Phoenix New Media Q1 2023 Earnings Call Transcript

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Provided by Quartr
May 15, 2023

There are 3 speakers on the call.

Operator

Good day and thank you for standing by. Welcome to Phoenix New Media First Quarter 2023 Earnings Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. Please be advised that today's conference is being recorded.

Operator

I'd now like to hand the conference over to Muzhi Kuo from IR Department. Please go ahead.

Speaker 1

Thank you, operator. Welcome to Phoenix New Media's Q1 2023 earnings conference call. The quarterly financial results and the webcast of this conference call are available on our website at ir. Ifeng.com. A replay of the call will be available on the website in a few hours.

Speaker 1

Before we get started, I would like to take this opportunity to remind you that our remarks today will include forward looking statements. Please refer to our Safe Harbor statement in our earnings press release, which applies to this call as well. Also, unless otherwise stated, all figures mentioned during the conference call are in RMB. Joining us on the call today are Mr. Yushong Sun, Chairman of the Board and the Chief Executive Officer and Mr.

Speaker 1

Edward Lu, Chief Financial Officer. Mr. Sun became our CEO at the end of March. This is his first time participating in the call. He has brought a wealth of experience and expertise to our company and we're excited to have him leading us.

Speaker 1

Without further ado, I will now turn the call over to him to offer his greetings. I will be translating for him afterwards. I'll be translating for Mr. Sun. Dear investors and shareholders, greetings to everyone.

Speaker 1

My name is Yushong Sun. It is my pleasure to join Phoenix New Media as CEO and work with this exceptional team. This is my first time participating in the investor conference call and I am honored to be here. I will do my best to take the company to a new level in the future. Currently, Phoenix New Media and its industry are facing numerous challenges.

Speaker 1

We need to analyze the underlying causes, identify breakthroughs and clarify the direction of our development. Our goal is to continue to evolve into a world class Chinese online media platform with a focus on maximizing content dissemination, influence and profitability. To achieve this, we must sustain our emphasis on creating and curating unique high quality content, while expanding revenue streams and exercising fiscal prudence. As we move forward, we must explore and innovate in areas such as operations, management, talent acquisition and fostering team enthusiasm and creativity in order to realize our development objectives. With the collective efforts of everyone in the company, I am confident that Phoenix New Media has a promising future.

Speaker 1

Thank you for your ongoing support and I look forward to achieving further success together. And today, I would also like to take the opportunity to thank Mr. Liu, who took the company public in the States over 10 years ago and also led the company to develop to the current stage. And he contributed to the company as CEO and senior management for such a long time. He resigned from the company as CEO for personal reasons at the end of March.

Speaker 1

And here, we thank him for his contribution over the past years and wish him all the best in his future endeavors. Thank you. This concludes Mr. Sun's greetings. I will now turn the call over to our CFO, Mr.

Speaker 1

Edward Lu, who will first read the prepared remarks on behalf of Mr. Sun and then go through the financial results. After the prepared remarks, we will open the call to questions. Edward, please go ahead.

Speaker 2

Thank you, Muzheng. In the Q1 of 2023, we continue to demonstrate our leading role in news reporting and hard topics curation. During the government's 2 sessions event, our video column dialogues with delegates interviewed 26 delegates and received extensive media exposure and market attention ranking 20 times on the hot search list on Douyin and Weibo. Our easy to share long posters seeing the new journey, new achievements, new responsibilities highlighted the Premier's Prize Conference, government's work report and popular proposals and was widely reposted across the Internet. More importantly, the 2 sessions are a vital platform for China to communicate with the rest of the world.

Speaker 2

Topics partly discussed during this year's 2 sessions, such as gender equality, how to cope with low birth rate and aging population and the bias against vocational education are also areas of concern for many countries. In our signature series, dialogue with the world we devolved into the broader implications of these issues. For example, we interviewed the Norwegian ambassador to China, Sigiri Car, during the 2 sessions, jointly exploring final Norwegian relations and the social hot topics, triggering extensive discussions on both domestic and overseas social media platforms. Additionally, our original columns have provided in-depth and multi angled commentaries on the key proposals and the hot topics discussed during the 2 sessions, including the proposed increase in the threshold for personal income tax, raising of retirement age and the pension reform, and whether the children of criminals should be barred from working in civil service. The commentary published by our opinion column, the message Feng Sheng on the left topic quickly became the top search on nearly all platforms.

Speaker 2

The article struck a balance between professional depth and the public acceptance, offering a systematic analysis of the same of justice in criminal law. It was read by tens of millions of people across multiple platforms and they were posted by nearly 30 mainstream media accounts, leading to countless discussions that continued for about a week, underscoring the value of the message as a content brand. Our reputation for breaking news and event coverage has not only on 10 hot search and nearly 1,000,000,000 views on Weibo, highlighting the significant media influence of iPhone Finance. In the automobile vertical, the Ifeng Global Auto Ceremony brought together 150 attendees and presented 21 awards covering mainstream Chinese automakers. We jointly released an industry report, Global Automotive Consumer Survey 2023 with consulting firm Deloitte, further solidifying Ifeng Auto's authority and expertise in the industry.

Speaker 2

The live broadcast and the promotion for this event exceeded 14,000,000 views with the hashtag topic, our few vehicles really losing the market, serving heated discussions across various media outlets. We continue to build our video and the live broadcasting product pipeline to diversify our premium content offerings and support monetization. During Lvu captured the lives of ordinary people in mini documentaries, while the Heroes Sports League, Yingxiong Piyuelemen, invited Olympic campaigns to join in public welfare initiatives, bringing sports spirit and supplies such as books and clothes to children in rural areas. Hometown, Jiayuan, centered around rural revitalization, while Culture Livestrong, Benhua, Junfuojian and the cover, Fengme, explores culture and the financial highlights in live broadcasting format. This content produced products provided a variety of customer marketing solutions to our advertisers catering to diversify the brand communication needs.

Speaker 2

For our iPhone app, we added a subscription feature to better capture user interest and preferences and customize push notification according to the patterns of subscriptions. This resulted in a 28% increase in the app's opening rate quarter over quarter with 24% of DAU coming from push notifications. For video content recommendations, we optimized the immersive video style and the recommendation logic, resulting in a 26% increase in click through rates of immersive videos, a 25% increase in average plays per person and a 12% increase in play time quarter over quarter. This combined optimizations resulted in a 6 percent increase in average time spent per user quarter over quarter, reaching a new high in recent years. Moving on to revenue diversification.

Speaker 2

Our online reading business line continue to partner with other industry players to lease our newly signed books, our self made audiobook. The opening of the main banners surpassed 1,000,000 plays in just 15 days, along with other works made to the top 100 in the new book list on Himalaya. In the real estate business, we met our internal target for Q1 revenue and the collection of payments. While the property market seeing a rebound, we actively promoted our brand through product promotion events in major cities, demonstrating our value to the industry and our clients. In terms of content, we launched the Good Housing Report action in cooperation with China Quality News, focusing on the completion and the delivery of real properties with emphasis on the improvement of quality contributing to consumer confidence.

Speaker 2

Furthermore, our e commerce business exceeded the target GMV in Q1. In January February, we focused on holiday gifts and shifted to seasonal demand in March, highlighting the category of binding and closing. For live broadcasting e commerce, we have collaborated with major overseas brands that are tailored to the profile of our users on the 3rd party platforms to further monetize the value of our accounts and user base. In summary, we continue to enrich our content offerings, strengthening our media influence and enhance the user experience of our APP during the Q1. Going forward, we will continue to drive operational and monetization efficiency.

Speaker 2

This will help us to achieve our financial objectives and develop into a more robust, adaptable and efficient organization. This concludes our CEO, Mr. Sun's prepared remarks. I will now walk you through our financial performance for the Q1 of 2023. All figures mentioned will be in RMB.

Speaker 2

Our total revenues were 100 and 36,400,000 as compared to RMB 175,400,000 in the same period of last year. To elaborate, net advertising revenues were RMB 126,200,000 compared to RMB158,400,000 in the same period of last year. The decrease was mainly due to the reduction in advertising spending of advertisers in certain industries and the intensified industry wide competition. Paid services revenues were RMB20.2 million compared to RMB17 1,000,000 in the same period of last year. The increase was mainly due to the increase in the revenues from certain IP copyright sales.

Speaker 2

Loss from operations was RMB74.4 million, narrowing by 30.3 percent year over year as a result of strict cost control measures implemented. Net loss attributable to Ifeng was RMB57.8 million, narrowing by 27.5 percent year over year. Moving on to our balance sheet. As of March 31, 2023, the company's cash and cash equivalents, term deposits, short term investments and restricted cash were RMB1.13 billion or approximately 164.1 million Finally, I'd like to provide our business outlook for the Q2 of 2023. We are forecasting total revenues to be between $160,900,000 and 180,900,000.

Speaker 2

For LINE advertising revenues, we are forecasting between 148,000,000 and 163,000,000. For paid service revenues, we are forecasting between $12,900,000 $17,900,000 This forecast reflects our current and preliminary view, which are subject to change and substantial uncertainties. This concludes the prepared portion of our call. We are now ready for questions. Operator, please go ahead.

Operator

Thank you. We will now begin the question and answer session. Our first question comes from the line of Sheru Jha from 86 Research. Please ask your question, Sheru.

Speaker 1

Sheryl. Good morning, management. Thank you for taking my question. Could you kindly provide insights into the factors contributing to a decline in Q1 ad revenues? Additionally, I will appreciate hearing your outlook for the app business in the coming quarters.

Speaker 2

Good morning, Zhu. Thank you for your question. Actually, Q1 twenty 23, the recovery of the overall advertising market was a little bit below expectation. According to market research report, the overall advertising market declined year over year in January February and advertisers were also cautious with their spending. When it comes to industries, the FMCG industry, including food, beverage and especially alcoholic beverage remain the driving force of the advertising market.

Speaker 2

The cosmetics and bathroom product industries also made a comeback in the top ranking list. These are the industries we focused on expanding in the Q1, and we achieved a milestone progress by completing some major campaigns or signing 3 more contracts. Also with the decline of brand advertising by traditional car makers, we are placing more weight on AI new energy vehicles, domestic brands in general and especially those who are growing their overseas market as they are placing more emphasis on branding. Brand advertising has been declining in recent years as short term growth and the sales pressures have been a priority for many. However, as the market returns to normal, the importance of branding has increased.

Speaker 2

Customers are more focused on building brand values through high quality media channels and lay a foundation for long term brand building in the future. This actually is what we are best at using high quality content and creativity to convey value. In the Q1, we attracted sponsorship for our coverage of the 2 sessions, Lianghui and the numerous IP content in finance, public welfare and other fields. Currently, we are also laying our innovative marketing projects centered around things such as rural revitalization, Golden Diploma CE Season and Tiling the Story of Chinese Enterprise to create customized brand story series products for our clients. We are also leveraging our capabilities in organizing large scale events and integrating resources to serve more 2B and 2G clients, helping them achieve their marketing goals.

Speaker 2

That's my answer to your questions, Zheugou.

Speaker 1

That's very helpful. Thank you.

Operator

Thank you. Our next question comes from the line of Alice Tang from Swiss Shanghai. Please ask your question, Alice. Good morning, management. Thank you for taking my question.

Operator

So we can see that the company's operating income has improved year over year. Was this mainly due to cost control? Are there any other plans to cut down costs further?

Speaker 2

Hi, actually, it's a very good question. In order to improve operational efficiency, we have done a lot of cost optimization in the past year, including staff costs, selling, G and A and R and D expenses, all of which have seen significant reductions. This was already reflected in the Q1 of last year with operating expenses decreasing by 26.6%. But to be honest, at this stage, there's not much room for further significant cost cut. We will continue to focus on the return on investments of our expenses and fine tune our cost structure and make adjustments as needed.

Speaker 2

Our main goal this year is to strive for more revenue, which is also crucial for returning to breakeven and achieving profitability in the long run. Thank you, Alex.

Operator

Thank you for taking my question. All right. Thank you. I am showing no further questions. I would now like to turn the conference back to management team for closing remarks.

Speaker 1

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 again for joining us today on the call. Have a good day.

Operator

Thank you. This does conclude our conference for today. Thank you for participating. You may now disconnect.

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Earnings Conference Call
Phoenix New Media Q1 2023
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