Qutoutiao Inc. (QTT) on Q1 2021 Results - Earnings Call Transcript
Operator: Hello, ladies and gentlemen. Thank you for standing by for the First Quarter 2021 Earnings Conference Call for Qutoutiao Incorporated. At this time all participants are in a listen-only mode. After management's remarks, there will be a question-and-answer session. Today's call is being recorded. I will now turn the call over to your host, Sai Chi Du. Please go ahead, Sai Chi.
Sai Chi Du: Thank you very much. Welcome everyone to the first quarter of 2021 earnings conference call of Qutoutiao, Inc. The company's financial and operational results were released by Newswire Services earlier today, and have been made available online. You can also view the earnings press release by visiting the IR section of our website at ir.qutoutiao.net. Participants on today's call will include our CEO, Mr. Eric Tan and our CFO, Mr. Xiaolu Zhu.
Eric Tan: Thank you, Sai Chi. And thanks, everyone, for joining today’s conference call. After year of adjustment, which we initiated last year following meaningful changes in the operational environment triggered by COVID-19, as well as our thinking in terms of how we can better position the business going forward, we started 2021 with a healthy and balanced portfolio of applications at various stages of development. After several quarters of consistent effort and execution, the business overall is today on a much stronger financial footing to march forward. We will continue to operate our business more efficiently, while stepping up our growth initiatives. A very important pillar of growth for us today is Midu Novels, which has been the pioneer and a leader of free online literature industry. Following the latest round of financing, as we have announced in the last earnings release, we brought on a new phase of significant investment in the growing Midu franchise. We are now strategically collaborating with Kuaishou in mini TV series or otherwise known as short drama series where we leverage our in-house produced IP to create short clips based on rich and engaging story lines. It’s an experiment for the expansion of IP value and a way for more users to come to know Midu as a brand and appreciate the quality of work Midu has to offer. China Literature has been leading the overall online literature industry for years and is reputed for creating and curating the highest quality literature works. We began to partner with them on the content side since Q4 of last year to expand the diversity and the scope of quality work available to our users.
Xiaolu Zhu: Thank you, Eric. And thank you, Sai Chi, and thank you everyone for joining today's call. Let me first go through financial highlights with you before providing outlook for the next quarter and the rest of the year. Our net revenues for the first quarter were RMB1,291 million with ARPU of RMB0.45 and quarterly average DAU of 32 million and MAU of 133 million, rather flattish sequentially. As we came off the peak season of Q4 and Q1 being the traditional low season for advertising due to Chinese New Year, this indicates underlying stability and recovery of our overall business.
Operator: Your first question comes from the line of Thomas Chong . Please ask your question.
Thomas Chong: Hi, good evening. Thanks management for taking my questions. I have a question about the Q2 revenue guidance. Can management comment about how we should think about the advertising momentum in coming quarters? And in particular, how is the trend across key industry categories? Are we actually seeing any slowdown in any particular vertical? And number two with regard to Midu. Can management reiterate again what's our KPI for this year in terms of the user and revenue? And any color on the KPI that would be grateful? Thank you.
Xiaolu Zhu: Thank you so much. So regarding your first question, regarding the Q2 revenue guidance, as we have said in the prepared remarks, we took a balanced approach this year towards investment and growth, especially on the marketing side. So we do require a very good ROI for every marketing dollar we spent. So this year we expect to have somewhat stable user base and revenue base. That being said, I think in Q2 in particular, we do see some weakness in the advertising market, especially in March - from March to May because some of the regulatory actions taken by the government regarding the entire Internet industry and also in particular for sectors like online education. I think we do see the mood to be dampened a bit in the - in late Q1 and early Q2. However, we do see a strong demand for advertising for the June 18 e-commerce activities. So I think, overall, we see the recovery trend in advertising market to continue for 2021, but we do see some certain weakness in Q2. But so far, we think it's still being limited in certain sectors and that does not change our outlook for the full year.
Thomas Chong: Thank you.
Operator: Your next question comes from the line of Vicky Wei . Please ask your question.
Vicky Wei: Good evening. Thanks management for taking my questions. So following up on your comment about the user growth of Midu, can management provide some color about the user acquisition strategy and implied acquisition cost for Midu? Thank you.
Xiaolu Zhu: Sure. Thank you, Vicky. So for Midu, I think the goal is to get to over 50 million in terms of DAU by year end. So we do want to make sure that we get to that number. But that being said, we also will take a disciplined approach to make sure that we get up ROIs for all the marketing dollars we spend on Midu. And so far, the results are quite promising because as we have said before, the ARPU - the monetization rates is also improving for Midu, and we are getting better user retention rate as well. So I think for us, we do believe that Midu has a long and good runway and we are making very good investment in this business and we will continue to do that for the rest of the year. Thank you.
Vicky Wei: Thank you.
Operator: As there are no further questions now, I'd like to turn the call back over to the company for the closing remarks.
Sai Chi Du: Thanks again for your time. And if you have any further questions, please do not hesitate to contact us. And have a very good day.
Operator: This concludes this conference call. You may now disconnect your lines. Thank you.
