The unintelligible interesting headlines and the unintelligible financial reports, especially the sales and marketing expenses reached 1.045 billion yuan, higher than the operating revenue of 977 million yuan, and the subsidies for users are increasing, Market concerns, If further development is made, it will form a black hole in sales expenses, which will impose a heavy subsidy burden on Interesting Headlines.
Article/Ling Xianjing, reporter of Sina Finance TMT
The business model has been full of controversial interesting headlines, and recently delivered a more controversial Q3 financial report.
In this financial report, the data disclosed by QiuToutiao and its brief, the core data of APP's installed capacity, monthly activity and customer acquisition cost were not disclosed, and the performance data was ugly or caused its share price to plunge sharply before the market, with a maximum decline of nearly 10%, falling below $5.4 per share, and already falling below the issue price of $7 per share.
Q3 financial report shows that its industrial income is 977 million yuan, an increase of 520.3% compared with 157 million yuan in the same period of 2017; However, the net loss was even more serious. During the reporting period, the net loss reached 1.033 billion yuan, which was 100 times larger than the same period last year's 11.5 million yuan.
In the financial report, the loss was attributed to the executives' stock based compensation expense of 717.7 million yuan, which led to the overall serious loss of Qutoutiao Q3. However, even if this part was discarded, the net loss attributable to ordinary investors under Qutoutiao's non US general accounting was still as high as 320 million yuan, 30 times more than the same period last year.
What worries the market most in the financial report is the disproportionate investment of interesting headlines in content.
As we all know, the business model of Qutoutiao is somewhat similar to Pinduoduo. Users can get red envelopes for sharing and profits for watching news and doing tasks. Therefore, users who can constantly obtain leisure time can earn money while watching news, which directly leads to much more investment in user acquisition than ordinary news and information companies.
The 2018 Q3 financial report showed that the sales and marketing expenses including user subsidies reached 1.045 billion yuan, an increase of 659.8% compared with 137.5 million yuan in the third quarter of 2017. This interesting headline explained that the main reason is that we continue to strive to acquire users, and because of the expansion of the user base, the cost of loyalty programs also increased.
According to the prospectus, the sales and marketing expenses in the first six months of 2018 were 836 million yuan, which means that in order to reward users, or to recruit and maintain users, the investment in Q3 far exceeded the investment in half a year, and the investment speed in this area far exceeded the growth rate of revenue.
Data shows that the sales expense rate in Q3 in 2017 was 87.58%, and that in Q2 in 2018 was 98.5%. By 2018, Q3 had reached 106.9%, and the proportion was rising step by step.
The market is worried that Qutoutiao is like a high-speed train, and the sales and marketing expenses are like the power system of the train. The excessive investment will make the high-speed train face the risk of losing control.
(The author of this article introduces: Sina Finance TMT reporter, who deeply interprets the financial report and disassembles the pan entertainment industry chain)
