A replay of the call will be available through August 22, 2017 by using the dial-in numbers and conference ID below:
International: +61290034211
Mainland China: 4006322162
Hong Kong: +85230512780
United States: +16462543697
Conference ID: 68225619
A live and archived webcast of the conference call will also be available at the Company's investor relations website at .
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/(loss) from operations, non-GAAP operating margin, non-GAAP net income/(loss) attributable to Phoenix New Media Limited, non-GAAP net margin and non-GAAP net income/(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/(loss) from operations is income/(loss) from operations excluding share-based compensation. Non-GAAP operating margin is non-GAAP income/(loss) from operations divided by total revenues. Non-GAAP net income/(loss) attributable to Phoenix New Media Limited is net income/(loss) attributable to Phoenix New Media Limited excluding share-based compensation and gain/(loss) from equity investments, including impairments. Non-GAAP net margin is non-GAAP net income/(loss) attributable to Phoenix New Media Limited divided by total revenues. Non-GAAP net income/(loss) per diluted ADS is non-GAAP net income/(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 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/(loss) from operations and net income/(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 RMB6.7793 to US$1.00, the noon buying rate in effect on June 30, 2017 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: ) 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 application, fashion application and mobile Internet website; and its operations with the telecom operators that provides 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
Matthew Zhao
Email:
ICR, Inc.
Rose Zu
Tel: +1 (646) 405-4883
Email:
Phoenix New Media Limited
Condensed Consolidated Balance Sheets
(Amounts in thousands)
December 31,
June 30,
June 30,
2016 2017
2017
RMB
RMB
US$
Audited*
Unaudited
Unaudited
ASSETS
Current assets:
Cash and cash equivalents 202,694
227,460
33,552
Term deposits and short term investments 781,298
499,236
73,641
Restricted cash 354,602
465,707
68,695
Accounts receivable, net 405,033
380,071
56,063
Amounts due from related parties 156,260
267,534
39,464
Prepayment and other current assets 64,069
58,619
8,647
Convertible loans due from a related party 104,429
104,250
15,378
Total current assets 2,068,385
2,002,877
295,440
Non-current assets:
Property and equipment, net 72,087
73,870
10,896
Intangible assets, net 9,475
8,376
1,236
Available-for-sale investments 939,432
1,182,730
174,462
Equity investments, net 8,809
9,272
1,368
Deferred tax assets** 54,307
59,704
8,807
Other non-current assets 16,047
13,267
1,957
Total non-current assets 1,100,157
1,347,219
198,726
Total assets 3,168,542
3,350,096
494,166
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term bank loans 358,602
357,954
52,801
Accounts payable 260,902
218,318
32,204
Amounts due to related parties 18,720
20,164
2,974
Advances from customers 27,825
49,378
7,284
Taxes payable 75,652
65,150
9,610
Salary and welfare payable 130,329
103,508
15,268
Accrued expenses and other current liabilities 111,049
95,852
14,139
Total current liabilities 983,079
910,324
134,280
Non-current liabilities:
Deferred tax liabilities 1,312
1,312
194
Long-term liabilities 21,723
21,890
3,229
Total non-current liabilities 23,035
23,202
3,423
Total liabilities 1,006,114
933,526
137,703
Shareholders' equity:
Phoenix New Media Limited shareholders' equity:
Class A ordinary shares 16,843
16,846
2,485
Class B ordinary shares 22,053
22,053
3,253
Additional paid-in capital 1,555,511
1,569,222
231,473
Statutory reserves 77,946
77,946
11,498
Retained earnings 195,069
187,826
27,706
Accumulated other comprehensive income 298,346
547,572
80,770
Total Phoenix New Media Limited shareholders' equity 2,165,768
2,421,465
357,185
Noncontrolling interests (3,340)
(4,895)
(722)
Total shareholders' equity 2,162,428
2,416,570
356,463
Total liabilities and shareholders' equity 3,168,542
3,350,096
494,166
* Derived from audited financial statements included in the Company's Form 20-F dated April 28, 2017.
** In 2017, the Company adopted the guidance of ASU 2015-17 issued by FASB in November 2015, which
requires entities to present deferred tax assets and deferred tax liabilities as noncurrent in a classified balance
sheet. Pursuant to the guidance, the Company retrospectively reclassified RMB54.3 million of deferred tax
assets from current assets to noncurrent assets in the balance sheets as of December 31, 2016.
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,
2016
2017
2017
2017
2016
2017
2017
RMB
RMB
RMB
US$
RMB
RMB
US$
Unaudited
Unaudited
Unaudited
Unaudited
Unaudited
Unaudited
Unaudited
Revenues:
Net advertising revenues 297,230
241,084
338,725
49,965
568,613
579,809
85,526
Paid service revenues 52,833
53,395
54,541
8,045
104,390
107,936
15,921
Total revenues 350,063
294,479
393,266
58,010
673,003
687,745
101,447
Cost of revenues (180,508)
(162,489)
(167,844)
(24,758)
(338,676)
(330,333)
(48,727)
Gross profit 169,555
131,990
225,422
33,252
334,327
357,412
52,720
Operating expenses:
Sales and marketing expenses (87,017)
(95,462)
(118,769)
(17,519)
(162,575)
(214,231)
(31,601)
General and administrative expenses (57,587)
(31,951)
(35,865)
(5,290)
(102,630)
(67,816)
(10,003)
Technology and product development
expenses (42,074)
(44,628)
(45,791)
(6,755)
(82,432)
(90,419)
(13,338)
Total operating expenses (186,678)
(172,041)
(200,425)
(29,564)
(347,637)
(372,466)
(54,942)
(Loss)/income from operations (17,123)
(40,051)
24,997
3,688
(13,310)
(15,054)
(2,222)
Other income/(loss):
Interest income 8,257
12,658
13,493
1,990
16,384
26,151
3,857
Interest expense (954)
(6,349)
(6,426)
(948)
(1,728)
(12,775)
(1,884)
Foreign currency exchange gain/(loss) 2,411
(2,311)
(7,890)
(1,164)
547
(10,201)
(1,505)
(Loss)/gain from equity investments,
including impairments (1,512)
(664)
1,127
166
(505)
463
68
Others, net 4,220
1,427
3,066
452
8,426
4,493
663
(Loss)/income before tax (4,701)
(35,290)
28,367
4,184
9,814
(6,923)
(1,023)
Income tax benefit /(expense) 1,442
2,341
(4,215)
(622)
(1,957)
(1,874)
(276)
Net (loss)/income (3,259)
(32,949)
24,152
3,562
7,857
(8,797)
(1,299)
Net loss attributable to noncontrolling
interests 778
775
779
115
1,280
1,554
229
Net (loss)/income attributable to Phoenix
New Media Limited (2,481)
(32,174)
24,931
3,677
9,137
(7,243)
(1,070)
Net (loss)/income (3,259)
(32,949)
24,152
3,562
7,857
(8,797)
(1,299)
Other comprehensive income, net of tax:
fair value remeasurement for
available-for-sale investments 11,329
8,891
256,588
37,849
16,643
265,479
39,160
Other comprehensive income/(loss), net
of tax: foreign currency translation
adjustment 11,002
(3,767)
(12,486)
(1,842)
8,934
(16,253)
(2,397)
Comprehensive income/(loss) 19,072
(27,825)
268,254
39,569
33,434
240,429
35,464
Comprehensive loss attributable to
noncontrolling interests 778
775
779
115
1,280
1,554
229
Comprehensive income/(loss) attributable
to Phoenix New Media Limited 19,850
(27,050)
269,033
39,684
34,714
241,983
35,693
Net (loss)/income attributable to Phoenix
New Media Limited (2,481)
(32,174)
24,931
3,677
9,137
(7,243)
(1,070)
Net (loss)/incomeper Class A and Class B
ordinary share:
Basic (0.00)
(0.06)
0.04
0.01
0.02
(0.01)
0.00
Diluted (0.00)
(0.06)
0.04
0.01
0.02
(0.01)
0.00
Net (loss)/incomeper ADS (1 ADS
represents 8 Class A ordinary shares):
Basic (0.03)
(0.45)
0.35
0.05
0.13
(0.10)
(0.01)
Diluted (0.03)
(0.45)
0.35
0.05
0.13
(0.10)
(0.01)
Weighted average number of Class A and
Class B ordinary shares used in
computing net (loss)/incomeper share:
Basic 573,074,298
573,935,277
573,948,891
573,948,891
573,035,634
573,943,337
573,943,337
Diluted 573,074,298
573,935,277
576,815,588
576,815,588
577,318,340
573,943,337
573,943,337
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,
2016
2017
2017
2017
2016
2017
2017
RMB
RMB
RMB
US$
RMB
RMB
US$
Unaudited
Unaudited
Unaudited
Unaudited
Unaudited
Unaudited
Unaudited
Revenues:
Net advertising service 297,230
241,084
338,725
49,965
568,613
579,809
85,526
Paid service 52,833
53,395
54,541
8,045
104,390
107,936
15,921
Total revenues 350,063
294,479
393,266
58,010
673,003
687,745
101,447
Cost of revenues
Net advertising service 146,233
131,125
141,459
20,866
272,265
272,584
40,209
Paid service 34,275
31,364
26,385
3,892
66,411
57,749
8,518
Total cost of revenues 180,508
162,489
167,844
24,758
338,676
330,333
48,727
Gross profit
Net advertising service 150,997
109,959
197,266
29,099
296,348
307,225
45,317
Paid service 18,558
22,031
28,156
4,153
37,979
50,187
7,403
Total gross profit 169,555
131,990
225,422
33,252
334,327
357,412
52,720
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,
2016
2017
2017
2017
2016
2017
2017
RMB
RMB
RMB
US$
RMB
RMB
US$
Unaudited
Unaudited
Unaudited
Unaudited
Unaudited
Unaudited
Unaudited
Revenue sharing fees 19,274
17,320
15,052
2,220
38,128
32,372
4,775
Content and operational costs 117,190
106,316
105,984
15,633
212,640
212,300
31,315
Bandwidth costs 15,291
14,528
13,607
2,007
32,637
28,135
4,150
Sales taxes and surcharges 28,753
24,325
33,201
4,898
55,271
57,526
8,487
Total cost of revenues 180,508
162,489
167,844
24,758
338,676
330,333
48,727
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, 2016
Three Months Ended March 31, 2017
Three Months Ended June 30, 2017
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 169,555
845 (1)
170,400
131,990
1,623 (1)
133,613
225,422
1,224 (1)
226,646
Gross margin 48.4%
48.7%
44.8%
45.4%
57.3%
57.6%
(Loss)/income from
operations (17,123)
4,453 (1)
(12,670)
(40,051)
8,266 (1)
(31,785)
24,997
5,460 (1)
30,457
Operating margin -4.9%
-3.6%
-13.6%
-10.8%
6.4%
7.7%
4,453 (1)
8,266 (1)
5,460 (1)
1,512 (2)
664 (2)
(1,127) (2)
Net (loss)/income
attributable to
Phoenix New
Media Limited (2,481)
5,965
3,484
(32,174)
8,930
(23,244)
24,931
4,333
29,264
Net margin -0.7%
1.0%
-10.9%
-7.9%
6.3%
7.4%
Net (loss)/incomeper
ADS-diluted (0.03)
0.05
(0.45)
(0.32)
0.35
0.41
Weighted average
number of ADSs
used in computing
diluted net
(loss)/incomeper
ADS 71,634,287
72,161,557
71,741,910
71,741,910
72,101,949
72,101,949
(1) Share-based compensation
(2) Loss/(gain) from equity investments, including impairments
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SOURCE Phoenix New Media Limited
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