Phoenix New Media Ltd. Q3 FY2024 earnings call

• In the third quarter, the company continued to focus on producing high-quality original content and swiftly covering significant news events, which elevated media presence and led to commercial success. During the Paris Olympics, the team provided diverse coverage, and the Sports column produced 8 in-depth pieces that sparked extensive discussions. Video content had a total view count of 160 million, with over 90 million views on Douyin and over 50 trending topics on Weibo. Assisted over 10 clients with marketing campaigns in France during the Olympics. - In the finance sector, the channel hosted the Feng’s Bay Area Finance Forum 2024, with many speeches and discussions going viral, totaling nearly 1 billion views. - Targeted the rapidly growing public sector, positioning culture, tourism, and culinary content as key vehicles for industry clients' marketing strategies, such as the 'handing time over to Shanxi' culture travel documentary and tailored content for the Hubei Department of Commerce.

In the third quarter, total revenues were RMB164.3 million, an increase of 7% from RMB153 million in the same period last year. Net advertising revenues were RMB148.4 million, up 10.5% from RMB134.3 million in the same period last year. Paid services revenues were RMB15.9 million compared to RMB19.3 million in the same period last year. Cost of revenues in the third quarter of 2024 was RMB102 million compared to RMB101.2 million in the same period last year. Gross margin increased to 37.9% from 34.1% in the same period last year. Loss from operations was RMB25.9 million, an improvement from RMB38.5 million in the same period last year. Net loss attributable to ifeng was RMB18.5 million compared to RMB21.5 million in the same period last year. As of September 30, 2024, cash and cash equivalents, term deposits, short term investments, and restricted cash were RMB971.8 million.

• Forecasts total revenues for the fourth quarter of 2024 to be between RMB197.9 million and RMB212.9 million. - Forecasts net advertising revenues for the fourth quarter to be between RMB108.2 million and RMB190.2 million. - Forecasts paid service revenues for the fourth quarter to be between RMB17.7 million and RMB22.7 million. This forecast is subject to changes and substantial uncertainties.

• Observed a trend of declining advertising spend per customer, need to better align content resources with client needs more quickly. - Increasing complexity and cost of project execution, need to continue focusing on cost control to ensure efficient operations.

Q: In the third quarter, the company achieved year-over-year growth in advertising revenue, the trend from the first half of the year. So could the management elaborate for the future.

A: Good morning. Thank you for your question. Actually, this year, our advertising revenue has outperformed the overall Internet media advertising market. This success is primarily due to our improved content monetization strategy and tactical adjustments, including the restructuring of the sales team, content team incentives and measures to encourage innovation. These efforts have fostered close collaboration between ourselves and the content teams, creating significant synergy. In terms of content, the public increasingly values content quality, human centered narratives and emotional connections conveyed through media. These are the core attributes we have consistently maintained. Looking at the result of our commercialization, it's clear that these qualities have been affirmed and recognized by both the market and our clients. Building on this solid foundation, we continue to emphasize the uniqueness of our marketing strategy. We have positioned ourselves as a media platform with a strong focus on international content, dissemination and marketing. For example, we consistently cover major global events and activities, while also engaging areas of interest for influential Chinese companies. This enables us to assist these companies in executing effective overseas marketing campaigns, seamlessly combining our content strength with our marketing expertise. For instance, during the Olympics, we saw a significant year over year revenue increase in the traditionally underperforming FMCG sector. Similarly, innovations in content and monetization have also driven strong growth in sectors like the public sector and the alcoholic beverages in the third quarter. That said, we have observed a trend of declining advertising spend per customer. We need to better and more quickly align our content resources with client needs. Another challenge is the increasing complexity and the cost of project execution. We must continue to focus on cost control to ensure we meet revenue growth with the most efficient operations. Despite these challenges, we are confident that the market still holds many opportunities.