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Phoenix New Media Reports Third Quarter 2019 Unaudited Financial Results

Live Conference Call to be Held at 8:00 PM U.S. Eastern Time on November 11, 2019

BEIJING, Nov. 11, 2019 /PRNewswire/ -- Phoenix New Media Limited (FENG) ("Phoenix New Media", "ifeng" or the "Company"), a leading new media company in China, today announced its unaudited financial results for the third quarter ended September 30, 2019.

Mr. Shuang Liu, CEO of Phoenix New Media, commented, "Despite the continuing macroeconomic headwinds, we have been able to revitalize and sustain the growth of our businesses. Leveraging our continued professional journalism and by combining our seasoned editorial daily picks and AI-powered recommendation engine, we have improved our user acquisition, retention, and engagement rates. During the third quarter, we upgraded our iFeng app, expanded our proprietary content library, advanced our in-house production capability, and enhanced our vertical channels. As a result, we sharpened our competitive edge and cultivated our monetization potential. While we continue to optimize our cost structure, the first tranche of proceeds from the Yidian transaction has provided us with sufficient working capital to fuel our long-term growth engine. Looking ahead, we are confident that we have the right team, strategy, and knowhow to adapt to the changing market dynamics and thrive in the new media industry."

Ms. Betty Ho, CFO of Phoenix New Media, further stated, "In the third quarter of 2019, our total revenues increased by 15.4% year-over-year, out of which, total net advertising revenues increased by 16.4% and total paid services revenues increased by 10.0% year-over-year, mainly driven by the consolidation of revenues from Tianbo and Tadu. As I pass the financial leadership role to our next CFO, Edward Lu, we are confident that as we continuing to optimize our product, to strengthen our content initiatives, and with the adequate working capital resources, we are well positioned for a renewed growth cycle."

Third Quarter 2019 Financial Results

REVENUES

Total revenues for the third quarter of 2019 were RMB380.2 million (US$53.2 million), representing an increase of 15.4% from RMB329.3 million in the third quarter of 2018. The increase was caused by the addition of consolidated revenues of RMB40.3 million (US$5.6 million) in the third quarter of 2019 from Beijing Yitian Xindong Network Technology Co., Ltd. ("Yitian Xindong" or "Tadu"), which has been consolidated starting from December 28, 2018 and the consolidated revenues of RMB80.1 million (US$11.2 million) in the third quarter of 2019 from Beijing Fenghuang Tianbo Network Technology Co., Ltd. ("Tianbo"), which has been consolidated starting from April 1, 2019.

Net advertising revenues for the third quarter of 2019 were RMB327.6 million (US$45.8 million), representing an increase of 16.4% from RMB281.5 million in the third quarter of 2018. The increase was primarily attributable to the consolidation of advertising revenues from Tianbo and Tadu. The Company's net advertising revenues from traditional business decreased by 16.2% due to the macroeconomic uncertainties and increased competitions.

Paid services revenues[1] for the third quarter of 2019 were RMB52.6 million (US$7.4 million), which represented an increase of 10.0% from RMB47.8 million in the third quarter of 2018. Revenues from paid contents for the third quarter of 2019 increased by 39.5% to RMB39.2 million (US$5.5 million) from RMB28.1 million in the third quarter of 2018, primarily attributable to the consolidation of digital reading revenues from Tadu, which was partially offset by a decrease in the Company's traditional digital reading business due to the regulatory tightening on digital reading sector in China. Revenues from games for the third quarter of 2019 were RMB2.5 million (US$0.3 million), which represented a decrease of 27.8% from RMB3.4 million in the third quarter of 2018. Revenues from MVAS for the third quarter of 2019 were RMB1.7 million (US$0.2 million), which represented a decrease of 84.7% from RMB10.8 million in the third quarter of 2018. Revenues from others for the third quarter of 2019 increased to RMB9.2 million (US$1.4 million) from RMB5.5 million in the third quarter of 2018, representing an increase of 68.6% year-over-year, which was mainly caused by the increase in revenues from E-commerce and online real estate related services.

[1] Prior to 2019, paid services revenues comprised of (i) revenues from digital entertainment, which included MVAS and digital reading, and (ii) revenues from games and others, which included web-based games, mobile games, content sales, and other online and mobile paid services through the Company's own platforms.
Beginning from January 1, 2019, paid services revenues have been re-classified and now comprised of (i) revenues from paid contents, which includes digital reading, audio books, paid videos, and other content-related sales activities, (ii) revenues from games, which includes web-based games and mobile games, (iii) revenues from MVAS, and (iv) revenues from others. For comparison purposes, the revenues from paid services for the quarters of 2018 have been retrospectively re-classified. 

 

COST OF REVENUES

Cost of revenues for the third quarter of 2019 was RMB194.3 million (US$27.2 million), representing an increase of 27.6% from RMB152.2 million in the third quarter of 2018. The increase in cost of revenues was mainly due to the following:

  • Content and operational costs for the third quarter of 2019 increased to RMB161.6 million (US$22.7 million) from RMB123.2 million in the third quarter of 2018, primarily attributable to the consolidation of content and operational costs of Tianbo and Tadu.
  • Revenue sharing fees to telecom operators and channel partners for the third quarter of 2019 increased to RMB17.4 million (US$2.4 million) from RMB14.3 million in the third quarter of 2018, primarily attributable to the increase in revenue sharing fees paid to content providers by Tadu.
  • Bandwidth costs for the third quarter of 2019 increased to RMB15.3 million (US$2.1 million) from RMB14.7 million in the third quarter of 2018.
  • Share-based compensation included in cost of revenues was RMB1.9 million (US$0.3 million) in the third quarter of 2019, as compared to RMB0.4 million the third quarter of 2018, primarily attributable to the restricted share units newly granted to some employees in 2019 under the restricted share unit scheme adopted in 2018 by Fread Limited, a subsidiary of the Company, and the options newly granted by the Company in July 2019.

GROSS PROFIT

Gross profit for the third quarter of 2019 increased to RMB186.0 million (US$26.0 million) from RMB177.1 million in the third quarter of 2018. Gross margin for the third quarter of 2019 decreased to 48.9% from 53.8% in the third quarter of 2018, mainly attributable to a decrease in gross margin of the Company's traditional advertising business and the acquisition of Tadu, partially offset by the margin contribution from Tianbo.

To supplement the financial measures presented in accordance with the United States Generally Accepted Accounting Principles ("GAAP"), the Company has presented certain non-GAAP financial measures in this press release, which excludes the impact of certain reconciling items as stated in the "Use of Non-GAAP Financial Measures" section below. The related reconciliations to GAAP financial measures are presented in the accompanying "Reconciliations of Non-GAAP Results of Operation Measures to the Nearest Comparable GAAP Measures."

Non-GAAP gross margin for the third quarter of 2019, which excluded share-based compensation, decreased to 49.4% from 53.9% in the third quarter of 2018.

OPERATING EXPENSES OR GAINS AND LOSS FROM OPERATIONS

Total operating expenses for the third quarter of 2019 decreased by 15.8% to RMB196.7 million (US$27.5 million) from RMB233.7 million in the third quarter of 2018, primarily attributable to the gain of RMB62.1 million arising from the changes in fair value of financial assets-contingent returnable consideration and a decrease in bad debt provision primarily caused by the collection of previously fully-reserved receivables of RMB16.2 million in the third quarter of 2019, which was partially offset by the consolidation of operating expenses from Tianbo and Tadu. Share-based compensation included in operating expenses was RMB3.4 million (US$0.5 million) in the third quarter of 2019, as compared to RMB2.1 million in the third quarter of 2018, mainly caused by the options newly granted by the Company in July 2019.

Changes in fair value of financial assets-contingent returnable consideration for the third quarter of 2019 was a gain of RMB62.1 million (US$8.7 million), which represented the changes in fair value of the Company's right to receive the contingent returnable consideration in relation to the acquisition of Tadu, subject to certain price adjustment mechanisms based on Tadu's operating and financial performance in 2019 and 2020. The Company recorded the financial assets-contingent returnable consideration as prepayments and other current assets in the balance sheet. Based on Tadu's estimated operating and financial performance in 2019, the Company adjusted the fair value of financial assets-contingent returnable consideration and recognized the changes in fair value in the consolidated statements of comprehensive income/(loss) in the third quarter of 2019.

Loss from operations for the third quarter of 2019 was RMB10.8 million (US$1.5 million), as compared to RMB56.6 million in the third quarter of 2018. Operating margin for the third quarter of 2019 was negative 2.8%, as compared to negative 17.2% in the third quarter of 2018.

Non-GAAP loss from operations for the third quarter of 2019, which excluded share-based compensation and changes in fair value of financial assets-contingent returnable consideration, was RMB67.6 million (US$9.5 million), as compared to RMB54.0 million in the third quarter of 2018. Non-GAAP operating margin for the third quarter of 2019, which excluded share-based compensation and changes in fair value of financial assets-contingent returnable consideration, was negative 17.8%, as compared to negative 16.4% in the third quarter of 2018.

OTHER INCOME OR LOSS

Other income or loss reflects interest income, interest expense, foreign currency exchange gain, income or loss from equity method investments, net of impairments, gain on disposal of convertible loans due from a related party and others, net[2]. Total net other income for the third quarter of 2019 was RMB19.6 million (US$2.7 million), as compared to RMB35.9 million in the third quarter of 2018.

  • Interest income for the third quarter of 2019 decreased to RMB8.1 million (US$1.1 million) from RMB12.3 million in the third quarter of 2018, primarily due to decrease in the loans granted to Particle, which were fully settled in the third quarter of 2018.
  • Interest expense for the third quarter of 2019 decreased to RMB0.3 million (US$0.04 million), from RMB3.1 million in the third quarter of 2018, which was primarily due to the decrease in outstanding short-term bank loans as the Company repaid all of the short-term bank loans in the second quarter of 2019.
  • Foreign currency exchange gain for the third quarter of 2019 was RMB6.1 million (US$0.9 million), which remained unchanged from the third quarter of 2018.
  • Income from equity method investments, net of impairments, for the third quarter of 2019 was nil, as compared to RMB4.2 million of income from equity method investments, net of impairments, in the third quarter of 2018.
  • Gain on disposal of convertible loans due from a related party for the third quarter of 2018 was RMB10.6 million, which was derived from the completion of the assignment to Long De Cheng Zhang Culture Communication (Tianjin) Co., Ltd. of the Company's rights under a loan to Particle Inc. with a principal amount of US$14.8 million originally granted in August 2016 and with the assignment price of approximately US$17.0 million. No such gain was recorded in the third quarter of 2019.
  • Others, net decreased to RMB5.7 million (US$0.8 million) in the third quarter of 2019 from RMB5.8 million in the third quarter of 2018.

 

[2] "Others, net" primarily consists of government subsidies and litigation loss provisions.

 

NET INCOME OR LOSS ATTRIBUTABLE TO PHOENIX NEW MEDIA LIMITED

Higher effective tax rate in the third quarter of 2019 was mainly attributable to larger taxable profits for the Company's subsidiaries as compared to the third quarter of 2018 after considering the valuation allowance of deferred tax assets. Net income attributable to Phoenix New Media Limited for the third quarter of 2019 was RMB5.9 million (US$0.8 million), as compared to net loss attributable to Phoenix New Media Limited of RMB16.6 million in the third quarter of 2018. Net margin for the third quarter of 2019 was positive 1.6%, as compared to negative 5.0% in the third quarter of 2018. Net income per diluted ADS[3] in the third quarter of 2019 was RMB0.08 (US$0.01), as compared to net loss per diluted ADS of RMB0.23 in the third quarter of 2018.

Non-GAAP net loss attributable to Phoenix New Media Limited for the third quarter of 2019, which excluded share-based compensation, income or loss from equity method investments, net of impairments, and changes in fair value of financial assets-contingent returnable consideration, was RMB50.8 million (US$7.1 million), as compared to RMB18.3 million in the third quarter of 2018. Non-GAAP net margin for the third quarter of 2019 was negative13.4%, as compared to negative 5.6%  in the third quarter of 2018. Non-GAAP net loss per diluted ADS in the third quarter of 2019 was RMB0.70 (US$0.10), as compared to RMB0.25 in the third quarter of 2018.

For the third quarter of 2019, the Company's weighted average number of ADSs used in the computation of diluted net loss per ADS was 72,790,541. As of September 30, 2019, the Company had a total of 582,324,325, ordinary shares outstanding, or the equivalent of 72,790,541 ADSs.

CERTAIN BALANCE SHEET ITEMS

As of September 30, 2019, the Company's cash and cash equivalents, term deposits and short term investments and restricted cash were RMB2.06 billion (US$288.9 million), which included RMB18.4 million (US$2.6 million) from Tadu and RMB131.3 million (US$18.4 million) from Tianbo.

As previously announced by the Company, the Company entered into a share purchase agreement (the "SPA") with Run Liang Tai and its designated entities (the "Proposed Buyers") on March 22, 2019 and entered into a supplemental agreement (the "Supplemental Agreement") to the SPA on July 23, 2019 for its proposed sale of 34% of the total outstanding shares of Particle Inc. ("Particle" or "Yidian") (the "Proposed Transaction"). After the Company executed the Supplemental Agreement, two shareholders of Particle, Long De Cheng Zhang Culture Communication (Tianjin) Co., Ltd. and Long De Holdings (Hong Kong) Co., Limited (collectively, the "Long De Entities") notified the Company that they intend to exercise their co-sale rights under the Shareholders Agreement with respect to 16 million shares of Particle for a total selling price of approximately RMB240 million while reserving their rights to co-sell more shares up to the maximum amount allowed under the Shareholders Agreement or fewer shares if they can find other buyers for their shares. The Company is in dispute with the Long De Entities as to whether the co-sale rights were duly exercised and is still discussing with the Long De Entities for an amicable resolution. If the Long De Entities are able to validly exercise their co-sale rights, the Company may have to reduce the Particle shares that it can sell in the Proposed Transaction if it decides to proceed with the transaction, and the proceeds to the Company from the transaction will be reduced accordingly. Alternatively, the Company may decide to terminate the Supplemental Agreement and reverse all transactions occurred under the Supplemental Agreement. In such case, the Company may have to resume its dispute with the Proposed Buyers under the original SPA. Notwithstanding the dispute, shareholders of the Company's parent company, Phoenix Media Investment (Holdings) Limited (2008.HK), a company listed on The Stock Exchange of Hong Kong ("Phoenix TV") approved the Supplemental Agreement on October 22, 2019, and pursuant to the Supplemental Agreement, the Proposed Buyers paid the Company a further cash deposit of US$50 million in October 2019. The Company has transferred 94,802,752 preferred shares of Particle (the "First Batch of Delivered Shares") to the Proposed Buyers, corresponding to US$200 million of purchase price received before August 10, 2019. There can be no assurance that the Company's disputes with the Long De Entities, or with the Proposed Buyers under the original SPA will be resolved in the Company's favor. There can be no assurance that the Proposed Transaction with respect to the remaining preferred shares to be delivered will ever be closed. The fair value of available-for-sale debt investments in Particle of the Company increased from RMB2,271.1 million as of June 30, 2019 to RMB3,153.2 million (US$441.1 million) as of September 30, 2019, mainly caused  by the adjustments to the assumptions used in valuation for the available-for-sale debt investments in the third quarter of 2019 as the Company transferred the First Batch of Delivered Shares to the Proposed Buyers.

[3] "ADS" means American Depositary Share of the Company. Each ADS represents eight Class A ordinary shares of the Company.

Business Outlook

For the fourth quarter of 2019, the Company expects its total revenues to be between RMB431.2 million and RMB451.2 million; net advertising revenues are expected to be between RMB370.9 million and RMB385.9 million; and paid services revenues are expected to be between RMB60.3 million and RMB65.3 million.

All of the above forecasts reflect the Company's current and preliminary view on the market and operational conditions, which are subject to change.

Conference Call Information

The Company will hold a conference call at 8:00 p.m. U.S. Eastern Time on November 11, 2019, (November 12, 2019 at 9:00 a.m. Beijing/Hong Kong time) to discuss its third quarter 2019 unaudited financial results and operating performance.

To participate in the call, please use the dial-in numbers and conference ID below:

International:                          

+65 67135090

Mainland China:                     

4006208038

Hong Kong:                            

+852 30186771

United States:                          

+1 8456750437

United Kingdom:                    

+44 2036214779

Australia:                                

+61 290833212

Conference ID:                       

1968979

A replay of the call will be available through November 18, 2019, by using the dial-in numbers and conference ID below:

International:                          

+61 2 8199 0299

Mainland China:                     

4006322162

Hong Kong:                            

+852 30512780

United States:                          

+1 6462543697

Conference ID:                       

1968979

A live and archived webcast of the conference call will also be available at the Company's investor relations website at http://ir.ifeng.com.

Use of Non-GAAP Financial Measures

To supplement the consolidated financial statements presented in accordance with the United States Generally Accepted Accounting Principles ("GAAP"), Phoenix New Media Limited uses non-GAAP gross profit, non-GAAP gross margin, non-GAAP income or loss from operations, non-GAAP operating margin, non-GAAP net income or loss attributable to Phoenix New Media Limited, non-GAAP net margin and non-GAAP net income or loss per diluted ADS, each of which is a non-GAAP financial measure. Non-GAAP gross profit is gross profit excluding share-based compensation. Non-GAAP gross margin is non-GAAP gross profit divided by total revenues. Non-GAAP income or loss from operations is income or loss from operations excluding share-based compensation and changes in fair value of financial assets-contingent returnable consideration. Non-GAAP operating margin is non-GAAP income or loss from operations divided by total revenues. Non-GAAP net income or loss attributable to Phoenix New Media Limited is net income or loss attributable to Phoenix New Media Limited excluding share-based compensation, income or loss from equity method investments, net of impairments, and changes in fair value of financial assets-contingent returnable consideration. Non-GAAP net margin is non-GAAP net income or loss attributable to Phoenix New Media Limited divided by total revenues. Non-GAAP net income or loss per diluted ADS is non-GAAP net income or loss attributable to Phoenix New Media Limited divided by weighted average number of diluted ADSs. The Company believes that separate analysis and exclusion of the aforementioned non-GAAP to GAAP reconciling items add clarity to the constituent parts of its performance. The Company reviews these non-GAAP financial measures together with the related GAAP financial measures to obtain a better understanding of its operating performance. It uses these non-GAAP financial measures for planning, forecasting and measuring results against the forecast. The Company believes that using these non-GAAP financial measures to evaluate its business allows both management and investors to assess the Company's performance against its competitors and ultimately monitor its capacity to generate returns for investors. The Company also believes that these non-GAAP financial measures are useful supplemental information for investors and analysts to assess its operating performance without the effect of items like share-based compensation, income or loss from equity method investments, net of impairments, and changes in fair value of financial assets-contingent returnable consideration, which have been and will continue to be significant and recurring in its business. However, the use of these non-GAAP financial measures has material limitations as an analytical tool. One of the limitations of using these non-GAAP financial measures is that they do not include all items that impact the Company's gross profit, income or loss from operations and net income or loss attributable to Phoenix New Media Limited for the period. In addition, because these non-GAAP financial measures are not calculated in the same manner by all companies, they may not be comparable to other similarly titled measures used by other companies. In light of the foregoing limitations, you should not consider these non-GAAP financial measures in isolation from, or as an alternative to, the financial measures prepared in accordance with GAAP.

Exchange Rate

This announcement contains translations of certain RMB amounts into U.S. dollars ("USD") at specified rates solely for the convenience of the reader. Unless otherwise stated, all translations from RMB to USD were made at the rate of RMB7.1477 to US$1.00, the noon buying rate in effect on September 30, 2019, in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB or USD amounts referred could be converted into USD or RMB, as the case may be, at any particular rate or at all. For analytical presentation, all percentages are calculated using the numbers presented in the financial statements contained in this earnings release.

About Phoenix New Media Limited

Phoenix New Media Limited (FENG) is a leading new media company providing premium content on an integrated Internet platform, including PC and mobile, in China. Having originated from a leading global Chinese language TV network based in Hong Kong, Phoenix TV, the Company enables consumers to access professional news and other quality information and share user-generated content on the Internet through their PCs and mobile devices. Phoenix New Media's platform includes its PC channel, consisting of ifeng.com website, which comprises interest-based verticals and interactive services; its mobile channel, consisting of mobile news applications, mobile video application, digital reading applications and mobile Internet website; and its operations with the telecom operators that provides mobile value-added services.

Safe Harbor Statement

This announcement contains forward−looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward−looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Among other things, the business outlook and quotations from management in this announcement, as well as Phoenix New Media's strategic and operational plans, contain forward−looking statements. Phoenix New Media may also make written or oral forward−looking statements in its periodic reports to the U.S. Securities and Exchange Commission ("SEC") on Forms 20−F and 6−K, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about Phoenix New Media's beliefs and expectations, are forward−looking statements. Forward−looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward−looking statement, including but not limited to the following: the Company's goals and strategies; the Company's future business development, financial condition and results of operations; the expected growth of online and mobile advertising, online video and mobile paid services markets in China; the Company's reliance on online and mobile advertising and MVAS for a majority of its total revenues; the Company's expectations regarding demand for and market acceptance of its services; the Company's expectations regarding maintaining and strengthening its relationships with advertisers, partners and customers; the Company's investment plans and strategies, fluctuations in the Company's quarterly operating results; the Company's plans to enhance its user experience, infrastructure and services offerings; the Company's reliance on mobile operators in China to provide most of its MVAS; changes by mobile operators in China to their policies for MVAS; competition in its industry in China; and relevant government policies and regulations relating to the Company. Further information regarding these and other risks is included in the Company's filings with the SEC, including its registration statement on Form F−1, as amended, and its annual reports on Form 20−F. All information provided in this press release and in the attachments is as of the date of this press release, and Phoenix New Media does not undertake any obligation to update any forward−looking statement, except as required under applicable law.

For investor and media inquiries please contact:
Phoenix New Media Limited
Qing Liu
Email: investorrelations@ifeng.com 

ICR, Inc.
Jack Wang
Tel: +1 (646) 405-4883
Email: investorrelations@ifeng.com

 

 

Phoenix New Media Limited

Condensed Consolidated Balance Sheets

(Amounts in thousands)



December 31,


September 30,


September 30,


2018

2019


2019



RMB


RMB


US$



Audited*


Unaudited


Unaudited

ASSETS







Current assets:







Cash and cash equivalents


174,024


169,157


23,666

Term deposits and short term investments


912,594


1,764,261


246,829

Restricted cash


269,648


131,441


18,389

Accounts receivable, net


484,113


613,237


85,795

Amounts due from related parties


91,228


71,843


10,051

Prepayment and other current assets


88,963


186,548


26,099

Total current assets


2,020,570


2,936,487


410,829

Non-current assets:







Property and equipment, net


95,631


110,116


15,406

Intangible assets, net


97,448


97,729


13,673

Goodwill


338,288


361,074


50,516

Available-for-sale debt investments


1,961,474


3,155,193


441,428

Equity investments, net


33,694


13,236


1,852

Deferred tax assets


60,160


72,318


10,118

Operating lease right-of- use assets, net**


-


91,786


12,841

Other non-current assets


23,454


20,258


2,834

Total non-current assets


2,610,149


3,921,710


548,668

Total assets


4,630,719


6,858,197


959,497

LIABILITIES AND SHAREHOLDERS' EQUITY







Current liabilities:







Short-term loans


267,665


-


-

Accounts payable


264,753


218,704


30,598

Amounts due to related parties


25,218


25,052


3,505

Advances from customers


54,601


69,611


9,739

Taxes payable


101,386


137,031


19,171

Salary and welfare payable


132,316


156,132


21,845

Amounts received from proposed buyers of investments in
   Particle


-


1,419,633


198,614

Accrued expenses and other current liabilities


227,328


289,275


40,471

Operating lease liabilities**


-


34,734


4,859

Total current liabilities


1,073,267


2,350,172


328,802

Non-current liabilities:







Deferred tax liabilities


140,960


256,956


35,949

Long-term liabilities


26,131


26,131


3,656

Operating lease liabilities**


-


58,469


8,180

Total non-current liabilities


167,091


341,556


47,785

Total liabilities


1,240,358


2,691,728


376,587

Shareholders' equity:







Phoenix New Media Limited shareholders' equity:







Class A ordinary shares


17,487


17,499


2,448

Class B ordinary shares


22,053


22,053


3,085

Additional paid-in capital


1,604,588


1,608,241


225,001

Statutory reserves


87,620


87,620


12,258

Retained earnings/(accumulated deficits)


159,621


(24,304)


(3,400)

Accumulated other comprehensive income


1,188,358


2,254,404


315,403

Total Phoenix New Media Limited shareholders' equity


3,079,727


3,965,513


554,795

Noncontrolling interests


310,634


200,956


28,115

Total shareholders' equity


3,390,361


4,166,469


582,910

Total liabilities and shareholders' equity


4,630,719


6,858,197


959,497















* Derived from audited financial statements included in the Company's Form 20-F dated April 26, 2019.







** The Company adopted the new leasing guidance (ASU 2016-2) started from January 1, 2019, which requires that a lessee recognize





     the assets and liabilities that arise from operating leases. The Company recognized a right-of-use asset and a liability relating to lease





     payments (the Lease Liability) in the statements of financial position for lease contracts having terms beyond 12 months period.





 

 

Phoenix New Media Limited

Condensed Consolidated Statements of Comprehensive Income/(loss)

(Amounts in thousands, except for number of shares and per share (or ADS) data)
















Three Months Ended


Nine Months Ended


September 30,


June 30,


September 30,


September 30,


September 30,


September 30,


September 30,


2018


2019


2019


2019


2018


2019


2019


RMB


RMB


RMB


US$ 


RMB


RMB


US$ 


Unaudited


Unaudited


Unaudited


Unaudited


Unaudited


Unaudited


Unaudited

Revenues:














Net advertising revenues

281,500


324,738


327,593


45,832


842,292


868,315


121,482

Paid service revenues

47,840


70,338


52,626


7,363


135,853


191,854


26,841

Total revenues

329,340


395,076


380,219


53,195


978,145


1,060,169


148,323

Cost of revenues

(152,236)


(184,951)


(194,268)


(27,179)


(415,276)


(557,364)


(77,978)

Gross profit

177,104


210,125


185,951


26,016


562,869


502,805


70,345

Operating expenses:














Sales and marketing expenses

(140,998)


(163,655)


(154,969)


(21,681)


(382,040)


(439,196)


(61,446)

General and administrative expenses

(41,692)


(65,380)


(43,131)


(6,034)


(117,898)


(157,363)


(22,016)

Technology and product development expenses

(50,969)


(60,121)


(60,735)


(8,497)


(147,904)


(180,297)


(25,224)

Changes in fair value of financial assets-contingent returnable
consideration

-


-


62,051


8,681


-


62,051


8,681

Total operating expenses

(233,659)


(289,156)


(196,784)


(27,531)


(647,842)


(714,805)


(100,005)

Loss from operations

(56,555)


(79,031)


(10,833)


(1,515)


(84,973)


(212,000)


(29,660)

Other income/(loss):














Interest income

12,349


4,637


8,106


1,134


38,837


21,401


2,994

Interest expense

(3,080)


(1,730)


(252)


(35)


(11,102)


(4,885)


(683)

Foreign currency exchange gain

6,066


2,922


6,134


858


7,166


6,889


964

Income/(loss) from equity method investments, net of impairments

4,240


521


-


-


1,375


(3,447)


(482)

Gain on disposal of convertible loans due from a related party

10,565


-


-


-


10,565


-


-

Others, net

5,773


4,789


5,608


785


11,994


12,638


1,768

(Loss)/income before tax

(20,642)


(67,892)


8,763


1,227


(26,138)


(179,404)


(25,099)

Income tax benefit/(expense)

3,889


(2,977)


(6,732)


(942)


115


(17,170)


(2,402)

Net (loss)/income 

(16,753)


(70,869)


2,031


285


(26,023)


(196,574)


(27,501)

Net loss attributable to noncontrolling interests

127


754


3,896


545


1,098


12,649


1,770

Net (loss)/income attributable to Phoenix New Media Limited

(16,626)


(70,115)


5,927


830


(24,925)


(183,925)


(25,731)

Net (loss)/income 

(16,753)


(70,869)


2,031


285


(26,023)


(196,574)


(27,501)

Other comprehensive income/(loss), net of tax: fair value
remeasurement for available-for-sale investments

52,111


(463,083)


734,931


102,821


103,762


997,251


139,521

Other comprehensive income, net of tax: foreign currency
translation adjustment

39,966


44,944


51,044


7,141


54,328


68,795


9,625

Comprehensive income/(loss)

75,324


(489,008)


788,006


110,247


132,067


869,472


121,645

Comprehensive loss attributable to noncontrolling interests

127


754


3,896


545


1,098


12,649


1,770

Comprehensive income/(loss) attributable to Phoenix New Media Limited

75,451


(488,254)


791,902


110,792


133,165


882,121

-

123,415

Net (loss)/income attributable to Phoenix New Media Limited

(16,626)


(70,115)


5,927


830


(24,925)


(183,925)


(25,731)

Net (loss)/income per Class A and Class B ordinary share:














Basic

(0.03)


(0.12)


0.01


0.00


(0.04)


(0.32)


(0.04)

Diluted

(0.03)


(0.12)


0.01


0.00


(0.04)


(0.32)


(0.04)

Net (loss)/income per ADS (1 ADS represents 8 Class A ordinary shares):














Basic

(0.23)


(0.96)


0.08


0.01


(0.34)


(2.53)


(0.35)

Diluted

(0.23)


(0.96)


0.08


0.01


(0.34)


(2.53)


(0.35)

Weighted average number of Class A and Class B ordinary shares
   used in computing net (loss)/income per share:














Basic

581,962,548


582,267,440


582,324,325


582,324,325


580,729,644


582,259,624


582,259,624

Diluted

581,962,548


582,267,440


582,324,325


582,324,325


580,729,644


582,259,624


582,259,624

 

 

Phoenix New Media Limited

Condensed Segments Information

(Amounts in thousands)



Three Months Ended


Nine Months Ended


September 30,


June 30,


September 30,


September 30,


September 30,


September 30,


September 30,


2018


2019


2019


2019


2018


2019


2019


RMB


RMB


RMB


US$ 


RMB


RMB


US$ 


Unaudited


Unaudited


Unaudited


Unaudited


Unaudited


Unaudited


Unaudited

Revenues:














Net advertising service

281,500


324,738


327,593


45,832


842,292


868,315


121,482

Paid services

47,840


70,338


52,626


7,363


135,853


191,854


26,841

Total revenues

329,340


395,076


380,219


53,195


978,145


1,060,169


148,323

Cost of revenues














Net advertising service

132,519


146,869


162,926


22,794


350,881


449,855


62,937

Paid services

19,717


38,082


31,342


4,385


64,395


107,509


15,041

Total cost of revenues

152,236


184,951


194,268


27,179


415,276


557,364


77,978

Gross profit














Net advertising service

148,981


177,869


164,667


23,038


491,411


418,460


58,545

Paid services

28,123


32,256


21,284


2,978


71,458


84,345


11,800

Total gross profit

177,104


210,125


185,951


26,016


562,869


502,805


70,345

 

 

Phoenix New Media Limited

Condensed Information of Cost of Revenues

(Amounts in thousands)



Three Months Ended


Nine Months Ended


September 30,


June 30,


September 30,


September 30,


September 30,


September 30,


September 30,


2018


2019


2019


2019


2018


2019


2019


RMB


RMB


RMB


US$ 


RMB


RMB


US$ 


Unaudited


Unaudited


Unaudited


Unaudited


Unaudited


Unaudited


Unaudited

Revenue sharing fees

14,261


13,676


17,363


2,429


34,338


48,368


6,767

Content and operational costs

123,281


156,346


161,600


22,609


338,002


464,907


65,043

Bandwidth costs

14,694


14,929


15,305


2,141


42,936


44,089


6,168

Total cost of revenues

152,236


184,951


194,268


27,179


415,276


557,364


77,978

 

 

Reconciliations of Non-GAAP Results of Operations Measures to the Nearest Comparable GAAP Measures

(Amounts in thousands, except for number of ADSs and per ADS data)




















Three Months Ended September 30, 2018


Three Months Ended June 30, 2019


Three Months Ended September 30, 2019


GAAP


Non-GAAP
Adjustments


Non-
GAAP


GAAP


Non-GAAP
Adjustments


Non-
GAAP


GAAP


Non-GAAP
Adjustments


Non-
GAAP


RMB


RMB


RMB


RMB


RMB


RMB


RMB


RMB


RMB


Unaudited


Unaudited


Unaudited


Unaudited


Unaudited


Unaudited


Unaudited


Unaudited


Unaudited

Gross profit

177,104


442

(1)

177,546


210,125


1,893

(1)

212,018


185,951


1,879

(1)

187,830

Gross margin

53.8%




53.9%


53.2%




53.7%


48.9%




49.4%




2,535

(1)





4,227

(1)





5,277

(1)





-

(2)





-

(2)





(62,051)

(2)


Loss from operations

(56,555)


2,535


(54,020)


(79,031)


4,227


(74,804)


(10,833)


(56,774)


(67,607)

Operating margin

(17.2)%




(16.4)%


(20.0)%




(18.9)%


(2.8)%




(17.8)%




2,535

(1)





4,227

(1)





5,277

(1)





-

(2)





-

(2)





(62,051)

(2)





(4,240)

(3)





(521)

(3)





-

(3)


Net (loss)/income attributable
   to Phoenix New
   Media Limited

(16,626)


(1,705)


(18,331)


(70,115)


3,706


(66,409)


5,927


(56,774)


(50,847)

Net margin

(5.0)%




(5.6)%


(17.7)%




(16.8)%


1.6%




(13.4)%

Net (loss)/income per
   ADS-diluted

(0.23)




(0.25)


(0.96)




(0.91)


0.08




(0.70)

Weighted average number
   of ADSs used in computing
   diluted net (loss)/income per ADS

72,745,318




72,745,318


72,783,430




72,783,430


72,790,541




72,790,541





































(1) Share-based compensation


















(2) Changes in fair value of financial assets-contingent returnable consideration















(3) Income from equity method investments, net of impairments



































Non-GAAP to GAAP reconciling items have no income tax effect.


















 

 

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