Financial Data and Key Metrics Changes - The company's net revenues for Q2 2021 were RMB 1.202 billion, with ARPU increasing by RMB 0.46 and a quarterly average DAU of 29 million and MAU of 132 million, remaining stable sequentially [15] - Cost of revenues decreased by 17% year-on-year to RMB 328 million, leading to a gross profit margin of 73%, which expanded both year-on-year and sequentially [16] - Operating loss was RMB 200 million, with expectations for operational profitability in the second half of the year [18][19] Business Line Data and Key Metrics Changes - The company focused on improving operating efficiency and growing Midu Novel, which has seen positive growth trends with DAU exceeding 10 million in Q2 [10][26] - Sales and marketing expenditures totaled RMB 901 million, flat year-on-year, but represented a 13 percentage point increase as a percentage of revenue due to increased investment in user base growth for Midu Novels [17] Market Data and Key Metrics Changes - The overall digital advertising market in China has faced headwinds post-COVID-19, with advertisers showing caution in spending and budgeting [9][22] - The company anticipates continued pressure in the second half of the year, particularly in Q3, due to uncertainties in economic growth and regulatory environments [10][23] Company Strategy and Development Direction - The company is focusing on improving operating efficiency and investing in Midu Novel as a key growth strategy [10][11] - Management views recent regulatory actions as positive for the long-term health and stability of the Chinese tech industry [12] Management Comments on Operating Environment and Future Outlook - Management expressed caution regarding the advertising outlook for the second half of the year, noting that clients are conservative in ad spending [22] - The company expects revenue for Q3 to be stable, ranging between RMB 1.050 billion to RMB 1.1 billion [19] Other Important Information - The company has maintained a focus on compliance with regulations and has positioned itself to meet high standards in data privacy and security [31] Q&A Session Summary Question: Advertising outlook in the second half and impact of regulatory environment - Management indicated that the advertising market outlook remains cautious due to uncertainties in economic growth and regulatory environments, with clients being conservative in ad spending [22][23] Question: User acquisition costs and engagement - Management noted that user engagement costs have stabilized, and acquisition costs are rising due to increased investment in Midu, which is expected to yield good ROI [25][26] Question: Impact of regulations on data collection and advertising business - Management welcomed the regulatory developments, stating that they do not foresee significant incremental impacts on the advertising business due to prior compliance measures [31]
Qutoutiao(QTTOY) - 2021 Q2 - Earnings Call Transcript