Phoenix New Media Limited

Ladies and gentlemen, thank you for standing by and welcome to Phoenix, New Media, fourth quarter 2020 earnings call. At this time, all participants are in listening mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one on your telephone. Please be advised that today's conference is being recorded. I would now like to hand the conference over to our first speaker today, Ms. Jane Lewis. Thank you. Please go ahead.

Thank you, operator. Welcome to Phoenix New Media Fourth 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, management will first provide a review of the quarterly results and then conduct a Q&A session. The Fourth Quarter 2020 financial results and webcast of this conference call are available on our website at ir.iphone.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 apply to this call as we will make forward-looking statements. Finally, please know 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, Qing. Good morning and good evening, everyone. We delivered encouraging results in the fourth quarter of 2020, despite the ongoing impact of COVID-19 on the macroeconomy and its corresponding effect on China's advertising industry. Meanwhile, quarterly revenues were in line with our previously provided guidance range, reaching RMB 362.2 million for the period. Our success in the face of such uncertainty further demonstrated the capabilities of our authoritative news coverage and established brand influence, our consistent cultivation of iPhone's content ecosystem, and the success of our new business initiatives. In 2020, the escalation of the COVID-19 pandemic significantly affected people's lives and created one of the most challenging social events. During this period of fear and confusion, our professional journalism enabled us to consistently deliver high-quality news coverage, inform the public about effective virus prevention methods, and dispel rumors through professional fact-checks. For example, during the fourth quarter, Tumor Intelligence Agency which is one of our We Media accounts, sheds light on hot topics such as COVID-19 vaccine development progress and the vaccine side effects through a steady flow of timely, in-depth, and scientific analysis reports. Those reports led to not only strong followings from our users, but also frequent republished on other social media platforms and gain additional industry recognition from traditional media outlets. In the meantime, our in-depth and comprehensive coverage of the 2020 U.S. presidential election, which originated from our platform and permitted through the internet, generated record-breaking viewership. Through our official account on Weibo alone, our election-related content garnered over 6 billion views. During the run-up to the election, we leveraged Phoenix TV's exclusive live news reports from its North America station and launched on our platform a second-to-none real-time feature update of ballot counting status, thus accomplishing a viewership of over 10 million on the election day. We provided our users with insightful interpretations of the U.S. election results, as well as their societal and political impacts by hosting exclusive interviews with thought leaders such as Professor Mr. Zheng Yongnian. In addition, through our We Media account, such as Tang Bofu, we carried tick-by-tick coverage of the daily tweets and terms throughout the presidential elections. and published original commentary on Biden's victory, both of which went viral on social media during the most intense period of the election. To further augment our brand influence, we produced a series of high-profile events during the quarter. For example, we hosted the 2020 iPhone Fashion Awards in December and generated over 1 billion views in total. Also, we organized the 2020 iPhone Beautiful Childhood Charity Gala through cooperation with a number of well-known charities and raised more than RMB 10 million in donations from children in need. Since this event's inception 13 years ago, we have helped to raise an accumulative amount of over RMB 227 million. In addition, our 2020 iPhone Finance Summit at the end of 2020 featured a stellar lineup of distinguished speakers, ranging from state-level dignitaries to authority figures in the fields of politics, finance, and academia, such as former Hong Kong Chief Executive Mr. Liang Zhengying, and in 2013, Nobel Prize winner Mr. Robert Shiller. For online reading, By integrating our M4 content library and IP production experience, we further explored several new and innovative opportunities, such as short-form video series. During the quarter, we brought our hit short-form video series, A Deal is a Deal, Yi Zhi Qi Yue, to Kuai Show, one of China's top online short video platforms. The show had accumulated more than $139,000 and 42 million views on Kuaishou by year-end, as we were awarded the Kuaishou's Best Partner of IP in 2020. In addition, for real estate, we leverage our established editorial capabilities and AI algorithm to launch a new real estate media platform, Feng Caixun, through which we provide home buyers and property developers with real-time industry information. in-depth industry reports and detailed data analysis. This platform has shown significant monetization potential to date, generating a total contract value of more than RMB 30 million. Now, turning to our flagship news app, iPhone. We implemented a number of initiatives recently to enhance our content ecosystem, which will serve as our core growth driver going forward. First, Our editorial recommendation and data analysis directed us to enrich our platform content by expanding the number of WeMedia accounts to ensure that the content remains high-quality, differentiated, and appealing to users. Secondly, through a combination of editorial recommendations and algorithm-based user segmentation, we continuously sharpened the quality of our premium content library For example, by allocating more exposure to the Reader's Digest module, we increase users' attainment of high-quality information. Thirdly, by combining our editors' professional journalism with our advanced software algorithms, our team scarred the entire internet to capture the hottest topics, optimizing their aggregation, and distributed the related content through our trending list and satisfy our users' needs of breaking news and trending topics. In addition, we continue to reinforce our exclusive access to Phoenix TV's video content library to expand our own resources of quality video content, solidify our brand influence, and distribute highly sought-after content across the Internet. we steadily improve our distribution strengths for premium content on other social media platforms to bolster our content exposure and channel additional user traffic back to our own products. By 2020, the number of online video users in China has reached 930 million and the overall user time span for online video has also ramped up significantly. Seizing the massive market opportunities emerging from this visualization trend, we have been proactively developing our video offerings with a three-pronged strategy. The first is leveraging Phoenix TV's massive library of evergreen content to better satisfy our core users' needs for differentiated content and set our brand apart from the competition. The second is developing our unique and original video programs in various verticals to further diversify our content productions. The third is identifying talented video content creators who are active in those areas that align with our overall content strategy and brand image. By providing them with the necessary support and assistance, we still improve the content production efficiency and generate more premium content on our platform. By attracting these top content creators with clearly defined goals and responsibilities, we believe that our content ecosystem will harvest the fruitful results in the near future. As we help content producers and short-term video content flourish on iPhone, we have also steadily optimized our AI algorithm and audience segmentation The average user time spent by users on iPhone grew by 30% on year-over-year basis, while its user retention rate grew by 23% in the quarter. Now, I would like to provide everyone with an update on new business initiatives. In November, leveraging our massive base of users who tend to possess advanced education, classic taste, and strong purchasing power, we upgraded our online e-commerce brand and officially launched Phoenix Premium products, Huangjia Shangping, to cater to their lifestyle needs. We have formed a team of professional buyers to select high-end products in categories such as fine culture and creativity, food and wine, and health and fitness. By employing rigorous standards in our selection of best-selling products, we'll not only achieve higher gross margins but also satisfy the demand of China's rising media class for better and healthier lifestyles. The combination of our massive user base, original content production capabilities, and a sophisticated recommendation algorithm have enabled us to reduce our e-commerce customer acquisition costs, enhance our product marketing precision, and boost our user retention rates, as well as transaction conversion rates, as prime A prime example is our best-selling book product, A Brief History of the World on Maps, which overtook the sales of comparable products on other e-commerce platforms and achieved a transaction conversion rate of 43.3%. In 2021, we plan to utilize a live inventory model for e-commerce initiatives, optimize our product selection, strengthen our supply chain management, and improve our transaction conversion rates for our products. With the continuous improvement in our e-commerce initiative's operating efficiency, we should be able to expand its profit margin accordingly. Moreover, by leveraging our unique integration of original content production and e-commerce, we'll continue to explore innovative e-commerce forms such as live broadcasting, and short-form video onto other social media platforms to fuel the momentum of our e-commerce space. In conclusion, as we uphold our professional standards of producing authentic, authoritative, and trustworthy content, we've made meaningful progress in enhancing our content ecosystem, expanding our product offerings, and cultivating new growth initiatives. While we recognize the current difficulty in forecasting for 2021, with the economy gradually recovering in the post-pandemic world, we are well positioned to revitalize our growth engine and generating lasting shareholder value. With that, I will turn the call to Edward, our CFO, to go through the financial results.