Qutoutiao (QTT) Tops Q1 EPS by 3c on Revenues of $199.4M

Qutoutiao (NASDAQ: QTT) reported Q1 EPS of ($0.20), $0.03 better than the analyst estimate of ($0.23). Revenue for the quarter came in at $199.4 million.

First Quarter 2020 Highlights

• Combined average MAUs1 were 138.3 million, representing an increase of 24.2% from 111.4 million in the first quarter of 2019, compared to 137.9 million in the previous quarter.
• Combined average DAUs2 were 45.6 million, representing an increase of 21.5% from 37.5 million in the first quarter of 2019, compared to 45.7 million in the previous quarter.
• Average daily time spent per DAU was 62.4 minutes, compared to 62.1 minutes in the first quarter of 2019 and 59.4 minutes in the previous quarter.
• Net revenues increased 26.2% year-over-year to RMB1,411.8 million (US$199.4 million), within the Company’s guided range of RMB1,400 million and RMB1,420 million.
• Net loss was RMB531.8 million (US$75.1 million), compared to net loss of RMB688.2 million in the first quarter of 2019 and net loss of RMB551.4 million in the fourth quarter of 2019. Net loss margin was 37.7%, compared to 61.5% in the first quarter of 2019 and 33.2% in the fourth quarter of 2019.
• Non-GAAP net loss3 was RMB388.1 million (US$54.8 million), compared to non-GAAP net loss of RMB617.7 million in the first quarter of 2019 and non-GAAP net loss of RMB470.2 million in the fourth quarter of 2019. Non-GAAP net loss margin was 27.5%, compared to 55.2% in the first quarter of 2019 and 28.4% in the fourth quarter of 2019.

Mr. Eric Siliang Tan, Chairman and Chief Executive Officer of Qutoutiao, commented, “We executed strongly in the first quarter of 2020 by growing our revenues over 26% year on year, this is a strong testament to our commitment and ongoing effort in enhancing the core capabilities of our advertising platform, especially given the unprecedented challenges facing our economy and the industry.”

“We expect to see both revenue and user base expansion in the second half of this year while continuing to improve our operating efficiency by holding a higher bar for capital allocation, especially with regard to user engagement and acquisition,” Mr. Tan concluded.

Mr. Xiaolu Zhu, Chief Financial Officer of Qutoutiao, added, “Despite the headwind brought by the pandemic, our goal to further increase operating efficiency and profitability remains unchanged. And we are delighted to see the significant improvement in our operating margins in the first quarter compared to the same period a year ago.”

Impact of COVID-19

The COVID-19 pandemic has adversely affected the global and Chinese economy as well as the advertising market in China. As a result, we experienced a slowdown of our growth speed in the first quarter of 2020. However, due to our continual efforts in optimizing our loyalty program and traffic acquisition strategy and our ability to enrich the content we offer, we managed to increase our revenues and decrease our net loss on a year-over-year basis. We have been closely monitoring the impact of COVID-19 on macro economy and advertising market in general, as well as the extent to which COVID-19 may continue to impact our business, results of operations and financial condition. At this point, the potential future impact of COVID-19 on our results is uncertain and difficult to predict and will depend on future developments, including the duration, severity and reach of the COVID-19 outbreak, and actions taken to contain the outbreak or treat its impacts. Please see the “Risk Factors” section in our annual report on Form 20-F for the fiscal year ended December 31, 2019 for more detailed information.

Business Outlook

For the second quarter of 2020, the Company currently expects net revenues to be between RMB1,410 million and RMB1,430 million, representing an increase of 2% to 3% year-over-year.

This business outlook is a forward-looking statement that reflects assumptions that we believe to be reasonable as of the date of this announcement and involve inherent risks and uncertainties, many of which we are not able to predict or control. The Company has considered the expected continued impact of the COVID-19 outbreak and resulting contraction of the Chinese economy in developing this forecast, as well as other challenges in the macro environment and the online advertising industry. This forecast represents the Company's current and preliminary view, which is subject to substantial uncertainty, particularly as to the status and impact of the COVID-19 pandemic in China and worldwide.

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

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