Qutoutiao Inc (NASDAQ:QTT) Q3 2019 Earnings Conference Call - Final Transcript
Dec 03, 2019 • 08:00 am ET
Sai Chi Du
advertising. We believe that given our current scale and leading position in the industry, brand campaign is a sense for additional marketing strategy, as increased awareness of our name should encourage natural inflows of users, and potentially word-of-mouth effect which can accelerate such natural traffic.
R&D expenses were 16% of revenues in the quarter, which was generally in line with Q2 2019, and higher than the 7% in the same period last year. Again to certain extent affected by our suppressed revenues, in addition to our increase in capital allocation to technology and talent. G&A expenses were 4% of revenues in the quarter, generally in line with history. Overall, our non-GAAP net loss was RMB833 million, representing a net loss ratio of 59% which was increased from a year-ago, largely reflecting the impact from the suspension of Midu Novels and investment required by the fast growing Midu Lite, and to a lesser extent, our investment in IT infrastructure.
This quarter, we have also completed the issuance of new shares to The Paper, also known as Shanghai Jifen, pursuant to the agreement, we entered into before our IPO. More details of this transaction can be found in our most recent Form F-3, filed mainly for the purpose of this transaction.
Our balance sheet remains strong with RMB2.1 billion cash as of September 30, and we remain confident that we are well supported to continue to grow and invest for the future. As Eric has already discussed, we would like to take a more balanced approach between growth and profitability going forward. Our most mature and biggest business line QTT has already seen a healthy uptick in operating margin in the second half of 2019, with a strong performance so far in the fourth quarter, we now expect this business line to breakeven in 2020 on a stand-alone basis.
Now for the fourth quarter, we are seeing better unit economics, as a result of better user retention, as well as better ARPU on the QTT side, which we believe will be sustained throughout the fourth quarter and beyond. Together with better economics, we expect our margins for the entire company in Q4 to also recover to a level better than what we achieved in the second quarter of this year.
For Q4 revenue guidance, based on our view of the market and the operating conditions which are subject to change. We expect net revenues to be in the range of RMB1.6 billion to RMB1.62 billion. This has taken into account the resumption of normal operations on Midu Novels for the latter half of the quarter.
That concludes our prepared remarks today. And now we are open for questions. Operator, please proceed.