Phoenix New Media Reports Unaudited Second Quarter 2018 Financial Results
BEIJING, Aug. 14, 2018 /PRNewswire/ -- 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, 2018.
Mr. Shuang Liu, CEO of Phoenix New Media commented, "We made significant progress on product innovation and content enrichment in the second quarter of 2018. We further enhanced our content production capabilities focusing on providing users with premium, original, unbiased, and exclusive content in the forms of news reports, live broadcasts, as well as documentaries and talk shows in video series format based on our original creation.
In addition, we have maximized users' satisfaction while optimizing our algorithms to effectively screen our content library to ensure full compliance with emerging regulations. Going forward, we will continue to leverage the credibility, authenticity and influence of our premium content and our brand to further fortify our leadership in the media industry in China."
Ms. Betty Ho, CFO of Phoenix New Media, further stated, "We are delighted to deliver solid financial results in the second quarter of 2018. The advertising revenue generated from our FENG app has increased by 43.2% year-over-year in the second quarter of 2018 under the old accounting standard. In order to diversify our content, we are looking for new investment opportunities in lifestyle related verticals, such as travel, health and fashion, to expand our user base and improve retention rate. Looking ahead, we will remain committed to investing in content and product innovations to strengthen our competitive edge while focusing on improving our profitability and maintaining our growth momentum."
Adoption of ASC606
Beginning from January 1, 2018, the Company adopted a new accounting standard of ASC606, Revenue from Contracts with Customers (the "new accounting standard"). The financial data presented in the Company's financial statements for the quarter and the six months ended June 30, 2018 are in accordance with the new accounting standard while all financial data presented for the quarter and the six months ended June 30, 2017 are in accordance with ASC605, Revenue Recognition (the "old accounting standard").
The impact of applying the new accounting standard on the Company's unaudited financial results as compared to the old accounting standard for the quarter ended June 30, 2018 was as follows:
Three Months Ended June 30, 2018
Adjustments New
Accounting
Old Standard(2)
Accounting
Standard(1)
----------
Sales Taxes And Barter Contract
Surcharges Transactions Fulfillment
Costs
-----
(RMB in thousands)
Revenues 396,707 (34,337) 91 - 362,461
======= ======= === === =======
Net advertising revenues 347,337 (31,393) 91 - 316,035
Paid services revenues 49,370 (2,944) - - 46,426
------ ------ --- --- ------
Cost of revenues (167,284) 34,337 (73) 145 (132,875)
-------- ------ --- --- --------
Gross profit 229,423 - 18 145 229,586
Operating expenses (199,309) - (845) - (200,154)
Sales and marketing expenses (108,978) - (845) - (109,823)
-------- --- ---- --- --------
Income from operations 30,114 - (827) 145 29,432
====== === ==== === ======
Note:
(1) This financial information for the three months ended June 30, 2018 was presented under the old accounting standard (ASC605).
(2) This financial information for the three months ended June 30, 2018 was presented under the new accounting standard (ASC606).
Second Quarter 2018 Financial Results
REVENUES
Total revenues for the second quarter of 2018 were RMB362.5 million (US$54.8 million) under the new accounting standard, which represented a decrease of 7.8% from RMB393.3 million in the second quarter of 2017.
Net advertising revenues for the second quarter of 2018 were RMB316.0 million (US$47.8 million) (net of advertising agency service fees and sales taxes and surcharges) under the new accounting standard, which represented a decrease of 6.7% from RMB338.7 million in the second quarter of 2017.
Paid services revenues([1]) for the second quarter of 2018 were RMB46.5 million (US$7.0 million) under the new accounting standard, which represented a decrease of 14.9% from RMB54.5 million in the second quarter of 2017. Revenues from digital entertainment([2]) for the second quarter of 2018 were RMB37.8 million (US$5.7 million) under the new accounting standard, which represented a decrease of 17.0% from RMB45.6 million in the second quarter of 2017. Revenues from games and others([3]) for the second quarter of 2018 were RMB8.7 million (US$1.3 million) under the new accounting standard, which represented a decrease of 3.5% from RMB9.0 million in the second quarter of 2017.
Under the old accounting standard ASC605, total revenues for the second quarter of 2018 would have been RMB396.7 million (US$60.0 million), which would have represented an increase of 0.9% from RMB393.3 million in the second quarter of 2017.
Under the old accounting standard ASC605, net advertising revenues for the second quarter of 2018 would have been RMB347.3 million (US$52.5 million), which would have represented an increase of 2.5% from RMB338.7 million in the second quarter of 2017, primarily attributable to a 23.0% year-over-year increase in mobile advertising revenues that was partially offset by a 26.6% year-over-year decrease in PC advertising revenues.
Under the old accounting standard ASC605, paid services revenues for the second quarter of 2018 would have been RMB49.4 million (US$7.5 million), which would have represented a decrease of 9.5% from RMB54.5 million in the second quarter of 2017. Under the old accounting standard ASC605, revenues from digital entertainment for the second quarter of 2018 would have been RMB40.1 million (US$6.1 million), which would have represented a decrease of 12.0% from RMB45.6 million in the second quarter of 2017, due to a 29.3% decrease in the MVAS revenues mainly resulting from the decline in users' demand for services provided through telecom operators in China. Under the old accounting standard ASC605, revenues from games and others for the second quarter of 2018 would have been RMB9.3 million (US$1.4 million), which would have represented an increase of 3.3% from RMB9.0 million in the second quarter of 2017, primarily attributable to the increase in revenues derived from other new businesses while the revenues generated from web-based games operated on the Company's own platforms were still declining.
[1] Paid services revenues
comprise of (i) revenues from
digital entertainment, which
includes MVAS and digital reading,
and (ii) revenues from games and
others, which includes web-based
games, mobile games, content
sales, and other online and mobile
paid services through the
Company's own platforms
[2] Digital entertainment includes
mobile value-added services
delivered through telecom
operators' platforms, or MVAS, and
digital reading.
[3] Games and others include web-
based and mobile games, and other
online and mobile paid services
through the Company's own
platforms
COST OF REVENUES
Cost of revenues for the second quarter of 2018 was RMB132.9 million (US$20.1 million) under the new accounting standard, which represented a decrease of 20.8% from RMB167.8 million in the second quarter of 2017. Under the old accounting standard ASC605, cost of revenues for the second quarter of 2018 would have been RMB167.3 million (US$25.3 million), which would have represented a decrease of 0.3% from RMB167.8 million in the second quarter of 2017. The decrease in cost of revenues under the new accounting standard was mainly due to:
-- The sales taxes and surcharges were RMB34.3 million (US$5.2 million) in
the second quarter of 2018, which was excluded from cost of revenues and
recorded as a reduction item of revenues under the new accounting
standard, as compared to sales taxes and surcharges of RMB33.2 million
in the second quarter of 2017, which was recorded as a component of cost
of revenues under the old accounting standard ASC605.
-- Content and operational costs for the second quarter of 2018 increased
slightly to RMB107.5 million (US$16.2 million) from RMB106.0 million in
the second quarter of 2017.
-- Revenue sharing fees to telecom operators and channel partners for the
second quarter of 2018 decreased by 23.9% to RMB11.5 million (US$1.7
million) from RMB15.1 million in the second quarter of 2017. The
decrease was primarily attributable to a decrease in the sales of MVAS
products.
-- Bandwidth costs for the second quarter of 2018 increased slightly to
RMB13.9 million (US$2.1 million) from RMB13.6 million in the second
quarter of 2017.
-- Share-based compensation included in cost of revenues was RMB0.6 million
(US$0.1 million) in the second quarter of 2018, as compared to RMB1.2
million in the second quarter of 2017. 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 2018 for
share options granted prior to 2018.
GROSS PROFIT
Gross profit for the second quarter of 2018 was RMB229.6 million (US$34.7 million), as compared to RMB225.4 million in the second quarter of 2017. Gross margin for the second quarter of 2018 increased to 63.3% from 57.3% in the second quarter of 2017. The increase in gross margin was primarily attributable to the increase in gross profit as well as the decrease in revenues under the new accounting standard as explained above.
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 excluded 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 2018, which excluded share-based compensation, was 63.5%, as compared to 57.6% in the second quarter of 2017.
OPERATING EXPENSES AND INCOME FROM OPERATIONS
Total operating expenses for the second quarter of 2018 decreased by 0.1% to RMB200.2 million (US$30.2 million) from RMB200.4 million in the second quarter of 2017. Share-based compensation included in operating expenses was RMB2.8 million (US$0.4 million) in the second quarter of 2018, as compared to RMB4.2 million in the second quarter of 2017. 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 2018 for share options granted prior to 2018.
Income from operations for the second quarter of 2018 was RMB29.4 million (US$4.4 million), as compared to RMB25.0 million in the second quarter of 2017. Operating margin for the second quarter of 2018 was 8.1%, as compared to 6.4% in the second quarter of 2017, which was primarily attributable to the decrease in revenues under the new accounting standard.
Non-GAAP income from operations for the second quarter of 2018, which excluded share-based compensation, was RMB32.8 million (US$5.0 million), as compared to RMB30.5 million in the second quarter of 2017. Non-GAAP operating margin for the second quarter of 2018, which excluded share-based compensation, was 9.1%, as compared to 7.7% in the second quarter of 2017.
OTHER INCOME OR LOSS
Other income or loss reflects interest income, interest expense, foreign currency exchange gain or loss, income or loss from equity investments, including impairments, and others, net([4]). Total net other income for the second quarter of 2018 was RMB28.1 million (US$4.2 million), as compared to RMB3.4 million in the second quarter of 2017.
-- Interest income for the second quarter of 2018 was RMB13.6 million
(US$2.0 million), as compared to RMB13.5 million in the second quarter
of 2017.
-- Interest expense for the second quarter of 2018 decreased to RMB3.4
million (US$0.5 million), from RMB6.4 million in the second quarter of
2017, which was primarily due to the decrease in both the carrying
amount and the interest rates of the outstanding short-term bank loans
in the second quarter of 2018 as compared to that in 2017.
-- Foreign currency exchange gain for the second quarter of 2018 was
RMB16.2 million (US$2.5 million), as compared to foreign currency
exchange loss of RMB7.9 million in the second quarter of 2017, which was
mainly caused by the depreciation of Renminbi against US dollars in the
second quarter of 2018 that generated exchange gain in Renminbi
denominated borrowings recorded in the Company's subsidiaries whose
functional currency is not Renminbi.
-- Loss from equity investments, including impairments, for the second
quarter of 2018 was RMB0.4 million (US$0.07 million), as compared to
income from equity investments, including impairments, of RMB1.1 million
in the second quarter of 2017.
-- Others, net, for the second quarter of 2018 was RMB2.1 million (US$0.3
million), as compared to RMB3.1 million in the second quarter of 2017.
[4] "Others, net" primarily
consists of government
subsidies and litigation loss
provisions.
NET INCOME ATTRIBUTABLE TO PHOENIX NEW MEDIA LIMITED
Net income attributable to Phoenix New Media Limited for the second quarter of 2018 was RMB49.2 million (US$7.4 million), as compared to RMB24.9 million in the second quarter of 2017. Net margin for the second quarter of 2018 was 13.6%, as compared to 6.3% in the second quarter of 2017. Net income per diluted ADS([5]) in the second quarter of 2018 was RMB0.67 (US$0.10), as compared to RMB0.35 in the second quarter of 2017.
Non-GAAP net income attributable to Phoenix New Media Limited for the second quarter of 2018, which excluded share-based compensation and income or loss from equity investments, including impairments, was RMB53.1 million (US$8.0 million), as compared to RMB29.3 million in the second quarter of 2017. Non-GAAP net margin for the second quarter of 2018 was 14.6%, as compared to 7.4% in the second quarter of 2017. Non-GAAP net income per diluted ADS in the second quarter of 2018 was RMB0.73 (US$0.11), as compared to RMB0.41 in the second quarter of 2017.
For the second quarter of 2018, the Company's weighted average number of ADSs used in the computation of diluted net income per ADS was 73,118,221. As of June 30, 2018, the Company had a total of 581,908,702 ordinary shares outstanding, or the equivalent of 72,738,588 ADSs.
[5] "ADS" means American
Depositary Share of the
Company. Each ADS
represents eight Class A
ordinary shares of the
Company.
CERTAIN BALANCE SHEET ITEMS
As of June 30, 2018, the Company's cash and cash equivalents, term deposits and short term investments and restricted cash were RMB1.32 billion (US$199.4 million). Restricted cash represents deposits placed as security for banking facilities granted to the Company, which are restricted in their withdrawal or usage.
Business Outlook
Based on the new accounting standard (ASC606), for the third quarter of 2018, the Company expects its total revenues to be between RMB376.1 million and RMB391.1 million; net advertising revenues are expected to be between RMB342.7 million and RMB352.7 million; and paid services revenues are expected to be between RMB33.4 million and RMB38.4 million.
If the old accounting standard (ASC605) were to be used, for the third quarter of 2018, the Company would expect its total revenues to be between RMB413.2 million and RMB428.2 million, its net advertising revenues to be between RMB378.0 million and RMB388.0 million, and its paid services revenues to be between RMB35.2 million and RMB40.2 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 14, 2018 (August 15, 2018 at 9:00 a.m. Beijing/Hong Kong time) to discuss its second quarter 2018 unaudited financial results and operating performance.
To participate in the call, please use the dial-in numbers and conference ID below:
International: +6567135440
Mainland China: 4001200654
Hong Kong: +85230186776
United States: +18456750438
Conference ID: 6098336
A replay of the call will be available through August 20, 2018 by using the dial-in numbers and conference ID below:
International: +61290034211
Mainland China: 4006322162
Hong Kong: +800963117
United States: +18554525696
Conference ID: 6098336
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 investments, including 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 investments, including 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.
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 RMB6.6171 to US$1.00, the noon buying rate in effect on June 29, 2018 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 such as news, finance, fashion, military and digital reading, and interactive services; its mobile channel, consisting of mobile news applications, mobile video application, HTML5-based mobile Internet websites, and mobile digital reading application; and its operations with the telecom operators that provides content and mobile value-added services.
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; 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.
Rose Zu
Tel: +1 (646) 405-4883
Email: investorrelations@ifeng.com
Phoenix New Media Limited
Condensed Consolidated Balance Sheets
(Amounts in thousands)
December 31, June 30, June 30,
2017 2018 2018
---- ---- ----
RMB RMB US$
Audited* Unaudited Unaudited
ASSETS
Current assets:
Cash and cash equivalents 362,862 236,580 35,753
Term deposits and short term investments 737,657 776,050 117,279
Restricted cash 336,700 307,000 46,395
Accounts receivable, net 458,744 385,845 58,310
Amounts due from related parties 187,214 199,034 30,079
Prepayment and other current assets 57,458 58,910 8,903
Convertible loans due from a related party 102,631 106,067 16,029
Total current assets 2,243,266 2,069,486 312,748
--------- --------- -------
Non-current assets:
Property and equipment, net 64,454 80,715 12,198
Intangible assets, net 6,712 5,852 884
Available-for-sale investments 1,196,330 1,265,490 191,245
Equity investments, net 15,342 12,477 1,886
Deferred tax assets 60,460 79,609 12,031
Other non-current assets 12,544 14,797 2,236
------ ------ -----
Total non-current assets 1,355,842 1,458,940 220,480
Total assets 3,599,108 3,528,426 533,228
========= ========= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term loans 330,000 308,047 46,553
Accounts payable 262,657 239,898 36,254
Amounts due to related parties 14,140 16,123 2,437
Advances from customers 65,196 59,861 9,046
Taxes payable 92,214 95,571 14,443
Salary and welfare payable 134,471 94,803 14,327
Accrued expenses and other current liabilities 173,253 120,216 18,167
------- ------- ------
Total current liabilities 1,071,931 934,519 141,227
--------- ------- -------
Non-current liabilities:
Deferred tax liabilities 1,312 1,312 198
Long-term liabilities 24,714 25,321 3,827
------ ------ -----
Total non-current liabilities 26,026 26,633 4,025
------ ------ -----
Total liabilities 1,097,957 961,152 145,252
--------- ------- -------
Shareholders' equity:
Phoenix New Media Limited shareholders' equity:
Class A ordinary shares 17,180 17,471 2,640
Class B ordinary shares 22,053 22,053 3,333
Additional paid-in capital 1,587,575 1,596,689 241,297
Statutory reserves 81,237 81,237 12,277
Retained earnings 229,250 220,928 33,387
Accumulated other comprehensive income 570,244 636,256 96,154
------- ------- ------
Total Phoenix New Media Limited shareholders' equity 2,507,539 2,574,634 389,088
Noncontrolling interests (6,388) (7,360) (1,112)
------ ------ ------
Total shareholders' equity 2,501,151 2,567,274 387,976
Total liabilities and shareholders' equity 3,599,108 3,528,426 533,228
========= ========= =======
* Derived from audited financial statements included in the Company's Form 20-F dated April 26, 2018.
Phoenix New Media Limited
Condensed Consolidated Statements of Comprehensive Income
(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,
2017 2018 2018 2018 2017 2018 2018
---- ---- ---- ---- ---- ---- ----
RMB RMB RMB US$ RMB RMB US$
Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited
Revenues:
Net advertising revenues 338,725 242,861 316,035 47,760 579,809 558,896 84,462
Paid service revenues 54,541 41,551 46,426 7,016 107,936 87,977 13,295
------ ------ ------ ----- ------- ------ ------
Total revenues 393,266 284,412 362,461 54,776 687,745 646,873 97,757
Cost of revenues (167,844) (128,233) (132,875) (20,081) (330,333) (261,108) (39,460)
-------- -------- -------- ------- -------- -------- -------
Gross profit 225,422 156,179 229,586 34,695 357,412 385,765 58,297
Operating expenses:
Sales and marketing expenses (118,769) (131,219) (109,823) (16,597) (214,231) (241,042) (36,427)
General and administrative expenses (35,865) (34,398) (41,808) (6,318) (67,816) (76,206) (11,517)
Technology and product development (45,791) (48,412) (48,523) (7,333) (90,419) (96,935) (14,649)
expenses
Total operating expenses (200,425) (214,029) (200,154) (30,248) (372,466) (414,183) (62,593)
-------- -------- -------- ------- -------- -------- -------
Income/(loss) from operations 24,997 (57,850) 29,432 4,447 (15,054) (28,418) (4,296)
Other income/(loss):
Interest income 13,493 12,938 13,550 2,048 26,151 26,488 4,003
Interest expense (6,426) (4,633) (3,389) (512) (12,775) (8,022) (1,212)
Foreign currency exchange (loss)/gain (7,890) (15,131) 16,231 2,453 (10,201) 1,100 166
Income/(loss) from equity investments, 1,127 (2,430) (435) (66) 463 (2,865) (433)
including impairments
Others, net 3,066 4,093 2,128 322 4,493 6,221 940
----- ----- ----- --- ----- ----- ---
Income/(loss) before tax 28,367 (63,013) 57,517 8,692 (6,923) (5,496) (832)
Income tax (expense)/benefit (4,215) 4,724 (8,498) (1,284) (1,874) (3,774) (570)
------ ----- ------ ------ ------ ------ ----
Net income/(loss) 24,152 (58,289) 49,019 7,408 (8,797) (9,270) (1,402)
Net loss attributable to noncontrolling interests 779 749 222 34 1,554 971 147
--- --- --- --- ----- --- ---
Net income/(loss) attributable to Phoenix New 24,931 (57,540) 49,241 7,442 (7,243) (8,299) (1,255)
Media Limited
Net income/(loss) 24,152 (58,289) 49,019 7,408 (8,797) (9,270) (1,402)
Other comprehensive income, net of tax: fair 256,588 46,364 5,287 799 265,479 51,651 7,806
value remeasurement for available-for-sale
investments*
Other comprehensive loss, net of tax: foreign (12,486) (35,014) 49,376 7,462 (16,253) 14,362 2,170
currency translation adjustment
Comprehensive income/(loss) 268,254 (46,939) 103,682 15,669 240,429 56,743 8,574
Comprehensive loss attributable to 779 749 222 34 1,554 971 147
noncontrolling interests
Comprehensive income/(loss) attributable to 269,033 (46,190) 103,904 15,703 241,983 57,714 8,721
Phoenix New Media Limited
Net income/(loss) attributable to Phoenix New 24,931 (57,540) 49,241 7,442 (7,243) (8,299) (1,255)
Media Limited
Net income/(loss) per Class A and Class B
ordinary share:
Basic 0.04 (0.10) 0.08 0.01 (0.01) (0.01) 0.00
Diluted 0.04 (0.10) 0.08 0.01 (0.01) (0.01) 0.00
Net income/(loss) per ADS (1 ADS represents 8
Class A ordinary shares):
Basic 0.35 (0.79) 0.68 0.10 (0.10) (0.11) (0.02)
Diluted 0.35 (0.79) 0.67 0.10 (0.10) (0.11) (0.02)
Weighted average number of Class A and Class
B ordinary shares used in computing net
income/(loss) per share:
Basic 573,948,891 579,228,111 580,976,381 580,976,381 573,943,337 580,102,974 580,102,974
Diluted 576,815,588 579,228,111 584,945,765 584,945,765 573,943,337 580,102,974 580,102,974
* The Company adopted ASU 2016-1, Recognition and Measurement of Financial Assets and Financial Liabilities, beginning from January 1, 2018. After the adoption of
this new accounting standard, the Company measures long-term equity investments other than equity method investments at fair value through earnings. As investments in
Particle meet the definition of debt securities, which are recorded as available-for-sale investments, there is no impact by the adoption of ASU 2016-1 on the available-for-
sale investments in Particle and the changes in their fair value continue to be recorded in other comprehensive income.
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,
2017 2018 2018 2018 2017 2018 2018
---- ---- ---- ---- ---- ---- ----
RMB RMB RMB US$ RMB RMB US$
Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited
Revenues:
Net advertising service 338,725 242,861 316,035 47,760 579,809 558,896 84,462
Paid services 54,541 41,551 46,426 7,016 107,936 87,977 13,295
------ ------ ------ ----- ------- ------ ------
Total revenues 393,266 284,412 362,461 54,776 687,745 646,873 97,757
------- ------- ------- ------ ------- ------- ------
Cost of revenues
Net advertising service 141,459 107,289 110,022 16,627 272,584 217,311 32,841
Paid services 26,385 20,944 22,853 3,454 57,749 43,797 6,619
------ ------ ------ ----- ------ ------ -----
Total cost of revenues 167,844 128,233 132,875 20,081 330,333 261,108 39,460
------- ------- ------- ------ ------- ------- ------
Gross profit
Net advertising service 197,266 135,572 206,013 31,133 307,225 341,585 51,621
Paid services 28,156 20,607 23,573 3,562 50,187 44,180 6,676
------ ------ ------ ----- ------ ------ -----
Total gross profit 225,422 156,179 229,586 34,695 357,412 385,765 58,297
======= ======= ======= ====== ======= ======= ======
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,
2017 2018 2018 2018 2017 2018 2018
---- ---- ---- ---- ---- ---- ----
RMB RMB RMB US$ RMB RMB US$
Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited
Revenue
sharing fees 15,052 8,617 11,460 1,732 32,372 20,077 3,034
Content and
operational
costs 105,984 105,273 107,516 16,249 212,300 212,789 32,158
Bandwidth
costs 13,607 14,343 13,899 2,100 28,135 28,242 4,268
Sales taxes
and
surcharges 33,201 - - - 57,526 - -
Total cost of
revenues 167,844 128,233 132,875 20,081 330,333 261,108 39,460
======= ======= ======= ====== ======= ======= ======
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, 2017 Three Months Ended March 31, 2018 Three Months Ended June 30, 2018
-------------------------------- --------------------------------- --------------------------------
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 225,422 1,224 (1) 226,646 156,179 205 (1) 156,384 229,586 634 (1) 230,220
Gross margin 57.3% 57.6% 54.9% 55.0% 63.3% 63.5%
Income/(loss) from 24,997 5,460 (1) 30,457 (57,850) 3,450 (1) (54,400) 29,432 3,390 (1) 32,822
operations
Operating margin 6.4% 7.7% -20.3% -19.1% 8.1% 9.1%
5,460 (1) 3,450 (1) 3,390 (1)
(1,127) (2) 2,430 (2) 435 (2)
------ ----- ---
Net income/(loss) 24,931 4,333 29,264 (57,540) 5,880 (51,660) 49,241 3,825 53,066
attributable to
Phoenix New
Media Limited
Net margin 6.3% 7.4% -20.2% -18.2% 13.6% 14.6%
Net income/(loss) 0.35 0.41 (0.79) (0.71) 0.67 0.73
per ADS--diluted
Weighted average 72,101,949 72,101,949 72,403,514 72,403,514 73,118,221 73,118,221
number of ADSs
used in computing
diluted net
income/(loss) per
ADS
(1) Share-based compensation
(2) Gain/(loss) from equity investments, including impairments
Non-GAAP to GAAP reconciling items have no income tax effect.
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SOURCE Phoenix New Media Limited
