Qutoutiao Inc. (QTT) Q3 2020 Earnings Conference Call December 16, 2020 8:00 PM ET Company Participants Sai Du - Investor Relations Eric Tan - Co founder, Chairman and Chief Executive Officer Xiaolu Zhu - Chief Financial Officer Conference Call Participants Vicky Wei - Citi Operator Hello, ladies and gentlemen, thank you for standing by for the Third Quarter 2020 Earnings Conference Call for the Qutoutiao, Inc. At this time, all participants will be in a listen-only mode. After managementÂ's remarks, there ...

Financial Data and Key Metrics Changes - Revenues for Q2 2020 were RMB 1,441 million, representing a 4% year-on-year increase and moderate sequential growth [22] - Daily Active Users (DAU) increased by 11% year-on-year, although Average Revenue Per User (ARPU) declined by 6% due to a weaker advertising market [22] - Non-GAAP operating loss narrowed to RMB 140.6 million, compared to RMB 506 million a year ago, with a non-GAAP operating loss margin of 9.8% [30] Business Line Data and Key Metrics Changes - Cost of revenues increased by 10.4% year-on-year to RMB 397 million, primarily due to rising content-related costs [25] - Sales and marketing expenses decreased by 29.6% year-on-year to RMB 922 million, representing 64% of net revenues, a significant improvement from 94.5% a year ago [26][27] - User acquisition expenses decreased by 44.7% year-on-year to RMB 436 million, reflecting optimized acquisition strategies [29] Market Data and Key Metrics Changes - The advertising market sentiment remains cautious due to the impact of the CCTV report, which temporarily removed the Qutoutiao app from major app stores [31][56] - The company expects Q3 2020 net revenues to be between RMB 1,130 million to RMB 1,150 million, reflecting the ongoing evaluation of the impact from the CCTV report [33] Company Strategy and Development Direction - The company aims to balance growth and profitability, focusing on sustainable growth while investing in technology and content [6][10] - A strategic cooperation with Midu Novels for short video series aims to leverage content and user traffic, enhancing monetization efficiency [11][12] - The company plans to shift its user base towards those attracted by content rather than loyalty points, aiming for a more engaged user mix [41][54] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the cautious approach due to the COVID-19 pandemic and the recent advertising compliance issues, emphasizing the importance of compliance with laws and regulations [6][31] - The company remains optimistic about recovery in Q4, expecting to achieve breakeven on a non-GAAP operating basis [34][48] - Management believes that content and recommendation algorithms are key pillars for future growth, with a focus on improving user engagement and experience [41][54] Other Important Information - The company has implemented measures to address compliance issues raised by the CCTV report, including stricter management of advertising content and enhancing user complaint channels [14][16] - The company is committed to building a better content ecosystem for all stakeholders on its platform, viewing recent challenges as opportunities for improvement [16] Q&A Session Summary Question: About the third quarter guidance and its impact on ARPU - Management explained that the cautious approach to advertising compliance and a balanced strategy between profitability and growth are reasons for the lower guidance, with a focus on ROI for marketing spending [39][40] Question: Strategy for user growth and cost reduction to achieve profitability - Management emphasized a disciplined spending approach, aiming for sustainable user growth while maintaining profitability, with a target of over 100 million DAUs [51][52] Question: Content cost trends and revenue sharing plans - Management confirmed that content costs are expected to increase as the company invests in high-quality content, with revenue sharing for news feeds remaining low and around 20% for Midu [60][61]

Qutoutiao Inc. Reports Second Quarter 2020 Unaudited Financial Results September 21, 2020 SHANGHAI, China, Sept. 21, 2020 (GLOBE NEWSWIRE) -- Qutoutiao Inc. ("Qutoutiao", the "Company" or "We") (NASDAQ: QTT), a leading operator of mobile content platforms in China, today announced its unaudited financial results in the second quarter ended June 30, 2020. Second Quarter 2020 Highlights Combined average MAUs1 were 136.5 million, compared to 119.3 million in the second quarter of 2019 and 138.3 million in the ...

Qutoutiao, Inc. (QTT) Q1 2020 Earnings Conference Call June 4, 2020 7:00 AM ET Company Participants Sai Chi Du – Investor Relations Xiaolu Zhu – Chief Financial Officer Eric Tan – Chief Executive Officer Conference Call Participants Vicky Wei – Citi Thomas Chong – Jefferies Miranda Zhuang – Bank of America Operator Hello, ladies and gentlemen, thank you for standing by for the First Quarter 2020 Earnings Conference Call for Qutoutiao, Inc. At this time all participants are in a listen-only mode. After manag ...

Qutoutiao Inc. (QTT) Q4 2019 Results Earnings Conference Call March 18, 2020 7:00 AM ET Company Participants Eric Siliang Tan - Co-founder, Chairman and Chief Executive Officer Xiaolu Zhu - Chief Financial Officer Conference Call Participants Zhijing Liu - UBS Nelson Cheung - Citigroup Jay Dong - TH Data Capital Operator Hello, ladies and gentlemen, thank you for standing by for the Fourth Quarter 2019 Earnings Conference Call for Qutoutiao Incorporated. At this time, all participants are in a listen-only m ...

Financial Data and Key Metrics Changes - The company generated RMB1.4 billion in revenues for Q3 2019, representing a 44% increase year-over-year, although sequentially revenues were slightly up due to the suspension of Midu Novels [23] - The ARPU for Q3 2019 was RMB0.36, down from RMB0.39 in Q2 2019 and RMB0.51 in Q3 2018, primarily due to a weak advertising market and the suspension of Midu Novels [25] - The non-GAAP gross margin was 65% in Q3 2019, down from 84% in Q3 2018, attributed to the loss of revenue from Midu Novels and increased content costs [26] Business Line Data and Key Metrics Changes - Daily Active Users (DAU) reached 42 million, doubling from the previous year, while Monthly Active Users (MAU) also showed significant growth [6] - Midu Lite, launched in May, quickly gained over 3 million DAU, contributing to the overall user growth [7] - Revenue from games and live streaming more than doubled quarter-on-quarter, with 10% to 20% of users accessing games and around 3% active on live streaming daily [12] Market Data and Key Metrics Changes - The company observed a tenfold increase in GMVs generated by Qutoutiao users on e-commerce platforms during the Double 11 Shopping Festival compared to the previous year, indicating strong market potential in lower-tier cities [21] - The competitive landscape remains challenging, with competitors like SINA and Feedly gaining momentum, but the company maintains a strong position in the free online literature market [42][51] Company Strategy and Development Direction - The company aims for long-term profitable growth, focusing on a balanced approach to growth and capital allocation with an emphasis on sustainability [22] - The strategy includes enhancing the content ecosystem and improving user retention through better content offerings and monetization efficiency [10][15] - The company plans to achieve breakeven for the QTT business line in 2020 and expects to see better margins in Q4 2019 [36][37] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a less hospitable operating environment but expressed confidence in the company's core capabilities and strategic direction [5] - The outlook for Q4 2019 includes expected revenues in the range of RMB1.6 billion to RMB1.62 billion, factoring in the resumption of normal operations for Midu Novels [38] - Management believes that the second half of 2020 could see accelerated revenue growth as the impact of the Midu suspension diminishes [66] Other Important Information - The company completed the issuance of new shares to The Paper, which is part of a prior agreement made before the IPO [34] - The balance sheet remains strong with RMB2.1 billion in cash as of September 30, indicating the ability to continue investing for future growth [35] Q&A Session All Questions and Answers Question: Surge in COGS and new marketing solution services - Management explained that the surge in COGS was due to several factors, including the loss of revenue from Midu and increased content costs associated with new marketing solutions [41][44] Question: Competition in the free-reading market - Management stated that despite the suspension, the company remains the number one player in the free online literature market and aims to maintain its competitive edge through user acquisition and content partnerships [42][51] Question: Fourth quarter guidance and user metrics - Management indicated that while there may be slower user base growth, they expect improved ARPU and overall revenue growth in Q4, with a focus on sustainable profitability [72][74]

Financial Data and Key Metrics Changes - The company's revenue for Q2 2019 reached RMB1.4 billion, nearly tripling compared to the same period last year [31] - Average user acquisition cost was RMB6.93, while user engagement expenses were RMB0.13 per DAU per day, and ARPU was RMB0.39 [25] - Gross margin for Q2 2019 was 74.0%, a decline of 1.2% quarter-on-quarter and 9.1% year-on-year [34] - Non-GAAP net loss was RMB496 million, representing a loss ratio of 35.8%, which increased from the previous year [39] Business Line Data and Key Metrics Changes - The overall business saw a quarterly average combined DAU of 38.7 million and combined MAU of 119.3 million, both more than tripling from a year ago [8] - Midu Lite was launched, attracting a different user base and contributing to user growth [9] - Midu's peak DAU reached over 8 million at the beginning of Q3, but faced a suspension from July 15 to October 15 [48] Market Data and Key Metrics Changes - The overall digital advertising market is experiencing weakness due to supply/demand imbalance and weak macro conditions [22] - Despite the tough environment, the company is delivering one of the fastest growth rates in the industry [22] Company Strategy and Development Direction - The company is focusing on growth, compliance, and optimization of internal teams to support future growth [8] - A significant investment in IT infrastructure is being made to accommodate data-intensive content [34] - The company aims to reach a DAU target of 50 million to 60 million by year-end, doubling the level at the end of the previous year [21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in resuming normal operations for Midu by mid-October and expects limited impact on Q4 [60] - The company anticipates that Midu could contribute up to 20% of total revenue in Q4 [60] - Management acknowledged the challenges in user acquisition and engagement costs but remains optimistic about future growth [62] Other Important Information - The company has been granted an Internet news license, marking a significant achievement in compliance [11] - The company is diversifying its monetization avenues by growing contributions from casual games and live streaming [22] Q&A Session Summary Question: DAU was stagnant in Q2; what is the user acquisition strategy? - Management noted some pressure in user growth due to competition and market weakness but observed recovery starting in June, with a 10% to 15% increase in DAU for Qutoutiao in Q3 [46][47] Question: How confident is management regarding regulatory headwinds? - Management expressed confidence in resuming normal operations by October 15, supported by the recent Internet News License [58] Question: What is the revenue outlook for Q4? - Management expects Q4 to be strong, with Midu potentially contributing up to 20% of total revenue [60][72] Question: What are the trends in advertising sectors? - E-commerce remains strong, continuing to be the largest segment of advertisers, with other segments remaining stable [85]

Financial Data and Key Metrics Changes - In Q1 2019, the company generated revenues of RMB1.1 billion, which is close to 5 times higher year-on-year driven by DAU growth and higher ARPU [30][31] - The average DAUs reached 37.5 million, a nearly four-fold increase year-on-year, while MAUs reached 111 million, also a four-fold increase [11] - ARPU was RMB0.33 in Q1 2019, down from RMB0.48 in Q4 2018 but up from RMB0.23 in Q1 2018 [31] Business Line Data and Key Metrics Changes - The user engagement expense per DAU per day improved to RMB0.17 from RMB0.20 in Q4 2018 [33] - The user acquisition costs per installation were RMB6.21, flat compared to Q1 2018 and lower than RMB6.57 in Q4 2018 [36] - R&D expenses increased to 12.4% of revenue, up from 8.7% in Q4 2018, reflecting a 20% absolute sequential increase in R&D spending [37] Market Data and Key Metrics Changes - The advertising market in China has been weaker than expected, affecting overall pricing and demand [28][61] - E-commerce advertisers, which contribute significantly to revenues, experienced a quieter period due to seasonality [30] Company Strategy and Development Direction - The company aims to enhance user experience and optimize unit economics, focusing on product improvement and user engagement [12][26] - A new proprietary writer program for Midu is being launched to enhance content quality and competitiveness [49] - The company is exploring collaborations with Alibaba to reduce user engagement expenses and enhance revenue streams [18][50] Management's Comments on Operating Environment and Future Outlook - Management noted challenges from irrational competition in the market, particularly from short video apps and free reading apps [25][46] - The company expects revenues for Q2 2019 to be between RMB1.38 billion to RMB1.42 billion, representing a 23% to 27% quarter-on-quarter growth [39] - Management anticipates that ARPU will improve over time but will take a while to return to peak levels due to pricing pressures in the advertising market [40] Other Important Information - The company has a strong balance sheet with RMB1.6 billion in cash and equivalents, not including proceeds from recent financing activities [41] - The management team has undergone changes, with Eric Tan taking over as CEO and Xiaolu Zhu appointed as Co-CFO [20][21] Q&A Session Summary Question: Revenue guidance and competition impact - Management clarified that the revenue guidance for Q2 is RMB1.38 billion to RMB1.42 billion, with a focus on improving operating efficiency to mitigate pricing pressure [46] - Regarding competition, management believes that unsustainable models will eventually pull back, allowing the company to gain market share [46] Question: Proprietary writer program and Alibaba cooperation - The proprietary writer program is expected to initially offer higher revenue shares to attract writers, with long-term content costs stabilizing around 20% of revenue [49] - The cooperation with Alibaba includes advertising, loyalty point redemption, and content collaboration, which are expected to enhance revenue and reduce engagement expenses [50] Question: User acquisition and maintenance costs - Management indicated that user acquisition costs will remain flat in Q2, with a cautious approach to spending [55] - Maintenance costs per DAU are expected to decline further, stabilizing around RMB0.15 by the end of the year [55][56] Question: App business sentiment and advertising trends - Management noted that while Q1 is typically weak for advertising, the recovery from Q1 to Q2 is not as significant this year due to overall market weakness [61] - The company plans to improve its billing platform and targeting algorithms to enhance pricing despite market pressures [61]

Financial Data and Key Metrics Changes - In Q4 2018, the company's revenue reached RMB1.3 billion, exceeding the high end of guidance and representing more than five times the revenue from the same period a year ago [31] - The total revenue for 2018 exceeded RMB3 billion, almost six times the revenue in 2017, which was just over RMB0.5 billion [30] - The average revenue per user (ARPU) was nearly RMB0.47 in Q4, slightly down from RMB0.5 in Q3 2018, but up from RMB0.29 in Q4 2017 [32] - Non-GAAP net loss was RMB367 million, with a non-GAAP loss margin of 27.6%, improved from 30.5% in the previous quarter [36] Business Line Data and Key Metrics Changes - The average monthly active users (MAU) reached RMB94 million, growing 286% year-on-year and 44% quarter-on-quarter [6] - The average daily active users (DAU) reached RMB31 million, representing an increase of 225% year-on-year and 45% quarter-on-quarter [7] - Midu, a new product, attracted 40 million installed users within six months of launch, with a DAU of 5 million by the end of December 2018 [16] Market Data and Key Metrics Changes - The company has become a significant traffic portal for lower-tier cities in China, with 70% of Qutoutiao app users based in tier three cities and below [9] - The total installations of the Qutoutiao app reached about 300 million, indicating substantial penetration potential in a population of 1 billion living in tier three and below cities [19] Company Strategy and Development Direction - The company aims to enhance its content ecosystem, improve social features, and optimize unit economics to connect with grassroots populations [21] - The strategy for Midu includes becoming the leading online literature app and building a writer ecosystem to foster original content [26] - The company plans to diversify revenue streams into areas such as paid subscriptions, live streaming, games, and e-commerce to create a balanced revenue mix [56] Management's Comments on Operating Environment and Future Outlook - Management acknowledged macroeconomic headwinds in the advertising market but noted that performance advertisers, who make up the majority of their revenue, are likely to increase spending during challenging economic times [54] - The company expects net revenues for 2019 to be between RMB7.5 billion to RMB8.5 billion, compared to RMB3 billion in 2018, indicating strong growth momentum [44] - Management anticipates that the user acquisition costs will continue to decline due to improved platform capabilities and content offerings [60] Other Important Information - The company has implemented a loyalty program that enhances user engagement, with the monetary value of loyalty points being minimal but effective in building customer loyalty [42] - The company is exploring AI-assisted content production to reduce content production costs and improve margins in the long term [99] Q&A Session Summary Question: What is the unit economy for the new Midu app, and what is the plan for Midu regarding investments in user acquisition and retention cost? - Management clarified that Midu has no engagement costs for users and expects the acquisition cost to be similar to Qutoutiao, with a payback period of 6 to 9 months [50] Question: Does the slowdown of the advertising market pose any threat to Qutoutiao's revenue growth in the first half? - Management noted that brand advertisers are less than 5% of total advertising revenue, and performance advertisers may increase spending during economic challenges, making the company relatively insulated from macro factors [54] Question: What is the reason behind the decline in user acquisition costs? - Management attributed the decrease to improved platform capabilities and a technical approach to user acquisition, which enhances efficiency [60] Question: How much of the user acquisition spend is for Qutoutiao versus Midu? - In Q4, the user acquisition mix was approximately 80% for Qutoutiao and 20% for Midu, with similar unit acquisition costs [69] Question: What is the status of the short video app? - The short video app is currently being tested with promising user engagement data, and a wider launch is expected in Q2 [77] Question: How will the company maintain its leadership in the online literature market? - Management emphasized the challenges of replicating the free-to-read model and highlighted their efficient user acquisition, retention, and monetization strategies [86]