Phoenix New Media Reports Second Quarter 2011 Results

17 August 2011 20 h 05 min 9 comments

2Q11 Total Revenues Up 83.5% YOY

BEIJING, Aug. 17, 2011 — Phoenix New Media Limited, a leading new media company in China , today announced its unaudited financial results for the second quarter of 2011.

Second Quarter 2011 Highlights

. Total revenues increased by 83.5% to RMB227.6 million (US$35.2million) from RMB124.1 million in the second quarter of 2010, primarily driven by a 150.5% increase in net advertising revenues and a 44.7% increase in paid service revenues.

. Gross profit increased by 89.3% to RMB104.0 million (US$16.1 million) from RMB54.9 million in the second quarter of 2010.

. Net income attributable to Phoenix New Media increased by 55.7% to RMB36.2 million (US$5.6million) from RMB23.3 million in the second quarter of 2010.

. Adjusted net income attributable to Phoenix New Media(1) increased by 76.0% to RMB44.8 million (US$6.9 million) from RMB25.5 million in the second quarter of 2010.

Mr. Shuang Liu, CEO of Phoenix New Media, stated, “We are extremely proud to have reached a milestone quarter in our company’s history where our quarterly net advertising revenues contributed over 50% of total revenues. This exceptional growth from early 2010 when we completed the integration of our advertising sales team has validated our belief in the tremendous value of our unique and highly valued content offerings.

We believe that future revenue growth would continue to be driven by advertising, and our increased product innovations will continue to benefit both our users and advertisers. Kuaibo, our recently announced social media platform that will be officially launched in the third quarter, is one of these innovations that we are confident will help drive future traffic growth, further cementing Phoenix New Media’s portal as the gateway of choice among China’s mainstream internet users. We firmly believe that the Kuaibo platform has the potential to enable us to capture our target users evolving demand in the era of fragmented media consumption and further enhance interaction among users with shared common interests.”

Second Quarter 2011 Financial Results

Revenues

. Total revenues for the second quarter of 2011 increased by 83.5% to RMB227.6 million (US$35.2 million) from RMB124.1 million in the second quarter of 2010.

. Net advertising revenues for the second quarter of 2011 increased by 150.5% to RMB114.0 million (US$17.6 million) from RMB45.5 million in the second quarter of 2010 and 51.5% from RMB75.2 million in the first quarter of 2011. This increase was driven by two key drivers: the number of advertisers, which grew by 38.1% to 268 in the second quarter of 2011 from 194 in the second quarter of 2010, and average revenues per advertiser (“ARPA”), which increased by 81.6% to RMB425,000 (US$65,800) in the second quarter of 2011 from RMB234,000 in the second quarter of 2010, primarily due to the Company’s deepening relationship with advertising clients. Net advertising revenues are recognized net of advertising agency service fees.

. Paid service revenues for the second quarter of 2011 increased by 44.7% to RMB113.6 million (US$17.6 million) from RMB78.5 million in the second quarter of 2010 and by 17.8% from RMB96.5 million in the first quarter of 2011. Paid service revenues include three major business sub-segments: revenues from mobile Internet and value-added services (“MIVAS”),which increased to RMB101.5 million (US$15.7 million) in the second quarter of 2011 from RMB67.4 million in the second quarter of 2010; revenues from video value-added services (“video VAS”), which increased to RMB10.8 million (US$1.7 million) in the second quarter of 2011 from RMB9.3 million in the second quarter of 2010; and, revenues from Internet value-added services (“Internet VAS”), which decreased to RMB1.4 million (US$0.2 million) from RMB1.8 million in the second quarter of 2010. MIVAS revenues grew primarily due to an increase in business volume, particularly in wireless value-added services revenues. The growth in video VAS revenues was primarily due to increased demand for both pay-per-view and subscription-based mobile video services.

Cost of revenues

. Cost of revenues for the second quarter of 2011 increased to RMB123.7 million (US$19.1 million) from RMB69.1 million in the second quarter of 2010, reflecting growth proportional to revenues, especially in content and operational costs. Revenue sharing fees paid to telecom operators and channel partners increased to RMB65.5 million (US$10.1 million) in the second quarter of 2011from RMB36.6 million in the second quarter of 2010 primarily due to MIVAS revenue growth. Content and operational costs in the second quarter of 2011 grew to RMB35.7 million (US$5.5 million) from RMB22.2 million in the second quarter of 2010. This growth is primarily due to an increase in staff cost due an increase in headcount in content production and advertising sales support. Share-based compensation expense included in cost of revenues was RMB1.7 million in the second quarter of 2011.

. For the second quarter of 2011, gross profit increased by 89.3% to RMB104.0 million (US$16.1 million) from RMB54.9 million in the second quarter of 2010. Gross margin increased to 45.7% in the second quarter of 2011 compared with 44.3% in the second quarter of 2010.Grossmargin excluding the impact of share-based compensation expense strengthened to 46.4%from 44.4% in the second quarter of 2010 and 42.2% in the first quarter of 2011.

Operating expenses

Total operating expenses for the second quarter of 2011 were RMB64.5 million (US$10.0 million) compared to RMB29.2 million in the second quarter of 2010. The increase was primarily attributable to general growth in the Company’s overall business. Total operating expenses in the second quarter of 2011 decreased sequentially by 20.5% from RMB 81.1 million in the first quarter of 2011 as a result of decrease of share-based compensation expenses. Share-based compensation expense included in operating expenses was RMB6.9 million in the second quarter of 2011.

Net income / loss

. Net income attributable to Phoenix New Media for the second quarter of 2011 increased by 55.7% to RMB36.2 million (US$5.6 million) from RMB23.3 million in the second quarter of 2010.

. Net loss attributable to ordinary shareholders for the second quarter of 2011 was RMB350.6 million (US$54.2 million), as compared to a net loss attributable to ordinary shareholders of RMB47.5 million in the second quarter of 2010.

Diluted net loss per ADS(2) in the second quarter of 2011 was RMB5.80 (US$0.90) as compared with RMB1.18 in the second quarter of 2010.The increase in net loss attributable to ordinary shareholders was primarily attributable to an increase in accretion to Series A redeemable convertible preferred shares redemption value. The accretion to Series A redeemable convertible preferred shares redemption value and income allocation expense to participating preferred shares were non-recurring charges related to the preferred shares which were automatically converted to ordinary shares upon the completion of the Company’s initial public offering on May 17, 2011.

. Adjusted net income attributable to Phoenix New Media for the second quarter of 2011, which excludes share-based compensation expense, increased by 76.0% to RMB44.8 million (US$6.9 million) from RMB25.5 million in the second quarter of 2010. Adjusted net margin for the second quarter of 2011 remained stable at 19.7% compared to 20.5% in the second quarter of 2010 and increased from 12.7% in the first quarter of 2011.

Business Outlook

For the third quarter of 2011, the Company expects its net advertising revenues to be between RMB121 million and RMB125 million, which represents year-over-year growth of approximately 145% to 153%. Paid service revenues are expected to be between RMB115 million and RMB120 million, which represents year-over-year growth of approximately 15% to 20%.

As a result, total revenues are expected to be between RMB236 million to RMB245 million, which represents year-over-year growth of approximately 58% to 64%.

These forecasts reflect the Company’s current and preliminary view on the market and operational conditions, which may be subject to change.

Recent Developments

. Phoenix New Media launched an enhanced homepage on June 30, 2011 to improve navigability and aesthetic appeal and create a more engaging and user-friendly experience. Through various design enhancements and other improvements, such as more efficient format layouts, a greater amount of video content, and better integration of video, text and photo content, the distribution of content on this homepage has been further improved to appeal to both male and female visitors. In addition, the newly designed website simplifies the navigational experience for all visitors.

. July operating data indicated a positive reaction to the re-design and suggested that visitors could more easily and intuitively access the vertical channels that appealed to their interests. In July, average daily unique visitors (“UV”) for a number of vertical channels increased month over month, including: Parenting by 36.0%, Sports by 28.9%, Culture by 26.3%, Travel by 7.6% and Fashion by 3.6%. The proportion of female users also increased to 35.2% in July from 32.4% in June according to iUserTracker, a product of iResearch, a third party independent research firm.

Full results

About Phoenix New Media Limited

Phoenix New Media Limited is the leading new media company providing premium content on an integrated platform across Internet, mobile and TV channels in China. Having originated from a leading global Chinese language TV network based in Hong Kong, Phoenix TV, PNM enables consumers to access professional news and other quality information and share user-generated content on the Internet and through their mobile devices. PNM’s platform includes its ifeng.com channel, consisting of its ifeng.com website, its video channel, comprised of its dedicated video vertical and video services and applications, and its mobile channel, including its mobile Internet website and mobile Internet and value-added services (“MIVAS”).

SOURCE Phoenix New Media Limited 

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