PR Newswire | May 10, 2021 05:00PM EDT

05/10 16:00 CDT

Phoenix New Media Reports First Quarter 2021 Unaudited Financial ResultsLive Conference Call to be Held at 9:00 PM U.S. Eastern Time on May 10, 2021 BEIJING, May 10, 2021

BEIJING, May 10, 2021 /PRNewswire/ -- Phoenix New Media Limited (NYSE: FENG) ("Phoenix New Media", "ifeng" or the "Company"), a leading new media company in China, today announced its unaudited financial results for the first quarter ended March 31, 2021.

Mr. Shuang Liu, CEO of Phoenix New Media, commented, "During the first quarter of 2021, we adapted to the evolving advertising landscape and implemented active measures to increase user traffic, enhance user engagement, and improve user retention. Those measures include producing more exclusive, premium, and original content, leveraging social media distribution to reach a broader audience, and augmenting our premium content pool operations. In addition, we continued to explore new business initiatives to diversify our revenue sources and increase our ability to manage macro risks. Going forward, we will continue to focus on fortifying our leadership in news reporting, expanding our new media influence to build a solid foundation for sustainable growth. We seek to leverage our core competencies to capitalize on emerging opportunities as the economy recovers in 2021."

Mr. Edward Lu, CFO of Phoenix New Media, further stated, "Certain segment of our advertising business experienced continued pressure during the first quarter of 2021, thus causing our net advertising revenue to decline slightly year over year. However, thanks to our continued efforts in diversifying our revenue streams, the growth in our paid services revenues partially offset the decline in our net advertising revenues. This led to our total revenues remaining relatively steady on a year-over-year basis. Going forward, we believe that the recovery of our brand advertising business, combined with the progress we have achieved in various new business initiatives, is setting the stage for a revitalization of our future growth."

First Quarter 2021 Financial Results

As disclosed in the second quarter 2020 unaudited financial results announcement made on August 17, 2020, the Company sold all of its investment in Beijing Yitian Xindong Network Technology Co., Ltd. ("Yitian Xindong" or "Tadu") in the second quarter of 2020 and the disposal of Tadu was qualified for reporting as a "discontinued operation" in the Company's financial statements. Accordingly, Tadu's results of operations have been excluded from the Company's results from continuing operations in the condensed consolidated statements of comprehensive income/(loss) and are presented in separate line items as discontinued operations for all prior periods. The financial information and non-GAAP financial information disclosed in this press release is presented on a continuing operations basis, unless otherwise specifically stated.

REVENUES

Total revenues in the first quarter of 2021 decreased by 2.3% to RMB226.1 million (US$34.5 million) from RMB231.4 million in the same period of 2020, primarily due to the year-over-year decline in the Company's net advertising revenues.

Net advertising revenues in the first quarter of 2021 decreased by 3.5% to RMB201.3 million (US$30.7 million) from RMB208.7 million in the same period of 2020, mainly due to the reduction in advertising budgets of advertisers in certain industries in the first quarter of 2021.

Paid services revenues[1] in the first quarter of 2021 increased by 9.3% to RMB24.8 million (US$3.8 million) from RMB22.7 million in the same period of 2020. Revenues from paid contents in the first quarter of 2021 decreased by 11.8% to RMB10.5 million (US$1.6 million) from RMB11.9 million in the same period of 2020, mainly due to the broader market conditions reflecting the trend towards free online reading. Revenues from E-commerce and others in the first quarter of 2021 increased by 32.4% to RMB14.3 million (US$2.2 million) from RMB10.8 million in the same period of 2020, which was mainly caused by the increase in revenues from E-commerce and online real estate related services.

COST OF REVENUES

Cost of revenues in the first quarter of 2021 increased by 2.7% to RMB108.1 million (US$16.5 million) from RMB105.3 million in the same period of 2020. The increase in cost of revenues was mainly due to the following:

* Content and operational costs in the first quarter of 2021 increased by 5.4% to RMB91.7 million (US$14.0 million) from RMB87.0 million in the same period of 2020, mainly caused by the resumption of normal operations in the first quarter of 2021 as compared to decreased operational activities in the same period of 2020 due to COVID-19 impact in China at that time. Share-based compensation included in the content and operational costs in the first quarter of 2021 decreased to RMB0.3 million (US$0.05 million) from RMB1.1 million in the same period of 2020.

The increase was partially offset by the following:

* Revenue sharing fees in the first quarter of 2021 decreased by 39.5% to RMB2.6 million (US$0.4 million) from RMB4.3 million in the same period of 2020, mainly due to the decrease in revenue sharing fees paid to telecom operators. * Bandwidth costs in the first quarter of 2021 decreased slightly to RMB13.8 million (US$2.1 million) from RMB14.0 million in the same period of 2020.

GROSS PROFIT

Gross profit in the first quarter of 2021 decreased by 6.4% to RMB118.0 million (US$18.0 million) from RMB126.1 million in the same period of 2020. Gross margin in the first quarter of 2021 decreased to 52.2% from 54.5% in the same period of 2020, mainly caused by the year-over-year increase in cost of revenues as well as the year-over-year decrease in revenues in the first quarter of 2021, as explained above.

To supplement the financial measures presented in accordance with the United States Generally Accepted Accounting Principles ("GAAP"), the Company has presented certain non-GAAP financial measures in this press release, which excluded the impact of certain reconciling items as stated in the "Use of Non-GAAP Financial Measures" section below. The related reconciliations to GAAP financial measures are presented in the accompanying "Reconciliations of Non-GAAP Results of Operation Measures to the Nearest Comparable GAAP Measures."

Non-GAAP gross margin in the first quarter of 2021, excluding share-based compensation, decreased to 52.3% from 55.0% in the same period of 2020.

OPERATING EXPENSES AND LOSS FROM OPERATIONS

Total operating expenses in the first quarter of 2021 decreased by 18.8% to RMB159.9 million (US$24.4 million) from RMB197.0 million in the same period of 2020, mainly due to the decrease in the Company's traffic acquisition expenses and the personnel-related expenses caused by the Company's strict cost control measures taken to enhance its operating efficiency. Share-based compensation included in operating expenses in the first quarter of 2021 was RMB1.0 million (US$0.2 million), compared to RMB1.6 million in the same period of 2020.

Loss from operations in the first quarter of 2021 was RMB41.9 million (US$6.4 million), compared to RMB70.9 million in the same period of 2020. Operating margin in the first quarter of 2021 was negative 18.6%, compared to negative 30.7% in the same period of 2020.

Non-GAAP loss from operations in the first quarter of 2021, which excluded share-based compensation, was RMB40.7 million (US$6.2 million), compared to RMB68.3 million in the same period of 2020. Non-GAAP operating margin in the first quarter of 2021, excluding share-based compensation, was negative 18.0%, compared to negative 29.5% in the same period of 2020.

OTHER INCOME OR LOSS

Other income or loss reflects net interest income, foreign currency exchange gain or loss, income or loss from equity method investments, net of impairment, changes in fair value of forward contract in relation to disposal of investments in Particle and others, net[2]. Total net other income in the first quarter of 2021 was RMB12.5 million (US$1.9 million), compared to RMB24.3 million in the same period of 2020.

* Net interest income in the first quarter of 2021 increased to RMB10.7 million (US$1.6 million) from RMB6.4 million in the same period of 2020. * Foreign currency exchange loss in the first quarter of 2021 was RMB2.8 million (US$0.4 million), compared to RMB1.7 million in the same period of 2020. * Loss from equity method investments, net of impairment, in the first quarter of 2021 was RMB0.1 million (US$0.02 million), compared to RMB0.2 million in the same period of 2020. * Changes in fair value of forward contract in relation to disposal of investments in Particle in the first quarter of 2021 was nil, compared to a gain of RMB14.7 million in the same period of 2020. * Others, net, in the first quarter of 2021 decreased to RMB4.7 million (US$0.7 million), from RMB5.1 million in the same period of 2020.

NET LOSS FROM CONTINUING OPERATIONS ATTRIBUTABLE TO PHOENIX NEW MEDIA LIMITED

Net loss from continuing operations attributable to Phoenix New Media Limited in the first quarter of 2021 was RMB29.2 million (US$4.5 million), compared to RMB38.6 million in the same period of 2020. Net margin from continuing operations in the first quarter of 2021 was negative 12.9%, compared to negative 16.7% in the same period of 2020. Net loss from continuing operations per diluted ordinary share in the first quarter of 2021 was RMB0.05(US$0.01), compared to a net loss from continuing operations per diluted ordinary share of RMB0.07 in the same period of 2020.

Non-GAAP net loss from continuing operations attributable to Phoenix New Media Limited, which excluded share-based compensation, income or loss from equity method investments, net of impairment, and changes in fair value of forward contract in relation to disposal of investments in Particle as applicable, was RMB27.8 million (US$4.2 million) in the first quarter of 2021, compared to RMB50.5 million in the same period of 2020. Non-GAAP net margin from continuing operations in the first quarter of 2021 was negative 12.3%, compared to negative 21.8% in the same period of 2020. Non-GAAP net loss from continuing operations per diluted ADS[3] in the first quarter of 2021 was RMB0.38(US$0.06), compared to RMB0.69 in the same period of 2020.

In the first quarter of 2021, the Company's weighted average number of ADSs used in the computation of diluted net loss per ADS was 72,790,541. As of March 31, 2021, the Company had a total of 582,324,325 ordinary shares outstanding, or the equivalent of 72,790,541 ADSs.

CERTAIN BALANCE SHEET ITEMS

As of March 31, 2021, the Company's cash and cash equivalents, term deposits and short term investments and restricted cash were RMB1.58 billion (US$240.9 million).

Business Outlook

For the second quarter of 2021, the Company expects its total revenues to be between RMB263.8 million and RMB283.8 million; net advertising revenues are expected to be between RMB244.8 million and RMB259.8 million; and paid services revenues are expected to be between RMB19.0 million and RMB24.0 million.

All of the above forecasts reflect the current and preliminary view of the Company's management, which are subject to change and substantial uncertainty, particularly in view of the potential impact of the COVID-19 outbreak, the effects of which are difficult to analyse and predict.

Conference Call Information

The Company will hold a conference call at 9:00 p.m. U.S. Eastern Time on May 10, 2021 (May 11, 2021 at 9:00 a.m. Beijing/Hong Kong time) to discuss its first quarter 2021 unaudited financial results and operating performance.

To participate in the call, please register in advance of the conference by navigating to http://apac.directeventreg.com/registration/event/2227658. Upon registering, you will be provided with participant dial-in numbers, Direct Event passcode and unique registrant ID by email. Please dial in 10 minutes prior to the call, using the participant dial-in numbers, Direct Event Passcode and unique registrant ID which would be provided upon registering. You will be automatically linked to the live call after completion of this process.

A replay of the call will be available through May 19, 2021 by using the dial-in numbers and conference ID below:

International: +61 2 8199 0299

Mainland China: 4006322162

Hong Kong: +852 30512780

United States: +1 646 254 3697

Conference ID: 2227658

A live and archived webcast of the conference call will also be available at the Company's investor relations website at http://ir.ifeng.com.

Use of Non-GAAP Financial Measures

To supplement the consolidated financial statements presented in accordance with the United States Generally Accepted Accounting Principles ("GAAP"), Phoenix New Media Limited uses non-GAAP gross profit, non-GAAP gross margin, non-GAAP income or loss from operations, non-GAAP operating margin, non-GAAP net income or loss from continuing operations attributable to Phoenix New Media Limited, non-GAAP net margin from continuing operations and non-GAAP net income or loss from continuing operations per diluted ADS, each of which is a non-GAAP financial measure. Non-GAAP gross profit is gross profit excluding share-based compensation. Non-GAAP gross margin is non-GAAP gross profit divided by total revenues. Non-GAAP income or loss from operations is income or loss from operations excluding share-based compensation and impairment of goodwill. Non-GAAP operating margin is non-GAAP income or loss from operations divided by total revenues. Non-GAAP net income or loss from continuing operations attributable to Phoenix New Media Limited is net income or loss from continuing operations attributable to Phoenix New Media Limited excluding share-based compensation, impairment of goodwill, income or loss from equity method investments, net of impairment, gain on disposal of available-for-sale debt investments and changes in fair value of forward contract in relation to disposal of investments in Particle. Non-GAAP net margin from continuing operations is non-GAAP net income or loss from continuing operations attributable to Phoenix New Media Limited divided by total revenues. Non-GAAP net income or loss from continuing operations per diluted ADS is non-GAAP net income or loss from continuing operations attributable to Phoenix New Media Limited divided by weighted average number of diluted ADSs. The Company believes that separate analysis and exclusion of the aforementioned non-GAAP to GAAP reconciling items add clarity to the constituent parts of its performance. The Company reviews these non-GAAP financial measures together with the related GAAP financial measures to obtain a better understanding of its operating performance. It uses these non-GAAP financial measures for planning, forecasting and measuring results against the forecast. The Company believes that using these non-GAAP financial measures to evaluate its business allows both management and investors to assess the Company's performance against its competitors and ultimately monitor its capacity to generate returns for investors. The Company also believes that these non-GAAP financial measures are useful supplemental information for investors and analysts to assess its operating performance without the effect of items like share-based compensation, income or loss from equity method investments, net of impairment, which have been and will continue to be significant recurring items, and without the effect of impairment of goodwill, gain on disposal of available-for-sale debt investments and changes in fair value of forward contract in relation to disposal of investments in Particle which have been significant and one-time items. However, the use of these non-GAAP financial measures has material limitations as an analytical tool. One of the limitations of using these non-GAAP financial measures is that they do not include all items that impact the Company's gross profit, income or loss from operations and net income or loss attributable to Phoenix New Media Limited for the period. In addition, because these non-GAAP financial measures are not calculated in the same manner by all companies, they may not be comparable to other similarly titled measures used by other companies. In light of the foregoing limitations, you should not consider these non-GAAP financial measures in isolation from, or as an alternative to, the financial measures prepared in accordance with GAAP.

Exchange Rate

This announcement contains translations of certain RMB amounts into U.S. dollars ("USD") at specified rates solely for the convenience of the reader. Unless otherwise stated, all translations from RMB to USD were made at the rate of RMB6.5518 to US$1.00, the noon buying rate in effect on March 31, 2021 in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB or USD amounts referred could be converted into USD or RMB, as the case may be, at any particular rate or at all. For analytical presentation, all percentages are calculated using the numbers presented in the financial statements contained in this earnings release.

About Phoenix New Media Limited

Phoenix New Media Limited (NYSE: FENG) is a leading new media company providing premium content on an integrated Internet platform, including PC and mobile, in China. Having originated from a leading global Chinese language TV network based in Hong Kong, Phoenix TV, the Company enables consumers to access professional news and other quality information and share user-generated content on the Internet through their PCs and mobile devices. Phoenix New Media's platform includes its PC channel, consisting of ifeng.com website, which comprises interest-based verticals and interactive services; its mobile channel, consisting of mobile news applications, mobile video application, digital reading applications and mobile Internet website; and its operations with the telecom operators that provides mobile value-added services.

Safe Harbor Statement

This announcement contains forward?looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward?looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Among other things, the business outlook and quotations from management in this announcement, as well as Phoenix New Media's strategic and operational plans, contain forward?looking statements. Phoenix New Media may also make written or oral forward?looking statements in its periodic reports to the U.S. Securities and Exchange Commission ("SEC") on Forms 20?F and 6?K, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about Phoenix New Media's beliefs and expectations, are forward?looking statements. Forward?looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward?looking statement, including but not limited to the following: the Company's goals and strategies; the Company's future business development, financial condition and results of operations; the expected growth of online and mobile advertising, online video and mobile paid services markets in China; the Company's reliance on online and mobile advertising for a majority of its total revenues; the Company's expectations regarding demand for and market acceptance of its services; the Company's expectations regarding maintaining and strengthening its relationships with advertisers, partners and customers; the Company's investment plans and strategies, fluctuations in the Company's quarterly operating results; the Company's plans to enhance its user experience, infrastructure and services offerings; competition in its industry in China; relevant government policies and regulations relating to the Company; and the effects of the COVID-19 on the economy in China in general and on the Company's business in particular. Further information regarding these and other risks is included in the Company's filings with the SEC, including its registration statement on Form F?1, as amended, and its annual reports on Form 20?F. All information provided in this press release and in the attachments is as of the date of this press release, and Phoenix New Media does not undertake any obligation to update any forward?looking statement, except as required under applicable law.

For investor and media inquiries please contact:

Phoenix New Media LimitedQing LiuEmail: investorrelations@ifeng.com

ICR, Inc.Jack WangTel: +1 (646) 405-4883Email: investorrelations@ifeng.com

Phoenix New Media Limited

Condensed Consolidated Balance Sheets

(Amounts in thousands)

December 31, March 31, March 31,

2020* 2021 2021

RMB RMB US$

Audited Unaudited Unaudited

ASSETS

Current assets:

Cash and cash equivalents 357,796 393,550 60,067

Term deposits and short term investments 1,280,033 1,159,786 177,018

Restricted cash 31,039 25,093 3,830

Accounts receivable, net 675,616 578,900 88,357

Amounts due from related parties 32,587 34,859 5,321

Prepayment and other current assets 42,846 48,602 7,418

Total current assets 2,419,917 2,240,790 342,011

Non-current assets:

Property and equipment, net 62,649 56,437 8,614

Intangible assets, net 12,396 12,347 1,885

Available-for-sale debt investments 36,662 35,150 5,365

Equity investments, net 94,821 108,714 16,593

Deferred tax assets 86,867 89,140 13,605

Operating lease right-of- use assets, net 49,487 42,466 6,482

Other non-current assets 9,753 9,293 1,418

Total non-current assets 352,635 353,547 53,962

Total assets 2,772,552 2,594,337 395,973

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Accounts payable 221,203 201,052 30,687

Amounts due to related parties 34,420 32,784 5,004

Advances from customers 38,835 36,528 5,575

Taxes payable 402,610 397,725 60,705

Salary and welfare payable 156,599 88,707 13,539

Accrued expenses and other current liabilities 172,376 129,611 19,782

Operating lease liabilities 36,370 32,385 4,943

Total current liabilities 1,062,413 918,792 140,235

Non-current liabilities:

Deferred tax liabilities 1,312 1,312 200

Long-term liabilities 28,182 28,182 4,301

Operating lease liabilities 16,672 10,174 1,553

Total non-current liabilities 46,166 39,668 6,054

Total liabilities 1,108,579 958,460 146,289

Shareholders' equity:

Phoenix New Media Limited shareholders' equity:

Class A ordinary shares 17,499 17,499 2,671

Class B ordinary shares 22,053 22,053 3,366

Additional paid-in capital 1,620,580 1,621,904 247,551

Statutory reserves 92,017 92,017 14,045

Accumulated deficit (88,191) (117,364) (17,914)

Accumulated other comprehensive loss (28,214) (27,927) (4,262)

Total Phoenix New Media Limited shareholders' equity 1,635,744 1,608,182 245,457

Noncontrolling interests 28,229 27,695 4,227

Total shareholders' equity 1,663,973 1,635,877 249,684

Total liabilities and shareholders' equity 2,772,552 2,594,337 395,973

* Derived from audited financial statements included in the Company's Form 20-Fdated April 28, 2021.

Phoenix New Media Limited

Condensed Consolidated Statements of Comprehensive Income/(loss)

(Amounts in thousands, except for number of shares and per share (or ADS) data)

Three Months Ended

March 31, December 31, March 31, March 31,

2020 2020 2021 2021

RMB RMB RMB US$

Revenues:

Net advertising revenues 208,710 336,653 201,313 30,726

Paid service revenues 22,666 25,546 24,778 3,782

Total revenues 231,376 362,199 226,091 34,508

Cost of revenues (105,298) (179,224) (108,104) (16,500)

Gross profit 126,078 182,975 117,987 18,008

Operating expenses:

Sales and marketing expenses (81,623) (75,660) (64,843) (9,898)

General and administrative expenses (70,272) (70,716) (54,828) (8,368)

Technology and product development expenses (45,111) (42,617) (40,275) (6,147)

Impairment of goodwill - (22,786) - -

Total operating expenses (197,006) (211,779) (159,946) (24,413)

Loss from operations (70,928) (28,804) (41,959) (6,405)

Other income/(loss):

Interest income, net 6,402 9,309 10,740 1,639

Foreign currency exchange (loss)/gain (1,728) 3,921 (2,765) (422)

Loss from equity method investments, net of (236) (179) (107) (16)impairment

Gain on disposal of available-for-sale debt - 477,254 - -investments

Changes in fair value of forward contract in relation to 14,744 - - -disposal of investments in Particle

Others, net 5,116 8,770 4,670 713

(Loss)/income from continuing operations before (46,630) 470,271 (29,421) (4,491)income taxes

Income tax benefit/(expense) 757 (14,793) (250) (38)

Net (loss)/income from continuing operations (45,873) 455,478 (29,671) (4,529)

Net loss from discontinued operations, net of (44,497) - - -income taxes

Net (loss)/income (90,370) 455,478 (29,671) (4,529)

Net loss/(income) attributable to noncontrollinginterests:

Net loss/(income) from continuing operations 7,254 (700) 498 76attributable to noncontrolling interests

Net loss from discontinued operations attributable to 22,875 - - -noncontrolling interests

Net loss/(income) attributable to noncontrolling 30,129 (700) 498 76interests

Net (loss)/income attributable to Phoenix NewMedia Limited:

Net (loss)/income from continuing operations (38,619) 454,778 (29,173) (4,453)attributable to Phoenix New Media Limited

Net loss from discontinued operations attributable to (21,622) - - -Phoenix New Media Limited

Net (loss)/income attributable to Phoenix New (60,241) 454,778 (29,173) (4,453)Media Limited

Net (loss)/income (90,370) 455,478 (29,671) (4,529)

Other comprehensive loss, net of tax: fair value - (2,736) (1,730) (264)remeasurement for available-for-sale debt investments

Other comprehensive loss, net of tax: reclassificationadjustment for disposal of available-for-sale debt - (491,197) - -investments

Other comprehensive income/(loss), net of tax: foreign 30,428 (41,326) 2,017 308currency translation adjustment

Comprehensive loss (59,942) (79,781) (29,384) (4,485)

Comprehensive loss/(income) attributable to 30,129 (700) 498 76noncontrolling interests

Comprehensive loss attributable to Phoenix New (29,813) (80,481) (28,886) (4,409)Media Limited

Basic net (loss)/income per Class A and Class Bordinary share:

-Continuing operations (0.07) 0.78 (0.05) (0.01)

-Discontinued operations (0.03) - - -

Basic net (loss)/income per Class A and Class B (0.10) 0.78 (0.05) (0.01)ordinary share

Diluted net (loss)/income per Class A and Class Bordinary share:

-Continuing operations (0.07) 0.78 (0.05) (0.01)

-Discontinued operations (0.03) - - -

Diluted net (loss)/income per Class A and Class B (0.10) 0.78 (0.05) (0.01)ordinary share

Basic (loss)/income per ADS (1 ADS represents 8Class A ordinary shares):

-Continuing operations (0.53) 6.25 (0.40) (0.06)

-Discontinued operations (0.30) - - -

Basic net (loss)/income per ADS (1 ADS represents (0.83) 6.25 (0.40) (0.06)8 Class A ordinary shares)

Diluted net (loss)/income per ADS (1 ADSrepresents 8 Class A ordinary shares)?

-Continuing operations (0.53) 6.25 (0.40) (0.06)

-Discontinued operations (0.30) - - -

Diluted net (loss)/income per ADS (1 ADS (0.83) 6.25 (0.40) (0.06)represents 8 Class A ordinary shares)

Weighted average number of Class A and Class Bordinary shares used in computing net (loss)/income pershare:

Basic 582,324,325 582,324,325 582,324,325 582,324,325

Diluted 582,324,325 582,324,325 582,324,325 582,324,325

Phoenix New Media Limited

Condensed Segments Information

(Amounts in thousands)

Three Months Ended

March 31, December 31, March 31, March 31,

2020 2020 2021 2021

RMB RMB RMB US$

Unaudited Unaudited Unaudited Unaudited

Revenues:

Net advertising service 208,710 336,653 201,313 30,726

Paid services 22,666 25,546 24,778 3,782

Total revenues 231,376 362,199 226,091 34,508

Cost of revenues

Net advertising service 97,233 165,581 101,255 15,455

Paid services 8,065 13,643 6,849 1,045

Total cost of revenues 105,298 179,224 108,104 16,500

Gross profit

Net advertising service 111,477 171,072 100,058 15,271

Paid services 14,601 11,903 17,929 2,737

Total gross profit 126,078 182,975 117,987 18,008

Phoenix New Media Limited

Condensed Information of Cost of Revenues

(Amounts in thousands)

Three Months Ended

March 31, December 31, March 31, March 31,

2020 2020 2021 2021

RMB RMB RMB US$

Unaudited Unaudited Unaudited Unaudited

Revenue sharing fees 4,256 6,897 2,571 392

Content and operational costs 87,030 158,458 91,717 13,999

Bandwidth costs 14,012 13,869 13,816 2,109

Total cost of revenues 105,298 179,224 108,104 16,500

Reconciliations of Non-GAAP Results of Operations Measures to the NearestComparable GAAP Measures

(Amounts in thousands, except for number of ADSs and per ADS data)

Three Months Ended March 31, 2020 Three Months Ended December 31, 2020 Three Months Ended March 31, 2021

GAAP Non-GAAP Non- GAAP Non-GAAP Non- GAAP Non-GAAP Non- Adjustments GAAP Adjustments GAAP Adjustments GAAP

RMB RMB RMB RMB RMB RMB RMB RMB RMB

Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited

Gross profit 126,078 1,141 (1) 127,219 182,975 229 (1) 183,204 117,987 268 (1) 118,255

Gross margin 54.5% 55.0% 50.5% 50.6% 52.2% 52.3%

2,666 (1) 2,734 (1) 1,288 (1)

- (2) 22,786 (2) - (2)

Loss from operations (70,928) 2,666 (68,262) (28,804) 25,520 (3,284) (41,959) 1,288 (40,671)

Operating margin (30.7)% (29.5)% (8.0)% (0.9)% (18.6)% (18.0)%

2,666 (1) 2,734 (1) 1,288 (1)

- (2) 22,786 (2) - (2)

236 (3) 179 (3) 107 (3)

- (4) (573,860) (4) - (4)

(14,744) (5) - (5) - (5)

- (6) (11,393) (6) - (6)

- (7) 96,606 (7) - (7)

Net (loss)/income from continuingoperations attributable to Phoenix (38,619) (11,842) (50,461) 454,778 (462,948) (8,170) (29,173) 1,395 (27,778)New Media Limited

Net margin (16.7)% (21.8)% 125.6% (2.3)% (12.9)% (12.3)%

Net (loss)/income per ADS-diluted (0.53) (0.69) 6.25 (0.11) (0.40) (0.38)

Weighted average number of ADSs used in computing diluted net (loss)/income 72,790,541 72,790,541 72,790,541 72,790,541 72,790,541 72,790,541per ADS

(1) Share-based compensation

(2) Impairment of goodwill

(3) Loss/(income) from equity method investments

(4) Gain on disposal of available-for-sale debt investments

(5) Changes in fair value of forward contract in relation to disposal ofinvestments in Particle

(6) Loss attributable to noncontrolling interest related to item (2)

(7) Accrued withholding taxes of item (4). Other non-GAAP to GAAP reconcilingitems have no income tax effect.

^[1] Prior to 2021, paid services revenues comprised of (i) revenues from paidcontents, which included digital reading, audio books, paid videos, and othercontent-related sales activities, (ii) revenues from games, which includedweb-based games and mobile games, (iii) revenues from MVAS, and (iv) revenuesfrom others.

As revenues from games and revenues from MVAS were small and had been decliningfor the past years, to better reflect the Company's paid services revenuesdisaggregated by products and services, beginning from January 1, 2021, paidservices revenues have been re-grouped and comprise of (i) revenues from paidcontents, which includes digital reading, audio books, paid videos, and othercontent-related sales activities, (ii) revenues from E-commerce and others,which mainly includes revenues from E-commerce, MVAS, games and others. Forcomparison purposes, the revenues from paid services for the quarters of 2020have been retrospectively re-classified.

^[2] "Others, net" primarily consists of government subsidies and litigationloss provisions.

^[3] "ADS" means American Depositary Share of the Company. Each ADS representseight Class A ordinary shares of the Company.

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SOURCE Phoenix New Media Limited