QTT - Earnings call transcript Q4 2020

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Hello, ladies and gentlemen. Thank you for standing by for the Fourth Quarter 2020 Earnings Conference Call for Qutoutiao Incorporated. [Operator Instructions]. Today's conference call is being recorded. I will now turn the call over to your host, Sai Chi Du. Chi. Sai ahead, go Please

Sai Chi Du

Services Thank you Quarter The to Fourth via welcome, financial made have available online. much, Earnings Conference and Newswire released XXXX were Inc. operational everyone, today Call and and been the results very earlier of company's Qutoutiao

can the Tan; include will release Xiaolu our Mr. Eric earnings You our by section CFO, IR Zhu. call the also on website our today's view and Mr. of at press visiting ir.qutoutiao.net. Participants CEO,

that note under please continue, discussion provisions will the made we Before Securities XXXX. statements forward-looking today's Act the of contain of harbor safe Litigation U.S. Private Reform

inherent involve statements risks Forward-looking and uncertainties.

reading for such, information in with thanks, has prospectus discussions Qutoutiao's includes a out applicable release and been As unaudited call GAAP Exchange from Further the unaudited regarding as for of does as well measures will you, to everyone, by measures. reconciliation different conference these any measures obligation unaudited filed Eric's transformational call. well materially The the Thank press commentary year and the statements, on Please other non-GAAP update press public contains not and and us. the financial non-GAAP I XXXX GAAP of company's law. as filings and the required earnings may unaudited world for Chi, conference Sai note assume as company's business first. start This company joining included today's of the measures. except as the U.S. as financial any Qutoutiao's other be release forward-looking is and today. to under Commission. the Securities this views expressed risks results uncertainties that

us loyalty gap flip earn of economics of pioneered the points strategy is but there clear been who predominantly being proportion the rather are meaningful has inevitably, of unit That as has and thinking the not. operational and rethink and that of more has whose the improve ever we users to products. business do is how and that platform a path part users a create now Not marketing but achieve doing a weathered reward consuming enhance differently enjoy, purpose pushed gamified perhaps content. the smart a the quality our are to quality content. some At the how economics. not the to and tested user side than also value those are of we engagement our same of is There have changed. money, consuming a it of environment valuable solely reason is and loyal to amount for than users who changes comes before. through is should the this most to from take our we for and platforms power maintain resiliency experience come adaptability The for which We is our who people position effective, our This coin Naturally, is less is distributed algorithms. we users it uncertainties loyalty no What heart unit content-oriented points. proposition We in our between is those we to it. content on

the else is remarkable, unit a story ARPU, a quarter the When net QX third slashing the a expenses and almost to was underlying better a equal, the of per this by a DAU profile. it's the in day, firm we While directly our ARPU imagine, better the headline ROI which ARPU at acquisition fourth Partially transformation taken Novels for better user One going throughout per user But XX% of base. our point into strategically driving ways figures virtuous is our decisive us part X DAU leaner are been points equation in MAU financing Midu XXXX have the base favorable richer the structurally strong to to But mix higher Naturally, turn level for both All less and as the bid a business also event revenue and engagement much able have X can generating improved, and gives higher the our saw has as significant our us Comparing savings. a ARPU, user overall loyalty the former, cycle we invested quarters quarter goes in increase. content this cost in of driven users user economics how being XX% more look Unit immediate much even latter. first year. improvement. user is remarkable result, is and a a the has to amounting quality million. and has you $XXX generate economics. the consistently of an This we quarter. into to with There offsetting average, serve in to user the shift recovery expense quarter retain net higher forward comparable tells ammunition the more base high-quality of was for being a channels. and coming fourth beyond. quality. we new with better from been round quarters at the from during first step Essentially the you to shown we year a

not and consistently with industry more to The us online yet large ecosystem. consistent in more understood getting general has its still a content, and see by in It's market, Our but build the we around a winner, will optimism potential. literature long-term clear the and have subsector, sector, see being recognized collaboration leaders, free-to-read strengthen our investment multibillion-dollar business. content room does the a

original authors The production to IP of signing the encouraging. by continue directly potential been the We results IP promotion our many expanding explore of through monetization and in-house dramas. have

end the development, Apart operational the this the size us double for has underlying profitability expect focus year the business. been by in in the DAU revenues. both in of of We strategic Midu from XXXX of terms to and Novels

non-GAAP profitable in IPO. quarter profitable the in are XXXX, turn We our fourth delighted first terms see since the quarter to operationally the group of

fact, more business, Despite generated more our which pandemic the we users relatively and sustainable committed and part dividend. environment business, operating of QX. seen Novels, million true and remain a challenging creating the our have paying excludes for profit effort program Midu in than value building more In healthy and as the of mature CCTV RMBXXX our a the result impact, to

We expect to maintain and profits from here onwards. grow our

to base year, doubling XXXX from this from apart to Novels, our and we fourth quarter rate. expand the out revenues looking Midu expect run XXXX, overall So user

and technology pulling far, as experience be smartly user namely: will same enhance our overall to content use platform. successfully to use We invest have the we entire levers done quality; Continue across better technology so in

we young For a competitive. the is as full the and group a still and our goal with as year stable we full well But highly relatively reach. believe is macro level year challenge company operating the XXXX, without are it's hopefully environment, of not of environment within strategy right profitability

is. the where China, smart lower-tier term, users on disposable for the our income growth is the focus Over committed to phone we potential which cities and in long remain

the will concludes CFO, Thank users' much. and grow over very to meet Xiaolu. with needs. and you high-quality call now our That to remarks, I We provide our our turn Eric's content users will

Xiaolu Zhu

call. again, thank And Chi. you, everyone, Sai joining and for Eric you, Thank today's

our operational before also review with full for me our you Let and next thoughts the the first financial quarter outlook results providing on and year.

We during sequential RMBX.XX, million net improvement. DAU ARPU is MAU an revenues in the of RMBX.XXX quarter. quarter which a the were Our of average fourth had XXX significant XX million billion with an and

for we a efficiency been XXXX. the on operational IPO turned the and our fourth profitable on XXXX focus non-GAAP quarter and basis year track. the ratios, for been enhancing consistently well time of has After Our cost-to-income improving operational first we since profitability, in have

more by in let's XX% partially of towards of non-GAAP investment referring costs disciplined of look will driven stock-based revenues quarter increased which million content. managing note, fourth RMBXXX.X our I the be offset at a in measures to So the approach year-on-year, Cost components, our XXXX, fixed detail. Please decrease and into by compensation. excludes were expenses

a we the at reading lower As our year. profit slightly gross strong year-on-year margin headwind the a considering RMBXXX.X result, throughout million gross with encountered revenue was XX%,

expense composed user of engagement and marketing, biggest and acquisition mainly is user which sales expenses. is expenses Our

During came to they the million quarter, RMBXXX and million, respectively. RMBXXX

to material from to marketing in both these Our on point the mode and sales a of our revenue our year of expense other produced has marketing percentage and have improvement management prudent reduction XX% significant a absolute now than improvement items and XX.X%. dollar margin. a saw percentage XX words, link total produced halving year-on-year ago as In operating activities underlying of a more new RMBXXX.X million operational line sales and in terms

of the as RMBXXX.X the G&A percentage result year. were in X% which RMBXX.X which small as was revenue, expenses a the teams. expenses million R&D Our R&D in XX% million we revenue observed during was under the throughout revenues, line our with quarter, of quarter, a were decrease range of of just streamlining of a

was DAU since despite first margin. came also also and at quarter and of quarterly meaningful IPO, like and positive, operating first increasingly IPO, the future endured, our As which profit funding It X% comment cash to strength the a all source turned achieved million result, a will sheet which operating of which have has MAU trend. we balance headwinds bit I'd investment on our during provide since our in we a the flow to RMBXX.X our drive our support at growth.

a we but loyalty low-quality to meaning line. has the our users lot the to cleaning the for is advertising aggressively or low-quality very even content previously, Eric points, for users purely experience little and contributed our mainly users Low-quality to royalty economics not unit attracted took As regular business. of top and offered result users. our this our up our to These of offer of the to users, customers already platform we said, points and the but improve

throughout the our users. So XXXX overall experience quality this process of ongoing improve recommendation of our and we as algorithms engine the has the content, offer been we continue our an to to

engagement day from recovery seen RMBX.XX user we As low-quality a stands to day the our we basis. improvement our XX% shows that been the per out significant in of result, on peak. our the strong users previous per especially from have revenues, user, This and QX seen user with we that a now per user drive from have real we at ARPU, XXXX, squeezing a improve quality about which also have is that very revenues successful, the the in expenses, matter only And users. savings has kept which each get

not was as process the XXXX, in were key of from As overall quarter completed a business of healthy our which stabilized better parts recent QX the the DAU and have much average The QX, user half as well means an economics in been we base far of a now user result, second the numbers end model. has months.

we XXXX, the XXXX, from improved similar revenue QX company QX for a Chinese growth to For expansion full impact user a expect for the modest base at economics Year, and also expect be DAUs XXXX. user our New year overall And level despite and as with we entire profitability.

are also over pleased of amount new to financing Midu round a We for announce of the $XXX very million. in Novels

of continue targeted fronts, to strategic transaction. the and across field to of the be multiple in partners after original content the growth the with shareholder cooperation will from higher-quality increase to completion the use the acquisition. plan the We We Midu on proceeds user to to of controlling support business

course, ROI of our be continue We disciplined will, high. keeping to spending, requirements with

to as by our revenues DAU based current fourth and as quarter of on expect double XXXX plan. business We well Midu's budget

to showed underlying expect for of Despite we XXXX, QX seasonality caused and Novels. typical first see and XXXX We Chinese line of trend top further range ahead, rest in generate in the billion for Midu, the company as acquisition do base a But quarter. small to similar the on Looking Midu as the strong investment by loss profitability revenue Year, level into of RMBX.XXX result New this billion. group see of last a consolidate to for the RMBX.XXX is user revenues increased content excluding the the of in XXXX a non-GAAP expect operating expected to recovery. the QX the quarter a of

firmer that on our to We strategic on the build we user put we base a our successfully efficiency. continue footing, high-quality confident higher in monetization healthier XXXX, and has initiatives are after business will which and executed

year group, today. revenue full prepared as operating cash We grow expect non-GAAP as our generate concludes to for here operating flow well including in and positive remarks XXXX. the from Midu That profit our entire

questions. please for open now are We proceed. Operator,

Operator

Instructions]. [Operator

Vicky Wei of Your the Citi. from first of comes question line

Vicky Wei

Congratulation on the first profitable quarter.

So is about question Midu. my

profile specific And management XXXX, literature see business strategy of and China? what profile the it for database specifically So good what guidance, assumption in online does the for acquisition Midu? regarding the think free is imply in what for from case of does third-party the for attrition the user And what first operating margin revenue is Midu the long-term we to operating Midu XXXX? in quarter margin base for contribution as user

Xiaolu Zhu

Vicky. you, Thank

Regarding early still still in the too think remodel, I business. we this of it's long-term margin prospect are earlier Midu of a as relatively stage the

XX%. operating However, the as think to if we like you I continue we margin we to achieved overall more see profitability for already of that And overall, over look QX level XXXX. business, in possible it's can mature be last achieve to at the group, that profit have our part year, increase

also a at the a I similar term, And profitability XX%. longer be able an points, think will Midu basically in Midu is we process business ad-supported achieve over to as loyalty which level model. So the are in over similar is without of least

The plan -- at to XXXX second said and least user compared DAU double as during have revenue we our QX strategy, year question that to by the remarks a acquisition XXXX prepared ago. we Midu's regarding

full for continue So the year. I to think in invest throughout we year XXXX, will Midu

done that to as the right XXXX. And will disciplined, user ROI we to dollars spent. have approach as said we get think side, marketing we all be the have want I we in we this On for before, continue acquisition we see to the want

terms And marketing far, program both very get think recovery able the we in of XXXX. of in the our especially revenue, terms revenue for that be and Midu on ARPU, of given so we side, will good our to ROIs

XXXX, In level company Midu, RMBXXX revenue least And last company of business, the terms and profit. the similar in of overall the the for margin terms we QX, profit. of excluding as impact generated the at I year, rest of Midu, the contribution said, operating operating million for in generate rest QX expect of over to a also

loss the the investment So continue due level to will of we the for think the Midu. And do level, this of a group increased small I expect investment year. mainly at throughout rest

that the turn overall, profit recovery then low next entire QX given to XXXX, the New company the will for Chinese for seasonality year. which profitable the year the in think for QX Although to three be trend and due usually the the we will that quarters, Year, a full we means QX remainder of

Operator

[Operator Instructions].

of question of comes Chong next Your from line Thomas the Jefferies.

Unidentified Analyst

management. asking behalf competitive Thomas. comment management on the got Congratulations, advertising of the I market of question the a about Could industry. since? landscape I'm on advertising

Xiaolu Zhu

Thank you.

speak think we I own mainly our can from So perspective.

growth. year if XXXX, between at took balanced we So look and a profitability back approach we

to So our we took disciplined side. a approach the investment, on more especially marketing

XXXX. second this continue very strong half we in And recovery, app However, I also back XXXX. we will and do which in far the and -- seen half of other QX XXXX, services, of e-commerce think demand see for the in trend our line as of especially trend top of so on XXXX getting second from in downloads category gradually top And is the web the well. year, this us is partners have

We was which in is also of that have weak XXXX. branding, recovery some another in seen terms area

some we breakthroughs to area in contribute think XXXX. given line this will lack top However, we continue to this of our and made previous years, in in have in exposure XXXX, our

increasingly get I believe think times and as will us getting our measurable strength And performance-based through customers our more difficult landscape help results. for overall, direct gradually the So back. are looking in is ads to we

end we XXXX. market think in are terms of I confident in the overall, overall quite So

Operator

[Operator Instructions].

I'd no remarks. the turn questions, to there to the over now As call like company for back the are closing further

Sai Chi Du

Thank thank you all again joining you and very for much for your today, us time.

please If you us. do have and Thank questions, further have good contact Thank a hesitate not to you, day. any you.

Operator

conference this concludes call. This

You may you. now Thank disconnect your lines.

Qutoutiao (QTTOY) 4 Mar 212020 Q4 Earnings call transcript