Qu Toutiao made a quarterly profit for the first time and also brought new stories.
Editor’s note: This article is from the micro-channel public number “deep burning” (ID: shenrancaijing), Author: Wei Jie, Editor: Dawn.
On March 4, Beijing time, Qu Toutiao released its fourth quarter and full-year earnings report for 2020.
In the fourth quarter, Qutoutiao’s net revenue was RMB 1.302 billion, an increase of 15.3% from the previous quarter. The net loss was 81.8 million yuan, a year-on-year decrease of 85.2%. In this quarter, the highlight of Qutoutiao’s financial report was that net losses narrowed sharply, exceeding market expectations.
Looking at the whole year of 2020, Qutoutiao’s more than one-year loss reduction plan has had a significant effect. In 2020, Qutoutiao’s net revenue was 5.285 billion yuan, a decrease of 5.1% from 2019. The net loss was 1.105 billion yuan, which was 59% narrower than in 2019.
At the beginning of 2020, Qutoutiao’s full-year goal is “to achieve breakeven and make products more attractive”. Based on the goals set at the beginning of the year and the latest transcripts, Qutoutiao has completed its goals in 2020.
At the same time, for Qutoutiao, this is a financial report of special significance. After operating losses have narrowed for five consecutive quarters, Qutoutiao ushered in a performance turning point. Under non-US GAAP, the fourth quarter of operation Sexual profit reached 42.5 million yuan, achieving the first quarterly profit since listing. Released along with the financial report, it is also interesting to hear that Midu, a free reading platform under the headline, has completed a $110 million Series C financing.
In the conference call, Qu Toutiao founder and chairman Tan Siliang said: From a long-term perspective, Qu Toutiao will still focus its business on third- and fourth-tier cities, and provide high-quality content to meet user needs. To achieve full-year profit in 2021.
Achieving a quarterly profit for the first time
If you use one word to summarize the latest financial report released by Qu Toutiao, it is “turning against the wind.”
Mapping/Shenran Data Source/Qutoutiao Financial Report
2020 will not be an easy year for Qu Toutiao. From the epidemic at the beginning of the year to the overall weakness of the advertising market in the first half of the year, Qu Toutiao has encountered problems this year.
On July 16, after the Qutoutiao APP was removed from all major Android channels, Qutoutiao carried out the third internal organizational structure adjustment. Tan Siliang on August 10Niss issued an internal letter to all employees stating that it is necessary to strengthen advertising review and technical input to ensure the quality of advertising, while reducing the cost of gold coin maintenance and customer acquisition.
The pain of adjustment is evident in user data. In the fourth quarter of 2020, Qutoutiao’s average monthly active users (MAU) was 125 million, down 9.6% from 138 million in the same period last year, and average daily active users (DAU) was 32.3 million, down 29.4 from 45.7 million in the same period last year. %, the average daily consumption time per DAU was 50.3 minutes, compared with 59.4 minutes in the same period last year.
In this regard, Zhu Xiaolu, chief financial officer of Qutoutiao, explained that the decline in DAU and MAU was because Qutoutiao eliminated low-quality users, that is, wool parties who were attracted by gold coins but were not interested in content.
Affected by this, in the fourth quarter of 2020, Qutoutiao’s net revenue was 1.302 billion yuan, a decline of 21.5% compared with 1.658 billion yuan in the same period last year. Advertising and marketing revenue, which contributed the bulk of revenue, was 1.242 billion yuan, a drop of 21.8% from the 1.589 billion yuan in the same period last year.
But what needs to be noticed is that with the strategic adjustment of “reducing costs and increasing efficiency”, Qutoutiao’s customer acquisition costs have also dropped significantly. In the fourth quarter of 2020, Qutoutiao’s user acquisition expenditure was 397 million yuan, a 41.7% drop compared with the same period last year. Sales and marketing costs were 680 million yuan, a decrease of 50.3% compared with the same period last year.
The most important thing is that under non-US GAAP, Qutoutiao’s operating profit in the fourth quarter was 42.5 million yuan, the first quarterly profit since its listing.
The market had long anticipated this news, because on January 4, 2021, Tan Siliang stated in an internal letter that Qu Toutiao as a whole achieved operating profits of tens of millions of RMB in the fourth quarter, although in the third quarter The revenue of the company was under relatively great pressure, but it still achieved five consecutive quarters of narrowing of operating losses.
And the good performance this quarter may be just the beginning of Qutoutiao’s bottoming out.
Qutoutiao predicts that in the first quarter of 2021, net revenue will reach 1.25 billion yuan to 1.30 billion yuan. Tan Siliang also disclosed in his internal letter Qu Toutiao’s 2021 goals-Qu Toutiao client, small video, short video, live broadcast, games and other innovative businesses of the company will achieve a full year of more than 700 million yuan on the basis of maintaining scale growth. In terms of operating profit, MiRead will double its DAU and revenue in the second half of 2021.
Why is QuTouTiao profitable?
Combined with the financial report and Qutoutiao’s strategic adjustments, it was found that Qutoutiao’s profitability was not accidental.
From the beginning of its establishment, Qu Toutiao has used social fission, cash rewards and other methods to refresh and cultivate user habits. Users can receive gold coins by reading information, signing in, completing tasks, participating in sharing, etc.Title “>Fali Nete, a new story about IP
The imagination of Qutoutiao to make money doesn’t stop there. Tan Siliang said to the public more than once: Qu Toutiao is underestimated. The performance of Midu, a free online literature reading product owned by Qutoutiao, is confirming this statement.
In 2018, online literature apps that adopted the free model have sprung up. In this year, Midu Novels, Qimao Free Novels, and Lianshang Free Books were all launched. In February 2019, Tomato Novels were launched.
An analyst who has been concerned about digital reading products for a long time said that for Internet products, first-mover advantage is very important. As an online entertainment content product focusing on the sinking market, Qutoutiao has been the first in the sinking market and segmented information track because it entered the game earlier. Midu, its free online literature product, was done early, so it took a step away from content construction and IP incubation. “Currently, there are not many Internet products with tens of millions of DAU in the market. Once it has a first-mover advantage or a network effect in a certain segment of the track, the company will continue to generate value with energy.”
In the fourth quarter of 2018, Qu Toutiao first disclosed the performance of Mi Duu novels in its financial report. With almost no guidance on Qu Toutiao’s guidance, Mi Duu novels had an activation of 40 million at the end of 2018. Users, DAU (daily active users) reaches 5 million, and the average daily usage time is 150 minutes.
Midu is also favored by the capital market. This time Midu completed US$110 million in Series C financing, which is exactly one year away from the US$100 million Series B financing obtained in October 2019. In addition to the US$18 million in Series A financing completed at the end of 2018, Midu’s accumulated financing reached US$228 million.
Midu’s commercial imagination may be larger than Qutoutiao. Industry insiders have stated that, unlike Qutoutiao, Midu has no user interaction costs, and its long-term profit margin will be significantly higher than Qutoutiao.
From the perspective of profit model, MiRead adopts the “free + advertising” model to cut into market segments. The free advertising model expands the overall monetization scale of the reading market, complements the payment model, enlarges the industry pie, and forms a hierarchical monetization system of advertising (traffic content) + paid (quality content).
According to “QuestMobile2020 China Mobile Internet Annual Report”, in December 2020, the number of users in the free reading APP industry has reached 140 million, an increase of 22% year-on-year. In the free reading mode, users are more accustomed to continuous reading, creating a high stickiness for free reading. Moreover, free-to-read users are more interested in celebrities, animations, games, etc., and provide a user basis for the realization of copyright realization by combining IP with video and games.
