qtt-6k_20190905.htm

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 6-K

 

REPORT OF FOREIGN ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

OF THE SECURITIES EXCHANGE ACT OF 1934

September 2019

(Commission File No. 001-38644)

 

QUTOUTIAO INC.

 

 

11/F, Block 3, XingChuang Technology Center

Shen Jiang Road 5005

Pudong New Area, Shanghai, 200120

People’s Republic of China

(Address of registrant’s principal executive office)

 

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F   Form 40-F  

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101 (b) (1):

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101 (b) (7):

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

    Yes      No  

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): N/A

 

 

 

 


 

EXHIBIT INDEX

 

 

 

Exhibit

 

Description

 

99.1

Press release: Qutoutiao Inc. Reports Second Quarter 2019 Unaudited Financial Results

 

2


 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereto duly authorized.

 

 

 

QUTOUTIAO INC.

 

 

 

By:

/s/ Jingbo Wang

 

Name:

Jingbo Wang

Title:

Chief Financial Officer

Date: September 5, 2019

3

qtt-ex991_6.htm

Exhibit 99.1

 

Qutoutiao Inc. Reports Second Quarter 2019 Unaudited Financial Results

 

SHANGHAI, China, September 4, 2019 (GLOBE NEWSWIRE) -- Qutoutiao Inc. (“Qutoutiao”, the “Company” or “We”) (NASDAQ: QTT), a leading operator of mobile content platforms in China, today announced its unaudited financial results in the second quarter ended June 30, 2019.

Second Quarter 2019 Highlights

 

Combined average MAUs1 reached 119.3 million, representing an increase of 250.2% from 34.1 million in the second quarter of 2018, compared to 111.4 million in the previous quarter.

Combined average DAUs2 reached 38.7 million, representing an increase of 207.6% from 12.6 million in the second quarter of 2018, compared to 37.5 million in the previous quarter.

Average daily time spent per DAU was 60.0 minutes, representing an increase of 27.5% from 47.0 minutes in the second quarter of 2018, compared to 62.1 minutes in the previous quarter.

Net revenues increased 187.9% year-over-year to RMB1,385.9 million (US$201.9 million), within the Company’s guided range between RMB1,380 million and RMB1,420 million.

Net loss was RMB561.3 million (US$81.8 million), compared to net loss of RMB211.8 million in the second quarter of 2018 and net loss of RMB688.2 million in the first quarter of 2019. Net loss margin was 40.5%, compared to 44.0% in the second quarter of 2018 and 61.5% in the first quarter of 2019.

Non-GAAP net loss was RMB496.3 million (US$72.3 million), compared to non-GAAP net loss of RMB112.8 million in the second quarter of 2018 and non-GAAP net loss of RMB617.7 million in the first quarter of 2019. Non-GAAP net loss margin was 35.8%, compared to 23.4% in the second quarter of 2018 and 55.2% in the first quarter of 2019.

 

Mr. Eric Siliang Tan, Chairman and Chief Executive Officer of Qutoutiao, commented,“Despite a weak digital advertising market, we have delivered strong revenue growth driven by user base expansion across our products. As the pioneer of the free-to-read model in online literature, Midu Novels has led this new market segment in both scale and content. Through consistent investment into people and content, Midu Novels has built the best coverage of high quality books among the ‘free-to-read’ peers and a strong editor team that will drive the generation of original content. On the Qutoutiao side, we continue to improve our content quality and enhance our compliance standards and capabilities which are well recognized by regulators.”

 

“In this quarter, we further improved our efficiency and internal collaboration through modularizing common functionalities, building full function teams, and introducing internal rotation programs for team leaders. I believe this will lay a solid foundation as we continue to upgrade our content offerings, bring more social features to our users and further enhance our monetization in the future. ” Mr. Tan added.


 

1 

“MAUs” refers to the number of unique mobile devices that accessed our relevant mobile application in a given month. “Combined average MAUs” for a particular period is the average of the MAUs for all of our mobile applications in each month during that period;

2 

“DAUs” refers to the number of unique mobile devices that accessed our relevant mobile application on a given day. “Combined average DAUs” for a particular period is the average of the DAUs for all of our mobile applications on each day during that period;

1

 


 

 

Second Quarter 2019 Financial Results

 

Net revenues in the second quarter of 2019 were RMB1,385.9 million (US$201.9 million), an increase of 187.9% from RMB481.4 million in the second quarter of 2018.

 

Advertising and marketing revenues were RMB1,358.0 million (US$197.8 million) in the second quarter of 2019, a significant increase of 209.2% from RMB439.2 million in the second quarter of 2018, primarily due to increases in the Company’s user base, time spent and ability to monetize user traffic.

 

Other revenues were RMB27.9 million (US$4.1 million) in the second quarter of 2019, compared to RMB42.2 million in the second quarter of 2018. Other revenues primarily represent revenues from providing agent and platform service between the advertising customers and third-party advertising platforms and online marketing platform services, and the decrease was primarily due to the decrease from agent and platform service.

 

Cost of revenues were RMB361.4 million (US$52.7 million) in the second quarter of 2019, an increase of 340.6% from RMB82.0 million in the second quarter of 2018, primarily attributable to increases in content procurement costs, bandwidth and IT infrastructure cost and increases in salaries and benefits associated with content management personnel.

 

Gross profit was RMB1,024.5 million (US$149.2 million) in the second quarter of 2019, an increase of 156.5% from RMB399.4 million in the second quarter of 2018. Gross margin was 73.9%, compared to 83.0% in the second quarter of 2018, the decrease of gross margin was mainly attributable to the growth of our content procurement cost as well as our bandwidth and IT infrastructure cost, as we are enriching our product offerings to include more engaging contents such as short videos, games and live-streaming.

 

Research and development expenses were RMB221.3 million (US$32.2 million) in the second quarter of 2019, increased 412.1% from RMB43.2 million in the second quarter of 2018, primarily due to an increase in R&D headcount as the Company continuously invests in enhancing technology capabilities, more specifically, the Company’s AI-based content recommendation technology.

 

Sales and marketing expenses were RMB1,321.8 million (US$192.5 million) in the second quarter of 2019, an increase of 178.8% from RMB474.1 million in the second quarter of 2018. Sales and marketing expense as a percentage of net revenues was 95.4%, compared to 98.5% a year ago and 115.9% a quarter ago, the decrease was primarily attributable to our continued efforts in optimizing our loyalty program.

 

User engagement expenses were RMB449.5 million (US$65.5 million) in the second quarter of 2019, increased by 82.9% year-over-year, primarily due to our enlarged user base. User engagement expenses per DAU per day were RMB0.13 in the second quarter of 2019, a decrease of 40.6% year-over-year and a decrease of 25.8% quarter-over-quarter. The decrease of user engagement expenses per DAU per day was primarily due to the Company’s ongoing efforts in optimizing user engagement expenses for Qutoutiao and the absence of such expenses for other products such as Midu Novels.

 

User acquisition expenses were RMB787.9 million (US$114.8 million) in the second quarter of 2019, an increase of 284.9% year-over-year. User acquisition expenses consist of the costs of both word-of-

2

 


mouth referrals and third-party marketing, and the increase was primarily driven by the Company’s continued strategic investments into building user base. User acquisition expenses per new installed user3 in the second quarter of 2019 were RMB6.93, compared to RMB6.21 in the first quarter of 2019 and RMB5.15 in the second quarter of 2018.

 

Other sales and marketing expenses were RMB84.3 million (US$12.3 million) in the second quarter of 2019, an increase of 257.5% year-over-year, mainly due to an increase in brand campaigns and promotions as we continue to strengthen our brand recognition.

 

General and administrative expenses were RMB64.1 million (US$9.3 million) in the second quarter of 2019, a decrease of 36.8% from RMB101.5 million in the second quarter of 2018. The decrease was mainly due to the decrease in share-based compensation expenses.

 

Loss from operations was RMB582.1 million (US$84.8 million) in the second quarter of 2019, compared to RMB219.4 million in the second quarter of 2018. Operating loss margin was 42.0%, compared to 45.6% in the second quarter of 2018.

 

Non-GAAP loss from operations was RMB517.0 million (US$75.3 million) in the second quarter of 2019, compared to RMB120.4 million in the second quarter of 2018. Non-GAAP operating loss margin was 37.3%, compared to non-GAAP operating loss margin of 25.0% in the second quarter of 2018.

 

Net loss was RMB561.3 million (US$81.8 million), compared to net loss of RMB211.8 million in the second quarter of 2018 and net loss of RMB688.2 million in the first quarter of 2019. Net loss margin was 40.5%, compared to 44.0% in the second quarter of 2018 and 61.5% in the first quarter of 2019.

 

Non-GAAP net loss was RMB496.3 million (US$72.3 million), compared to non-GAAP net loss of RMB112.8 million in the second quarter of 2018 and non-GAAP net loss of RMB617.7 million in the first quarter of 2019. Non-GAAP net loss margin was 35.8%, compared to 23.4% in the second quarter of 2018 and 55.2% in the first quarter of 2019.

 

Net loss attributable to Qutoutiao Inc.'s ordinary shareholders was RMB564.3 million (US$82.2 million) in the second quarter of 2019, compared to RMB255.8 million in the second quarter of 2018. Non-GAAP net loss attributable to Qutoutiao Inc.'s ordinary shareholders was RMB499.2 million (US$72.7 million) in the second quarter of 2019, compared to RMB156.8 million in the second quarter of 2018.

 

Basic and diluted net loss per American Depositary Share (“ADS”) were RMB2.21 (US$0.32) in the second quarter of 2019. Non-GAAP basic and diluted net loss per ADS were RMB1.95 (US$0.28) in the second quarter of 2019. Each four ADSs represent one Class A ordinary share of the Company.

 

 

Balance Sheet

 

As of June 30, 2019, the Company had cash, cash equivalents and short-term investments of RMB 2,287.6 million (US$333.2 million), compared to RMB1,638.3 million as of March 31, 2019. Cash,

 

3 

New installed users” refers to the aggregate number of unique mobile devices that have downloaded and launched our relevant mobile applications at least once

3

 


cash equivalents and short-term investments includes the US$171 million proceeds from the convertible loan advanced by Alibaba and the US$31 million net proceeds from issuing new shares in the follow-on share offering.

 

Recent Developments

 

On August 22, 2019, Shanghai Jifen Culture Communications Co., Ltd., one of the Company’s consolidated entities, was granted an Internet News License (the "License") by the Cyberspace Administration of China (the "CAOC").

 

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 third quarter of 2019, the Company currently expects net revenues to be at a similar level as we have achieved in the second quarter of 2019.

 

Conference Call

 

The Company’s management will host an earnings conference call at 9:00 p.m. U.S. Eastern Time on September 4, 2019 (9:00 a.m. Beijing/Hong Kong time on September 5, 2019).

 

Dial-in details for the live conference call are as follows:

 

United States:

+1-845-675-0437

United States (toll free):

+1-866-519-4004

Hong Kong:

+852-3018-6771

Hong Kong (toll free):

800-906-601

China:

400-620-8038

International:

+65-6713-5090

Conference ID:

6847257

 

Additionally, a live and archived webcast of the conference call will be available on the Company's investor relations website at https://ir.qutoutiao.net.

 

A replay of the conference call will be accessible approximately two hours after the conclusion of the live call until September 10, 2019, by dialing the following telephone numbers:

United States:

+1-646-254-3697

Hong Kong :

+852-3051-2780

China:

400-632-2162

International:

+61-2-8199-0299

Replay Access Code:

6847257

 

About Qutoutiao Inc.

 

Qutoutiao Inc. operates innovative and fast-growing mobile content platforms in China with a mission to bring fun and value to its users. The eponymous flagship mobile application, Qutoutiao, meaning “fun headlines” in Chinese, applies artificial intelligence-based algorithms to deliver customized feeds

4

 


of articles and short videos to users based on their unique profiles, interests and behaviors. Qutoutiao has attracted a large group of loyal users, many of whom are from lower-tier cities in China. They enjoy Qutoutiao’s fun and entertainment-oriented content as well as its social-based user loyalty program. Launched in May 2018, Midu Novels is a pioneer in offering free literature supported by advertising and has grown rapidly to become a leading player in the online literature industry. The Company will continue to bring more exciting products to users through innovation, and strive towards creating a leading global online content ecosystem.

 

For more information, please visit: https://ir.qutoutiao.net.

 

Use of Non-GAAP Financial Measures

 

We use non-GAAP loss from operations, non-GAAP net loss and non-GAAP net loss attributable to Qutoutiao Inc.’s ordinary shareholders, which are non-GAAP financial measures, in evaluating our operating results and for financial and operational decision-making purposes. Non-GAAP loss from operations represents loss from operations before share-based compensation expenses; non-GAAP net loss represents net loss before share-based compensation expenses; and non-GAAP net loss attributable to Qutoutiao Inc.’s ordinary shareholders represents net loss attributable to Qutoutiao Inc.’s ordinary shareholders before share-based compensation expenses. We believe that such non-GAAP financial measures help identify underlying trends in our business that could otherwise be distorted by the effect of such share-based compensation expenses that we include in cost of revenues, total operating expenses and net loss. We believe that all such non-GAAP financial measures also provide useful information about our operating results, enhance the overall understanding of our past performance and future prospects and allow for greater visibility with respect to key metrics used by our management in its financial and operational decision-making.

 

The non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. They should not be considered in isolation or construed as alternatives to net loss or any other measure of performance prepared in accordance with U.S. GAAP or as an indicator of our operating performance. We mitigate these limitations by reconciling the non-GAAP financial measures to the most comparable U.S. GAAP performance measures, all of which should be considered when evaluating our performance. For more information on these non-GAAP financial measures, please see the table captioned “Reconciliations of GAAP and Non-GAAP Results” set forth at the end of this press release.

 

Exchange Rate Information

 

This announcement contains translations of certain RMB amounts into U.S. dollars at a specified rate solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to U.S. dollars are made at a rate of RMB6.8650 to US$1.00, the rate in effect as of June 28, 2019 as set forth in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB or US$ amounts referred could be converted into US$ or RMB, as the case may be, at any particular rate or at all.

 

Safe Harbor Statement

 

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "fu

5

 


ture," "intends," "plans," "believes," "estimates" and similar statements. Statements that are not historical facts, including statements about Qutoutiao's beliefs, plans and expectations, are forward-looking statements. Among other things, the “Business Outlook” section and quotations from management in this announcement, contain 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: Qutoutiao’s strategies; Qutoutiao’s future business development, financial condition and results of operations; Qutoutiao’s ability to retain and increase the number of users and provide quality content; competition in the mobile content platform industry; Qutoutiao’s ability to manage its costs and expenses; general economic and business conditions globally and in China; and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in Qutoutiao's filings with the SEC. All information provided in this press release is as of the date of this press release, and Qutoutiao does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

 

For investor and media inquiries, please contact:

 

In China:

 

Qutoutiao Inc.

Investor Relations

Tel: +86-21-6858-3790

E-mail: ir@qutoutiao.net

 

The Piacente Group, Inc.

Jenny Cai

Tel: +86-10-6508-0677

E-mail: qutoutiao@tpg-ir.com

 

In the United States:

 

Qutoutiao Inc.
Oliver Yucheng Chen
E-mail: oliver@qutoutiao.net

 

The Piacente Group, Inc.

Brandi Piacente

Tel: +1-212-481-2050

E-mail: qutoutiao@tpg-ir.com

 

6

 


QUTOUTIAO INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(All amounts in RMB, or otherwise noted)

 

As of December 31,

As of June 30,

 

2018

2019

 

RMB

RMB

ASSETS

 

 

Current assets:

 

 

Cash and cash equivalents

2,186,288,246

2,103,479,913

Short-term investments

115,436,080

184,088,800

Accounts receivable, net

203,984,074

410,329,309

Amount due from related parties

-

104,097,946

Prepayments and other current assets

120,365,506

142,508,846

Total current assets

2,626,073,906

2,944,504,814

 

 

 

Non-current assets:

 

 

Investments

-

32,498,800

Property and equipment, net

13,929,542

18,799,411

Intangible assets

94,527,598

92,333,723

Goodwill

7,268,330

7,268,330

Right-of-use assets, net4

-

64,171,819

Other non-current assets

10,672,141

27,614,520

Total non-current assets

126,397,611

242,686,603

Total assets

2,752,471,517

3,187,191,417

 

 

 

LIABILITIES, REDEEMABLE NON-CONTROLLING INTEREST AND SHAREHOLDERS’ EQUITY

 

 

Current liabilities:

 

 

Accounts payable

131,249,219

261,428,799

Registered users’ loyalty payable

256,661,934

178,912,204

Advance from customer

155,099,317

166,090,687

Salary and welfare payable

43,422,202

73,901,862

Tax payable

101,286,721

92,118,427

Lease liabilities, current5

-

32,117,473

Accrued liabilities related to users’ loyalty programs

44,133,812

46,255,061

Accrued liabilities and other current liabilities

379,130,559

487,511,837

Total current liabilities

1,110,983,764

1,338,336,350

 

 

 

Lease liabilities, non-current6

-

26,586,966

Convertible loan

-

1,174,616,692

Deferred tax liabilities

23,631,899

22,430,277

Other non-current liabilities

9,686,219

8,419,246

Non-current liabilities

33,318,118

1,232,053,181

 

4 

.5.6 The Company has adopted ASU No. 2016-02, “Leases,” beginning January 1, 2019. Under the new provisions, the Company has recognized right-of-use assets and lease liabilities for all operating leases (primarily related to office buildings) with terms more than 12 months.

 

 

7

 


Total liabilities

1,144,301,882

2,570,389,531

 

 

 

Total redeemable non-controlling interest

96,936,855

130,481,205

 

 

 

Shareholders’ equity

 

 

  Ordinary shares

41,547

43,141

  Treasury stock

-

(102,630,674)

  Additional paid-in capital

3,684,130,058

4,031,844,904

  Accumulated other comprehensive loss

(16,428,875)

(31,637,042)

  Accumulated deficit

(2,153,235,425)

(3,407,814,586)

Total Qutoutiao Inc. shareholders’ equity

1,514,507,305

489,805,743

  Non-controlling interest

(3,274,525)

(3,485,062)

Total equity

1,511,232,780

486,320,681

 

 

 

Total liabilities, redeemable non-controlling interest and shareholders’ equity

2,752,471,517

3,187,191,417

 

 

 

8

 


QUTOUTIAO INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(All amounts in RMB, except ADS data, or otherwise noted)

 

For the three months ended

 

For the six months ended

 

June 30

March 31

June 30

 

June 30

June 30

 

2018

2019

2019

 

2018

2019

 

RMB

RMB

RMB

 

RMB

RMB

 

 

 

 

 

 

 

Advertising and marketing revenues

439,206,884

1,087,178,223

1,358,002,272

 

669,870,895

2,445,180,495

Other revenue

42,233,643

31,671,630

27,944,539

 

47,963,837

59,616,169

 

 

 

 

 

 

 

Net revenues

481,440,527

1,118,849,853

1,385,946,811

 

717,834,732

2,504,796,664

 

 

 

 

 

 

 

Cost of revenues

(82,026,600)

(279,192,974)

(361,446,349)

 

(145,993,211)

(640,639,323)

 

 

 

 

 

 

 

Gross profit

399,413,927

839,656,879

1,024,500,462

 

571,841,521

1,864,157,341

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

Research and development expenses

(43,215,540)

(155,383,992)

(221,318,168)

 

(62,912,378)

(376,702,160)

Sales and marketing expenses

(474,095,711)

(1,296,951,191)

(1,321,768,628)

 

(836,939,842)

(2,618,719,819)

General and administrative expenses

(101,542,677)

(84,664,699)

(64,147,788)

 

(193,885,977)

(148,812,487)

Total operating expenses

(618,853,928)

(1,536,999,882)

(1,607,234,584)

 

(1,093,738,197)

(3,144,234,466)

 

 

 

 

 

 

 

Other gains-net

-

626,110

637,822

 

-

1,263,932

 

 

 

 

 

 

 

Loss from Operations

(219,440,001)

(696,716,893)

(582,096,300)

 

(521,896,676)

(1,278,813,193)

 

 

 

 

 

 

 

Interest income(net of interest expense)

4,732,128

12,913,540

8,955,594

 

5,388,699

21,869,134

Foreign exchange related gains, net

2,889,500

(2,925,080)

390,043

 

2,098,062

(2,535,037)

Other gains/(loss), net

(11,918)

(2,057,303)

10,838,665

 

(25,598)

8,781,362

 

 

 

 

 

 

 

Loss before provision for income taxes

(211,830,291)

(688,785,736)

(561,911,998)

 

(514,435,513)

(1,250,697,734)

Income tax benefits

-

600,811

600,811

 

-

1,201,622

 

 

 

 

 

 

 

Net loss

(211,830,291)

(688,184,925)

(561,311,187)

 

(514,435,513)

(1,249,496,112)

 

 

 

 

 

 

 

Net loss attributable to non-controlling interests

-

153,826

56,711

 

-

210,537

Net loss attributable to Qutoutiao Inc.

(211,830,291)

(688,031,099)

(561,254,476)

 

(514,435,513)

(1,249,285,575)

 

 

 

 

 

 

 

Accretion to convertible redeemable preferred shares redemption value

(44,003,718)

(2,273,465)

(3,020,121)

 

(58,963,543)

(5,293,586)

Deemed dividend to preferred shareholders

-

-

-

 

(1,916,871)

-

 

 

 

 

 

 

 

Net loss attributable to Qutoutiao Inc.'s ordinary shareholders

(255,834,009)

(690,304,564)

(564,274,597)

 

(575,315,927)

(1,254,579,161)

 

 

 

 

 

 

 

9

 


 

For the three months ended

 

For the six months ended

 

June 30

March 31

June 30

 

June 30

June 30

 

2018

2019

2019

 

2018

2019

 

RMB

RMB

RMB

 

RMB

RMB

Net loss

(211,830,291)

(688,184,925)

(561,311,187)

 

(514,435,513)

(1,249,496,112)

Other comprehensive loss/(income):

 

 

 

 

 

 

Foreign currency translation adjustment, net of nil tax

(14,062,923)

(37,023,304)

21,815,137

 

(12,562,130)

(15,208,167)

Total comprehensive loss

(225,893,214)

(725,208,229)

(539,496,050)

 

(526,997,643)

(1,264,704,279)

Comprehensive loss attributable to non-controlling interests

-

153,826

56,711

 

-

210,537

Comprehensive loss attributable to Qutoutiao Inc.

(225,893,214)

(725,054,403)

(539,439,339)

 

(526,997,643)

(1,264,493,742)

 

 

 

 

 

 

 

Net loss per ADS (1 Class A ordinary share equals 4 ADSs):

 

 

 

 

 

 

— Basic and diluted

(2.62)

(2.79)

(2.21)

 

(5.93)

(5.00)

 

 

 

 

 

 

 

Weighted average number of ADS used in computing basic and diluted earnings per ADS:

 

 

 

 

 

 

— Basic

97,656,592

247,358,700

255,563,250

 

96,953,296

250,737,044

— Diluted

97,656,592

247,358,700

255,563,250

 

96,953,296

250,737,044

 

 


10

 


 

QUTOUTIAO INC.

Reconciliation of GAAP And Non-GAAP Results

(All amounts in RMB, except ADS data, or otherwise noted)

 

For the three months ended

 

For the six months ended

 

June 30

March 31

June 30

 

June 30

June 30

 

2018

2019

2019

 

2018

2019

 

RMB

RMB

RMB

 

RMB

RMB

 

(Unaudited)

(Unaudited)

(Unaudited)

 

(Unaudited)

(Unaudited)

 

 

 

 

 

 

 

Loss from Operations

(219,440,001)

(696,716,893)

(582,096,300)

 

(521,896,676)

(1,278,813,193)

Add: Share-based compensation expenses

 

 

 

 

 

 

  Cost of revenue

851,249

1,656,985

1,629,139

 

1,429,581

3,286,124

  General and administrative

90,632,466

45,429,920

14,208,730

 

173,840,923

59,638,650

  Sales and marketing

2,166,503

7,090,761

11,776,526

 

3,393,178

18,867,287

  Research and development

5,411,653

16,333,114

37,446,655

 

6,719,793

53,779,769

 

 

 

 

 

 

 

Non-GAAP Loss from Operations

(120,378,130)

(626,206,113)

(517,035,250)

 

(336,513,201)

(1,143,241,363)

 

 

 

 

 

 

 

Net loss

(211,830,291)

(688,184,925)

(561,311,187)

 

(514,435,513)

(1,249,496,112)

Add: Share-based compensation expenses

 

 

 

 

 

 

  Cost of revenue

851,249

1,656,985

1,629,139

 

1,429,581

3,286,124

  General and administrative

90,632,466

45,429,920

14,208,730

 

173,840,923

59,638,650

  Sales and marketing

2,166,503

7,090,761

11,776,526

 

3,393,178

18,867,287

  Research and development

5,411,653

16,333,114

37,446,655

 

6,719,793

53,779,769

 

 

 

 

 

 

 

Non-GAAP net loss

(112,768,420)

(617,674,145)

(496,250,137)

 

(329,052,038)

(1,113,924,282)

 

 

 

 

 

 

 

Net loss attributable to Qutoutiao Inc.

(211,830,291)

(688,031,099)

(561,254,476)

 

(514,435,513)

(1,249,285,575)

Add: Share-based compensation expenses

 

 

 

 

 

 

  Cost of revenue

851,249

1,656,985

1,629,139

 

1,429,581

3,286,124

  General and administrative

90,632,466

45,429,920

14,208,730

 

173,840,923

59,638,650

  Sales and marketing

2,166,503

7,090,761

11,776,526

 

3,393,178

18,867,287

  Research and development

5,411,653

16,333,114

37,446,655

 

6,719,793

53,779,769

 

 

 

 

 

 

 

Non-GAAP net loss attributable to Qutoutiao Inc.

(112,768,420)

(617,520,319)

(496,193,426)

 

(329,052,038)

(1,113,713,745)

 

 

 

 

 

 

 

Net loss attributable to Qutoutiao Inc.’s ordinary shareholders

(255,834,009)

(690,304,564)

(564,274,597)

 

(575,315,927)

(1,254,579,161)

Add: Share-based compensation expenses

 

 

 

 

 

 

  Cost of revenue

851,249

1,656,985

1,629,139

 

1,429,581

3,286,124

  General and administrative

90,632,466

45,429,920

14,208,730

 

173,840,923

59,638,650

  Sales and marketing

2,166,503

7,090,761

11,776,526

 

3,393,178

18,867,287

  Research and development

5,411,653

16,333,114

37,446,655

 

6,719,793

53,779,769

 

 

 

 

 

 

 

Non-GAAP Net loss attributable to Qutoutiao Inc.’s ordinary shareholders

(156,772,138)

(619,793,784)

(499,213,547)

 

(389,932,452)

(1,119,007,331)

 

 

 

 

 

 

 

Non-GAAP net loss per ADS (1 Class A ordinary share equals 4 ADSs):

 

 

 

 

 

 

     Basic and diluted

(1.61)

(2.51)

(1.95)

 

(4.02)

(4.46)

11

 


 

For the three months ended

 

For the six months ended

 

June 30

March 31

June 30

 

June 30

June 30

 

2018

2019

2019

 

2018

2019

 

RMB

RMB

RMB

 

RMB

RMB

 

(Unaudited)

(Unaudited)

(Unaudited)

 

(Unaudited)

(Unaudited)

 

 

 

 

 

 

 

Weighted average number of ADS used in computing basic and diluted earnings per ADS

 

 

 

 

 

 

Basic

97,656,592

247,358,700

255,563,250

 

96,953,296

250,737,044

Diluted

97,656,592

247,358,700

255,563,250

 

96,953,296

250,737,044

 

 


12

 


QUTOUTIAO INC.

APPENDIX I Non-GAAP Margin Structure

(As % of net revenues, or otherwise noted)

 

 

For the three months ended

 

June 30

September 30

December 31

March 31

June 30

 

2018

2018

2018

2019

2019

Net revenues

100.0%

100.0%

100.0%

100.0%

100.0%

Cost and Expenses

 

 

 

 

 

 

 

 

 

 

 

Cost of revenues

16.9%

15.5%

15.2%

24.8%

26.0%

 

 

 

 

 

 

User engagement

51.1%

49.2%

42.5%

51.9%

32.4%

User acquisition

42.5%

54.5%

56.3%

60.4%

56.9%

Other sales and marketing

4.4%

2.9%

4.1%

3.0%

5.2%

Total sales and marketing expenses

98.0%

106.6%

102.9%

115.3%

94.5%

 

 

 

 

 

 

Research and development

7.9%

7.0%

8.7%

12.4%

13.3%

General and administrative

2.3%

2.4%

2.3%

3.5%

3.6%

 

 

 

 

 

 

Non-GAAP operating loss margin

(25.0%)

(31.6%)

(29.0%)

(56.0%)

(37.3%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 


13

 


QUTOUTIAO INC.

APPENDIX II  Supplementary Operating Information

(RMB in millions, or otherwise noted)

 

 

For the three months ended

 

June 30

September 30

December 31

March 31

June 30

 

2018

2018

2018

2019

2019

Net revenues

481.4

977.3

1,327.0

1,118.8

1,385.9

 

 

 

 

 

 

User engagement expenses7

245.8

481.0

563.3

580.8

449.5

User acquisition expenses8

204.7

532.2

746.9

675.3

787.9

Other sales and marketing expenses

23.6

31.8

57.9

40.9

84.3

 

 

 

 

 

 

Total sales and marketing expenses

474.1

1,045.0

1,368.1

1,297.0

1,321.8

 

 

 

 

 

 

Combined Average MAUs (in millions)

34.1

65.2

93.8

111.4

119.3

Combined Average DAUs (in millions)

12.6

21.3

30.9

37.5

38.7

New installed users (in millions)

39.7

88.6

113.6

108.7

113.7

 

 

 

 

 

 

Net Revenues per DAU per day(RMB)

0.42

0.50

0.47

0.33

0.39

User engagement expenses per DAU per day (RMB)

0.21

0.25

0.20

0.17

0.13

User acquisition expenses per new installed user(RMB)

5.15

6.01

6.57

6.21

6.93

 

 

 

 

 

5 

We offer loyalty program for registered users of our mobile applications to enhance user engagement and loyalty and incentivize word-of-mouth referrals. “User engagement expenses” refer to the cost of loyalty points associated with taking specific actions, such as viewing and sharing of content, that encourage engagement and retention on our mobile applications. Such expenses are recognized as part of sales and marketing expenses in the consolidated statements of operations. “User engagement expenses per average DAUs per day” refer to such expenses incurred on an average DAU per day during a particular period.

6 

“User acquisition expenses” refer to the sum of the cost of loyalty points associated with referring new users to register on our mobile applications and the cost of third-party advertising and marketing of our mobile applications. Such expenses are recognized as part of sales and marketing expenses in the consolidated statements of operations. “User acquisition expenses per new registered user” refer to the average cost of acquiring a new installed user from both word-of-mouth referrals and third-party channels.

14