Phoenix New Media Reports Unaudited Second Quarter 2018 Financial Results

BEIJING,Aug. 15,2018 -- Phoenix New Media Limited (NYSE: FENG) ("Phoenix New Media","ifeng" or the "Company"),a leading new media company in China,today announced its unaudited financial results for the second quarter ended June 30,2018.

Mr. Shuang Liu,CEO of Phoenix New Media commented,"We made significant progress on product innovation and content enrichment in the second quarter of 2018. We further enhanced our content production capabilities focusing on providing users with premium,original,unbiased,and exclusive content in the forms of news reports,live broadcasts,as well as documentaries and talk shows in video series format based on our original creation.

In addition,we have maximized users' satisfaction while optimizing our algorithms to effectively screen our content library to ensure full compliance with emerging regulations. Going forward,we will continue to leverage the credibility,authenticity and influence of our premium content and our brand to further fortify our leadership in the media industry in China."

Ms. Betty Ho,CFO of Phoenix New Media,further stated,"We are delighted to deliver solid financial results in the second quarter of 2018. The advertising revenue generated from our FENG app has increased by 43.2% year-over-year in the second quarter of 2018 under the old accounting standard. In order to diversify our content,we are looking for new investment opportunities in lifestyle related verticals,such as travel,health and fashion,to expand our user base and improve retention rate. Looking ahead,we will remain committed to investing in content and product innovations to strengthen our competitive edge while focusing on improving our profitability and maintaining our growth momentum."

Adoption of ASC606

Beginning from January 1,2018,the Company adopted a new accounting standard of ASC606,Revenue from Contracts with Customers (the "new accounting standard"). The financial data presented in the Company's financial statements for the quarter and the six months ended June 30,2018 are in accordance with the new accounting standard while all financial data presented for the quarter and the six months ended June 30,2017 are in accordance with ASC605,Revenue Recognition (the "old accounting standard").

The impact of applying the new accounting standard on the Company's unaudited financial results as compared to the old accounting standard for the quarter ended June 30,2018 was as follows:

Three Months Ended June 30,2018

Old

Accounting

Standard(1)

Adjustments

New

Accounting

Standard(2)

Sales Taxes And

Surcharges

Barter

Transactions

Contract

Fulfillment

Costs

(RMB in thousands)

Revenues

396,707

(34,337)

91

-

362,461

Net advertising revenues

347,337

(31,393)

91

-

316,035

Paid services revenues

49,370

(2,944)

-

-

46,426

Cost of revenues

(167,284)

34,337

(73)

145

(132,875)

Gross profit

229,423

-

18

145

229,586

Operating expenses

(199,309)

-

(845)

-

(200,154)

Sales and marketing expenses

(108,978)

-

(845)

-

(109,823)

Income from operations

30,114

-

(827)

145

29,432

Note:

(1) This financial information for the three months ended June 30,2018 was presented under the old accounting standard (ASC605).

(2) This financial information for the three months ended June 30,2018 was presented under the new accounting standard (ASC606).

Second Quarter 2018 Financial Results

REVENUES

Total revenues for the second quarter of 2018 were RMB362.5 million (US$54.8 million) under the new accounting standard,which represented a decrease of 7.8% from RMB393.3 million in the second quarter of 2017.

Net advertising revenues for the second quarter of 2018 were RMB316.0 million (US$47.8 million) (net of advertising agency service fees and sales taxes and surcharges) under the new accounting standard,which represented a decrease of 6.7% from RMB338.7 million in the second quarter of 2017.

Paid services revenues[1] for the second quarter of 2018 were RMB46.5 million (US$7.0 million) under the new accounting standard,which represented a decrease of 14.9% from RMB54.5 million in the second quarter of 2017. Revenues from digital entertainment[2] for the second quarter of 2018 were RMB37.8 million (US$5.7 million) under the new accounting standard,which represented a decrease of 17.0% from RMB45.6 million in the second quarter of 2017. Revenues from games and others[3] for the second quarter of 2018 were RMB8.7 million (US$1.3 million) under the new accounting standard,which represented a decrease of 3.5% from RMB9.0 million in the second quarter of 2017.

Under the old accounting standard ASC605,total revenues for the second quarter of 2018 would have been RMB396.7 million (US$60.0 million),which would have represented an increase of 0.9% from RMB393.3 million in the second quarter of 2017.

Under the old accounting standard ASC605,net advertising revenues for the second quarter of 2018 would have been RMB347.3 million (US$52.5 million),which would have represented an increase of 2.5% from RMB338.7 million in the second quarter of 2017,primarily attributable to a 23.0% year-over-year increase in mobile advertising revenues that was partially offset by a 26.6% year-over-year decrease in PC advertising revenues.

Under the old accounting standard ASC605,paid services revenues for the second quarter of 2018 would have been RMB49.4 million (US$7.5 million),which would have represented a decrease of 9.5% from RMB54.5 million in the second quarter of 2017. Under the old accounting standard ASC605,revenues from digital entertainment for the second quarter of 2018 would have been RMB40.1 million (US$6.1 million),which would have represented a decrease of 12.0% from RMB45.6 million in the second quarter of 2017,due to a 29.3% decrease in the MVAS revenues mainly resulting from the decline in users' demand for services provided through telecom operators in China. Under the old accounting standard ASC605,revenues from games and others for the second quarter of 2018 would have been RMB9.3 million (US$1.4 million),which would have represented an increase of 3.3% from RMB9.0 million in the second quarter of 2017,primarily attributable to the increase in revenues derived from other new businesses while the revenues generated from web-based games operated on the Company's own platforms were still declining.

[1] Paid services revenues comprise of (i)revenues from digital entertainment,which includes MVAS and digital reading,and (ii)revenues from games and others,which includes web-based games,mobile games,content sales,and other online and mobile paid services through the Company's own platforms

[2] Digital entertainment includes mobile value-added services delivered through telecom operators' platforms,or MVAS,and digital reading.

[3] Games and others include web-based and mobile games,and other online and mobile paid services through the Company's own platforms

COST OF REVENUES

Cost of revenues for the second quarter of 2018 was RMB132.9 million (US$20.1 million) under the new accounting standard,which represented a decrease of 20.8% from RMB167.8 million in the second quarter of 2017. Under the old accounting standard ASC605,cost of revenues for the second quarter of 2018 would have been RMB167.3 million (US$25.3 million),which would have represented a decrease of 0.3% from RMB167.8 million in the second quarter of 2017. The decrease in cost of revenues under the new accounting standard was mainly due to:

The sales taxes and surcharges were RMB34.3 million (US$5.2 million) in the second quarter of 2018,which was excluded from cost of revenues and recorded as a reduction item of revenues under the new accounting standard,as compared to sales taxes and surcharges of RMB33.2 million in the second quarter of 2017,which was recorded as a component of cost of revenues under the old accounting standard ASC605.

Content and operational costs for the second quarter of 2018 increased slightly to RMB107.5 million (US$16.2 million) from RMB106.0 million in the second quarter of 2017.

Revenue sharing fees to telecom operators and channel partners for the second quarter of 2018 decreased by 23.9% to RMB11.5 million (US$1.7 million) from RMB15.1 million in the second quarter of 2017. The decrease was primarily attributable to a decrease in the sales of MVAS products.

Bandwidth costs for the second quarter of 2018 increased slightly to RMB13.9 million (US$2.1 million) from RMB13.6 million in the second quarter of 2017.

Share-based compensation included in cost of revenues was RMB0.6 million (US$0.1 million) in the second quarter of 2018,as compared to RMB1.2 million in the second quarter of 2017. As the Company recognized share-based compensation,net of estimated forfeitures,on a graded-vesting basis over the vesting term of the awards,there was less share-based compensation recognized in the second quarter of 2018 for share options granted prior to 2018.

GROSS PROFIT

Gross profit for the second quarter of 2018 was RMB229.6 million (US$34.7 million),as compared to RMB225.4 million in the second quarter of 2017. Gross margin for the second quarter of 2018 increased to 63.3% from 57.3% in the second quarter of 2017. The increase in gross margin was primarily attributable to the increase in gross profit as well as the decrease in revenues under the new accounting standard as explained above.

To supplement the financial measures presented in accordance with the United States Generally Accepted Accounting Principles ("GAAP"),the Company has presented certain non-GAAP financial measures in this press release,which excluded the impact of certain reconciling items as stated in the "Use of Non-GAAP Financial Measures" section below. The related reconciliations to GAAP financial measures are presented in the accompanying "Reconciliations of Non-GAAP Results of Operation Measures to the Nearest Comparable GAAP Measures."

Non-GAAP gross margin for the second quarter of 2018,which excluded share-based compensation,was 63.5%,as compared to 57.6% in the second quarter of 2017.

OPERATING EXPENSES AND INCOME FROM OPERATIONS

Total operating expenses for the second quarter of 2018 decreased by 0.1% to RMB200.2 million (US$30.2 million) from RMB200.4 million in the second quarter of 2017. Share-based compensation included in operating expenses was RMB2.8 million (US$0.4 million) in the second quarter of 2018,as compared to RMB4.2 million in the second quarter of 2017. As the Company recognized share-based compensation,there was less share-based compensation recognized in the second quarter of 2018 for share options granted prior to 2018.

Income from operations for the second quarter of 2018 was RMB29.4 million (US$4.4 million),as compared to RMB25.0 million in the second quarter of 2017. Operating margin for the second quarter of 2018 was 8.1%,as compared to 6.4% in the second quarter of 2017,which was primarily attributable to the decrease in revenues under the new accounting standard.

Non-GAAP income from operations for the second quarter of 2018,was RMB32.8 million (US$5.0 million),as compared to RMB30.5 million in the second quarter of 2017. Non-GAAP operating margin for the second quarter of 2018,was 9.1%,as compared to 7.7% in the second quarter of 2017.

OTHER INCOME OR LOSS

Other income or loss reflects interest income,interest expense,foreign currency exchange gain or loss,income or loss from equity investments,including impairments,and others,net[4]. Total net other income for the second quarter of 2018 was RMB28.1 million (US$4.2 million),as compared to RMB3.4 million in the second quarter of 2017.

Interest income for the second quarter of 2018 was RMB13.6 million (US$2.0 million),as compared to RMB13.5 million in the second quarter of 2017.

Interest expense for the second quarter of 2018 decreased to RMB3.4 million (US$0.5 million),from RMB6.4 million in the second quarter of 2017,which was primarily due to the decrease in both the carrying amount and the interest rates of the outstanding short-term bank loans in the second quarter of 2018 as compared to that in 2017.

Foreign currency exchange gain for the second quarter of 2018 was RMB16.2 million (US$2.5 million),as compared to foreign currency exchange loss of RMB7.9 million in the second quarter of 2017,which was mainly caused by the depreciation of Renminbi against US dollars in the second quarter of 2018 that generated exchange gain in Renminbi denominated borrowings recorded in the Company's subsidiaries whose functional currency is not Renminbi.

Loss from equity investments,for the second quarter of 2018 was RMB0.4 million (US$0.07 million),as compared to income from equity investments,of RMB1.1 million in the second quarter of 2017.

Others,net,for the second quarter of 2018 was RMB2.1 million (US$0.3 million),as compared to RMB3.1 million in the second quarter of 2017.

[4] "Others,net" primarily consists of government subsidies and litigation loss provisions.

NET INCOME ATTRIBUTABLE TO PHOENIX NEW MEDIA LIMITED

Net income attributable to Phoenix New Media Limited for the second quarter of 2018 was RMB49.2 million (US$7.4 million),as compared to RMB24.9 million in the second quarter of 2017. Net margin for the second quarter of 2018 was 13.6%,as compared to 6.3% in the second quarter of 2017. Net income per diluted ADS[5] in the second quarter of 2018 was RMB0.67 (US$0.10),as compared to RMB0.35 in the second quarter of 2017.

Non-GAAP net income attributable to Phoenix New Media Limited for the second quarter of 2018,which excluded share-based compensation and income or loss from equity investments,was RMB53.1 million (US$8.0 million),as compared to RMB29.3 million in the second quarter of 2017. Non-GAAP net margin for the second quarter of 2018 was 14.6%,as compared to 7.4% in the second quarter of 2017. Non-GAAP net income per diluted ADS in the second quarter of 2018 was RMB0.73 (US$0.11),as compared to RMB0.41 in the second quarter of 2017.

For the second quarter of 2018,the Company's weighted average number of ADSs used in the computation of diluted net income per ADS was 73,118,221. As of June 30,the Company had a total of 581,908,702 ordinary shares outstanding,or the equivalent of 72,738,588 ADSs.

[5] "ADS" means American Depositary Share of the Company. Each ADS represents eight Class A ordinary shares of the Company.

CERTAIN BALANCE SHEET ITEMS

As of June 30,the Company's cash and cash equivalents,term deposits and short term investments and restricted cash were RMB1.32 billion (US$199.4 million). Restricted cash represents deposits placed as security for banking facilities granted to the Company,which are restricted in their withdrawal or usage.

Business Outlook

Based on the new accounting standard (ASC606),for the third quarter of 2018,the Company expects its total revenues to be between RMB376.1 million and RMB391.1 million; net advertising revenues are expected to be between RMB342.7 million and RMB352.7 million; and paid services revenues are expected to be between RMB33.4 million and RMB38.4 million.

If the old accounting standard (ASC605) were to be used,the Company would expect its total revenues to be between RMB413.2 million and RMB428.2 million,its net advertising revenues to be between RMB378.0 million and RMB388.0 million,and its paid services revenues to be between RMB35.2 million and RMB40.2 million.

All of the above forecasts reflect the Company's current and preliminary view on the market and operational conditions,which are subject to change.

Conference Call Information

The Company will hold a conference call at 9:00 p.m. U.S. Eastern Time on August 14,2018 (August 15,2018 at 9:00 a.m. Beijing/Hong Kong time) to discuss its second quarter 2018 unaudited financial results and operating performance.

To participate in the call,please use the dial-in numbers and conference ID below:

International:

+6567135440

Mainland China:

4001200654

Hong Kong:

+85230186776

United States:

+18456750438

Conference ID:

6098336

A replay of the call will be available through August 20,2018 by using the dial-in numbers and conference ID below:

International:

+61290034211

Mainland China:

4006322162

Hong Kong:

+800963117

United States:

+18554525696

Conference ID:

6098336

A live and archived webcast of the conference call will also be available at the Company's investor relations website at http://ir.ifeng.com.

Use of Non-GAAP Financial Measures

To supplement the consolidated financial statements presented in accordance with the United States Generally Accepted Accounting Principles ("GAAP"),Phoenix New Media Limited uses non-GAAP gross profit,non-GAAP gross margin,non-GAAP income or loss from operations,non-GAAP operating margin,non-GAAP net income or loss attributable to Phoenix New Media Limited,non-GAAP net margin and non-GAAP net income or loss per diluted ADS,each of which is a non-GAAP financial measure. Non-GAAP gross profit is gross profit excluding share-based compensation. Non-GAAP gross margin is non-GAAP gross profit divided by total revenues. Non-GAAP income or loss from operations is income or loss from operations excluding share-based compensation. Non-GAAP operating margin is non-GAAP income or loss from operations divided by total revenues. Non-GAAP net income or loss attributable to Phoenix New Media Limited is net income or loss attributable to Phoenix New Media Limited excluding share-based compensation and income or loss from equity investments,including impairments. Non-GAAP net margin is non-GAAP net income or loss attributable to Phoenix New Media Limited divided by total revenues. Non-GAAP net income or loss per diluted ADS is non-GAAP net income or loss attributable to Phoenix New Media Limited divided by weighted average number of diluted ADSs. The Company believes that separate analysis and exclusion of the aforementioned non-GAAP to GAAP reconciling items add clarity to the constituent parts of its performance. The Company reviews these non-GAAP financial measures together with the related GAAP financial measures to obtain a better understanding of its operating performance. It uses these non-GAAP financial measures for planning,forecasting and measuring results against the forecast. The Company believes that using these non-GAAP financial measures to evaluate its business allows both management and investors to assess the Company's performance against its competitors and ultimately monitor its capacity to generate returns for investors. The Company also believes that these non-GAAP financial measures are useful supplemental information for investors and analysts to assess its operating performance without the effect of items like share-based compensation and income or loss from equity investments,which have been and will continue to be significant and recurring in its business. However,the use of these non-GAAP financial measures has material limitations as an analytical tool. One of the limitations of using these non-GAAP financial measures is that they do not include all items that impact the Company's gross profit,income or loss from operations and net income or loss attributable to Phoenix New Media Limited for the period. In addition,because these non-GAAP financial measures are not calculated in the same manner by all companies,they may not be comparable to other similarly titled measures used by other companies. In light of the foregoing limitations,you should not consider these non-GAAP financial measures in isolation from,or as an alternative to,the financial measures prepared in accordance with GAAP.

Exchange Rate

This announcement contains translations of certain RMB amounts into U.S. dollars ("USD") at specified rates solely for the convenience of the reader. Unless otherwise stated,all translations from RMB to USD were made at the rate of RMB6.6171 to US$1.00,the noon buying rate in effect on June 29,2018 in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB or USD amounts referred could be converted into USD or RMB,as the case may be,at any particular rate or at all. For analytical presentation,all percentages are calculated using the numbers presented in the financial statements contained in this earnings release.

About Phoenix New Media Limited

Phoenix New Media Limited (NYSE: FENG) is a leading new media company providing premium content on an integrated Internet platform,including PC and mobile,in China. Having originated from a leading global Chinese language TV network based in Hong Kong,Phoenix TV,the Company enables consumers to access professional news and other quality information and share user-generated content on the Internet through their PCs and mobile devices. Phoenix New Media's platform includes its PC channel,consisting of ifeng.com website,which comprises interest-based verticals such as news,finance,fashion,military and digital reading,and interactive services; its mobile channel,consisting of mobile news applications,mobile video application,HTML5-based mobile Internet websites,and mobile digital reading application; and its operations with the telecom operators that provides content and mobile value-added services.

Safe Harbor Statement

This announcement contains forward−looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward−looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Among other things,the business outlook and quotations from management in this announcement,as well as Phoenix New Media's strategic and operational plans,contain forward−looking statements. Phoenix New Media may also make written or oral forward−looking statements in its periodic reports to the U.S. Securities and Exchange Commission ("SEC") on Forms 20−F and 6−K,in its annual report to shareholders,in press releases and other written materials and in oral statements made by its officers,directors or employees to third parties. Statements that are not historical facts,including statements about Phoenix New Media's beliefs and expectations,are forward−looking statements. Forward−looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward−looking statement,including but not limited to the following: the Company's goals and strategies; the Company's future business development,financial condition and results of operations; the expected growth of online and mobile advertising,online video and mobile paid services markets in China; the Company's reliance on online and mobile advertising and MVAS for a majority of its total revenues; the Company's expectations regarding demand for and market acceptance of its services; the Company's expectations regarding maintaining and strengthening its relationships with advertisers,partners and customers; fluctuations in the Company's quarterly operating results; the Company's plans to enhance its user experience,infrastructure and services offerings; the Company's reliance on mobile operators in China to provide most of its MVAS; changes by mobile operators in China to their policies for MVAS; competition in its industry in China; and relevant government policies and regulations relating to the Company. Further information regarding these and other risks is included in the Company's filings with the SEC,including its registration statement on Form F−1,as amended,and its annual reports on Form 20−F. All information provided in this press release and in the attachments is as of the date of this press release,and Phoenix New Media does not undertake any obligation to update any forward−looking statement,except as required under applicable law.

For investor and media inquiries please contact:

Phoenix New Media Limited

Qing Liu

Email: investorrelations@ifeng.com

ICR,Inc.

Rose Zu

Tel: +1 (646) 405-4883

Email: investorrelations@ifeng.com

Phoenix New Media Limited

Condensed Consolidated Balance Sheets

(Amounts in thousands)

December 31,

June 30,

2017

2018

2018

RMB

RMB

US$

Audited*

Unaudited

Unaudited

ASSETS

Current assets:

Cash and cash equivalents

362,862

236,580

35,753

Term deposits and short term investments

737,657

776,050

117,279

Restricted cash

336,700

307,000

46,395

Accounts receivable,net

458,744

385,845

58,310

Amounts due from related parties

187,214

199,034

30,079

Prepayment and other current assets

57,458

58,910

8,903

Convertible loans due from a related party

102,631

106,067

16,029

Total current assets

2,243,266

2,069,486

312,748

Non-current assets:

Property and equipment,net

64,454

80,715

12,198

Intangible assets,net

6,712

5,852

884

Available-for-sale investments

1,196,330

1,265,490

191,245

Equity investments,net

15,342

12,477

1,886

Deferred tax assets

60,460

79,609

12,031

Other non-current assets

12,544

14,797

2,236

Total non-current assets

1,355,842

1,458,940

220,480

Total assets

3,599,108

3,528,426

533,228

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Short-term loans

330,000

308,047

46,553

Accounts payable

262,657

239,898

36,254

Amounts due to related parties

14,140

16,123

2,437

Advances from customers

65,196

59,861

9,046

Taxes payable

92,214

95,571

14,443

Salary and welfare payable

134,471

94,803

14,327

Accrued expenses and other current liabilities

173,253

120,216

18,167

Total current liabilities

1,071,931

934,519

141,227

Non-current liabilities:

Deferred tax liabilities

1,312

1,312

198

Long-term liabilities

24,714

25,321

3,827

Total non-current liabilities

26,026

26,633

4,025

Total liabilities

1,097,957

961,152

145,252

Shareholders' equity:

Phoenix New Media Limited shareholders' equity:

Class A ordinary shares

17,180

17,471

2,640

Class B ordinary shares

22,053

22,053

3,333

Additional paid-in capital

1,587,575

1,596,689

241,297

Statutory reserves

81,237

81,237

12,277

Retained earnings

229,250

220,928

33,387

Accumulated other comprehensive income

570,244

636,256

96,154

Total Phoenix New Media Limited shareholders' equity

2,507,539

2,574,634

389,088

Noncontrolling interests

(6,388)

(7,360)

(1,112)

Total shareholders' equity

2,501,151

2,567,274

387,976

Total liabilities and shareholders' equity

3,228

* Derived from audited financial statements included in the Company's Form 20-F dated April 26,2018.

Phoenix New Media Limited

Condensed Consolidated Statements of Comprehensive Income

(Amounts in thousands,except for number of shares and per share (or ADS) data)

Three Months Ended

Six Months Ended

June 30,

March 31,

2017

2018

2018

2018

2017

2018

2018

RMB

RMB

RMB

US$

RMB

RMB

US$

Unaudited

Unaudited

Unaudited

Unaudited

Unaudited

Unaudited

Unaudited

Revenues:

Net advertising revenues

338,725

242,861

316,035

47,760

579,809

558,896

84,462

Paid service revenues

54,541

41,551

46,426

7,016

107,936

87,977

13,295

Total revenues

393,266

284,412

362,461

54,776

687,745

646,873

97,757

Cost of revenues

(167,844)

(128,233)

(132,875)

(20,081)

(330,333)

(261,108)

(39,460)

Gross profit

225,422

156,179

229,586

34,695

357,412

385,765

58,297

Operating expenses:

Sales and marketing expenses

(118,769)

(131,219)

(109,823)

(16,597)

(214,231)

(241,042)

(36,427)

General and administrative expenses

(35,865)

(34,398)

(41,808)

(6,318)

(67,816)

(76,206)

(11,517)

Technology and product development

expenses

(45,791)

(48,412)

(48,523)

(7,333)

(90,419)

(96,935)

(14,649)

Total operating expenses

(200,425)

(214,029)

(200,154)

(30,248)

(372,466)

(414,183)

(62,593)

Income/(loss) from operations

24,997

(57,850)

29,432

4,447

(15,054)

(28,418)

(4,296)

Other income/(loss):

Interest income

13,493

12,938

13,550

2,048

26,151

26,488

4,003

Interest expense

(6,426)

(4,633)

(3,389)

(512)

(12,775)

(8,022)

(1,212)

Foreign currency exchange (loss)/gain

(7,890)

(15,131)

16,231

2,453

(10,201)

1,100

166

Income/(loss) from equity investments,

including impairments

1,127

(2,430)

(435)

(66)

463

(2,865)

(433)

Others,net

3,066

4,093

2,128

322

4,493

6,221

940

Income/(loss) before tax

28,367

(63,013)

57,517

8,692

(6,923)

(5,496)

(832)

Income tax (expense)/benefit

(4,215)

4,724

(8,498)

(1,284)

(1,874)

(3,774)

(570)

Net income/(loss)

24,152

(58,289)

49,019

7,408

(8,797)

(9,270)

(1,402)

Net loss attributable to noncontrolling interests

779

749

222

34

1,554

971

147

Net income/(loss) attributable to Phoenix New

Media Limited

24,931

(57,540)

49,241

7,442

(7,243)

(8,299)

(1,255)

Net income/(loss)

24,402)

Other comprehensive income,net of tax: fair

value remeasurement for available-for-sale

investments*

256,588

46,364

5,287

799

265,479

51,651

7,806

Other comprehensive loss,net of tax: foreign

currency translation adjustment

(12,486)

(35,014)

49,376

7,462

(16,253)

14,362

2,170

Comprehensive income/(loss)

268,254

(46,939)

103,682

15,669

240,429

56,743

8,574

Comprehensive loss attributable to

noncontrolling interests

779

749

222

34

1,554

971

147

Comprehensive income/(loss) attributable to

Phoenix New Media Limited

269,033

(46,190)

103,904

15,703

241,983

57,714

8,721

Net income/(loss) attributable to Phoenix New

Media Limited

24,255)

Net income/(loss)per Class A and Class B

ordinary share:

Basic

0.04

(0.10)

0.08

0.01

(0.01)

(0.01)

0.00

Diluted

0.04

(0.10)

0.08

0.01

(0.01)

(0.01)

0.00

Net income/(loss)per ADS (1 ADS represents 8

Class A ordinary shares):

Basic

0.35

(0.79)

0.68

0.10

(0.10)

(0.11)

(0.02)

Diluted

0.35

(0.79)

0.67

0.10

(0.10)

(0.11)

(0.02)

Weighted average number of Class A and Class

B ordinary shares used in computing net

income/(loss)per share:

Basic

573,948,891

579,228,111

580,976,381

580,381

573,943,337

580,102,974

580,974

Diluted

576,815,588

579,111

584,945,765

584,765

573,974

* The Company adopted ASU 2016-1,Recognition and Measurement of Financial Assets and Financial Liabilities,beginning from January 1,2018. After the adoption of

this new accounting standard,the Company measures long-term equity investments other than equity method investments at fair value through earnings. As investments in

Particle meet the definition of debt securities,which are recorded as available-for-sale investments,there is no impact by the adoption of ASU 2016-1 on the available-for-

sale investments in Particle and the changes in their fair value continue to be recorded in other comprehensive income.

Phoenix New Media Limited

Condensed Segments Information

(Amounts in thousands)

Three Months Ended

Six Months Ended

June 30,

2017

2018

2018

2018

2017

2018

2018

RMB

RMB

RMB

US$

RMB

RMB

US$

Unaudited

Unaudited

Unaudited

Unaudited

Unaudited

Unaudited

Unaudited

Revenues:

Net advertising service

338,462

Paid services

54,757

Cost of revenues

Net advertising service

141,459

107,289

110,022

16,627

272,584

217,311

32,841

Paid services

26,385

20,944

22,853

3,454

57,749

43,797

6,619

Total cost of revenues

167,844

128,233

132,875

20,081

330,333

261,108

39,460

Gross profit

Net advertising service

197,266

135,572

206,013

31,133

307,225

341,585

51,621

Paid services

28,156

20,607

23,573

3,562

50,187

44,180

6,676

Total gross profit

225,297

Phoenix New Media Limited

Condensed Information of Cost of Revenues

(Amounts in thousands)

Three Months Ended

Six Months Ended

June 30,

2017

2018

2018

2018

2017

2018

2018

RMB

RMB

RMB

US$

RMB

RMB

US$

Unaudited

Unaudited

Unaudited

Unaudited

Unaudited

Unaudited

Unaudited

Revenue sharing fees

15,052

8,617

11,460

1,732

32,372

20,077

3,034

Content and operational costs

105,984

105,273

107,516

16,249

212,300

212,789

32,158

Bandwidth costs

13,607

14,343

13,899

2,100

28,135

28,242

4,268

Sales taxes and surcharges

33,201

-

-

-

57,526

-

-

Total cost of revenues

167,460

Reconciliations of Non-GAAP Results of Operations Measures to the Nearest Comparable GAAP Measures

(Amounts in thousands,except for number of ADSs and per ADS data)

Three Months Ended June 30,2017

Three Months Ended March 31,2018

Three Months Ended June 30,2018

Non-GAAP

Non-GAAP

Non-GAAP

GAAP

Adjustments

Non-GAAP

GAAP

Adjustments

Non-GAAP

GAAP

Adjustments

Non-GAAP

RMB

RMB

RMB

RMB

RMB

RMB

RMB

RMB

RMB

Unaudited

Unaudited

Unaudited

Unaudited

Unaudited

Unaudited

Unaudited

Unaudited

Unaudited

Gross profit

225,422

1,224

(1)

226,646

156,179

205

(1)

156,384

229,586

634

(1)

230,220

Gross margin

57.3%

57.6%

54.9%

55.0%

63.3%

63.5%

Income/(loss) from

operations

24,997

5,460

(1)

30,457

(57,850)

3,450

(1)

(54,400)

29,432

3,390

(1)

32,822

Operating margin

6.4%

7.7%

-20.3%

-19.1%

8.1%

9.1%

5,460

(1)

3,450

(1)

3,390

(1)

(1,127)

(2)

2,430

(2)

435

(2)

Net income/(loss)

attributableto

Phoenix New

Media Limited

24,931

4,333

29,264

(57,540)

5,880

(51,660)

49,241

3,825

53,066

Net margin

6.3%

7.4%

-20.2%

-18.2%

13.6%

14.6%

Net income/(loss)

per ADS--diluted

0.35

0.41

(0.79)

(0.71)

0.67

0.73

Weighted average

number of ADSs

used in computing

diluted net

income/(loss) per

ADS

72,101,949

72,403,514

72,514

73,221

73,221

(1) Share-based compensation

(2) Gain/(loss) from equity investments,including impairments

Non-GAAP to GAAP reconciling items have no income tax effect.

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