Briefing: Qutoutiao reports 8886.1% increase in net loss increase in third quarter

1 min read

趣头条第三季度财报:日活达2130万 净亏损超10亿 – Xinhua News Agency

What happened: Nasdaq-listed Qutoutiao, a news and content distribution platform, reported an unaudited net loss of RMB 1.3 billion ($150.5 million) for the third quarter of 2018, an 8886.1% increase from the same period last year. The company’s net revenues for the period were RMB 977.3 million, an increase of 520.3% from RMB 157.6 million year-over-year. Apart from increasing costs to retain users, share-based compensation expenses of RMB 717.7 million were recognized to consolidate corporate loyalty and encourage contribution. This is Qutoutiao’s first fiscal report since it’s IPO in September. Qutoutiao’s average daily active users for the quarter were 21.3 million, up 229.0% year-over-year.

Why it’s important: The Chinese business model “seize market share first, and think about profitability later” is seeing increasing costs. As giants such as Tencent join the content game with new projects designed for their ecosystem—Tencent recently updated QQ’s algorithm-supported community recommendation features to improve user experience—it’s getting harder and harder for up and comers to keep users and maintain a competitive team. Meanwhile, content production and distribution is facing rising pressure from Beijing. A few hours ago, Beijing reportedly cracked down over 9,800 WeChat subscription accounts.