Phoenix New Media Ltd. Q4 FY2024 earnings call

• Committed to content professionalism and quality, achieving year-on-year revenue growth.
• Strong news coverage in Q4 2024, including rapid response and in-depth analysis during US election and South Korea martial law crisis.
• Original content IP innovation, with columns and IPs like in-depth commentary on Korean plane crash, finance cover story, and video IP journey garnering high views.
• Impactful events showcasing social responsibility, such as China Power Person of the Year Gala and charity gala.
• Progress in commercialization, including paid services revenue growth from new digital reading services on mini programs.

Total revenues for the fourth quarter of 2024 were RMB 218.1 million, representing a 3% year-on-year increase from RMB 211.8 million. Net advertising revenues were RMB 189 million, down from RMB 197 million in the same period last year. Paid services revenues were RMB 29.1 million, a 96.6% year-on-year increase from RMB 14.8 million, driven by the new digital reading services on mini programs. Cost of revenues was RMB 121.1 million, slightly up from RMB 120.5 million year-on-year. Gross margin improved to 44.5% from 43.1% in the prior year. Total operating expenses were RMB 90.3 million, a 32% year-on-year increase. Income from operations was RMB 6.7 million compared to RMB 22.9 million in the same period last year. Net loss attributable to IFENG was RMB 3.6 million vs net income of RMB 8.1 million in the prior year. As of December 31, 2024, cash and cash equivalents, term deposits, short-term investments, and restricted cash totaled approximately US$143.3 million.

• Forecasts total revenues for Q1 2025 to be between RMB 147 million and RMB 162 million.
• Projects net advertising revenues for Q1 2025 to be between RMB 112 million and RMB 122 million.
• Expects paid service revenues for Q1 2025 to be between RMB 35 million and RMB 40 million. These forecasts are current and preliminary, subject to change and uncertainties.

Q: Could management please elaborate on the underlying factors contributing to the substantial increase in paid services revenue during the fourth quarter?

A: The growth in paid services revenue stems from the paid short story novel business launched on third-party mini programs, tapping into traffic ecosystems like Douyin, Kuaishou, and WeChat. Related promotion fees are recorded under sales and marketing expenses, and while expecting strong year-over-year growth in the near term, the business remains small in scale.

Q: Could you please share the strategies used to attract advertisers despite the broader slowdown in the online advertising market?

A: Two key approaches: sales team shifted to industry-specific divisions, focusing on sectors like public sector (securing budgets from local tourism and cultural bureaus) and FMCG (using trendy content). Accelerated innovation in content resources and upgraded marketing products, including tailoring international marketing strategies for overseas companies and boosting content distribution on short video platforms.