Phoenix New Media Limited (FENG), a leading new media company in China, reported a 7% increase in total revenues for the third quarter of 2024, as announced in their latest earnings call. The company's net advertising revenues saw a 10.5% rise from the previous year, while paid services experienced a slight decline.
The firm's focus on high-quality original content and effective commercialization strategies were highlighted as key factors contributing to their financial performance. The earnings call, led by CFO Edward Lu, provided insights into the company's operational success and future outlook.
Key Takeaways
- Total (EPA:TTEF) revenues for Q3 2024 increased by 7% year-over-year to RMB 164.3 million.
- Net advertising revenues grew by 10.5% to RMB 148.4 million compared to the same period last year.
- Paid services revenues were down, totaling RMB 15.9 million, a decrease from RMB 19.3 million in the previous year.
- Gross margin improved to 37.9%, up from 34.1% year-over-year.
- Operating loss decreased to RMB 25.9 million from RMB 38.5 million in the same period last year.
- Net loss attributable to Phoenix New Media was RMB 18.5 million, an improvement over the RMB 21.5 million net loss from the previous year.
- Cash and cash equivalents, along with other liquid assets, stood at RMB 971.8 million as of September 30, 2024.
- The company provided a fourth-quarter revenue forecast ranging from RMB 197.9 million to RMB 212.9 million.
Company Outlook
- Phoenix New Media expects total revenues for Q4 2024 to be between RMB 197.9 million and RMB 212.9 million.
- Net advertising revenue forecasts for the fourth quarter range between RMB 108.2 million and RMB 190.2 million.
- Paid service revenues for the upcoming quarter are projected to be between RMB 17.7 million and RMB 22.7 million.
Bearish Highlights
- There has been a trend of declining advertising spend per customer.
- Challenges include the increasing complexity and cost of project execution.
Bullish Highlights
- The company's content monetization strategy and tactical adjustments have led to outperforming the overall Internet media advertising market.
- Successful coverage of the Paris Olympics and the Feng’s Bay Area Finance Forum 2024 contributed to increased brand influence and commercial success.
- Strategic focus on sectors like culture, tourism, and culinary content has strengthened the company's position in destination branding.
Misses
- Paid services revenue decreased compared to the same period in the previous year.
Q&A Highlights
- Edward Lu attributes the increase in advertising revenue to the company's improved content monetization strategy, restructuring of sales and content teams, and fostering innovation.
- The company's unique marketing strategy, focusing on international content and major global events, has been recognized by the market and clients.
- Despite the decline in advertising spend per customer, Phoenix New Media is confident in the opportunities the market still presents.
Phoenix New Media's third-quarter earnings call underlined the company's commitment to quality content and efficient commercialization. With a positive outlook for the fourth quarter and strategic measures in place to address challenges, the company is poised to navigate the complex market environment while continuing to enhance its media influence and monetization capabilities.
InvestingPro Insights
Phoenix New Media Limited (FENG) has shown resilience in a challenging market environment, as evidenced by its recent financial performance. To complement the earnings call analysis, InvestingPro data provides additional context for investors.
Despite the company's reported increase in total revenues, InvestingPro data indicates that FENG's revenue growth for the last twelve months as of Q2 2024 was -7.85%. This suggests that the recent 7% increase in Q3 2024 revenues represents a significant turnaround in the company's performance trajectory.
The company's focus on high-quality content and effective monetization strategies appears to be paying off. An InvestingPro Tip highlights that FENG has achieved a high return over the last year, with a 1 Year Price Total Return of 107.38% as of the latest data. This impressive stock performance aligns with the company's improved financial results and strategic initiatives mentioned in the earnings call.
Another relevant InvestingPro Tip notes that FENG holds more cash than debt on its balance sheet. This strong liquidity position is reflected in the earnings report, which stated that cash and cash equivalents, along with other liquid assets, stood at RMB 971.8 million. This financial stability provides the company with flexibility to invest in content creation and pursue growth opportunities.
It's worth noting that FENG is trading at a low Price / Book multiple of 0.18, according to InvestingPro data. This valuation metric could be of interest to value-oriented investors, especially considering the company's improved performance and positive outlook for Q4 2024.
For readers interested in a more comprehensive analysis, InvestingPro offers 10 additional tips for FENG, providing a deeper understanding of the company's financial health and market position.
Full transcript - Phoenix New Media Ltd (FENG) Q3 2024:
Operator: Thank you for standing by. Welcome to Phoenix New Media Third Quarter 2024 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 now like to turn the conference over to your speaker today, Muzi Guo from Investor Relations. Please go ahead.
Muzi Guo: Thank you, and welcome to Phoenix New Media's earnings conference call for the third quarter of 2024. On today's call, we'll begin with an overview of our quarterly results, followed by a Q&A session. You can find our quarterly financial results on the webcast of this conference call on our website at ir.ifeng.com. Before we continue, please note our Safe Harbor statement included in the earnings press release, which applies to any forward-looking statements made during the call. Additionally, unless otherwise specified, all figures mentioned are in RMB. Joining me here today is our CFO, Mr. Edward Lu. I will now turn the call over to him to deliver the prepared remarks on behalf of our CEO, Mr. Yusheng Sun.
Edward Lu: Thank you, Mu. Hello, everyone. I'm pleased to deliver today's opening remarks on behalf of our CEO, Mr. Sun. In the third quarter, we continued to focus on producing high quality original content, swiftly covering significant news events. This elevated our media presence, which translated into commercial success. During the Paris Olympics, our team provided diverse coverage on the ground reports, professional commentary and engaging videos, showcasing our unique perspectives. We focused not only on the outcomes of the games, but also on inspiring stories from Olympic figures worldwide, as well as trending topics, particularly the controversial ones. Our Sports column produced 8 in-depth pieces that sparked extensive discussions across major platforms, earning endorsements from seasoned media professionals. Our video content achieved a total view count of 160 million with over 90 million views Douyin. On Weibo (NASDAQ:WB), it reached trending topics more than 50 times, further solidifying Feng's leading media position in major events. The Olympics also became a major commercial success for us, as we assisted over 10 clients with their marketing campaigns in France. Despite the challenges, each project was delivered to the client's satisfaction, creating exemplary cases of international content, dissemination and marketing that achieved both recognition and profitability. In the finance sector, our channel continues to lead. In September, we hosted the new opportunities, new vitality, Feng’s Bay Area Finance Forum 2024, featuring prominent guests from politics and academia. Many speech and the discussions from the forum went viral across the Internet, covering topics such as economic trends, capital markets, and healthcare. The total number of views approached nearly 1 billion with short video views reaching 180 million alongside numerous trending topics on Weibo and Douyin. This event not only solidified Feng’s brand influence in the finance sector, but also provided a platform for addressing economic concerns, helping individuals regain their confidence. At the same time, we are continuously enhancing our commercialization efficiency by optimizing the alignment of commercial resources with our clients. This year, targeting the rapidly growing public sector, we positioned culture, tourism and culinary content as key vehicles for our industry clients' marketing strategies. One example is handing time over to Shanxi, a culture travel documentary that explores Shanxi's ancient architecture, trendy districts, industrial features, and Jin Cuisine, highlighting the unique character and the charm of these cities. Additionally, we tailored a series of content and activities for the Hubei Department of Commerce focused on the journey to discover true cuisine, bringing this millennial old culinary tradition to a global stage, while continuing Feng's Golden Wutong China restaurant guide evaluation system, fostering a renaissance of true cuisine and the culture exchange. Through this commercial initiative, we demonstrated our strong influence and communication advantages in travel destination branding, injecting new vitality into local culture and tourism. Overall, in the third quarter, we continue to prioritize quality content, destination, enhancing our media influence through exclusive reports and original content. Meanwhile, by expanding our marketing resources and optimizing our client portfolio, we continuously strengthened our monetization capabilities. Looking ahead, we remain committed to differentiating ourselves as a media platform and achieving our monetization goals to navigate the challenging market environment. This concludes our CEO, Mr. Sun's prepared remarks. I will now walk you through our financial performance for the third quarter of 2024. All figures mentioned will be in RMB. Our total revenues were RMB164.3 million, representing an increase of 7% from RMB153 million in the same period of last year. Specifically, net advertising revenues were RMB148.4 million, representing an increase of 10.5% from RMB134.3 million in the same period of last year. Paid services revenues were RMB15.9 million compared to RMB19.3 million in the same period of last year. Cost of revenues in the third quarter of 2024 were RMB102 million compared to RMB101.2 million in the same period of last year. Gross margin in the third quarter increased to 37.9% from 34.1% in the same period of last year. Loss from operations was RMB25.9 million, an improvement from operating loss of RMB38.5 million in the same period of last year, due to strict cost control measures. Net loss attributable to ifeng was RMB18.5 million compared to net loss attributable to ifeng of RMB21.5 million in the same period of last year. Moving on to our balance sheet, as of September 30, 2024, the company's cash and cash equivalents, term deposits, short term investments, and restricted cash were RMB971.8 million or approximately RMB138.5 million. Finally, I'd like to provide our business outlook for the fourth quarter of 2024. We are forecasting total revenues to be between RMB197.9 million and RMB212.9 million. For net advertising revenues, we are forecasting between RMB108.2 million and RMB190.2 million. For paid service revenues, we are forecasting between RMB17.7 million and RMB22.7 million. This forecast reflects our current and the preliminary view, which are subject to changes and substantial uncertainties. This concludes the prepared portion of our call. We are now ready for questions. Operator, please go ahead.
Operator: Thank you. [Operator Instructions] Our first question comes from Alice Tang of First Shanghai. Please go ahead.
Alice Tang: Good morning. Thank you for taking my question. 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 [Indiscernible] for the future.
Edward Lu: Okay, 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. Thank you, Alice.
Alice Tang: Thank you.
Operator: Thank you. I see no further questions at this time. I will now hand the conference back to Muzi.
Muzi Guo: Thank you. This concludes our Q&A session and conference call. If you have any additional questions, please don't hesitate to reach out to us. Thank you for joining us today, and have a great day.
Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.
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