Phoenix New Media Ltd
NYSE:FENG
Earnings Call Analysis
Q4-2023 Analysis
Phoenix New Media Ltd
In an earnings call, it was reported that the company's total revenues declined to CNY 211.8 million from CNY 223.9 million in the same period of the previous year, marking a decline of approximately 5.4%. The drop was primarily attributed to reduced advertising spending by advertisers in certain industries and increased competition. Paid services also dipped to CNY 14.8 million from CNY 18.5 million due to lower e-commerce revenues. Despite this, the company managed to enhance its gross margin to 43.1% from 39.4% in the prior year, a sign of effective cost control measures.
The company's operational profit witnessed a significant decrease, with income from operations halving approximately to CNY 22.9 million from CNY 46.7 million year-over-year, and net income attributable to iFeng similarly reducing to CNY 8.1 million from CNY 41.6 million. In contrast, the balance sheet remains robust with a cash and cash equivalent position of CNY 1.09 billion. Looking forward, the company provided a cautious revenue outlook for Q1 2024, projecting total revenues between CNY 130.8 million and CNY 145.8 million, with advertising and paid service revenues also expected to see declines.
For 2024, the company is concentrating on boosting operating profits and curtailing losses to promote revenue growth, efficient cost management, and stable cash flow. Their approach includes closer collaboration between various teams, support from tech and management, and implementation of actionable operational metrics with incentive structures to drive performance. Despite a challenging advertising market closely tied to economic fluctuations, the company affirms its dedication to capitalizing on opportunities through innovative marketing strategies and rapid adaptations to market dynamics. They harbor ambitions to grow avenues such as global branding and cultural tourism marketing, along with monetizing video platform accounts.
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Good day, and thank you for standing by. Welcome to Phoenix New Media Fourth Quarter 2023 Earnings Call. [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.
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. [Foreign Language]
[Foreign Language]
[Foreign Language] [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.
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 related -- 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 [indiscernible]. [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 [indiscernible].
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 shopper industry focus, streamlined resources allocation and accelerated innovation, laying the groundwork for sustained commercial growth.
Our priorities are clear: To expand our customer base; [indiscernible] 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 CNY 211.8 million as compared to CNY 223.9 million in the same period of last year. To elaborate, net advertising revenues were CNY 197 million compared to CNY 205.4 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 CNY 14.8 million compared to CNY 18.5 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 CNY 120.5 million from CNY 135.8 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 CNY 22.9 million compared to income from operations of CNY 46.7 million in the same period of last year. Net income attributable to iFeng was CNY 8.1 million compared to net income attributable to iFeng of RMB 41.6 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 restricted cash were RMB 1.09 billion or approximately USD 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 CNY 130.8 million and CNY 145.8 million. For net advertising revenues, we are forecasting between CNY 121.3 million and CNY 131.3 million. For paid service revenues, we are forecasting between CNY 9.5 million and CNY 14.5 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.
[Operator Instructions] Our first question comes from Alice Tang of First Shanghai.
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 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 giving a 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 difference 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 see opportunities. We will maintain our unique positioning as a mainstream media outline, 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 report new annual for growth in areas like global branding, cultural tourism marketing and the monetization of our accounts on the video platform.
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.
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 -- have a good day.
Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]