Phoenix New Media Ltd (FENG) 2023 Q3 法說會逐字稿

Good day, and thank you for standing by. Welcome to Phoenix New Media Third Quarter 2023 Earnings Call.

(Operator Instructions) Please be advised that today's conference is being recorded.

I'd now like to hand the conference over to Muzi Guo from Investor Relations Department. Please go ahead.

Thank you, operator. Welcome to Phoenix New Media's Earnings Conference Call for the Third Quarter of 2023. Joining me here today are our CEO, Mr. Yusheng Sun; and our CFO, Mr. Edward Lu.

During this call, our management team will begin by providing an overview of our quarterly results, followed by a Q&A session. You can find our financial results for the third quarter of 2023 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. 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 RMB.

Now I will pass the call over to Mr. Sun, our CEO, for his opening remarks. I will provide the translation. (foreign language)

(foreign language)

(foreign language) [Interpreted] Hello everyone. In the second half of the year, we find ourselves navigating a macro environment filled with uncertainties. This challenging backdrop has created headwinds in our advertising business. However, in these trying times, it's imperative that we remain faithful to our core values and competencies, and at the same time, we must proactively adapt our decision-making processes and innovation strategies to quickly respond to the ever-evolving market.

We need to clarify our core competency, which is "news". We will continue to leverage our advantage in news coverage and create an irreplaceable content quality that sets us apart from others, thus better supporting our content marketing efforts.

Next, Edward will provide a more detailed rundown of our operations in the third quarter.

Edward, please go ahead.

Thank you, Muzi. During the third quarter, we were committed in upholding the quality of our content as a mainstream media outlet. In the current turbulent global landscape and macro environment, trustworthiness has emerged as an essential requirement for our users.

Since the outbreak of the Israel-Palestine conflict, we have compiled over 100 news flash and articles, establishing ourselves as the go-to source for tracking the development of the crisis. Our content has been widely shared by users, resulting in a substantial boost in traffic. Visits driven by hot topics accounted for 30% of the total new visits. In our live broadcasts, we provided on-site reporting under the title "Live from the Israel-Palestine Conflict Zone at the Gaza Border." Our Phoenix journalist, Cao Jie, ventured to Sderot, the city closest to the Israel-Palestine conflict zone at the Gaza border, located less than 1 kilometer away. The report centered on the local people, the city's situation, and the ground reality, offering valuable insights for the audience to grasp the real situation on the ground.

On the sports front, we closely followed the Asian Games, achieving high exposure and attention on various social platforms. Our sports and video channels released nearly 100 short videos, accumulating a total view count of 37 million. For news and information in general, our "Phoenix News" account on Douyin has gained 3.31 million new followers in the third quarter, surpassing a total of 10 million followers.

We continued to maximize the dissemination of our content and unlock our business potential on social media platforms. In the post-pandemic era, individuals are experiencing heightened anxiety and fatigue. Users are increasingly seeking content that provides positive energy, particularly in a concise and high-quality form. This is where we come in, closely attuned to users' emotional needs, providing them with positive emotional sustenance.

Accordingly, our original content focuses on individual experiences and the articulation of individual demands. We also continued to demonstrate our social responsibility in action. In October, the 2023 Forever Happiness Charity Gala, jointly organized by Phoenix and Chi Heng Foundation Canada, was successfully held in Vancouver, Canada. Local overseas Chinese, political and business leaders, philanthropists, celebrities, and media partners gathered for the event. This marked the fifth time the Forever Happiness Charity Gala went abroad. The event was attended by the Consul-General of China in Vancouver, Yang Shu, Chi Heng Foundation's founder and chairman, Du Cong, and other dignitaries. The event raised over CNY 2.7 million, which will be fully used for AIDS orphans and disadvantaged students.

On the advertising front, we faced some challenges in the third quarter. In a market where traffic has peaked, and growth has slowed down, the key to future growth lies in our ability to precisely target and influence specific potential audiences. As a mainstream media outlet, we have earned recognition from advertisers for our credibility and influence. On one hand, we excel at creating high-quality content that resonates with a brand's values and identity. On the other hand, we are adept at crafting immersive brand experiences through offline events, offering interactive platforms for brand-consumer connections.

However, we also need to engage in self-reflection and foster innovation from within. We urgently need to clarify our growth strategy. It entails understanding which industries we will target, identifying key new customers, and understanding their unique marketing needs. Once we have established our goals, it's crucial to ensure that our company's resources align with these objectives.

As we plan for the upcoming year, we are closely analyzing and preparing for organizational restructuring, in order to accelerate the innovation and upgrading of our content marketing products to adapt more swiftly to market changes. By leveraging our extensive media influence and international reach, we are exploring new opportunities in areas such as the global market, cultural tourism marketing, and social media platforms. We will make adjustments based on comprehensive, data-driven, and rational plans to lay a solid foundation for future operation.

In summary, confronting the current market environment and the formidable challenges it presents, we are acutely aware of the urgency to change. In addition to improving content and product quality, enhancing media influence and brand value, we are also adjusting the company's organizational structure and incentive mechanisms to accelerate innovation and upgrade of content marketing products. Our goal is to respond more promptly to market demands, attain our financial objectives at the earliest opportunity.

I will now walk you through our financial performance for the third quarter of 2023. All figures mentioned will be in RMB.

Our total revenues were 153.6 million, as compared to 194.8 million in the same period of last year. To elaborate, net advertising revenues were 134.3 million, compared to 172.4 million 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 19.3 million, compared to 22.4 million in the same period of last year. The decrease was mainly due to the decline in E-commerce revenues.

Loss from operations was 38.5 million, compared to loss from operations of 36.5 million in the same period of last year.

Net loss attributable to iFeng was 21.5 million, compared to net income attributable to iFeng of 24.3 million in the same period of last year.

Moving on to our balance sheet. As of September 30, 2023, the Company's cash and cash equivalents, term deposits, short-term investments, and restricted cash were RMB 1.03 billion, or approximately US$141.8 million.

Finally, I'd like to provide our business outlook for the fourth quarter of 2023. We are forecasting total revenues to be between 179.8 million and 199.8 million. For net advertising revenues, we are forecasting between 169 million and 184 million. For paid service revenues, we are forecasting between 10.8 million and 15.8 million. These forecasts reflect 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 Instructions) Question comes from the line of Alice Tang from First Shanghai.

My question is that our company had previously announced a stock buyback. Could you please provide us with some insight and updates on the buyback transaction?

Thank you for the question. Actually, we have confidence in the company's fundamentals and future performance, which is why the board of directors approved the buyback plan. Currently, the company has a very strong cash position, providing enough support for the company's future growth for a considerable period. Through this buyback, we aim to return some cash to our shareholders from now until the end of February next year.

We will execute the plan in compliance with the U.S. securities laws and other relevant regulations, and the buyback transactions will be conducted in the open market at market prices. We expect to start the buyback transactions shortly after the Q3 earnings release. Thank you, Alice.

And that's all we have for question-and-answer session. I would now like to turn the conference back to Muzi Guo for any additional closing comments.

Thank you. We have now 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 today on this call. Have a good day.

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

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]