Phoenix New Media Limited (NYSE:FENG) Q3 2023 Earnings Conference Call November 14, 2023 8:30 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 Third 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'd now like to hand the conference over to Muzi Guo from Investor Relations Department. Please go ahead.

Muzi Guo

Thank you, operator. Welcome to Phoenix New Media's earnings conference call for the third 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 the financial results for the third 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 the call. Additionally, please note that unless otherwise specified, all figures mentioned throughout this conference call are in RMB.

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

Yusheng Sun

[Foreign Language]

Hello, everyone. In the second half of the year, we find ourselves navigating a macro environment filled with uncertainties. This challenging backdrop has created headwinds in our advertising business. However, in these trying times, it's imperative that we remain faithful to our core values and competencies, and at the same time, we must proactively adapt our decision-making process and innovation strategies to quickly respond to the ever-evolving market.

We need to clarify our core competency, which is news. We will continue to leverage our advantage in news coverage and create an irreplaceable content quality that sets us apart from others, thus better supporting our content marketing efforts.

Next, Edward will provide a more detailed rundown of our operation in the third quarter. Edward, please go ahead.

Edward Lu

Thank you, Muzi. During the third quarter, we were committed in upholding the quality of our content as a mainstream media outlet. In the current turbulent global landscape and the macro environment, trustworthiness has emerged as an essential requirement for our users.

Since the outbreak of the Israel-Palestine conflict, we have compiled over 100 news flash and articles, establishing ourselves as the go-to source for tracking the development of the crisis. Our content has been widely shared by users, resulting in a substantial boost in traffic. This is driven by hot topics, accounted for 30% of the total new visits. In our live broadcast, we provided on-site reporting under the title Live from the Israel-Palestine Conflict Zone at Gaza Border.

Our Phoenix journalist, [indiscernible] ventured to Sderot, the city closest to the Israel-Palestine conflict zone at the Gaza border, located less than one kilometer away. The report centered on the local people, the city's situation and the ground reality, offering valuable insights for the audience to grasp the real situation on the ground.

On the sports front. We closely followed the Asian Games, achieving high exposure and attention on various social platforms. Our sports and video channels released nearly 100 short videos, accumulating a total view count of 37 million. For news and information, in general, our Phoenix News accounts on Douyin has gained 3.31 million new followers in the third quarter, surpassing a total of 10 million followers. We continue to maximize the dissemination of our content and unlock our business potential on social media platforms.

In the post-pandemic era, individuals are experiencing heightened anxiety and fatigue. Users are increasingly seeking content that provides positive energy, particularly in a concise and high-quality form. This is where we come in, closely attuned to users' emotional needs, providing them with positive emotional sustenance. Accordingly, our original content is focused on individual experiences and the articulation of individual demand. We also continue to demonstrate our social responsibility in action.

In October, the 2023 Forever Happiness Charity Gala, jointly organized by Phoenix and the Children's Foundation Canada, was successfully held in Vancouver, Canada. Local overseas Chinese, political and business leaders, philanthropists, celebrities and media partners gather for the event. This marks the fifth time the Forever Happiness Charity Gala went abroad. The event was attended by the Consul General of China in Vancouver, YANG Shu, Children's Foundation Founder and Chairman, [indiscernible] and other dignitaries. The event reached over RMB2.7 million, which will be fully used for its orphan and the disadvantaged children.

On the advertising front, we faced some challenges in the third quarter in a market where traffic has peaked and the growth has slowed down. The key to future growth lies in our ability to precisely target and influence specific potential audiences. As a mainstream media outlet, we have earned recognition from advertisers for our credibility and influence.

On one hand, we excel at creating high-quality content that resonate with our brand's value and identity. On the other hand, we are adept at crafting immersive brand experiences through offline events, offering interactive platforms for brand consumer connections.

However, we also need to engage in self-reflection and foster innovation from within. We urgently need to clarify our growth strategy. It entails understanding which industries we will target, identifying key new customers and understanding their unique marketing needs. Once we have established our goals, it's crucial to ensure that our company's resources align with these objectives.

As we plan for the upcoming year, we are closely analyzing and preparing for organizational restructuring. In order to accelerate the innovation and the upgrading of our content marketing products to adapt more swiftly to market changes.

By leveraging our extensive media influence and the international reach, we are exploring new opportunities in areas such as the global market, culture tourism marketing and social media platforms. We will make adjustments based on comprehensive data-driven and rational plans to lay a solid foundation for future operations.

In summary, confronting the current market environment and the formidable challenges it presents, we are acutely aware of the urgency to change. In addition to improving content and product quality, enhancing media influence and brand value, we are also adjusting the company's organizational structure and the incentive mechanisms to accelerate innovation and the upgrade of content marketing products. Our goal is to respond more promptly to market demands, attain our financial objectives at the earliest opportunity.

I will now walk you through our financial performance for the third quarter of 2023. Our figures mentioned will be in RMB. Our total revenues were RMB153.6 million as compared to RMB194.8 million in the same period of last year.

To elaborate, net advertising revenues were RMB134.3 million compared to RMB172.4 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 RMB19.3 million compared to RMB22.4 million in the same period of last year. The decrease was mainly due to the decline in e-commerce revenues. Loss from operations was RMB38.5 million compared to loss from operations of RMB36.5 million in the same period of last year.

Net loss attributable to ifeng was RMB21.5 million compared to net income attributable to ifeng of RMB24.3 million in the same period of last year.

Moving on to our balance sheet. As of September 30, 2023, the company's cash and cash equivalents, term deposits, short-term investments and the restricted cash were RMB1.03 billion or approximately US$141.8 million.

Finally, I'd like to provide our business outlook for the fourth quarter of 2023. We are forecasting total revenues to be between RMB179.8 million and RMB199.8 million. For net advertising revenues, we are forecasting between RMB169 million and RMB184 million.

For paid service revenues, we are forecasting between RMB10.8 million and RMB15.8 million. This forecast reflects our current and the preliminary view, which are subject to change and substantial uncertainties.

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

Question-and-Answer Session

Operator

Thank you. [Operator Instructions] Question comes from the line of Alice Tang from First Shanghai. Please ask your question, Alice.

Alice Tang

Good morning, management. Thank you for taking my question. My question is that our company had previously announced a stock buyback plan. Could you please provide us with some insight and updates on the buyback transaction? Thank you.

Edward Lu

Thank you for the question. Actually, we have confidence in the company's fundamentals and future performance, which is why the Board of Directors approved the buyback plan. Currently, the company has a very strong cash position, providing enough support for the company's future growth for our considerable durable period.

Through this buyback we aim to return some cash to our shareholders from now until the end of February next year. We will execute the plan in compliance with the U.S. securities law and other relevant regulations. And the buyback transactions will be conducted in the open market at market prices. We expect to start the buyback transaction shortly after the Q3 earnings release. Thank you, Alice.

Alice Tang

Thank you. That's very helpful.

Operator

Thank you. And that's all we have for question-and-answer session. I would now like to turn the conference back to Muzi Guo for any additional closing comments.

Muzi Guo

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 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.