Phoenix New Media Q3 2023 Earnings Call Transcript

Quartr
Provided by Quartr
November 14, 2023

There are 3 speakers on the call.

Operator

Good day and thank you for standing by. Welcome to Phoenix New Media Third Quarter 2023 Earnings Call. At this time, all participants are in listen only mode. After the speakers' presentation, there will be a question and answer session.

Speaker 1

Session.

Operator

Please be advised that today's conference is being recorded. I'd now like to hand the conference over to Muzuo from Investor Relations Department. Please go ahead.

Speaker 2

Thank you, operator. Welcome to Phoenix New Media's earnings conference call for the Q3 of 2023. Joining me here today are our CEO, Mr. Yu Sheng Sun and our CFO, Mr. Edward Lu.

Speaker 2

During this call, our management team will begin by providing an overview of our quarterly results, followed by a Q and A session. You can find the financial results for the Q3 of 2023 as well as the webcast of this conference call on our website at ir. Ifeng.com. A replay of this call will also be made available on the website within the next few hours. Before we proceed, I would like to draw your attention to our Safe Harbor statement, which can be found in our earnings press release.

Speaker 2

This statement is important as it pertains to our forward looking statements during the call. Additionally, please note that unless otherwise specified, all figures mentioned throughout this conference call are in RMB. Now I will pass the call over to Mr. Sun, our CEO, for his opening remarks. I will provide the translation.

Speaker 2

Hello, everyone. In the second half of the year, we find ourselves navigating a macro environment filled with uncertainties. This challenging backdrop has created headwinds in our advertising business. However, in these trying times, it's imperative that we remain faithful to our core values and competencies. And at the same time, we must proactively adapt our decision making process and innovation strategies to quickly respond to the ever evolving market.

Speaker 2

We need to clarify our core competency, which is news. We will continue to leverage our advantage in news coverage and create a replaceable content quality that sets us apart from others, thus better supporting our content marketing efforts. Next, Edward will provide a more detailed rundown of our operation in the Q3. Edward, please go ahead. Thank you, Mingqi.

Speaker 1

During the Q3, we were committed in upholding the quality of our content as a mainstream media outlet. In the current turbulent global landscape and the macro environment, trustworthiness has emerged as an essential requirement for our users. Since the outbreak of the Israel Palestine conflict, we have compiled over 100 news flash and articles, establishing ourselves as the go to source for tracking the development of the crisis. Our content has been widely shared by users, resulting in a substantial boost in traffic. This is driven by hot topics accounted for 30% of the total new visits.

Speaker 1

In our live broadcast, we provided on-site reporting under the title Live from the Israel Palestine Conflict Zone at Gaza Border. Our Phoenix journalist, Cao Jie, ventured to Saudi Route, the city closest to the Israel Palestine conflict zone at the Gaza border located less than 1 kilometer away. The report centered on the local people, the city's situation and the ground reality offering valuable insights for the audience to grasp the real situation on the ground. On the sports front, we closely followed the Asian games, achieving high exposure and attention on various social platforms. Our sports and video channels released nearly 100 short videos, accumulating a total view count of 37,000,000.

Speaker 1

For news and information in general, our Phoenix news account on Douyin has gained 3,310,000 new followers in the 3rd quarter, supporting a total of 10,000,000 followers. We continue to maximize the dissemination of our content and unlock our business potential on social media platforms. In the post pandemic era, individuals are experiencing heightened anxiety and fatigue. Users are increasingly seeking content that provides positive energy, particularly in a concise and high quality form. This is where we come in, closely attuned to users' emotional needs, providing them with positive emotional sustenance.

Speaker 1

Accordingly, our original content focused on individual experiences and articulation of individual demands. We also continue to demonstrate our social responsibility in action. In October 2023, Forever Happiness Charity Gala, jointly organized by Finks and the Chi Huong Foundation Canada, was successfully held in Vancouver, Canada. Local overseas Chinese, political and business leaders, philanthropists, celebrities and media customers gathered for the events. This marks the 5th time the Forever Happiness Charity Gala went abroad.

Speaker 1

The event was attended by the Consul General of China in Vancouver, Yang Shu, Zhenghe Foundation's Founder and Chairman, Du Tong and other dignitaries. The event raised over CHF2.7 million, which will be fully used for its offense and disadvantaged students. On the advertising front, we faced some challenges in the Q3. In a market where traffic has peaked and the growth has slowed down, the key to future growth lies in our ability to precisely target and influence specific potential audiences. As a mainstream media outlet, we have earned recognition from advertisers for our credibility and influence.

Speaker 1

On one hand, we excel at creating high quality content that resonates with our brand's value and identity. On the other hand, we are adept at crafting immersive brand experiences through offline events, offering interactive platforms for brand consumer connections. However, we also need to engage in self reflection and foster innovation from within. We urgently need to clarify our growth strategy. It entails understanding which industries we will target, identifying key new customers and understanding their unique marketing needs.

Speaker 1

Once we have established our goals, it's crucial to ensure that our company's resources align with these objectives. As we plan for the upcoming year, we are closely analyzing and preparing for organizational restructuring in order to accelerate the innovation and upgrading of our content marketing products to adapt more swiftly to market change. By leveraging our extensive media influence and the international reach, we are exploring new opportunities in areas such as the global market, culture tourism marketing and the social media platforms. We will make adjustments based on comprehensive data driven and rational plans to lay a solid foundation for future operation. In summary, confronting the current market environment and the formidable challenges it presents, we are acutely aware of the urgency to change.

Speaker 1

In addition to improving content and product quality, enhancing media influence and brand value, we are also adjusting the company's organizational structure and incentive mechanisms to accelerate innovation and upgrade of content marketing products. Our goal is to respond more promptly to market demands, attain our financial objectives at the earliest opportunity. I will now walk you through our financial performance for the Q3 of 2023. Our figures mentioned will be in RMB. Our total revenues were 153,600,000 dollars as compared to $194,800,000 in the same period of last year.

Speaker 1

To elaborate, net advertising revenues were $134,300,000 compared to $172,400,000 in the same period of last year. The decrease was mainly due to the reduction in advertising spending of advertisers in certain industries and intensified industry wide competition. Paid services revenues were $19,300,000 compared to $22,400,000 in the same period of last year. The decrease was mainly due to the decline in e commerce revenues. Loss from operations was $38,500,000 compared to loss from operations of $36,500,000 in the same period of last year.

Speaker 1

Net loss attributable to ifeng was RMB21.5 million compared to net income attributable to ifeng of RMB24.3 million in the same period of last year. Moving on to our balance sheet. As of September 30, 2023, the company's cash and cash equivalents, term deposits, short term investments and the restricted cash were RMB1.03 billion or approximately $141,800,000 Finally, I'd like to provide our business outlook for the Q4 of 2023. We are forecasting total revenues to be between $179,800,000 $199,800,000 For net advertising revenues, we are forecasting between $169,000,000 $184,000,000 For paid service revenues, we are forecasting between $10,800,000 $15,800,000 This forecast reflects our current and preliminary view, which are subject to change and substantial uncertainties. This concludes the prepared portion of our call.

Speaker 1

We're now ready for questions. Operator, please go ahead.

Operator

Thank you. Question comes from the line of Alice Tang from First Shanghai. Please ask your question, Alice.

Speaker 2

Good morning, management. Thank you for taking my question. My question is that, so our company had previously announced a stock buyback plan. Could you please provide us with some insight and updates on the buyback transaction? Thank you.

Speaker 1

Hi, Alex. Thank you for the question. Actually, we have confidence in the company's fundamentals and future performance, which is why the Board of Directors approved the buyback plan. Currently, the company has a very strong cash position, providing enough support for the company's future growth for a considerable period. Through this buyback, we aim to return some cash to our shareholders from now until the end of February next year.

Speaker 1

We will execute the plan in compliance with the U. S. Securities law and other relevant regulations. And the buyback transactions will be conducted in the open market at market prices. We expect to start the buyback transactions shortly after the Q3 earnings release.

Speaker 1

Thank you, Alice.

Speaker 2

Thank you. That's very helpful.

Operator

Thank you. And that's all we have for question and answer session. I would now like to turn the conference back to Mu Zeko for any additional closing comments.

Speaker 2

Thank you. We have now come to the end of our Q and A session and our conference call. Please feel free to contact us if you have any further questions. Thank you for joining us today on this call. Have a good day.

Operator

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.

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Key Takeaways

  • Phoenix New Media reported Q3 total revenues of RMB153.6M, down from RMB194.8M a year ago, with a net loss of RMB21.5M versus net income of RMB24.3M in Q3 2022.
  • Net advertising revenues declined to RMB134.3M from RMB172.4M YoY, primarily due to reduced advertiser spending and increased competition, while paid services revenues fell to RMB19.3M.
  • The company achieved strong user engagement with over 100 Israel-Palestine conflict updates driving 30% of new visits, 37M sports video views, and 3.31M new Douyin followers, bringing its total base to 10M.
  • Facing macro headwinds, Phoenix plans organizational restructuring and content marketing product innovation to target high-potential industries, optimize resource allocation, and expand into global and social media markets.
  • For Q4 2023, management forecasts total revenues of RMB179.8M–199.8M, net advertising revenues of RMB169M–184M, and paid services revenues of RMB10.8M–15.8M, noting substantial uncertainties.
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Earnings Conference Call
Phoenix New Media Q3 2023
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