Q1 2022 Phoenix New Media Ltd Earnings Call
Good day, and thank you for standing by and welcome to Phoenix, New Media first quarter 2022 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.
I'll ask a question during the session to a need to press star one on your telephone. Please be advised that today's conference is being recorded if you require any further assistance. Please press star zero.
I'd like to hand, the comprehensive to your host today, Mr. Guo from IR team. Thank you. Please go ahead.
Thank you operator, and welcome to Phoenix, New Media first quarter 2022 earnings Conference call I'm joined here today by our Chief Executive Officer, Mr from Neal and Chief Financial Officer, Mr. Eduardo <unk>.
On today's call management will first provide a review of the quarter results and then conduct a Q&A session.
The first quarter of 2022 financial result, a webcast of this conference call are available on our website at IR Dot iPhone Dot com a replay of the call will be available on the website in a few hours.
Before we continue I'd like to refer you to our Safe Harbor statement in our earnings press release, which applies to this call as we will make forward looking statements.
Finally, please note that unless otherwise stated all figures mentioned during the conference call are in RMB.
With that I would like to turn the call over to Mr. Sean Liu our CEO .
Thank you Melissa Hello, everyone and thank you for joining our call today.
In the first quarter the nationwide Covid researches continue to impact the execution of some of our advertising services.
Advertising revenues were also negatively affected as many advertisers reduce it budgets.
Lance to macroeconomic uncertainties.
Nevertheless, this quarter, what's the vessel in terms of news events with.
We sharpened our competitive batch reporting and distributing our regional thompsons and we're able to maximize our brand influence.
Okay.
At the same time, we continue to expand and elevate our monetization capability across all channels.
In the first quarter, our coverage of a number of significant news events. Once again received extensive media exposure.
And market potential.
Our teams professionalism, leading position in news reported.
This.
<unk> included two sessions, the Winter Olympics, Russia, Ukraine Colby.
Colby resurgence the stock market to them.
Major aviation.
To name just a few.
From the onset of the Russia Ukraine.
We have been reporting that you've been through live streaming from the frontline by leveraging our local connections with Spanish television correspondents Chinese actress Queen local Youll Queens references.
We launched the first challenge in China to report on the latest development in the Mercury complex complex.
Designated a special segment.
Numerous new information regarding the company.
To enhance our user online viewing experience, we adopted a timeline format.
<unk> presentation, which tracks the real time development the wall.
It became the all in one place while user profile like that.
In addition, we.
Distributed.
Tailored concepts catering to diverse individual user needs by offering slow live streaming short we use our reporting from frontline correspondence with interviews.
Experts in military appears on International Relations, who provided professional opinion is I'm sure their interpretation of the situation in Ukraine.
Our live streaming coverage of the war garnered 250 million views our own platform.
Over 1 billion accumulated abuse of third party platforms, including <unk>.
Which have view.
Also we reported the events from multiple angles and cap.
Zing history humanity.
<unk>.
Our original in depth news stories generated 3 million cumulated views through our wechat.
Official accounts.
Yes.
In addition to our breaking news coverage. We also continue to expand the monetization capabilities of our original content production.
During the first quarter of 2022, our documentary series titled Mega projects.
Demonstrated unique commercial values as we focus on developing high quality content related to the renewable energy industry.
A number of well known automotive companies collaborated with us and sponsored the serious it.
It is a lie.
Items with a corporate strategies to reduce their carbon footprints.
For the remainder of 2022 were planted.
<unk> deeper into the topic of carbon neutral.
And clean energy.
Our advertisers to demonstrates the transformation to a low carbon business models.
Well multichannel network MTN south of that.
This further on the success of the finished global observer.
Launched in 2021.
Such serious engaged our parent company Phoenix TV Global network of reporters.
And generated global lifestyle.
Were employed social media as its main distribution channel, helping to broaden our audience reach.
As a globally themed product offerings.
Laurie additional avenues for commercialization.
During the first quarter of 2022, we achieved a breakthrough in commercialization by partnering with clients in the banking and automated industries launched a number of original competence here.
The support that globalization initiatives.
For example in conjunction with our content creators around the globe with tailor made a short video series four major banks, featuring Chinese people around the world celebrating the spring Festival.
This series was very effective in promoting the best cross border Ras image and helping it to establish global.
In addition to developing original content, we continue to explore the live streaming format, while further enhancing our distribution and monetization capabilities.
So tremendous styles.
Livestream.
Our differentiation is in live interview format, which maximize synergies between our professional media content production capability.
Extensive contact network.
For example, while our coverage of the Russian you'll clean wall.
Interviewed over 50.
Commentators and the specialists delivering a variety.
<unk> Haven opinions to others.
On the financial news front, we conducted live interviews with a number of renown cognos analytics.
Business executives, who share their thoughts on global stock market trends and related financial topics.
Moreover, we brought many popular writers performance artist <unk> live streaming channel to discuss culture artistic topics.
To assure the highest possible.
Quality of our entities.
Particularly drafted discussion topics in each of your questions.
We interacted with our viewers are received high user engagement and views.
After the live streaming sessions the video recording.
It into short clips tacked on images.
Comfort is then distributed over of course, our App and surpassing third party platforms for further stipulations.
This in turn.
Our audience reach.
Our number of hours our cultural happens.
Our interview with a public later.
Like copper.
So much of what you do.
Became immediately.
At lunch.
It's attracted nearly 1 million viewers doing live streaming session received over one point to immediate paybacks.
Of course, the Internet and also exceeded the milestone.
10000 page views for wider sure.
Exposure on Wechat, which added 14, southern Power's official accounts.
To keep this traffic momentum.
Not only do we need to focus on the consistent production of the life ships, we also need to be.
Pizza patient.
Active promotion, such as social media announcements livestream alerts.
<unk>.
That's what attracted and grew our fan base on certified the platforms, we should be able to further strengthen.
Advertising distribution capabilities increase our monetization potential.
On the user App side, we continue the rollout upgrades to improve our interactive features specifically improve iPhone apps light.
And to me the following features.
<unk> chat features were mainly offered professionally generated content with a focus on military affairs and trending topics in various comforting.
By integrating court constant production user interactions.
Attracted more users to join a lighthouse to discuss the topics of interest.
With the gas.
That's been enhancing our user retention.
Then suddenly.
<unk> users time for them to do that.
For our community, Florida feature we aim to create a friendly and engaging discussions I mean for all trending topics.
Now some verticals.
With many other online communities featuring user generated content ecosystem.
We must face the challenge of recruiting the pop Kid console creators and generating high quality and more interactive content. While users we have recruited a number of influencers.
Popular with our younger user cohorts.
We have continued to evaluate our user feedback.
Usage statement aiming to attract more younger users to our platform.
Paul.
Now, let's turn to our progress revenue diversification with <unk>.
Continue to develop our online reading segment during the quarter.
Collaborated with a few more online reading platform to monetize our premium IP come on.
And further expanded our original content.
IP library.
Wow.
<unk> new revenue growth drivers.
As for our real estate vertical the industry is facing headwinds from the current nationwide tobit resurgence.
Later on if at all that stringent industry regulations implemented in 2021.
During this challenging period.
<unk> continued to increase our media influence and the real estate sector by delivering a recent company events.
Event campaigns.
For example, <unk>.
While consumer lifestyle.
350 pulp buyers published quality reports, a member but real estate developments.
Laboratory with developers industry associations are law firms to produce multi dimensional coverage industry paint.
Meanwhile, our team has taken proactive measures to navigate through the uncertainties.
New business opportunities.
In summary during the first quarter, we worked tirelessly to overcome the negative impact of macro uncertainty advertiser demand.
Our own offline operations.
We continue to enrich our offerings.
Refine our live streaming capabilities.
He has the user experience of our AP.
Looking ahead in the face of macro headwinds, we will prudently manage our business operations. Unfortunately execute on new business initiatives.
While maintaining our focus on business development.
Areas of emerging growth.
With that I will now.
Now I'll turn the call to our CFO and will do to provide a closer look into.
Into our quarterly financials.
Thank you Sean.
Thank you all for joining our conference call today.
Our total revenues in the first quarter of 2022, or RMB, $475 4 million as compared to RMB.
$226 1 million in the same period of last year.
To elaborate net advertising revenues in the first quarter of 2022 or RMB $158 four minute compared to RMB $201 three minutes in the same period of last year.
The decrease was mainly due to reduction in advertising spending of advertisers in certain industries.
The intensified industry wide competition.
The negative impact of the COVID-19 outbreak in certain regions in China in the first quarter.
Paid services revenues in the first full quarter of <unk>.
Or RMB 17 million compared to RMB $24 8 million in the same period of last year.
Revenues from paid content in the first quarter of 2022, or RMB $4 6 million compared to RMB $10 5 million in the same period of last year.
Many late you choose a reduction in content spending of certain customers.
Revenues from E Commerce, and the others in the first quarter of 2022, or RMB $12 4 million compared to RMB 14, three minutes in the same period of 2021.
Loss from operations in the first quarter of 2022 was RMB $106 8 million.
<unk> to RMB 41, 9 million in the same period of last year.
<unk> margin in the first quarter of 2020 tool was negative 69% compared to a negative 18, 6% in the same.
Same period of last year.
non-GAAP loss from operations in the first quarter of 2020 towards was RMB $106 1 million compared to RMB 47 million in the same period of last year.
non-GAAP operating margin in the first quarter of 2022 was negative with 65% compared to negative 18% in the same period of last year.
Net loss attributable to iPhone in the first quarter of 2020 tool was RMB $79 7 million compared to RMB $29 2 million in the same period of last year.
non-GAAP net loss attributable to iPhone in the first quarter of 2020 tools was RMB 79, 6 million compared to RMB 27, eight minutes in the same period of last year.
Moving on to our balance sheet.
March 31, 2022, the Companys cash and cash equivalents term deposits short term investments and <unk>.
Restricted cash or RMB 141 billion.
<unk> approximately U S dollar 222 8 million.
Finally, we're still at a too early of a stage to quantify the lasting impact of the nationwide COVID-19 resurgence.
Nevertheless.
I would like to provide some color on the outlook.
For the second quarter, we are forecasting total revenues to be between RMB, $198 6 million and RMB $218 6 million.
For net advertising revenues, we are forecasting between RMB 167 million and RMB 182 minutes.
Paid service revenues, we are forecasting between RMB 31, six minute and the RMB $36 six minute.
These forecasts reflect our current and up.
Preliminary views, which are subject to change.
And the substantial uncertainties.
In summary, we experienced significant volatility from the macro environment in the first quarter.
Challenges from industry wide competition agreement.
So we continue to expand our presence through news coverage and the original content production and monetization and then in order to minimize the negative impact on our bottom line.
We are taking necessary steps to adjust over operational strategy and haven't made a greater effort on cost control and reducing expenditures.
We believe that our ongoing efforts will prepare us to achieve a better margin recovery in the quarters to come.
Yes.
This concludes the prepared portion of our call.
Now ready for questions.
Operator. Please go ahead. Thank you.
This time, if you'd like to ask question. Please press star one on your telephone.
Your question, please press the pound or hash key.
First question comes from the line I'll share route Chung from 86 research. Please go ahead.
Hi, Good morning management. Thank you for taking my question I have one question about your outlook.
So could you please elaborate more.
That may be impacting the business in Q1, and Q2 and how should I look at that growth outlook for the rest up yes. Thank you.
Good morning, Shoelaces afterwards speaking.
Thank you for your question.
Indeed, the nationwide cover the resurgence this year already has had a large impact on our.
Our revenues.
Our advertising business is utilized.
Heavily on execution, and our offline activities and executions or.
Affected by the Lockdown.
On top of that so overall consumption.
Weak due to the difficult situation caused by the outbreak of COVID-19.
Many industries are facing downward pressure and all of our clients in those industries are also.
Cutting back on advertising and brand and marketing budget.
Uh huh.
Hopefully the situation will get better in the second half of the year.
No one has a crystal ball.
In light of this.
Internal challenges.
We are committed to enhancing over.
<unk> business fundamentals in the advertising.
Victor.
Content wise.
We further improved our original content to grow our influence across diverse sectors.
Our elevated our brand image well increase our brand value and drive.
Tenable grows to over other housing business in the future.
Also increased.
Corporation.
Our content production and monetization.
Monetization now serves as the.
Primary goal, that's what drives our content production development.
Also in the time.
In order to create.
Engaging community.
For users and <unk>.
Increase our user retention rate.
We allocated more resources to upgrade products featured and.
Try to ease the social social interactions.
Our iPhone app.
These efforts should have boosted our advertising itself and grow into.
Enterprise value.
In the long term.
Thank you sure.
Thank you that's very helpful.
Thank you for the questions.
Next question comes from the line of at least Tung from first Shanghai. Please go ahead.
Hi management.
Hi.
One question.
Any outlook.
Outlook that was given back.
Could you please share.
That's correct.
Thank you Ben.
Sure.
Thank you.
Thank you Eddie this is Sean as.
As we previously mentioned we are facing challenges on the decrease advertising revenue.
Is the main course.
Of the extended loss this quarter.
As Edward has mentioned in his part were trying our best to.
To boost our advertising revenue.
Wow.
Topline growth remains our focus we also determined that we need to constantly review our cost structure.
We used a lot, but as much as we can.
And support business development with effective cost structure.
We have already that they do cost management goes and conducted.
Comprehensive evaluation return on investments.
We will streamline the process and reduce viable costs.
Including project execution costs.
Well, maintaining our service standards.
We are also actively manage our fixed costs, including optimizing our employee structure.
Through effective cost management measures, we should make significant improvement in.
And overall operating efficiency.
Our goal is to bring our core portal business.
Which is due online news and content providers.
Through our PC mobile.
<unk> App and third party platforms.
Breakeven.
In the next two or three years.
And to make Michigan profits with our new initiatives.
Including online reading e-commerce, and so long.
That future growth.
To breakeven and become public.
Thank you for the questions.
As there are no more questions from the phone line I would like to hand, the call back to Mr. Cohen for closing remarks. Please go ahead.
Thank you, let's come to the end of our Q&A session and our conference call. If you have any further questions. Please feel free to contact us. Thank you for joining us today have a good day.
This concludes today's conference call. Thank you for participating you may now disconnect.
[music].
Okay.
[music].
[music].
[music].
Good day and thank you for standing by welcome to Phoenix, New Media first quarter 2022 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 to a need to press star one on your telephone please.
Be advised that today's conference is being recorded if you require any further assistance. Please press star zero.
Now I'd like to hand, the comprehensive to your host today, Mr. Motta call from IR team. Thank you. Please go ahead.
Thank you operator, and welcome to Phoenix, New Media first quarter 2022 earnings Conference call I'm joined here today by our Chief Executive Officer, Mr. Shan, Li and Chief Financial Officer, Mr. Eduardo.
On today's call management will first provide a review of the quarter result, and then conduct a Q&A session.
The first quarter 'twenty to 'twenty two financial result, a webcast of this conference call are available on our website at IR got iPhone Dot com a replay of the call will also be available on the website in a few hours.
Before we continue I'd like to refer you to our safe Harbor statements in our earnings press release, which applies to this call as we will make forward looking statements.
Finally, please note that unless otherwise stated all figures mentioned during the conference call are in RMB.
With that I would like to turn the call over to Mr. Sean New RFP.
Thank you Melissa Hello, everyone and thank you for joining our call today and.
In the first quarter the nationwide Covid resurgence continue.
The impact of execution of some of our advertising services.
Advertising revenues were also negatively affected as many advertisers reduced their budgets in response to macroeconomic uncertainties.
Nevertheless, this quarter, what's the vessel in terms of news would be best.
We sharpen our competitive edge and reporting of distributing original Thomson's I wont able to maximize our graph equals suki.
At the same time, we continue to expand and elevate our monetization capability across all channels.
In the first quarter.
A number of significant news events once again received extensive media exposure.
And market depression, highlighting our teams professionalism, our leading position in news reported.
Even the <unk>.
<unk> included two sessions the Winter Olympics in Russia, and Ukraine was Colgate resurgence the top market from other major aviation accident.
To name just a few.
From the onset of the Russia and Ukraine.
We have been reporting the event live screening from the frontline by leveraging our local connections with Spanish television correspondents Chinese access new claim local you're cleaning exactly this.
We launched the first challenge in China to report on the latest development in Mercury complex complex.
That'd be related the specialty segment.
They all tumors at least inflammation regarding the conflict.
To enhance our user online news viewing experience, we adopted the timeline format news presentation, which tracks the real time develop the work.
It became the all in one place while user profile like that.
In addition, we are distributed.
Constance catering to diverse individual user needs by offering slow live streaming short we use reporting from frontline correspondence with interviews.
Experts in military appears on international relations, who provided their professional tennis and share their interpretation of the situation in Ukraine.
Our live streaming coverage of the war garnered 250 million views our own platform.
And over 1 billion accumulated abuse, all third party platforms, including <unk>.
Question on the Wechat view.
Also we reported that you bet from multiple angles.
Causing history humanity I think Alex.
Our original in depth news stories generated 3 million cumulated views, so our wechat official accounts.
In addition to our breaking news coverage.
We also continue to expand the monetization capabilities of our original content production.
In the first quarter of 2022, our documentary series titled Magic projects demonstrated unique commercial banks as we focus on developing high quality content related to the renewable energy industry.
A number of well known automotive companies collaborated with us and sponsored the theories.
He is in alignment with our corporate strategies to reduce our carbon footprints.
For the remainder of 2022 rips attitude.
<unk> deeper into the topic of carbon controller.
And clean energy.
Our advertisers to demonstrates the transformation to a low carbon business models.
Well multi channel network MTN tablet would be.
Further on the success of our finished global Observer series launching in 2021.
Such serious engaged our parent company Phoenix TV Global network of reporters and generated global lifestyle.
Employed social media as a main distribution channel, helping to broaden our audience reach.
With a globally themed product offerings.
Laurie additional avenues, but commercialization.
In the first quarter of 2022, we achieved a breakthrough in commercialization by partnering with clients in the banking and automated industry launched a number of our region the competency areas that support the globalization initiatives.
For example in conjunction with our content creators around the globe with tailor made a short video series for a major bank featuring Chinese people around the world celebrating the spring Festival.
This series was very effective in promoting the best cross border raster image and helping it to is that is global.
In addition to developing original content, we continue to explore the live streaming format, while further enhancing our distribution and monetization capabilities.
So tremendous styles of livestream.
Our differentiation is in live interview format, which maximize synergies between our professional media DNA cotton production capability at extensive contacts network.
For example, while our coverage of the Russia, and Ukraine wall, we interviewed over 50.
Commentators and the specialists delivering over right.
Peyton opinions to others.
On the financial news front, we conducted live interviews with a number of renowned columns analyst and the business executives who share their thoughts on global stock market tests and related financial topics.
Moreover.
We brought many popular writers performance on <unk>.
Artist to live streaming channel to discuss culture.
Pistic topics.
Okay.
To assure the highest possible quality.
We meticulously drafted discussion topics in each of your questions.
Have you interacted with our viewers, obviously high user engagement and views after.
The live streaming sessions.
The video recording edited into short clips tact images. This comfort is then distributed over of course, our app and sort of classic sort of party platforms for further simulation.
In turn expanded our audience reach.
Our number of hours our cultural happens.
For example, our interview with a public ledger cultural life.
Programmers so much of what you.
Immediately.
Lunch.
Attracted nearly 1 million viewers during live streaming session. Please.
Or what point do immediate paybacks.
Of course, the Internet and also exceeded the milestone.
10000 page views for wider sharing on exposure on Wechat, which added 14 southern Power's official accounts.
To keep this traffic momentum.
Not only do we need to focus on the consistent production of the life ships, we also need to viewers.
It's a patient.
Active promotion, such as social media announcements livestream alerts.
<unk>.
That's what attracted and grew our fan base on certified the platforms, we should be able to further strengthen our advertising distribution capabilities.
Kris.
<unk>.
On the user App side, we continue to rollout upgrades to improve our interactive features specifically, we improve all iPhone apps like <unk> and.
I am committed borrowing features while live chat features were mainly offered professionally generated content with a focus on military appears and trending topics in various verticals.
By integrating court cotton production with user interactions.
Attracted more users to join a lighthouse to discuss the topics of interest.
With the gas flows that's enhancing our user retention as well as then.
Something users' time staff to do that.
For our community for a feature we aim to create a bradley and engaging discussions mean for overcoming topics on cosmetics.
With many other online communities featuring user generated content ecosystem.
We must face the challenge of recruiting the top tier constant graders and generating high quality and more interactive content. While users. We have recruited a number of influencers, while popular with our younger user cohorts.
We are continued to evaluate our user feedback on that.
Usage data aiming to attract more younger users to our platform.
Now, let's turn to our progress revenue diversification.
We continue to develop.
I am reading segment during the quarter.
Collaborated with a few more online reading platform.
Monetize premium IP content on.
And further expanded our original content.
IP library.
Lay the groundwork for developing new revenue growth drivers.
As for our real estate vertical the industry is facing headwinds from the current nationwide Toby researches.
Later on effect that stringent industry regulations implemented in 2021.
During this challenging period.
<unk> continued to increase our media influence and the real estate sector by delivering for original content.
<unk> campaigns.
Temple.
In consumer lifestyle, we introduced 350 homebuyers published quality reports, a member, but real estate development and collaborated with developers industry associations are law firms to produce multi dimensional coverage industry pain points.
Points.
While our team has taken proactive measures to navigate through the uncertainties.
Florida, new business opportunities.
In summary during the first quarter, we worked tirelessly to overcome the negative impact of macro uncertainty advertiser demand.
Our own offline operations.
We continue to enrich our offerings refine our live streaming capabilities.
He has the user experience of our IPP.
Looking ahead in the face of macro headwinds, we will prudently manage our business operations and of course lastly, execute on new business initiatives as.
While maintaining our focus on business development.
Areas of emerging growth.
With that I will now turn the call to our CFO to provide a closer look.
Into our quarterly financials.
Okay.
Thank you Sean and thank you all for joining our conference call today.
Our total revenues in the first quarter of 2022, or RMB, $475 4 million as compared to RMB.
$226 one minute in the same period of last year.
Leverage net advertising revenues in the first quarter of 2022, or RMB, $158 4 million compared to RMB $201 three minutes in the same period of last year.
The decrease was mainly due to reduction in advertising spending of advertisers in certain industries.
The intensified industry wide competition.
The negative impact of the COVID-19 outbreak in certain regions in China in the first quarter.
Paid services revenues in the first of the quarter of 2019.
Or RMB 17 million compared to RMB $24 8 million in the same period of last year.
Revenues from paid content in the first quarter of 2022, or RMB $4 6 million compared to RMB 10, 5 million in the same period of last year.
Many late you choose a reduction in content spending of certain customers.
Revenues from E Commerce, and the others in the first quarter of 2022, or RMB $12 4 million compared to RMB 14 points for a minute in the same period of 2021.
Loss from operations in the first quarter of 2022 was RMB $106 8 million.
Compared to RMB 41, 9 million in the same period of last year.
<unk> margin in the first quarter of 2020 tool was negative 69% compared to a negative 18, 6% in the same period of last year.
non-GAAP loss from operations in the first quarter of 2020 towards was RMB $106 1 million compared to RMB 47 million in the same period of last year.
non-GAAP operating margin in the first quarter of 2022 was negative with 65% compared to negative 18% in the same period of last year.
Net loss attributable to iPhone in the first quarter of 2022.
RMB $79 7 million compared to RMB $29 2 million in the same period of last year.
non-GAAP net loss attributable to iPhone in the first quarter of 2020 tools was RMB 79, 6 million compared to RMB 27, eight minutes in the same period of last year.
Moving on to our balance sheet as of March 31, 2022, the companys cash and cash equivalents term deposits short term investments and we.
Restricted cash or RMB 141 billion.
<unk> approximately U S dollar 222 eight minutes.
Finally, we're still too early of a stage to quantify the lasting impact of the nationwide COVID-19 resurgence.
Nevertheless.
I would like to provide some color on the outlook.
For the second quarter, we are forecasting total revenues to be between RMB, $198 6 million and RMB $218 6 million.
For net advertising revenues we are.
Forecasting between RMB $167 million and the RMB 182 minutes.
For paid service revenues.
We are forecasting between RMB 31, six minute and RMB <unk> $36 6 million.
This forecast reflects our current and up.
Preliminary views, which are subject to change and substantial uncertainties.
In summary, we experienced significant volatility from the macro environment in the first quarter.
<unk> challenges from industry wide competition.
And so we continue to expand our presence through new courage and the original content production and monetization and then in order to minimize the negative impact of our bottom line.
Taking necessary steps to adjust our operational strategy and haven't made a greater effort on cost control and reducing expenditures.
We believe that our ongoing efforts will prepare us to achieve a better margin recovery in the quarters to come.
Yes.
This concludes the prepared portion of our call.
We're now ready for questions.
Operator. Please go ahead. Thank you.
At this time, if you'd like to ask question. Please press star one on your telephone to withdraw your question. Please press the pound or hash key.
First questions comes from the line I'll share route Chung from 86 research. Please go ahead.
Good morning management. Thank you for taking my question.
One question about your out of business.
So could you please elaborate.
Great.
How the other crops that are impacting the business in Q1, and Q2 here and how should they look at that growth outlook for the rest of them yeah. Thank you.
Good morning, Shoelaces afterwards speaking thank.
Thank you for your question.
Indeed.
<unk> covered a resurgence this year already has had a large impact.
Our revenues are.
Our advertising business utilized.
Heavily on execution, and our offline activities and executions or affected by the lockdown.
On top of that so overall consumption.
This week due to the difficult situation caused by the outbreak of COVID-19.
Many industries are facing downward pressure and all of our clients in those industries are also cutting back on advertising and brand and marketing budget.
Hopefully so tuition will get better in the second half of the year.
No one has a crystal ball.
In light of this external challenges.
<unk> committed to enhancing over.
The business fundamentals in the advertising.
Victor.
Content wise wafer.
We further improved our original content to grow our influence across various sectors.
Our elevated our brand image well increase of our brand value and drive sustainable growth to over other housing business in the future.
We also increased our.
Cooperation.
Between our content production and monetization team.
Monetization now service.
The primary goal that drives our content production development.
Also in some time.
They are to create engaging community.
For users and.
Increase our user retention rate.
We allocated more resources to upgrade products features and.
Tried to enhance social inter Soc.
<unk> interactions.
Our iPhone app.
These efforts should boost our advertising sales and growth.
Enterprise value.
In the long term.
Thank you sure.
Thank you that's very helpful.
Thank you for the questions.
The next question comes from the line of at least Tung from first Shanghai. Please go ahead.
Hi management. Thank you.
I had one question regarding company.
Hell give it back.
Could you please share.
The current profitability.
Breakeven.
Thank you.
Thank you Eddie this is shuang.
As we previously mentioned, we are facing challenges and decreased advertising revenue.
Is the main cause.
Of the extended loss this quarter.
<unk> has mentioned in his part we are trying our best to.
To boost our advertising revenue.
Well.
Topline growth remains our focus we also determined that we need to constantly review our cost structure reduce our loss as much as we can.
And support business development with a competitive cost structure.
We have already set they do cost management goes and.
Our comprehensive evaluation return on investments.
We will streamline the process and reduce viable costs.
Including project execution costs.
While maintaining our service standards.
We are also actively manage our fixed costs, including optimizing our employee structure.
Through effective cost management measures, we should make significant improvement in.
And overall operating efficiency.
Our goal is to bring our core portal business.
Which is due online news and content providers.
Through our PC mobile.
<unk> App and third party platforms.
The breakeven.
In the next two or three years.
And to make many of your profits without new initiatives.
Including online reading e-commerce and so on.
That future growth.
To breakeven and be comparable.
Thank you for the questions.
There are no more questions from the phone line I would like to hand, the call back to Mr. Caulfield.
Closing remarks. Please go ahead.
Thank you, let's come to the end of our Q&A session and our conference call. If you have any further questions. Please feel free to contact us. Thank you for joining us today have a good day.
This concludes today's conference call. Thank you for participating you may now disconnect.