Q2 2023 Phoenix New Media Ltd Earnings Call

The next lesson in p? Good day and thank you for standing by.

Welcome to the Phoenix New Media second quarter 2023 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, you will need to press star 1-1 on your telephone. You will hear a message advising your hand is raised.

To withdraw the question, simply press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Muzy Guo from Investor Relations Department.

Thank you, operator. Welcome to CME Media's earnings conference call for the second quarter of 2023. Joining me here today are our CEO , Mr. Yu-Hsiung Sun, and our CFO , Mr. Edward Du.

During this call, our management team will begin by providing an overview of our quarterly results followed by a Q&A session.

You can find the financial results for the second quarter of 2023 as well as the webcast of this conference call on our website at ir.iphone.com

A replay of this call will also be made available on the website within the next few hours.

Before we proceed, I would like to draw your attention to our Safe Harbor Statement, which can be found in our Earnings Press Release.

This statement is important as it pertains to our forward-looking statements during this call.

Additionally, please note that unless otherwise specified, all figures mentioned throughout this conference call are in R&D.

Now I will pass the call to Mr. Sun, our CEO , for his opening remarks. I will provide the translation.

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Hello everyone. During the past quarter, Phoenix New Media has been dreadlessly working towards maximizing content reach and profits.

Thanks to our team's awareness, our team effectively covered major news events like the Russian-Ukraine war and the Shangri-La dialogue.

This resulted in timely and impactful content, widely shared across the Internet.

In terms of original content, we have created numerous high-quality programs such as The Message, Eye of the Storm, Journey, and Extraordinary Paths.

These programs frequently make it to the trending list, sparkling discussions across the internet.

This not only enhances the overall impact of our content, but also strengthens our brand advertising sales.

The collaboration between Phoenix TV and Phoenix New Media has also become stronger.

We've managed to seamlessly integrate major events reporting and sales of integrated marketing resources amplifying the synergy effect of the collaboration.

Looking ahead, we will continue to deepen and refine our coverage of breaking news and major events, while also focusing on differentiation in content dissemination.

Apart from excelling in current affairs and politics, we will continue to strengthen our position in social trends, legal matters, finance and technology.

aiming to

secure our competitive advantage in speed and breadth.

Even more importantly, we will further embrace and delve into social media channels. By utilizing various social media platforms, we intend to maximize the dissemination of our content and unlock additional business prospects.

Next, Edward will provide a more detailed rundown of our operation in the second quarter.

Edward, please go ahead. During the second quarter of 2023, we maintained our commitment to strengthen our media influence by dedicating ourselves to being present at the media event.

Not only at the Shangri-La Dialogue in Singapore, our frontline reporter engaged in onsite dialogues and delivered several exclusive and groundbreaking reports.

We were the first to break the news about the China-U.S. Defense Secretary's table dinner.

the sole Chinese media to question the US defense secretary on site.

and the first to publish China's response to the US Defense Secretary's speech.

Our related video content achieved a remarkable total of 77 million views, going viral on platforms like Vysen Video and Douyin, and earning acclaim from other teams, media outlets.

such as Lianhe Daobao, Bloomberg.

Afahi, Ximbu, and others.

In this tool, during the Wagner revival, we organized a series of live broadcast providing comprehensive coverage of the event to help the audience understand its unfolding. The event was released and is being impacted by many places includingigmatic Tonyi andNoa.

became a defining moment in the courage of the Russia-Ukraine conflict.

On the first day of the LiveWorx Cup, we reached the top five on Kuaishou's trending list, with nearly 40 million viewers across all platforms and a surge of

251,000 new for

We also provided real-time updates through short video clips for broader audience coverage.

Our original columns such as Phoenix reference, Feng Huang Ga Tangao, and Tang Bo Hu offered insightful analysis of the event, garnering extensive sharing and comments on social media platforms.

In our signature series, dialogue with the world.

We continue to hold conversations with prominent figures.

In May, we featured an exclusive interview with Thomas Friedman.

Three-time Pulitzer Prize winner, famous American political commentator and author.

During the challenging times between China and the United States,

resulting in high-quality rational conversations that align perfectly with Fing's journalistic mission.

Freizman himself highly praised the new media for its professional pursuits and the interview content received widespread sharing by influencers on various platforms, masterminds, techs and abroad.

marking an important step for a fixed dialogue with the world towards the global media stage.

In 2002, we continued to enrich our commercially supported content resources and expanded our client base.

In early July , we held the 2023 World City Brand Conference in Macau.

aiming to create a world-class international forum focused on supporting the development of cultural tourism industries.

and the Promoting World Cost Destination brands.

with our tenants.

Roots in Chinese culture global perspective will play a unique and dispensable role in shaping and disseminating city and culture tourism brands in the future.

Additionally, we expanded our marketing services to clients in consumer goods industries.

including food and beverages.

home improvements and appliances are planted.

especially

to those venturing into the international market, leveraging our contracted links.

journalists and KOLs worldwide, along with our global network of resources and allies.

We provided them with compiling overseas content and marketing execution.

For instance, through our global observation team, Chen Qiu Wenhatan.

We tailored the contents in Africa, the Middle East, Japan, the UK, France and other regions for our clients, integrating local hot topics and brand storage.

These productions showcase our global content production and branding capabilities and continue to attract more clients with these needs.

We also incorporate AIGC into our content.

Our technology vertical launched AI Vanguard, an original program that utilized

AI to revolutionize traditional video production.

Achieving success with five episodes produced and a total of 420,000 views.

to show employees popular AI tools for topic selection.

script generation, image creation, and audio and video generation.

Focusing on cutting-edge AI content, it covers everything from news briefs to in-depth analysis.

expert industry observations and trend predictions.

A.I. Vanguard is one of the first programs to fully...

leverage AI for content generation in the industry.

We believe that AI has the potential to generate highly personalized content catering to the unique needs of diverse audiences while increasing our overall productivity.

On our flagship iPhone X

We made further progress with AI-generated content summary and AI-powered interactive features.

making it easier for users to quickly graph the items of the content.

Users responded positively to this enhancement.

evident in a 5% increase in the proportion of logged in users, quarter over quarter, a 15% drive-in click-through rate in the comment section, and a 9% increase in daily average.

common interaction. Apart from AI-powered

We optimized the new flashcard feature of the app

enabling direct generation of shareable cards from Flash news articles.

facilitating social sharing and dissemination of news content.

Furthermore, we introduced a separate recommendation algorithm and channel for Think.TV's video content.

resulting in a twofold increase in exposure and a 10% increase in click-through rate for high-quality TV content.

Additionally, we improved the distribution algorithm for hard public and focused image.

Creating more opportunities for exposure to hard content.

With these joint optimizations in recommendation algorithms and content editing, the overall click-through rate on our app increased by 12% and the average time spent per user increased by 8%, quarter over quarter.

In conclusion, during the second quarter, we continue to bolster our media influence by covering major events and delivering exclusive reports and original content through our flagship app and across all social platforms.

We also strengthened our monetization capabilities by upgrading our marketing resources and expanding our content.

As we move forward, our focus will be on aligning resources to strategic business units.

Nearby, solidifying our position as a leading force in the leader industry.

Hector Wright, by Bolt-Goring Media.

brand value and commercial value.

I will now walk you through our financial performance for the second quarter of 2023.

All figures mentioned will be in RMB.

Our total revenue was 180.2 minutes as compared to 191.6 minutes.

in the same period of last year.

To elaborate, net advertising revenue increased to 161.8 minutes, compared to 160.5 minutes in the same period of last year.

Paid services revenue were 18.4 minutes compared to 31.1 minutes in the same period of last year.

The secret was mainly due to the reduction in the content spending of certain customers and decline in e-commerce values.

Most firm operations were 35.7 minutes, narrowing by 62.4% year-over-year as a result of increased growth profit and decreased operating expenses.

Net loss attributable to iPhone was 31.3 minutes, narrowing by 67.3% year-over-year.

Moving on to our band sheet.

As of June 30, 2023, the company's cash and cash equivalents turn deposits, short-term investments and restricted cash, or RMB, 1.08 billion or approximately USD 149 million.

Finally, I'd like to provide our business outlook for the third quarter of 2023.

We are focusing total RAM use to be between

158.5 minutes and 178.5 minutes.

For NAT advertising revenues, we are focusing between

148.7 minutes and 163.7 minutes.

For pit service revenue, we are focusing between 9.8 minutes and 14.8 minutes.

This forecast reflects our current and the preliminary views which are subject to changes and substantial uncertainty.

This concludes the prepared portion of our call. We are now ready for questions. A preacher, please go ahead.

Thank you. And as a reminder, to ask a question, simply press star 11 on your telephone and wait for your name to be announced. To withdraw the question, simply press star 11 again. One moment while we compile the Q&A roster.

And our first question is from Cyril.

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Zero Zhang with 86 research.

Good morning, Madam Chair. Thank you for taking my question. Could you kindly offer a brief review of the ad business during the first half of the year and share your perspectives on the anticipated outlook for the ad market in the second half? Thank you.

Morning, Xero. Thank you for the question. Actually, in the first quarter, our ad-rem new decrease due to the slow economic recovery, but things looked better in the second quarter. Overall, the Chinese advertising market.

showed a moderate recovery trend. In my opinion, it's still facing challenges and advertisers are being cautious with their marketing budgets.

Hemp said that we have identified the possible areas of growth.

For instance, after the pandemic, brands are pushing new product development and promotions.

We have actively responded to that demand, increasing marketing services for new products launched in many industries such as automobile, alcoholic, beverage, electronics, and home improvement sectors.

Also a lot of brands.

want to break through local growth barriers and guide a bigger piece of the global market. We have been working on this for over a year using our brand and content global appeal to provide advertisers with truth.

For example, events like the World City Brand Conference and our cultural tourism related content.

have helped us attract new clients such as local tourism bureaus, luxury hotel chains.

In today's market, with tons of different channels and fragmented user attention, advertisers are back to the core of content marketing and they place great emphasis on top-tier media.

So our game plan is all about boosting our uniqueness and the media strength in the content area. At the same time,

We are enhancing our marketing resources and capabilities.

I think our ad revenue will be quite stable in the second half of the year.

will be quite stable in the second half of the year. Thank you.

One moment for our next question, please.

It comes from the line of Alice Tang with First Shanghai.

Good morning. Thank you for taking my question. So the company experienced a noticeable decline in paid services revenue in Q2. So could the management team please shed light on the future plans for the diversified business and the focus of the operation in the future? Thank you. Go ahead and roll on that one.

Hello Alice, before diving into the Rameo diversification, actually our primary focus is on ensuring profitability and maintaining a steady Rameo stream.

To achieve this, we need to strategically direct our limited resources towards the most critical parts of our business.

So our profit centers and our co-media operations

It's the key part of our business.

All right.

Regarding our revenue diversification, the main reason why our paid services revenue went down in 2022 is because some parts of our business generated revenue, but they weren't making as much profit as we hoped.

such as the private label brand for our e-commerce sale.

So we are not continuing with this kind of ventures this year. It's part of our approach to putting profit first.

For our co-businesses, we are setting the bar higher. For advertising revenue, our strategy is market-focused.

We are pinpointing our time and their marketing needs and setting clear goals.

We are directing our limited resources toward projects that permit better returns.

In addition, we are fostering teamwork across departments to craft a powerful plan and content.

that both impress advertisers and make an impact. And on top of that, we are all about increasing productivity and keeping costs in check.

These factors are the backbone of our common healthy operation.

Thank you, Alex.

Thank you.

Thank you. And with that, we finish our Q&A, and I will turn the call back to Musi.

Thank you. We have come to the end of our Q&A session and our conference call. Please feel free to contact us if you have any further questions. Thank you for joining us today on this call. Have a good day.

And with that, thank you all for participating. You may now...