Phoenix New Media Limited

Thank you all for standing by and welcome to the Phoenix New Media second quarter 2022 earnings call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session. To ask a question at that time you'll need to press star then 11 on your telephone keypad. Please be advised that today's conference is being recorded. And I'd now like to hand the conference over to your speaker Muzi Guo from Investor Relations. Thank you. Please go ahead.

Thank you, Operator. And hello, everyone. Welcome to Phoenix New Media's second quarter 2022 earnings conference call. I'm joined here today by our CEO, Mr. Shrong, and our CEO, Mr. Edward Lutz. On today's call, management will first provide a review of the quarterly results and then conduct a Q&A session. The second quarter 2022 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 move on to the prepared remarks, I'd like to refer you to our safe harbor statement in our earnings press release, which applies to this call as we will make forward-looking statements. Finally, please note that unless otherwise stated, All figures mentioned during the conference call are in RMB. And now I'd like to turn the call over to Mr. Shuang Liu, our CEO.

Thank you, Mu Zi. Hello, everyone, and thank you for joining our call today. In the second quarter of 2022, the nationwide COVID resurgence continues to exert pressure on our business. While some of our marketing executions were postponed or canceled, many of our advertisers choose to tighten their branding budget in a highly uncertain macro environment. Nevertheless, we remained resilient during challenging times. We concentrated on expanding our media presence through offering premium content, made significant upgrades to our product, and continued to explore new business opportunities to diversify our revenue streams. This year marks the 11th anniversary of our Phoenix Finance Summit. We took this signature event online in light of the challenges of holding offline events. This year, Mrs. Carrie Lam, former Chief Executive of Hong Kong Special Administration Region, and nearly 50 other political dignitaries and business tycoons gathered at our online summit to exchange and share insights and ideas on the global and Chinese economy. The summit generated an immense number of views and discussions on social platforms with 300 million views on Weibo and was reported by more than 60 media outlets, making it one of the most high-profile events during the quarter. In terms of news event coverage, we jointly planned a two-day special coverage with Phoenix TV on the 25th anniversary of the establishment of the Hong Kong SAR. We invited scholars and experts to participate in featured interviews and discussions focusing on hot topics such as opportunities and challenges faced by the region in areas of politics, finance, innovation and education. In addition, we reacted 10 memorable moments in the 25 years of Hong Kong SAR history into digital collectibles which were not only sought after in the digital marketplace but also attracted more younger generations to our event coverage. Our original content continues to deliver value to our users and society. Our investigative column, Eye of the Storm , focuses on unveiling and exposing relevant facts behind controversial topics and the social phenomenon, ranging from financial scams targeted at seniors to the pollution caused by electric cars many factors. The column receives widespread praise for raising public awareness and seeking answers to difficult questions. In that opinion column, the messages function explore trending topics with a focus on ordinary individuals and their life stories, especially on the pandemic prevention and control. It covers these topics from different angles, such as laws and regulations, industry standards, social economy, public policy, using an authoritative, rational, and constructive style consistent with our content strategy and differentiation. The message attracted a group of loyal followers with a considerable number of articles, each generating over 100,000 views on WeChat. On the video content front, Our newly launched original series, The Journey, went viral across all social platforms. The Journey is a micro-video film documentary that records people around us and fitness and sweetness in their lives. Far in our spotlight was a tech company executive suffering from ALS but is resilient and persistent. a restaurant owner struggling to support his business under the pandemic, and a mid-age coder re-navigating his life after losing his job. These stories resonated well among our audience. Each series episode received 10 million views across the internet and generated over 100,000 new followers on Douyin and Bilibili. In terms of our product, we continue to refine our iPhone app during the quarter. The newly developed page integrating old news articles in the app with audio functions allow users to listen to the uninterrupted latest update of their preferred news while performing other tasks. They can now also choose to listen to Finnish TV's live programs instead of watching. This has resulted In noticeable improved user engagement, the average time spent by users using the audio function has increased by 26%. Meanwhile, we continue to refine our content curation strategy. On the other hand, our algorithms distribute content based on nearly 60 user profiles to fulfill their sub-news and interest-based content needs. On the other hand, By adding their own captions, our editors carefully choose and present the information they publish. A sentence or two of their own source or calling out a quote help highlight the content in the news feed, which leads to more clicks and a few interactions and discussions. These enhancements have greatly improved our user experiences. As we continue to optimize our traffic acquisition costs, our user traffic remains stable, while our user engagement has improved. The average click-through rate has increased by 22% year over year. Average time span by user increased by 15%, and the next day retention rate increased by 15%. Lastly, I would like to share our progress in revenue diversification. For our online reading, we continue to monetize from our collection of premium IP literature, our audiobook Wending. Jointly produced with Himalaya, reached 9 million views with two months' lengthy release. Meanwhile, six of our self-produced audiobooks rank in the Himalaya New Book Top. Monetization of our audiobooks also made a significant progress as we entered into a copyright sales agreement with NetEase Cloud Music. For our real estate vertical, the aftershock of the industry regulation and liquidity concerns lingered, and the macro environment remained uncertain. While driving growth in real estate advertising was challenging, our team vigorously promoted innovative solutions to our clients, including selling customized appliance packages. On the content side, we focused our reporting issues concerned by C and home buyers, such as the quality of construction and renovation. In the meantime, our ESG index, released in the second quarter, became the first comprehensive ESG ranking in the real estate industry, highly recognized by investors and property developers. Our 2B and C influence were both growing thanks to these efforts. The team optimized the sales team structure and eliminated certain city divisions that did not meet expectations for profitability to improve operational efficiency. As for e-commerce, we launched our digital collectible platform Phoenix Artworks during the quarter. As previously noted, we published a compilation of digital historical moments in honor of the 25th anniversary of the establishment of Hong Kong SAR. What set us apart from the other platforms is our genre in art and culture and our partnership with world's leading museums and art institutions. The first collection launched, A Thousand Leaves of Rivers and Mountains, a 12th century painting in the collection of the Palace Museum was sold out within one hour of release. Western collections, such as the Impressionist World Series by Van Gogh, Bazin, and Gauguin, were likewise extremely popular and quickly sold out. The digital collectible can generate considerable discussion and enthusiasm online. This is especially important for events emerging IPs and brands that want to increase their recognition and exposure quickly. As such, we believe that, in addition to the sale of digital collectibles, they can complement our future events and marketing solutions. In summary, despite the macro headwind, we remain committed to strengthening our brand influence through breaking new coverage and our signature events while continuing to enrich our content offerings and upgrade our product. At the same time, we cautiously evaluated and invested in new business initiatives to diversify our revenue streams. In the future, we will prudently manage our business operations while focusing on business development and emerging growth areas. With that, I will now turn the call to our CFO, Edward Liu. to provide a closer look into our quarterly financials.