The service was started in 2010 by search giant Baidu, which owns a dominant 70 percent of the company. Xiaomi (eight percent) and Hillhouse (six percent) are the other major names that have backed it.
A Netflix-like service that include paid and ad-supported content, iQiyi claims to have over 50 million paying subscribers. The company says its content gets 420 million monthly viewers, with as many as 126 million tuning in on a daily basis.
The company is rivaled by Tencent’s video service and Alibaba-owned Youku Tudou. A recent report from eMarketer suggested that iQiyi holds a slim lead in the market but there’s plenty to play for. The Chinese video market forecast to expand from 22 billion RMB ($3.5 billion) in 2015 to 96.2 billion ($15.2 billion) RMB by 2020, according to IHS Markit.
The iQiyi story is one of high growth but also large losses. The company recorded revenue of 17.4 billion RMB in 2017 ($2.7 billion) which represented a 55 percent year-on-year jump and was tripled its revenue in 2015.
It has, however, been unprofitable since day one. iQiyi lost 3.7 billion RMB ($574 million) in 2017, as operating losses widened from 3.1 billion RMB and 2.6 billion RMB in 2016 and 2015, respectively.
That’s where Baidu comes in, and the search engine giant has propped iQiyi up financially and also let the company lean on its artificial intelligence technology and tap into its DuerOS smart operating system. Indeed, Baidu gave the company an interest-free $100 million loan last month, according to the filing.
It isn’t yet confirmed exactly how much iQiyi will raise from its public listing, but the company said the primary purpose of the IPO is to expand its content catalog using half of the proceeds. It also plans to develop its technology and stock up on working capital which could be used to fund acquisitions.
The iQiyi listing follows U.S.-based IPOs from Huami, Xiaomi’s wearables partner, in February and Tencent-backed search engine Sogou last November. Others that are expected to follow suit include Xiaomi and Tencent’s music division.