Phoenix New Media Q1 2024 Earnings Call Transcript

Quartr
Provided by Quartr
May 13, 2024

There are 4 speakers on the call.

Operator

Good day and thank you for standing by. Welcome to Phoenix New Media First Quarter 2024 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 would now like to hand the call over to Muzhi Guo from IR Department. Thank you. Please go ahead.

Speaker 1

Thank you, operator. Welcome to Phoenix New Media's earnings conference call for the Q1 of 2024. Joining me here today are our CEO, Mr. Yu Sheng Sun and our CFO, Mr. Edward Lu.

Speaker 1

During this call, our management team will begin by providing an overview of quarterly results, followed by a Q and A session. You can find the financial results for the Q1 of 2024 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 1

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 our earnings release. Now, I would like to pass the call to Mr. Sun, our CEO, for his opening remarks. I will provide the translation.

Speaker 1

And I will provide the translation now. Hello, everyone. I'm pleased to report on the company's operational progress in the Q1 of 2024 and engage in discussions on topics of interest. The Q1 of 2024 started off well. Despite the ongoing macroeconomic uncertainties, the team overcame many challenges and achieved our performance targets.

Speaker 1

On the content front, we remained committed to our media values, consistently delivering high quality content to strengthen brand value and influence. We continuously optimized and iterated our content and ad products. In advertising sales, we focused on industry strategies, aligning content with the needs of industry clients. We aim to maintain this positive operational momentum and strive to achieve our annual operational objectives. Now, I will invite Edward to provide a more detailed summary of our Q1 results.

Speaker 1

Edward, please go ahead.

Speaker 2

In the Q1 of 2024, we made significant progress in expanding our year influence, thereby driving the successful monetization of our content. We continue to lead in reporting major news events, achieving excellent audience reach and engagement during the Taiwan leadership election with out as the sole mainland based news app offering real time coverage excelling in speed distribution and the content quality. We collaborated with contributors from various perspectives and our comprehensive articles were widely published by major mainland and the Taiwanese media outlets. In February, our journalists in International Affairs provided live coverage from the Munich Security Conference. Our in-depth article titled Munich Unfolded gained significant exposure and leadership on our news app and the 3rd party social media platforms.

Speaker 2

It has received praise from experts at renowned institutions such as Peking University, the Chinese Academy of Social Sciences and the Tsinghua University as well as recognition from other mainstream media outlets such as Sunlian Live Weekly, Caixin and CGTN. This further solidified Ping's media influence in international affairs. In addition to on-site updates, we published same short videos on 3rd party video platforms covering over 3,000,000 views and tens of millions of exposures through media reports. In the growing sector of culture and the tourism, we persisted in enhancing our content product offerings through collaboration with local authorities, capitalizing on our content creation and event management expertise. The 2nd finance and economics event Changbai Mountain Forum was organized in collaboration with regional culture and the tourism bureaus and sponsored by local businesses and corporations.

Speaker 2

The event boasted distinguished guests from academia, politics and influential key opinion leaders, fight against the scenic backdrop of Snow Mountain. The forum featured skin, carnival and elevated guest experiences. It's garnered significant media coverage serving as a prime example of effective brand marketing in the culture and the tourism industry. Our original investigative series Eye of the Storm remained dedicated to delivering high quality in-depth reporting on trending topic, producing several articles that surpass 100,000 risk benchmark on Weixin. Beyond achieving significant traffic, Eye of the Storm earned acclaim from its principled stance on contentious issues upholding media ethics and values.

Speaker 2

In January, the finance channel responsible for producing Eye of the Storm was honored with the Good News Award from the China Banking Association, acknowledging Finx Finance's positive impact on the financial sector. Our presence on 3rd party platforms continued to grow in the Q1. Our Faixin video platform accounts gained 400,000 new followers, surpassing 3,000,000 in total, reflecting our commitment to producing captivating content to a broader reach. During the March explosion in Hebei, our Douyin accounts live streamed the thing drawing in over a 1000000 viewers. In total, this live stream and subsequent short videos garnered 46,000,000 cumulative views and attracted 18,000 new followers.

Speaker 2

Reinforcing our reputation for being consistently on the same for breaking news and enhancing user engagement. Our content initiatives yield tangible business outcomes in Q1 following the restructuring of our sales department last year. Sales and the content strategies were better attuned to industry needs, resulting in growth across diverse sectors. We observed a clear industry strategies and enhanced market penetration. While the restructuring posted professionalism and efficiency in market development.

Speaker 2

Additionally, there was notable improvement in content support and collaboration. Q1 net advertising revenue exceeded expectations, marking a 10% year on year increase. Overall, in Q1, we continue to enrich our content offerings, bolster our media influence and strengthen content monetization. Looking forward, challenges persist. In the face of tighter client budgets and the heightened competition, cost control throughout project execution is paramount to ensure profitability.

Speaker 2

Nevertheless, we are confident in our ability to enhance operational and commercial efficiency and achieve our business objectives in the upcoming quarters. This concludes our CEO, Mr. Sun's prepared remarks. I will now walk you through our financial performance for the Q1 of 2024. All figures mentioned will be in RMB.

Speaker 2

Our total revenues were 153,000,000, representing an increase of 4.5 percent, RMB146 point 4 million in the same period of last year. To elaborate, net advertising revenues were 100 and 38,600,000, representing an increase of 9.8% from RMB126.2 million in the same period of last year. Paid services revenue were RMB14.4 million compared to RMB20.2 million in the same period of last year. The decrease was mainly due to the decline in the revenues from licensing of certain copyrighted content and in e commerce revenues. Cost of revenues in the Q1 of 2024 decreased by 7.7% to RMB109 1,000,000 from RMB118.1 million in the same period of last year.

Speaker 2

And gross margin in the Q1 of 2024 increased to 28.8% from 19.3% as a result of strict cost control measures implemented. Loss from operations was RMB36.5 million compared to loss from operations of 74,400,000 in the same period of last year. Net loss attributable to ifeng was RMB26 1,000,000 compared to net loss attributable to ifeng of RMB 57.8 million in the same period of last year. Moving on to our balance sheet. As of March 31, 2024, the Company's cash and cash equivalents, term deposits, short term investments and restricted cash or RMB1.03 billion or approximately US143 million dollars Finally, I'd like to provide our business outlook for the Q2 of 2024.

Speaker 2

We are forecasting total revenues to be between 150,200,000 and 165,200,000. For net advertising revenues, we are forecasting between 141,900,000 1151,900,000. For paid service revenues, we are forecasting between 8,300,000 and 13,300,000. 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 2

We are now ready for questions. Operator, please go ahead.

Operator

Thank you. Our first question comes from Alice Tang from First Shanghai. Please go ahead.

Speaker 3

Good morning. Thank you for taking my question. So the company achieved revenue growth in the Q1. So could management please discuss your views on the current advertising market in the Q1 as well as the opportunities and challenges for company revenue and expectations for the Q2?

Speaker 2

Hi, Alice. Thank you for the question. Actually, the advertising market showed promising trends in the Q1 of this year. We believe it's aligned with the recovery of economic environment with a slight year on year increase. However, according to third party industry data, the growth was mainly concentrated in offline advertising such as elevators and the train stations.

Speaker 2

Internet advertising on the other hand experienced a significant double digit decline in such a market environment. Achieving year on year growth was particularly challenging for us. Our Q1 results showed that our organizational restructuring last year was quite effective, which focused more on meeting our clients' industry demands. Specifically, we observed strong growth in the food and beverage industry, especially in alcoholic beverage. In tournament, major online services and electronic product industries also experienced growth, which is consistent with the overall performance of the advertising market segmented by industry.

Speaker 2

It also worth mentioning that we made significant progress on the monetization of our third party social media accounts through a stable fund base and precise content marketing. We attracted top new energy vehicle companies that are primarily focused on Internet marketing. Additionally, we attend many new clients in consumer electronics, food and beverage and cosmetics. The advertising market in 2024 still holds growth potential, But we understand that with macroeconomic change and increased competition, Advertisers may manage advertising budgets more cautiously. We need to accurately grasp advertisers' needs and adjust our strategies.

Speaker 2

Also, I think we need to ensure the company's cost efficiency, put profits first above all else. Thank you, Alan.

Speaker 3

Thank you, Edward.

Operator

Thank you for the questions. There are no more questions from the line. I would like to hand the call back to Mutsi Kuo for closing remarks.

Speaker 1

Thank you. That concludes our earnings conference call. Please feel free to contact us if you have any further questions. Thank you for joining us today on this conference call. Have a good day.

Operator

That does conclude today's conference. You may now disconnect. Thank you for all your participation.

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Key Takeaways

  • In Q1 2024, total revenues reached RMB153 million (up 4.5% YoY), net advertising revenue grew 9.8% to RMB138.6 million, gross margin rose to 28.8%, and net loss narrowed to RMB26.1 million.
  • Real-time coverage of the Taiwan leadership election and the Munich Security Conference earned widespread acclaim from top academic and media institutions, strengthening the company’s influence in international affairs.
  • Third-party social platforms saw significant growth, with Faixin adding 400,000 followers to exceed 3 million, and Douyin live coverage of the Hebei explosion attracting 1 million viewers and 46 million cumulative views.
  • Following last year’s sales restructuring, an industry-focused content strategy drove a 10% increase in advertising revenue, with strong demand from food & beverage, consumer electronics and new energy vehicle advertisers.
  • The company forecasts Q2 revenues of RMB150.2–165.2 million but highlights tighter client budgets and competitive pressures, making strict cost control essential to sustain profitability.
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Earnings Conference Call
Phoenix New Media Q1 2024
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