Qutoutiao (QTT) Misses Q3 EPS by 14c

Qutoutiao (NASDAQ: QTT) reported Q3 EPS of ($0.49), $0.14 worse than the analyst estimate of ($0.35). Revenue for the quarter came in at $196.8 million versus the consensus estimate of $196.4 million.

Third Quarter 2019 Highlights

• Combined average MAUs1 reached 133.9 million, representing an increase of 105.3% from 65.2 million in the third quarter of 2018, compared to 119.3 million in the previous quarter.
• Combined average DAUs2 reached 42.1 million, representing an increase of 97.7% from 21.3 million in the third quarter of 2018, compared to 38.7 million in the previous quarter.
• Average daily time spent per DAU was 61.3 minutes, compared to 55.9 minutes in the third quarter of 2018 and 60.0 minutes in the previous quarter.
• Net revenues increased 44.0% year-over-year to RMB1,406.9 million (US$196.8 million), compared to RMB1,385.9 million in the previous quarter, and were above the Company’s guidance.
• Net loss was RMB888.4 million (US$124.3 million), compared to net loss of RMB1,033.4 million in the third quarter of 2018 and net loss of RMB561.3 million in the second quarter of 2019. Net loss margin was 63.1%, compared to 105.7% in the third quarter of 2018 and 40.5% in the second quarter of 2019.
• Non-GAAP net loss was RMB833.1 million (US$116.6 million), compared to non-GAAP net loss of RMB298.4 million in the third quarter of 2018 and non-GAAP net loss of RMB496.3 million in the second quarter of 2019. Non-GAAP net loss margin was 59.2%, compared to 30.5% in the third quarter of 2018 and 35.8% in the second quarter of 2019.
• Basic and diluted net loss per American Depositary Share (“ADS”) were RMB3.54 (US$0.49) in the third quarter of 2019. Non-GAAP basic and diluted net loss per ADS were RMB3.32 (US$0.46) in the third quarter of 2019. Each four ADSs represent one Class A ordinary share of the Company.

Mr. Eric Siliang Tan, Chairman and Chief Executive Officer of Qutoutiao, commented, “Despite the less than hospitable operating environment which has persisted for much of the year, we have pushed on with determination as well as agility. Our quarterly average MAUs has reached 133.9 million and DAUs has reached 42.1 million, both of which have doubled from the levels a year ago. During this quarter, we have also made meaningful progress on product suite expansion, most notably Midu Lite which commenced in May and has quickly gathered more than 3 million DAU.”

“We believe the lower tier cities remain the most attractive space today with unmatched structural potential for growth and monetization. During the Double 11 Shopping Festival, GMVs generated by Qutoutiao users on e-commerce platforms increased more than ten-fold in comparison to last year.”

“Our priority is not simply growth, but rather long-term profitable growth. We tend to respond to market fluctuations with reason and gain comfort in remaining focused on doing the right things that will ultimately matter. That means a balanced approach to growth and capital allocation, with an emphasis on sustainability. With better retention and ARPU3 on an improving path in this quarter, we shall see better ROI driving our business going forward.” Mr. Tan. Concluded.

Business Outlook

Based on the current market conditions, the Company provides the following outlook reflecting the Company’s preliminary estimates of market and operating conditions, and customer demand:

For the fourth quarter of 2019, the Company expects net revenues to be between RMB 1,600 million and RMB 1,620 million.

For earnings history and earnings-related data on Qutoutiao (QTT) click here.

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