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BEIJING, February 23 (TMTPOST) —— China"s leading online entertainment video service provider iQIYI achieved profitability in 2022, which was the first time since its launch in April 2010.

Non-GAAP net profits attributable to the company in 2022 were 1.3 billion yuan ($188.5 billion), compared to a net loss of 4.5 billion yuan ($652.5 billion) in 2021, while the annual revenues in 2022 were 29 billion yuan ($4.2 billion) in 2022, down 5% year on year, according to its fourth quarterly results and 2022 annual results released on Wednesday. 

In the fourth quarter of 2022, iQIYI"s total revenues were 7.6 billion yuan ($1.1 billion), up 3% year on year, slightly higher than the average forecast of 15 analysts from Yahoo Finance. Non-GAAP net profit attributable to the company was 856 million yuan ($124 million), compared with a loss of 1 billion yuan ($144.9 million) in the same period in 2021.

This was the fourth consecutive quarter for iQIYI to have positive operating profits. On the news that the company achieved its goal of "non-GAAP operating profit break-even" in 2022, iQIYI’s stock price in pre-market trading surged more than 8% on Wednesday.

iQIYI"s strong profits resulted from the strategy of cost reduction and efficiency improvement. The company started large-scale job cuts at the end of 2021 to shift its investment focus from extensive content to high-value content. It spent 16.5 billion yuan ($2.4 billion) on purchasing and producing content in 2022, a year-on-year decrease of 20%, driving the overall revenue cost down 19% to 22.3 billion yuan($3.2 billion).

Gong Yu, CEO of iQIYI, summarized the company"s strategic shift over the past year in a letter to shareholders released on the same day, saying that the company would continue to focus on original contents to deliver high-quality growth and create more value for stakeholders. According to Gong, behind the continued output of blockbuster videos are persistence, intensive capital investment, talent cultivation, and technological innovation, making such a business model hard to be replicated.

"iQIYI is seeking high-quality growth for 2023, including growth in both operating profit and revenue," Gong said on the earnings call that this will prove that the long video business model can achieve high-quality growth. The company’s rivals would be forced to pursue efficiency more rationally and improve their investment efficiency.