Phoenix New Media Limited (FENG) Q4 2023 Earnings Call Transcript

Phoenix New Media Limited (NYSE:FENG) Q4 2023 Earnings Conference Call March 12, 2024 9:30 PM ET

Company Participants

Muzi Guo – Investor Relations Manager

Yusheng Sun – Chief Executive Officer

Edward Lu – Chief Financial Officer

Conference Call Participants

Alice Tang – First Shanghai Securities

Operator

Good day, and thank you for standing by. Welcome to Phoenix New Media Fourth Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded.

I would like to hand the conference over to your first speaker today, Muzi Guo of IR Department. Please go ahead.

Muzi Guo

Thank you, operator. Welcome to Phoenix New Media’s earnings conference call for the fourth quarter of 2023. Joining me here today are our CEO, Mr. Yusheng Sun; and our CFO, Mr. Edward Lu.

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 financial results for the fourth quarter of 2023 as well as the webcast of this conference call on our website at ir.ifeng.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 RMB.

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

Yusheng Sun

[Foreign Language]

Muzi Guo

[Interpreted] Hello, dear investors. Today’s meeting aims to provide an overview of the company’s operational progress in the fourth quarter and to share our reflections for the future. We look forward to engaging in discussions and addressing any questions you may have.

Before delving into the report, I’d like to emphasize that regardless of shifts in the macro environment, our company is enduring core competency licensed news. This competency will be a focal point in our ongoing efforts to optimize operational resources, enhance brand value premium, foster innovation in business models and ensure the sustained and robust development of the company.

Now I’ll have Edward present a more detailed report on my behalf.

Edward Lu

In the fourth quarter, we focused on boosting our content productivity, emphasizing content distribution via video platforms and the monetization of our content and the event marketing offerings. Throughout Q4, we maintained our lead in covering major events and breaking news such as the Third Belt and Road Forum for International Cooperation in Beijing.

Through meticulous planning and swift execution, we delivered a diverse array of reports from on-ground interviews to insightful commentaries. We are leveraging our social media presence to disseminate curated content across various platforms. Our interviews with influential political figures, foreign dignitaries and the Belt and Road scholars garnered widespread acclaim, reflected in the remarkable 13 million views of Belt and Road-related content on our video accounts.

Our dedication to original content creation was duly recognized, exemplified by our short documentary series, [Journey], which changed the China documentary Top 10 award. Across the 11 episodes released in Q4, Journey captivated audiences with over 700 million views with several episodes surpassing the 100 million view milestone. [Indiscernible], the portrayal of elderly people in nursing homes resonated deeply, accumulating 230 million views overall, including 110 million views on Douyin, securing permanent positions on trending and social list. By year-end, Journey posted over 2 million subscribers on Douyin, highlighting its commercial availability within our content portfolio.

As the year draws to a close, we successfully executed a series of flagship events and marketing initiatives, reaffirming our media influence in the industry. Our iFeng Finance Summit in December [indiscernible] the circle, posting the confidence, commend luminary from academia and the industry to engage in discussions on issues, shaping the global and the Chinese economies in 2024. Additionally, we hosted the first influencer awards, earning together over 100 [QS]. [Indiscernible] agency representatives and brand representatives to celebrate the transformative impact of social media influencers across diverse domains. For beauty and fashion, to fittings and the lifestyle, underscoring our commitment to recognizing and amplifying positive industry developments.

On the product front, we concentrated on optimizing the content recommendation algorithm, resulting in a seamless fusion of timely updates, personalized insights and the immersive experiences, bolstered by a 20% year-on-year increase in [indiscernible] and double-digit growth in video engagement metrics. Our content strategy was well received by our users, driving deeper engagement and extended user session.

In parallel with our content and product enhancements, we embarked on a strategic overhaul of our advertising sales team, transitioning from regional sales hubs to industry-specific business units. This realignment facilitated sharper industry focus, streamlined resources allocation and accelerated innovation, laying the groundwork for sustained commercial growth.

Our priorities are clear. To expand our customer base, untapped opportunities, and fortify our market positioning across diverse segments. With a tailored approach to customer engagement, strategic content investments and our renewed focus on marketing differentiation, we are well positioned to support the conventional media boundaries and provide comprehensive marketing solutions to our clients.

In 2023, through improvements in operational efficiency, we managed to significantly reduce operating losses. Moving forward, we are committed to sustain this momentum by prioritizing operational excellence and strategic innovation while also continuing to strengthen our media influence and the brand value. As such, we are confident in our ability to navigate the evolving media landscape and work towards achieving our financial objectives.

This concludes our CEO, Mr. Sun’s, prepared remarks. I will now walk you through our financial performance for the fourth quarter of 2023. All figures mentioned will be in RMB.

Our total revenues were RMB211.8 million as compared to RMB223.9 million in the same period of last year. To elaborate, net advertising revenues were RMB197 million compared to RMB205.4 million in the same period of last year. The decrease was mainly due to the reduction in advertising spending of advertisers in certain industries and intensified industry-wide competition.

Paid services revenues were RMB14.8 million compared to RMB18.5 million in the same period of last year. The decrease was mainly due to the decline in e-commerce revenues. Cost of revenues in the fourth quarter of 2023 decreased by 11.3% to RMB120.5 million from RMB135.8 million in the same period of last year.

And the gross margin in the fourth quarter of 2023 increased to 43.1% from 39.4% as a result of strict and cost control measures implemented. Income from operations was RMB22.9 million compared to income from operations of RMB46.7 million in the same period of last year. Net income attributable to ifeng was RMB8.1 million compared to net income attributable to ifeng of RMB41.6 million in the same period of last year.

Moving on to our balance sheet. As of December 31, 2023, the company’s cash and cash equivalents, term deposits, short-term investments and the restricted cash were RMB1.09 billion or approximately US$154 million.

Finally, I’d like to provide our business outlook for the first quarter of 2024. We are forecasting total revenues to be between RMB130.8 million and RMB145.8 million. For net advertising revenues, we are forecasting between RMB121.3 million and RMB131.3 million.

For paid service revenues, we are forecasting between RMB9.5 million and RMB14.5 million. This forecast reflects our current and preliminary view, which are subject to change and the substantial uncertainties.

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

Question-and-Answer Session

Operator

Thank you. [Operator Instructions] Our first question comes from Alice Tang of First Shanghai. Please go ahead. Thank you, Alice.

Alice Tang

Good morning. Thank you for taking my question. So it appears that the company’s operational profit saw a notable uptick in 2023. Could you please provide some insights into your expectations for the company’s performance in 2024? And additionally, what are the prospects for the advertising market anticipated for the upcoming year? Thank you.

Edward Lu

Thank you for the question. This year, we will focus on further boosting operating profit and reducing losses. This means increasing revenue, keep a close eye on our costs and ensuring stable cash flow. When we planned out our goals for 2024, we took a good hard look at the landscape and came up with same solid strategies to help us hit these targets. We are beefing up collaboration between ourselves and the content teams, making sure our tech and management are on point providing essential support. We also set up operational metrics that are both actionable and accountable, supplemented by appropriate incentive structures to drive performance.

Now about the advertising market. We saw a decrease in Internet advertisers last year. The advertising market will still be closely tied to economic shifts. There will be challenges but the – regardless of the environment. We believe there are always opportunities to pursue. Through innovative thinking, targeted strategies and execution, we believe we can seize opportunities. We will maintain our unique positioning as a mainstream media outlet, while accelerating the development of innovative marketing solutions and responding quickly to market changes. Leveraging our extensive media influence and international marketing capabilities, we will explore new avenues for growth in areas like global branding, cultural tourism marketing and the monetization of our accounts on the video platform.

Operator

Thank you. Thank you for the questions. I see no further questions at this time. I’d like to hand back the conference to Muzi. Please go ahead.

Muzi Guo

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.

Operator

Thank you. This concludes today’s conference call. Thank you for participating. You may now disconnect.