Phoenix New Media Q2 2024 Earnings Report

Phoenix New Media EPS Results

• Actual EPS: -$0.06
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Phoenix New Media Revenue Results

• Actual Revenue: $23.16 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Phoenix New Media Announcement Details

• Quarter: Q2 2024
• Date: 8/13/2024
• Time: N/A
• Conference Call Date: Tuesday, August 13, 2024
• Conference Call Time: 9:30PM ET

Phoenix New Media (NYSE:FENG) Inc. is a leading Chinese new media company that provides online news and information services through its flagship portal, ifeng.com, as well as a suite of mobile applications and video platforms. The company offers a wide array of multimedia content, including live streaming news, on-demand video, audio programming and article publishing across topics such as finance, technology, entertainment, lifestyle and sports. In addition to content distribution, Phoenix New Media generates revenue through digital advertising and subscription services.

Formed as a spin-off of its parent Nanfang Media Group’s overseas broadcasting business, Phoenix New Media was established to capitalize on the rapid growth of Internet and mobile consumption in China. The company completed its initial public offering on the New York Stock Exchange in April 2013 under the ticker symbol FENG. Leveraging the editorial expertise and global news network of Phoenix Satellite Television, Phoenix New Media has cultivated a reputation for timely news updates and in-depth feature reporting.

Phoenix New Media primarily serves audiences in Mainland China, Hong Kong and Macau, while also reaching overseas Chinese users in North America, Europe and other regions. Its digital ecosystem encompasses desktop and mobile websites, iOS and Android apps, as well as integrations with smart TVs and over-the-top (OTT) devices. The company’s video-on-demand service and live-broadcasting capabilities have become key growth drivers, particularly among younger, tech-savvy demographics.

Guided by a management team with extensive experience in media, technology and finance, Phoenix New Media continues to invest in product innovation and artificial intelligence-driven content recommendations. The company remains focused on expanding its user base, enhancing engagement through interactive features and developing new digital marketing solutions to meet the evolving needs of advertisers and audiences alike.

Phoenix New Media Q2 2024 Earnings Call Transcript

Key Takeaways

• In Q2, strict cost control improved gross margin to 38.9% (from 31%) and narrowed net loss to RMB5.5 million versus RMB31.3 million a year ago.
• Total Q2 revenues fell to RMB168.3 million from RMB180.2 million, with paid services revenue dropping to RMB13.6 million from RMB18.4 million.
• The FinsLab video series amassed 1.7 billion views across platforms and surpassed 1 million followers on Bilibili, contributing to about 170 million active followers overall and a Douyin account nearing 20 million.
• Expansion into public sector promotions and overseas campaigns drove double-digit year-over-year growth in advertising revenue from third-party social media platforms.
• Q3 guidance forecasts total revenues between RMB131.6 million and RMB166.6 million, reflecting ongoing market uncertainties and the company’s push for further diversification.

Presentation

[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 listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you'll need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I will now hand the conference over to your first speaker today, Muzi Guo, from IR Department. Please go ahead.

[Muzi Guo, Head of Investor Relations at Phoenix New Media Limited]

Thank you, operator. Welcome to Phoenix New Media's earnings conference call for the second quarter of 2024. Joining me here today are our CEO, Mr. Yusheng Sun, and our CFO, Mr. Edward Lu. During this call, our management team will start with an overview of our quarterly results, followed by a Q&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. Now, I will pass the call to Mr. Sun, our CEO, for his opening remarks. I will provide the translation. Sun.

[Sun Yusheng, CEO at Phoenix New Media Limited]

[Foreign language].

[Muzi Guo, Head of Investor Relations at Phoenix New Media Limited]

Hello, everyone. The year 2024 is already halfway over. Our operations have remained generally stable, and we have achieved our performance targets, significantly reducing losses. In the second quarter, we effectively enhanced Phoenix'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 second quarter performance on my behalf. Edward, please go ahead.

[Edward Lu, CFO at Phoenix New Media Limited]

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

[Edward Lu, CFO at Phoenix New Media Limited]

It delivered over 20 original articles with over 100,000 reads on WeChat, and several with over 300,000 reads, earning praise for its commitment to objective and ethical journalism on controversial issues. Our original video series, Phoenix Lab, targeting towards a younger demographic, focused on creating practical consumer guides across various scenarios, addressing consumer concerns and providing quality oversight. In Q2, Phoenix Lab produced 23 original long videos, 72 original short videos, and two major industry event reports. One long video became a hit on Bilibili with over 1 million views, and the series achieved a total of 1.7 billion views across platforms. The Phoenix Lab's Bilibili account surpassed the 1 million follower milestone in Q2, establishing itself as a leading consumer product review IP. Quality content requires broad distribution channels and effective user reach.

[Edward Lu, CFO at Phoenix New Media Limited]

In the second quarter, our followers and the influence on third-party social media platforms grew steadily. Our team developed differentiated operational strategies tailored to each platform, enhancing dissemination through trending topics, interactive discussions, and live broadcasts. We now have approximately 170 million active user followers across all platforms. We have developed several key accounts on different platforms, with rapidly growing follower bases, and commercial value. For example, our Douyin account is approaching the 20 million follower milestone. The advertising revenue from this third-party platform accounts also achieved double-digit growth year-over-year. On the commercial front, we maintained positive momentum in the first half of the year. We expanded our effort 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-over-year growth.

[Edward Lu, CFO at Phoenix New Media Limited]

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 a 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. This effort effectively communicated the open confidence and socially responsible image of Chinese brands, garnering widespread recognition from overseas audiences. In the second quarter 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. This concludes our CEO, Mr. Sun's prepared remarks.

[Edward Lu, CFO at Phoenix New Media Limited]

I will now walk you through our financial performance for the second quarter of 2024. All figures mentioned will be in RMB. Our total revenues were RMB 168.3 million, compared to RMB 180.2 million in the same period of last year. Specifically, net advertising revenues were RMB 154.7 million, compared to RMB 161.8 million in the same period of last year. Paid services revenues were RMB 13.6 million, compared to RMB 18.4 million in the same period of last year.

[Edward Lu, CFO at Phoenix New Media Limited]

Cost of revenues in the second quarter of 2024 decreased by 17.2% to RMB 102.9 million, from RMB 124.3 million in the same period of last year, resulting in an increase in gross margin from 31% to 38.9%. Loss from operations was RMB 8.9 million, a significant improvement compared to a loss from operations of RMB 35.7 million in the same period of last year, as a result of strict cost control measures implemented. Net loss attributable to Ifeng was RMB 5.5 million, compared to net loss attributable to Ifeng of RMB 31.3 million in the same period of last year. Moving on to our balance sheet.

[Edward Lu, CFO at Phoenix New Media Limited]

As of June 30, 2024, the company's cash and cash equivalents, term deposits, short-term investments, and restricted cash were RMB 989.1 million, or approximately U.S. dollar $136.1 million. Finally, I'd like to provide our business outlook for the third quarter of 2024. We are forecasting total revenues to be between RMB 131.6 million and RMB 166.6 million. For net advertising revenues, we are forecasting between RMB 142.3 million and RMB 152.3 million. For paid service revenues, we are forecasting between RMB 9.3 million and RMB 14.3 million. 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 are now ready for questions. Operator, please go ahead.

[Operator]

Thank you very much. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by as we compile the Q&A roster. Our first question comes from the line of Alice Pan of First Shanghai. Please go ahead.

[Alice Pan, Senior Equity Research Analyst at First Shanghai]

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?

[Edward Lu, CFO at Phoenix New Media Limited]

Morning, Alice. Thank you for the question. Actually, from the market data from the first half of 2024, 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. 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 beverages, FMCG, and public sector.

[Edward Lu, CFO at Phoenix New Media Limited]

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 FMCG sector, we have utilized our specialized teams and the trendy, useful content to attract more clients. In the public sector, we have been helping cities and counties showcase their history, culture, and attraction, making them stand out and build strong city brand images. 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.

[Edward Lu, CFO at Phoenix New Media Limited]

Our clients appreciate Ifeng's international image, content reach, and the ability to execute overseas campaigns, and we are confident 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. 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, Alice. 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 Muzi.

[Muzi Guo, Head of Investor Relations at Phoenix New Media Limited]

Thank you. This concludes our Q&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.

Participants

Executives

• Edward Lu, CFO
• Muzi Guo, Head of Investor Relations
• Sun Yusheng, CEO

Analysts

• Alice Pan, Senior Equity Research Analyst at First Shanghai