Qutoutiao Inc.

Q3 2021 net revenue was RMB966 million. ARPU was RMB0.41, quarterly average DAU was 27 million, and MAU was 119 million. Cost of revenues was RMB258 million, down 27% year over year, producing gross profit of RMB697 million and a 72% gross margin. Sales and marketing expenses were RMB958 million, up 41% year over year and 99% of revenue; R&D was RMB118 million; G&A was RMB161 million, including an RMB134 million expected credit loss provision. The company reported an operating loss of about RMB516 million. Cash, cash equivalents, restricted cash and short-term investments were RMB862 million as of September 30, 2021, down from RMB986 million at year-end 2020. For Q4 2021, revenue is expected to be RMB850 million to RMB900 million.

Eric Tan said the second half of the year has been difficult because the company is trying to reshape its business into a more efficient structure while advertisers face financial pressure and weak confidence. He pointed to economic headwinds and regulatory actions in advertising and the broader internet sector as key reasons for the lack of visibility. His tone was cautious but focused on operating discipline, cost control, and building a better foundation for long-term sustainable growth.

Xiaolu Zhu highlighted that the quarter reflected tightening regulation and constrained advertiser budgets, but gross margin still held at 72%. He said cost of revenues fell 27% year over year, while sales and marketing rose sharply as a percentage of revenue because of lower revenue and continued investment in Midu Novels; G&A also included an RMB134 million expected credit loss provision tied to advertiser defaults, mostly from real estate and some online sectors. He also noted the company ended the quarter with RMB862 million in cash, cash equivalents, restricted cash and short-term investments, and reiterated that the rest of the company should still break even for full-year 2021 and beyond excluding Midu and impairment charges.

There was no substantive analyst Q&A in the transcript; the call ended after management’s prepared remarks. The main open questions implied by management were how long advertiser pressure and regulatory uncertainty will persist, and whether Midu Novels can reach standalone cash flow breakeven in the second half of 2022.