Phoenix New Media Limited

Ladies and gentlemen, thank you for standing by and welcome to the Phoenix New Media 2020 first quarter earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, press star 1 on the telephone. I must advise you that today's conference is being recorded. I would like to hand the conference over to our first speaker today, IR Senior Manager, Ting Liu. Thank you. Please go ahead.

Thank you, operator. Welcome to Phoenix New Media First Quarter 2020 Earnings Conference Call. I'm joined here by our Chief Executive Officer, Mr. Shuang Liu, and Chief Financial Officer, Mr. Edward Lu. On today's call, MindMan will first provide a review of the quarter result and then conduct a Q&A session. The First Quarter 2020 financial result and webcast of this conference call are available on our website at ir.taifeng.com. A replay of the call will be available on the website in a few hours. Before we continue, I would like to refer you to our Safe Harbor Statement in our earnings price release, which applies to this call as we will make forwarding statements. Finally, please note that, unless otherwise stated, all figures mentioned during this conference call are in RMB. With that, I would like to turn the call over to Mr. Shuang Liu, our CEO.

Thank you, Ching. Good morning and good evening, everyone. In the first quarter of 2020, the COVID-19 pandemic swept across the globe. As a leader of the new media industry in China, we took the resulting macroeconomic challenges head on. We sharpened our focus on enhancing our core competencies, streamlined our content operations, optimized our operating efficiencies, and explored new business initiatives in a prudent and disciplined manner. Our efforts have resulted in enhanced user loyalty narrowed operating loss, and improved cash positions, thus setting the stage for us to capitalize on the post-pandemic economic recovery resulting growth. First, on the content front, we continued to implement a number of new and innovative features in our flagship news app iPhone to further enhance user engagement. During the quarter, for example, we introduced short-form content and trending topic lists into iPhone's news feeds to allow users to effectively access information. We also further enhance iPhone's user engagement by optimizing our audience voting feature and top comment summaries on the platform. These product advancements led to an increase in the diversification of the news feed consumption scenarios. Our premium coverage of the Coronavirus pandemic, combined with our diversified news feed features, has helped to boost the appeal of our news feeds to users. Consequently, the number of users who opened iPhone push notifications increased by 117% year-over-year and 30% sequentially in the quarter. Moreover, by categorizing news content in terms of relevance and time sensitivity, we upgraded our content distribution system and it further boosted our platform's capacity for major breaking news coverage. Such upgrades to iPhone have enabled us to further increase our user retention rate by 38% year over year. Besides upgrading our news app, we remain committed to providing high quality and differentiated content, leveraging our team of leading media professionals we produced a substantial amount of premium news coverage on the COVID-19 outbreak. For example, one article we produced about the struggle of an ordinary family in the death of the coronavirus epidemic received over 530 million views online. The report helped to secure crucial support for the family during their darkest hour. Overall, our focus on advocating for the lives of ordinary people in Wuhan during the outbreak successfully raised public awareness and channeled aid to more people in a timely manner. Such achievements, again, reflected our substantial coverage capabilities for major social events as well as our powerful media influence. Our information news content also received public recognition as a force for the greater social good. In honor of our contribution to society, the State Information Center ranked us among the top 10 online media outlets, providing the most social value. This endorsement is further evidence of our journalistic expertise, striking brand influence, and leading content capabilities. Beyond the news coverage front, we worked tirelessly to produce informative and in-depth to better inform the public. During the coronavirus outbreak, for example, our finance team produced a series of detailed reports depicting entrepreneurs' heroic battle to overcome the pandemic challenges. These pieces struck a chord throughout society, generating more than 13 million views on social media and fostering widespread support in China. We also produced a series of reports titled Frontline, which portrayed the heroic efforts of Chinese healthcare workers and ordinary people from all walks of life fighting against the pandemic on the front line. The series also documented the real-life experiences of those overseas Chinese coping with the stress and uncertainties of state-at-home orders and provides advice to the public about COVID-19 medical treatments. Frontlines achieved outstanding operating metrics, with 16 of its articles collecting over 17 million views across the social media. Moreover, in our fashion vertical, we organized a campaign featuring over 100 celebrity voices recording to boost public morale, accumulating more than 40 million views and 60,000 interactions on social media. in the face of the coronavirus epidemic. Against the backdrop of unprecedented macro uncertainties and market challenges, our ability to control our costs and preserve an ample cash reserve has become essential to the long-term growth of our company. Consequently, we have made a number of proactive adjustments to bolster our operating performances. We have refocused our current growth strategy onto the reduction of user churn rate and improvement of user retention rate. We are also actively avoiding inefficient user acquisition methods, as we firmly believe that such tactics would jeopardize our user base quality and monetization efficiency. Despite a reduction in our marketing expenditures as we pulled out inefficient user acquisition channels, we enhanced existing user satisfaction and engagement, and improve new user attraction by leveraging our high-quality content and premium user experiences. As the epidemic accelerates the migration of commerce from offline to online and shifts internet marketing closer to the point of transaction, we have made a decisive push to capitalize on emerging growth opportunities in e-commerce. In the real estate vertical, for example, we launched an innovative shopper payment marketing campaign. This creative model integrated property sales into celebrity live streaming content, which successfully fulfilled the marketing needs of our real estate clients. By partnering with the top celebrity and R&F group, Fuli Group, one of the largest scale real estate companies in China, The campaign became an instant smash hit, attracting over 10 million viewers to our platform and approximately 20 million across the internet. Additionally, during the first quarter, to cater to the increasing number of users who wish to attend highly sought-after product launches virtually through webcasts, we created a new format for our super product launch conference and upgraded the live broadcast platform Despite increased competition from video and live streaming e-commerce platforms, our potent brand influence and meticulous product curation have heightened our platform's competitive advantages in the marketplace. Completing the final link in the transaction value chain for advertisers, our platform has unleashed the power of our closed-loop marketing system. For our new business initiatives, we continue to make steady progress in the monetization of our comic book and online real estate business in the first quarter. On the comic book front, our highly acclaimed theorist Love Chucky and A Deal is a Deal maintain their outstanding performances, collecting 124 million and 108 million online views by the end of this quarter, respectively. Furthermore, we formed a strategic partnership with international publishers to export two of our own popular comic book series into the Korean market. In addition to being a win-win deal for both parties, these partnerships will serve as valuable experience for us as we continue to explore more IP initiatives in the comic book industry going forward. Notably, for online real estate, We have further improved the profitability of this business segment through effective project management and cost control measures, despite the fact that real estate developers are becoming increasingly cautious about their advertising budgets in response to the coronavirus outbreak. We are also collaborating with real estate developers to help them better generate high-quality sales leads through the active exploration of new marketing models, including offline to online, live broadcast, and more. Real estate developers continue to show interest in such initiatives, in such innovation solutions. And we are optimistic about their growth potential. In summary, we are constantly facing challenges in advancing our advertising business and expanding our user base. Since the worldwide pandemic, has caused severe disruption to the entire advertising industry. Nevertheless, in spite of these near-term headwinds, we aim to continue enhancing our content capabilities and content distribution process to further refine our operating efficiency. The resiliency and strength of a proven business model, as well as our compelling broad influence, will also enable us to explore potential growth drivers in new fields in business. In light of the current market environment, we expect the epidemic to impact our business segments in the short term. However, our consistent delivery of premium news content and elevated brand influence will help us mitigate these challenges and minimize our exposure to the increasing macro uncertainties. With that, I'll turn the call to Edward, our CFO, to go through the financial results.