenue: Premium content drove pricing revenues up 48% year over year.
Micro Drama Monetization: Top titles surpassed RMB 1 million in revenue sharing within one week, while the average production cost per micro drama was under RMB 1 million.
Operational Profitability Overseas: Management stated the overseas segment has been profitable over the past couple of years.
SUMMARY
iQIYI, Inc. (IQ -8.33%) management outlined a strategy to grow market share in both long-form and micro drama formats while leveraging AI features to enhance user experiences and support revenue diversification. International expansion continued, but future overseas growth depends on increased investment and the gradual scaling of local content and operations across markets.
Chief Financial Officer Jun Wang said, "the result of our efforts to optimize the capital structure is very clear," emphasizing a sequential increase in non-GAAP operating income.
Chief Executive Officer Yu Gong stated future investment in strategic areas such as content and user experience "may lead to short-term costs," but is designed for sustainable, long-term value creation.
Management noted the sequential declines in advertising revenue were due to "macro headwind seasonality" and positioned upcoming premium content as a catalyst for a rebound.
Chief Content Officer Xiaohui Wang stated their drama strategy would now focus on "releasing high-quality shorter episodes of premium dramas" along with increased quantity and diversity of titles.
INDUSTRY GLOSSARY
Micro Drama: Ultra-short scripted video series, often produced at low cost, designed for fast consumption and high user engagement, typically via mobile apps.
Convertible Debt: Bonds or loans that can be converted into a predetermined amount of the company’s equity, generally used as a financing mechanism.
Non-GAAP Operating Income: Earnings from core operations excluding costs determined not to reflect normal, recurring business (e.g., stock compensation, restructuring), used as an alternative performance measure.
AI-Powered User Features: Platform enhancements leveraging artificial intelligence to personalize video experiences and automate user engagement tools (e.g., AI video highlight navigation).
Full Conference Call Transcript
Yu Gong: Hello, everyone, and thank you for joining us today. We delivered our fourth quarter, gaining sequential growth in both total revenue and profits. This was built by a strong response in our long-form premium content and strategic investment in vertical format, macro dramas. Actually, it's actually investing this position as a go-to platform for users, making a blend of long-form and short-form entertainment. Creating exciting opportunities for future commercialization and this will strengthen our confidence and commitment to drive even deeper upgrades across our business model and the content ecosystem in response to evolving market and user demand.
For the call long-form video content, we are committed to delivering engaging and ultra-solid content as we reflect in our strong iron on top-tier drama. Notably, getting away from our flagship Langham filter brand The Path, the ten thousand IT companies in Dax Squad, where the demon hunters romance we'll do and move like this takes. Alright? Are you attention? Both achieve this call? Okay. Over nine thousand and six hundred. Looking ahead, we are dedicated to focusing on premium content with strong commercial value while also upholding excellence. Additionally, we will further enhance our production mechanism to deliver shorter, faster-paced, and more competitive storytelling than the softness strongly with all of this.
So this user-centric approach, we are confident in our ability to unleash our full creative potential and foster our content ecosystem for micro dramas. We made notable progress on HE Light microcombers, now the second in terms of daily time spent and the first in the number of daily unique visitors. This clearly shows they are growing in captivating audiences, reinforcing our confidence in further unlocking their full potential. Moving forward, we are committed to expanding our microgrammar for the federal placing a strong asset on premium micrograms by enhancing original production and acquisition capabilities. At the same time, we aim to effectively monetize their growing traffic through advertising and e-commerce.
Beyond our content ecosystem, we are leveraging technology innovation to improve user experience. A standout example is the launch of our AI part I jump feature, Telkom, which transforms how users engage with long-form videos with a simple swipe up all done on their mobile screen. Users can afford less escape between key highlights in each episode without missing any exciting moments. Delivering a user-centric microgramer-like experience tailored to the enterprise. Pace. Where we have it. Highlight points. Are generated by AI-based videos on the personalized behaviors of each user. As all the investors are aware, the market is becoming increasingly unpredictable as it continues to evolve.
However, in fact, what I know environment, the ability to create sustainable value is emerging as a well and available asset. With this implies we are wrapping up our investments in strategic areas such as enriching our content ecosystem and enhancing the user experience. While this investment may lead to short-term costs, they are designed to deliver long-term benefits. Now let's move on to the details of our core business segments. Starting with long-form videos, which serve as the foundation of our content ecosystem. Maintain leadership in those core drama categories. At the current top spot in terms of total viewership market share during the quarter. Or coming through in licensed data.
Our strong performance was highlighted by Rakuten in our seller mode as we have now ten days of five distinctive signature brands. Each featuring unique company genres. In the suspense genre, our brand achieved a remarkable milestone with a relief of a Okay? As the first title to surpass the ten thousand IT chain in data score. It also generated the third highest single and sole revenue in our history. Just behind the mega hit there's no cloud and my hero husband, In the government general, Lavalanche Hotel, brand made notable progress in this quarter.
Expanding our portfolio of content for the net female audiences with the release of four captivating titles autograph, Our in-house produced a fantasy drama of worldwide. Mid-stage nine hundred and six nine thousand and six hundred or more than Romano's drama, the FSC. I n e was not only a success in the domestic market, but also the best performing modern drama, c drama. Overseas platform. All masterpiece sales are at the edge of town. For the type of thing, that's for the specializing in cancer. Right? Adoption and really take direct debuted. Is for the title North War. The drama adapted from mobile literature of past winning novel. Has further strengthened our reputation for top-notch drama.
Lastly, our micro custom filter and last one Delta, Xiao Ru Yu Chong. Focus on innovation ignore video dramas errors. With and accommodate. With activity. Building on the success of past the huge such as to the with another with our time. And the greater normally at one p point o. This brand accepts to release an expansion client here. Turning to Moby's. We continue to dominate the category during the quarter with the highest viewership market share according to investment. Premium content has a strong long tail effect. It can it's sub twenty five either that's true. During Chinese New Year.
The firm boosted the viewership of the original Sneaking as the most watched movie on our platform this quarter. In addition, our original production fleet forecast logo to achieve the strong brand new and build shape. Its passion. Right? Among male users to action and the prime Gerald. When it shows during the first of the quarter, a flagship multi thousand IP become a far more stable fee. Twenty percent made a strong comeback. Sustaining strong traffic and positive quarter of month. Our brand new IP the blooming journey, it will benefit excels with a key top line index score of over eight thousand. Attracting audiences in lower-tier cities. And among older audience beyond. Commercial financial viewers.
In terms of animations during the first of the quarter, we continue to improve our production capability. Key titles such as super pure twenty-one and the growth of season food. Generated positive user feedback during the quarter. Moving on to our content strategy and the pipeline. In our core drama category, our focus is on creating a well-evidence of content mixed with that. Online commercial success with database. I send it Excellent. We are committed to three key drivers, realistic the spend, and the signal focused drama. To cater to past the pace view habits, we are enhancing our content creation strategies. This includes reducing the episode cost for long-form drivers. And increasing the number of high-quality drop dramas.
With each episode lasting five to twenty minutes. This change is well explained. The volume of diversity of our offering. In which the user experience and the draft deeper audience engagement. Our drama pipeline features an exceptional lineup of post-care content. The already released that these are hunters' rawness and I mean, log in. Path delay. Quite a bit. Gather. One spread. Okay? Adding to that, I said asset. Asset segment, the highly anticipated field in Jiangxi a dream with a missing a dream. Will be released soon. In the general, Our results debuted breaking the shadow. And alive. That can also look forward to upcoming releases including justifiable defense, And form with luck advantage from the with now.
No actual crime. Additionally, the new science fiction suspense drama was a wonderful work by Indian will be released shortly as well. Online app of realistic drama includes highly anticipated title. Such as the swiping slack. We are increasing investments in operational production focusing on theatrical releases with strong focus on the sequential multiplier. Our low original production manual. Have already actually have the box office Randall. Of over RMB five hundred and forty million. We have six more titles scheduled for the article release soon as the rest of the year. Including the Shadows Edge of controlling Additionally, we are boosting support for online movies. With revenue sharing model.
That was line up include eight Orange Store, online movie, such as ultimate mission, Northeast brother student street. Hong Kong. Covering popular general such as mathematics. Martial arts, comedy, and action. For licensed theatrical movie, we launched several hits. Including Legends of the Conquer and detective Chinatown. One nine zero Tong Hai Yuu. Both of which have successfully their actual rents during the Chinese New Year and now and now performing well on our platform. So where it shows we will maintain our focus on producing top-quality programs. While introducing exciting new content. This includes sequels to a beloved classic like and the draft of China two thousand and twenty-five.
Alongside flash IP such as Xing Acer, Yaro, Hingsheng, and the real quality show. As now as you. Building on the successful building on the success of the growing journey. We also plan to launch a second season data in this year. For animation, we are dedicated to increasing revenue contribution from our original production. Especially high-quality Chinese animation. We also aim to broaden our collection of enduring viruses and optimize our operations. To maximize IP value. Major titles to be launched include animation, over the divide rules. Empress, Moreover, we are invited to announce that the highly acclaimed Japanese animation One Piece, control. Have resumed error in the dedicated fund base.
For children's conference, we will concentrate on IP commercialization and develop our comprehensive IP ecosystem. That spans the IPO life cycle. Offering all edge cloud services tailored to parents, child, audiences. Undespected title include Princess Doran Yi season four, Cabinet on the fourth. Food truck, Xiaopu which have demonstrated the potential using our Continental System harnessing, this powerful momentum. We are quite the two amplifying our investments in micro drama content. And strengthening user acquisition efforts. We have three key objectives that we attracting our user base and boosting business. Resilience by increasing microgrammers into our content ecosystem. Secondly, we proceed micro dramas as a catalyst for attracting new users and a driving membership revenue growth.
Especially in under a lower-tier cities and among older audiences. We are actively exploring monetization opportunities for our micro drama soon initiative. Benchmarking and commerce. We have successfully achieved the first objective by revamping our apps and the rapid delay, expanding our macroeconomic and fellow to over fifteen thousand titles now. We have available for free and the other half exclusive to members. Of react to us, provisioned differently in terms of design and the target. Audience. The main IT app focuses primarily on long-form video and mainly do this subscription model. With microgrammers serving as complementary value add. The IT lite app, properly focus on free micro dramas and many types. Then. Some advertising and e-commerce.
This meaningful progress has driven impressive growth in both daily build time and unique data for microgrammers with substantial increases of over three hundred percent and one hundred and ten percent with Pactiv Lab. When comparing the first week of April to December. In the future. Actually, last will be represented at IKEA MacKoh dramas and we are confident that this transformation will tap into its full potential. For a pioneer, the concept of dedicated Chinese New Year slate from microgrammers. Released in twenty-eight premium titles. Hit like my sweet home and the place come into my park. By consistently delivering premium customer, we are reinforcing our position at we are going to plan for macro dramas.
As a micro drama, we continue to evolve the growing user demand for premium type of online profectile with our core SaaS with export tax increment trans brand and a loyal user base. We are uniquely positioned to cover your life. On this plant. Coupled with all extensive resources. Talent, team, and advanced technologies. We deliver unique value to the macroeconomic industry. With that, we are continuing our select in pacing enhancing our ability to produce original mark micro drama. Well, it's probably innovative gyros to broaden our content offering. With an initial tech include notable projects such as that are around one hundred classic Hong Kong movies and producing and an extensive series of legal educational content.
All to be developed as micrograms. Additionally, we are integrating technologies like AI and workflow production to improve both efficiency fair and correlated Building on this initial case, we are collaborating with partners to foster a thriving industry ecosystem. In March we hosted the first half microclimate delivery flight light. A thermostat, a blue together hundreds of farm maintenance. Actors creators, and industry professionals. The event sparked meaningful interest from our head our headings eager for future collaboration. As the first-ever ceremony, dedicated to the macroeconomic industry, is not only enhanced output profile, but also reimbursed our low as our key industry player. Moving on to membership services.
Revenue regained growth momentum during the quarter, increasing seven percent in the sequential rate. To RMB four point four billion. This will help healthy growth in subscriber base in q one. Supported by the strong performance of key titles such as Jupin'Away, more life, mistakes, and the number four. I will try your program number remain analysis and thanks to our improved operating initiatives. Our strategy is focused on developing a membership business that caters to a broad audience. Expands our subscriber base delivers enhanced value, and ultimately accelerates revenue growth as the core of membership business is essential content. Is drive We strive to boost once. Of number acquisition and retention by maintaining consistent, low operating long-form content.
And engaging macro farmers. We continue stressing our membership plans in November, delivering a greater value to our membership members. Yeah. Refining product position, comparing. To connect with our broader user base. The family-oriented premium app segment plan saw excellent growth after we introduced free unlimited ease. Price package benefits. Means well or add a supported basic membership plan. Designed to offer exceptional value and a lower price. Which historic adoption price. Younger generation and users from low care IT. Leave this service in new members with many join as the first-time subscribers. We focus on enhancing web browser larger chain and the driver upgrades.
Long-term members now enjoy greater discounts while premium at seminars members receive free price package to conversions with expanded options like express package. Contents the insurance program, tomorrow. Who purchased this, with added benefit. This step makes all membership services more attractive and available supporting steady revenue growth and a strong membership community. Moving on to advertising business. AdWords advertising revenue in the first quarter is creates a sequential decline of one point three billion other than the macro prior q one and the ticket volume, low season compared to q four. For burner app, our top-tier commerce and the warranty showed remain strong for analog handsets. With content-driven and over half of the revenue.
Notably the SQL to on cloud six IP become a further c lead advertising sales while the new IP are growing in Germany. And the Panasonic camera. Mode line, mid-chip. Generated, widespread positive feedback, looking ahead. Brand and the ads are showing encouraging signs of a potential rebound driven by premium content we plan to drive and sell by leveraging premium dramas and a generous perfect Telstra brand. So while you showed with our focus on delivering high-impact projects and expanding vehicle opportunities for classic IPs. Additionally. We aim to launch a money path meaning warranty shows, micro climbers, and customized advertising programs, providing innovative and tailored advertising solutions.
On the performance side, we captured buckets from new high-potential customers in the Internet services and allocation sectors Further, that was refined. Other times, time service. In addition. Incorporating API into advertising content creation has boosted our ROI by over twenty percent compared to last developed with our AI The future focus is on continuously enhancing our technologies and the platform capabilities to drive new revenue growth across Internet service. Services. Ecommerce, gaming, and application. Furthermore, we plan to see its growth opportunities in microcommerce and deepen the integration of APIs, maximize monetization efficiency.
Commitment to enhancing ad efficiency is further demonstrated by the recent launch of our API-driven Qiju app placement platform, by integrating results from both our long-form and micro drama ecosystem This platform imparts both brand and performance as with sophisticated smart marketing solutions. Moving on to technology and products. We continue to announce video production soon in the realization. Enhancing both efficiency and creativity. For example, by scaling up the reuse of digital assets, in major original dramas like Batman, Disney, Fox, And without that, we have a luxury with those production time. And cost without a confirmed missing quality.
Moreover, our cutting-edge tech to speech TTS, doubling solutions designed to combine emotion of pain as exhibited have already been applied to the integration upgrade for both long-form and macro dramas. On the user front, we are harnessing symbols. AI will redefine the entertainment experience in addition to a newly launched I jump filter measured earlier. They also interest deal with other AI-powered products to enhance user engagement. Our AI-powered chatbot platform called OVA, Launched in the last April features around one thousand AI characters from our popular IPs. And have engaged with users of over one meeting. One hundred and million tons. Recently, we introduced the personal AI assistant Holdong. Within the platform.
Which users can use to do to discover content discover cloud, and control playback. Additionally, we launched our senior mode feature even for Motorola. Builders. Complain about earlier paid mode divided for younger audiences. Moving on to our business performance in widgets, outside of Midland China. We maintained strong growth momentum in the first quarter, with social revenues increasing by over thirty percent year over year and the average daily number of fast charging members reaching new high. Moreover, we are thrilled to see dramas gaining traction with our wider global audiences. According to Google trends data worldwide search for Deepgram. Please select. Reached a five-year high even surpassing first before Karim Drama.
Or Original production have planned a key role in this growing international affair. With four of the top ten overseas drama the past six months. Coming from iQIYI, Inc. Our modern drama the best of team. Fast run cars, on our international platform is publishing a new revenue benchmark. For this channel. Additionally, our original Chinese animation super pro also achieved the highest single data for Chinese admission within the first week of over six release The influence of our premium content travel and our pricing revenues by forty-eight percent year over year. Our original Thai drama yield one gained a substantial traction from brand advertiser, while our training variety show become a farmer Also, to interest from overseas class.
Looking at We are focused on expanding our investment in original production to create high-quality content. Tailored to international audiences. While integrating five core dramas into our global confluence. At the same time, we aim to deepen collaboration with local partners and further enhance our brand improves across key market. Last but not least, actually, consistently pushed the boundaries of business innovation and evidence by our pursuit of new opportunities and exploration of untapped horizon. We are leveraging cutting-edge digital technologies to seamlessly integrate all IPs depending on their lifecycle and unlocking greater control. We recently expanded our footprint to offline experience part. The first IT is LAN is set to open in year.
With a second project underway in Kaifeng, in addition of VR immersive sensors are expanding rapidly. Feature popular IP factor, and Three details of Tom Dennis j. And the last between Phil and the Devo. Tangential These VR alternatives are now available in over fifty stores. Across nearly thirty cities. We believe this immersive entertainment experience will deepen user engagement with our content and IPs. On the e-commerce front, the rest of new content formats such as microgrammers combined with consumption they narrow down the vertical content and use it. Opportunity in the sector to cultivate the car pick her life. On this opportunity. We have launched trail operations for IT e-commerce.
By leveraging our robust IP portfolio intensive artist resulted and high-quality member base. We hold distinct along the edge in this space. This year, there are concentrating on building a solid foundation for content retrieval in e-commerce. With the goal of driving accelerated growth and in the year ahead. Continue to evolve, we remain committed to investing in our content ecosystem and elevating the user experience. This is a strategic effort that enables us to accelerate our content. Flywheel traffic, resilience, they are a foundation for sustainable growth. And the delivery. Long-term value to all six holders. Let me pass on to Jun Wang for go through our financial performance.
Jun Wang: Thank you, Mr. Yu Gong, and hello, everyone. Now let's take a look at the Q1 key numbers. In the first quarter, total revenues were RMB seven point two billion, up nine percent sequentially. Membership services revenue reached RMB four point four billion up seven percent sequentially. The increase was primarily driven by the strong performance of the long-form dramas. For online advertising revenue, decreased by seven percent sequentially to RMB one point three billion primarily due to macro headwind seasonality. Account and distribution revenue reached RMB six hundred and twenty-eight point seven million up fifty-five percent sequentially. Driven by more common titles distributed during the quarter.
Other revenues increased by twenty-four percent sequentially to RMB eight hundred and thirty point nine million primarily driven by growth of certain business lines. Moving on to costs and expenses. Content cost was RMB three point eight billion up ten percent sequentially, driven by a higher number of premium dramas launched during the quarter. Total operating expenses were RMB one point four billion up eight percent sequentially primarily driven by higher marketing spending. Earned profit and cash flow our non-GAAP operating income was RMB four hundred and fifty-eight point five million up thirteen percent on a sequential basis. The non-GAAP operating margin was six percent.
The net cash provided by operating activities totaled RMB three hundred and thirty-nine million, positive for twelve consecutive quarters. As of the end of the first quarter, we had cash equivalent restricted cash short-term investment and the long-term restricted cash included in the prepayment and other assets the total of RMB five point seven did. In addition, the company had a loan of five hundred and twenty-two point five million US dollars to PAG recorded under amount due from other parties. When reviewing our financial performance, the result of our efforts to optimize the capital structure is very clear.
Over the past two years, we have acquired our time to this goal through a series of initiatives to lower our debt levels optimize repayment schedules, and amend our debt restructure more manageable. Notably, the total outstanding principal balance of our convertible home has sharply declined dropping from two point nine billion at the end of the first quarter back in two thousand twenty-three to one point one seven billion this year. And of the current outstanding balance, they are red five hundred twenty-two point five million as we mentioned earlier. Will result through equivalent loan arrangements with a creditor.
And we continue to optimize the debt structure we have also achieved a substantial reduction in net interest expense which has declined from two hundred twenty-three million RMB to one hundred and fifty-five million RMB in the first quarter of this year it decreased by over thirty percent year over year. For detailed financial performance, and data, please refer to our press release on our IR website. Now we will open the floor for Q&A.
Operator: Thank you. If you wish to ask a question, please If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question. Queue if you have additional questions. Your first question is from Shi Quingshan from CICC. Please go ahead.
Shi Quingshan: Thank management for taking my question my question about micro dramas. Confirmation some operational updates on Michael dramas in the prepared remarks. A management elaborate a little more on the latest developments of micro dramas and outline the key focus points for its future development. Thank you.
Yu Gong: Just go back. I'm sure our CEO Mr. Yu Gong, is answering this question. First of all, the users have gradually developed the habit of watching MicroGometrics on iQIYI, Inc. We now have over fifteen thousand micrograms titles, with free content and a member exclusive content that each attend network about half. and brand positioning. Our two mobile apps have also developed very distinct The main IT app focuses on members who are for free model, primarily featuring paid micro dramas, while the IT Lite app primarily focuses on free micro drama supporting my advertising. This development app I mentioned earlier have driven rapid growth in both user time spent and user base for micro dramas.
While significantly enhancing the user stickiness. So when we compare the April to December of last year, the number of high heavy microgramming users, I think, which are users who spend eighty percent of their time watching micro drama, have increased about three times. We just stepped into the micro drama, this field. For not so long. And then I just started our original production. And seeing some in because of product. For example, recently released original micro drama called China Hotel in as capable of scorching love. Ranks first in IT's micro drama viewing time for several consecutive weeks. And I also successfully entered the ADX top ten list, which is a well renowned list.
In the micro drama field. So amount the acquirer to talk to your title, for example, like, my sweet home, and Please Come Into My Heart each achieved revenue sharing milestone of over one million RMB within a week. And these progress reflecting the high user recognition and a appreciation of high quality microcommerce. I'll there's some background that I would like to share with everyone. For example, the custom cost for each micro zone title on average cost less than one million RMB. And the top tier, titles usually will be less than two million. RMB. Per title. Oh, so you do. May Jordan or Troy will call you back later. Mhmm.
So as such, the within the week, the revenue share dollar, RMB, reached one million. It's actually a very sizable amount on my income. Going forward, there are two areas we're focusing on. First is to have more and better quality microcommerce and, second, to invest more user acquisition user voice. In addition, we'll try more ways to monetize the growing traffic for example, advertising and also e-commerce. Awesome. Thank you.
Operator: Thank you. The next question is from Vicky Way from Citi. Please go ahead.
Vicky Way: Thanks management for taking my question. What management share some color about the change of long video content strategy and the nation and the rationale behind it. Thank you.
Yu Gong: Thank you. I will invite a chief content officer, Mr. Xiaohui Wang, to answer this question. Of all, non-core video are the cornerstone of iQIYI, Inc.'s content ecosystem. And our commitment to this remains unwavering. Dramas are at the core of long-run videos. So to better cater to involving user preferences, our future drama strategy will focus on two key areas. First of all, releasing high-quality shorter episodes of premium dramas and second, producing more high-quality short dramas. With each episode lasting five to twenty minutes. Going forward, the total number of drama titles will increase. Accompanied by enhanced content quality and greater diversity.
This approach will not only improve the flexibility and stability of conference scheduling, but will also reduce reliance on individual titles and effectively mitigate food. Thank you.
Operator: Thank you. The next question is from Maggie Ye from CLSA. Please go ahead.
Maggie Ye: Would you please share more details on the of our overseas business, such as membership and content distribution as well. From a financial perspective, what is the current situation of the overseas business in terms of revenue and profit contribution, and how shall we expect from the over what shall we expect from overseas business in the next one to three years?
Yu Gong: We started our overseas business in the second half of two thousand twenty. Two thousand nineteen. And after that, we experienced three years of COVID. So there were some difficulties in terms of, you know, getting hep counts and also, travel plans to between mainland China and overseas. So the development of our actually quite lower than expectation. But after COVID, in the recent two years, the business has been going through a very rapid development phase. But, however, we do have some restrictions in terms of the financial resources So there's some limitations to the development.
In addition to what I mentioned in the opening remarks that we experienced rapid growth in terms of the annual growth, also subscriber count, etcetera. There are some very important progress we made Very importantly, that we kinda figure out the right content mix for each region overseas and also what can we do from the content mix to drive user growth and also to drive revenue performance. And more importantly, in addition to that, we also take it out how we can really operate in each region. For example, how we can promote content to acquire a better user growth and also in terms of the user growth, how we can improve that as well.
In terms of the content mix for our overseas business, that's the Chinese content actually accounts for about half of the content, and the other half are the local content. Based on the data that we collected, the training video content actually value that are increasing in the global market, which is very beneficial to our overseas business. Growth. Right now, currently, the revenue contribution from the overseas market is still at a relatively low percentage. But it also depends on the future investment into the overseas business, limited to for example, the scale of our financial support and also the financing of sources.
So these are the areas where we look out for the overseas As the CFO just added to our CEO's comment, So what we took from the past few years are really valuable revenue growth as well as the right content mix as well as the operating takeaways from each market, and these are the key takeaways in the past few years. Of course, these are under a very disciplined investment cycle that we did in over the past few years as well. And from the management accounting credit, the overseas business is profitable in the couple of years. And in the future going forward, of course, maintaining profitability is important. However, it doesn't have to be a meaningful amount.
What we want is to invest take that profit, and invest into the business. Hopefully, it will drive a greater growth opportunity in the future. Thank you. Thank you.
Operator: Thank you. There are no further questions at this time. I'll now hand back management for closing remarks.
Yu Gong: Thank you, everyone, for participating on the call today. And if you have any questions, don't hesitate to contact us. Thank you and see you next quarter.
Operator: Thank you. Goodbye. Thank you. So that does conclude our conference for today. Thank you for participating. You may now disconnect.