Content platform Qutoutiao doubles user base as losses climb in Q2

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Content aggregator Qutoutiao more than doubled the size of its user base in the second quarter, an achievement that powered strong revenue growth but drove significantly wider losses, according to company statements released Wednesday.

Why it matters: Qutoutiao’s rapid revenue growth while companies such as Tencent see advertising income decelerate sharply showcases the content platform’s ability to monetize its lower-tier city-focused content services.

Details: Qutoutiao recorded a 187.9% year-on-year increase in net revenues, which reached RMB1.39 billion (around $201.9 million) during the quarter ended June 30.

  • Advertising and marketing revenues increased 209.2% year on year to RMB 1.36 billion, accounting for 98% of the company’s net revenues for the second quarter. Qutoutiao attributed the growth to increases in user base, time spent, and the ability to monetize user traffic.
  • Combined monthly active users (MAUs), which include users from both Qutoutiao and online novel platform “Midu Novels,” surged 250.2% year on year, reaching 119.3 million. Combined daily active users (DAUs) also jumped 207.6% year-on-year to 38.7 million.
  • Average daily time spent per DAU also grew 27.5% year on year to 60 minutes, though it weakened compared with 62 minutes in the previous quarter.
  • Net losses widened 165.0% to RMB 561.3 million compared with the same period last year.
  • Sales and marketing expenses rose 178.8% year on year to RMB 1.32 billion, primarily attributable to the platform’s loyalty program, which gives users monetary rewards for using the app.
  • User acquisition expenses per new install reached RMB 6.9, compared to the RMB 5.15 during the same period in 2018.
  • The company expects net revenues for the third quarter 0f 2019 to remain flat sequentially.

Context: Qutoutiao has been diversifying its product lineup. In addition to rolling out Midu Novel in May, the company has also been pushing a short video app for Android devices named “Qiuqiu Video.”

  • The short video app was downloaded around 48,430 times per day on Android devices for the past 30 days, according to figures from data analytics firm Qima. In comparison, Douyin and Kuaishou each had around 32 million downloads per day on average in the past month.
  • Qutoutiao was also briefly removed from Apple’s China App Store in May for unknown reasons.