Q1 2023 Phoenix New Media Limited Earnings Call
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Speaker 3: Good day and thank you for standing by. Welcome to Phoenix New Media first quarter 2023 earnings call. At this time all participants are in the listen only mode.
Speaker 3: After the speaker's presentation, there will be a question and answer session.
Speaker 3: To ask a question during the session, you will need to press star 1 1 on your telephone.
Speaker 3: You will then hear an automated message advising your hand is raised.
Speaker 3: To withdraw your question, please press star 1 once again.
Speaker 3: Please be advised that today's conference is being recorded.
Speaker 3: I'd now like to hand the conference over to Mu zi Kuo from IR department. Please go ahead.
Speaker 3: Thank you, operator. Welcome to Phoenix New Media's first quarter 2023 earnings conference call. The quarterly financial results and the webcast of this conference call are available on our website at ir.iphone.com. A replay of the call will be available on the website in a few hours.
Speaker 3: Before we get started, I would like to take this opportunity to remind you that our remarks today will include four overlooking statements.
Speaker 3: Please refer to our Safe Harbor Statement in our earnings press release, which applies to this call as well.
Speaker 3: Also, unless otherwise stated, all figures mentioned during the conference call are in R&B.
Speaker 3: Joining us on the call today are Mr. Yu Sheng Sun, Chairman of the Board and the Chief Executive Officer and Mr. Edward Lu, Chief Financial Officer.
Speaker 3: Mr. Sun became our CEO at the end of March. This is his first time participating in the call.
Speaker 3: He has brought a wealth of experience and expertise to our company and we are excited to have him leading us.
Speaker 3: Without further ado, I will now turn the call over to him to offer his greetings. I will be translating for him afterwards.
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Speaker 3: I'll be translating for Mr. Sun.
Speaker 3: Dear investors and shareholders, greetings to everyone. My name is Yuxiang Sun. It is my pleasure to join Phoenix New Media as CEO . I work with this exceptional team.
Speaker 3: This is my first time participating in the VESTR conference call and I am honored to be here. I will do my best to take the company to a new level in the future.
Speaker 3: Currently, Phoenix New Media and its industry are facing numerous challenges.
Speaker 3: We need to analyze the underlying causes, identify breakthroughs, and clarify the direction of our development.
Speaker 3: Our goal is to continue to evolve into a world-class Chinese online media platform with a focus on maximizing content dissemination, influence, and profitability.
Speaker 3: To achieve this, we must sustain our emphasis on creating and curating unique, high-quality content, while expanding revenue streams and exercising fiscal prudence.
Speaker 3: As we move forward, we must explore and innovate in areas such as operations, management, talent acquisition and fostering team enthusiasm and creativity in order to realize our development objectives.
Speaker 3: With the collective efforts of everyone in the company, I am confident that Phoenix New Media has a promising future.
Speaker 3: Thank you for your ongoing support and I look forward to achieving further success together.
Speaker 3: And today I would also like to give the opportunity to thank Mr. John Liu, who took the company public.
Speaker 3: in the States over 10 years ago and also led the company to develop to the current stage and he contributed to the company as CEO and senior management for for such a long time. He resigned from the company as CEO for personal reasons.
Speaker 3: at the end of March. And here we thank him for his contribution over the past year and wish him all the best in his super in-depth.
Speaker 3: at the end of March. And here we thank him for his contribution over the past year and wish him all the best in his future endeavors. Thank you.
Speaker 3: This concludes Mr. Sun's greeting. I will now turn the call over to our CFO , Mr. Edward Liu, who will first read the prepared remarks on behalf of Mr. Sun and then go through the financial results.
Speaker 3: After the prepared remarks, we will open for questions.
Speaker 3: After the prepared remarks, we will open call to questions. Edward, please go ahead.
Speaker 4: Thank you Muthu.
Speaker 7: In the first quarter of 2023, we continued to demonstrate our leading role in news, reporting, and high-topic curation. During the government's two sessions event, our video column dialogues with delegates interviewed 26 delegates and received extensive media exposure and market attention.
Speaker 7: ranking 20 times on the hot search list on Douyin and Weibo. Our easy to share long posters.
Speaker 7: Since the new journey, new achievements, new responsibilities highlighted the Premier's Pride Conference Government's Work Report and the popular proposals and was widely reported across the internet.
Speaker 7: In the new journey, new achievements, new responsibilities highlighted the Premier's Prize Conference, Government's Work Report and the popular proposals and was widely reported across the internet. What's most importantly?
Speaker 7: The two sessions are a retro platform for China to communicate with the rest of the world. Topics hardly discussed during this year's two sessions such as gender equality, how to cope with low birth rate and aging population.
Speaker 7: and barriers against vocational education are also areas of concern for many countries.
Speaker 7: In our signature series, dialogue with the world will devolve into the broader implications of these issues.
Speaker 7: For example, we interviewed the Norwegian ambassador to China.
Speaker 7: cigarette car during the two sessions, jointly following final Norwegian relations and social topics, triggering extensive discussions on both dramatic and overseas social media platforms.
Speaker 7: Additionally, our original column have provided in-depth and multi-angled commentaries on the key proposals and hard topics discussed during the two sessions.
Speaker 7: including the proposed increase in the threshold for personal income tax, raising of retirement age, and pension reform. And why the children of criminals should be barred from working in civil service?
Speaker 7: The commentary published by our opinion column, the message, Feng Xiong, on the left topic, quickly became the top search on nearly all platforms.
Speaker 7: The article struck a balance between professional depth and public acceptance, offering a systematic analysis of the theme of justice in criminal law.
Speaker 7: It was read by tens of millions of people across multiple platforms and they were posted by nearly 30 mainstream media accounts.
Speaker 7: leading to countless discussions that continued for about a week, underscoring the value of the message as a content brand.
Speaker 7: Our reputation for breaking news and event coverage has not only boosted our media influence, but also generated revenue through sponsored content. Our coverage of the two sessions in various formats.
Speaker 7: interviews, opinion pieces, videos, animations, and posters.
Speaker 7: was all sponsored by advertisers helping us meet our first-quarter advertising revenue target.
Speaker 7: In addition to news and high topics, we also expanded our influence in industry verticals.
Speaker 7: The Wu Tong Night Talk, Wu Tong Ye Hua, held by iPhone Finance, China at the Boao Forum for Asia, attracted distinguished guests and reinforced our academic characteristics in the finance and economics area.
Speaker 7: We also hosted two high-profile forums in Macau and Changbaixian with relevant
Speaker 7: topics appearing on 10 hot searches and nearly 1 billion views on Weibo, highlighting the significant media influence of iPhone fans.
Speaker 7: In the automobile vertical, the iPhone Global Auto Ceremony brought together 150 attendees and presented 21 awards covering mainstream Chinese automakers.
Speaker 7: We jointly released an industry report, Global Automotive Consumer Survey 2023 with consulting firm Deloitte.
Speaker 7: further solidifying iPhone Auto's authority and expertise in the industry.
Speaker 7: The live broadcast and promotion for this event exceeded 14 million views. With the hashtag topic, are few vehicles really losing the market during heated discussions across various media outlets? We continue to build our videos.
Speaker 7: and live broadcasting product pipeline to diversify our premium content offerings and support monetization. Journey, Liu Chuo captured the lives of ordinary people in many documentaries, while the heroes fought league, Ying Xiong, Piyu Le Mon.
Speaker 7: The United Olympics campaigned to join in public welfare initiatives, bringing sports spirit and supplies such as books and clothes to children in rural areas.
Speaker 7: Hometown, dragon centered around the rural revitalization, while culture live room.
Speaker 7: Benhua Zhibuojian and the cover, Fengming Explored Culture and Financial High Topics in live broadcasting format.
Speaker 7: This content produced products providing a variety of customer marketing solutions to our advertisers catering to diversify the brand communication needs. For our iPhone app, we added a subscription feature.
Speaker 7: to better capture user interests and preferences.
Speaker 7: and customize push notifications according to the pattern of subscription.
Speaker 7: This resulted in a 28% increase in the F-
Speaker 7: Opening rate quarter over quarter with 24% of DAU coming from push notifications.
Speaker 7: For video content recommendations, we optimized the immersive video style and recommendation logic resulting in a 26% increase in click-through rate of immersive videos.
Speaker 7: 25% increase in average play per person and 12% increase in play time quarter over quarter.
Speaker 7: This combined optimization resulted in a 6% increase in average time spent per user quarter over quarter, reaching a new high in recent years. Moving on to revenue diversification. Our online reading business line continues to partner with other industry players to
Speaker 7: These are our newly signed books.
Speaker 7: newly signed books, our self-made audiobook.
Speaker 7: The opening of the mean dynamics.
Speaker 7: surpassed 1 million plays in just 15 days, along with other works made to the top 100 in the new book list on K
Speaker 7: In the real estate business, we match our internal target for Q1 revenue and collection of payments.
Speaker 7: While the property market seeing a rebound, we actively promoted our brand through product promotion events in major cities.
Speaker 7: demonstrating our value to the industry and our clients.
Speaker 7: In terms of content, we launched the Good Housing Report action in cooperation with China Quality News, focusing on the completion and delivery of real properties with emphasis on the improvement of quality.
Speaker 7: contributing to consumer confidence. Furthermore, our e-commerce business exceeded the target GME in Q1. In January and February , we focused on holiday gifts and shifted to seasonal demand in March.
Speaker 7: highlighting the category of binding and the closing.
Speaker 7: For live broadcasting e-commerce, we have collaborated with major overseas brands that are tailored to the profile of our users on the third-party platforms.
Speaker 7: to further monetize the value of our account and user base.
Speaker 7: In summary, we continue to enrich our content offerings.
Speaker 7: strengthen our media influence and enhance the user experience of our APP during the first quarter.
Speaker 7: Going forward, we will continue to drive operational and monetization efficiency. This will help us to achieve our financial objectives and develop into a more robust, adaptable and efficient organization. This concludes our session.
Speaker 7: to you Mr. Sun's prepared remarks. I will now walk you through our financial performance for the first quarter of 2023. All figures mentioned will be in RMB. For Polkadotr
Speaker 7: as compared to 175.4 minutes in the same period of last year. To elaborate, net advertising revenues or 126.2 minutes compared to 158.4 minutes in the same period of last year.
Speaker 7: in the same period of last year.
Speaker 7: The decrease was mainly due to the reduction in advertising spending of advertisers in certain industries and the intensified industry-wide competition. The paid services revenues were 20.2 minutes compared to 17 minutes in the same period of last year.
Speaker 7: The increase was mainly due to the increase in the revenues from certain IP copyright sales.
Speaker 7: Loss from operations was 74.4 minutes, narrowing by 30.3% year over year.
Speaker 7: as a result of strict cost control measures implemented.
Speaker 7: Net loss attributable to iPhone was 57.8 minutes, narrowing by 27.5% year-over-year. Moving on to our bench sheet.
Speaker 7: As of March 31, 2023, the count is cash and cash equivalents, term deposits, short-term investments, and restricted cash, or RMB 1.13 billion or approximately US$164.1 billion. Finally, I'd like to provide our business outlook for the 2021-2021 year-to-year. Thank you for your attention.
Speaker 7: For paid service members, we are forecasting between 12.9 million and 17.9 million.
Speaker 7: This forecast reflects our current and preliminary views, which are subject to change and substantial uncertainties.
Speaker 7: This concludes the prepared portion of our call. We are now ready for questions.
Speaker 8: Operator, please go ahead. Thank you. We will now begin the question and answer session. To ask a question, please press star 11 on your telephone and like for your name to be announced.
Speaker 8: To withdraw your question, please press star 1-1 again. Please stand by while we compile the Q&A roster.
Speaker 8: Our first question comes from the line of Shairu Jha from 86 Research. Please ask your question, Shairu. Good morning, Benjamin. Thank you for taking my question. Could you kindly provide insights into the effect of contributing to a decline in Q1 ad revenues?
Speaker 8: Additionally, I will appreciate hearing your outlook for the app business in the coming quarters.
Speaker 7: Good morning to you. Thank you for your question. Actually Q1, 2023, the recovery of the overall advertising market was a little bit below expectation.
Speaker 7: According to market research reports, the overall advertising market declined year over year in January and February . And advertisers were also cautious with their spending. When it comes to industry...
Speaker 7: FMCG industry including food, beverage and especially alcoholic beverage remain the driving force of the advertising market.
Speaker 7: The cosmetics and bathroom product industries also made a comeback in the POC ranking list.
Speaker 7: These are the industries we focus on expanding in the first quarter.
Speaker 7: And we achieved the milestone progress by completing some major campaigns or signing three more contracts.
Speaker 7: Also, with the decline of brand advertising by traditional car makers, we are placing more weight on AI new energy vehicles, domestic brands in general, and especially those...
Speaker 7: who are growing their overseas market as they are placing more emphasis on branding.
Speaker 7: Brand advertising has been declining in recent years as short-term growth and sales pressures have been a priority for many.
Speaker 7: However, as the market returns to normal, the importance of branding has increased.
Speaker 7: Customers are more focused on building brand values through high quality media channels and lay a foundation for long term brand building in the future.
Speaker 7: This actually is what we are best at using high quality content and creativity to convey value. In the first quarter, we attracted sponsorship for our coverage of the two sessions.
Speaker 7: and numerous IP contents in finance, public welfare and other fields.
Speaker 7: Currently, we are also laying our innovative marketing project centered around themes such as rural revitalization, golden diplomacy season and telling the story of Chinese enterprise to create customized brand story series products.
Speaker 7: for our clients. We are also leveraging our capabilities in organizing large scale events and integrating resources to serve more to be and to be clients, helping them achieve their marketing goals.
Speaker 7: my answer to your question too.
Speaker 8: That's very helpful. Thank you.
Speaker 8: Thank you. Our next question comes from the line of Alice Tang from the Shanghai. Please ask your question, Alice.
Speaker 8: Good morning, Manager, and thank you for taking my question. So we can see that the company's operating income has improved year over year. Was this mainly due to cost control? Are there any other plans to cut down costs further?
Speaker 7: Actually it's a very good question. In order to improve operational efficiency we have done a lot of cost optimization in the past year including staff costs,
Speaker 7: GNA and R&D expenses, all of which have seen significant reductions. This was already reflected in the fourth quarter of this year with operating expenses decreasing by 26.6%.
Speaker 7: But to be honest, at this stage there is not much room for further significant cost cut.
Speaker 7: We will continue to focus on the return on investment of our expenses and fine-tune our cost structure and make adjustments as needed.
Speaker 7: Our main goal this year is to strive for more revenue, which is also crucial for returning to breakeven and achieving profitability in the long run.
Speaker 7: The goal this year is to strive for more revenue, which is also crucial for returning to Berkeley even and achieving profitability in the long run. Thank you Alex.
Speaker 9: Thank you for taking my question.
Speaker 9: Thank you for taking my question. All right, thank you.
Speaker 3: I am showing no further questions. I'd now like to turn the conference back to the management team for closing remarks. Thank you. We have now come to the end of our Q&A session and our conference call. Please feel free to contact us if you have any further questions. Thank you again for joining us today on the call. Have a good day.
Speaker 3: This does conclude our conference for today. Thank you for participating. You may now disconnect. institute of brain Loweref, Phillip
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