Ladies and gentlemen, thank you for standing by and welcome to the Phoenix New Media First Quarter and 2013 Earnings Call. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. (Operator Instructions) I must advise you that this conference is being recorded today, Wednesday, 15 May 2013. I would now like to hand the conference over to your first speaker today, Mr. Matthew Zhao. Thank you. Please go ahead, sir.

Thank you, operator. And thank you and welcome to Phoenix New Media first quarter and fiscal year 2013 earnings conference call. I am joined here by our Chief Executive Officer, Mr. Shuang Liu; our Chief Operating Officer, Mr. Ya Li; and our Chief Financial Officer, Ms. Lily Liu. For today’s agenda, management will provide us with a review on the quarter and also include a Q&A session after the management’s prepared remarks. The first quarter 2013 financial results and the webcast of this conference call are available at the Investor Relations sections of www.ifeng.com. A replay of the call will be available on the website in a few hours. Before we continue, I refer you to our Safe Harbor statements in our earnings press release, which applies to this call, as we will make forward-looking statements. Finally, please note that unless otherwise stated, all figures mentioned during this conference call are in Renminbi. With that, I would like to turn the call over to Mr. Liu Shuang, our CEO.

Thank you, Matthew. Good morning and good evening everyone. We are very pleased to announce our first quarter 2013 financial results which exceeded consensus estimated for both top-line revenues and the bottom-line net profits. For the first quarter of 2013, we outpaced other major internet portals in terms of user traffic growth making iFeng one of China’s fastest growing internet portals. Despite the first quarter is our seasonally weakest quarter for our online advertising sales, we still grew advertising revenue by over 29% year-over-year to approximately RMB166 million, well ahead of the internet display advertising market growth average of 14.6% according to iResearch. Our strong momentum in online ad revenue drove our total revenue growth which increased by over 18% year-over-year to RMB283 million. With that today I would like to discuss three key topics with you. First, our significant user base expansion, along with our premium content offers. Second, our efforts to further expand our mobile internet operations and third update on our gaming business. First, our user growth dynamics and content offering, along with China’s accelerated modernization and integration with the global community, our Chinese leaders have showed greater interest in news coverage on social and political peers that increasingly matters in the daily life, such as domestic issues, geopolitics, diplomatic issues and global current affairs. Meanwhile, China’s rising educated middle-class are also hungry for unbiased, high-quality and intensive news coverage and professional journalism that will help them make the important decisions for them and the family lifestyle decisions, investments, education and other matters. From a voters perspective, the professional journalism that iFeng strives to provide with the current healthy courage active participation of public opinions, the societal developments and encourage citizens in decision-making of social areas with defining our mission development priorities. Against this macro factor of…

Thank you Zhao and thank you all for joining our conference call today. Let me now take you through our financial highlights for the first quarter of 2013 results. The amounts mentioned here are only in RMB unless otherwise noted. iFeng’s total revenue for the first quarter came in at RMB281.4 million, which exceeded the high end of our guidance. Non-GAAP net income for the first quarter was RMB38.7 million, or RMB0.49 non-GAAP net income per diluted ADS which exceeded Bloomberg’s street consensus by over 47%. Let me now run through the other key financial highlights. Starting with net advertising revenues, net advertising revenues for the first quarter came in at RMB166.4 million, which also beat the high end of our guidance and represents a respectable year-over-year growth of 29%. Average revenue per advertiser increased 25.9% to RMB690, 600 for 241 total advertisers. Our top five industry contributors for this quarter are auto, food, beverages and wine, e-commerce, medical services and financial services. Turning to paid service revenues, for the first quarter of 2013, iFeng generated RMB114.9 million paid service revenues, which beats the high end of our guidance. From this year we adjusted our paid service revenue classification from previously Mobile Internet Value-Added Services or MIVAS and Video Value-Added Services or VVAS into currently Mobile Value-Added Services or MVAS and game and others. MVAS includes all of our paid services which are offered to telecom operators platforms, such as wireless value-added services or WVAS, mobile video, mobile digital reading and mobile games. Games and others includes web-based games, content sales, digital reading, and other online and mobile paid services through our own platform. For the first quarter 2013 mobile value-added services represent a decrease by 8.2% to RMB95.9 million due to an expected decrease in sales from our 2G…

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. (Operator Instructions) Your first question comes from Mr. Alex Yao of Deutsche Bank. Please ask your question. Alex Yao – Deutsche Bank: Hi, good morning everyone and congratulations on a very solid quarter and also all the best to Lily. So I have two questions, number one, can management share with us the 2013 online advertising revenue growth outlook? And also specifically, what are the key drivers, what are the key advertiser categories in this year? And number two question is, you guys – in the prepared remarks mentioned, increasing usage on the mobile app and you guys are obviously making increasingly more efforts on mobile internet and my question is on distribution and user acquisition sites, given the fragmented market environment in China, what are the strategies that you guys adopted to gain mobile users? Thank you.

Hi Alex, this is Ya, good morning. And thanks for the question. For the question about the 2013 advertising outlook and the key drivers for our advertising growth. I think we did give second quarter guidance of ad revenue growing from 31% to 36% compared to last year. I think the main driver behind this first of course is our recovery in economy compared to the same time last year. Even though there are still uncertainties, but we are cautiously optimistic and based on our progress up to to-date and the contract we signed, it seems we have climbed all of the last year’s bottom situation. And the key drivers I think for our growth include the following, first of course, the continuous user growth of our portal keeps driving our market share gain from the peer as we are able to raise our rate cards and also grab budget allocation for our key clients and we do expect both the ARPU and number of clients to grow this year, contributing to revenue growth. And from the sector perspective, there are certain sectors performing well. First, we maintained our strong hold in auto sector contributing to the tune of 8% in the first quarter and most importantly we improved the FMCG almost fruit beverage and Chinese wine contributing from 15% in Q4 to 20% in Q1. This sector along with regional travel as well as our – which is online news reading strategy and we realigned our online video sales team and also improved the video advertising product and technology, we are seeing continuous growth in the video’s contribution to our overall revenue. And also importantly our leadership in sectors such as fashion, lifestyle and entertainment, growing our revenues in sectors such as luxury brands which contributed a 3% in the first quarter and which was not among the top 24. And also the cosmetics, clothes, all these will benefit from our leadership in the fashion, lifestyle, entertainment sectors which we are very strong in the portal business. And lastly the major driver will come from integrated marketing solution coming from our convergence platform including the 18.6 million daily visitors from our mobile platform, plus the 34 million on our PC platform. And we are able to provide this integrated marketing solution to satisfy the clients’ growing needs to reach their target consumers across different platforms, different screens. And we have given example in strong CEO speech. And I think so, the growth in our portal’s unique visitors and our online video, news video strategy and also the integrated marketing solution including mobile, all of this are the key drivers for this year’s continuous advertising growth.

Also Alex, this is Liu Shuang, let’s get back to your question two. Actually, about the user acquisition, actually there are two different types of approach to grow our mobile users, one to aggressively standing a partnership with third-parties to ensure a certain exposure, two to improving user experience for gradual but consistent user growth. Actually, we at this stage, we have started the latter approach which seek the balance between investment and growth and the profitability. Approach one, I would say may lead to very rapidly needed user junks in the near term, but healthy growth does not necessarily translate into very loyal thickness which is even more important to sustain the growth in the long run. So compare with this aggressive and extensive expense strategy at the current pace, I think our main focus will be on portal improvement, user experience improvement, maybe the approach to represent a more prudent and long-term oriented strategy to grow the user base with this events and lessons. If you look at our history, we had a major business event in year 2006. At that time, all the other portals has come public. In just five or six years we totally simplified the market and enjoyed very rapid user growth to very strong adoption, premium content and understanding of user behavior and the unique approach toward public education. So we are confident that we can keep this kind same kind of success on the portal. Alex Yao – Deutsche Bank: Thank you very much.

Thank you. The next question comes from Julia Chung of Morgan Stanley. Please ask your question. Julia Chung – Morgan Stanley: Thank you for taking my question and congratulations on a solid quarter and my first question is about the advertising price hike. You raised the price for your advertising earlier this year and I just wonder what’s your advertising client feedback on the rate hike and you have many clients to increase the price in the second half and (inaudible)

Okay, hi, Julia, your voice is a little bit low, but I think your question is regarding the advertising rate cards. Yeah, we – I think about, just about to announce the most recent rates increase and for the four to five and the overall price raise is about 5% but premium advertisement provisions price increase is over 20% and on January 1, we raised on our price to both video and the non-videos. The video increase overall daily inventory value by 48% and for the July 1, we decide that the video rate cover will stay the same. And for the mobile part, we also had a recent rate increase on April 1 and ATT and the mobile websites, each increased over 80%. I think our strategy is to gradually increase our rate cards and with the goal to maximizing the budget allocation and market share gain from the peers. Julia Chung – Morgan Stanley: For peers, what’s the pricing – your pricing level compared to your peers?

Okay, yeah because there are just so many different advertising products and provisions and one of the key measurements, for example the front page top banner CTM is about two-thirds of the leading portal, the other, for example the leading market share leaders in display advertisement it’s about two-thirds. And of course, we use integrated market solutions – to measure the absolute CTM. Julia Chung – Morgan Stanley: So as we speak, different advertiser profiles for your video advertising?

Repeat again.

Yeah, your voice is too low. It’s difficult to hear you. Julia Chung – Morgan Stanley: Are there different advertiser profiles for your video advertising?

Yeah, indeed. As we mentioned before, we adopt differentiated video strategy. I think, instead of computing for the TV drama and movie content, we focus on short form professional news content and the micro documentaries. So, our target advertisers includes those who are typical TV news advertisers such as in the Chinese wine sector the regional travel sector and there are some government agencies. And these sectors actually fits well with our news reader strategy and also we are combining our certain vertical channel, portal channel with our video channel towards integrated solution for this categories of advertisers and that’s what’s driving the contribution of the food beverage and wine sector in the first quarter and continuously. I think while the – I want to add that the other video companies’ revenue continue to grow, but their profitability I think remain elusive. So our model is to be sustainable and profitable and to grow our video advertising revenue targeting the TV news at target. Julia Chung – Morgan Stanley: Thank you.

Thank you.

(Operator Instructions) Thank you. The next question comes from Jiong Shao of Macquarie. Please ask your question. Jiong Shao – Macquarie: Good morning guys. Thank you for taking my questions, very good results and then Lily have a great time with the family.

Thank you. Jiong Shao – Macquarie: I have two questions; first question is unfolding upon your comments on video. Sorry, if I missed it earlier in your prepared remarks. How much was the video revenue contribution to your advertising business? And how much is sort of PC versus mobile? And of that revenue, how much is banner versus pre-roll? So that’s my first question.

Okay, yeah, first overall contribution, we have over 16% from video and over 8% from mobile. And this demonstrates strong growth from the first quarter of 2012 and the actual pre-roll, we do not give out that number, as we mentioned, we provide both pre-roll advertisement and also integrated marketing solution including sponsorships, including entitlement and which I think best utilizing our convergence platform. Jiong Shao – Macquarie: Okay, so just to clarify, when you say 8% from mobile, that includes the mobile banners not just mobile video, right?

Yeah, at this time, most mobile advertisements are along video that includes formats like loading page, like mini sites like banners, like text, like floating advertisement, but mostly are not video. Jiong Shao – Macquarie: Okay, would you be able to elaborate a bit more on the video, just give us some rough idea in terms of the loading rates or basically the inventory ratio or sales ratio? Just we can have a better understanding on the potential upside, a revenue opportunity for you from the video business?

Yeah, I didn’t – to just understand the potential side of our video business, first is to understand the market size. China’s TV news advertising has a 30 billion market a year. And the annual CCTV auction demonstrates the majority of the programs auction. They are news related and we are best positioned and we are the leader in online news video because of the exclusive TV news programs on Phoenix TV and our regional video content program produced in-house, as well as our strong leadership in our long video portal news channel among all the portals. And I think the challenge was, is to accelerate, speed up the market adaptation process to capture the ad budgets. As the viewers already shifted their viewing habits from the living room to their PC and mobile devices and, right now the fill rates for our video ad and as well as for our portal ad is smoothly over 30%. So we still have potential to increase both the fill rates and also to capture the market share. Jiong Shao – Macquarie: Okay, thanks, Ya. And my second question is on your mobile, you thought about you have now three apps, so I just want to clarify that you have both android version and iOS and also you mentioned the DAU of 18.5 million, if I remember 18.5 million is that the DAU for your mobile apps or is that mobile apps plus the whoever get on to your news portal from any kind of mobile browser?

That’s a – in half that’s the download.

Yeah, actually that’s I think you are right, the 18.5 includes both DAU from downloaded apps as well as the 3g.ifeng.com mobile portal site. Jiong Shao – Macquarie: Okay, great. And could you elaborate, I know in early days, probably monetization was your key focus but I was wondering, could you elaborate a bit on the longer-term, one, how do you think these key apps can be monetized to subscription base or ad based? And other than these three apps, what are some of the other areas you are considering to launch as to leverage your very broad and high end user base?

This is Liu Shuang. At the current stage, our main focus is on improving the user experience and portal experience of these three apps. Our flagship apps will be iFeng news. And right now, the monetization is pretty encouraged I think, it enjoys very high advertising growth. But monetization is definitely our top most focus right now, while continue to improve brand awareness, user experience to further and later we will monitor the market development to see waiting the best timing to invest more aggressively in terms of the product promotion. Speaking of the monetization method, I think all of us have paid our advertising or some other type of method. But, right now, I think the focus is on the user experience, focus is on main flagship apps which is iFeng news. Jiong Shao – Macquarie: Okay, thanks, Shuang. I also wonder upon what you mentioned earlier in your prepared remarks about you are gaining business, I think you mentioned that, iFeng will always be focusing on the content creation on the gaming side. But for the PC side, the web gaming still it makes sense, but for the mobile, it seems you kind of don’t really have a big platform yet for your mobile. How are you going to host a third-party sort of mobile games and how many games do you have on your PC by the way for the web game portfolio? Thank you.

Jiong, I’ll take that question on gaming. We have two part of gaming related revenues right now. One is both in paid services, one part is what we call mobile value-added services, that includes our mobile games and the other games and other, games and other are web page games hosted on our own platform. Mobile game currently for us is primarily mobile games working with telecom operators. So we have just started our own mobile game platform, but for now, that’s actually, that’s still very small. So going forward, this part of the revenue will continue to grow. So for now, so essentially to answer your question is short, our mobile team currently is still primarily working with telecom operators. Jiong Shao – Macquarie: Okay.

And on your question regarding the PC and web page games, right now, we have approximately 60 web page games license on our platform on the PC. Jiong Shao – Macquarie: Okay. Thank you, Lily. Thank you all for the helpful answers.

Thank you.

Thank you. Your next question comes from William Huang of Barclays. Please ask your questions. William Huang – Barclays: Hi, good morning. Congratulations, great quarter and my best wishes to Lily. Just want to follow-up question about mobile monetization. Obviously, your mobile platform is growing very nicely. I just wonder in terms of the existing monetization such as now adds a mobile video ads and maybe even mobile games, what is the customer feedback so far? And particularly what kind of the customer seems to have higher interest on placing budget on mobile in the current stage? And I have a second question. Thank you.

Sure, William. This is Ya, thanks for the question. The mobile monetization right now, the mobile advertising enjoys the highest quote rates and while as Lily mentioned, the non-operator related mobile games are expected to grow in 2013 and next year. Certainly, mobile advertising and the sectors actually includes some of the typical brand advertisement such as also we enjoyed those strong mobile advertising in Q1. And of course e-commerce or internet services, it’s actually lastly renders the double eleven day promotion from the giant clients like Taobao also contributed most to the mobile advertising. We are working seamlessly on our key advertising. We are working both on the branding effectiveness and also the sales promotions effectiveness of the enhanced results. And we are working with almost all industry sectors. And we believe that as we are able to step-by-step develop the most better mobile product increasing – improve the user experience and expanding the daily active users, while we will execute the mobile advertising strategy systematically to leverage our overall advertising monetization capability. So that’s where it is now. And for mobile video right now and as also we are working with both paid and provision model and also the advertising model for the pads, for the mobile – for the video on pads, our pricing level is the highest compared to the peers at all and compared to our own PC video advertising model our pricing on mobile video advertising. So we are working on different screens for our mobile video try to first advertising and expect that to contribute meaningfully in the second half of this year. William Huang – Barclays: Okay, just want to follow-up in terms of when you guys carrying the banner ads or video ads to customer, do you sell them as a package or you sell them separately and in terms of customer profile, do you see different customers versus PC? Thank you.

Yes, indeed. As we mentioned earlier, we do see different customers in addition to our portal advertisers and also in addition to the typical video companies advertising base. And we sell them, of course pre-roll is one we sell and actually among all the different formats, it contributes most to our video advertising revenue. But we do have integrated marketing solution and by providing both vertical channel banner advertisements as well as the video pre-roll sponsorship apps to certain advertisements. Depending on the advertisers, especially the typical TV news advertiser instead of – or typical online advertiser or a different industry or sector.

Hi, this is Liu Shuang. Let me emphasize that. It seems that you get pressing or reading on – but it does not necessarily mean that our PC type traffic growth and advertising growth is included in. What we are experiencing from other players, we are enjoying a very robust user growth and advertising dollar growth across the board, actually our PC side growth is leading other portals. So that the PC side advertising contribution still represents significant part of our total ad revenue. And given the fact that our growth is on PC side still very robust, it demonstrates very strong monetization, further monetization potential in this regard. I think after all we are living in the modern touch screen world, virtually with the traffic migrating from PC to other platforms, at least that’s my observation on the portals such that now what we are experiencing. We are experiencing very robust traffic growth on all internet-enabled devices. So, we feel very – I think we have a very nice portfolio of media assets which will support our future monetization. William Huang – Barclays: Thank you. Very helpful.

Thank you. Our next question comes from Mr. Eric Qiu of Guosen Securities. Please ask your questions. Eric Qiu – Guosen Securities: Good morning, management team. Thank you for taking my call. And we’ve seen very strong first quarter advertising results and also you have good estimates for Q2. And you just mentioned that you also enjoy very strong PC site user traffic. I just want to follow-up on that. Can you give me some more details or data about the user traffic on PC site and the mobile side like, what’s the PC’s PV and UV also on the mobile site? My second question is regarding to the video, you converted your number for your video sites and also the paid view terms for your video site? Thank you.

Hi, this is Liu Shuang. Let me answer your first question. Actually, as I said in my opening remarks, our PC site is gaining very rapid growth. We achieved 49% year-over-year unique visitor growth to 34 million users. Our user timestamp is also one of the fastest growing among major Chinese portals. That demonstrates that we continue to grab shares from other competitors. I think that has lot to do with the internal factors like the – as I mentioned in my opening remarks, the accelerated migration of country side workers to metropolitan area, China’s further integration with outside world and media control and also has lot to do with our internal steps, very strong brand adoption, premier content, our unique approach in dealing with content aggregation and very nice portal offers. Mobile site, you know the kind of growth is also very encouraging. We have more than 80 million downloads of three major apps. But for mobile side, that result is not our top priority. We are still at a stage of improving our user experience, our portal experience. I think it’s a long battle, it’s a long battle. So, we are kind of monitoring the market developments to see when is the best time to invest more aggressively in terms of marketing and promotion.

Hi, let me add that – first, most of the data we use from iResearch and unique services and especially for both PC and video and they actually give more details than what we normally get close. For example, they also show that our home page ifeng.com enjoys the highest PV and UV among the top five portals in China for the last two quarters. And also it gives us the ranking among all the video sites. So in addition to our leadership being news video, we are also ranked top ten among all the video sites in China. And on the mobile part, the IUT and UT is the less, right now it’s less with all I think the different operating system on the mobile platform is difficult to have a consolidated measurement. I think, it’s best – maybe our IR firm can for lots of you – after the call provide you with more detailed numbers. Eric Qiu – Guosen Securities: Okay. got it. Thank you.

Thank you.

Thank you. (Operator Instructions) There are no further questions at this time. I would now like to hand the conference back to today’s speakers, please continue.

Yes, thank you, operator. We have come to the end of our Q&A session and our conference call. Please feel free to contact us if you have any questions. Thank you for joining us on this call. Have a good day.

Ladies and gentlemen, that does conclude our conference for today. Thank you for participating. You may all now disconnect.