iQIYI, a leading provider of online entertainment video services in China, announced on Thursday its unaudited financial results for the first quarter ended March 31, 2024.

The company reported revenue of 7.9 billion yuan ($1.1 billion) and operating income of 944.8 million yuan with its operating income margin surging to 12 percent, marking a 10 percent annual increase.

The latest report also shows iQIYI recorded a positive operating cash flow for eight consecutive quarters.

“Our operating profits and corresponding margins reached historical highs, thanks to our quality execution and increased operating efficiency,” commented Gong Yu, founder and CEO of iQIYI.

“The initial integration of generative AI into our operations is already yielding promising results. We are eager to harness the power of this innovative technology to improve our capacity for delivering top-tier content and to expand our growth possibilities,” he said.

The company revealed that generative AI has revolutionized advertising material production, improving ROI (return on investment) for advertisers.

With over 70 percent of key new dramas launched in Q1 being original, the premium content powerhouse has armed its producers with an advanced AI toolkit to streamline production process. New AI features go beyond summarizing novels and scripts to crafting story outlines and character profiles, boosting producers’ reading efficiency by 9 times, the report said.

Partly thanks to the use of innovative technologies such as generative AI, the cost of revenues was 5.6 billion yuan, decreasing 5 percent year over year. Content costs as a component of cost of revenues were 4 billion yuan, decreasing 5 percent from a year ago.

According to the financial report, membership services revenue was 4.8 billion yuan, decreasing 13 percent year over year, primarily due to the high base effect in the same period last year.

The company, without disclosing data to membership numbers, reported its monthly ARM (Average Revenue per Membership) achieved 6 consecutive quarters of sequential growth, propelled by optimized operations, enriched product offerings and enhanced membership benefits.

Revenue from online advertising services increased by 6 percent year over year to 1.5 billion yuan. Performance ads experienced double-digit growth and hit a historical high in Q1 fueled by the growing adaptation of Generative AI, which in turn, boosts ROI. Brand ad business continues to attract advertisers, with over half of revenue stemming from content-targeted ads, exemplified by a notable 80 percent increase in this year’s revenue for the hit variety show Become a Farmer.

Content distribution revenue was 928 million yuan, increasing 27 percent year over year, primarily driven by the distribution of several major titles. Other revenues were 718.4 million yuan, increasing 8 percent year over year.

The report also highlighted the streaming giant’s robust growth in the overseas market as iQIYI original productions found increasing resonance with global audiences.

Membership revenue grew both annually and sequentially, with a nearly 80 percent annual increase in multiple markets outside of the Chinese mainland, including Hong Kong and the UK.

The original Chinese drama Sword and Fairy 4 topped viewership in all regions and categories on iQIYI’s overseas platform, while Malaysian original drama Rampas Cintaku 2 bolstered both traffic and membership revenue growth on iQIYI’s Malaysian site.