Phoenix New Media Limited (FENG) Earnings Call Transcript & Summary

Good day, and thank you for standing by. Welcome to Phoenix New Media Second Quarter 2026 Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to turn the conference over to your first speaker today, Muzi Guo from Investor Relations. Please go ahead.

Thank you, operator. Welcome to Phoenix New Media's Earnings Conference Call for the Second Quarter of 2026. Today's call will begin 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.ifeng.com. Before we continue, please note the safe harbor statement included in our earnings press release, which applies to any forward-looking statements made during this call. Unless otherwise stated, all figures mentioned are in RMB. Joining me today are our CEO, Li Qi and our CFO, Edward Lu. I will now pass the call to Mr. Li for his opening remarks. I will provide translation as needed.

[Foreign Language] [Interpreted] Hello, everyone, and welcome. I am Li Qi, the new CEO of Phoenix New Media. It is my pleasure to join you for the first time in this role. I look forward to maintaining ongoing communication with our investors. Together with the management team, I will continue to focus on Phoenix' core strengths including our professional content capabilities, brand influence and commercial capabilities. We will continue to improve operational efficiency, strengthen our business foundation and enhance long-term value for our shareholders. Next, I would like to invite our CFO, Edward, to walk you through our business performance and key developments during the quarter.

Okay. Thank you, Muzi. In Q2 2026, we saw continued strong demand from brand advertisers for high-quality content. As information becomes more fragmented and the user attention becomes harder to capture, high-quality content that effectively connects brands with audiences has become increasingly valuable. Leveraging our long-standing content expertise, we are deepening our strategy of driving business value through quality content. This quarter, several major international events demonstrated our ability to produce high-quality content and respond quickly. During President Trump's visit to China, Phoenix provided full live coverage of the key activities and captured the critical moments in real time. Our video who were the Chinese company representatives at Trump's welcome dinner achieved over 40 million views on Douyin and WeChat channels, while also leading to additional business opportunities with major brand clients. This is a good example of how premium journalism can translate into commercial value. Our systematic approach to major event coverage from preparation and the live reporting to follow-up analysis continue to differentiate us. During the Iran conflict, we delivered a fast, high-quality coverage through breaking live broadcast and special programs. For the 2026 World Cup hosted by Canada, Mexico and the United States, we built comprehensive content and marketing products around the tournament. Our original sports content IP generated more than 75 million impressions across the web, attracted over 10 leading brands and achieved significant commercial growth. In addition, our reporting on the Shanxi Xingyuan mine accident demonstrated our investigative capabilities and journalistic expertise in major public events with multiple exclusive stories being republished by mainstream media. Our original content IPs continue to demonstrate long-term value. Programs such as Journey and Analyst Conversations have built strong audience engagement and the brand influence through authentic storytelling and in-depth conversations. We believe premium branded content creates value beyond product promotion by connecting brands with meaningful social issues and compelling stories. Our flagship interview IP show, Wisdom Talk, has operated for 8 seasons and maintained 8 consecutive years of brand partnerships. The advertiser base of this premium IP has expanded from traditional liquor brands into industries, such as automobile and technology, demonstrating that strong content IPs are not only effective audience acquisition but also long-term commercial assets with repeat monetization potential. As our content capabilities continue to build, commercial value is being unlocked across key verticals. Following the shift toward more in-depth original vertical videos on WeChat Channels, our tech channel achieved quarterly revenue growth of over 100% year-over-year. Our ifeng Car Research Lab established differentiated expertise with professional such as Xiaomi, EV's airbag testing and delivered strong revenue growth through event marketing around the Beijing Auto Show. Meanwhile, our large-scale event IPs also performed well. The Her Power Weibo topic approached 200 million reads and the Greater Bay Area Finance Forum achieved over 100 million impressions and was republished by industry organizations. AI is now integrated into our content workflow. We use AI to support content preparation, production and post production. This allows us to maintain high quality while improving efficiency and optimizing costs. We are also enhancing content distribution, user reach and operational precision to maximize content value and commercial conversion. Looking ahead, our priorities remain clear: continue investing in trusted content, deepen the use of AI across our workflow, expand monetization opportunities in key verticals and strengthen the connection between our content capabilities and commercial value. We believe this effort will further reinforce FENG's position as a trusted media company. and support sustainable long-term growth. This concludes our CEO, Mr. Li's prepared remarks. I will now walk you through our financial performance for the second quarter of 2026. All figures mentioned will be in RMB. Our total revenues were RMB 216.7 million representing a 15.8% increase year-on-year from RMB 187.1 million. Specifically, net advertising revenue were RMB 146.9 million compared to RMB 153.3 million in the same period of last year. Paid services revenues were RMB 69.8 million, representing a 106.5% increase year-on-year from RMB 33.8 million primarily driven by revenue generated from our digital reading services offered through mini programs on third-party applications. Cost of revenues decreased by 2.6% to RMB 92.6 million from RMB 95.1 million in the same period of last year. Gross margin for the second quarter improved to 57.3% from 49.2% in the same period of last year. Total operating expenses were RMB 129.4 million reflecting a 30.4% increase year-on-year from RMB 99.2 million. This increase was primarily due to higher sales and marketing expenses incurred for the digital reading services mentioned earlier. Loss from operations were RMB 5.3 million compared to RMB 7.2 million in the same period of last year. Net income attributable to ifeng was RMB 6.5 million compared to net loss attributable to ifeng of RMB 10.4 million in the same period of last year. Moving on to our balance sheet. As of June 30, 2026, the company's cash and cash equivalents, term deposits, short-term investments and restricted cash totaled RMB 990 million or approximately USD 145.9 million. Finally, I'd like to provide our business outlook for the third quarter of 2026. We forecast total revenues to be between RMB 220.9 million and RMB 235.9 million. For net advertising revenues, we project between RMB 151.9 million and RMB 161.9 million. While for paid service revenues, we project between RMB 69 million and RMB 74 million. This forecast reflects our current and preliminary view, which is subject to change and the potential uncertainties. This concludes the prepared portion of our call. We are now ready for questions. Operator, please go ahead.

[Operator Instructions] First question comes from [ Alexandra Liu ] from First Shanghai.