Phoenix New Media Ltd (FENG) 2016 Q3 法說會逐字稿

Ladies and gentlemen, thank you for standing by and welcome to the Phoenix New Media Third Quarter 2016 Earnings Conference Call. (Operator Instructions).

I must advise you that this conference is being recorded today, Wednesday November 9, 2016. I would now like to hand the conference over to your first speaker today, the IR Director of Phoenix New Media, Mr. Matthew Zhao, thank you, please go ahead.

Thank you, operator, and thank you and welcome to Phoenix New Media third quarter 2016 earnings conference call. I'm joined here by our Chief Executive Officer, Mr. Shuang Liu, our President, Mr. Ya Li, and the Chief Financial Officer, Ms. Betty Ho.

For today's agenda, management will provide us with a review on the quarter and also include a Q&A session after the management's prepared remarks. The third quarter 2016 financial results and the webcast of this conference call are available at the investor relations section of www.ifeng.com.

A replay of the call will be available on the website in a few hours. Before we continue, I refer you to our Safe Harbor Statement in our earnings press release, which applies to this call, as we will make forward-looking statements.

Finally, please note that, unless otherwise stated, all figures mentioned during this conference call are in Renminbi.

With that, I would like to turn the call over to Mr. Liu Shuang, our CEO.

Thank you, Matthew. Good morning and good evening, everyone. I'm very pleased to report our solid financial results for the third quarter of 2016, where we exceeded the Street's profit estimates. This was primarily driven by strong results around our mobile advertising demand. The robust 69% year-over-year increase in our mobile advertising revenues continued to highlight the sustainability of our overall net advertising revenue growth.

This exemplifies solid progress in the implementation of our mobile strategy and we are encouraged by these strong results that we continue to see in this area. Meanwhile, the macro environment remains challenging in the industry. That is no exception for us. We expect the trend to continue in the near future and are confident that our strong mobile execution and performance will help us counter these macro headwinds.

We continue to focus on strengthening our core capabilities by providing our users with customized, uniquely specialized and high quality content across our platforms. We remain diligent and agile as the media landscape evolves in China. As such, we are excited to have the veteran Chinese media executive, Mr. Chen Tong, join us as the co-president of ifeng and president of Yidian. Chen Tong is a pioneer of China's internet media ecosystem, having evolved with the industry and spearheaded the development and success of China's portal, blog and weibo productions.

He is a proven leader with significant media and content development expertise and a deep understanding of the changes and direction that are taking place in our industry. Most importantly, he clearly sees and understands the tremendous growth opportunities that are present for the Yidian and ifeng platforms.

Going forward, he will be responsible for ifeng's content operations management, and Yidian's content, product operations, and public relations.

By partnering with Ya and me to help to ease ifeng into the next level of internet media expansion. We are extremely excited about Chen Tong's appointment and look forward to working with him to build upon the Company's strong foundation and accelerate our success for years to come.

Moving on to Yidian Zixun and ifeng's encouraging progress. We continued to see solid user growth for Yidian Zixun. Our total average DAUs for this September almost tripled year-over-year to more than 40 million users.

Unlike other personalized apps, by leveraging its advanced data collection and analysis technology, Yidian is able to help users to avoid many technical traps such as over-pushed tabloid news, title baiting, limited and confined information being pushed which is creating very narrow perspectives and many other similar issues. Yidian Zixun aims to provide our users with more balanced and professional coverage that is far beyond other competing platforms' aggregated and commoditized news.

By using an increasing amount of AI, and machine learning technologies, the product encourages users to explore and express the information he or she specifically wants. In addition, ifeng's strong media DNA allows us to make an ideal balance between algorithm and professional journalism, to prevent over-exploiting the human weakness in users' interests, which in turn provides superior user experience based on both readings of personal interest and premium current affairs content. Meanwhile, such personalized and specialized content offers significantly better targeting opportunities with advertisers and thus, improves monetization opportunities.

In addition, we recently launched our strategic partnership with OPPO, handsets with preinstalled Yidian apps have just started to ship over the past months and we expect monetization to begin at the end of this year. In addition, this partnership allows OPPO's browser on both existing and new phones exclusively using Yidian's revenue stream.

We also further strengthened our partnership with Xiaomi. Similar to OPPO, Xiaomi's browser has also directly embedded the Yidian private newsfeed and is going very well. It is important for us to mention that both of these partnerships have enabled substantial Yidian branding exposure on major global handset manufacturers.

We are confident that by strategically partnering with handset manufacturers, and effectively marketing the app, we will achieve more sustainable long-term user growth and establish Yidian as the leading personalized content consumption app in China.

Moving on to ifeng's developments, we hosted and sponsored numerous events around the globe this quarter. The Company held the 2016 ifeng Fashion Choice Show and the Phoenix International Forum, both of which were sponsored by major brands and received tremendous success. The ifeng Fashion Choice is an annual large-scale fashion award ceremony that recognizes Chinese representatives and top fashion brands that made significant contribution to the fashion industry in the past year.

Importantly, this year's event was broadcasted live and achieved record viewership with more than 2.3 million viewers tuning in on our platform. In addition, ifeng has been increasingly engaged in giving back to the global community. On September 30, we sponsored and attended a charity event hosted by Operation Smile in Los Angeles, to raise money to help Chinese children with cleft lips and palates.

The event attracted nearly 500 attendees, including political and business leaders from both the US and China, Hollywood celebrities and many other influential public figures. The charity dinner was a remarkable success and we are extremely honored to be able to work with organizations such as Operation Smile to help children worldwide.

We firmly believe that these types of charity initiatives characterize ifeng's consistent and strengthening commitment to utilizing our unique media platform and global influence to contribute to the positive development of Chinese society.

Going forward, we will continue to leverage our global footprint and resources to sponsor and participate in more international philanthropic efforts.

On the content side, ifeng continues to be innovative and industry-leading in its content creation, and is now taking advantage of the opportunities that come with the rising popularity of live broadcasting. By differentiating ourselves from other live broadcasting platforms which are more focused on online collaborative-style chat room broadcasting, we are able to leverage our unique brand influence and media expertise to broadcast live major events in fashion, travel, film premieres, conferences, product launches and many other verticals with key opinion leaders.

We believe that by doing so, our live broadcasting offering will be strengthened and the user stickiness on our platforms will be further enhanced. Moreover, we recently converged ifeng and Yidian's we-media accounts together in efforts to further leverage our we-media resources on both platforms. Going forward, through a consolidated content pool for we-media content offers, both ifeng and Yidian can recommend and distribute we-media content with a powerful distribution channel which has close to 70 million daily unique visitors.

By continuing to execute on the strategic initiatives across all of our platforms, we are confident that we will capture new growth opportunities and improve our market position to drive value for users, strategic partners and shareholders.

To conclude, as always, we are committed to providing our users with the highest quality of media content that caters to each user's specific need and interests. Both ifeng and Yidian continue to make large strides in improving our platforms, with cutting edge technology and high quality proprietary content as the industry and viewers' consumption habits evolve.

We remain focused on the execution of our mobile expansion strategy and continue to work with our strategic partners to improve our preinstalled app adoption and broaden our user footprint.

We believe that we have the right strategy and team in place to further improve our performance and capitalize on the growth opportunities that exist at the intersection of big data analytics, supported by advanced algorithm and high quality journalism. We look forward to delivering additional value to our valued users, partners and shareholders. With this, I would like to turn it over to our CFO, Betty Ho.

Thank you, Shuang, and thank you all for joining our conference call today. As Shuang mentioned earlier, we are very glad to have another strong quarter with bottom line which had beaten the Street consensus, driven by the mobile growth.

ifeng's total revenue for the third quarter came in at RMB360 million, driven by the mobile advertising sales growth. Non-GAAP net income attributable to Phoenix New Media for the third quarter was RMB25 million, or RMB0.34 non-GAAP net income per diluted ADS.

Now let me take you through our financial highlights for the third quarter of 2016 results. The amounts mentioned here are all in RMB, unless otherwise noted.

The differences between GAAP and non-GAAP are non-cash or non-operating items, which are share-based compensation and loss from equity investments including impairments.

Starting with revenues, net advertising revenues for the third quarter came in at RMB310.4 million, which represents a year-over-year increase of 3.5%. The increase was primarily due to the 69.4% year-over-year growth in mobile advertising revenue and was partially offset by the 22.8% year-over-year decrease in PC advertising revenues.

Paid service revenues for the third quarter was RMB49.6 million, which represents a year-over-year decrease of 45.1%, which was better than expected.

MVAS revenues decreased by 63.7%, to RMB25.8 million, mainly resulting from the decline in users' demand for services provided through telco operators in China, which was consistent with the Company's expectations given the shrinking demand for such services in general.

Games and others revenues increased by 23.5%, to RMB23.8 million, primarily due to the increased revenues generated from online digital reading services through the Company's own platform.

Secondly, gross profit and margin, non-GAAP gross profit for the third quarter of 2016 was RMB172 million, compared to RMB184.7 million in the same period last year. Non-GAAP gross margin for the third quarter slightly increased to 47.8%, from 47.3% in the same period last year.

In terms of cost of revenues, non-GAAP content and operational costs as a percentage of total revenues increased to 34.6%, from 26.6% in the same period last year. It was mainly driven by the increase in general operating costs and advertisement related content production costs.

Revenue sharing fees as a percentage of total revenues decreased to 4.6%, from 13.2%, primarily due to the decrease in sales of MVAS products. Bandwidth cost as a percentage of total revenue decreased to 4.6%, from 5.3% in the same period last year.

Sales tax and surcharges increased to 8.5%, from 7.6% in the same period last year. Thirdly, non-GAAP operating expenses for the third quarter decreased by 7%, to RMB152.9 million, from RMB164.4 million in the same period last year.

Non-GAAP operating income for the third quarter was RMB19 million, compared to RMB20.3 million in the same period last year. Non-GAAP operating margin for the third quarter was 5.3% as compared to 5.2% at the same period last year. The decrease in operating margin was mainly due to the increase in mobile traffic acquisition expenses.

Fourthly, GAAP net income attributable to ifeng for the third quarter increased by 49.5% to RMB31.7 million from RMB21.2 million in the same period last year. Non-GAAP net income attributable to ifeng for the third quarter was RMB24.8 million as compared to RMB35.9 million in the same period last year.

Non-GAAP net income per diluted ADS for the third quarter was RMB0.34 compared to RMB0.50 in the same period last year. In terms of balance sheet items, as of September 30, 2016, the Company's cash and cash equivalents, term deposits and short-term investments and restricted cash were RMB1.16 billion or approximately $173.8 million.

Restricted cash represents deposits placed at a security or banking facilities granted to the Company which are restricted as to their withdrawal or usage.

In order to better incentivize our employees, the Company has implemented a new option exchange program to replace the old one with lower exercise price. Therefore, share-based compensation is expected to be increased in the coming quarters.

Lastly, I would like to provide our business outlook for the fourth quarter of 2016. We are forecasting total revenues to be between RMB353 million to RMB368 million, representing a decrease of 18.1% to 14.6% year-over-year. For net advertising revenues, we are forecasting between RMB306 million and RMB316 million, representing a decrease of 11.6% to 8.7% year-over-year.

For paid service revenues, we are forecasting between RMB47 million and RMB52 million, representing a decrease of 44.4% to 38.5%.

This concludes the written portion of our call. We are now ready for questions. Please go ahead, operator.

(Operator Instructions).

Our first question today comes from the line of Wendy Huang from Macquarie. Wendy, please go ahead.

Thank you. My first question is about Yidian and also competition in the newsfeed and personalized news area. So what kind of the financial and also the traffic target that you have set for Yidian for next year? Are you still on track to consolidate Yidian in 2017?

Recently, we have also observed the increasing competition from new players, for example, Baidu started to promote their newsfeed as well, and today's headlines, they raised more money and high valuation, so can you comment on the competitive landscape?

My second question is about some of the live broadcasting initiatives you mentioned in the prepared remarks, so what kind of revenue model -- or how would you like to generate revenue from those live broadcasting initiative you just mentioned?

Is it mainly through the advertising revenues that you used to derive from your traditional product or do you also expect to get some kind of tipping over to ifeng's revenue like other live broadcasting platforms? Thank you.

Hi, thank you for the question, this is Ya. Our first question is about the user growth and revenue growth for Yidian. As we enter into the fourth quarter of this year, we accelerated our user growth.

First OPPO started to ship new handsets with pre-installed Yidian apps. And secondly, both for OPPO and Xiaomi handsets, we are starting to provide embedded news stream in their browsers. These two handsets actually are two of the top five manufacturers in China. And also, OPPO became the number one in the third quarter.

Both of them have large existing browser user base and also for the next 13 months towards the end of next year, we are expecting at least 100 million to 150 million new shipments with preinstalled Yidian apps as well as the embedded news services in their browsers.

So we are very excited about this user growth just from the strategic channel partners. We believe we should be able to double our user base from the level of over 40 million we announced in September. And also because our unique product positioning for Yidian and that is also the reason, actually, these two manufacturers initially chose to partner with us. We are trying to provide a balanced premium content between algorithm and professional journalism so that we can provide news not just based on the so-called users' interests, but also the quality content, to make the content not only interesting or newsworthy, but also useful and tasteful.

So this unique product positioning based on our exclusive interest engine technology should also help us grow users from like, iOS users, Apple users. We are also starting our brand advertising to help users understand the uniqueness of our product positioning.

In addition, the ifeng proprietary contents, premium contents is also providing the Yidian users the kind of overall content experience superior to many of the competitors. So that has paved for a very exciting user growth for 2017.

On the revenue side, also based on our unique product positioning we can capture those user interests or better user interest graphs beyond their interest like about reading some of the newsworthy or tabloid content, we are capturing those useful and valuable interest of users for their work, for their life, for their family, their health, education, investment, travel, et cetera.

So the better capture of users' true and useful interests is -- will provide us with better monetization capacity for targeted advertising. In addition, since our product combines users' expressive interests with the AI-based recommendation technology, so we are actually having the opportunity to innovate in the areas like mobile search apps and mobile subscription apps. This is also based on our unique product features and our unique product positioning.

For the first three quarters of this year, we are starting to monetize and receive material revenue growth. Going -- entering this quarter and going next year, as we accelerate our user growth, as mentioned earlier, we are expecting the revenue to grow multiple folds in 2017, as also the monetization efficiency, or effectiveness, has been proved or validated by many of our peer companies.

Then going to your question about the competitive landscape, yes, I think just because of the attractiveness of this mobile-leading sector, we see UC and also Baidu entering this area in the form of the so-called embedded news stream service. That's the same as we mentioned, as I mentioned, what we are doing with the OPPO and Xiaomi browsers. We are the exclusive news stream provider embedded in their browsers.

I think our user growth in this form of embedded news stream, I think will grow faster than both of these two competitors, despite of their existing large user base. I think the key strategic handset manu partnership is important for future user growth. It will be rather challenging for both of these leading peers to capture new users. They are right now just monetized through the news stream and native apps based on existing user base for their UC browser and mobile Baidu apps. However, we have a better user growth prospect.

So we are encouraging by I think the industry's interest in this form of mobile news service, while we keep confident about our own growth. That's about the question you asked for Yidian.

Going -- about the question for live broadcasting for ifeng, I think the key is -- I think there are a couple of factors. First, on the regulatory side, I think the regulatory body actually is keeping close monitoring about the so-called chatroom live broadcasting. However, we are leveraging our brand influence and our media platform to provide live broadcasts for many events, like product launches, like business conferences, like film premieres, like fashion, travel, and other vertical events. And these actually are very welcomed by many of the brand advertisers, and this is something unique -- we have unique advantage in providing.

So, combining this live broadcasting with our brand advertising, especially the native marketing initiatives, I think this will become a new revenue source. It's not based on the existing user base but rather on the authoritative media influence we provide for a live event. That's where we will complement many of the -- our advertising partners and for many of the event organizers.

I don't know if that addressed your questions.

Thank you. I still have a question regarding the Q4 revenue guidance. So your Q4 revenue guidance seems came below my original estimate. So, can you maybe give more color on the rationale, provide the guidance that you're giving, and also the business momentum by different segments? Thank you.

Okay. Yes. I think for the past quarter, we achieved year-over-year growth for our advertising revenue, despite of the soft economy and also the continuous trend of migrating from PC to mobile advertising. Going into the fourth quarter, we continue to see uncertainty or the increased uncertainty of the Chinese macro economy. That's why we want to keep cautious in providing the guidance.

However, we are making several -- we'll continue on our several initiatives, hopefully to achieve at least on a whole year base actually to be at least flat as per last year. We are seeing rapid growth in our programmatic buy, the DST revenues. We are also continue to push our native marketing strategy initiative to generate more revenues for our brand advertising. And also, I think we are leveraging the synergies between ifeng and Yidian, try to become a larger media platform to provide some integrated solutions for the major advertising needs of the leading advertisers.

I think about the sector change, the trends, we see the -- first, the auto industry continues to be the number one sector for us, and we see it as stable and flat.

The second sector is the e-commerce sector. We see e-commerce revenue continue to be the number one sector actually on our PC platform, as our PC traffic is decreasing its traffic but at the lowest rate compared to our peers. Also, we are seeing the overall e-commerce advertising spend to be stable. But for this quarter, because due to the double-11 factor, we see the e-commerce to grow compared to the previous quarter.

For the finance sector, which is the third contributor by sector, we are increasing a lot of new advertisers, from insurance companies, from bank -- traditional banks, from asset management and other small and medium-size advertisers, based on our programming by platform, the (spoken in Chinese) platform, which helps us to increase, not just for the finance sector but also overall, to increase the utilization rate of our unsold ad inventories and to bringing more advertisers to feel both PC and mobile inventories.

Also we are seeing the competition among the handset manufacturers and telecom operators. We're also seeing the increased advertising budget from the communication service providers. On internet service side, we are also leveraging our programming by platform to bringing more small and medium-size advertisers.

Another sector we are seeing opportunity for next year is the Chinese white wine, the baijiu industry, as it stabilized over the last 24 months and as we also are getting information from some leading indicators like CCTV's advertising revenue growth from the white wine industry, we are also expecting accelerated growth in this sector as it fits our user profile better. We do have a lot of, I think, audience compared to other platforms who drink Chinese white wines. So that's the sector-by-sector outlook for 2017.

Thanks, Ya.

Our next question today comes from the line of Natalie Wu from CICC. Natalie, please go ahead.

Hi, good morning, Shuang-zong, Ya-zong, Betty, Matthew and Jessie. Thanks for taking my question.

Firstly, a housekeeping question. So, what's the mobile contribution for your advertising revenue in the last quarter?

And also, in terms of the top five sectors, actually you just mentioned that e-commerce ranked the -- should be there firstly, right, in terms of your like advertising revenue, and finance as the third. So what's the second contributor to your advertising revenue? Can you -- can management remind us of the contribution from the top five sectors to your advertising revenue, respectively?

Also the second question is regarding your Yidian business. So, Yidian's DAU reached over 14 million in September. This is a very impressive number. So, just wondering, how much of the 14 million is coming from apps and how much from web? Are these similar level of monetization potential in the future? And also, can management update us the average daily using time in terms of Yidian?

Also, actually I noticed that there's some litigation going on between you and Yidian's competitor. So, wondering, can management also have some comment on that please. Thank you.

Thanks, Natalie. This is Shuang. It's nice you have raised these very important questions about Yidian's litigation -- yes, ifeng's litigation against competitors.

Actually, a few months ago, a user reported that when they try to upgrade the ifeng product, another competitor's app installation alerts someone and pop up. This is a typical type of traffic hijacking behavior. Traffic hijacking has been a very, very big, serious issue for internet companies, and continue to cause immeasurable damage for users. Also the competitors intentionally mislead users while searching to download ifeng, to install other apps instead through purchasing keywords from search engines.

So this kind of actions actually are violating fair, honest business ethics and also severely affect users' daily consumption of ifeng's product. So we decided to safeguard our rights through legal actions. Actually by doing so, we hope to help the industry to create a better, fair competition environment. I hope this answers your question.

Hi, Natalie. Thanks for the questions. First, about the mobile contribution for the third quarter. It's 47%, as compared to 29% a year ago or 40% a quarter ago. We did grow mobile advertising at a rate of 69% for this quarter.

Secondly, you raised the sector contributions. Let me first clarify that the e-commerce is number one contributor for our PC advertising. However, on the mobile, it's overwhelmingly the auto industry. So overall when we combine PC with mobile, the top five sectors and their relative contributions, the auto sector 27%; e-commerce 13%; financial service 10%; communications service is 9%; and internet service, which includes like internet, transportation, like some of the other O2O and sharing economy, all those internet services, 7%. These are the top five sector contributions.

On the Yidian's user, the 40 million DAUs, yes, currently I think that both the Yidian app and the embedded news service in the browser contributed to this number. However, we do exclude those browser users which do not use our embedded news service or we count those users based on whether we have advertising capacity for that user on that day. In other words, if the user doesn't see our ad, doesn't -- of course, excluding the factor of ad field, we only count the users who is able to see our ad towards the DAU.

Currently, we do not provide the breakup between these two categories, but we do believe both the app user and the embedded news service user will accelerate this growth. As I mentioned, OPPO started to shift their handsets with preinstalled Yidian app in late October.

About the time spent on our apps and browsers, the average time spent on our apps is about 50 minutes, and a very small portion, I think less than -- or around 10% of that time is spent on short form video. So, actually, users spend more time reading different categories of content. We have over 3 million channels subscribed by different users. These 3 million channels make our user profile more accurate because we have a smaller concentration on those leisure and tabloid news or the breaking news.

Leisure, tabloid news or breaking news provides minimum information about user's true interests for our targeted advertising or to provide better useful information for the user. Well, our product idea has this, in Chinese we call it (spoken in Chinese). Actually this kind of positioning is quite different than most of the peers, which base mostly on the click-through rates or on users' time spent to decide what continue to push, to provide for the users. However, we want our content not only to be interesting or newsworthy but also to be useful and tasteful. So this methodology, this product position allow us to increase user stickiness. As our value provided to users are not -- are irreplaceable, cannot be provided easily by other platforms, whereas most other platforms, users can jump from one to another, it's just different levels of tabloid news provided, which we think are exploitation of human nature or of human weakness.

So, also because of this, our browser time spent is quite high as well. It's -- I would say, it's in -- it's about the same as many of the independent news apps for the time spent per user per day on our embedded news service on these two browsers. At this time also, we are not providing enough personalization or much video content on our browsers or on our apps yet, on our apps, to the extent we are accelerating that. We believe that, with increased video content provisioning, we will be able to further extend our time spent on our apps. And also as we start to provide video content on our embedded news service on the browsers, we should see continuous growth potential for the time spent on the browsers. And overall, I think our product positioning and our product -- the technology behind it will provide us with increased user stickiness and better targeted advertising results.

That's it, Natalie.

Our next question today comes from the line of Binbin Ding from JPMorgan. Binbin, please go ahead.

Hey, good morning. Thanks for taking my question, management. I'm very pleased to see that Chen Tong joins Phoenix and Yidian as part of the management team. So my question is, what kind of changes or synergies can we expect that Chen Tong will bring to Phoenix as well as Yidian Zixun? And as Chen Tong will serve as both President of Phoenix and Yidian, so, what will be Chen Tong's time allocation between these two platforms?

My second question is about user engagement. So in addition to the average time spent on -- per user, so, can you give us some more color in terms of the user engagement, for example, as measured by the DAU and divided by the MAU ratio? Is there any major difference between the user behaviors on the users you acquired from pre-installation as compared to the organic downloads? Thank you.

Hi, this is Shuang. Let me answer your first question. Chen Tong has -- will serve as the President of Yidian Zixun and continue to represent Xiaomi as a Director. And he will be fully responsible for Yidian's content product operations, public relations. He will also serve as the Co-President of ifeng, responsible for ifeng.com and app operation management.

As I said in my opening remarks, Chen Tong is the pioneer of China's portal blog and mini-blog business. He basically defined the market and bring these three product lines to the highest level in China's industry arena. So with his joining ifeng and Yidian, he will bring in his very super-sensitive journalism and very strong execution capabilities, and his extensive industry contacts and also very deep insight into content consumption behavior of all these internet users.

His major, I think he will spend more than (technical difficulty) of his time and energy on focusing Yidian Zixun, and also further accelerate the cooperation between Yidian Zixun and ifeng because there's lots of synergies in the areas of we-media channel development and content cooperation, and also major coverage of the current affair events and all the things. So he can help to realize the huge synergy in these areas between ifeng and Yidian side. Yes.

Okay. Hi, Binbin, this is Ya. Thanks for your question. First, about user engagement measurement for Yidian. I think there are several numbers we did disclose in the past. First is the number of channels subscribed by our users, with 3 million, currently, 3 million channels subscribed by users. That actually is truly unique. I think the only comparable platform is YouTube. YouTube has over a million channels, I think, defined and sometimes subscribed by users.

This large scale or super-DIY capacity allow us to provide the so-called value reading (spoken in Chinese) to our users, beyond tabloid news and breaking news. And with internal, we do manage many more aspects of user behavior, like the number of searches, the number of subscriptions, percentage of those things, and also other engagement numbers like the number of social sharing onto Weixin and Weibo or other social platforms, the number of like marking as favorite, the number of user discussion, user comments, and et cetera.

I think these, and many more engagement numbers, you know, we do not -- we scarcely disclose them as we -- some internal management, we watch to improve our user satisfaction and also to improve user stickiness, prevent user exit to jump to other platforms.

For the MAU level to the DAU level, I think that we are among the highly frequently used platforms, I think among the top three, but the actual number we never disclosed in the past.

Lastly, you mentioned about the importance of -- or the number of organic downloads. We realize our product positioning and the value proposition for our users actually represents I think the direction of the -- or the evolution of mobile rating. That's the reason in the beginning why Phoenix New Media, why ifeng strategically invested in Yidian, because it fits well with our mission of providing the premium content and professional journalism, the two useful contents for our audience.

Certainly, that's also the reason that these two leading handset manufacturers, OPPO and Xiaomi, choose us, not some of the other competitors as their exclusive partners. However, we do believe that our -- the product proposition and value proposition will also attract users as I think the mobile rating evolves. But we do have to go through the path of first, improve brand awareness and also the -- to convey our unique product positioning and the true value to the audience. That's why we started a round of brand advertising in mid-October through November. And we believe, going into 2017, we will increase more budget in brand advertising and also independent channel promotion to help increase user growth and also organic download.

One of the measurement about users' acceptance of our app is in the trend of users we obtained from the social sharing. Because now, every day, as millions of -- tens of millions of users are using our service, they also share our content on Weixin and Weibo platform. And this creates user acquisition opportunities. We are seeing the trend that users acquired through that social sharing on a daily basis doubled in the last three, four months. That's also an indicator of, I think, the direction of our organic user acquisition going into 2017.

Thank you very much.

Thank you, Binbin.

Our next question today comes from the line of Xin Wang from Citigroup. Xin, please go ahead.

Hi, management. Thank you for taking my questions. I have two questions.

The first one is, how do you see the user overlap between your news app and Yidian?

The second one is, what's Yidian's traffic breakdown by OPPO and Xiaomi and other category? And what's the breakdown for the incremental part of the traffic? Thank you.

Okay. Thank you for the question. First, I think we have rather different user profiles on ifeng news app and on the Yidian news app. I think -- Ya speaking right now -- on Yidian, we have more users which are also Xiaomi handset users and also OPPO handset users, and on ifeng, we have more iOS users.

Actually this creates opportunities for us to cross-promote users, as these two products have different positioning. I think on ifeng news app, we do emphasize more on professional journalism, on newsworthy events like today's US presidential coverage. And on Yidian we provide more comprehensive but more personalized content based on artificial intelligence and machine learning and big data and our unique product positioning. So this user profile difference actually creates I think some synergy for us in the future. Also, Yidian's larger mobile user base will help to help ifeng's original content and media influence to spread over a larger user base. So that's another synergy for them.

On the Yidian's traffic breakup, we do not provide that information at this time. However, as OPPO starts to ship its preinstalled -- ship handsets with preinstalled Yidian apps, we believe that OPPO's user contribution will increase rapidly. Both on Xiaomi and OPPO, we see that users, through the embedded news service on browsers, to grow very quickly, as the browser's system level, fundamental software provided by the handset manufacturers. They are not removable and they have, you know, they are positioned at the bottom of the handsets and very easy for users to launch the service. And as I mentioned, more importantly, the time spent on this browser for our embedded news service, actually, given it's -- now it's at the beginning, are already at the same level as the average time spent by many of the peer independent apps, news apps.

So we are confident the overall traffic growth, including on my previous answering on my previous question, the organic user growth will, overall, will contribute to a very healthy contribution to our -- to next year's user growth, which would be at least double from the September level this year.

Thank you.

Thank you.

There are no further questions on the line at this time. I would now like to hand the conference back to Mr. Zhao for closing remarks.

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

Thank you.

(Spoken in Chinese).

(Operator instructions).