According to SEC, iQiyi posted revenue of $2.67 billion in 2017, an increase of 55% year over year. The streaming segment generated a net loss of $574 million, which increased 22% from the prior year.

iQiyi has a business model that generates revenue from subscriptions, advertising on its platform, and content distribution. In this way, it more closely resembles Hulu than Netflix.

The company generated revenue from membership services (subscriptions) that grew to $1.0 billion, up 73.7% year over year, while online advertising sales hit $1.25 billion, up 44% over 2016.

Small amounts of additional revenue are generated by a variety of activities, such as relicensing certain content, broadcasting live programming, providing online games, and licensing iQiyi's intellectual property. Content distribution revenue grew 138% year over year to $183 million, while other revenue grew to $229 million, up 13% over the prior year.

Cost of revenue grew to $2.67 billion, up 52% over 2016, driven by increases in the cost of programming and bandwidth. Content costs of $1.94 billion increased 67.3% over 2016, as the company ramped up its programming to establish a firm foothold in the nascent market. Bandwidth cost grew to $336 million, up 16.8% over the prior year.

iQiyi noted that over the short term, its cost of revenue would continue to outpace revenue growth, as it invested in content and worked to improve its streaming technology. The company expects that rapid subscriber growth and economies of scale will, over the longer term, result in escalating revenue.

The company's investment in content appears to be paying off. In 2017, iQiyi's original programming accounted for five of the top 10 original internet variety shows, and six of the top 10 original internet drama series in China. Its first high-budget original series, The Lost Tomb, generated more than 100 million video views in the first 24 hours and over 4 billion total views.

iQiyi appears to be playing to Baidu's strength in artificial intelligence (AI) and taking a page from the Netflix playbook, as it uses the technology to inform its programming decisions. In the filing, it says: "We distinguish ourselves in the online entertainment industry by our leading technology platform powered by advanced AI, big data analytics and other core proprietary technologies. Our core proprietary technologies are critical to producing content that caters to user tastes, delivering superior entertainment experience to our users."

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