IQIYI Inc (NASDAQ:IQ) Q3 2025 Earnings: Profitability Beats Expectations Despite Revenue Miss

Chinese streaming platform iQIYI Inc (NASDAQ:IQ) reported its third-quarter 2025 financial results, delivering a performance that notably surpassed analyst expectations on profitability, despite a slight revenue miss. The market's initial reaction appears cautiously optimistic, with the stock showing minimal movement in pre-market trading.

Earnings and Revenue Performance

The company's financial results for the quarter ended September 30, 2025, presented a mixed picture relative to analyst forecasts. While revenue fell short of expectations, the bottom-line performance was significantly better than anticipated.

• Revenue: Total revenues were RMB 6.68 billion (approximately $938.7 million), an 8% decrease compared to the same period in 2024. This figure came in just below the analyst estimate of RMB 6.81 billion.
• Earnings Per Share (Non-GAAP): The company reported a non-GAAP net loss per ADS of RMB 0.15 (approximately $0.02). This was a substantial improvement over the analyst forecast, which had projected a deeper loss of RMB 0.27 per ADS.

This divergence suggests that iQIYI's cost management and operational efficiency efforts are having a positive impact, allowing it to contain its losses more effectively than the market had predicted, even in a softer revenue environment.

Market Reaction and Financial Health

The immediate market response to the earnings release has been muted. The stock's minimal pre-market decline of approximately 1.95% indicates that investors are balancing the positive earnings surprise against the ongoing revenue challenges. This follows a period of relative stability, with the stock down less than 7% over the past month.

From a liquidity perspective, the company reported a solid cash position. As of September 30, 2025, iQIYI held cash, cash equivalents, restricted cash, and short-term investments totaling RMB 4.88 billion (approximately $686.0 million). However, cash flow generation was negative for the quarter, with free cash flow at negative RMB 290.3 million, a reversal from the positive free cash flow recorded in the same period last year.

Management Commentary and Strategic Focus

In the earnings release, Founder and CEO Yu Gong emphasized the company's continued focus on its intellectual property (IP)-centric ecosystem. He highlighted the success of recent drama hits and the expansion of the business model "from online to offline, growing from domestic to overseas markets, and leveraging AI to revolutionize content creation and consumption."

CFO Jun Wang pointed to robust growth in overseas operations as a sign that investments in new initiatives are bearing fruit. He also noted that the company maintained its top position in total drama viewership market share in the domestic market for the quarter, according to third-party data.

Looking Ahead

The company did not provide a specific financial outlook for the upcoming quarter or the full year in the press release. For context, analysts are currently modeling for the next quarter (Q4 2025) with the following estimates:

• Estimated Q4 Revenue: RMB 6.87 billion
• Estimated Q4 EPS (Non-GAAP): RMB 0.06

The absence of formal guidance from management is a neutral factor and does not inherently explain the market's reaction. Investors will likely focus on the company's ability to stabilize its revenue streams while continuing to improve profitability, particularly in its overseas expansion efforts.

Conclusion

iQIYI's third-quarter results highlight a company successfully navigating a transitional period by tightening its financial controls. The significant earnings beat, despite a slight revenue shortfall, appears to have provided a floor for the stock price in the near term. The key challenges remain reigniting top-line growth and returning to positive cash flow generation. The company's strategic bets on international markets and AI-enhanced content will be critical areas to watch in the coming quarters.

For a detailed breakdown of historical earnings and future analyst estimates, you can review the data here.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. The author has no position in any stock mentioned. Readers should conduct their own research and consult with a qualified financial advisor before making any investment decisions.