Qutoutiao Inc (NASDAQ:QTT) Q2 2020 Earnings Conference Call - Final Transcript

Hello, ladies and gentlemen, thank you for standing by for the Second Quarter 2020 Earnings Conference Call for Qutoutiao Incorporated. At this time, all participants are in a listen-only mode. After management's remarks, there will be a question-and-answer session. Today's conference call is being recorded.

I will now turn the call over to your host, Sai Chi Du. Please go ahead, Sai Chi.

Thank you very much. Welcome everyone to the second quarter of 2020 earnings conference call of Qutoutiao Inc. The company's financial and operational results were released via newswire services earlier today and have been made available online. You can also view the earnings press release by visiting the IR section of our website at ir.qutoutiao.net.

Participants on today's call will include our CEO, Mr. Eric Tan and our CFO, Mr. Xiaolu Zhu.

Before we continue, please note that today's discussion will contain forward-looking statements made under the Safe Harbor provisions of the US Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties, as such, the company's results may be materially different from the views expressed today. Further information regarding these and other risks and uncertainties is included in the company's prospectus and other public filings as filed with the US Securities and Exchange Commission. The company does not assume any obligation to update any forward-looking statements except as required under applicable law. Please note that Qutoutiao's earnings press release and this conference call include discussions of unaudited GAAP financial measures as well as unaudited non-GAAP financial measures. Qutoutiao's press release contains a reconciliation of the unaudited non-GAAP measures to the unaudited GAAP measures.

I will start by reading out Eric's commentary on the business. So far this year, strategically, we are maintaining a good balance between growth and profitability. In other words, sustainability and healthy growth have been playing a very important role in our thinking, as COVID-19 put a damper on the general economy in the first half. We have taken a relatively cautious approach to managing the overall business. Despite the generally weak market and the slow recovery for the first half of this year, our business expanded at mid-teens rate in comparison to a year ago. In terms of sales, this is the result of all our hard work and unwavering investment, it's a demonstration of the value we create for advertising customers as well as our loyal users who have been the biggest of support for us during challenging times like this.

Our operational efficiency has improved tremendously as we have kept overall costs well under control as the business expands. We managed to operate on a smaller sales and marketing budget, while maintaining a larger user base, which has very positively impacted our profitability. At the same time, we invested more into areas we deem to be strategically important over the long-term, mainly technology, algorithms, and content. We have been selective, i.e. not as plain straightforward as just adding headcount everywhere. Instead we are trying to gain a