Phoenix New Media Second Quarterly

August 13, Phoenix New Media (Nyse:feng) released 2013 second Quarterly Bulletin. Earnings showed a rapid growth in total revenue and net profits in the two quarter, with net profit of 77.4 million yuan, up 121.1% per cent from 35 million yuan in the same period last year.

"Phoenix New media solid performance growth, with high growth, the current stock prices and can not truthfully reflect its prospects, I think both now and in the future Phoenix are a company with high value investment." "In the face of strong performance, Phoenix New Media COO and deputy CFO Lyapunov in the" Daily economic News "interview, the future expressed great confidence.

2012, due to the slowdown in China's macroeconomic growth, causing public concern about the media industry, Phoenix New Media to respond quickly, the mobile business model from 2G services to 3G transformation, bringing it nearly accounted for the total revenue of 40% growth. Through the iconic "Phoenix" brand, as well as industry-leading content advantages, consolidate their own competitiveness.

Meanwhile, with the industry's most robust quality content support, Phoenix New media put forward large data + Big Idea (Bigdata+bigidea) of the brand and effect of digital marketing concept, as well as across channels, cross-platform advertising dissemination, fully enhance the advertising main marketing investment returns, to bring the continued growth of advertising net profit.

A number of analysts in the industry predict that the Phoenix New media shares are now seriously undervalued market. "As a multi-channel internet company, Phoenix New Media flexible use of mobile and video business and occupy the edge, in the next 3-4 years, due to its long-term positive factors, the impact of continued to appear, long-term investors will get higher returns." "Phoenix New Media Two quarterly results after the release of a number of investment banks to update the report, to increase the company's stock rating or target price." Morgan Stanley maintains a "buy" rating, raising the target share price from $4.8 to $9.8; Macquarie Securities maintained a "buy" rating, raising its target share price from 4.8 to 11.6 dollars, and CICC upgraded its rating from "hold" to "buy", raising its target share price from 4.25 to $11.

Wireless and video boost performance doubling

According to earnings, as of June 30, 2013, Phoenix New media two quarter total revenue increased to 364.2 million yuan, an increase of 28.5%, gross profit of 190.8 million yuan, compared to the same period last year 126.1 million yuan growth of 51.4% yuan, the second quarter net advertising revenue of 209.5 million, year-on-year growth of 41.9%.

Among them, the two quarter Phoenix New media should account for a net profit of 77.4 million yuan, an increase of 121.1%. Excluding the equity incentive expenditure, the two-quarter revised Phoenix New media should account for net profit increase to 83.6 million yuan, an increase of 120.4%. The net interest rate for the second quarter was 23%, up from 13.4% in the same period last year. Second-quarter adjustment after the diluted ads per share net profit of 1.08 yuan, an increase of 130%.

According to the public earnings, Phoenix's new media revenue growth, mainly due to net advertising revenue year-on-year growth of 41.9%, as well as pay service revenue growth of 14% year-on-year. Phoenix New Media net advertising revenue growth, mainly due to the average revenue per advertiser increased. Phoenix's new media two-quarter advertisers were 295, up 30% from a year earlier, with an average revenue of 710,200 yuan per advertiser and a 9.2% increase over the same period last year.

To the advertisement domain overall advertisement realizes the rise, in Lyapunov view, may analyze from several angles.

First of all, automobiles, food and beverage, liquor, and E-commerce is to stimulate the growth of advertising revenue of the main industry. Among them, the automobile becomes the top ten industry contribution fastest growth industry. Compared with the past, the auto industry is one of the industries that reflects the strong demand of advertising in the mobile and video fields. and cosmetics, luxury brands and apparel to achieve high growth, but mainly thanks to Phoenix in fashion, entertainment and other channels have been maintained a leading position.

In addition, video advertising contributed significantly, two-quarter video advertising growth of up to 91%. Food and beverage, government, tourism, wine (especially liquor, in the television advertising cost is very large) is very suitable for the Phoenix News-oriented video service. The goal of Phoenix Video customer outreach is to get more from the budget for traditional TV news programs, rather than TV or movie commercials.

Lyapunov further points out that all this stems from an increase in the number of independent users Phoenix months, not only the ARPA (average single customer advertising revenue contribution) to improve (9%), more to promote the number of advertisers increased by 30%, "in the past year compared to the same period of the digital advertising market recovery, visibility has been improved, We are expected to bring the three-quarter ad to 50% year-on-year growth. ”

In addition, revenue from games and other businesses in the two quarter was 23.2 million yuan, up 387.4% from 4.8 million yuan in the same period last year. Phoenix New Media Two quarterly games and other business revenue growth, mainly due to the company's gaming platform for the growth of the game revenue.

"We did have a significant increase in game revenue over the last year as well as in the past, but we still maintain a small share of total revenue ratio," he said. At present, we only operate the agent game on the PC side, but we are carefully weighing the games that are more suitable for the target user. Lyapunov says the mobile-end game is still in its development phase compared to PC Web games, and will be highly focused on this area. However, as of the end of the two quarter, the Phoenix platform has a total of 55 page games, while the mobile end has more than 150 games.

It is understood that Phoenix New media two quarterly results than the company and Wall Street analysts expected, the company's three-quarter revenue outlook also exceeded analysts ' expectations. Bloomberg survey, the average forecast of Phoenix New Media 2013 three quarter total revenue of 344 million yuan, and the company expects the third quarter total revenue of 367 million yuan to 382 million yuan.

Phoenix New Media CEO Liu Yan said: "In the future phase of the company will focus on upgrading products and rich content to further optimize the user experience to enhance the impact of diversified platforms and achieve long-term growth of the company." With the continuous growth of media consumption on mobile devices, Phoenix's aggregation platform model and high quality content resources can gain unique advantages in the growth trend of mobile Internet, and can provide Chinese network users with the required content on various devices. ”

Focus on mobile internet in the second half

"Phoenix New Media is a leading multi-channel media company, taking full advantage of the four most influential long-term trends in the Chinese media industry," Toroinvestmentpartners's analyst wrote on the Seekingalpha of the information website before the earnings release.

(a) The transition from offline to online advertising payments; (ii) The boom of "smart" mobile devices; (iii) Growth of online video; (iv) Continuous refinement of media distribution across channels and devices.

Therefore, he believes that the combination of other factors, such as industry-leading content advantages, the achievement of long-term growth, the most attractive user structure, Phoenix New media will realize the value of rapid, substantial and long-term growth, and is currently being undervalued by some non-basic factors.

Given the current heat wave in the mobile internet, for mobile, Lyapunov that the company is more transparent about the mobile internet in its peers, with six consecutive quarterly reports and a 2% rise to 9% per cent. One of the key data is revenue contributions from 3G smartphone device users, including mobile pay games, mobile video, digital reading, mobile internet advertising, and about 22% of total revenue.

He further indicated that the company mobile Internet user structure has the high academic record, the high income characteristic, is the Chinese Internet user average income 4 times times above, the upscale ability has brought the foundation for the advertisement service and the pay business, also has given the more confidence for us to continue to invest the mobile internet.

"We plan to invest more money in the second half of the year, focusing on the mobile internet, which will focus on app applications, product development, user promotion, marketing, bandwidth," Lyapunov said. But will balance the development of products with users on the wireless web side. On both the wireless web side and the native app platform, we have successfully commercialized. With our integrated marketing solutions, many advertisers have chosen these two platforms at the same time. ”

At present, Phoenix New media in the broad sense of the 3G smartphone revenue has exceeded the traditional SP (mobile value-added service provider), traditional SP future depends on wireless and video drive. Data show that the Phoenix in mobile end of this quarter active users up to 20 million, while the PC side, that is, Ifeng.com's daily independent visitors up to 38 million.

It is understood that in attracting mobile customers this aspect, the Phoenix New media has adopted two different ways: one is, with mobile application manufacturers in mobile commercialization, with cash to obtain users. And the other is to grow autonomously and strengthen market share through content.

"At this stage, we focus primarily on the user experience and product development. At the present stage, we are basically focused on autonomous growth. But with the development of our products, we will also invest more in cooperation with mobile device manufacturers, as well as operators. China Mobile is our major shareholder, we can also use this advantage, looking to the future, we are full of confidence in user expansion. At present, we are satisfied with the market share and user growth. I think what really matters is content, user experience, and branding. We can also take advantage of the powerful effects of brands and parent companies in PCs. "Lyapunov said.

Content quality as core competitiveness

In Lyapunov's view, in the long run, whether it is the product, or the user experience of the promotion, in the final analysis, the content quality determines the user's choice and loyalty. "Phoenix as a new media derived from the traditional TV media-Phoenix TV, from a global perspective, or relatively successful, independent operation and the first landing in the capital market." And here, we first grasp the content competitiveness of the core, to organize the operation of the core enterprises. ”

According to Lyapunov's description, from a few years ago, Phoenix management has a sense of differentiated operations Phoenix, not simply the pursuit of mass fast, but want to provide insightful influential content, and these content covering various industries. "The role we play in the midst of this includes environmental monitoring, agenda setting, identity development and entertainment, where agenda setting not only requires insight, but also leads to attention, as a balanced and organizer of social pluralism, playing a role in the agenda of a media play in modern society, Not just the reprint mode. ”

Today, the Internet has become the second largest media, after television. But the challenge of the Internet display advertisement is increasing, which directly promote the advertisers and the media in the blue Ocean of content marketing.

2013, Phoenix New media combined with its own content quality advantages, insight value, as well as the current large data trends, put forward large data + Big Idea (Bigdata+bigidea) digital marketing concept, its core is precision marketing and interactive marketing, to provide measurable marketing results, Increase the return on investment (ROI) of The advertiser's marketing.

The essence of a big idea is insight and creative power, on the basis of paying attention to the use of data analysis, the deep insight into human living condition will become more important, and the value proposition based on this kind of insight is the cornerstone of brand building and development, and makes marketing surpass simple promotion, Bring to the Enterprise brand premium, customer loyalty and many other value-added.

This February, the term "native advertising" became a new concept that was hotly discussed at the annual leaders ' meeting held by the American Interactive Advertising Agency (Theinteractiveadvertisingbureau), which many American Internet media intended to use as a new way to boost advertising revenue. The original advertisement is not an advertisement form, but the marketing idea, the birth of this idea is based on the innovation of the media marketing mode.

This and Phoenix New media proposed "big Data + Big idea" coincide. "Large data and great ideas of the integration of the marketing model is to help advertisers realize the value of advertising content, to help advertisers really bring valuable information." In the past, we created for Lenovo's advertising case, ' Dream on action ', the consumer's heart, the pursuit of the value advocated by Lenovo combined. ”

In Lyapunov's view, the original advertisement is from the advertisement implanted mode to upgrade, is the promotion of content marketing, also represents the traditional media advertising business model upgrade.

"I think it represents a new direction for content marketing, which brings a new perspective on the evolution of the media," he said. Phoenix's success is one thing that can be used for reference by traditional media, which is the core competitive advantage of quality content value. "Lyapunov said.