UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549

 

FORM 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF THE
SECURITIES EXCHANGE ACT OF 1934

 

August 2018

 


 

Commission File Number: 001-35158

 

PHOENIX NEW MEDIA LIMITED

 

Sinolight Plaza, Floor 16
No. 4 Qiyang Road
Wangjing, Chaoyang District, Beijing, 100102
People’s Republic of China
(Address of principal executive offices)

 

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

 

Form 20-F      x      Form 40-F      o

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  o

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  o

 

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

 

Yes  o                                        No  x

 

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):  N/A

 

 

 



 

TABLE OF CONTENTS

 

Exhibit 99.1 Press release: Phoenix New Media Reports Unaudited Second Quarter 2018 Financial Results

 

2



 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

 

PHOENIX NEW MEDIA LIMITED

 

 

 

 

 

 

 

 

 

 

By:

/s/ Betty Yip Ho

 

Name:

Betty Yip Ho

 

Title:

Chief Financial Officer

 

 

 

Date: August 14, 2018

 

 

 

3


Exhibit 99.1

 

Phoenix New Media Reports Unaudited Second Quarter 2018 Financial Results

 

Live Conference Call to be Held at 9:00 PM U.S. Eastern Time on August 14, 2018

 

BEIJING, China, August 15, 2018 — 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 second quarter ended June 30, 2018.

 

Mr. Shuang Liu, CEO of Phoenix New Media commented, “We made significant progress on product innovation and content enrichment in the second quarter of 2018. We further enhanced our content production capabilities focusing on providing users with premium, original, unbiased, and exclusive content in the forms of news reports, live broadcasts, as well as documentaries and talk shows in video series format based on our original creation.

 

In addition, we have maximized users’ satisfaction while optimizing our algorithms to effectively screen our content library to ensure full compliance with emerging regulations. Going forward, we will continue to leverage the credibility, authenticity and influence of our premium content and our brand to further fortify our leadership in the media industry in China.”

 

Ms. Betty Ho, CFO of Phoenix New Media, further stated, “We are delighted to deliver solid financial results in the second quarter of 2018. The advertising revenue generated from our FENG app has increased by 43.2% year-over-year in the second quarter of 2018 under the old accounting standard. In order to diversify our content, we are looking for new investment opportunities in lifestyle related verticals, such as travel, health and fashion, to expand our user base and improve retention rate. Looking ahead, we will remain committed to investing in content and product innovations to strengthen our competitive edge while focusing on improving our profitability and maintaining our growth momentum.”

 

Adoption of ASC606

 

Beginning from January 1, 2018, the Company adopted a new accounting standard of ASC606, Revenue from Contracts with Customers (the “new accounting standard”). The financial data presented in the Company’s financial statements for the quarter and the six months ended June 30, 2018 are in accordance with the new accounting standard while all financial data presented for the quarter and the six months ended June 30, 2017 are in accordance with ASC605, Revenue Recognition (the “old accounting standard”).

 

1



 

The impact of applying the new accounting standard on the Company’s unaudited financial results as compared to the old accounting standard for the quarter ended June 30, 2018 was as follows:

 

 

 

Three Months Ended June 30, 2018

 

 

 

 

 

Adjustments

 

 

 

 

 

Old
Accounting
Standard (1)

 

Sales Taxes And
Surcharges

 

Barter
Transactions

 

Contract
Fulfillment
Costs

 

New
Accounting
Standard (2)

 

 

 

(RMB in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

396,707

 

(34,337

)

91

 

 

362,461

 

Net advertising revenues

 

347,337

 

(31,393

)

91

 

 

316,035

 

Paid services revenues

 

49,370

 

(2,944

)

 

 

46,426

 

Cost of revenues

 

(167,284

)

34,337

 

(73

)

145

 

(132,875

)

Gross profit

 

229,423

 

 

18

 

145

 

229,586

 

Operating expenses

 

(199,309

)

 

(845

)

 

(200,154

)

Sales and marketing expenses

 

(108,978

)

 

(845

)

 

(109,823

)

Income from operations

 

30,114

 

 

(827

)

145

 

29,432

 

 


Note:

 

(1) This financial information for the three months ended June 30, 2018 was presented under the old accounting standard (ASC605).

 

(2) This financial information for the three months ended June 30, 2018 was presented under the new accounting standard (ASC606).

 

Second Quarter 2018 Financial Results

 

REVENUES

 

Total revenues for the second quarter of 2018 were RMB362.5 million (US$54.8 million) under the new accounting standard, which represented a decrease of 7.8% from RMB393.3 million in the second quarter of 2017.

 

Net advertising revenues for the second quarter of 2018 were RMB316.0 million (US$47.8 million) (net of advertising agency service fees and sales taxes and surcharges) under the new accounting standard, which represented a decrease of 6.7% from RMB338.7 million in the second quarter of 2017.

 

Paid services revenues1 for the second quarter of 2018 were RMB46.5 million (US$7.0 million) under the new accounting standard, which represented a decrease of 14.9% from RMB54.5 million in the second quarter of 2017. Revenues from digital entertainment2 for the second quarter of 2018 were RMB37.8 million (US$5.7 million) under the new accounting standard, which represented a decrease of 17.0% from RMB45.6 million in the second quarter of 2017. Revenues from games and others3 for the second quarter of 2018 were RMB8.7 million (US$1.3 million) under the new accounting standard, which represented a decrease of 3.5% from RMB9.0 million in the second quarter of 2017.

 


1     Paid services revenues comprise of (i) revenues from digital entertainment, which includes MVAS and digital reading, and (ii) revenues from games and others, which includes web-based games, mobile games, content sales, and other online and mobile paid services through the Company’s own platforms

 

2       Digital entertainment includes mobile value-added services delivered through telecom operators’ platforms, or MVAS, and digital reading.

 

3       Games and others include web-based and mobile games, and other online and mobile paid services through the Company’s own platforms

 

2



 

Under the old accounting standard ASC605, total revenues for the second quarter of 2018 would have been RMB396.7 million (US$60.0 million), which would have represented an increase of 0.9% from RMB393.3 million in the second quarter of 2017.

 

Under the old accounting standard ASC605, net advertising revenues for the second quarter of 2018 would have been RMB347.3 million (US$52.5 million), which would have represented an increase of 2.5% from RMB338.7 million in the second quarter of 2017, primarily attributable to a 23.0% year-over-year increase in mobile advertising revenues that was partially offset by a 26.6% year-over-year decrease in PC advertising revenues.

 

Under the old accounting standard ASC605, paid services revenues for the second quarter of 2018 would have been RMB49.4 million (US$7.5 million), which would have represented a decrease of 9.5% from RMB54.5 million in the second quarter of 2017. Under the old accounting standard ASC605, revenues from digital entertainment for the second quarter of 2018 would have been RMB40.1 million (US$6.1 million), which would have represented a decrease of 12.0% from RMB45.6 million in the second quarter of 2017, due to a 29.3% decrease in the MVAS revenues mainly resulting from the decline in users’ demand for services provided through telecom operators in China. Under the old accounting standard ASC605, revenues from games and others for the second quarter of 2018 would have been RMB9.3 million (US$1.4 million), which would have represented an increase of 3.3% from RMB9.0 million in the second quarter of 2017, primarily attributable to the increase in revenues derived from other new businesses while the revenues generated from web-based games operated on the Company’s own platforms were still declining.

 

COST OF REVENUES

 

Cost of revenues for the second quarter of 2018 was RMB132.9 million (US$20.1 million) under the new accounting standard, which represented a decrease of 20.8% from RMB167.8 million in the second quarter of 2017. Under the old accounting standard ASC605, cost of revenues for the second quarter of 2018 would have been RMB167.3 million (US$25.3 million), which would have represented a decrease of 0.3% from RMB167.8 million in the second quarter of 2017. The decrease in cost of revenues under the new accounting standard was mainly due to:

 

·                  The sales taxes and surcharges were RMB34.3 million (US$5.2 million) in the second quarter of 2018, which was excluded from cost of revenues and recorded as a reduction item of revenues under the new accounting standard, as compared to sales taxes and surcharges of RMB33.2 million in the second quarter of 2017, which was recorded as a component of cost of revenues under the old accounting standard ASC605.

 

·                  Content and operational costs for the second quarter of 2018 increased slightly to RMB107.5 million (US$16.2 million) from RMB106.0 million in the second quarter of 2017.

 

·                  Revenue sharing fees to telecom operators and channel partners for the second quarter of 2018 decreased by 23.9% to RMB11.5 million (US$1.7 million) from RMB15.1 million in the second quarter of 2017. The decrease was primarily attributable to a decrease in the sales of MVAS products.

 

3



 

·                  Bandwidth costs for the second quarter of 2018 increased slightly to RMB13.9 million (US$2.1 million) from RMB13.6 million in the second quarter of 2017.

 

·                  Share-based compensation included in cost of revenues was RMB0.6 million (US$0.1 million) in the second quarter of 2018, as compared to RMB1.2 million in the second quarter of 2017. As the Company recognized share-based compensation, net of estimated forfeitures, on a graded-vesting basis over the vesting term of the awards, there was less share-based compensation recognized in the second quarter of 2018 for share options granted prior to 2018.

 

GROSS PROFIT

 

Gross profit for the second quarter of 2018 was RMB229.6 million (US$34.7 million), as compared to RMB225.4 million in the second quarter of 2017. Gross margin for the second quarter of 2018 increased to 63.3% from 57.3% in the second quarter of 2017. The increase in gross margin was primarily attributable to the increase in gross profit as well as the decrease in revenues under the new accounting standard 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 for the second quarter of 2018, which excluded share-based compensation, was 63.5%, as compared to 57.6% in the second quarter of 2017.

 

OPERATING EXPENSES AND INCOME FROM OPERATIONS

 

Total operating expenses for the second quarter of 2018 decreased by 0.1% to RMB200.2 million (US$30.2 million) from RMB200.4 million in the second quarter of 2017. Share-based compensation included in operating expenses was RMB2.8 million (US$0.4 million) in the second quarter of 2018, as compared to RMB4.2 million in the second quarter of 2017. As the Company recognized share-based compensation, net of estimated forfeitures, on a graded-vesting basis over the vesting term of the awards, there was less share-based compensation recognized in the second quarter of 2018 for share options granted prior to 2018.

 

Income from operations for the second quarter of 2018 was RMB29.4 million (US$4.4 million), as compared to RMB25.0 million in the second quarter of 2017. Operating margin for the second quarter of 2018 was 8.1%, as compared to 6.4% in the second quarter of 2017, which was primarily attributable to the decrease in revenues under the new accounting standard.

 

Non-GAAP income from operations for the second quarter of 2018, which excluded share-based compensation, was RMB32.8 million (US$5.0 million), as compared to RMB30.5 million in the second quarter of 2017. Non-GAAP operating margin for the second quarter of 2018, which excluded share-based compensation, was 9.1%, as compared to 7.7% in the second quarter of 2017.

 

4



 

OTHER INCOME OR LOSS

 

Other income or loss reflects interest income, interest expense, foreign currency exchange gain or loss, income or loss from equity investments, including impairments, and others, net4. Total net other income for the second quarter of 2018 was RMB28.1 million (US$4.2 million), as compared to RMB3.4 million in the second quarter of 2017.

 

·                  Interest income for the second quarter of 2018 was RMB13.6 million (US$2.0 million), as compared to RMB13.5 million in the second quarter of 2017.

 

·                  Interest expense for the second quarter of 2018 decreased to RMB3.4 million (US$0.5 million), from RMB6.4 million in the second quarter of 2017, which was primarily due to the decrease in both the carrying amount and the interest rates of the outstanding short-term bank loans in the second quarter of 2018 as compared to that in 2017.

 

·                  Foreign currency exchange gain for the second quarter of 2018 was RMB16.2 million (US$2.5 million), as compared to foreign currency exchange loss of RMB7.9 million in the second quarter of 2017, which was mainly caused by the depreciation of Renminbi against US dollars in the second quarter of 2018 that generated exchange gain in Renminbi denominated borrowings recorded in the Company’s subsidiaries whose functional currency is not Renminbi.

 

·                  Loss from equity investments, including impairments, for the second quarter of 2018 was RMB0.4 million (US$0.07 million), as compared to income from equity investments, including impairments, of RMB1.1 million in the second quarter of 2017.

 

·                  Others, net, for the second quarter of 2018 was RMB2.1 million (US$0.3 million), as compared to RMB3.1 million in the second quarter of 2017.

 

NET INCOME ATTRIBUTABLE TO PHOENIX NEW MEDIA LIMITED

 

Net income attributable to Phoenix New Media Limited for the second quarter of 2018 was RMB49.2 million (US$7.4 million), as compared to RMB24.9 million in the second quarter of 2017. Net margin for the second quarter of 2018 was 13.6%, as compared to 6.3% in the second quarter of 2017. Net income per diluted ADS5 in the second quarter of 2018 was RMB0.67 (US$0.10), as compared to RMB0.35 in the second quarter of 2017.

 

Non-GAAP net income attributable to Phoenix New Media Limited for the second quarter of 2018, which excluded share-based compensation and income or loss from equity investments, including impairments, was RMB53.1 million (US$8.0 million), as compared to RMB29.3 million in the second quarter of 2017. Non-GAAP net margin for the second quarter of 2018 was 14.6%, as compared to 7.4% in the second quarter of 2017. Non-GAAP net income per diluted ADS in the second quarter of 2018 was RMB0.73 (US$0.11), as compared to RMB0.41 in the second quarter of 2017.

 


4     “Others, net” primarily consists of government subsidies and litigation loss provisions.

 

5     “ADS” means American Depositary Share of the Company. Each ADS represents eight Class A ordinary shares of the Company.

 

5



 

For the second quarter of 2018, the Company’s weighted average number of ADSs used in the computation of diluted net income per ADS was 73,118,221. As of June 30, 2018, the Company had a total of 581,908,702 ordinary shares outstanding, or the equivalent of 72,738,588 ADSs.

 

CERTAIN BALANCE SHEET ITEMS

 

As of June 30, 2018, the Company’s cash and cash equivalents, term deposits and short term investments and restricted cash were RMB1.32 billion (US$199.4 million). Restricted cash represents deposits placed as security for banking facilities granted to the Company, which are restricted in their withdrawal or usage.

 

Business Outlook

 

Based on the new accounting standard (ASC606), for the third quarter of 2018, the Company expects its total revenues to be between RMB376.1 million and RMB391.1 million; net advertising revenues are expected to be between RMB342.7 million and RMB352.7 million; and paid services revenues are expected to be between RMB33.4 million and RMB38.4 million.

 

If the old accounting standard (ASC605) were to be used, for the third quarter of 2018, the Company would expect its total revenues to be between RMB413.2 million and RMB428.2 million, its net advertising revenues to be between RMB378.0 million and RMB388.0 million, and its paid services revenues to be between RMB35.2 million and RMB40.2 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 9:00 p.m. U.S. Eastern Time on August 14, 2018 (August 15, 2018 at 9:00 a.m. Beijing/Hong Kong time) to discuss its second quarter 2018 unaudited financial results and operating performance.

 

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

 

International:

 

+6567135440

Mainland China:

 

4001200654

Hong Kong:

 

+85230186776

United States:

 

+18456750438

Conference ID:

 

6098336

 

A replay of the call will be available through August 20, 2018 by using the dial-in numbers and conference ID below:

 

International:

 

+61290034211

Mainland China:

 

4006322162

Hong Kong:

 

+800963117

United States:

 

+18554525696

Conference ID:

 

6098336

 

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.

 

6



 

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 and income or loss from equity investments, including impairments. 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 and income or loss from equity investments, including impairments, 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.

 

7



 

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 RMB6.6171 to US$1.00, the noon buying rate in effect on June 29, 2018 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 (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 such as news, finance, fashion, military and digital reading, and interactive services; its mobile channel, consisting of mobile news applications, mobile video application, HTML5-based mobile Internet websites, and mobile digital reading application; and its operations with the telecom operators that provides content and 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; 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.

 

8



 

For investor and media inquiries please contact:

 

Phoenix New Media Limited

Qing Liu

Email: investorrelations@ifeng.com

 

ICR, Inc.

Rose Zu

Tel: +1 (646) 405-4883

Email: investorrelations@ifeng.com

 

9



 

Phoenix New Media Limited

Condensed Consolidated Balance Sheets

(Amounts in thousands)

 

 

 

December 31,

 

June 30,

 

June 30,

 

 

 

2017

 

2018

 

2018

 

 

 

RMB

 

RMB

 

US$

 

 

 

Audited*

 

Unaudited

 

Unaudited

 

ASSETS

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

362,862

 

236,580

 

35,753

 

Term deposits and short term investments

 

737,657

 

776,050

 

117,279

 

Restricted cash

 

336,700

 

307,000

 

46,395

 

Accounts receivable, net

 

458,744

 

385,845

 

58,310

 

Amounts due from related parties

 

187,214

 

199,034

 

30,079

 

Prepayment and other current assets

 

57,458

 

58,910

 

8,903

 

Convertible loans due from a related party

 

102,631

 

106,067

 

16,029

 

Total current assets

 

2,243,266

 

2,069,486

 

312,748

 

Non-current assets:

 

 

 

 

 

 

 

Property and equipment, net

 

64,454

 

80,715

 

12,198

 

Intangible assets, net

 

6,712

 

5,852

 

884

 

Available-for-sale investments

 

1,196,330

 

1,265,490

 

191,245

 

Equity investments, net

 

15,342

 

12,477

 

1,886

 

Deferred tax assets

 

60,460

 

79,609

 

12,031

 

Other non-current assets

 

12,544

 

14,797

 

2,236

 

Total non-current assets

 

1,355,842

 

1,458,940

 

220,480

 

Total assets

 

3,599,108

 

3,528,426

 

533,228

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Short-term loans

 

330,000

 

308,047

 

46,553

 

Accounts payable

 

262,657

 

239,898

 

36,254

 

Amounts due to related parties

 

14,140

 

16,123

 

2,437

 

Advances from customers

 

65,196

 

59,861

 

9,046

 

Taxes payable

 

92,214

 

95,571

 

14,443

 

Salary and welfare payable

 

134,471

 

94,803

 

14,327

 

Accrued expenses and other current liabilities

 

173,253

 

120,216

 

18,167

 

Total current liabilities

 

1,071,931

 

934,519

 

141,227

 

Non-current liabilities:

 

 

 

 

 

 

 

Deferred tax liabilities

 

1,312

 

1,312

 

198

 

Long-term liabilities

 

24,714

 

25,321

 

3,827

 

Total non-current liabilities

 

26,026

 

26,633

 

4,025

 

Total liabilities

 

1,097,957

 

961,152

 

145,252

 

Shareholders’ equity:

 

 

 

 

 

 

 

Phoenix New Media Limited shareholders’ equity:

 

 

 

 

 

 

 

Class A ordinary shares

 

17,180

 

17,471

 

2,640

 

Class B ordinary shares

 

22,053

 

22,053

 

3,333

 

Additional paid-in capital

 

1,587,575

 

1,596,689

 

241,297

 

Statutory reserves

 

81,237

 

81,237

 

12,277

 

Retained earnings

 

229,250

 

220,928

 

33,387

 

Accumulated other comprehensive income

 

570,244

 

636,256

 

96,154

 

Total Phoenix New Media Limited shareholders’ equity

 

2,507,539

 

2,574,634

 

389,088

 

Noncontrolling interests

 

(6,388

)

(7,360

)

(1,112

)

Total shareholders’ equity

 

2,501,151

 

2,567,274

 

387,976

 

Total liabilities and shareholders’ equity

 

3,599,108

 

3,528,426

 

533,228

 

 


* Derived from audited financial statements included in the Company’s Form 20-F dated April 26, 2018.

 

10



 

Phoenix New Media Limited

Condensed Consolidated Statements of Comprehensive Income

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

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

June 30,

 

March 31,

 

June 30,

 

June 30,

 

June 30,

 

June 30,

 

June 30,

 

 

 

2017

 

2018

 

2018

 

2018

 

2017

 

2018

 

2018

 

 

 

RMB

 

RMB

 

RMB

 

US$

 

RMB

 

RMB

 

US$

 

 

 

Unaudited

 

Unaudited

 

Unaudited

 

Unaudited

 

Unaudited

 

Unaudited

 

Unaudited

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net advertising revenues

 

338,725

 

242,861

 

316,035

 

47,760

 

579,809

 

558,896

 

84,462

 

Paid service revenues

 

54,541

 

41,551

 

46,426

 

7,016

 

107,936

 

87,977

 

13,295

 

Total revenues

 

393,266

 

284,412

 

362,461

 

54,776

 

687,745

 

646,873

 

97,757

 

Cost of revenues

 

(167,844

)

(128,233

)

(132,875

)

(20,081

)

(330,333

)

(261,108

)

(39,460

)

Gross profit

 

225,422

 

156,179

 

229,586

 

34,695

 

357,412

 

385,765

 

58,297

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing expenses

 

(118,769

)

(131,219

)

(109,823

)

(16,597

)

(214,231

)

(241,042

)

(36,427

)

General and administrative expenses

 

(35,865

)

(34,398

)

(41,808

)

(6,318

)

(67,816

)

(76,206

)

(11,517

)

Technology and product development expenses

 

(45,791

)

(48,412

)

(48,523

)

(7,333

)

(90,419

)

(96,935

)

(14,649

)

Total operating expenses

 

(200,425

)

(214,029

)

(200,154

)

(30,248

)

(372,466

)

(414,183

)

(62,593

)

Income/(loss) from operations

 

24,997

 

(57,850

)

29,432

 

4,447

 

(15,054

)

(28,418

)

(4,296

)

Other income/(loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

13,493

 

12,938

 

13,550

 

2,048

 

26,151

 

26,488

 

4,003

 

Interest expense

 

(6,426

)

(4,633

)

(3,389

)

(512

)

(12,775

)

(8,022

)

(1,212

)

Foreign currency exchange (loss)/gain

 

(7,890

)

(15,131

)

16,231

 

2,453

 

(10,201

)

1,100

 

166

 

Income/(loss) from equity investments, including impairments

 

1,127

 

(2,430

)

(435

)

(66

)

463

 

(2,865

)

(433

)

Others, net

 

3,066

 

4,093

 

2,128

 

322

 

4,493

 

6,221

 

940

 

Income/(loss) before tax

 

28,367

 

(63,013

)

57,517

 

8,692

 

(6,923

)

(5,496

)

(832

)

Income tax (expense)/benefit

 

(4,215

)

4,724

 

(8,498

)

(1,284

)

(1,874

)

(3,774

)

(570

)

Net income/(loss)

 

24,152

 

(58,289

)

49,019

 

7,408

 

(8,797

)

(9,270

)

(1,402

)

Net loss attributable to noncontrolling interests

 

779

 

749

 

222

 

34

 

1,554

 

971

 

147

 

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

 

24,931

 

(57,540

)

49,241

 

7,442

 

(7,243

)

(8,299

)

(1,255

)

Net income/(loss)

 

24,152

 

(58,289

)

49,019

 

7,408

 

(8,797

)

(9,270

)

(1,402

)

Other comprehensive income, net of tax: fair value remeasurement for available-for-sale investments*

 

256,588

 

46,364

 

5,287

 

799

 

265,479

 

51,651

 

7,806

 

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

 

(12,486

)

(35,014

)

49,376

 

7,462

 

(16,253

)

14,362

 

2,170

 

Comprehensive income/(loss)

 

268,254

 

(46,939

)

103,682

 

15,669

 

240,429

 

56,743

 

8,574

 

Comprehensive loss attributable to noncontrolling interests

 

779

 

749

 

222

 

34

 

1,554

 

971

 

147

 

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

 

269,033

 

(46,190

)

103,904

 

15,703

 

241,983

 

57,714

 

8,721

 

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

 

24,931

 

(57,540

)

49,241

 

7,442

 

(7,243

)

(8,299

)

(1,255

)

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

0.04

 

(0.10

)

0.08

 

0.01

 

(0.01

)

(0.01

)

0.00

 

Diluted

 

0.04

 

(0.10

)

0.08

 

0.01

 

(0.01

)

(0.01

)

0.00

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

0.35

 

(0.79

)

0.68

 

0.10

 

(0.10

)

(0.11

)

(0.02

)

Diluted

 

0.35

 

(0.79

)

0.67

 

0.10

 

(0.10

)

(0.11

)

(0.02

)

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

573,948,891

 

579,228,111

 

580,976,381

 

580,976,381

 

573,943,337

 

580,102,974

 

580,102,974

 

Diluted

 

576,815,588

 

579,228,111

 

584,945,765

 

584,945,765

 

573,943,337

 

580,102,974

 

580,102,974

 

 


*        The Company adopted ASU 2016-1, Recognition and Measurement of Financial Assets and Financial Liabilities, beginning from January 1, 2018. After the adoption of this new accounting standard, the Company measures long-term equity investments other than equity method investments at fair value through earnings. As investments in Particle meet the definition of debt securities, which are recorded as available-for-sale investments, there is no impact by the adoption of ASU 2016-1 on the available-for-sale investments in Particle and the changes in their fair value continue to be recorded in other comprehensive income.

 

11



 

Phoenix New Media Limited

Condensed Segments Information

(Amounts in thousands)

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

June 30,

 

March 31,

 

June 30,

 

June 30,

 

June 30,

 

June 30,

 

June 30,

 

 

 

2017

 

2018

 

2018

 

2018

 

2017

 

2018

 

2018

 

 

 

RMB

 

RMB

 

RMB

 

US$

 

RMB

 

RMB

 

US$

 

 

 

Unaudited

 

Unaudited

 

Unaudited

 

Unaudited

 

Unaudited

 

Unaudited

 

Unaudited

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net advertising service

 

338,725

 

242,861

 

316,035

 

47,760

 

579,809

 

558,896

 

84,462

 

Paid services

 

54,541

 

41,551

 

46,426

 

7,016

 

107,936

 

87,977

 

13,295

 

Total revenues

 

393,266

 

284,412

 

362,461

 

54,776

 

687,745

 

646,873

 

97,757

 

Cost of revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net advertising service

 

141,459

 

107,289

 

110,022

 

16,627

 

272,584

 

217,311

 

32,841

 

Paid services

 

26,385

 

20,944

 

22,853

 

3,454

 

57,749

 

43,797

 

6,619

 

Total cost of revenues

 

167,844

 

128,233

 

132,875

 

20,081

 

330,333

 

261,108

 

39,460

 

Gross profit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net advertising service

 

197,266

 

135,572

 

206,013

 

31,133

 

307,225

 

341,585

 

51,621

 

Paid services

 

28,156

 

20,607

 

23,573

 

3,562

 

50,187

 

44,180

 

6,676

 

Total gross profit

 

225,422

 

156,179

 

229,586

 

34,695

 

357,412

 

385,765

 

58,297

 

 

12



 

Phoenix New Media Limited

Condensed Information of Cost of Revenues

(Amounts in thousands)

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

June 30,

 

March 31,

 

June 30,

 

June 30,

 

June 30,

 

June 30,

 

June 30,

 

 

 

2017

 

2018

 

2018

 

2018

 

2017

 

2018

 

2018

 

 

 

RMB

 

RMB

 

RMB

 

US$

 

RMB

 

RMB

 

US$

 

 

 

Unaudited

 

Unaudited

 

Unaudited

 

Unaudited

 

Unaudited

 

Unaudited

 

Unaudited

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue sharing fees

 

15,052

 

8,617

 

11,460

 

1,732

 

32,372

 

20,077

 

3,034

 

Content and operational costs

 

105,984

 

105,273

 

107,516

 

16,249

 

212,300

 

212,789

 

32,158

 

Bandwidth costs

 

13,607

 

14,343

 

13,899

 

2,100

 

28,135

 

28,242

 

4,268

 

Sales taxes and surcharges

 

33,201

 

 

 

 

57,526

 

 

 

Total cost of revenues

 

167,844

 

128,233

 

132,875

 

20,081

 

330,333

 

261,108

 

39,460

 

 

13



 

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 June 30, 2017

 

Three Months Ended March 31, 2018

 

Three Months Ended June 30, 2018

 

 

 

 

 

Non-GAAP

 

 

 

 

 

Non-GAAP

 

 

 

 

 

Non-GAAP

 

 

 

 

 

GAAP

 

Adjustments

 

Non-GAAP

 

GAAP

 

Adjustments

 

Non-GAAP

 

GAAP

 

Adjustments

 

Non-GAAP

 

 

 

RMB

 

RMB

 

RMB

 

RMB

 

RMB

 

RMB

 

RMB

 

RMB

 

RMB

 

 

 

Unaudited

 

Unaudited

 

Unaudited

 

Unaudited

 

Unaudited

 

Unaudited

 

Unaudited

 

Unaudited

 

Unaudited

 

Gross profit

 

225,422

 

1,224

(1)

226,646

 

156,179

 

205

(1)

156,384

 

229,586

 

634

(1)

230,220

 

Gross margin

 

57.3

%

 

 

57.6

%

54.9

%

 

 

55.0

%

63.3

%

 

 

63.5

%

Income/(loss) from operations

 

24,997

 

5,460

(1)

30,457

 

(57,850

)

3,450

(1)

(54,400

)

29,432

 

3,390

(1)

32,822

 

Operating margin

 

6.4

%

 

 

7.7

%

-20.3

%

 

 

-19.1

%

8.1

%

 

 

9.1

%

 

 

 

 

5,460

(1)

 

 

 

 

3,450

(1)

 

 

 

 

3,390

(1)

 

 

 

 

 

 

(1,127

)(2)

 

 

 

 

2,430

(2)

 

 

 

 

435

(2)

 

 

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

 

24,931

 

4,333

 

29,264

 

(57,540

)

5,880

 

(51,660

)

49,241

 

3,825

 

53,066

 

Net margin

 

6.3

%

 

 

7.4

%

-20.2

%

 

 

-18.2

%

13.6

%

 

 

14.6

%

Net income/(loss) per ADS—diluted

 

0.35

 

 

 

0.41

 

(0.79

)

 

 

(0.71

)

0.67

 

 

 

0.73

 

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

 

72,101,949

 

 

 

72,101,949

 

72,403,514

 

 

 

72,403,514

 

73,118,221

 

 

 

73,118,221

 

 


(1) Share-based compensation

(2) Loss/(income) from equity investments, including impairments

 

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

 

14