Phoenix New Media Limited

Good day and thank you for standing by. Welcome to Phoenix New Media First Quarter 2026 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, you need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised, today's conference is being recorded. I would now like to turn the conference over to our first speaker today, Mu Zi Gu from Investor Relations. Please go ahead.

Thank you, operator. Welcome to CNET New Media's earnings conference call for the first quarter of 2026. Today's call will start with an overview of our quarterly results, followed by a Q&A session. Our quarterly financial results and the webcast of this conference call are available on our website at ir.ifone.com. Before we continue, please note the Faith Harper statement in our earnings press release, which applies to any forward-looking statement made during this call. Unless otherwise stated, all figures mentioned are in RMB. Joining me here today are our CEO, Mr. Yu Chengsun, and our CFO, Mr. Edward Liu. I will now pass the call to Mr. Sun for his opening remarks. I will provide translation as needed. Mr. Sun, please speak.

Thank you all for attending today's call. This year's first quarter, we will continue to focus on core energy construction, surrounding domestic and foreign major events to enhance the impact and implementation of the platform. Whether it is the rapid use of international initial news, and the systematization of the focus program have all demonstrated a more stable execution ability and content competitiveness. At the same time, we continue to promote technology and content integration, and enhance the overall operating efficiency. From the business results, the company's income has increased, and the operating losses have increased.

Thank you all for joining today's call. In the first quarter, we stayed focused on strengthening our core capabilities, leveraging major domestic and international events to improve both our brand influence and user engagement. Our ability to respond quickly to breaking news and deliver structured coverage of key events reflects solid execution and content competitiveness. We also continue to integrate technology into our content operations to improve efficiency. Finally, we achieved the revenue growth and narrowed operating losses with overall performance improving year over year. Next, I would like to invite Edward to present specific highlights and achievements of Q1.

In Q1, we continue to capitalize on major domestic and international events to reach more audiences, increase the impact of our content, and strengthen our brand and long-term user engagement. In major event coverage, The business highlight this quarter was our strong execution. During the US-Israel-Iran conflict, we responded quickly and coordinated well across teams and formats. We delivered real-time updates, live broadcasts, in-depth commentary, and feature stories at key moments with both speed and accuracy. Our timeline product and multilingual reporting system played a key role, supported by fact-checking and on-the-ground reporting. Our diary reports from Tehran added a strong sense of immediacy, and we were the first to conduct an in-depth, inclusive interview with Chinese seafarers stranded in the Strait of Hormuz. This showed our ability to deliver international news directly from the field. Overall, what mattered most was not any single viral piece, but the entire process. It proved that our international news reporting system is now at industry-leading level of maturity and responsiveness. During the two sessions, we combined structured interviews with delegates with targeted issue-based content planning. This helped us reach a wider audience. Several short videos on public policy topics made it onto trending lists, showing we can balance authoritative mainstream reporting with content that appeals to the general audience. In vertical content, sports coverage performed very well during major events. Around the Milan Winter Olympics and other key tournaments, we used full platform coordination to significantly increase exposure and engagement. Total Winter Olympics exposure exceeded 250 million. Our Abu Dhabi Masters coverage achieved full integration across fixed TV, PC, mobile app, and third-party video platforms. it attracted over 1.2 million live viewers with three topics entering six trending lists, generating more than 15 million total reads. We also saw once again that high-quality human-centered content can still stand out in today's crowded information environment. Our journey series is a good example. One recent episode alone reached over 80 million views and triggered follow-up reports from major national media outlets. This kind of impact is hard to replicate and remains one of our core strengths. On the commercialization front, we made solid progress through our in-depth participation and coverage at major international exhibitions. In Q1, Through our active media coverage of CES, MWC, and EWE, both our client members and the revenue in tech sector grew substantially. This success validated our business model of international exhibitions plus premium content plus monetization in the tech sector and gave us valuable experience that can be applied to other vertical fields. On the product side, our mobile app saw a clear increase in user engagement, driven by major news events. To meet users' need for both speed and better understanding, we improved our content structure and distribution. We added new sections such as on the scene and word affairs, which made it easier for users to find content and helped improve retention. Overall, our direction remains unchanged. We are building a more stable and scalable content system, one that can deliver reliable outputs during major news cycles, create strong original content, and adapt to new technologies. At the same time, we are steadily accelerating commercialization. Looking ahead, we will keep focusing on content quality, strengthen our IP portfolio, improve operational efficiency, and pursue steady and sustainable growth. This concludes our CEO, Mr. Sun's prepared remarks. I will now walk you through our financial performance for the first quarter of 2026. All figures mentioned will be in RMB. Our total revenues were 108.8 million representing a 21.6% increase year-on-year from 155.2 million. Specifically, night advertising revenues were 125.3 million, representing a 4% increase year-on-year from 120.5 million. Paid services revenues were 63.5 million, representing a 83% increase year-on-year from 34.7 million, primarily driven by revenue generated from our digital reading services offered through many programs on third-party applications. Cost of revenues decreased by 5.1% to 87.8 million from 92.5 million in the same period of last year. Gross margin for the first quarter improved to 53.5% from 40.4% in the same period of last year. Total operating expenses were 130.9 million, reflecting a 29.5% increase year-on-year from 101.1 million. This increase was primarily due to higher sales and marketing expenses incurred for the digital reading services mentioned earlier. Loss from operations was 29.9 million compared to 38.4 million in the same period of last year. Net loss attributable to iPhone was 16.8 million compared to 29.7 million in the same period of last year. Moving on to our balance sheet, as of March 31, 2026, the company's cash and cash equivalents from deposits, short-term investments, and restricted cash, totaling $955.8 million, or approximately $138.6 million. Finally, I'd like to provide our business outlook for the second quarter of 2026. We forecast total revenues to be between $195.7 million and $210.7 million. For net advertising revenues, we project between $141.8 million and $151.8 million, while for paid service revenues, we project between $53.9 million and $58.9 million. This forecast reflects our current and preliminary view, which is subject to change and substantial uncertainties. This concludes the prepared portion of our call. We are now ready for questions. Officers, please go ahead.

Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by as you compile the Q&A roster. First question comes from Alice Tang of First Share High. Please go ahead.

Good morning. Thank you for taking my question. We saw that the company achieved year-on-year revenue growth in Q1. So could you please share the highlights and challenges in advertising revenue and your views on the near to medium-term outlook, please? Thank you.

Hi. Morning, Alice. Actually in Q1 we did see some budget adjustment pressure in certain categories, but we are happy to see that several high potential consumption and service sectors delivered solid growth, which helped offset the pressure. Areas like liquor, internet services, automotive, home appliances, finance and retail all grew year on year. We are especially encouraged by the strong momentum in emerging AI application sectors. Also, our deeper involvement in international sports events and exhibitions also performed well and really showcases our progress in international marketing. We are seeing a clear shift In brand marketing, it's moving away from just chasing traffic toward building deeper emotional connections with users and creating lasting brand value. Let's place directly to our strengths in content marketing. In the near to medium term, We think macro headwinds and budget pressure may continue for a while. We will keep optimizing our climate mix and focus on areas with stronger resilience and better growth prospects. We will also push on internationalization to sharpen our competitive edge. Overall, I think we will make steady progress through 2026. Thank you, Alice.

Thank you. Thank you. I see no further questions at this time. I will now turn back to Mu Zi for closing remarks.

Thank you. This concludes our Q&A session and conference call. If you have any further questions, please feel free to contact us. Thank you for joining us today and have a great day.

This concludes today's conference call. Thank you for participating. You may now disconnect.