What happened

Shares of iQiyi (NASDAQ:IQ) climbed 35% in February, according to data from S&P Global Market Intelligence, after the Chinese video streaming leader announced strong fourth-quarter 2018 results.

iQiyi stock soared more than 20% on Feb. 22, 2019, alone -- the first trading day after its quarterly report hit the wires.

Asian family watching television together

IMAGE SOURCE: GETTY IMAGES.

So what

iQiyi's performance was indeed staggering on multiple fronts. Quarterly revenue went up 55% year over year to $1.0 billion, helped by a combination of 9% growth from online ad revenue to $320.5 million, 137% growth from content distribution sales, and a 76% increase in membership services revenue to $465.6 million.

On the latter, iQiyi's number of total subscribing members jumped 72% year over year to 87.4 million by the end of 2018, the vast majority of whom were paying subscribers. Still, it's worth noting content costs nearly doubled to $943 million, dwarfing its membership revenue stream for now.

Check out the latest earnings call transcript for iQiyi.

Now what

"As we enter 2019, we are confident in generating growth across the board, led by membership services which has demonstrated continued momentum," stated iQiyi founder and CEO Dr. Yu Gong. "We maintain our strategic focus on producing original premium content, and will continue to advance our technology innovation and nurture our ecosystem to fully leverage the tremendous IP value in our content."

For the first quarter of 2019, iQiyi anticipates revenue to land between $989.6 million and $1.0 billion, good for 40% to 46% year-over-year growth. But given iQiyi's habit of underpromising and overdelivering of late, it should come as little surprise that most analysts are modeling first-quarter revenue growth closer to 49% as of this writing.

In the end, the market is willing to give iQiyi the benefit of the doubt as it consciously forsakes bottom-line profitability in order to drive top-line growth. With the stock still trading more than 40% below its 52-week high set last June, it's no surprise that iQiyi shares rallied in response last month.