Phoenix New Media Ltd (FENG) 2024 Q1 法說會逐字稿

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. (Operator Instructions) I would now like to hand the call over to Muzi from IR department. Thank you. Please go ahead.

Thank you, operator. Welcome to Phoenix New Media's Earnings Conference Call for the first 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 begin by providing an overview of quarterly results, followed by a Q&A session. You can find the financial results for the first quarter 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 statements, 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 would like to pass the call to Mr. Sun , our CEO, for his opening remarks, I will provide the translation.

(interpreted) And I will provide the translation now. Hello, everyone, I'm pleased to report on the company's operational progress in the first quarter of 2024 and engage in discussions on topics of interest.

The first quarter of 2024 started off well. Despite the ongoing macroeconomic uncertainties, the team overcame many challenges and achieved our performance targets. 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 app 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 first-quarter results. Edward, please go ahead.

In the first quarter of 2024, we made significant progress in expanding our media influence, thereby driving the successful monetization of our content. We continued to lead in reporting major news events, achieving excellent audience reach and engagement. During the Taiwan leadership election, we stood out as the sole mainland-based news app offering real-time coverage, excelling in speed, distribution, and content quality. We collaborated with contributors from various perspectives, and our comprehensive articles were widely republished by major mainland and Taiwanese media outlets.

In February, our journalist in international affairs provided live coverage from the Munich Security Conference. Our in-depth article titled “Munich Unfolded” gained significant exposure and readership on our news app and third-party social media platforms. It received praise from experts at renowned institutions such as Peking University, the Chinese Academy of Social Sciences, and Tsinghua University, as well as recognition from mainstream media outlets such as Sanlian Life Weekly, Caixin, and CGTN. This further solidified Phoenix's media influence in international affairs. In addition to on-site updates, we published themed short videos on third-party video platforms, garnering over 3 million views and tens of millions of exposures through media reposts.

In the growing sector of cultural and 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 "ChangbaiMountain Forum,” was organized in collaboration with regional culture and tourism bureaus and sponsored by local businesses and corporations. The event boasted distinguished guests from academia, politics, and influential Key Opinion Leaders. Set against the scenic backdrop of snow mountains, the forum featured skiing carnivals and elevated guest experiences. It garnered significant media coverage, serving as a prime example of effective brand marketing in the culture and 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 surpassed 100,000 reads benchmark on Weixin. Beyond achieving significant traffic, “Eye of the Storm” earned acclaim for its principled stance on contentious issues, upholding media ethics and values. 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 Phoenix Finance's positive impact on the financial sector.

Our presence on third-party platforms continued to grow in the first quarter. Our Weixin video platform account gained 400,000 new followers, surpassing 3 million in total, reflecting our commitment to producing captivating content for broader reach. During the March explosion in Hebei, our Douyin account live-streamed the scene, drawing in over a million viewers. In total, this live stream and subsequent short videos garnered 46 million cumulative views and attracted 18,000 new followers, reinforcing our reputation for being consistently on the scene for breaking news and enhancing user engagement.

Our content initiatives yielded tangible business outcomes in Q1. Following the restructuring of our sales department last year, sales and content strategies were better attuned to industry needs, resulting in growth across diverse sectors. We observed clearer industry strategies and enhanced market penetration, while the restructuring boosted professionalism and efficiency in market development. 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 continued 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 heightened competition, cost control throughout project execution is paramount to ensure profitability. 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 first quarter of 2024. All figures mentioned will be in RMB.

Our total revenues were 153 million, representing an increase of 4.5% from 146.4 million in the same period of last year. To elaborate, net advertising revenues were 138.6 million, representing an increase of 9.8% from 126.2 million in the same period of last year.

Paid services revenues were 14.4 million, compared to 20.2 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 first quarter of 2024 decreased by 7.7% to 109 million from 118.1 million in the same period of last year, and gross margin in the first quarter of 2024 increased to 28.8% from 19.3% as a result of strict cost control measures implemented.

Loss from operations was 36.5 million, compared to loss from operations of 74.4 million in the same period of last year.

Net loss attributable to iFeng was 26 million, compared to net loss attributable to iFeng of 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 were RMB1.03 billion, or approximately USD143 million.

Finally, I'd like to provide our business outlook for the second quarter of 2024. We are forecasting total revenues to be between 150.2 million and 165.2 million. For net advertising revenues, we are forecasting between 141.9 million and 151.9 million. For paid service revenues, we are forecasting between 8.3 million and 13.3 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 are now ready for questions. Operator, please go ahead.

Thank you. (Operator Instructions )

Alice Tang, First Shanghai.

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

Hi Alice. Thank you for the question. Actually, the advertising market showed promising trends in the first quarter of this year. We believe it aligns with the recovery of the 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 train stations.

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 effective, which focused more on meeting our customer industry demands.

Specifically, we observed strong growth in the food and beverage industry, especially in alcoholic beverages. Entertainment, leisure, online services, and electronic products industries also experienced growth, which is consistent with the overall performance of the advertising market segmented by industry.

It's also worth mentioning that we made significant progress on the monetization of our third-party social media accounts. Through a stable fan base and precise content marketing, we attracted top new energy vehicle companies that primarily focused on internet marketing. Additionally, we attained 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 changes and increased competition, advertisers may manage advertising budgets more cautiously. We need to accurately grasp advertisers' needs and adjust our strategies. Also, I think we need to ensure the company’s cost efficiency - put profits first, above all else.

Thank you, Alice.

Thank you, Edward.

Thank you for the questions. There are no more questions from the line. I'd like to hand the call back to Muzo Guo for closing remarks.

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.

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

Portions of this transcript that are marked (interpreted) were spoken by an interpreter present on the live call. The interpreter was provided by the company sponsoring this event.