Mi read the anti-flag?
Editor’s note: This article is from the micro-channel public number “different concept of Finance” (ID: DifferentFin), Author: ghosts ghosts before.
The interesting headlines that have completely fallen behind in the “sinking market three giants” have always been difficult to break the “loss curse”, and finally ushered in a performance turning point, achieving the first quarterly profit since listing.
Yesterday, the global market experienced a “Black Thursday”, and the futures index collectively fell. Although Qutoutiao achieved its first quarterly profit, its revenue, daily activity, and user duration all declined to varying degrees, causing Qutoutiao’s stock price to plummet by 25.9 %, reported closing of US$2.830, a drop of nearly 60% from the issue price of US$7, with a total market value of US$844 million, which is not in the same order of magnitude as Pinduoduo and Kuaishou.
Users flee in pursuit of profit, Qu Toutiao has completely fallen behind in the sinking market
On March 4, Beijing time, Qu Toutiao (NASDAQ: QTT) released its unaudited financial performance report for the fourth quarter and full year of 2020. Qu Toutiao, which has been losing money, finally ushered in a performance turning point. Under non-US GAAP, operating profit in the fourth quarter reached 42.5 million yuan, achieving the first quarterly profit since listing. Its subsidiary Midu completed a series C financing of 110 million US dollars, and everything seems to be very good.
But what about the fact? Is this beautiful sustainable?
Advertising is the core source of revenue for Qutoutiao, and user profile plays a key role in revenue.
Advertising is the core source of income for Qutoutiao. In the beginning, Qu Toutiao’s business model was to buy users by spending money and then sell users to advertisers. Only when the platform has a large user base, can it be possible to attract more advertisers to launch, that is to say, the situation of platform users will directly affect the advertiser’s decision to launch.
Obviously, Qu Toutiao has captured a large number of sinking market users in a short period of time by virtue of the “reading news to make money + accepting apprentices” model. With the tightening of platform subsidies, users are fleeing for profit, the scale of daily active users and users The length of stay on the platform is decreasing.
According to the financial report, in the fourth quarter of 2020, Qutoutiao’s daily users (DAU) were 32.3 million, a decrease of 13.4 million from 45.7 million in the same period of the previous year, and a decrease of 7.4 million from 39.7 million in the previous quarter.
(Data Source/Financial Report; Mapping/Yiguan Finance)
Since Q4 2019, users have spent less and less time on Qutoutiao.
The daily usage time of Q4 users in 2019 was 59.4 minutes, which was lower than 63.1 minutes in Q4 2018. Q1 of 2020 is the most severe time of the new crown epidemic. People stay at home and spend more leisure time. The time spent by Qutoutiao users has increased, from 59.4 minutes in Q4 of 2019 to 62.4 minutes, but it is still lower than below 63.1 minutes in Q4 2018. In the last three quarters of 2020, user usage time will be reduced to 55.2 minutes, 55.3 minutes and 50.3 minutes respectively.
(Data Source/Financial Report; Mapping/Yiguan Finance)
The escape of users directly led to the decrease of Qutoutiao ads and total revenue.
According to the financial report, Qutoutiao’s revenue in the fourth quarter of 2020 was 1.302 billion yuan, a decrease of 21.5% from the 1.658 billion yuan in the same period last year. Among them, advertising and marketing revenue was 1.242 billion yuan, a decrease of 21.8% from 1.589 billion yuan in the fourth quarter of 2019.
As for the decrease in advertising and marketing revenue, Qu Toutiao said that this is mainly due to the company’s strategy of prioritizing optimization of operational efficiency and ensuring financial health.
According to the financial report, Qutoutiao’s net loss in the fourth quarter was 81.8 million yuan, compared with a net loss of 551.4 million yuan in the fourth quarter of 2019. Under non-US GAAP, operating profit in the fourth quarter was 42.5 million yuan, achieving the first quarterly profit since listing.
So can Qutoutiao’s quarterly earnings last? Is Qutoutiao’s profitability strong?
Under normal circumstances, the higher the gross profit margin, the stronger the company’s profitability. From the perspective of profitability, the higher the gross profit margin, the greater the profit of the company, and it also shows that the company’s products have better competitiveness.
Yiguan Finance, by combing through the financial data of Qutoutiao from 2017 to 2020, found that Q2 of 2017 was the quarter with the highest gross profit margin of Qutoutiao, with a gross profit margin of 91.4%. From then on, Q3 2017 to Q2 2018. Continued to decline, falling to 72.9%, and the gross profit margin increased from Q3 2018 to Q1 2019, rising to 84.6%. However, after Q2 of 2019, it has been declining. The gross profit margin of Q3 in 2020 is now 67.1%, the lowest in history. This has released a dangerous signal that Qutoutiao’s profitability is worrying.
(Data Source/Financial Report; Mapping/Yiguan Finance)
Behind the in-depth analysis of Qutoutiao’s first quarterly profit, it is mainly the result of continuous cost reduction. In order to pursue the possibility of profitability, Qu Toutiao gave up the growth of user scale and reduced various costs and expenditures by reducing user subsidies.
According to the financial report, Qu Toutiao has narrowed its losses for five consecutive quarters. Correspondingly, Qu Toutiao has reduced its marketing expenses for five consecutive quarters. The financial report shows that in the fourth quarter of 2020, Qutoutiao’s marketing expenses were reduced by 50.3%, from 1.368 billion yuan in the same period last year to 680 million yuan.
(Data Source/Financial Report; Mapping/Yiguan Finance)
The reduction in marketing expenditure is related to the reduction of user participation subsidies in Qu Toutiao. According to the financial report, Qutoutiao’s user participation fee in the fourth quarter was 163 million yuan, a decrease of 71.4% from 571 million yuan in the same period last year, and a 38.3% decrease from 265 million yuan in the previous quarter.
(Data Source/Financial Report; Mapping/Yiguan Finance)
Sinking the market user group has a high sensitivity to price. Qutoutiao’s reduction in user participation subsidies has directly led to the loss of users and the reduction of usage time. Users who have no money to make money are fleeing Qutoutiao for profit.
Nowadays, Qu Toutiao is far behind Pinduoduo and Kuaishou in terms of users and revenue scale, as well as market value.
First of all, in terms of user scale, as of the end of September 2020, Pinduoduo had 731.3 million annual active buyers, compared with 536.3 million in Q3 of 2029, an annual net increase of 195 million and a quarterly net increase of 74 million. The average monthly active users reached 643.4 million, a year-on-year increase of 50%. According to information on the official website of Kuaishou, in the first half of 2020, the average daily active users of Kuaishou’s Chinese apps and mini programs exceeded 300 million.
Secondly, revenueIn terms of scale, in the third quarter of 2020, Pinduoduo’s quarterly revenue was 14.21 billion yuan, an increase of 89% year-on-year; according to Kuaishou’s updated prospectus data, as of November 30, 2020, the total revenue of Kuaishou was 52.5 billion yuan. , Far surpassing Qu Toutiao’s 2020 full year 5.285 billion yuan.
Finally, in terms of market value, as of the release of Yiguan Finance, the total market value of Pinduoduo was US$194.25 billion; the market value of Kuaishou was HK$1.22 trillion; and the total market value of Qutoutiao was US$844 million.
To sum up, Qu Toutiao, Pinduoduo, and Kuaishou are not in the same position at all, and they fall behind in the “Sinking Market Big Three”.
Can Mireading “resurrect” interesting headlines?
If you abandon the way of burning money in exchange for users, and if Qutoutiao wants to acquire more new users and increase the retention rate of existing users, the platform needs to continuously provide high-quality content.
However, when Qu Toutiao was launched, it directly bypassed content barriers and directly regarded customer acquisition as a business model. The content was not paid much attention to, and the content became a shortcoming of Qu Toutiao. Therefore, Qu Toutiao hopes to attract more users through the free reading mode, and promote the growth of users and revenue through the content ecology.
Midu has high hopes. Qu Toutiao hopes to use MiRead to make up for its shortcomings in content, and at the same time it may become its next business growth point, promote user and revenue growth, and thus “resurrect” Qu Toutiao.
Qutoutiao disclosed in its 2020 Q4 financial report that its online platform Midu has completed a $110 million Series C financing. In this regard, Tan Siliang, Chairman and CEO of Qutoutiao, said: “Throughout the whole year, we are committed to providing users with rich and interesting content, realizing sustainable business development, and achieving returns in the fourth quarter. We will continue to work hard in 2021. , Continue to enrich the content ecology, optimize the algorithm technology, and promote the strong growth of users and revenue. At the same time, we will strengthen the investment and support for MiRead, achieve the goal of doubling MiRead users and revenue in the second half of the year, and continue to remain in the field of free reading Leading position.
Qutoutiao Chairman and CEO Tan Siliang said that in the future, it will strengthen the investment and support for MiRead, and achieve the goal of doubling MiRead users and revenue in the second half of the year.
According to the financial report, as of the fourth quarter of 2020, the total volume of Midu original books increased by 142.04% year-on-year; so far, Midu has incubated more than 30 original novels into IP skits. Qu Toutiao said that after receiving the capital blessing, MiRead will increase its investment in original content, try various forms such as instant noodles and interactive dramas in IP incubation, and strive to double the daily active users and income in 2021.
Midu’s free model mainly relies on advertising monetization to support operating costs. However, there are many competing pairs for MiRead. In addition to facing the pressure of competition from leading platforms such as China Reading Group, Zhangyue Technology, and Alibaba Literature, Lian ShangwenXue, ByteDance’s Tomato Novels, and Baidu’s Qi Mao Novels are also rivals of Midu.
At the beginning of 2021, Reading draws on Chinese Online, and Palm Reading has joined hands with ByteDance and Station B, and the online writing industry is changing once again.
Internet literature has become one of the most important IP sources in the digital cultural industry ecosystem in my country. At the beginning of 2021, the pattern of the online literature industry has once again changed.
On January 26, 2021, the Chinese online announcement stated that the “Share Transfer Agreement” had been signed with Shanghai Reading, Shenzhen Litong and Baidu Qimao. After the completion of the share agreement transfer, Shanghai Reading and Shenzhen Litong , Baidu Qimao will become an important shareholder holding more than 5% of the company’s shares. Since then, Chinese online shareholders have gathered the two major traffic giants, Tencent and Baidu.
In February this year, Palmyue Technology released the “Report on the Issuance of Non-public A Shares”, announcing the completion of the private placement of RMB 1.061 billion in financing. The subscription targets include 20 investors including Bilibili. Among them, the investment amount of station B reached 50 million yuan, and the highest price was quoted during the subscription process.
This is not the first cooperation between Palm Read and Station B. In July 2020, the domestic animation “Yuanlong”, which was jointly produced by Palmyue Pictures and Bilibili, adapted from the novel of the same name by the author of Palmyue, was broadcast. This animation received a total of 270 million broadcasts on station B. The number of followers was 4.23 million, and the score was as high as 9.0.
In addition, Quantum, a wholly-owned subsidiary of ByteDance last year, invested 1.1 billion yuan in shares of Palm Reading, becoming its third largest shareholder. This also reflects the fact that short video platforms and traffic giants are more inclined to web text head product platforms.
In September last year, MiRead and Kuaishou reached a strategic cooperation. In terms of the specific cooperation model, MiRead will provide the platform with short drama content adapted from original novels for Kuaishou, which will be broadcast exclusively on Kuaishou. At present, Midu has more than 30 original novels adapted into IP skits, and the total number of skits on the whole network is 2 billion.
This year, the sudden outbreak of the new crown epidemic in 2020 has ignited the home economy, and content platforms have also enjoyed the traffic dividends brought by the epidemic, and traffic has skyrocketed. In the first quarter of 2020, when the epidemic was the most severe, the monthly active users of Qutoutiao increased by 24.1% year-on-year. After that, the rate of monthly active users slowed down, and there was a decline in Q3 and Q4. This shows to a certain extent that the content of Qutoutiao seems to be insufficient to retain users.
High-quality content can attract readers. If you want to get more high-quality content, you need to strongly support content creators. However, whether it is creative support or short drama production, it is inseparable from financial support. The financial report shows that as of December 31, 2020, the company’s cash, cash equivalents, restricted cash and short-term investments are 985.8 million yuan.
Although Midu has achieved certain results, in terms of online texts, in terms of the number of original authors of online texts and the number of works, it has to face powerful opponents such as reading and palm reading; in terms of traffic, Tencent, Baidu, and today Huge traffic such as headlinesThe head also puts great pressure on Qu Toutiao. Whether Mi Duo can break into a good future and shoulder the important task of “reviving” Qu Toutiao, there is a long way to go and it is worth looking forward to.