Financial Data and Key Metrics Changes - The company's net revenues for Q1 2021 were RMB1,291 million, with an ARPU of RMB0.45 and a quarterly average DAU of 32 million and MAU of 133 million, indicating stability and recovery after the peak season of Q4 [21][22] - Cost of revenues decreased by 17% year-on-year to RMB380 million, resulting in a gross profit of RMB910 million and a gross margin of 71%, reflecting a margin expansion of 3% to 4% both year-on-year and sequentially [22] - The company incurred a small operating loss of RMB54 million, with an operating loss ratio of just 4.2%, maintaining good cost discipline since breaking even in Q4 2020 [25][26] Business Line Data and Key Metrics Changes - Midu Novels has become a significant growth pillar, with DAU peaking over 10 million in Q2 and revenues doubling year-over-year [16][29] - The company has seen improved unit economics, with better ARPU and significantly reduced user engagement expenses, particularly excluding Midu [27][30] Market Data and Key Metrics Changes - The advertising market showed some weakness from March to May due to regulatory actions affecting the Internet industry, particularly online education, but a recovery trend is expected to continue for 2021 [35][36] - The company anticipates stable DAU and revenue for the rest of the year, with some seasonal movements [30] Company Strategy and Development Direction - The company is committed to a balanced approach towards growth and profitability while developing its portfolio of applications, aiming for full-year group-level profitability [18][30] - Strategic collaborations with Kuaishou for mini TV series and partnerships with China Literature are part of the strategy to enhance content quality and user engagement [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving full-year targets despite short-term challenges in the advertising market, emphasizing a disciplined approach to marketing investments [34][36] - The company aims to double Midu's DAU and revenue by year-end, with a target of over 50 million DAU [37][38] Other Important Information - The company has maintained a streamlined R&D team, with R&D expenses at RMB137 million, representing 11% of revenues, which is consistent with previous quarters [24] - The management highlighted the importance of user retention and monetization efficiency as key components of their growth strategy for Midu [29] Q&A Session Summary Question: Q2 revenue guidance and advertising momentum - Management expects stable user and revenue bases but noted some weakness in the advertising market due to regulatory actions, particularly affecting online education [34][35] Question: Midu's KPIs for the year - Management reiterated the goal to double Midu's DAU and revenue by year-end, with current DAU already surpassing 10 million [37][38] Question: User acquisition strategy for Midu - Management emphasized a disciplined approach to user acquisition, ensuring good ROI on marketing expenditures while seeing promising results in ARPU and user retention [42][43]
Qutoutiao(QTTOY) - 2021 Q1 - Earnings Call Transcript