Q2 2021 Phoenix New Media Ltd Earnings Call
[music].
Ladies and gentlemen, thank you for studying by and welcome to the Phoenix, New Media second 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 answer questions with recession Press star one on your telephone.
Most of that today's conference is being recorded.
So.
What's your first speaker today.
Thank you. Please go ahead.
Thank you operator welcome to maybe.
Second.
Earnings Conference call I'm joined here by our Chief Executive Officer.
Lilly and Chief financial Officer sort of alcohol Luke on today's call management will first provide a review of the coffee readout and then come back on Q&A session. The SEC.
Colorado 2021 financial result on white part of the income.
This call are available on our website at IR adult typhoon Dot com a replay of the call will be available on the website in a 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 suppose we will make forward looking statements. Finally, please note that unless otherwise stated all figures mentioned during this conference call I RMB.
With that I would like to turn the call over to Mr. Shortly will oversee all.
Thank you Qi Hello, everyone. Thank you for doing this call today.
The fourth quarter of 2021, we continue to encounter downward pressure of the competition intensified regulations heightened advertisers remain cautious with their budgets and so on.
Core comp competitive differentiation lies in our original content production capabilities, we have upheld our commitment to originality.
With them all accomplished revenue.
We believe that our newly automated causing metrics where they are.
Solid foundation to attract new users and increase their loyalty and generate a sustainable revenue stream.
I would like to start by discussing our key efforts you're dumping cousins brothers.
Users suffer from information overload in the digitally charge world. We're convinced that the most effective way to add value to our users is to produce original content with distinctive characters that are true to our brand.
Hence we have the position a constant metrics.
Yes, it's a constant production pipeline to produce a series of columns and programs each written and presented in the certain boys and style consistent with our branding differentiation.
Through these efforts, we intend to not only enhance our breath image.
Create a unique brand affinity among our youth.
And advertisers, which should help us a lot more sustained stable long term value from our breath equity return.
Yeah.
To elaborate in area or region, the company's auditors, who cater to very user demands we have focused our resources on producing three distinct Dodger opinion column invest investigated reporting on premium IP production.
For example, during the second quarter, we launched our original opinion column titled Eye of the storm football yet.
We're just distinctively positioned to examine contentious.
Yes.
It represents the audience with a unique authentic and privately interpretation.
Issues like conducting meticulous research.
Flooring, a wide array of viewpoints.
Our coverage on various controversial topics on social phenomenon generated immense number of views of cortisol a P. P. On other social platforms with the most popular piece garnered more than 140 million views on weibo.
That's what invest investigative reporting.
Trademark columns such as possible.
On the tumor intelligence agency.
Continue to bring our user well rounded and thorough analysis on the hottest topics.
Such as COVID-19 Delta Airlines ladies.
The latest vaccine development, Miami condo traps and saw.
In addition, our social investigating column living guidance, yet examines societal issues sort of life stories ordinary people.
Reading public awareness of these tissues and keeping boys could open voices.
Our new short video series titled your achievements.
<unk> pioneered a unique stories cutting methods by combining few production Pep talk like pet.
Pep talk South beach, but a list celebrities.
The serious poultry is how often people have overcome tremendous difficulties to accomplish nearly impossible projects.
Is that really so much with the current audience, that's migration excellence like that.
Or that it became an instant tickets across the internet.
So two episodes released during the quarter accumulated over 10 minute plays.
P alone.
The second episode became.
Number one hot search ability, but also exactly the top teeth to keep them at all similar theme programs.
Your achievements elevated premium IP production comp.
Hi.
Someday by our industry, leading patent and the production capabilities.
In addition to a quality production advertisers also appreciate it David.
Two luminaries in our culture science on the politics with backlogs entrees.
With the breast images.
For example through video series G&P talk Jim Keane ton.
Interviewed handmade them renew.
Contemporary Chinese artists the pro.
Graham.
Attained a large number of like an endorsement from top kols as well yeah.
Actuals, who.
Constitute the large the.
The target.
Demographics.
Coveted by advertisers.
That's what reporting news and events, we continue to it.
Distinguish ourselves sort of industry, leading breaking news coverage during the quarter.
We covered the launch of Chinese man Speedstrip shouldn't Joe Shiho.
Central to southern.
Through a variety of formats, including live streaming.
Push notification on the focal topic.
Foundations.
Hi dimensional coverage.
5 million views of following.
Particularly sort of live streaming which attracted Uh huh.
Historical record of over 800000.
Thousands like audiences.
Yeah, the cornerstone of our original content unused reporting.
<unk> made strides in expanding our content ecosystem.
In the quarter, we launched our own MCM platform called as we know it future you'll hear us.
The name suggests it is positioned as a hub for knowledge based content created by our contracted influencer.
Taking into consideration of our professional journalist DNA.
Local contact.
Network and a highly educated user base.
By the end of second quarter.
N had contracts.
Contracted 14 subject experts, including Phoenix TV reporters.
Let me now intellectuals and overseas constant creators our first original video series called finished global Observer.
And you're going to have fun brings few reports of live interviews on trending global topics and events to audience.
The theaters became an instant success on Weibo did I believe other third party platforms. In addition to our own platform.
Attaining y user filings.
In the meantime, when the process of exiting a greater mix to cover subjects, such as law on economics health and wellness culture and social science.
Through our <unk> platform.
With greater benefit from our brands versus imports.
While we generate value by enhancing our constant metrics.
Strengthening our brand equity and providing clients with diversified marketing solutions.
Looking ahead.
We believe the combination of our cross border content delivery capabilities.
With our distinctive greater mix, which consists of both foreigners in China and Chinese Patrick Wood.
It will become a competitive advantage for us.
We foresee.
An ever growing demand for overseas marketing by Chinese rents.
Next I will briefly touch on the nature of events during the quarter.
This year Mark.
The 10th anniversary of our Phoenix financial Summit.
And speakers, including the Chief Executive of Hong Kong as they are this carry land together with 31 other.
Political dignitaries on business tycoons congregated at this year's summit.
Also while iPhone Gourmet food festival in Beijing, and currently our center of Chengdu.
Attracted over 160 distinguished guests at each location.
Green top chefs food critics.
That's around <unk> and celebrities thus greatly enhancing our brand influence in the food sector.
Now, let's take a look at our iPhone a P. P. He responds to a REIT align content strategy, we have implemented a few initiatives to enhance the content ecosystem, we think or a P. P. <unk>.
We carefully segregated content related to issues out of our premium constant pool.
Thus setting time sensitive content with temporarily high views.
Paul Evergreen conflict with sustainable profit lives.
I'll, let hand, it continued to make editorial content recommendation of trending topics to cater to user he's dying to chewy and current events.
The other hand.
We have also refined our premium content pool to maintain in that content with large user value.
Including high quality content from those original columns and programs mentioned earlier as well as from other we media accounts.
Optimizing our operation and distribution of premium content, we intend to increase both our user retention rate every.
Every user time spend on <unk> in fact, our monthly repeat use increased by 4% sequentially over.
Over the last quarter.
As we.
Collaborate more closely with Phoenix TV distribution rights, we have vastly improved our ABB user interface unpaid layout to better leverage.
The exclusive content from Phoenix TV for.
For example, we have a segmented Phoenix TV related content into a standalone column, which is one landing page at comparable levels to highlight inclusivity.
Because of the Phoenix TV brand carries significant user affinity trust.
Distributing exclusive content from it through the iPhone ABB has significantly improved our user stickiness.
During the second quarter was in the Phoenix TV column monthly active users increased by 18%, while the click through rate increased by 27% on sequential basis.
Lastly, I'd like to share our progress you revenue diversification for.
For online reading, we have made significant progress, adding more methods of monetization.
Monetizing our premium IP content.
In addition to our cooperation with him a liar in audio content production. We have also entered into a long term strategic cooperation agreement with Tencent.
Music Entertainment group to expand our audit licensing program to all of it.
It forms including QQ, Google on the cool abusing.
Well audio visual concepts, we have formed a strategic cooperation with Shandong film and television production company.
Renowned producer of movie and TV programs to jointly.
Great movies, and TV shows based on a copyright IP companies as well as to jointly engage investors.
And sponsors.
Well real estate vertical our performance in the first half year net oh expectations. Despite heightened market regulation, which we believe will likely prevail throughout the rest of the year.
The anticipation of a challenging environment going forward, we're proactively streamlining business operations at a local branch office to boost their revenue generation capabilities. We're also optimizing our revenue composition by gradually diversifying our client base to reduce customer concentration.
Right.
On the ecommerce front, our independently developed E. Commerce platforms was close to completion during the second quarter, we have invested substantial effort in refining our merchandising strategy to establish our competitive differentiation in the E Commerce Arena.
After two reviews summary, after thorough reviews of our user base characteristics.
Our operating performance data and third party market research.
We have concluded that our competitive edge lives in selecting and marketing products in two specialty categories.
Why is high culture, and creativity and the other one.
Wells going forward, we will focus our platform resources on those two product categories.
However, we have decided to leverage external resources beyond our own user traffic to achieve faster growth for E Commerce business.
<unk> is actively exploring different ways of utilizing our premium content. So January user traffic from third party platforms such as Wechat.
We'll also leverage our content production capabilities in various vertical channels, such as Phoenix labs, food and beverage health and wellness culture, and reading to effectively close the loop a vertical content to specialty commerce.
In summary, while we are fully aware of the multitude of challenges. We're currently facing.
Facing we remain confident in our business prospect as we zero in on our core competency original contemplation rely on our operating income focus.
<unk>, our constant metrics and adjust our distribution strategies with that I'll now turn the call to our CFO <unk> to provide a closer look.
Our quarterly financials.
Thank you Sean and thank you all for joining our conference call today.
Our total revenues in the second quarter of 2020 watt or RMB 256.7 minutes.
Presenting a decrease of 17, 8% from RMB $312 three minutes in the same period of last year I will now provide some additional color on our revenue during the second quarter of 2021 net.
Net advertising revenues in the second quarter of 'twenty, 'twenty, one or RMB 233 minute, representing a decrease of 18, 6% from RMB $286 three minutes in the same period of last year, mainly due to the reductions in the advertising spend.
<unk>, Oh I've ever high search from certain industries in the period.
Paid services revenues in the second quarter of 2021 decreased by eight 8% to RMB $23.7 million from RMB 26 million in the same period of last year revenue from pay the content in the second quarter of 2021 decreased by 32, 4%.
RMB nine 6% minutes from RMB 14, two minutes in the same period of last year, mainly due to the trend towards free online reading in the.
Oh I'm reading market.
Revenues from E Commerce and the other in the second quarter of 2021 increased by 19, 5% to RMB 14, one minute from RMB 11, eight minutes in the same period of 2020.
They are caused by the increase in revenues from E Commerce speakers.
Loss from operations in the second quarter of 2021 was RMB 34, 8 million compared to income from operations of RMB 25, 6 million in the same period of last year operating margin.
In the second quarter of 2021 was negative 17, 5% compared to positive eight 2% in the same period of last year.
<unk> mentioned, we have made a strategic decision to increase our investment in bolstering our original content production capabilities.
Well, it's actually investment well impact our appropriate margin in the short term.
As we managing our expenses prudently, we believe that will help boost our competitive advantages and revitalize our growth trajectory.
Non-GAAP loss from operations.
In the second quarter of 2021 was RMB 31 minutes compared to non-GAAP income from operations of RMB 27, eight minutes in the same period of last year.
Non-GAAP operating margin in the second quarter of 2021 was negative 11, 7%.
Compared to positive eight 9% in the same period of last year.
Net loss from continuing operations.
Attributable to iPhone in the second quarter of 2021, plus RMB seven one minute compared to net income from continuing operations attributable to iPhone of RMB two eight minutes.
In the same period of last year.
Non-GAAP net loss from continuing operations attributable to iPhone in the second quarter of 2021 was RMB, two 1 million compared to a non-GAAP net income from continuing operations attributable to iPhone of RMB 27.7 minutes in the same period of last year.
Moving on to our balance sheet as of June 32021, the Companys cash and cash equivalents term deposits short term investments and restricted cash were RMB 161 billion.
Approximately U S dollar $248 nine minutes.
Finally.
I'd like to provide our business outlook for the third quarter of 2021, we are forecasting total revenues to be between RMB 257, nine minutes and the RMB $282 nine minutes for a net advertising revenue we are forecasting between RMB 200.
$36 seven minutes and the RMB $256 seven minutes.
For paid service revenue, we are forecasting between RMB 21, two minutes and RMB $26.2 million.
Okay.
We will continue to prioritize the attraction and retention of our users through the protection of exclusive and original content.
Same time, we aim to execute more product upgrades to refine our user experiences and to improve all of our content operations.
Which should arguments really fueled the growth of our brand equity.
In line with these efforts we are also focused on bolstering our operating efficiency.
Investigating new monetization strategies.
Improving our revenue stream mix.
Such efforts will allow us to enter a new growth cycle and further improve our overall profitability. Please.
This concludes the prepared portion of our call. We are now ready for questions. Operator. Please go ahead.
Thank you.
Ladies and gentlemen, we will now begin the question and answer session. If you wish to ask a question. Please press star one on the telephone and what's your name to be announced if you wish of tenths of a request. Please press the pound.
Yeah.
Okay.
Yeah.
Your first question comes from shampoo drop off.
86 research. Please ask your question.
Good morning management.
Taking my question.
One question.
Can management share with us.
Sure.
In the second quarter Jeff.
Jeff without looking back at how.
You see that.
Any major English should we see that in second half.
Karla.
Yeah.
Hello. This is <unk> speaking actually is a very good question.
Actually all of our brand advertising business is still facing challenges in revenue growth.
During the cold here advertisers in certain industries.
Do you still your marketing spending for it.
Example, clients.
The auto industry.
Our.
Advertising business most of the important revenue.
Revenue source.
But because of the ongoing.
<unk> of auto chip supply auto industry production capability.
With reducing and the lower sales targets first the industry times to cut.
Cut their ad spending.
Advertisers in other industries, such as our real estate also trimmed out here advertising activities.
Result of the tightening regulatory environment.
Also during.
During the second quarter, COVID-19, and researched in southern China.
The execution of some of our important offline operations and our events in the region had to be put on hold.
This of course are also negatively affected our revenues in the second quarter.
But in the meantime, various short video and social media platforms.
An increasing portion of our market share in the online advertising industry so well.
At the same time facing intense competition as well.
Having said that we are.
We have carefully reviewed our business operations.
We evaluated all of our sales team and have made timely operational adjustments to.
To better prepare for the challenges ahead.
We have assessed all of our industry and customer mix.
Our regional market dynamics to export more self so opportunities and creating the new incentive schemes around the business development to acquire more new customer.
Customers and.
The inter new industries.
Actually advertisers demands for strategic a branding and marketing are always evolving.
They now require a more comprehensive marketing solutions instead of single add a product.
Aside from our signature events and.
Our premium content our friends are.
Actually we are leveraging our user traffic and influence on social media and the short video platforms.
Including those generated by our I'm seeing influencers to enrich all of our products and the service offerings.
Also as Sean mentioned.
<unk>.
Earlier like Oh, I can make other adjustments to our original content strategy and it's very important as well and this will further enhance our brand.
This combined with all of our strategic planning in various industry verticals, such as tourism health and wellness and automobiles well help us improve user loyalty.
Chris our brand influence and arguments really drives the growth of all our advertising business in this sector.
Last about the note list utilizing our international business.
Their perspective, we are actively launching official accounts, all social platforms overseas, such as Facebook and Youtube to further amplify our global brand presence and influence.
At the same time.
We have utilized all of our <unk> platform to sign money overseas Q out with international Baccarat I.
I believe these efforts will create enormous value for large scale Corporation has in China housing.
Helping them to expand your international exposure and conduct more overseas branding activities.
Thank you and I hope I have answer your question.
Yes, that's very helpful. Thank you.
Yeah.
Yeah.
Yeah.
Your next question comes from Carmen Zhang.
Shanghai Securities. Please ask your question.
Yeah.
Sure.
Okay.
Yes.
Information regarding all operations Pakistan.
Hum.
Good morning.
Okay.
Central Karen this is shuang.
Well definitely.
Becoming more focused on third party platforms.
Uh huh.
This platform is becoming more and more important because at first can function as a channel for premium content.
Distribution also.
Becoming a very important source of traffic and therefore.
Monetization opportunities opportunities.
In terms of Brent advertising, all third party platform traffic.
Provided existing advertisers with more opportunities to heighten their brand exposure.
Well us reach more potential consumers on third party platforms.
It will support our brand advertising revenue in return.
Beside from brand influence.
We also believe the in dash commercial value of these traffic.
Has yet to be fully unleashed.
They have helped us to access our large client base was growing demands for content marketing.
Notably those in the F M C G industry.
Also it seems that increasing number of consumers are shopping our social media platforms.
Such as Dow in special on Wechat.
Large follower account.
<unk>.
Which we have accumulated on these platforms.
Also drive our e-commerce business grows.
As such.
We have laid out a detailed action plan.
Our operation on the surpass it platforms.
We have a specific eight to further explore their commercial value.
First we need to concentrate our resources on.
Developing top tier accounts on third party platforms.
And focus.
Quality.
Over quantity.
We have also categorize all accounts on third party platforms into different groups for various purpose.
For example, our iPhone accounts on Weibo, given its breadth broad content coverage with.
With more than 20 minutes.
Plan to use it.
To fortify our breath inflows.
Rather than to drive monetization going forward.
On the other hand, we have our vertical content accounts, such as finance and economy and fashion.
Our IP counsel accounts, such as living site in June.
And the accounts of all engines contracted the Influencers.
These accounts target more specific audience base.
More detailed user profile.
They are planned to be the main category for monetization.
Also.
I'll focus on beauty constant Joshua differ from platform to platform in order to attract quality traffic on targeted followers.
As the characteristics between platforms are quite different.
Example, which had has a large user base for finance and culture.
Availability for <unk>.
Jack and knowledge.
And so on.
These plans will now would not only work with streamlined operational process and the fact that performance evaluation.
We have established a qualitative.
Performance indicators.
As a <unk>.
Members on content publishing.
Articles views followers B shares.
And the comments of course different platforms.
By evaluating these metrics, we can decide whether or not we have met our operational targets.
Along with our persistent focus on content quality and influence as well as our sales efforts.
We believe.
Client base and average revenue per customer.
Both increase.
And of course.
The commercial value of these traffic with.
With natural default.
Okay.
Yeah. This is my answer thank you.
Yeah.
Yes.
Okay.
Once again, if you wish to ask a question. Please press star one.
Yeah.
Yes.
Yes.
Yes.
I would now like to hand, the conference switching.
Yeah.
Thank you operator, we have come to the end of our Q&A session and our conference call.
Feel free to contact us if you have any further questions.
This call have a good day.
Okay.
[music].
Okay.
[music].
Yeah.
[music].
Okay.
[music].
Thank you.
[music].
Yeah.
[music].
Okay.
Okay.
[music].
Yeah.
[music].
Yes.
[music].
Yeah.
Okay.
[music].
Yeah.
Yeah.
[music].
Ladies and gentlemen, thank you for standing by and welcome to the Phoenix, New media second quarter Covid.
Q1 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 just telephone I'm not sure. If I said that today's conference is being recorded.
Sure.
What's your first speaker today.
Thank you.
Yeah.
Thank you operator welcome to me.
Second for 2020 one.
Earnings Conference call I'm joined here by our Chief Executive Officer Shawn.
<unk> and Chief Financial Officer at all Luke on today's call management will first provide a review of the cost data readout and then conduct a Q&A session. The second cultural change you're talking a lot of financial results webcast of today's conference call are available on our website at IR docs.
<unk> Dot com a replay of the call will be available on the website in a few hours before.
Before we continue I would like to refer you to two.
Two our safe Harbor statements in our earnings press release, which apply to this call I suppose I'll make forward looking statements.
Finally, please note that unless otherwise stated all figures mentioned during this conference call I RMB.
With that I would like to turn the call over to Mr. Shaun O'neil our C L.
Thank you Qi Hello, everyone. Thank you for doing this call today.
In the second quarter of 2021, we continue to encounter downward pressure.
Petition intensified regulation tightened and advertisers remain cautious with their budgets.
Our core comp competitive differentiation lies in our original content production capabilities, we have upheld our commitment to originality.
Revamped our content strategy.
And believe that our newly augmented cousin metrics will lay a solid foundation to attract new users increase their loyalty and generate a sustainable revenue stream.
I would like to start by discussing our key efforts revamping our continent travelers.
As users suffer from information overload in the digitally charge world. We're convinced that the most effective way to add value to our users is to produce original content with distinctive characters that are true to our brand. Hence we have positioned our continent metrics adjusted constant production.
Pipeline to produce a series of columns and programs each region and presented in the certain boys and style consistent with our branding differentiation.
Through these efforts, we intend to not only enhance our breath image, but also create that unique brand affinity among our users and advertisers, which should help us a lot more sustained stable long term value from our brand equity and Turner.
To elaborate in the area of our regional companies honored to cater to very user demands we have focused our resources on producing three distinct gotcha opinion column invest investigative reporting on premium IP production.
For example, during the second quarter, we launched our original opinion column titled Eye of the storm from volume.
We just distinctively positioned to examine compassion current events will present, the audience with a unique authentic untimely interpretation.
Issues by conducting meticulous research exploring a wide array of viewpoints.
Our coverage on various controversial topics on social phenomenon generated immense number of views of cortisol ADP on other social platforms with the most popular piece garnered more than 140 million views on weibo.
That's what invest investigative reporting.
Trademark columns, such as the possible.
On the tumor intelligence agency <unk>.
Continue to bring our user well rounded and thorough analysis on the hottest topics.
Such as COVID-19 Delta Airlines ladies.
Latest vaccine development, Miami condo traps and saw.
The addition of <unk>.
Social investigating column living guidance, yet examined societal issues sort of <unk>.
Lifestyle Reis ordinary people.
Reading public awareness of these issues I'm keeping boys could open voices.
Our new short video series titled your achievements.
Thank you.
Pioneered a unique storytelling methods by combining few production Pep talk like pet.
Pep talk South beach by a list celebrities.
The serious poultry is how often are people have overcome tremendous difficulties to accomplish nearly impossible projects.
Is that really so much with the current audience of migration excellence like that.
The honor that it became an instant hit across the Internet.
The two episodes released during the quarter accumulated over 10 minute plays.
<unk> alone.
The second episode became.
Number one hot search on visibility is also exactly the top.
Matt.
Similar theme programs.
Your achievements elevated our premium IP production to new Heights.
Exemplify our industry, leading patent and the production capabilities.
In addition to a quality production advertisers also appreciate it David.
Our access to luminaries in our culture science and politics with backgrounds entrees.
With the images.
For example through video series GMP talk Jim Keane ton.
Interviewed hovnanian.
Contemporary Chinese artists.
Hogan attained a large number of lives and endorsements from top kols as well ya'll intellectuals, who.
Constitute the large the target.
Demographics.
Coveted by our advertisers.
That's what reporting news and events we continued.
Distinguish ourselves through industry, leading breaking news coverage during the quarter.
We covered the launch of Chinese man spaceship shouldn't Joe Shiho.
Central to southern.
Through a variety of formats, including live streaming pushed.
Clarification on the <unk> topic.
Recommendations are Mike high dimensional coverage.
5 million user following.
Particularly sort of live streaming which attracted.
Historical record of over 800000.
Life audiences.
Yeah, the cornerstone of our original unused reporting we also made strides in expanding our conflict ecosystem.
In the quarter, we launched our own MTM platform.
As we know it future Youll hear.
As the name suggests it is positioned as the hub for knowledge based content created by our contracted Influencer.
Taking into consideration of our professional journalism DNA at local contact network and a highly educated user base.
By the end of second quarter.
C N had contracts.
Contracted 14 subject experts, including Phoenix TV reporters right.
Now intellectuals and overseas constant creators.
Our first original video series called Spin Global Observer.
Full launch into Quintiles fun brings Fuchs reports, a light interviews on trending global topics and events to audience.
Tears became an instant success on label visibility at other third party platforms. In addition to our own platform.
Painting y user filings.
In the meantime, when the process of exempting, a greater mix to cover subjects, such as law on economics health and wellness culture and social science.
MCM sample constant graders benefit for more brands perverse of impulse, while we generate value by enhancing our content metrics strengthening our brand equity and providing clients with diversified marketing solutions.
Okay.
Looking ahead.
We believe the combination of our cross border content delivery capabilities.
With our distinctive greater mix, which consists of both corners in China and Chinese expatriate.
We'll become a competitive advantage for us as we foresee.
Ever growing demand for overseas marketing by Chinese rents.
Next I will briefly touch on the nature of events during the quarter.
This year Mark.
The 10th anniversary of our Phoenix financial Summit.
The speakers, including the Chief Executive of Hong Kong as they are this carry land together with 31 other political dignitaries on a business tycoons congregated at this year's summit.
Also while iPhone Gourmet food festival in Beijing, and Culinary Arts center of Chengdu.
Attracted over 160 distinguished guests at each location.
Green top chefs food critics.
That's around <unk> and celebrities.
Thus greatly enhancing our brand influence in the food sector.
Now, let's take a look at our iPhone ABP he responds to our realigned company strategy, we have implemented a few initiatives to enhance the content ecosystem. We think are a P.
We carefully segregated content related to issues out of our premium constant pool.
Setting time sensitive content with temporarily high views apart from evergreen conflict with sustainable profit lives.
I'll, let hand it.
Continue to make a detour compensate recommendation of trending topics to cater to user desire to chewy current events.
On the other hand.
We have also refined our premium content to maintain invest content with large user value.
Adding high quality content from those original columns and programs mentioned earlier as well as from other we media accounts.
But optimizing our operation and distribution of premium Continental we intend to increase both our user retention rate or.
Every user time spend on <unk> in fact, our monthly repeat user increased by 4% sequentially over.
Over the last quarter.
As we can.
Collaborate more closely with Phoenix TV distribution rights, we have vastly improved our ABB user interface unpaid lay out to better leverage.
The exclusive content from Phoenix TV for.
For example, we have a segmented Phoenix TV related content into a standalone column, which its own landing page at comparable levels to highlight inclusivity.
Because the Phoenix TV brand carries inhibiting user affinity trust.
Distributing exclusive content from it soon.
IPhone ABB has significantly improved our user stickiness.
During the second quarter was in the Phoenix TD column monthly active users increased by 18%, while the click through rate increased by 27% a sequential.
Sequential basis.
Lastly, I'd like to share our progress you revenue diversification.
I'll, let reading, we have made significant progress, adding more methods of monetizing monetizing our premium IP content.
<unk> to our cooperation with hemophilia in all do come from production will also enter into a long term strategic cooperation agreement with Tencent.
Music Entertainment group to expand our audit come from licensing program to all of it.
That forms including QQ Google.
Who are abusing.
Well I'll do visual concepts, we have formed a strategic cooperation with Shandong film and television production company.
A renowned producer of movie and TV programs to jointly.
Great movies, and TV shows based on copyright IP content.
Well as to translate engage investor.
And sponsors.
Well the real estate vertical our performance in the first half of the year not only expectation despite heightened market regulation, which we believe will likely prevail throughout the rest of the year.
In anticipation of a challenging environment going forward.
We're proactively streamlining business operations at a local branch office to boost their revenue generation capabilities. We're also optimizing our revenue composition by gradually diversifying our client base to reduce customer concentrated risks.
On the E Commerce front, our independently developed E. Commerce platforms was closed to completion during the second quarter, we have invested substantial effort in refining.
<unk> strategy to establish our competitive differentiation in the E Commerce Arena.
After two reviews summary, after thorough reviews of our user base characteristics.
Operating performance data on third party market research, we have concluded that our competitive edge lies in selecting and marketing products in two specialty categories.
Why is high culture, and creativity and the other one.
Health and wellness going forward, we will focus our platform resources on those two product categories.
However, we have decided to leverage external resources beyond our own user traffic to achieve faster growth for E Commerce business.
Our team is actively exploring different ways of utilizing our premium content. So general user traffic from third party platforms such as Wechat.
Also leverage our content production capabilities in various vertical channels, such as Phoenix lab, food and beverage health and wellness culture, and reading to effectively close the loop a vertical content to specialty commerce.
In summary, while we are fully aware of the multitude of challenges. We're currently facing.
Covenant business prospect as we zero in on our core competency.
The contemplation rely our operating income focus and expand our content metrics, Jeff distribution strategies.
I will now turn the call to our CFO to provide a closer look into our quarterly financials.
Thank you Sean and thank you all for joining our conference call today.
Our total revenue in second quarter of 2020 watt or RMB $256 seven minute, representing a decrease of 17, 8% from RMB 312 point Street minute in the same period of last year I will now provide some additional color on the revenue during the second quarter.
Her off 2021.
Net advertising revenues in the second quarter of 2021, or RMB 273 minute, representing a decrease of 18, 6% from RMB $286 three minutes in the same period of last year, mainly due to the reductions in advertising spending.
Hi, Sir it's from certain industries in the period.
Hey, the services revenue in the second quote her of 2021 decreased by eight 8% to RMB $23.7 million from RMB 26 minutes in the same period of last year revenue was from pay the content in the second quarter of 2021.
Just by 32, 4% to RMB nine 6% our minutes from RMB 14, two minutes in the same period of last year, mainly due to the trend towards free online reading in the.
Oh I'm reading market.
Revenues from E Commerce and the other in the second quarter of 2021 increased by 19, 5% to RMB 14, one minute from RMB 11, eight minutes in the same period of 2020, mainly caused by the increase in revenues from e-commerce species.
Loss from operations in the second quarter of 2021 was RMB <unk> 48 minutes compared.
Compared to income from operations of RMB $25.6 million in the same period of last year.
Turning to margin.
In the second quarter of 2021 was negative $13 five per cent.
Compared to positive eight 2% in the same period of last year.
<unk> mentioned, we have made a strategic decision to increase our investments in bolstering our original content production capabilities.
Well, it's actually investment of well impact our profit margin in the short term.
We are managing our expenses prudently.
Leave that agent will help boost our competitive advantages and revitalized.
Our growth trajectory.
Non-GAAP.
Loss from operations.
In the second quarter of 2021 was RMB 31 minutes.
Compared to non-GAAP income from operations of RMB 27, eight minutes in the same period of last year.
Non-GAAP operating margin in the second quarter of 2021 was negative 11, 7% compared to positive eight 9% in the same period of last year.
Net loss from continuing operations attributable to iPhone in the second quarter of 2021, plus RMB seven one minute compared to a net income from continuing operations attributable to iPhone of RMB two eight minutes in.
In the same period last year.
Non-GAAP net loss from continuing operations attributable to iPhone in the second quarter of 2021 was RMB, two 1 million compared to a non-GAAP net income from continuing operations attributable to iPhone.
RMB 27 minutes in the same period of last year.
Moving on to our balance sheet as of June 32021, the Companys cash and cash equivalents term deposits short term investments and restricted cash were RMB 161 billion.
Approximately U S dollar $248 nine minutes.
Suddenly.
I'd like to provide our business outlook for the third quarter of 2020, what we are forecasting total revenues to be between RMB 237, nine minutes and the RMB $282 nine minutes for net advertising revenue we are forecasting between RMB 200.
$36 seven minutes and the RMB $256 seven minutes.
For paid service revenue, we are forecasting between RMB 21, two minutes and RMB $26.2 million.
Okay.
We will continue to prioritize the attraction and retention of our users through the production of exclusive and original content and <unk>.
Same time, we aim to execute more product upgrades to refine our user experiences and to improve all of our content operation.
Which should arguments really fueled the growth of our brand equity.
In line with these efforts we are also focused on bolstering our operating efficiency.
Investigating new monetization strategies.
Improving our revenue stream mix.
Such efforts will allow us to enter a new growth cycle and further improve our overall profitability.
This concludes the prepared portion of our call. We are now ready for questions.
Operator, Please go ahead.
Thank you.
Ladies and gentlemen, we will now begin the question and answer session. If you wish to ask a question. Please press star one on the telephone and if your name to be announced if you wish of tenths of a request. Please press the pound.
Okay.
Yeah.
Your first question comes from Chevron drop off.
86 research. Please ask your question.
Good morning management, Thank you for <unk>.
Taking my question.
One question regarding <unk>.
Can management comment about that.
Sure.
In the second quarter, Jeff without looking at the Amsterdam.
How you see that real time.
Any major initiatives should we be back in second half two for desktop.
The girls.
Okay.
Hello. This is <unk> speaking.
This is a very good question actually.
Brand advertising business.
It is still facing challenges in revenue growth.
During the cold here advertisers in certain industries reduced earlier marketing spending.
For example clients in our auto industry our.
Our.
Advertising business most of the important revenue.
Revenue source.
But because of the ongoing.
<unk> auto chip supply auto industry production capability.
It was a reduced and the lower sales targets first the industry clients to cut.
Cut your AD spending.
Either monetize or in other industries, such as our real estate also trimmed out here.
Rising activities.
As a result of the tightening regulatory environment.
Also do you know.
During the second quarter, COVID-19 researched in southern China.
The execution of some of our important to offline operations and the events in the region had to be put on hold.
This of course also negatively affected our revenue in the second quarter.
But in the meantime, various short video and social media platforms.
An increasing portion of our market share in the online advertising industry so well.
At the same time facing intense competition as well.
Having said that we.
We have carefully reviewed our business operations.
We evaluated all of our sales team and the timely operational adjustments to.
To better prepare for the challenges ahead.
Well, we have assessed all of our industry and our customer mix.
Whereas our regional market dynamics to export more self so opportunities and creating the new incentive schemes around the business development to acquire more new customers.
Customers.
And the inter new industries.
Actually advertisers demand for strategic branding and marketing are always evolving.
They now require a more comprehensive marketing solutions instead of single add a product.
Aside from our signature events and regular premium content offerings.
Actually we are leveraging our user traffic and the influence on social media and the short video platforms.
Including those.
<unk> generated by our I'm seeing influencers to enrich our product and service offerings.
Also as Sean mentioned.
Yeah.
Okay.
Earlier like Oh.
Men to tour, our original content strategy.
Very important as well and this will further enhance our brand.
This combined with all of our strategic planning in various industry.
Industry verticals, such as tourism health, and wellness and automobiles, well help us improve user loyalty.
Increase our brand influence and the arguments really drives the growth of our advertising business is this sectors.
Lots about the note list utilizing our international business.
Prospectively we.
We are actively launching official accounts, all social platforms overseas, such as Facebook and Youtube.
To further amplify our global brand presence and influence.
At the same time.
We have utilized all of our <unk> platform to sign many overseas Q out with international Baccarat.
I believe these efforts will create enormous value for large scale corporations in China housing.
Helping them to expand your international exposure and conduct more overseas branding activities.
Thank you and I hope I have answered your question.
Yes, that's very helpful. Thank you.
Yeah.
Okay.
Your next question comes from common John.
Firstly Shanghai Securities. Please ask your question.
Uh huh.
Okay.
Okay. So no income.
Sure.
The operation.
Marquee social media.
Yeah.
Hum.
Good morning.
Okay.
Hi, Central Karin this is Sean.
Well definitely.
Becoming more focused on third party platforms.
This platform is becoming more and more important because at first can function as a channel for our premium content.
Distribution also.
Becoming a very important source of traffic and therefore.
Monetization of that unit opportunities.
In terms of brand advertising all third party platform traffic has provided existing advertisers with more opportunities to heighten their brand exposure.
As well as reach more potential consumers on third party platforms.
It will support our brand advertising revenue in return.
So aside from brand influence.
We also believe the India as commercial value of these traffic.
Has yet to be fully unleashed.
They have helped us to access our large client base was growing demands for content marketing.
Notably those in the F M C G industry.
So it seems that increasing number of consumers are shopping our social media platforms.
Just do in special on Wechat.
The large follower account.
[noise] counts.
Which we have accumulated on these platforms.
It will also drive our e-commerce business grows.
As such.
We have laid out a D to ask from them.
<unk> operation on the surpass it platforms.
We have a specific eight to further explore their commercial value.
First we need to concentrate our resources on.
Developing top tier accounts on third party platforms.
And focus.
Quality.
Over quantity.
We have also categorize all accounts on third party platforms.
Different groups for very purpose.
For example, our iPhone accounts on Weibo.
Bret broad content coverage.
With more than 20 minutes bombers.
Our plan to use it.
To fortify our breath inflows.
Rather than to drive monetization going forward.
On the other hand, we have our vertical constant accounts, such as finance and economy and fashion.
Oh IP content accounts, such as living site in June.
On the accounts of all <unk> contracted to Influencers.
These accounts target more specific audience space with some more detailed user profile.
They are planned to be the main category for monetization.
Also.
I'll focus on beauty content Joshua differ from platform to platform in order to attract quality traffic on target the followers.
As the characteristics between platforms are quite different.
Temple Wechat has a large user base for finance and culture.
Visibility for tech and knowledge.
And so on.
These tests will now would not only work with streamlined operational process and effective performance evaluation.
We have established.
Hey, Dave.
Performance indicators.
Such as a <unk>.
The numbers on content publishing.
Rd reviews followers B shares.
And the comments of course different platforms.
By evaluating these metrics, we can decide whether or not we have met our operational targets.
Along with our persistent focus on content quality and influence as well as our sales efforts will.
We believe.
Client base and average revenue per customer.
Both increase.
And of course.
The commercial value of these traffic with natural default.
Yeah.
Yes. This is my answer thank you.
Yeah.
Yes.
Okay.
Once again, if you wish to ask a question. Please press star one.
Yeah.
I would now like to hand, the conference back to change.
Yeah.
Thank you operator, we have come to the end of our Q&A session and our conference call.
Feel free to contact us if you have any further questions.
Thank you for.
This call have a good day.