Qutoutiao Inc (NASDAQ:QTT) Q3 2019 Earnings Conference Call - Final Transcript

Dec 03, 2019 • 08:00 am ET

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Qutoutiao Inc (NASDAQ:QTT) Q3 2019 Earnings Conference Call - Final Transcript

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Q & A
Executive
Xiaolu Zhu

if you look going forward, I think there will be more leverage content cost as a percentage of revenue will decrease as Midu's revenue increase, IT infrastructure related costs should be stable and our content compliance cost should be stable as well. So overall, I think for the next year, we will see a gross margin over 75%.

To your second question regarding the competition of Midu, I think despite the suspension in Q3, we continue to be the number one player in the free online literature market with a comfortable margin based on third-party data we have seen. Our goal to become the number one player in the entire online literature market has not changed. It's actually with the launch of Midu Lite, we were able to keep our combined user traffic to be stable for the entire Q3. So our -- the combined DAU of Midu and Midu Lite, is still over 8 million as of now. The other thing that with the additional royalty feature on Midu Lite, the new app attracts somewhat different user base compared to the original Midu app. And also with this royalty program, we are able to increase the ARPU of Midu in Q4. So, and combined, the two apps now contribute to close to RMB3 million per day in terms of revenue for the first week of December, and we see continued clear path towards profitability, especially on the Midu Lite side with higher ARPU next year. Also overall, the user overlap between Midu and Midu Lite is very small, at around 2%. Midu Lite is able to attract users new to online literature because of its loyalty feature. So we believe both apps has a long-term strategic value for us, and we believe it will help us to capture a bigger share of the market. Thank you.

Analyst
Zhijing Liu

Thank you very much.

Operator
Operator

Thank you, sir. We will move to the next question now. The next one comes from Alicia Yap. Please go ahead.

Analyst
Alicia Yap

Hi. Good evening management. Thanks for taking my question. [Foreign Speech]

I have two questions. The first one is related to the softness for the fourth quarter guidance. So I understand, that is part of it is related to the Midu app revenue, kind of rebounding, maybe taking a bit slower. So I just wanted to get a bit more sense in terms into next year, how should we think about this 4Q guidance that indicated for -- as we go into 2020. Should we expect the revenue growth rate could reaccelerate in the later half of 2020 as we lapse out this fiscal half.

The second question is a little bit follow-up on the competitive landscape on the free-reading app. So I think just now management already mentioned, quite a bit of the strategy, the differentiation, but just wanted to get a bit more color in terms of the differentiation between the apps, like what could be the attractive points for the user to come to Midu