Phoenix New Media Q2 2024 Earnings Call Transcript

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August 13, 2024

There are 4 speakers on the call.

Operator

Good day, and thank you for standing by. Welcome to Phoenix New Media Second 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 Please be advised that today's conference is being recorded. I will now hand the conference over to your first speaker today, Mo Zu Gu from IR Department.

Operator

Please go ahead.

Speaker 1

Thank you, operator. Welcome to Phoenix New Media's earnings conference call for the Q2 of 2024. Joining me here today are our CEO, Mr. Yu Shuang Sun and our CFO, Mr. Edward Lu.

Speaker 1

During this call, our management team will start with an overview of our quarterly results, followed by a Q and A session. You can find the quarterly results as well as the webcast of this conference call on our website at ir. Ifeng.com. Before the management's prepared remarks, I would like to draw your attention to our Safe Harbor statement contained in our earnings press release, which also pertains to our forward looking statements during this call. Additionally, please note that unless otherwise specified, all figures mentioned throughout this conference call are in RMB.

Speaker 1

Now I will pass the call to Mr. Sun, our CEO, for his opening remarks. I will provide the translation. Hello, everyone. The year 2024 is already halfway over.

Speaker 1

Our operations have remained generally stable, and we have achieved our performance targets, significantly reducing losses. In the Q2, we effectively enhanced Pfenex's media influence through high quality content and news reporting, coupled with extensive online distribution, laying a solid foundation for commercialization. Simultaneously, we continue to refine our products, optimize user experience and foster innovation in both content and commercial products. In the second half of the year, we'll continue to work with full dedication to achieve our annual operating goals to reduce losses year over year. Now I will invite Edward to provide a more detailed summary of our Q2 performance on my behalf.

Speaker 1

Edward, please go ahead.

Speaker 2

Thank you, Muju. In the Q2, we successfully covered a series of major events, achieving extensive reach across the Internet. Among the most significant international news stories in the Q2 was the death of the Iranian President in planned crash. Our detailed reports included a clear time line and a thorough analysis. We quickly produced multiple original pieces, providing exclusive insights into the crash course, analyzing Iran's future political landscape and discussing the country's military capabilities.

Speaker 2

Our original series worked well together to offer comprehensive and in-depth perspectives. Beyond major news events, we consistently produced original programs, ensuring a steady supply of high quality content that garnered wide distribution and discussion, enhancing our brand's advertising value. The in-depth investigative series, Eye of the Storm continued to excel in high quality, in-depth coverage of trending topics. It delivered over 20 original articles with over 100,000 reads on Weixin and several with over 300,000 reads, earning praise for its commitment to objective and ethical journalism on controversial issues. Our original video series, FinxLab, targeting towards a younger demographic, focused on creating practical consumer gaps across various scenarios, addressing consumer concerns and providing quality oversight.

Speaker 2

In Q2, Fink's Lab produced 23 original long videos, 72 original short videos and 2 major industry event reports. 1 long video became a hit on Bilibili with over 1,000,000 views, and the series achieved a total of 1,700,000,000 views across platforms. The FinsLab Bilibili account surpassed a 1,000,000 follower milestone in Q2, establishing itself as a leading consumer product review IP. Quality content requires broad distribution channels and effective user reach. In the Q2, our followers and the influence on 3rd party social media platforms grew steadily.

Speaker 2

Our team developed differentiated operational strategies tailored to each platform, enhancing dissemination through trending topics, interactive discussions and the live broadcast. We now have approximately 170,000,000 active user followers across all platforms. We have developed several key accounts on different platforms with rapidly growing followers basis and commercial value. For example, our Douyin account is approaching the 20,000,000 follower milestone. The advertising revenue from this 3rd party platform accounts also achieved double digit growth year over year.

Speaker 2

On the commercial front, we maintained positive momentum in the first half of the year. We expanded our efforts in the public sector beyond traditional culture and tourism promotions to include local industry bureaus and associations. Our services extended from provincial and city levels to county levels, achieving year on year growth. In terms of international marketing, we made significant strides in meeting clients' needs for overseas expansion. Our successful execution of several overseas campaigns, such as our brand's international sourcing project in New Zealand and the various award events resulted in widely discussed articles and videos on Weibo, Facebook and Twitter.

Speaker 2

This effort effectively communicated the open, confident and socially responsible image of Chinese brands, garnering widespread recognition from overseas audiences. In the Q2 of the year, we will continue to establish ourselves as a leading new media outlet. We will focus on strengthening our team's professional capabilities, producing quality content, refining our product and optimizing user experience. This is the core of our competitiveness as an Internet media company. At the same time, we will focus on further improving our operational efficiency and monetization capabilities to strengthen our position.

Speaker 2

This concludes our CEO, Mr. Sun's prepared remarks. I will now walk you through our financial performance for the Q2 of 2024. All figures mentioned will be in RMB. Our total revenues were RMB168.3 million compared to RMB180.2 million in the same period of last year.

Speaker 2

Specifically, net advertising revenues were 154,700,000 compared to 1,000,000 in the same period of last year. Paid services revenues were RMB13.6 million compared to RMB 18,400,000 in the same period of last year. Cost of revenues in the Q2 of 2024 decreased by 17.2% to RMB102.9 million from RMB124.3 million in the same period of last year, resulting in an increase in gross margin from 31% to 38.9%. Loss from operations was RMB8.9 million, a significant improvement compared to a loss from operations of RMB35.7 million in the same period of last year as a result of strict cost control measures implemented. Net loss attributable to ifeng was RMB5.5 million compared to net loss attributable to ifeng of RMB31.3 million in the same period of last year.

Speaker 2

Moving on to our balance sheet. As of June 30, 2024, the company's cash and cash equivalents, term deposits, short term investments and restricted cash were RMB989.1 million or approximately RMB136.1 million. Finally, I'd like to provide our business outlook for the Q3 of 2024. We are forecasting total revenues to be between RMB131,600,000 and RMB166,600,000. For net advertising revenues, we are forecasting between 142,300,000 and 152,300,000.

Speaker 2

For paid service revenues, we are forecasting between RMB 9,300,000 RMB 14,300,000. This forecast reflects our current and preliminary view, which are subject to changes and substantial uncertainties. This concludes the prepared portion of our call. We're now ready for questions. Operator, please go ahead.

Operator

Thank you very much. Our first question comes from the line of Alice Tan of First Shanghai. Please go ahead.

Speaker 3

Good morning. Thank you for taking my question. So the growth rate of the Internet advertising market seems to be slowing down. So could the management please share their views on the forward advertising market and discuss the relevant measures the company is planning on taking to respond to the current market environment, please?

Speaker 2

Good morning, Ed. Thank you for the question. Actually from the market data from the first half of twenty twenty four, the overall Internet media ad spending has experienced a year over year decline. Despite this, our advertising revenue for the first half of the year has remained stable with a slight increase, which is not easy. Especially in the automotive sector, traditional one of our strong areas, ad spending has dropped even further.

Speaker 2

To keep up our revenue, we need to step out of our comfort zone and make breakthroughs in other industry sectors. In the first half of the year, we saw significant growth in key areas like alcoholic beverage, FMCG and public sector. Our premium IP content and high end interviews align well with the branding needs of alcoholic beverage clients, leading to steady long term ad spending. In the MCG sector, we have utilized our specialized team and trendy useful content to attract more clients. In the public sector, we have been helping cities and counties showcase their history, culture and attractions, making them stand out and build strong city brand images.

Speaker 2

Looking ahead to the second half of the year, our international marketing efforts also look promising With the ongoing Paris Olympics, we are working with many brands on overseas event marketing. Our clients appreciate things international image, content rich and the ability to execute overseas campaigns. And we are confident that we can continue to grow in this area. Of course, we have got challenges too. For the sectors that are declining, we need to keep adjusting our strategies.

Speaker 2

Plus with the overall trend of lower per customer transaction, we need to work hard to bring in more clients and orders to hit our revenue goals. Thank you, Alex. Thank you again.

Operator

Thank you. Thank you for the questions. I see no further questions at this time. I will now turn the conference back to Mu Zhi.

Speaker 1

Thank you. This concludes our Q and A session and conference call. If you have any additional questions, please don't hesitate to reach out to us. Thank you for joining us and have a great day.

Operator

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

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Earnings Conference Call
Phoenix New Media Q2 2024
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