EX-99.1 2 d791021dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

Phoenix New Media Reports Second Quarter 2019 Unaudited Financial Results

Live Conference Call to be Held at 9:00 PM U.S. Eastern Time on August 12, 2019

BEIJING, China, August 13, 2019 – Phoenix New Media Limited (NYSE: FENG) (“Phoenix New Media”, “ifeng” or the “Company”), a leading new media company in China, today announced its unaudited financial results for the second quarter ended June 30, 2019.

Mr. Shuang Liu, CEO of Phoenix New Media, commented, “Despite a challenging macroeconomic environment during the second quarter of 2019, we remained committed to the sustained growth and evolution of our business. During the second quarter, we continued to refine our combination of AI-powered content recommendation and seasoned editorial curation. Moreover, we further expanded our market-leading content library, which allowed us to explore additional monetization opportunities. Going forward, we are confident that our robust content recommendation system, premium brand equity, and innovative growth initiatives will further solidify our leadership in China’s new media industry.”

Ms. Betty Ho, CFO of Phoenix New Media, further stated, “In the second quarter of 2019, our total revenues reached RMB395.1 million, representing an 8.6% year-over-year growth and 38.7% sequential growth. Importantly, total revenues for paid services in the second quarter of 2019 increased by 51.1% year over year to RMB70.3 million, mainly driven by the outstanding performance of our digital reading business since the acquisition of Tadu. Also, our new business initiatives made material contributions to our growth as we continued to deliver a broad range of informative content in lifestyle-related categories such as real estate, food, and fashion. Our net advertising revenues for the second quarter of 2019 increased by 2.3% year over year to RMB324.8 million. Looking ahead, we will continue to invest in the development of AI technology, production of in-house content, and expansion of lifestyle verticals. We are confident that through our strategic allocation of capital and well-defined business objectives we will continue to generate long-term return to our shareholders.”

Second Quarter 2019 Financial Results

REVENUES

Total revenues for the second quarter of 2019 were RMB395.1 million (US$57.5 million), representing an increase of 8.6% from RMB363.9 million in the second quarter of 2018. The increase was caused by the consolidated revenues of RMB49.2 million (US$7.2 million) in the second quarter of 2019 from Beijing Yitian Xindong Network Technology Co., Ltd. (“Yitian Xindong” or “Tadu”) consolidated starting from December 28, 2018 and the consolidated revenues of RMB84.6 million (US$12.3 million), starting from April 1, 2019, from Beijing Fenghuang Tianbo Network Technology Co., Ltd. (“Tianbo”). The Company’s net advertising revenues from traditional business decreased by 28.5% due to the macroeconomic uncertainties and increased competitions.

Net advertising revenues for the second quarter of 2019 were RMB324.8 million (US$47.3 million), representing an increase of 2.3% from RMB317.4 million in the second quarter of 2018. The increase was primarily attributable to the consolidation of advertising revenues from Tianbo. However, the Company’s net advertising revenues from traditional business declined due to the above stated reason.

 

1


Paid services revenues1 for the second quarter of 2019 were RMB70.3 million (US$10.2 million), which represented an increase of 51.1% from RMB46.5 million in the second quarter of 2018. Revenues from paid contents for the second quarter of 2019 increased by 126.7% to RMB54.0 million (US$7.9 million) from RMB23.8 million in the second quarter of 2018, primarily due to the consolidation of digital reading revenues from Tadu. Revenues from games for the second quarter of 2019 were RMB2.6 million (US$0.4 million), which represented a decrease of 34.7% from RMB4.0 million in the second quarter of 2018. Revenues from MVAS for the second quarter of 2019 were RMB6.7 million (US$1.0 million), which represented a decrease of 62.0% from RMB17.5 million in the second quarter of 2018. Revenues from others for the second quarter of 2019 increased to RMB7.0 million (US$1.0 million) from RMB1.2 million in the second quarter of 2018, representing an increase of 513.4% year-over-year, which was mainly caused by the increase in revenues from E-commerce and online real estate related services.

COST OF REVENUES

Cost of revenues for the second quarter of 2019 was RMB185.0 million (US$26.9 million), representing an increase of 37.7% from RMB134.3 million in the second quarter of 2018. The increase in cost of revenues was mainly due to the following:

 

   

Content and operational costs for the second quarter of 2019 increased to RMB156.4 million (US$22.7 million) from RMB108.9 million in the second quarter of 2018, primarily attributable to the consolidation of content and operational costs of Tianbo and Tadu, and due to an increase in IP production costs.

 

   

Revenue sharing fees to telecom operators and channel partners for the second quarter of 2019 increased to RMB13.7 million (US$2.0 million) from RMB11.5 million in the second quarter of 2018, primarily attributable to the increase in revenue sharing fees paid to content providers by Tadu.

 

   

Bandwidth costs for the second quarter of 2019 increased to RMB14.9 million (US$2.2 million) from RMB13.9 million in the second quarter of 2018.

 

   

Share-based compensation included in cost of revenues was RMB1.9 million (US$0.3 million) in the second quarter of 2019, as compared to RMB0.6 million the second quarter of 2018, primarily attributable to the restricted share units newly granted to some employees in 2019 under a restricted share unit scheme adopted in 2018 by Fread Limited, a subsidiary of the Company.

 

 

1

Prior to 2019, paid services revenues comprised of (i) revenues from digital entertainment, which included MVAS and digital reading, and (ii) revenues from games and others, which included web-based games, mobile games, content sales, and other online and mobile paid services through the Company’s own platforms.

Beginning from January 1, 2019, paid services revenues have been re-classified and now comprised of (i) revenues from paid contents, which includes digital reading, audio books, paid videos, and other content-related sales activities, (ii) revenues from games, which includes web-based games and mobile games, (iii) revenues from MVAS, and (iv) revenues from others. For comparison purposes, the revenues from paid services for the quarters of 2018 have been retrospectively re-classified.

 

2


GROSS PROFIT

Gross profit for the second quarter of 2019 decreased to RMB210.1 million (US$30.6 million) from RMB229.6 million in the second quarter of 2018. Gross margin for the second quarter of 2019 decreased to 53.2% from 63.1% in the second quarter of 2018, mainly attributable to a combined effect of a decrease in gross margin of the Company’s traditional advertising business and the margin contributions from Tianbo and Tadu.

To supplement the financial measures presented in accordance with the United States Generally Accepted Accounting Principles (“GAAP”), the Company has presented certain non-GAAP financial measures in this press release, which excludes the impact of certain reconciling items as stated in the “Use of Non-GAAP Financial Measures” section below. The related reconciliations to GAAP financial measures are presented in the accompanying “Reconciliations of Non-GAAP Results of Operation Measures to the Nearest Comparable GAAP Measures.”

Non-GAAP gross margin for the second quarter of 2019, which excluded share-based compensation, decreased to 53.7% from 63.3% in the second quarter of 2018.

OPERATING EXPENSES AND INCOME/(LOSS) FROM OPERATIONS

Total operating expenses for the second quarter of 2019 increased by 44.5% to RMB289.1 million (US$42.1 million) from RMB200.2 million in the second quarter of 2018, primarily attributable to the consolidation of operating expenses from Tianbo and Tadu. Share-based compensation included in operating expenses was RMB2.3 million (US$0.3 million) in the second quarter of 2019, as compared to RMB2.8 million in the second quarter of 2018. As the Company recognized share-based compensation, net of estimated forfeitures, on a graded-vesting basis over the vesting term of the awards, there was less share-based compensation recognized in the second quarter of 2019 for share options granted prior to 2019.

Loss from operations for the second quarter of 2019 was RMB79.0 million (US$11.5 million), as compared to income from operations of RMB29.4 million in the second quarter of 2018. Operating margin for the second quarter of 2019 decreased to negative 20.0% from positive 8.1% in the second quarter of 2018.

Non-GAAP loss from operations for the second quarter of 2019, which excluded share-based compensation, was RMB74.8 million (US$10.9 million), as compared to non-GAAP income from operations of RMB32.8 million in the second quarter of 2018. Non-GAAP operating margin for the second quarter of 2019, which excluded share-based compensation, decreased to negative 18.9% from positive 9.0% in the second quarter of 2018.

OTHER INCOME OR LOSS

Other income or loss reflects interest income, interest expense, foreign currency exchange gain or loss, income or loss from equity method investments, net of impairments, and others, net2. Total net other income for the second quarter of 2019 was RMB11.1 million (US$1.6 million), as compared to RMB28.1 million in the second quarter of 2018.

 

 

2 

“Others, net” primarily consists of government subsidies and litigation loss provisions.

 

3


   

Interest income for the second quarter of 2019 decreased to RMB4.6 million (US$0.7 million) from RMB13.6 million in the second quarter of 2018, primarily due to decrease in the loans granted to Particle, which were fully settled in the third quarter of 2018.

 

   

Interest expense for the second quarter of 2019 decreased to RMB1.7 million (US$0.3 million), from RMB3.4 million in the second quarter of 2018, which was primarily due to the decrease in outstanding short-term bank loans as the Company repaid all of the short-term bank loans in the second quarter of 2019.

 

   

Foreign currency exchange gain for the second quarter of 2019 was RMB2.9 million (US$0.4 million), as compared to RMB16.2 million in the second quarter of 2018. This decrease was mainly caused by the less significant depreciation of Renminbi against US dollars in the second quarter of 2019, as compared to that of 2018, which generated less exchange gain in Renminbi denominated liabilities recorded in the Company’s subsidiaries whose functional currency is not Renminbi.

 

   

Income from equity method investments, net of impairments, for the second quarter of 2019 was RMB0.5 million (US$0.1 million), as compared to loss from equity method investments, net of impairments, of RMB0.4 million in the second quarter of 2018. The Company recognized income from equity method investments, net of impairments, of RMB0.5 million (US$0.1 million) as a result of the re-measurement of the previously held equity interests upon completion of the step acquisition in Tianbo on April 1, 2019, which was previously accounted using the equity method of accounting.

 

   

Others, net increased to RMB4.8 million (US$0.7 million) in the second quarter of 2019 from RMB2.1 million in the second quarter of 2018, which was primarily attributable to the increase of the government subsidies received in the second quarter of 2019 as compared to that of 2018.

NET INCOME/(LOSS) ATTRIBUTABLE TO PHOENIX NEW MEDIA LIMITED

Net loss attributable to Phoenix New Media Limited for the second quarter of 2019 was RMB70.1 million (US$10.2 million), as compared to net income attributable to Phoenix New Media Limited of RMB49.2 million in the second quarter of 2018. Net margin for the second quarter of 2019 decreased to negative 17.7% from positive 13.5% in the second quarter of 2018. Net loss per diluted ADS3 in the second quarter of 2019 was RMB0.96 (US$0.14), as compared to net income per diluted ADS of RMB0.67 in the second quarter of 2018.

Non-GAAP net loss attributable to Phoenix New Media Limited for the second quarter of 2019, which excluded share-based compensation and income or loss from equity method investments, net of impairments, was RMB66.4 million (US$9.7 million), as compared to non-GAAP net income attributable to Phoenix New Media Limited of RMB53.1 million in the second quarter of 2018. Non-GAAP net margin for the second quarter of 2019 decreased to negative 16.8% from positive 14.6% in the second quarter of 2018. Non-GAAP net loss per diluted ADS in the second quarter of 2019 was RMB0.91 (US$0.13), as compared to non-GAAP net income per diluted ADS of RMB0.73 in the second quarter of 2018.

 

 

3 

“ADS” means American Depositary Share of the Company. Each ADS represents eight Class A ordinary shares of the Company.

 

4


For the second quarter of 2019, the Company’s weighted average number of ADSs used in the computation of diluted net loss per ADS was 72,783,430. As of June 30, 2019, the Company had a total of 582,324,325 ordinary shares outstanding, or the equivalent of 72,790,541 ADSs.

CERTAIN BALANCE SHEET ITEMS

As of June 30, 2019, the Company’s cash and cash equivalents, term deposits and short term investments and restricted cash were RMB1.69 billion (US$245.8 million), which included RMB251.6 million (US$36.7 million) from Tianbo and RMB16.3 million (US$2.4 million) from Tadu.

As previously announced by the Company, on July 23, 2019, the Company entered into a supplemental agreement (the “Supplemental Agreement”) to the share purchase agreement (the “SPA”) dated March 22, 2019 between the Company and Run Liang Tai Management Limited (“Run Liang Tai”) for the sale of 32% of the total outstanding shares of Particle Inc. (“Particle” or “Yidian”) to Run Liang Tai and its designated entities (the “Proposed Buyers”) (the “Proposed Transaction”). The Company agrees to increase the number of Particle shares to be transferred to the Proposed Buyers from 199,866,509 shares to 212,358,165 shares while the total purchase price will remain unchanged at US$448 million. Instead of requiring full payment of the purchase price after satisfaction of all closing conditions, the Supplemental Agreement allows the Proposed Buyers to pay the purchase price in several installments. In addition to the deposit of US$100 million received in March 2019, the Proposed Buyers have paid the first installment of US$100 million to the Company according to the Supplemental Agreement. Unless otherwise agreed by both parties, the Proposed Buyers may pay the remaining purchase price on or before August 10, 2020. There can be no assurance that the Proposed Transaction will ever be closed. The fair value of available-for-sale debt investments in Particle decreased from RMB2,728.4 million as of March 31, 2019 to RMB2,271.1 million (US$330.8 million) as of June 30, 2019, mainly due to the decrease in the per-share value of Particle shares held by the Company as more shares would be transferred to the Proposed Buyers with the same total purchase price, and the time value of the purchase price used in the valuation of available-for-sale debt investments in Particle for the second quarter of 2019.

Business Outlook

For the third quarter of 2019, the Company expects its total revenues to be between RMB373.4 million and RMB393.4 million; net advertising revenues are expected to be between RMB312.0 million and RMB327.0 million; and paid services revenues are expected to be between RMB61.4 million and RMB66.4 million.

All of the above forecasts reflect the Company’s current and preliminary view on the market and operational conditions, which are subject to change.

Conference Call Information

The Company will hold a conference call at 9:00 p.m. U.S. Eastern Time on August 12, 2019, (August 13, 2019 at 9:00 a.m. Beijing/Hong Kong time) to discuss its second quarter 2019 unaudited financial results and operating performance.

 

5


To participate in the call, please use the dial-in numbers and conference ID below:

 

International:

   +65 67135090

Mainland China:        

   4006208038

Hong Kong:

   +852 30186771

United States:

   +1 8456750437

United Kingdom:    

   +44 2036214779

Australia:

   +61 290833212

Conference ID:

   2384599

A replay of the call will be available through August 20, 2019, by using the dial-in numbers and conference ID below:

 

International:

   +61 2 8199 0299

Mainland China:        

   4006322162

Hong Kong:

   +852 30512780

United States:

   +1 6462543697

Conference ID:

   2384599

A live and archived webcast of the conference call will also be available at the Company’s investor relations website at http://ir.ifeng.com.

Use of Non-GAAP Financial Measures

To supplement the consolidated financial statements presented in accordance with the United States Generally Accepted Accounting Principles (“GAAP”), Phoenix New Media Limited uses non-GAAP gross profit, non-GAAP gross margin, non-GAAP income or loss from operations, non-GAAP operating margin, non-GAAP net income or loss attributable to Phoenix New Media Limited, non-GAAP net margin and non-GAAP net income or loss per diluted ADS, each of which is a non-GAAP financial measure. Non-GAAP gross profit is gross profit excluding share-based compensation. Non-GAAP gross margin is non-GAAP gross profit divided by total revenues. Non-GAAP income or loss from operations is income or loss from operations excluding share-based compensation. Non-GAAP operating margin is non-GAAP income or loss from operations divided by total revenues. Non-GAAP net income or loss attributable to Phoenix New Media Limited is net income or loss attributable to Phoenix New Media Limited excluding share-based compensation and income or loss from equity method investments, net of impairments. Non-GAAP net margin is non-GAAP net income or loss attributable to Phoenix New Media Limited divided by total revenues. Non-GAAP net income or loss per diluted ADS is non-GAAP net income or loss attributable to Phoenix New Media Limited divided by weighted average number of diluted ADSs. The Company believes that separate analysis and exclusion of the aforementioned non-GAAP to GAAP reconciling items add clarity to the constituent parts of its performance. The Company reviews these non-GAAP financial measures together with the related GAAP financial measures to obtain a better understanding of its operating performance. It uses these non-GAAP financial measures for planning, forecasting and measuring results against the forecast. The Company believes that using these non-GAAP financial measures to evaluate its business allows both management and investors to assess the Company’s performance against its competitors and ultimately monitor its capacity to generate returns for investors. The Company also believes that these non-GAAP financial measures are useful supplemental information for investors and analysts to assess its operating performance without the effect of items like share-based compensation and income or loss from equity method investments, net of impairments, which have been and will continue to be significant and recurring in its business. However, the use of these non-GAAP financial measures has material limitations as an analytical tool. One of the limitations of using these non-GAAP financial measures is that they do not include all items that impact the Company’s gross profit, income or loss from operations and net income or loss attributable to Phoenix New Media Limited for the period. In addition, because these non-GAAP financial measures are not calculated in the same manner by all companies, they may not be comparable to other similarly titled measures used by other companies. In light of the foregoing limitations, you should not consider these non-GAAP financial measures in isolation from, or as an alternative to, the financial measures prepared in accordance with GAAP.

 

6


Exchange Rate

This announcement contains translations of certain RMB amounts into U.S. dollars (“USD”) at specified rates solely for the convenience of the reader. Unless otherwise stated, all translations from RMB to USD were made at the rate of RMB6.8650 to US$1.00, the noon buying rate in effect on June 30, 2019, in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB or USD amounts referred could be converted into USD or RMB, as the case may be, at any particular rate or at all. For analytical presentation, all percentages are calculated using the numbers presented in the financial statements contained in this earnings release.

About Phoenix New Media Limited

Phoenix New Media Limited (NYSE: FENG) is a leading new media company providing premium content on an integrated Internet platform, including PC and mobile, in China. Having originated from a leading global Chinese language TV network based in Hong Kong, Phoenix TV, the Company enables consumers to access professional news and other quality information and share user-generated content on the Internet through their PCs and mobile devices. Phoenix New Media’s platform includes its PC channel, consisting of ifeng.com website, which comprises interest-based verticals and interactive services; its mobile channel, consisting of mobile news applications, mobile video application, digital reading applications and mobile Internet website; and its operations with the telecom operators that provides mobile value-added services.

 

7


Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” and similar statements. Among other things, the business outlook and quotations from management in this announcement, as well as Phoenix New Media’s strategic and operational plans, contain forward-looking statements. Phoenix New Media may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (“SEC”) on Forms 20-F and 6-K, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about Phoenix New Media’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: the Company’s goals and strategies; the Company’s future business development, financial condition and results of operations; the expected growth of online and mobile advertising, online video and mobile paid services markets in China; the Company’s reliance on online and mobile advertising and MVAS for a majority of its total revenues; the Company’s expectations regarding demand for and market acceptance of its services; the Company’s expectations regarding maintaining and strengthening its relationships with advertisers, partners and customers; the Company’s investment plans and strategies, fluctuations in the Company’s quarterly operating results; the Company’s plans to enhance its user experience, infrastructure and services offerings; the Company’s reliance on mobile operators in China to provide most of its MVAS; changes by mobile operators in China to their policies for MVAS; competition in its industry in China; and relevant government policies and regulations relating to the Company. Further information regarding these and other risks is included in the Company’s filings with the SEC, including its registration statement on Form F-1, as amended, and its annual reports on Form 20-F. All information provided in this press release and in the attachments is as of the date of this press release, and Phoenix New Media does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

For investor and media inquiries please contact:

Phoenix New Media Limited

Qing Liu

Email: investorrelations@ifeng.com

ICR, Inc.

Jack Wang

Tel: +1 (646) 405-4883

Email: investorrelations@ifeng.com

 

8


Phoenix New Media Limited

Condensed Consolidated Balance Sheets

(Amounts in thousands)

 

     December 31,      June 30,     June 30,  
   2018      2019     2019  
     RMB      RMB     US$  
     Audited*      Unaudited     Unaudited  

ASSETS

       

Current assets:

       

Cash and cash equivalents

     174,024        501,046       72,986  

Term deposits and short term investments

     912,594        941,226       137,105  

Restricted cash

     269,648        245,017       35,691  

Accounts receivable, net

     484,113        609,344       88,761  

Amounts due from related parties

     91,228        75,889       11,054  

Prepayment and other current assets

     88,963        111,296       16,212  
  

 

 

    

 

 

   

 

 

 

Total current assets

     2,020,570        2,483,818       361,809  
  

 

 

    

 

 

   

 

 

 

Non-current assets:

       

Property and equipment, net

     95,631        95,900       13,969  

Intangible assets, net

     97,448        98,293       14,318  

Goodwill

     338,288        361,074       52,596  

Available-for-sale debt investments

     1,961,474        2,273,126       331,118  

Equity investments, net

     33,694        13,236       1,928  

Deferred tax assets

     60,160        70,649       10,292  

Operating lease right-of- use assets, net**

     —          100,122       14,584  

Other non-current assets

     23,454        20,061       2,923  
  

 

 

    

 

 

   

 

 

 

Total non-current assets

     2,610,149        3,032,461       441,728  
  

 

 

    

 

 

   

 

 

 

Total assets

     4,630,719        5,516,279       803,537  
  

 

 

    

 

 

   

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

       

Current liabilities:

       

Short-term loans

     267,665        —         —    

Accounts payable

     264,753        213,316       31,073  

Amounts due to related parties

     25,218        18,683       2,721  

Advances from customers

     54,601        71,481       10,412  

Taxes payable

     101,386        129,324       18,838  

Salary and welfare payable

     132,316        134,181       19,547  

Deposits from proposed buyers of investments in Particle

     —          687,470       100,141  

Accrued expenses and other current liabilities

     227,328        589,616       85,888  

Operating lease liabilities**

     —          33,996       4,952  
  

 

 

    

 

 

   

 

 

 

Total current liabilities

     1,073,267        1,878,067       273,572  
  

 

 

    

 

 

   

 

 

 

Non-current liabilities:

       

Deferred tax liabilities

     140,960        171,065       24,918  

Long-term liabilities

     26,131        26,131       3,806  

Operating lease liabilities**

     —          67,830       9,881  
  

 

 

    

 

 

   

 

 

 

Total non-current liabilities

     167,091        265,026       38,605  
  

 

 

    

 

 

   

 

 

 

Total liabilities

     1,240,358        2,143,093       312,177  
  

 

 

    

 

 

   

 

 

 

Shareholders’ equity:

       

Phoenix New Media Limited shareholders’ equity:

       

Class A ordinary shares

     17,487        17,499       2,549  

Class B ordinary shares

     22,053        22,053       3,212  

Additional paid-in capital

     1,604,588        1,605,745       233,903  

Statutory reserves

     87,620        87,620       12,763  

Retained earnings/(accumulated deficits)

     159,621        (30,231     (4,404

Accumulated other comprehensive income

     1,188,358        1,468,429       213,901  
  

 

 

    

 

 

   

 

 

 

Total Phoenix New Media Limited shareholders’ equity

     3,079,727        3,171,115       461,924  

Noncontrolling interests

     310,634        202,071       29,436  
  

 

 

    

 

 

   

 

 

 

Total shareholders’ equity

     3,390,361        3,373,186       491,360  
  

 

 

    

 

 

   

 

 

 

Total liabilities and shareholders’ equity

     4,630,719        5,516,279       803,537  
  

 

 

    

 

 

   

 

 

 

 

*

Derived from audited financial statements included in the Company’s Form 20-F dated April 26, 2019.

**

The Company adopted the new leasing guidance (ASU 2016-2) started from January 1, 2019, which requires that a lessee recognize the assets and liabilities that arise from operating leases. The Company recognized a right-of-use asset and a liability relating to lease payments (the Lease Liability) in the statements of financial position for lease contracts having terms beyond 12 months period.

 

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Phoenix New Media Limited

Condensed Consolidated Statements of Comprehensive Income/(loss)

(Amounts in thousands, except for number of shares and per share (or ADS) data)

 

     Three Months Ended     Six Months Ended  
     June 30,     March 31,     June 30,     June 30,     June 30,     June 30,     June 30,  
     2018     2019     2019     2019     2018     2019     2019  
     RMB     RMB     RMB     US$     RMB     RMB     US$  
     Unaudited     Unaudited     Unaudited     Unaudited     Unaudited     Unaudited     Unaudited  

Revenues:

              

Net advertising revenues

     317,344       215,984       324,738       47,303       560,792       540,722       78,765  

Paid service revenues

     46,538       68,890       70,338       10,246       88,013       139,228       20,281  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     363,882       284,874       395,076       57,549       648,805       679,950       99,046  

Cost of revenues

     (134,296     (178,145     (184,951     (26,941     (263,040     (363,096     (52,891
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     229,586       106,729       210,125       30,608       385,765       316,854       46,155  

Operating expenses:

              

Sales and marketing expenses

     (109,823     (120,572     (163,655     (23,839     (241,042     (284,227     (41,402

General and administrative expenses

     (41,808     (48,852     (65,380     (9,524     (76,206     (114,232     (16,640

Technology and product development expenses

     (48,523     (59,441     (60,121     (8,758     (96,935     (119,562     (17,416
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     (200,154     (228,865     (289,156     (42,121     (414,183     (518,021     (75,458
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income/(loss) from operations

     29,432       (122,136     (79,031     (11,513     (28,418     (201,167     (29,303

Other income/(loss):

              

Interest income

     13,550       8,658       4,637       675       26,488       13,295       1,937  

Interest expense

     (3,389     (2,903     (1,730     (252     (8,022     (4,633     (675

Foreign currency exchange gain/(loss)

     16,231       (2,167     2,922       426       1,100       755       110  

(Loss)/income from equity investments, net of impairments

     (435     (3,968     521       76       (2,865     (3,447     (502

Others, net

     2,128       2,241       4,789       698       6,221       7,030       1,024  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income/(loss) before tax

     57,517       (120,275     (67,892     (9,890     (5,496     (188,167     (27,409

Income tax expense

     (8,498     (7,461     (2,977     (434     (3,774     (10,438     (1,520
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income/(loss)

     49,019       (127,736     (70,869     (10,324     (9,270     (198,605     (28,929

Net loss attributable to noncontrolling interests

     222       7,999       754       110       971       8,753       1,275  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income/(loss) attributable to Phoenix New Media Limited

     49,241       (119,737     (70,115     (10,214     (8,299     (189,852     (27,654
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income/(loss)

     49,019       (127,736     (70,869     (10,324     (9,270     (198,605     (28,929

Other comprehensive income/(loss), net of tax: fair value remeasurement for available-for-sale investments

     5,287       725,403       (463,083     (67,456     51,651       262,320       38,211  

Other comprehensive income/(loss), net of tax: foreign currency translation adjustment

     49,376       (27,193     44,944       6,547       14,362       17,751       2,586  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income/(loss)

     103,682       570,474       (489,008     (71,233     56,743       81,466       11,868  

Comprehensive loss attributable to noncontrolling interests

     222       7,999       754       110       971       8,753       1,275  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income/(loss) attributable to Phoenix New Media Limited

     103,904       578,473       (488,254     (71,123     57,714       90,219       13,143  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income/(loss) attributable to Phoenix New Media Limited

     49,241       (119,737     (70,115     (10,214     (8,299     (189,852     (27,654

Net income/(loss) per Class A and Class B ordinary share:

              

Basic

     0.08       (0.21     (0.12     (0.02     (0.01     (0.33     (0.05

Diluted

     0.08       (0.21     (0.12     (0.02     (0.01     (0.33     (0.05

Net income/(loss) per ADS (1 ADS represents 8 Class A ordinary shares):

              

Basic

     0.68       (1.65     (0.96     (0.14     (0.11     (2.61     (0.38

Diluted

     0.67       (1.65     (0.96     (0.14     (0.11     (2.61     (0.38

Weighted average number of Class A and Class B ordinary shares used in computing net income/(loss) per share:

              

Basic

     580,976,381       582,187,109       582,267,440       582,267,440       580,102,974       582,227,496       582,227,496  

Diluted

     584,945,765       582,187,109       582,267,440       582,267,440       580,102,974       582,227,496       582,227,496  

 

10


Phoenix New Media Limited

Condensed Segments Information

(Amounts in thousands)

 

     Three Months Ended      Six Months Ended  
     June 30,      March 31,      June 30,      June 30,      June 30,      June 30,      June 30,  
     2018      2019      2019      2019      2018      2019      2019  
     RMB      RMB      RMB      US$      RMB      RMB      US$  
     Unaudited      Unaudited      Unaudited      Unaudited      Unaudited      Unaudited      Unaudited  

Revenues:

                    

Net advertising service

     317,344        215,984        324,738        47,303        560,792        540,722        78,765  

Paid services

     46,538        68,890        70,338        10,246        88,013        139,228        20,281  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total revenues

     363,882        284,874        395,076        57,549        648,805        679,950        99,046  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Cost of revenues

                    

Net advertising service

     110,909        140,060        146,869        21,394        218,362        286,929        41,796  

Paid services

     23,387        38,085        38,082        5,547        44,678        76,167        11,095  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total cost of revenues

     134,296        178,145        184,951        26,941        263,040        363,096        52,891  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Gross profit

                    

Net advertising service

     206,435        75,924        177,869        25,909        342,430        253,793        36,969  

Paid services

     23,151        30,805        32,256        4,699        43,335        63,061        9,186  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total gross profit

     229,586        106,729        210,125        30,608        385,765        316,854        46,155  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

11


Phoenix New Media Limited

Condensed Information of Cost of Revenues

(Amounts in thousands)

 

     Three Months Ended      Six Months Ended  
     June 30,      March 31,      June 30,      June 30,      June 30,      June 30,      June 30,  
     2018      2019      2019      2019      2018      2019      2019  
     RMB      RMB      RMB      US$      RMB      RMB      US$  
     Unaudited      Unaudited      Unaudited      Unaudited      Unaudited      Unaudited      Unaudited  

Revenue sharing fees

     11,460        17,329        13,676        1,992        20,077        31,005        4,516  

Content and operational costs

     108,937        146,961        156,346        22,774        214,721        303,307        44,182  

Bandwidth costs

     13,899        13,855        14,929        2,175        28,242        28,784        4,193  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total cost of revenues

     134,296        178,145        184,951        26,941        263,040        363,096        52,891  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

12


Reconciliations of Non-GAAP Results of Operations Measures to the Nearest Comparable GAAP Measures

(Amounts in thousands, except for number of ADSs and per ADS data)

 

     Three Months Ended June 30, 2018     Three Months Ended March 31, 2019     Three Months Ended June 30, 2019  
           Non-GAAP                 Non-GAAP                 Non-GAAP        
     GAAP     Adjustments     Non-GAAP     GAAP     Adjustments     Non-GAAP     GAAP     Adjustments     Non-GAAP  
     RMB     RMB     RMB     RMB     RMB     RMB     RMB     RMB     RMB  
     Unaudited     Unaudited     Unaudited     Unaudited     Unaudited     Unaudited     Unaudited     Unaudited     Unaudited  

Gross profit

     229,586       634 (1)      230,220       106,729       1,441 (1)      108,170       210,125       1,893 (1)      212,018  

Gross margin

     63.1       63.3     37.5       38.0     53.2       53.7

Income/(loss) from operations

     29,432       3,390 (1)      32,822       (122,136     3,987 (1)      (118,149     (79,031     4,227 (1)      (74,804

Operating margin

     8.1       9.0     (42.9 )%        (41.5 )%      (20.0 )%        (18.9 )% 
       3,390 (1)          3,987 (1)          4,227 (1)   
       435 (2)          3,968 (2)          (521 )(2)   

Net income/(loss) attributable to Phoenix New Media Limited

     49,241       3,825       53,066       (119,737     7,955       (111,782     (70,115     3,706       (66,409
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net margin

     13.5       14.6     (42.0 )%        (39.2 )%      (17.7 )%        (16.8 )% 

Net income/(loss) per ADS-diluted

     0.67         0.73       (1.65       (1.54     (0.96       (0.91

Weighted average number of ADSs used in computing diluted net income/(loss) per ADS

     73,118,221         73,118,221       72,773,389         72,773,389       72,783,430         72,783,430  

 

(1)

Share-based compensation

(2)

Loss/(income) from equity method investments, net of impairments

Non-GAAP to GAAP reconciling items have no income tax effect.

 

13