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On August 21, the company reported a net loss during the second quarter of the year, mainly due to decreases in revenue from membership services and advertising.
For the three months ending June 30, the net loss amounted to approximately 133.7 million yuan (around $18.7 million), compared to a profit of about 68.7 million yuan (roughly $9.6 million) in the same period last year, according to the latest financial results released yesterday.
The company’s revenue declined 11 percent to roughly 6.6 billion yuan ($925.3 million). This drop was primarily driven by a 9 percent decrease in membership service revenue to 4.1 billion yuan, attributed to a lighter content lineup, and a 13 percent fall in online advertising revenue, which reached 1.3 billion yuan, as some advertisers adjusted strategies amid macroeconomic pressures.
Meanwhile, international membership revenue increased significantly, rising 35 percent year-over-year for the second quarter, with key markets such as Brazil, Mexico, and Indonesia posting increases of over 80 percent.
“We managed our resources effectively and optimized our capital structure, resulting in a consistent decline in net interest expenses over the past seven quarters,” said the company’s chief financial officer. “This positions us better for creating long-term value.”
The cost of revenue decreased 7 percent compared to the previous year, totaling approximately 5.3 billion yuan, with content costs down 8 percent to about 3.8 billion yuan. Selling, general, administrative expenses, and research and development costs also decreased slightly, by 1 percent and 6 percent respectively, reaching roughly 958.6 million yuan ($134 million) and 421.9 million yuan.
The company marked its 14th straight quarter of operating profitability excluding non-GAAP measures and maintained a strong balance sheet, holding close to 5.1 billion yuan in cash, equivalents, restricted cash, short-term investments, and long-term restricted cash included in prepayments and other assets.
Additionally, the firm repurchased USD 85 million of debt notes maturing in 2028 using cash, leaving an outstanding principal balance of USD 208 million for those notes, according to company officials.
The company’s net interest expenses decreased by 33 percent in the second quarter from the previous year, noted the CFO.
“Throughout the second quarter and into the summer, we launched several blockbuster titles and secured the top market share in overall drama viewership, based on data from Enlightent,” said the company’s founder and CEO.
The company also maintained its leading position in movie viewership in China for the 14th consecutive quarter, according to Enlightent data.
During the period, three major dramas released by the company achieved popularity index scores exceeding 10,000. One notable release, an action crime drama starring Jackie Chan titled “The Shadow’s Edge,” hit theaters and grossed over 300 million yuan at the box office.
“We are focused on innovation and investing in key growth areas, including artificial intelligence, micro dramas, experiential businesses, and global expansion—all aimed at sustainable, long-term success,” explained the CEO.
The company’s micro-drama segment experienced strong growth, with approximately 15,000 titles showing double-digit increases in daily viewing time and unique visitors during the second quarter.
Several AI innovations were launched, such as the iJump feature that allows viewers to easily navigate between key scenes across more than 2,300 titles, and Taodou World, an AI platform offering over 1,200 character profiles from popular content to assist users with search, recommendations, and plot insights to boost engagement.
Recent regulatory changes in China’s broadcasting sector removed the 40-episode limit for TV dramas and reduced seasonal programming restrictions.
These updates can shorten content production and review timelines, grant creators more creative freedom, enhance collaboration between online platforms and TV broadcasters, and attract more talent and investment into content development, contributing to the industry’s healthy growth, said the company’s chief content officer.
The company’s shares rose 0.9 percent to $2.30 in New York trading yesterday.
According to recent media reports, plans are underway for a secondary listing in Hong Kong, with the company reportedly engaging Bank of America, China International Capital Corporation, and JPMorgan Chase as underwriters. This move could potentially raise between $200 million and $300 million. The company has not officially commented on these plans.
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