Phoenix New Media Reports First Quarter 2022 Unaudited Financial Results

Live Conference Call to be Held at 9:00 PM U.S. Eastern Time on May 9, 2022

BEIJING, May 9, 2022 /PRNewswire/ -- Phoenix New Media Limited (NYSE: FENG) ("Phoenix New Media", "ifeng" or the "Company"), a leading new media company in China, today announced its unaudited financial results for the first quarter ended March 31, 2022.

Mr. Shuang Liu, CEO of Phoenix New Media, commented, "During the first quarter of 2022, we faced an evolving macroeconomic landscape and challenges posed by the resurgence of Covid. Confronting these pressures, we remained steadfastly committed to providing premium content, optimizing the usability of our app, and enhancing our livestreaming capabilities. In addition, we fortified our leading position in news reporting and continued to diversify our revenue streams. Going forward, we will continue to explore new business initiatives and prudently manage our operations while adapting to the changing market dynamics."

Mr. Edward Lu, CFO of Phoenix New Media, further stated, "Our topline came under increased pressure this quarter due to the impact of the Covid outbreaks in many cities in China. While we remain dedicated to expanding our media presence and diversifying our revenue streams, we are also taking necessary steps to minimize the negative impact on our bottom line. We have proactively adjusted our operational strategy and augmented our cost control efforts. We believe that our continuous endeavors will sustain us through these adversities and prepare us to achieve a better margin recovery in the future."

First Quarter 2022 Financial Results

REVENUES

Total revenues in the first quarter of 2022 decreased by 22.4% to RMB175.4 million (US$27.7 million) from RMB226.1 million in the same period of 2021, primarily due to the year-over-year decline in the Company's net advertising revenues.

Net advertising revenues in the first quarter of 2022 decreased by 21.3% to RMB158.4 million (US$25.0 million) from RMB201.3 million in the same period of 2021, mainly due to the reduction in advertising spending of advertisers from certain industries, the intensified industry-wide competition and the negative impact of the COVID-19 outbreak in certain regions in China in the first quarter of 2022.

Paid services revenues^[1] in the first quarter of 2022 decreased by 31.5% to RMB17.0 million (US$2.7 million) from RMB24.8 million in the same period of 2021. Revenues from paid contents in the first quarter of 2022 decreased by 56.2% to RMB4.6 million (US$0.7 million) from RMB10.5 million in the same period of 2021, mainly due to the reduction in the content spending of certain customers. Revenues from E-commerce and others in the first quarter of 2022 decreased by 13.3% to RMB12.4 million (US$2.0 million) from RMB14.3 million in the same period of 2021. 

COST OF REVENUES

Cost of revenues in the first quarter of 2022 increased by 31.6% to RMB142.3 million (US$22.5 million) from RMB108.1 million in the same period of 2021, which was mainly attributable to the increase in the content and operational costs caused by the increase in costs to develop original content and content costs paid to Phoenix TV Group in the first quarter of 2022.

GROSS PROFIT

Gross profit in the first quarter of 2022 decreased by 71.9% to RMB33.1 million (US$5.2 million) from RMB118.0 million in the same period of 2021. Gross margin in the first quarter of 2022 decreased to 18.9% from 52.2% in the same period of 2021, primarily attributable to the year-over-year decline in the Company's net advertising revenues as well as the increase in the Company's content and operational costs, as explained above.

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 excluded 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 in the first quarter of 2022, excluding share-based compensation, decreased to 19.0% from 52.3% in the same period of 2021.

OPERATING EXPENSES AND LOSS FROM OPERATIONS

Total operating expenses in the first quarter of 2022 decreased by 12.5% to RMB139.9 million (US$22.1 million) from RMB159.9 million in the same period of 2021, primarily attributable to the decrease in the personnel-related expenses as a result of the strict cost control measures.

Loss from operations in the first quarter of 2022 was RMB106.8 million (US$16.8 million), compared to RMB41.9 million in the same period of 2021. Operating margin in the first quarter of 2022 was negative 60.9%, compared to negative 18.6% in the same period of 2021.

Non-GAAP loss from operations in the first quarter of 2022, which excluded share-based compensation, was RMB106.1 million (US$16.7 million), compared to non-GAAP loss from operations of RMB40.7 million in the same period of 2021. Non-GAAP operating margin in the first quarter of 2022, excluding share-based compensation, was negative 60.5%, compared to negative 18.0% in the same period of 2021.

OTHER INCOME OR LOSS

Other income or loss reflects net interest income, foreign currency exchange gain or loss, income or loss from equity method investments, net of impairment, fair value changes in investments, net, and others, net^[2]. Total net other income in the first quarter of 2022 was RMB13.5 million (US$2.1 million), compared to RMB12.5 million in the same period of 2021. The increase in total net other income was mainly due to the following:

• Net interest income in the first quarter of 2022 was RMB8.6 million (US$1.4 million), compared to RMB10.7 million in the same period of 2021.
• Foreign currency exchange gain in the first quarter of 2022 was RMB1.2 million (US$0.2 million), compared to a foreign currency exchange loss of RMB2.8 million in the same period of 2021.
• Loss from equity method investments, net of impairment, in the first quarter of 2022 was RMB0.2 million (US$0.03 million), compared to a loss of RMB0.2 million in the same period of 2021.
• Fair value changes in investments, net in the first quarter of 2022 was a gain of RMB0.8 million (US$0.1 million), compared to a gain of RMB0.1 million in the same period of 2021, which represented changes in fair value of investments in certain private equity funds.
• Others, net, in the first quarter of 2022 was RMB3.1 million (US$0.4 million), compared to RMB4.7 million in the same period of 2021.

NET LOSS ATTRIBUTABLE TO PHOENIX NEW MEDIA LIMITED

Net loss attributable to Phoenix New Media Limited in the first quarter of 2022 was RMB79.7 million (US$12.6 million), compared to net loss attributable to Phoenix New Media Limited of RMB29.2 million in the same period of 2021. Net margin in the first quarter of 2022 was negative 45.4%, compared to negative 12.9% in the same period of 2021. Net loss per diluted ordinary share in the first quarter of 2022 was RMB0.14(US$0.02), compared to RMB0.05 in the same period of 2021.

Non-GAAP net loss attributable to Phoenix New Media Limited, which excluded share-based compensation, income or loss from equity method investments, net of impairment, and fair value changes in investments, net, was RMB79.6 million (US$12.6 million) in the first quarter of 2022, compared to RMB27.8 million in the same period of 2021. Non-GAAP net margin in the first quarter of 2022 was negative 45.4%, compared to negative 12.3% in the same period of 2021. Non-GAAP net loss per diluted ADS^[3] in the first quarter of 2022 was RMB1.09(US$0.17), compared to RMB0.38 in the same period of 2021.

In the first quarter of 2022, the Company's weighted average number of ADSs used in the computation of diluted net loss per ADS was 72,790,541. As of March 31, 2022, 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 March 31, 2022, the Company's cash and cash equivalents, term deposits and short term investments and restricted cash were RMB1.41 billion (US$222.8 million).

Business Outlook

For the second quarter of 2022, the Company expects its total revenues to be between RMB198.6 million and RMB218.6 million; net advertising revenues are expected to be between RMB167.0 million and RMB182.0 million; and paid services revenues are expected to be between RMB31.6 million and RMB36.6 million.

All of the above forecasts reflect the current and preliminary view of the Company's management, which are subject to changes and substantial uncertainty, particularly in view of the potential impact of the COVID-19 outbreak, the effects of which are difficult to analyse and predict.

Conference Call Information

The Company will hold a conference call at 9:00 p.m. U.S. Eastern Time on May 9, 2022 (May 10, 2022 at 9:00 a.m. Beijing/Hong Kong time) to discuss its first quarter 2022 unaudited financial results and operating performance.

To participate in the call, please register in advance of the conference by navigating to https://apac.directeventreg.com/registration/event/4731568. Upon registering, you will be provided with participant dial-in numbers, Direct Event passcode and unique registrant ID by email. Please dial in 10 minutes prior to the call, using the participant dial-in numbers, Direct Event Passcode and unique registrant ID that will be provided upon registering. You will be automatically linked to the live call after completion of this process.

A replay of the call will be available through May 17, 2022 by using the dial-in numbers and conference ID below:

A live and archived webcast of the conference call will also be available at the Company's investor relations website at https://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. 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 impairment, and fair value changes in investments, net. 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 impairment, fair value changes in investments, net, which have been and will continue to be significant recurring items. 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 readers. Unless otherwise stated, all translations from RMB to USD were made at the rate of RMB6.3393 to US$1.00, the noon buying rate in effect on March 31, 2022 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 presentations, 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 (NYSE: 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 third-party business partners, including 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 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; competition in its industry in China; relevant government policies and regulations relating to the Company; and the effects of the COVID-19 on the economy in China in general and on the Company's business in particular. 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, LLC
Robin Yang
Tel: +1 (646) 405-4883
Email: investorrelations@ifeng.com

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SOURCE Phoenix New Media Limited