Q1 2021 Phoenix New Media Ltd Earnings Call
[music].
Good day, and thank you for setting by welcome to the Phoenix, New media first quarter 2021 earnings call at this time all cash.
Shipments are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question during the session Press star one on the telephone to spit out West that today's conference is being recorded on them.
I'd like to hand, the conference what's your first speaker today Chengdu. Thank you. Please go ahead.
Yeah.
Thank you operator.
Welcome to Phoenix, New Media force on her Hunter you talked you on earnings Conference call I'm joined here by our Chief Executive Officer, Mr. Shang meal, and Chief Financial Officer, Mr. Abel New on today's call Mountain metal horse for why they reveal of the club day without on that comes out okay on a session the horse.
Called her time hit on one financial result on what the cause of this conference call are available on our website at all on Dodge has on Dot com a replay on so called will be available on the website channel few hours.
Before we continue I would like to refer you to our safe Harbor statements in our earnings press release, which apply to this call I spend we will make forward looking statements. Finally, please note that unless otherwise stated all figures mentioned during this conference call I RMB way that I would like to turn the call over to Mr. Shang.
No other C O.
Thank you Qi Hello, everyone. Thank you for doing this on our call today during the fourth quarter of 2021 the industry wide competition continued to exert pressure on our business growth.
On fortifying, our core advantages by creating and delivering our regional exclusive on high quality constant unsecured all brand advertising baseline.
While striving to create new growth curves.
Additionally, we remain committed to exploring on new business initiatives to argument our revenue source mix.
In the first quarter, we continued to demonstrate our leading role in news coverage.
Especially.
It's a go to place for breaking news during the government two sessions event in 2021 iPhone engage in full coverage for event, so our PC and mobile channels as well as a consequence on old major social platforms.
Our original news coverage, especially especially our featured live broadcasts on exclusive content from Phoenix TV generated a record breaking 2 billion views across the internet.
Our professionalism on credit building journalism.
Allow us to stand out among other commercial media on gay more interaction opportunities with government officials.
Italy, we publish original interview series with dozens of commissions scholars on experts issues. These cars at the two sessions, which were widely republish, but other domestic and foreign media such as C. G T V Singapore.
Yeah.
Paul on the Forbes, China, I'd rank on wafers populist cobalt searches.
All coverage extended beyond news articles and short videos.
T vs. Two session coverage, which included eight important even sessions with.
<unk> forecasted so our life life platform to reach millions of users across the globe.
Results from the two sessions speak for themselves.
The number of advertising clients for the event.
New highs.
Compared to prior years.
And our brand advertising revenues from the event increased by 50% year over year.
The other major event that we cover with the China U S dialogues, helping Alaska in March so for.
First in person dialogue between the Chinese government on the by the administration.
This was one of those years highest.
Profile events so far.
For Chinese media outlets.
Access to the event, we were the sole commercial media outlet by.
By capturing the official dialogue interacting with the Chinese representative outside of the conference rooms are raising questions on general public concerns.
We covered events from various perspectives.
As the only commercial media outlets on the frontline we publish excuse.
Exclusive live video feeds on interviews most of which will be published by our peers to generate massive user traffic across all major social media platforms.
Coverage of the dialogues on the post event interviews accumulated more than 700 million views on social media platforms of course the internet.
Other than new continents.
Original IP programs such as on the cover you know financial vertical on iPhone talk you know entertainment vertical continue to gain popularity among viewers and Brent advertising customer.
We integrated our vertical teams expertise and capturing trending topics on social bus as well as our core sales teams in depth understanding of our advertisers branding needs to create IP programs tailored to those same.
Needs.
Cause either crimping talks chimps ton with the liver this culture each of your programs specifically for sheet meter.
Jim King Tox facilities in Das dialogues BT.
Between various industry experts on the celebrities align with sneakers breath image in order to effectively.
The market and promote the brands products.
Moreover, but making a premium IP programs, such as Jim beam talks available on Weibo on other maintenance third party social media platforms.
We gained access on exposure to a broader audience space for.
Other enhancing our brand recognition and influence.
Well were actively distributing our content to other third party platforms and executed distribution strategies tailored to the unique characteristics of each platform.
Total number of hours on social media platforms exceeded 100 million in the first quarter.
More specifically.
Fishel LIBOR accounts exceeded the 20 million followers Mark for the first time on earned eight heart surgeons.
Hum such as in the first quarter.
The increased exposure of our brands of course, other social media platforms bring us new monetization opportunities.
Although we're still exploring various possibilities we believe the monetization of our third party Traffics will serve as a new driver of business growth.
Now turning to our iPhone.
Yep.
The first quarter.
In the presence of severe competition from other algorithm based apps.
Put significant sub substantial effort.
Hasnt iphones user experience on retention.
Implementing a series of upgrades to boost his algorithm.
Efficacy streamline is content operations on.
<unk> is highly differentiated differentiated content library.
First we refined our algorithm to differentiate it.
On the record.
Generic brick trending social topics.
From interest based vertical content on tailored our distribution strategies based on constant classifications.
Allowing us to not only maximize the exposure of these topics across our platform, but also provide all users with easy access to personalized interest based content.
Furthermore, we also refined the segmentation of our user profiles by providing a constant flow of aggregated content based on individual user profile on interest we continue to improve the user experience of our price.
Second we continue to strengthen the operations of our premium content pool.
During the quarter, we focus on maximizing the exposure of the premium content that was totally related to trending hot topics.
By providing consistent on complementary topics on inflammation that users interest we have.
And has the platform's user experience.
In the meantime, we also directed our resources to the production of high quality articles and videos to further enrich and diversify our premium content pool and enhance the overall content quality.
Our news App.
Third took to provide our users with access to Phoenix Tvs life fees on.
Classic TV programs were introduced a feature channel a new bat, which further enhance iphones breadth influence on user retention.
As a result of the efforts mentioned above our study the user retention rate increased by 10% on sequential basis on the user clickthrough rate increased by 3% on.
The sequential basis now turning to new initiatives.
During the quarter, we remain committed to advancing various new initiatives to further diversify our revenue streams on argument growth.
But real estate, we are focused on establishing a <unk>. One is the <unk> product, we rolled out with all our smart content generation solution <unk>.
Oregon system.
This system provides the user with key industry updates on analysis on areas relative to new real estate companies, including their stock price fluctuations.
Strategic changes on property development.
On the other hand on.
Digital real estate New service.
From Typhoon focus on active operation on distribution of B to B content.
By closely monitoring the quarterly earnings results of more than 300 listed real estate companies.
The product.
Has helped real estate brands to boost their market exposure, while also demonstrating its keep up.
Capacity for <unk>.
Function as a premier new service for <unk>.
Executives managers and other stockholders of real estate for enterprises.
On the online reading front, we have accumulated on extensive library of premium online library IP literally IP.
Our primary goal has been to foster more diverse monetization opportunities for this IP.
Our initial work in all other continent reproducing.
Literally IP was an instant success by the end of March.
Audio channel on <unk>, one of China's largest audio platform.
Over 151 million followers.
On access.
$500 some day minute place.
We transformed other luxury IP into video content on.
In house production of boss links sweetheart range, all the Tianjin country.
Short form video series has already collected 40 million views since launching on quite a show in February.
In fact audience warm reception to the series.
On a spot on the platforms top five must watch.
On the e-commerce front to enhance our e-commerce platforms overall competitiveness, we continue to strengthen our original content production capabilities on the personalized content recommendation algorithm.
Too efficient.
Efficiently convert the user traffic, we generated from content into e-commerce customers.
We also accelerated the optimization of our independent developed e-commerce platform during the quarter, we upgraded the PC version on Wechat Mini program of Phoenix premium products to provide a better user experience.
As a result of these upgrades, we achieved increased user conversion rates on both platforms.
More importantly.
We're also actively exploring different ways of generating user traffic from surplus day platforms through our <unk>.
Premium content offerings.
Two lower e-commerce customer acquisition costs.
During the fourth quarter. For example, we officially launched our E Commerce live streaming feature on the progress we have made so far is quite encouraging.
Driven by these combined efforts Phoenix premium products group is G N V by 24% sequentially.
Gross profit by 23% sequentially.
The first quarter.
In summary.
Aware of the downward pressure on certain segments of our advertising business and that we are facing existing positions.
Areas of our new business initiatives.
Nevertheless, we have proactively realign our business strategies to increase user traffic.
Exclusive on premium content offerings.
At the same time, we continue to invest new business initiatives in order to diversify our revenue streams.
Going forward.
They focus on fortifying our leadership in news reported extending our new media influence on optimizing our cost structure to build a solid foundation for sustainable business for us.
This concludes my prepared remarks, I will now hand, the call to our CFO Mr. At what Lou to provide a closer look into our quarterly financials.
Thank you Sean and thank you all for joining our conference call today.
Our total revenues in the first quarter of 2021 were RMB $226, one minute along with our previous guidance.
This represents a decrease of two 3% from RMB $231 4 million in the.
The same period of last year.
I'll now provide some additional color on.
Revenue during the first quarter of 2021.
Net advertising revenues in the first quarter of 2021 or RMB $201 for a minute representing a decrease of three five percentage from RMB $208 seven minutes in the same period of last year.
Due to the reductions in advertising budgets from advertisers in certain policy sensitive industries in the in the period.
Pedro services revenues in the first quarter of 2021 increased by nine 7% to RMB $24 eight a minute from RMB $22 seven minutes in the same period of last year revenues from paid content in the first quarter of 2021 decreased by 8% to RMB 10.
Then five minutes from RMB 11, 9 million in the same period of last year.
Due to the broader market conditions, reflecting the trend towards free on a reading.
Revenues for from E Commerce, and the other in the first quarter NOI increased by two 4% to RMB $14 3 million from RMB 10, eight a minute in the same period of 2020 Monterrey caused by the increased new revenues from E Commerce and online you already.
State related to seriously.
Cash from operations in the first quarter of 2021 was RMB $41 9 million improving from RMB 79 million in the same period of last year.
Operating margin in the first quarter of 2021 was negative for 18, 6% improving from negative 37% from the same period of last year.
Non-GAAP loss from operations in the first quarter of 2021 was RMB 47 minutes improving from RMB six eight points three minutes in the same period of last year.
Non-GAAP operating margin in the first quarter of 2021 was negative 18% important improving from negative 29, 5% in the same period of last year.
Not at all from continuing operations attributable to iPhone in the first quarter of 2021 was $29 two minutes compared to RMB $38 six minute in the same period last year.
Non-GAAP net loss from continuing operations attributable to iPhone in the first quarter of 2021 was RMB $27 eight a minute for me for R&D 55 minutes in the same period of last year.
Yeah.
Moving onto our balance sheet.
As of March 31.
On the one the company's cash and cash equivalents term deposits short term do you estimate.
On the restricted cash for RMB 150.
58 billion.
Approximately U S dollar $240 nine minutes.
Finally, I'd like to per watt, our business outlook for the second quarter of 2021, we are forecasting total revenue to be between RMB $263 8 million and RMB 280, 383 8 million for net advertising revenues we are forecasting.
It's between RMB $244 eight minutes and the RMB 259 on eight minutes for.
Paid service revenues, we are forecasting between RMB 19 minute on the RMB 24 minutes.
In summary, we will continue to build on our effort of producing exclusive and original content to attract and a return on our users.
We are also investing in product upgrades to enhance user experience and streamline content operation to strengthen brand equity yes.
In addition, we will continue to explore new monetization strategies diversify our revenue stream.
On the crude all of our operating efficiency.
These initiatives combined with the gradual recovery of the advertising industry is setting the stage for a recovery of our growth and profitability.
This concludes the prepared portion of our call for.
We're now ready for questions. Operator. Please go ahead.
Thank you we will now begin the question and answer.
Okay.
Ask the question on cash balance on that.
One for cancer.
Press the pound key.
Your first question comes from bin bin Ding from JP.
J P Morgan.
Thank you.
Morning to manage that.
On it.
Yeah.
First one is what is the current between your organic truck.
Truck and bus is choppy.
Uh huh.
However, it should be.
True.
These two truck exhaust growth in the future second day is what other major sources of your third party trucks and how do you generate those traffic.
Third one year's cash management also talk about the monetization plan of your third party traffic in the future. Thank you very much.
Yeah.
Hi, This is Rob yeah, I like to talk about the strategy starting from last year, we have.
More focus on the organic growth of our traffic and I think, especially we are more cautious about the.
User acquisition strategy.
More focus on the content driven a brand driven.
User growth approach. So that's why you can see our marketing expense.
Is on the control and I.
At this stage.
I can not qualify it a portion of the organic traffic.
Traffic and other traffic, but I like to tell you.
Going forward.
Most of that.
Major portion of the traffic will come from organic growth.
Which means it's kind of driven by our content brand by hour.
Premium content.
And we have talking about our social media.
I'll, let <unk> traffic.
I'd like to share that we have accumulated over 100 million user on third party platforms.
This demonstrated our brand influence comes on value.
Hi monetization potential.
We have also already achieved solid progress on wechat and weavers weibo's content ecosystem.
Every day tens of millions of users consume our exclusive content.
While engaging in dynamic social interactions on these two platforms.
And also we are making good progress.
Expanding our user base on short video platforms.
Like so in quite a show on the variability.
We plan to promote posts from Phoenix, TV as well as other partnered opinion leaders who created content.
That feeds our trademark style.
We believe these personalized contents in the form of short videos with a pugh.
Two and better service the younger user demographic.
On a massive social media base.
User base brings greater monetization monetization potential.
Frankly speaking we have not yet fully utilize these resources.
In the first quarter, we launched our funding program to better monetize this enormous user.
So social media.
Also in the process of utilizing all professional marketing and planning capabilities to provide brand clients.
With more options.
These services allow us to provide brand clients with integrated marketing services.
Includes.
Placing the brand advertisement on more Pops third party social media accounts.
Massive social media traffic.
And not only help our existing advertisers to reach more potential target customers.
We believe it also allow us to attract advertisers in new industries.
Specially winning more budget allocations from advertisers.
Fast growing customer growth industries.
So going forward, we will continue to.
To optimize our capabilities to customize original content for third party platforms to asset <unk> the <unk>.
<unk> of our content on to increase user interactions.
As we continue to improve our thickness for user on third party platforms.
Hence our monetization capabilities.
Our user expansion on monetization capabilities will for a.
Ah self enforcing style.
I also want to emphasize that we are at early stage of.
Monetizing our outlets on the social media platforms.
We used a more integration more interaction between our portals.
And also Phoenix TV part.
We're confident we can leverage our television hosts they are premium content more effectively and.
Further.
Improve the strength of our brand recognition on the further monetize.
These are the traffics on these sites.
Thank you.
Yeah.
For months.
Okay.
Uh huh.
Okay.
Thank you. Your next question comes from Frank Chen of Macquarie. Please ask your question.
With more agreement from I have two quick questions Christy.
Christina.
For those.
Our new CEO.
Additionally.
It's nice if you are willing to share more operating metrics.
The current question is a follow up question on your social media you can use your true cut.
Sure ill share us more about the economics.
Economic help that how is your mix your user acquisition cost on to the.
On monetization potential of units for for example, you have 100 million on over 100 million followers on social media, how should we think of them on the titration potential offset.
On mountain top followers on the what will be the model for that well you get throughout the New York share range from those social media platform. All while you have something new to you.
On to you come from a protein inside you will come from.
Sure.
Hi, Good morning, Frank This is the other words speaking regarding the first question of all of our current visit actually you know on our progress on the E Commerce business is quite encouraging.
A sequential basis in the first quarter.
Oh My Gosh on case, Jim we grew by like a 24% and gross profit grew by 27 per cent.
At this point of time the.
Majority of our E Commerce revenues are still generated from our iPhone platform.
By creating original commerce content, such as articles and the short video and utilizing our content recommendation algorithms.
We provide the ecommerce services to our iPhone apps existing users who trust our brand.
This allows us to explore and improve the monetization potential of our user traffic.
Also this capabilities have allowed us to quickly build a new Congress series system.
It's 10 or two or a target cost for consumers and.
That's a very low actually we have a very low consumer acquisition costs.
Of course to achieve a more significant new.
E Commerce business growth in the long term, we need to go beyond our existing user traffic on our ecommerce team has already started to explore different new ways of using other premium content to generate.
User traffic from third party platforms, such as Wechat.
The first for Cold here are we successfully organized a serial of E Commerce live streaming session on shore.
New platforms, such as <unk>.
Current OEM and throughout the day sessions, we collaborated with well established all of that new Influencers for.
Premium collection of high quality product at a very competitive price it.
This.
Result is credit extra as a result is quite encouraging and we will continue to try different ways to acquire potential E. Commerce users onshore three new platforms.
We will continue to.
Well, whatever new and continuing to refine the fundamental from fundamentals of our commerce season.
It's a business that has a lot of headroom for improvement, especially in terms of our product selection strategy.
On the Aquarius third party platform traffic at a reasonable price reasonable cost.
Moreover, we need to further enhance our daily operation efficiency true optimized cost structure.
Converting our 100 million social media followers.
U a e-commerce.
Consumer remains a challenge. It also has enormous potential to both for all of our future growth.
Regarding your second question I'm not sure if I heard a little clarity.
The weighted.
Don't spend that much on the user acquisition cost up on this on the social platforms, you got to wait for why the Ah <unk>.
Exclusive on the premium content to a lot of channels like Weibo and Wechat and Oh, So video platforms, such as total in et cetera. So users adjusted well they like all of our content on there, they're well subscribed our accounts on this kind of a social media.
Channel.
You already know like we have like on more than 100 million followers on.
We bought a wechat and Dorian crashaw into central and <unk>.
We believe we like this kind of massive user base have a big potential for the for the future and this is a business model actually is quite simple first likewise, our brand advertising, we provide a more exposure opportunities for our existing advertising.
Brand advertising.
Clients, so they can reach more potential.
Consumers all of our social platform so.
So for network platforms as well, so lethal well definitely on the health of our advertising.
Advertising business also no for let's kind of a massive user base.
As I already mentioned above like a farmer.
Faster developing e-commerce business.
Because users on our social platform.
Like for like a like a three or five years ago consumers on a buy from taobao and Tyndall, let's kind of.
For the platform E Commerce platform, but nowadays people are more on the more come to a total inquiries Shaw and on the Wechat platform.
To do their shopping and so we believe in the future the massive user base on these social media platform will help our ecommerce business for sure.
I hope that helps answer your question Yeah, Let me add a few more words on your second question actually.
I have answered being being the same sort of questions.
At the beginning you might want to double check with that but.
But I want to emphasize that Oh, the monetization of our over 100 million users on social network platforms is still at the early stage.
Or is that the monetization options includes native apps and the revenue sharing with a third party.
Platforms.
But right.
Right now it's too early stage, so it's a little premature to share that data and.
The portion of the native apps and revenue sharing options.
But we'll definitely keep you updated.
Thank you Sean afterwards, very clear thank you.
Thank you.
Once again to ask a question press star one on no telephone.
Our next question comes from common Zhang.
For Shanghai Securities. Please ask your question.
Hi management, Thanks for taking my question on.
Can you tell us more about advertising.
In the first quarter and the main challenges.
Okay.
Advertising revenue.
Hi morning, Carmen This is Edward speaking.
Actually for all of our advertising business.
The macro economy continue to recover items, our first quarter.
Our brand advertising business achieved a house our growth rates.
On the clinical phase however from a broader perspective, our other Manhattan as a whole still faces challenges in future Grand new growth.
We expect that all of our brand advertising business to continue its year over year growth trend new the Technicolor.
Expectation is based on the fact that most of our brand new advertisers should continue to experience a rebound in.
In addition.
As the pandemic continues to be brought under control in China, many offline events such as our true together can be conducted at normal rates.
Well have a positive impact on all of our brand advertising growth.
Nonetheless.
Certain industries North about a real estate, we are aware of the impact from tapping international macroeconomic policy.
Which well need to uncertainties advertising spending therefore, we expect our brand advertising to experience more pressure.
The increasing execution costs for brand advertising per day.
It's also a challenge and we will need to come up with a more refined project management program to better control costs.
We're also adjusting our sales team to balance our sales capabilities across different regions.
Besides we are enhancing all of our content offering.
Actually in terms of original content and this is allowing us to expand our influence in areas such as new consumption.
Online education health care and.
The new energy vehicles.
We believe with other of our influence.
These errors well eventually translate into new growth jammer for our brand advertising business.
For programmatic.
Advertising business.
So overall budgets in the market continues to be absorbed by the leading short form video.
Platforms towards.
Excellent to survive this kind of competitive environment, we must approach more effort to upgrade our AD product features accordingly.
Actually we have already enhanced as the underlying technology of our AD platforms.
For for me will enable the U K talking to more efficient and data sharing and the other placement accordion nation.
On our platform and our advertisers for five years, we have strengthened our data support system for our platforms are other processing plants in the finance vertical has helped us to improve our conversion rates for current surrounds and for finance industry.
Yeah.
From a fee waiver.
We expanded our business development efforts and the convergence of multiple leading smartphone manufacturers into from Phase Alliance partners for which drove additional user traffic at Chu from fan.
In this call her on.
These challenges I have mentioned on the ball improved.
Efficiency and effectiveness effectiveness of our programmatic AD delivery and then make all of our programmatic for systems more competitive.
The market.
Thank you.
Okay.
Once again to ask a question press star one on your telephone.
Okay.
Once again to ask a question press star one on the telephone.
Okay.
I would now like to hand, the conference back to the management team for closing remarks. Please continue.
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.
Okay.
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[music].
Good day, and thank you for setting by welcome to the Phoenix, New media first quarter 2021 earnings call. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question during the session Press star one on debt.
Telephone please be advised that today's conference is being recorded on I'd like to turn.
The conference what's your first speaker today Chengdu. Thank you. Please go ahead.
Thank you operator.
Welcome to Phoenix, New media first quarter 2021 earnings conference call I'm joined here by our Chief Executive Officer, Mr. Shang, Neal and Chief Financial Officer, Mr. Admiral note on todays call, Mike Malouf Force polite I reveal also putting it out on that on that okay on a session.
First quarter are talking total one financial read out on what.
Part of this conference call are available on our website at IR Dal tile phone dot com a replay of the call will be available on the website channel a few hours.
Before we continue I would like to wait for you to our Safe Harbor statement channel, our earnings price, who needs, which apply to this call I suppose we will make forward looking statements. Finally, please note that unless otherwise stated all figures mentioned during this conference call I M D.
With that I would like to turn the call over to Mr. Sean O'neill.
C O.
Okay.
Sure.
Thank you Qi Hello, everyone. Thank you for joining us on our call today during the fourth quarter of 2021, the industry wide competition continued to exert pressure on our business growth with focus on fortifying, our core advantages by creating and delivering our regional exclusive.
On high quality concentrate on securing our brand advertising baseline.
While striving to create new growth curves.
Additionally, we remain committed to exploring a new business initiatives to argument our revenue source mix.
In the first quarter, we continued to demonstrate our leading role in news coverage.
Especially.
Go to place for breaking news.
On the government two sessions event in 2021 iPhone engage in full coverage of the event, so our PC and mobile channels as well as a consequence on old major social platforms.
Our original news coverage, especially especially our featured live broadcast on <unk>.
Lucid content from Phoenix, TV generated a record breaking 2 billion views across the internet.
Professionalism on credibility in journalism.
On allow us to stand out among other commercial media and gain more interaction opportunities with government officials additions.
Additionally, we publish original interview series with dozens of commissions scholars and experts issues. These cars at the two sessions.
It won't widely published by other domestic and foreign media such as CCTV Singapore.
Yeah, So Paul on the Forbes, China, I'd rank on waivers topless for pulse searches.
Ill coverage extended beyond news articles and short videos.
Phoenix Tvs to session coverage, which included eight important event sessions was forecasted through a lifeline platform to reach millions of users across the globe on.
Our results from the two sessions speak for themselves the number of brand advertising clients for the event.
Reached new highs.
Peer to prior years.
Brent advertising revenues from the event increased by 50% year over year.
But the other major event that we cover was a China U S dialogues healthy Alaska in March as the first in person dialogue between the Chinese government on the biting on administration. This was one of those years highest.
Profile events, so far of the for.
For Chinese media uploads brought access to the event.
For the solid commercial media outlet.
By capturing the official dialogue interacting with the Chinese representative outside the conference rooms are raising questions on general public concerns.
We cover the events from various perspectives.
As the only commercial media outlets on the frontline with published.
Lucid live video feeds on interviews most of which will be published by our peers to generate massive user traffic across all major social media platforms.
Our coverage of the dialogues on the post event interviews accumulated more than 700 million views on social media platforms of course the internet.
Other than new counsels arrear.
Original IP programs, such as on the cover financial vertical on iPhone talk.
Entertainment vertical continue to gain popularity among viewers and Brent advertising customer.
We integrated our vertical teams expertise in capturing trending topics on social bus as well as our core sales teams in depth understanding of our advertisers branding needs to create IP programs tailored to those same new.
Meats.
You can see they're trending talks champion time with the liver this culture into the program specifically for sheet meter.
Jumping talks for <unk>.
Militates in debt dialogues.
Between various industry experts on the celebrities align with sneakers brand image in order to effectively market and promote the brands products.
Moreover, by making our premium IP programs, such as jumping togs available on Weibo on other means third party social media platforms.
<unk> access and exposure to a broader audience base.
Further enhancing our brand recognition and influence.
Well, we actively distributed content to other third party platforms and executed distribution strategies tailored to the unique characteristics of each platform.
Our total number of hours on social media platforms exceeded 100 million in the first quarter.
More specifically on official Weibo accounts exceeded the 20 million followers Mark for the first time on earned eight hot such 80 hubs such as in the first quarter.
The increased exposure of our brand of course, other social media platforms bring us new monetization opportunities.
Although we're still exploring various possibilities we believe the monetization of our third party Traffics will serve as a new driver of business growth.
Now turning to our iPhone.
Yep.
The first quarter.
In the presence of severe competition from other algorithm based apps.
Put significant sub substantial effort.
Hence the iPhone user experience on retention.
Implementing a series of upgrades to boost his algorithm.
Efficacy streamline is content operations on.
<unk> is highly differentiated differentiated content library.
First we refined our algorithm to.
Differentiated generic.
Jeanette brick trending social topics.
From interest based vertical content on tailored all our distribution strategies based on current classifications, allowing us to not only maximize the exposure of these topics across our platform, but also provide all users with easy access to personalize.
Interest based content.
Furthermore, we also refined the segmentation of our user profiles by providing a constant flow of aggregated content based on individual user profile on interest we continue to improve the user experience of our partners.
Second we continue to strengthen the operations of our premium content pool.
During the quarter, we focus on maximizing the exposure of the premium content that will.
Closely related to trending hot topics.
By providing consistent on complementary topics on inflammation that users interest we have.
Enhanced the platform's user experience.
In the meantime, we also directed our resources to the production of high quality articles and videos to further enrich and diversify our premium content pool on enhanced the overall content quality.
Our new Sam.
Third took to provide our users with access to Phoenix Tvs life fees on.
Classic TV programs were introduced a feature channel a new.
Is that which further enhance iphones breadth influence on user retention.
As a result of the efforts mentioned above our sturdy day user retention rates increased by 10% on sequential basis on the user clickthrough rate increased by 3% on sequential basis now turning to new initiatives.
During the quarter, we remain committed to advancing various new initiatives to further diversify our revenue streams on.
Argument growth, but real estate, we are focused on establishing a <unk> inflows one of the <unk> product, we rolled out with all our smart content generation solution.
Harrington system.
This system provides the user with key industry updates on <unk>.
<unk> are areas relative to new real estate companies, including their stock price fluctuations strategic changes and probably development on.
On the other hand on.
Our digital real estate New service.
Phones hygiene focus on active operation on distribution of B to B content.
By closely monitoring the quarterly earnings results of more than 300 listed real estate companies.
The product.
Has help real estate brands to boost their market exposure, while also demonstrating its keep up.
Capacity for <unk>.
Function as a premier new service for <unk>.
Executives managers and other stockholders of real estate for enterprises.
On.
On the online reading front, we have accumulated on extensive library of premium online library IP literally IP. Our primary goal has been to foster more diverse monetization opportunities for this IP.
Our initial work in all the income from reproducing on <unk>.
IP was an instant success by the end of March on.
Audio channel on heme, a lie on one of China's largest audio platform.
Oh 151 million followers.
On access.
500, some day minute place.
Transform other luxury IP into media content, our in house production.
Production of boss links sweetheart range, all the Tianjin Ganji.
Short form media series has already collected 40 million views since launching on quite a show in February.
In fact audience warm reception to the series.
Earnings are spot on our platforms top five must watch.
On the e-commerce front to enhance our e-commerce platforms overall competitiveness, we continue to strengthen our original content production capabilities on the personalized content recommendation algorithm.
Efficient.
Efficiently convert the user traffic, we generated from content into e-commerce customers.
We also accelerated the optimization of our independent developed e-commerce platform during the quarter, we upgraded the PC version on Wechat Mini program for Phoenix premium products to provide a better user experience.
As a result of these upgrades, we achieved increased user conversion rates on both platforms.
More importantly.
We're also actively exploring different ways of generating user traffic from third party platforms. So we're on.
Premium come from offerings to lower e-commerce customer acquisition costs.
During the first quarter for example, we officially launch on E. Commerce live streaming feature on the progress we have made so far is quite encouraging.
Driven by these combined efforts Phoenix premium products grew EPS GMB by 24% sequentially.
And gross profit by 23% sequentially in the for.
First quarter.
In summary.
Aware of the downward pressure on certain segments of our advertising business and that we are facing existing composition.
In areas of our new business initiatives net.
The other lists we have proactively realign our business strategies to increase user traffic.
Exclusive on premium offerings at.
At the same time, we continue to invest new business initiatives in order to diversify our revenue streams.
Going forward.
They focus on fortifying our leadership in news reporting ex.
Adding on new media influence on optimizing our cost structure to build a solid foundation for sustainable business for us.
This concludes my prepared remarks, I will now hand, the call to our CFO, Mr. <unk> to provide a closer look into our quarterly financials.
Thank you for sure and thank you all for joining our conference call today.
Our total revenues in the first quarter of 2021 were RMB $226, one minute along with our previous guidance.
Other than a decrease of two 3% from RMB $231 4 million in the same period of last year.
I'll now provide some additional color on revenue during the first quarter of 2021.
Net advertising revenues in the first quarter of 2021, or RMB 201 for a minute representing a decrease of three 5% from RMB $208 seven minutes in the same period of last year, mainly due to the reductions in advertising budgets from advertisers.
On certain policy sensitive industries in the in the period.
Paid for services revenues in the first quarter of 2021 increased by nine 3% to RMB $24 eight a minute from RMB $22 seven minutes in the same period of last year revenues from pay for content in the first quarter of 2021 decreased by 8% to RMB 10.
Five minutes from RMB 11, 9 million in the same period of last year.
Due to the broader market conditions, reflecting the trend towards free online reading.
Revenues for from E Commerce, and the other in the first quarter interest.
Increased <unk>, 4% to RMB 14 points for a minute.
From an RMB 10, eight a minute in the same period of 2020, mainly caused by the increased new revenues from E Commerce and online real estate related services.
Cash from operations in the fourth quarter of 2021 was RMB 41, nine minutes improving from RMB 79 minutes in the same period of last year on.
Operating margin in the first quarter of 2021 was negative for 18, 6% improving from negative 37% in the same period of last year.
Non-GAAP loss from operations in the first quarter of 2021 was RMB 47 minutes improving from RMB.
Eight points for a minute in the same period of last year.
Non-GAAP operating margin in the first quarter of 2021 was negative 18%.
And moving from negative 29, 5% in the same period of last year.
Not at all from continuing operations attributable to iPhone in the first quarter of 2021 was $29 two minutes compared to RMB 78, six minutes in the same period last year.
Non-GAAP net loss from continuing operations attributable to iPhone in the first quarter of 2021 was RMB $27 eight a minute before moving from RMB 55 minutes in the same period of last year.
Yes.
Moving on onto our balance sheet.
March did for anyone.
For anyone the company's cash and cash equivalents term deposits short term day last night and the restricted cash were RMB 150.
58 billion on.
Approximately U S dollar $240 nine minutes.
Finally, I'd like to for what our business outlook for the second quarter of 2000, depending on what we're forecasting total revenue to be between RMB 263, 8 million and RMB 280, 383 8 million for net advertising revenues we are forecasting.
Net between RMB $244 eight minutes and the RMB 259 eight minutes for.
Paid service revenues, we are forecasting between RMB 19 minutes on the RMB $24 million.
In summary, we will continue to build on our effort of producing exclusive original content to attract and their return on our users.
We're also investing in product upgrades to enhance user experience and the streamline content operation to strengthen brand equity yes.
In addition, we will continue to explore new monetization strategies diversify our revenue streams and we accrued all of our operating efficiency.
These initiatives combined with the gradual recovery of the advertising industry is exciting at this stage for a recovery of our growth and profitability.
This concludes the prepared portion of our cash we're now ready for questions. Operator. Please go ahead.
Thank you moving now begin the question and answer session.
Ask a question on the press Star one on your telephone.
On for cancer for your question press the pound key.
Your first question comes from bin bin Ding from JP Morgan. Please ask your question.
Yes.
Morning management.
Okay.
First one is what is the current.
The organic Chuck on purpose.
Shopping.
Uh huh.
Fitness.
True.
These two truck exhaust grows in the future second day is what other major sources of your third party truck and how do you generate those trepid.
So that's one year's cash management also talk about the monetization plan all for your third party traffic in the future. Thank you very much.
Yeah.
Hi, This is Charles Yeah, I like to talk about our strategy starting from last year, we have a more focus on the organic growth of our traffic and I think.
We are more cautious about the.
User acquisition strategy.
More focus on the content driven a brand driven.
User growth approach. So that's why you can see our marketing expense.
Is on the control and I.
At this stage.
I can not qualified a portion of the organic.
Traffic and other traffic, but I like to tell you.
Moving forward.
Most of.
Major portion of the traffic will come from organic growth.
Which means it's kind of driven by our content brand by hour.
Premium content.
And we have talking about our social media.
I'll, let <unk> traffic.
I'd like to share that we have accumulated over 100 million users on third party platforms.
This demonstrated our brand new inflows comes on value.
Hi on monetization potential.
We have also already achieved solid progress on wechat and weavers weibo's content ecosystem.
Every day tens of millions of users consume our exclusive content.
While engaging in dynamic social interactions on these two platforms.
And also we are making good progress.
Expanding our user base on short video platforms.
Like so in quite a show on availability.
We plan to promote hosts from Phoenix TV as well as other partnered opinion leaders who created content.
That is our trademark style.
We believe these personalized contents in the form of short videos with a Q.
Two and better service the younger user demographic.
On massive social media base.
User base brings.
Greater monetization monetization potential.
And frankly speaking we have not yet fully utilized these resources.
In the first quarter, we launched <unk>.
Funding program.
To better monetize this enormous user.
So social media.
We're also in the process of utilizing all professional marketing and planning capabilities to provide brand clients.
With more options.
These services allow us to provide brand clients with integrated marketing services.
Includes.
Placing the brand advertisement on more Pops third party social media accounts.
Massive social media traffic can not only help our existing advertisers to reach more potential target customers. We believe it also allow us to attract advertisers in new industries.
Especially winning more budget allocations from advertisers.
Fast growing customer growth industries.
So going forward, we will continue.
To optimize our capabilities to customize original content for third party platforms to asset <unk>.
Exposure of our content on to increase user interactions.
As we continue to improve our thickness for user on third party platforms.
Hence our monetization capabilities.
User expansion on monetization capabilities will for a.
Ah self enforcing style.
I also want to emphasize that we are at early stage of.
Monetizing our outlets on the social media platforms.
With the more integration more interaction between our portals.
And also Phoenix TV partners.
We're confident we can leverage our television hosts they have premium content.
Is that total fleet and <unk>.
Further.
Improve the strength of our brand recognition on the further monetize our.
These are the traffics on these sites.
Thank you.
For months.
Okay.
Okay.
Thank you Youre on.
Next question comes from Frank Chen of <unk>.
Sorry, please ask a question.
With more agreements from IHOP.
Two quick questions.
Our new share more.
<unk>.
So utilization on.
It's nice to you for you are willing to share more operating metrics.
The current crushing as a follow up question on your social media user tier.
Sure ill share us more about your account economics.
Economic help that how is your view on ex U.
With the acquisition cost on the monetization potential of units for for example, you have 100 mill for about 100 million followers on social media, how should we think of the monetization potential for that.
On a mountaintop followers on for what will be the business model for that well you catch throughout the new share everything from social media platform. All while you have some nature.
On to you protein inside Youll come from.
Yeah.
Hi, Good morning, Frank This is Edward speaking regarding the first question of all of our current visit actually on all of our products on the E Commerce business is quite encouraging.
A sequential basis in the first quarter.
Okay, Jim we grew by 24% on the gross profit grew by 10, 7%.
At this point of time the.
Majority of our E. Commerce revenues are still generated from all of our iPhone platform.
By creating original ecommerce content, such as articles and short video and utilizing our content recommendation algorithms.
We provide the ecommerce services to our iPhone apps existing users who trust our brand list allows us to explore and to improve the monetization potential of our user traffic.
Also this capabilities have allowed us to quickly build up E. Commerce service system, let his tenure to our target cost from consumers and.
That's a very low actually we have a very low consumer acquisition costs.
Of course to achieve on more significantly up.
E Commerce business growth in the long term, we need to go beyond our existing user traffic argue commerce team has already started to explore different ways of using other premium content to generate.
User traffic from third party platforms, such as Wechat.
In the first for called her we successfully organized our cereal E Commerce live streaming sessions on short video platforms such as.
Question for Antonio and throughout the day sessions, we collaborated with well established all other influencers.
Premium collection of high quality product at a very competitive price it.
This.
Result is quite an extra as a result, it is quite encouraging.
We will continue to explore different ways to acquire potential e-commerce users on short three new platforms.
We will continue to.
Well well definitely on a continuing to refine the fundamental from fundamentals of our E Commerce business.
This business has a lot of headroom for improvement, especially in terms of our product selection strategy.
On the aquarium third party platform traffic at a reasonable price at a reasonable cost.
Tomorrow, we need to further enhance our daily operation efficiency to optimize cost structure.
Although converging our 100 million social media followers true.
To e-commerce.
Consumers remains a challenge and it also has enormous potential to both for our future growth.
Regarding your second question I'm not sure if I heard a little clarity.
Actually a weighted we don't spend much on the user acquisition cost on this on the social platforms youre not the only provider.
Exclusive on the premium content to a lot of China's like Weibo and wechat and on.
So video platforms, such as <unk> et cetera. So users just for you know well they like all of our content on the neo well subscribed for our accounts on this kind of a social media.
Channel.
As you already know like we have like on more than 100 million followers on our Weibo wechat and Dow in graduate into central and <unk>.
We believe.
Believe like let's kind of massive user base have a big potential for the for the future and this is a business model actually is quite simple first likewise, our brand advertising we provide a more.
The exposure opportunities for our existing advertising for them.
On the advertising.
Uh huh.
Clients, so they can reach more potential.
Consumers all of our social platform so.
So for network platforms as well, so Lisa will definitely help all of our.
Advertising business also no for let's kind of a massive user base.
As I already mentioned above like a forward.
Faster developing e-commerce business.
Because users on our social platform.
Like for like a like a three or five year scope consumers on a buy from cobalt.
And tyndale, let's kind of platform e-commerce platform, but nowadays people are more on the more come to total.
<unk> and <unk>.
On the Wechat platform to do new Air shelving and so we believe in the future the massive user base on this.
Social media platform well have other e-commerce business for sure.
I hope that helps answer your question, Yes, let me add a few more words on your second question actually.
I have answered being being the same sort of questions are.
At the beginning you might want to double check with that.
But I want to emphasize that Oh, the monetization of our over 100 million users on social network platforms is still at the early stage.
Is that the monetization options includes native apps and the revenue sharing with a third party.
Platforms.
But right.
Right now it's still at early stage so it's a.
Or is it premature to share that data and <unk>.
The portion of the native apps and.
Around their sharing options.
But we'll definitely keep you updated on this.
Thank you Sean afterwards, very clear thank you.
Thank you.
Okay.
Once again to ask a question press star one on the telephone. Your next question comes from common Zhang Our first Shanghai Securities. Please ask your question.
Hi management, Thanks for taking my question on.
Can you tell us about ex.
In the first quarter and the main challenges.
Okay.
Revenue.
Hi morning, Carmen, let's say for outerwear speaking.
Actually for all of our advertising business.
On the macro economy continue to recover items first our culture, our brand advertising business achieved a house.
Growth rates are.
The clinical data however from.
Broader per packaging, our other Manhattan as a whole still faces challenges in <unk>.
Future Grand New growth.
We expect that our brand advertising business to continue its year over year growth trend.
Technical debt.
On this expectation is based on the effect that's on most of our branded advertisers should continue to experience a rebound in.
Additionally.
As the pandemic continues to be brought under control in China, many offline events such as our true the guy that can be conducted at normal as well.
Have a positive impact on all of our brand advertising growth.
Nonetheless.
Certain industries, notably real estate.
We are aware of the impact from tapping international macroeconomic policy.
Which will lead to uncertainty.
New spending therefore, we expect our brand advertising to experience more pressure.
The increasing execution costs for brand advertising per day is.
It's also a challenge and we will need to come up with a more refined project management per day to better control costs.
We're also adjusting our sales team to balance our sales capabilities across different regions.
Besides we are enhancing our content offering.
Actually in terms of original content and this is allowing us to expand our influence in areas such as new consumption.
Consumption online education health care and.
The new energy vehicles.
We believe with other of our influence.
This errors well eventually translate into new growth jammers for our brand advertising business.
For programmatic.
Advertising business.
So overall budgets in the market continuous to be absorbed by the leading short form video.
Platforms towards.
Excellent to survive this kind of competitive environment, we must have put more effort to upgrade our AD product features accordingly.
Actually we have already enhanced as the underlying technology of our AD platforms.
For for me, we enable the API talking to more efficient and data sharing and the other placement accordion nation.
On our platform and advertisers for phone media, we have strengthened our data support system for our platforms on the price.
Clients in the finance vertical.
How is the debt to improve our conversion rates for cons throughout the day.
<unk> industry.
Well from a fee waiver.
We expanded our business development efforts and the convergence of multiple leading smartphone manufacturers into.
From our Alliance partners.
Each drove additional U S traffic Chu from fan in.
In this quote her on.
These challenges I have mentioned that ball well it improved.
Pension and other effecting the effectiveness of our programmatic AD delivery and they make all of our programmatic systems more competitive.
The market.
Thank you.
Once again to ask a question press star one on your telephone.
Okay.
Once again to ask a question press star one on your telephone.
Okay.
I would now like to hand, the conference back to the management team for closing remarks. Please continue.
Thank you operator, we have come to the end of our Q&A session on 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.