After more than a decade of losses, Chinese video streamer iQiyi Tuesday unveiled another improved quarter. But its problems are scarcely in the rear-mirror and it simultaneously announced that it will raise a further $500 million of capital.

Revenues in the April to June 2022 period, the second quarter of iQiyi’s financial year, dropped by 13% to RMB 6.66 billion.

Net losses for the quarter weighed in at RMB214 million. That was a massive reduction compared with the RMB1.40 deficit recorded in the equivalent quarter in 2021. But it also represented a return to loss after recording a maiden first quarter profit – RMB169 million – in the January to March period.

Like many Chinese companies, iQiyi also chooses to offer a non-GAAP interpretation of its bottom line. This shows the company made a modest profit of RMB78 million. That was down from the first quarter when it made RMB162 million.

At the end of last year, iQiyi announced plans to slash costs and increase discipline over its spending, especially content investment. The operation appears to bearing some fruit.

Despite slashing its spending on content by 25% year-on-year iQiyi’s subscribers do not appear to mind much. Subscriber numbers continued their very slow decline (98.3 million at the end of June, compared with 99.2 million a year earlier) and revenue from subscriptions managed a 7% increase.

But other revenue lines remained weak. Advertising revenues crashed by 35% year-on-year. Program sales dived by 30%. And other revenues slumped by 37%.

For the full six -period, covering January to June, revenue slipped from RMB15.6 billion to RMB13.9 billion. iQiyi managed an operating profit of RMB219 million, compared with deep losses of RMB2.13 billion in the first half of 2021. At the net level, there was a loss of RMB44 million, compared with net losses of RMB2.66 billion).

“We fought against the gravity of [China’s] macro downturn throughout the second quarter of 2022 and booked operating profit growth. The process was extremely challenging, but the result was absolutely remarkable,” said CEO Gong Yu. “In the third [current] quarter, we [have] built important partnership[s] with Douyin and PAG. This together with the positive momentum of a series of blockbuster new releases makes us more confident than ever that we will be able to deliver greater profit growth in the future.”

The company’s new outlook has enabled it to bring on board new financial investors. PAG Asia (formerly Pacific Alliance Group), a Hong Kong-based private equity firm with $50 billion under management (as of March this year) is buying an initial $500 million of iQiyi’s convertible notes. PAG was previously an investor in the Universal Japan theme park.

The iQiyi convertible notes bear a 6% annual interest rate and can be converted into iQiyi’s NASDAQ-listed ADR shares between three and five years from now.

iQiyi enjoyed an IPO in 2018 with the ADRs selling at $18 apiece, but rapidly returned to the market for more capital. It has issued convertible debt on multiple previous occasions since its 2018 IPO – in December 2018, March 2019, and again in December 2020. Additionally, in March this year, iQiyi diluted its equity by nearly 8% when it issued new shares to parent company Baidu and a group of financial investors.

Its ADR shares finished trading on Monday at $3.93, giving the company a market value of $3.14 billion. In pre-market trading on Tuesday, following the results announcement, the counter was trading up slightly at $4.04.