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Phoenix New Media Reports Third Quarter 2012 Unaudited Financial Results

   Phoenix New Media Reports Third Quarter 2012 Unaudited Financial Results

3Q12 Net Advertising Revenues Up 11.4% YOY

Live Conference Call to be Held at 8:00 PM U.S. Eastern Time on November 20

PR Newswire

BEIJING, Nov. 20, 2012

BEIJING, Nov. 20, 2012 /PRNewswire/ -- Phoenix New Media Limited (NYSE: FENG),
a leading new media company in China ("Phoenix New Media", "ifeng" or the
"Company"), today announced its unaudited financial results for the third
quarter ended September 30, 2012.

Third Quarter 2012 Highlights

  oTotal revenues increased by 5.8% year-over-year to RMB286.4 million
    (US$45.6 million), driven by an 11.4% increase in net advertising
    revenues.
  oNet income attributable to Phoenix New Media was RMB11.5 million (US$1.8
    million), as compared to RMB56.8 million in the third quarter of 2011.
  oAdjusted net income attributable to Phoenix New Media(1) was RMB14.1
    million (US$2.2 million), as compared to RMB61.5 million in the third
    quarter of 2011.

Mr. Shuang Liu, CEO of Phoenix New Media, stated, "Even though our advertising
business continued to experience softness due to the uncertainty of the
macro-economic situation, advertisers continued to demonstrate confidence in
our media platform by increasing their average spending on our platform by
nearly 36% year-over-year. This increase was a direct result of our premium
content which generated over 110% year-over-year growth to 38 million in
ifeng's daily unique visitors in September, the growth of which continued to
significantly outpace our peers, according to iResearch. Looking forward, we
remain confident that once the macro-economic situation stabilizes, we can
expect stabilization in the overall advertising business, providing us
improved visibility in the coming quarters."

Third Quarter 2012 Financial Results

REVENUES

Total revenues for the third quarter of 2012 increased by 5.8% to RMB286.4
million (US$45.6 million) from RMB270.8 million in the third quarter of 2011.

Net advertising revenues, calculated net of advertising agency service fees,
for the third quarter of 2012 increased by 11.4% to RMB140.5 million (US$22.4
million) from RMB126.2 million in the third quarter of 2011, primarily due to
an increase in average revenue per advertiser ("ARPA") of 35.5% to RMB585,500
(US$93,100) for 240 total advertisers.

Paid service revenues for the third quarter of 2012 increased by 0.9% to
RMB145.8 million (US$23.2 million) from RMB144.6 million in the third quarter
of 2011. Mobile Internet and value-added services ("MIVAS")(2) revenues
decreased by 7.0% to RMB125.5 million (US$20.0 million) in the third quarter
of 2012 from RMB134.9 million in the third quarter of 2011 due to the expected
decrease in sales from 2G text message based pay-per-view services. Video
value-added services ("video VAS") revenues increased by 109.9% to RMB20.4
million (US$3.2 million) in the third quarter of 2012 from RMB9.7 million in
the third quarter of 2011, primarily due to an expansion in video VAS user
base across the three major telecom operators in China.

COST OF REVENUES AND GROSS PROFIT

Cost of revenues for the third quarter of 2012 increased by 14.5% to RMB173.9
million (US$27.7 million) from RMB151.9 million in the third quarter of 2011.
Revenue sharing fees to telecom operators and channel partners decreased to
RMB79.4 million (US$12.6 million) in the third quarter of 2012 from RMB89.1
million in the third quarter of 2011, primarily due to the decrease in MIVAS
revenues. Content and operational costs increased to RMB60.1 million (US$9.6
million) in the third quarter of 2012 from RMB37.9 million in the third
quarter of 2011 due to the increase in staff-related costs, office rental
fees, as well as the increase in content production and acquisition costs.
Bandwidth costs increased to RMB20.2 million (US$3.2 million) in the third
quarter of 2012 from RMB9.5 million in the third quarter of 2011 primarily due
to the significant growth in user traffic. Sales tax and surcharges decreased
to RMB14.2 million (US$2.3 million) in the third quarter of 2012 from RMB15.4
million in the third quarter of 2011. Share-based compensation expenses
included in cost of revenues was RMB0.6 million (US$0.1 million) in the third
quarter of 2012 as compared to RMB1.2 million in the third quarter of 2011.

Gross profit for the third quarter of 2012 decreased by 5.4% to RMB112.5
million (US$17.9 million) from RMB118.9 million in the third quarter of 2011.
Gross margin was 39.3% in the third quarter of 2012 as compared to 43.9% in
the third quarter of 2011, mainly due to the increase in staff-related costs,
bandwidth costs and office rental fees. Adjusted gross margin, which excludes
share-based compensation expenses, was 39.5% in the third quarter of 2012 as
compared to 44.3% in the third quarter of 2011.

OPERATING EXPENSES AND INCOME FROM OPERATIONS

Total operating expenses for the third quarter of 2012 increased by 46.3% to
RMB108.8 million (US$17.3 million) from RMB74.3 million in the third quarter
of 2011. The increase in operating expenses was primarily attributable to
increased staff-related costs, marketing and promotion events and office
rental fees.Share-based compensation expenses included in operating expenses
was RMB2.0 million (US$0.3 million) in the third quarter of 2012 as compared
to RMB3.5 million in the third quarter of 2011.

Income from operations for the third quarter of 2012 was RMB3.7 million
(US$0.6 million) as compared to RMB44.5 million in the third quarter of 2011.
Operating margin was 1.3% for the third quarter of 2012 as compared to 16.4%
in the third quarter of 2011. The decrease in operating margin was primarily
due to increased headcount, marketing and promotion events and office rental
fees.

Adjusted income from operations, which excludes the impact of share-based
compensation expenses, for the third quarter of 2012 was RMB6.3 million
(US$1.0 million) as compared to RMB49.2 million in the third quarter of
2011.Adjusted operating margin was 2.2% for the third quarter of 2012 as
compared to 18.2% in the third quarter of 2011.

FOREIGN CURRENCY EXCHANGE GAIN/LOSS AND INTEREST INCOME

Foreign currency exchange loss for the third quarter of 2012 was RMB2.0
million (US$0.3 million), as compared to an exchange gain of RMB13.3 million
in the third quarter of 2011. Interest income for the third quarter of 2012
was RMB8.2 million (US$1.3 million), as compared to RMB4.3 million in the
third quarter of 2011. The increase in interest income was primarily due to
higher deposit levels resulting from the Company's IPO net proceeds.

NET INCOME

Net income attributable to Phoenix New Media for the third quarter of 2012 was
RMB11.5 million (US$1.8 million) as compared to RMB56.8 million in the third
quarter of 2011. Net margin for the third quarter of 2012 was 4.0% as compared
to 21.0% in third quarter of 2011.Net income per diluted ADS(3) in the third
quarter of 2012 was RMB0.14 (US$0.02) as compared to RMB0.70 in the third
quarter of 2011.

Adjusted net income attributable to Phoenix New Media for the third quarter of
2012, which excludes share-based compensation expenses, was RMB14.1 million
(US$2.2 million) as compared to RMB61.5 million in the third quarter of 2011.
Adjusted net margin for the third quarter of 2012 was 4.9% as compared to
22.7% in the third quarter of 2011. Adjusted net income per diluted ADS was
RMB0.17 (US$0.03) in the third quarter of 2012, as compared to RMB0.76 in the
third quarter of 2011.

For the third quarter of 2012, the Company's weighted average number of ADS
used in computing diluted net income per ADS was 80,672,024.

Business Outlook

For the fourth quarter of 2012, the Company expects its total revenues to be
between RMB266 million and RMB276 million. Net advertising revenues are
expected to be between RMB166 million and RMB171 million. Paid service
revenues are expected to be between RMB100 million and RMB105 million. These
forecasts reflect the Company's current and preliminary view on the market and
operational conditions, which are subject to change.

Share Repurchase Program

As of September 30, 2012, the Company had repurchased an aggregate of
1,228,724 American Depositary Shares ("ADSs") at an aggregate cost of
approximately US$4.5 million on the open market. Under its ADS repurchase
program, the Company has been authorized to repurchase up to US$20 million of
its outstanding ADSs for a period not to exceed twelve (12) months since
August 2012. The Company expects to continue to implement its share
repurchase program in a manner consistent with market conditions and the
interest of its shareholders, subject to the restrictions relating to volume,
price and timing under applicable law.

Conference Call Information

The Company will hold a conference call at 8:00p.m. U.S. Eastern Time on
November 20, 2012 (November 21, 2012 at 9:00a.m. Beijing / Hong Kong time) to
discuss its third quarter 2012 financial results and operating performance.

To participate in the call, please dial the following numbers:

International:      +6567239385
China: 4001200654
Hong Kong:       +85230512745
United States:        +16462543515
Conference ID:            59655968

A replay of the call will be available through November 26, 2012 by dialing
the following numbers:

International:           +61281990299
China:   4001200932
United States:     +18554525696
Hong Kong: +85230512780
Conference ID:        59655968

A live and archived webcast of the conference call will also be available at
the Company's investor relations website at http://ir.ifeng.com.

Use of Non-GAAP Financial Measures

To supplement the consolidated financial statements presented in accordance
with the United States Generally Accepted Accounting Principles ("GAAP"),
Phoenix New Media uses adjusted gross profit, adjusted gross margin, adjusted
income from operations, adjusted operating margin, adjusted net income
attributable to Phoenix New Media, adjusted net margin, adjusted net income
attributable to ordinary shareholders and adjusted net income per diluted ADS,
each of which is a non-GAAP financial measure. Adjusted gross profit is gross
profit excluding share-based compensation expenses. Adjusted gross margin is
adjusted gross profit divided by total revenues. Adjusted income from
operations is income from operations excluding share-based compensation
expenses. Adjusted operating margin is adjusted income from operations divided
by total revenues. Adjusted net income attributable to Phoenix New Media is
net income attributable to Phoenix New Media excluding share-based
compensation expenses. Adjusted net margin is adjusted net income attributable
to Phoenix New Media divided by total revenues. Adjusted net income
attributable to ordinary shareholders is net income attributable to ordinary
shareholders excluding share-based compensation expenses. Adjusted net income
per diluted ADS is adjusted net income attributable to ordinary shareholders
divided by weighted average number of diluted ADS. The Company believes that
separate analysis and exclusion of the non-cash impact of share-based
compensation adds clarity to the constituent parts of its performance. The
Company reviews adjusted net income together with net income to obtain a
better understanding of its operating performance. It uses this non-GAAP
financial measure for planning, forecasting and measuring results against the
forecast. The Company believes that using multiple measures to evaluate its
business allows both management and investors to assess the company's
performance against its competitors and ultimately monitor its capacity to
generate returns for its investors. The Company also believes that non-GAAP
financial measures are useful supplemental information for investors and
analysts to assess its operating performance without the effect of non-cash
share-based compensation expenses, which have been and will continue to be
significant recurring expenses in its business. However, the use of non-GAAP
financial measures has material limitations as an analytical tool. One of the
limitations of using non-GAAP financial measures is that they do not include
all items that impact the Company's net income for the period. In addition,
because non-GAAP financial measures are not measured in the same manner by all
companies, they may not be comparable to other similar titled measures used by
other companies. In light of the foregoing limitations, you should not
consider non-GAAP financial measure in isolation from or as an alternative to
the financial measure prepared in accordance with U.S. GAAP.

Exchange Rate

This announcement contains translations of certain RMB amounts into U.S.
dollars ("USD") at specified rates solely for the convenience of the reader.
Unless otherwise stated, all translations from RMB to USD were made at the
rate of RMB6.2848 to US$1.00, the noon buying rate in effect on September 30,
2012 in the H.10 statistical release of the Federal Reserve Board. The Company
makes no representation that the RMB or USD amounts referred could be
converted into USD or RMB, as the case may be, at any particular rate or at
all. For analytical presentation, all percentages are calculated using the
numbers presented in the financial statements contained in this earnings
release.

About Phoenix New Media Limited

Phoenix New Media Limited (NYSE: FENG) is the leading new media company
providing premium content on an integrated platform across Internet, mobile
and TV channels in China. Having originated from a leading global Chinese
language TV network based in Hong Kong, Phoenix TV, the Company enables
consumers to access professional news and other quality information and share
user-generated content on the Internet and through their mobile devices.
Phoenix New Media's platform includes its ifeng.com channel, consisting of its
ifeng.com website, its video channel, comprised of its dedicated video
vertical and video services and applications, and its mobile channel,
including its mobile Internet website and mobile Internet and value-added
services ("MIVAS").

Safe Harbor Statement

This announcement contains forward−looking statements. These statements are
made under the "safe harbor" provisions of the U.S. Private Securities
Litigation Reform Act of 1995. These forward−looking statements can be
identified by terminology such as "will," "expects," "anticipates," "future,"
"intends," "plans," "believes," "estimates" and similar statements. Among
other things, the business outlook and quotations from management in this
announcement, as well as Phoenix New Media's strategic and operational plans,
contain forward−looking statements. Phoenix New Media may also make written or
oral forward−looking statements in its periodic reports to the U.S. Securities
and Exchange Commission ("SEC") on Forms 20−F and 6−K in its annual report to
shareholders, in press releases and other written materials and in oral
statements made by its officers, directors or employees to third parties.
Statements that are not historical facts, including statements about Phoenix
New Media's beliefs and expectations, are 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: the Company's goals and strategies; the Company's future business
development, financial condition and results of operations; the expected
growth of the online and mobile advertising, online video and mobile paid
service markets in China; the Company's reliance on online advertising and
MIVAS for the majority of its total revenues; the Company's expectations
regarding demand for and market acceptance of its services; the Company's
expectations regarding the retention and strengthening of its relationships
with advertisers, partners and customers; fluctuations in the Company's
quarterly operating results; the Company's plans to enhance its user
experience, infrastructure and service offerings; the Company's reliance on
mobile operators in China to provide most of its MIVAS; changes by mobile
operators in China to their policies for MIVAS; competition in its industry in
China; and relevant government policies and regulations relating to the
Company. Further information regarding these and other risks is included in
the Company's filings with the SEC, including its registration statement on
Form F−1, as amended, and its annual report on Form 20−F. All information
provided in this press release and in the attachments is as of the date of
this press release, and Phoenix New Media does not undertake any obligation to
update any forward−looking statement, except as required under applicable law.

(1) An explanation of the Company's non-GAAP financial measures is included in
the section entitled "Use of Non-GAAP Financial Measures" below, and the
related reconciliations to GAAP financial measures are presented in the
accompanying "Reconciliations of Non-GAAP Results of Operation Measures to the
Nearest Comparable GAAP Measures".
(2) MIVAS includes Internet VAS, which was previously a separate component of
paid service.
(3) "ADS" is American Depositary Share. Each ADS represents eight ordinary
shares.

For investor and media inquiries please contact:

Phoenix New Media Limited
Matthew Zhao
Tel: +86 (10) 6067-6868
Email: ir@ifeng.com 

ICR, Inc.
Jeremy Peruski
Tel: +1 (646) 405-4883
Email: Jeremy.peruski@icrinc.com

Phoenix New Media Limited
Unaudited Condensed Consolidated Balance Sheets
(Amounts in thousands)
                                    December31,  September30,  September30,
                                    2011          2012           2012
                                    RMB           RMB            US$
ASSETS
Current assets:
 Cash and cash equivalents            397,166        319,091        50,772
 Term deposit                         784,023        797,972        126,969
 Accounts receivable, net             202,097        308,887        49,148
 Amounts due from related parties     64,388         61,836         9,839
 Prepayment and other current         46,334         76,827         12,224
 assets
 Deferred tax assets                  11,931         20,506         3,263
 Total current assets                 1,505,939      1,585,119      252,215
Non current assets:
 Property and equipment, net          41,012         99,880         15,892
 Intangible assets, net               5,415          8,385          1,334
 Other non-current assets             12,128         11,139         1,773
 Total non-current assets             58,555         119,404        18,999
Total assets                          1,564,494      1,704,523      271,214
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
 Accounts payable                     120,910        171,759        27,329
 Amounts due to related parties       3,889          16,046         2,553
 Advances from customers              7,191          11,977         1,906
 Taxes payable                        35,822         29,140         4,637
 Salary and welfare payable           45,119         51,289         8,161
 Accrued expenses and other           39,276         43,486         6,919
 current liabilities
 Total current liabilities            252,207        323,697        51,505
 Long-term liabilities                5,504          7,224          1,149
Total liabilities                     257,711        330,921        52,654
Shareholders' equity
 Ordinary shares                     42,054         42,271         6,726
 Additional paid-in capital           1,830,882      1,818,767      289,391
 Treasury stock                       -              (7,106)        (1,131)
 Statutory reserves                   24,647         24,647         3,922
 Accumulated deficit                  (555,831)      (476,334)      (75,790)
 Accumulated other comprehensive      (34,969)       (28,643)       (4,558)
 loss
 Total shareholders' equity           1,306,783      1,373,602      218,560
Total liabilities and                 1,564,494      1,704,523      271,214
shareholders' equity





Phoenix New Media Limited
Unaudited Condensed Consolidated Statements of Operations
(Amounts in thousands, except for number of shares and per share data)


                                                                            Three Months Ended                                      Nine Months Ended
                                                                            September     June 30,      September     September     September     September     September
                                                                            30,                         30,           30,           30,           30,           30,
                                                                            2011          2012          2012          2012          2011          2012          2012
                                                                            RMB           RMB           RMB           US$          RMB           RMB           US$
Revenues:
                                                                            126,172       147,603       140,521       22,359        315,387       417,022       66,354
Netadvertisingrevenues
 Paid service revenues                                                      144,599       135,777       145,837       23,205        354,753       391,788       62,339
Total revenues                                                               270,771       283,380       286,358       45,564        670,140       808,810       128,693
Cost of revenues                                                             (151,912)     (157,313)     (173,887)     (27,668)      (390,440)     (466,224)     (74,183)
Gross profit                                                                 118,859       126,067       112,471       17,896        279,700       342,586       54,510
Operating expenses:
 Sales and marketing expenses                                               (36,890)      (37,218)      (54,073)      (8,604)       (113,166)     (130,773)     (20,808)
 General and administrative expenses                                        (19,716)      (31,591)      (29,029)      (4,619)       (55,679)      (78,004)      (12,412)
 Technology and product development expenses                                (17,732)      (22,208)      (25,676)      (4,085)       (51,114)      (67,875)      (10,799)
Total operating expenses                                                     (74,338)      (91,017)      (108,778)     (17,308)      (219,959)     (276,652)     (44,019)
Income from operations                                                       44,521        35,050        3,693         588           59,741        65,934        10,491
Other income:
 Interest income                                                            4,260         8,554         8,150         1,297         4,699         25,466        4,052
 Foreign currency exchange gain/(loss)                                      13,318        (3,474)       (1,976)       (314)         13,418        (4,692)       (747)
 Others, net                                                                1,010         1,487         1,494         237           1,967         4,508         718
Net income before tax                                                        63,109        41,617        11,361        1,808         79,825        91,216        14,514
 Income taxes expenses                                                      (6,271)       (6,595)       181           28            (12,989)      (11,719)      (1,865)
Net income attributable to                                                   56,838        35,022        11,542        1,836         66,836        79,497        12,649
 Phoenix New Media
 Accretion to convertible redeemable preferred                              -             -             -             -             (773,623)     -             -
 share redemption value
 Income allocation to participating preferred shares                       -             -             -             -             (6,172)       -             -
Net income/(loss) attributable to                                            56,838        35,022        11,542        1,836         (712,959)     79,497        12,649
 ordinary shareholders
Net income/(loss) per ordinary share—basic                                   0.09          0.06          0.02          0.003         (1.46)        0.13          0.020
Net income/(loss) per ordinary share—diluted                                 0.09          0.05          0.02          0.003         (1.46)        0.12          0.020
Weighted average number of ordinary shares used                              610,872,332   623,297,593   624,008,549   624,008,549   487,159,760   622,010,661   622,010,661
 in computing basic net income/(loss) per share
Weighted average number of ordinary shares used                              648,380,080   648,612,661   645,376,189   645,376,189   487,159,760   647,617,767   647,617,767
 in computing diluted net income/(loss) per share
Net income/(loss) per ADS—basic                                              0.74          0.45          0.15          0.024         (11.71)       1.02          0.163
Net income/(loss) per ADS—diluted                                            0.70          0.43          0.14          0.023         (11.71)       0.98          0.156
Weighted average number of ADS used in                                       76,359,042    77,912,199    78,001,069    78,001,069    60,894,970    77,751,333    77,751,333
 computing basic net income/(loss) per ADS
Weighted average number of ADS used in                                       81,047,510    81,076,583    80,672,024    80,672,024    60,894,970    80,952,221    80,952,221
 computing diluted net income/(loss) per ADS



Reconciliations of Non-GAAP Results of Operations Measures to The Nearest Comparables GAAP Measures
(Amounts in thousands, except for number of shares and per share data)
                                                                                                 Three Months Ended September 30, 2011           Three Months Ended June 30, 2012              Three Months Ended September 30, 2012
                                                                                                                Non-GAAP                                        Non-GAAP                                    Non-GAAP
                                                                                                 GAAP           Adjustments^(1)  Non-GAAP       GAAP           Adjustments^(1)  Non-GAAP     GAAP         Adjustments^(1)  Non-GAAP
                                                                                                 RMB            RMB               RMB            RMB            RMB               RMB          RMB          RMB               RMB
                                                                                                 (Unaudited)    (Unaudited)       (Unaudited)    (Unaudited)    (Unaudited)       (Unaudited)  (Unaudited)  (Unaudited)       (Unaudited)
Grossprofit  118,859        1,188             120,047        126,067        677               126,744      112,471      554               113,025
Gross margin                                                                                     43.9%                            44.3%          44.5%                            44.7%        39.3%                          39.5%
Income from operations                                                                           44,521         4,651             49,172         35,050         2,903             37,953       3,693        2,561             6,254
Operating margin                                                                                 16.4%                            18.2%          12.4%                            13.4%        1.3%                           2.2%
Net income attributable to PNM                                                                  56,838         4,651             61,489         35,022         2,903             37,925       11,542       2,561             14,103
Net margin                                                                                       21.0%                            22.7%          12.4%                            13.4%        4.0%                           4.9%
Net income attributable to ordinary shareholders                                                56,838         4,651             61,489         35,022         2,903             37,925       11,542       2,561             14,103
Net income per ADS—diluted                                                                       0.70                             0.76           0.43                             0.47         0.14                           0.17
Weighted average number of ADS used in computing                                                 81,047,510                       81,047,510     81,076,583                       81,076,583   80,672,024                     80,672,024
 diluted net income per ADS
(1) Non-GAAP adjustment is only to exclude share-based compensation expenses.
Details of cost of revenue is as follows:
                                                                                                 Three Months Ended
                                                                                                 September30,  June 30,          September30,  September30,
                                                                                                 2011           2012              2012           2012
                                                                                                 RMB            RMB               RMB            US$
(Amounts in thousands)                                                                           (Unaudited)    (Unaudited)       (Unaudited)    (Unaudited)
Revenue sharing fees                                                                             89,100         72,775            79,383         12,631
Content and operational costs                                                                    37,920         50,530            60,109         9,564
Bandwidth costs                                                                                  9,489          16,739            20,175         3,210
Sales tax and surcharages                                                                        15,403         17,269            14,220         2,263
Total cost of revenue                                                                            151,912        157,313           173,887        27,668

SOURCE Phoenix New Media Limited

Website: http://ir.ifeng.com